If you think getting a loan secured by your home, either a home equity or first mortgage is a piece of cake it might be time to think again.

Over the past several months I have run into several client scenarios where the assumption was that getting mortgage financing for a new home, or to refinance an older mortgage, was a no-brainer. In two recent cases loans were denied where there was significant income (i.e. north of $250,000 per year) and plenty of liquid assets (i.e. well over $2 million); one client is a senior executive at a major technology company.

You might be saying, huh?

Well, in the brave new world of banking, it is more prevalent than you might believe. To get the bottom of the story and why it is happening with increased frequency, I contacted my good friend Robert Wuflestad, who is a very experienced mortgage banker, for some answers.

So, Robert, what is going on right now in the banking world that’s causing so many wealth creators grief?

The simple answer to this question is the industry is still in recovery. The fed is propping up conforming and government loans, but the mortgage crisis virtually wiped out the secondary market for Jumbo mortgages and non-conforming mortgages. Without this secondary market, there is little choice or competition and borrowers are limited to the institutions that have money to lend. Since many of these institutions are still trying to recover from their own problems, they are only willing to lend if they are certain there is little risk AND they are going to make a profit. This gets rather silly at times especially with the big banks because they can be extremely rigid in what they will allow. Competition is emerging and there are some attractive programs available through institutions other than the big national banks, but borrowers must still be able to document income and assets, common sense has been abandoned. Credit scoring can be challenging and you must manage this prior to entering the market.

It appears to me that high levels of assets, even if they are liquid, no longer matter. Is that right?

To get the best rates, if you have the required minimum of assets, generally it doesn’t matter how much more you have. You still must meet the required income, credit and property requirements. The idea of “common sense” guidelines have died, may it RIP.

There are a few regional banks that will lend on the strength of the borrower, but rates may be a bit higher, but even they have to be concerned about new regulations designed to protect borrowers from predatory lending and putting borrowers in position where their income cannot support their debt.

Continue Reading »

I ran across this article when I was doing some research on barefoot running. I absolutely love it and the application to live a fulfilling life, with clarity and control! (Warning: it’s a tad long but I promise that you won’t be disappointed if you read the entire thing).

These are a few points that came into focus for me as I read the article:

• I am becoming more and more aware of how important it is to live my life authentically and how often I let fear and controlling behaviors stop me from expressing my true self.
• I am also learning that it takes a great deal energy and work to protect myself from the pain of life, and by living in my authentic self, life can be lived easier and more simply. (I didn’t say pain free, however).
• By embracing the courage to truly experience the highs and the lows of life, and not living in the protected “safe” range of mediocrity, we can have the richness of life that flows naturally without having to worry about it.

What points of the article challenge you to live a fulfilling life?

It’s Friday, which means we’re bringing you part one of our three part guest blogging sports series!

Guest post by Daniel McGilvray, vice president of investments, Highland Capital Management

Many of you may have seen a portion of, or at least heard about the longest match in tennis history, which was played a few weeks ago at Wimbledon. Unless you are a tennis player however, you may not realize exactly how in the world this happened.

Basically, each of the players had a great serve and not a very good return of serve so neither could ever beat the other one on their serve. In fact, there were 215 aces in the match with each player serving over 100 aces! With a typical game being the first one to get four points and a typical set being the first one to get 6 games that means both John Isner (who finally broke serve in the 138^th game of the 5^th set to win it) and Nicolas Mahut each won over four sets on aces alone! In fact, this match could have gone on forever if it weren’t for exhaustion because without a tie breaker in the 5^th set if someone doesn’t break the other persons serve the match would literally go on forever and no one would ever lose (or win).

There is a term and strategy in investing which is very similar to holding serve in tennis; it’s called passive investing. With it, you will never underperform the benchmark (assuming the investment vehicle you use tracks the benchmark closely), but you also will sacrifice any opportunity for outperformance. This is precisely why we, and many other investment firms, have a “core” holding in passive indexes for one, or many, asset classes to provide the “beta” in the portfolio. The strategy allows you to at least meet the benchmark on a portion of your portfolio at virtually no cost.

To win a tennis match, however, one has to break serve. Similarly, to beat the benchmark, a portfolio has to take some deviation from the benchmark. This is commonly known as active investing or providing “alpha” to the portfolio. At Highland we do this by trying to pick the best active funds over both a long period of time and recently and those that have a fairly consistent history of beating the benchmarks in their respective categories. We also watch our funds closely for any changes in management, changes in strategy, weakening returns, etc. to make changes if/when necessary. So, while everyone hopes to win the match (beat the benchmarks), there is some comfort, as Isner had in this match, of holding serve.

The book The 4-Hour Workweek has taught me to pay attention productively. 

Productivity is not just about getting things done.  We need to pay attention and set boundaries for ourselves.  Check out our newest video where I discuss how not to let situational circumstances control those boundary lines.

What are you going to do to pay attention?

I am not a huge soccer fan but I’ve found myself captivated by the excitement  and drama of the World Cup.  Okay, I’ll admit that I pretty much can get suckered into anything on ESPN; I am the sports junkie and these athletes teach us to never give up a goal.

The US win versus Algeria was absolutely amazing to watch.  The winning goal in the overage period will likely be remembered as one of the best ever.  Watch the winning goal here:

In two short minutes, near the end of the match, the US went from being eliminated from competition to winning their bracket.  They had been the better team most of the game, and in fact had scored a goal that was disallowed in a controversial call earlier in the second period.

What caught my attention was the postgame interview with the leader of the team, Landon Donovan. When asked about a bad call made during the game he said (and I am paraphrasing), “we embody what the US stands for…we can moan about the call or we can move on, perservere, and believe.”

Hard work doesn’t always guarantee success or some type of pay off in life, as in sports; but had the US team given up they would have missed one of the biggest victories in recent memory.  

This game reminded me to not give up on my goals even when I don’t know if they will materialize.   I want to believe my desired outcomes in life can become a reality but the only thing I can control is to continue working hard, staying focused on my plan, and taking the daily steps that matter in my life.  The result will take care of itself…and it could be closer than you think.

I don’t have one, but sure wish I did.  Many times in my life, I’ve wanted a mentor – someone I could talk to about my career, life, key decisions, and all the stuff in life that can use the soothing wisdom that only rich life experience can provide.

Many people have played mentor-like roles in my life: my wife, friends and colleagues, and a few consultants.  Their perspectives have always been helpful, but the dynamics in many of those relationships have been more like sounding boards. I’ve never had a mentor in the true sense. 

Maybe some of the reasons I never had an actual mentor are that I didn’t know where to look or how to find one, also I lacked the wisdom to really appreciate and understand the benefits.  It is clear to me now that I missed out, so I’ve decided to try a different tack.

Three untraditional strategies to finding a perfect mentor:

 First, I am building my network of business people who have deep experience in various industries.  I ask them to evaluate my strategies and ideas and to offer their input on opportunities and roadblocks and what they see in the future.  It’s a funny thing – most are thrilled just to share their experiences and watch as I progress.  As one of the guys said to me today, “It is fun for me to grab you by the scruff of the neck, show you what to do, but you have to go do it.” 

Second, I am embracing the openness and transparency that these types of relationships require.  It takes some practice but the quicker I have gotten “real” with my issues the better the conversations have become.

Third, I am processing the idea of building out an advisory board with a few of these key individuals.  There are other approaches like YPO (Young Presidents’ Organization) and Vistage that can provide important support in similar ways, but the idea of a personal advisory board seems to make sense to me right now.

In time, I believe a few of these relationships could turn into mentorships, and that would be just fine with me.

Have you found a mentor that already existed in your own network?