Jack M. Guttentag The Mortgage Professor

DougO - Sunday, September 9, 2007, 11:25AM ET  Report Abuse

• Overall: 4/5

I have an ARM I took out during the days of 1% short term T-bills. At the time, lenders ran ads showing that in months 1-12 (the teaser period) the rate was, say 4.00%, and in months 13-360 it was 3.75%, representing a 1% index plus 2.75% margin. _I_ knew such a situation couldn't last and that my index would be most likely 3-6% at re-set time, but I wonder how many people didn't.

John - Saturday, September 8, 2007, 7:36PM ET  Report Abuse

• Overall: 3/5

Looks like all the mortgage people didn't like this article. I thought it was good- must be because I am just an average "Joe". There should be no fingers pointing to why people had an ARM mortgage- you don't know their situation. We actually had one that we just got out of recently. We knew it was risky to do the 2 year interest only, but we were trying to rebuild our credit and knew (so we thought) we would get a better interest rate next time. Who knew the market would change! I really feel bad for those that are stuck in a loan they can't get out of now because of falling values of houses. We did get proactive after we refinanced our mortgage and got on the Money Merge Account. It is a great program that will help us pay down our 30 year mortgage in half the time and thank goodness we had enough equity in our house to pay off a lot of our loan and credit card debt, too! We went to this website www.u1stfinancial.net/johnfechik and filled out the analysis and found out we fit the criteria to use the program. It has been great and we just had to re-do the way we do our banking- we are cancelling out interest from our first mortgage and using a little of the bank's money each month for free. I know there are many critics of this program, but it is working great and I know of many people all over the U.S. that are using it now. In fact, Broker Banker magazine just endorsed the MMA and so did the guy from the Reality Zone website. People have said you can do the same thing yourself- I disagree, because I know when we use the bank's money each month for a little bit on interest to pay down our 1st mortgage, there is no way we'd get the same results unless I used my own money! Why not use theirs instead of mine? I'd rather spend mine on other things! Plus, this is not a new idea- the MMA concept has been used in Australia for over 10 years and they pay $100,000 - $150,000 less in interest on the same size mortgage! What does that tell you!? It may not be for everybody, but it's working for us!

bill14224 - Saturday, September 8, 2007, 11:31AM ET  Report Abuse

• Overall: 4/5

I noticed that no one who has read this article has posted the information the author asked for and said he would gladly eat his words if someone did. I however have no sympathy for anyone who would take an ARM in the first place. Everyone knows that fixed rate mortgages have been around forever. For someone to take an ARM to save a couple percent is noting short of gambling in my view, especially in light of the fact that fixed rates have been reasonable or even downright cheap for 15 years. I just retired an 8.75% mortgage over 15 years. Anyone who has an ARM at 4 or 5% and may end up paying 10% can cry me a river. If you can't afford your mortgage at 10% you are living beyond your means and need to learn the simple economic facts of life. It just isn't worth saving a couple percent to gamble on having to pay 2 or 3 times that down the line. Why not throw-in your first born child? You should have taken a fixed mortgage and bought a cheaper house, one that may be a longer commute to and from work. You are a gambler and a sucker and deserve what you get if you think otherwise. It may look sometimes like a lender is screwing someone, but the loan contract says what it says and YOU SIGNED IT, so if you think the government will save you and not screw you even worse in return is incredibly naive. Suffice it to say that everything the government touches costs a lot of money, and most of the money they handle is wasted or spent on administering policies that worsen the situation rather than help.

Joseph - Friday, September 7, 2007, 9:31PM ET  Report Abuse

• Overall: 2/5

I am in, and have been, in the industry for seven years now. It is true that I have been through the "good times of the Mortgage industry", but I feel the need to clarify that not all mortgage brokers, and or lenders are bad. It is very true that there were some in the industry that unfortunately took advantage of the less knowledgeable or fortunate people of america. However, to characterize all in the industry as being bad is intollerable, and will only cause mass panic in the legislature. I am not a salesman, I am a mortgage processor, but in my current role I have a significant amount of influence on the type of loans sold (you see I realized long ago that I am not a sales person) and if I feel that a loan is not in the best interest of a customer, I will force the borrower and loan officer to prove to me that they want and need a particular program. My big concern here is that this author comments that many/most lenders do not disclose what your interest rate is made up of via a comment of "I have not done a survey but would be surprised if there are any lenders who do this. It is symptomatic of the wretched level of service provided by mortgage-servicing agents, a subject on which I have railed on numerous occasions." With no true reaseach, how is Jack considered an investigative reporter or one that we can trust to provide facts? You need to contact and analyze both sides of an argument to provide a well thought interpretation on an opinion. For those of you that were harmed by non-profeesional mortgage lenders or broker loan officers, I am sorry, and unfortunately I cannot fix all of the problems that they caused. To think however, that your legislators (who have for the most part have no experience in the mortgage industry or the economy whatsoever), will be able to develop a successful plan to bail you out is wrong. I am in, and have been in, this industry to help people meet their dreams. Most people in this country cannot buy their home with cash and they need a loan to achive their dream home. This industry is here to help you achive that goal.

Patti - Friday, September 7, 2007, 8:05PM ET  Report Abuse

• Overall: 3/5

I have been a Mortgage Broker/Consultant for 10 years and have seen the highs and lows and sadly, the stories of those put into bad loans or losing their homes. There are some basic questions to think about when taking out a mortgage, that will help you know what kind of mortgage is best for you: Is this a first home that you may only stay in for 3 to 5 years, if so, then it is ok to get an 3 or 5 Year Fixed Arm loan, if this is a home you want to stay in for many years, then get a Fixed Rate loan. Make an informed choice, use your wisdom and please don't get into a payment that is more than you can reasonably afford. A good mortgage person will ask lots of questions, credit, job questions, savings, income, debts, etc. help them help you. You can always refinance if rates get better, but it costs around $5,500 in closing costs to refinance about a $275K loan. Keep that cost in mind also when you get your original loan, the easy oh, we can refinance you out of it" may only a benefit for the mortgage person, not you. Ask about the cost to buy down to a lower rate initially if you plan on being in the house for many years. $35. less in payment per month adds up to be $12,600 over 30 years (360 mos). The mortgage person should educate you about mortgages and the options that are available to you for your particular situation. Normally, there are options and choices, just ask what they are. Try to think toward the future even though you may not know exactly, you can make an educated guess. If you are not getting the answers you want, feel uncomfortable or your mortgage person does not answer your questions, trust your gut and look elsewhere. You want to work with someone who can give you a comfort and peace of mind that the mortgage program you are being offered is what is best for you at this time. I am sorry to say, there are some mortgage people with little or no honor or integrity, who got in the industry when rates were so low, anyone could do it and sadly, did. Being in the wrong kind of mortgage can impact your life for years. Ask questions and be smart, this is a big financial decision that will affect you for many years to come. The wrong kind of loan can cause you thousands over the life of the loan or sadly, at this time, the wrong kind of loan can cost you your home. Good luck! Patti G