{"id":1343,"date":"2007-04-24T05:56:02","date_gmt":"2007-04-24T12:56:02","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1343"},"modified":"2007-04-24T05:56:02","modified_gmt":"2007-04-24T12:56:02","slug":"confessions-of-an-arms-dealer","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1343\/confessions-of-an-arms-dealer\/","title":{"rendered":"Confessions of an ARMs Dealer"},"content":{"rendered":"

Strategic Equity Positioning<\/a> is a buzz phrase in the mortgage industry today. The concept of equity management came from the book, Missed Fortune<\/a>, by Doug Andrews. Andrews, a life insurance agent and financial planner, discovered a strategy that extracts equity from your home to fund tax deferred investments. The response was nothing short of remarkable. A study by the Chicago Federal Reserve<\/a> Bank remarked:<\/p>\n

“..taxpayers with incomes over $100,000 a year who use mortgage-deductible interest as part of an arbitrage strategy in retirement accounts would appear to have the most to gain, and the authors find it “puzzling” that more people who are in “better financial shape” than the average taxpayer don’t take advantage of this kind of strategy.”<\/em><\/p><\/blockquote>\n

I first heard of the term “equity management” in 2003. I heard Barry Habib<\/a> discuss this concept at a seminar at the Del Mar Racetrack (critics, please refrain from pointing out the obvious irony<\/em>). My first thought was “Cool, they have a name for it now!” You see, I am an ARMs dealer and have been since 1996. My background was on Wall Street as a financial consultant for two major wirehouses. I learned about financial planning in Plainsboro, NJ.<\/a><\/p>\n

I met a man from Wachovia Bank (nee World Savings<\/em>), Mike Cushing, in 1996. Mike taught me how to properly analyze negative amortization loans. He taught me how to temper the negative amortization with bi-weekly payments<\/a>. I seized the opportunity and developed the mantra “Go Negative and Invest the Difference<\/em>“. This mantra was not unlike the one espoused by Art Williams<\/a> as he built the insurance empire that eventually became Primerica (now owned by CitiGroup). Art Williams encouraged Americans to “Buy Term and Invest the Difference<\/em>“.<\/p>\n

When presented with the idea of extracting equity to fund investments, I was puzzled. It seemed, well…kind of reckless. I was taught that the NASD forbid recommendations that would extract equity to invest when I attempted this arbitrage play for a securities client in 1990. I’ve since learned that the NASD softened their stance in 2002<\/a> with a strict admonition that the loan and subsequent investment pass a suitability test.<\/p>\n

Let Read more<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Strategic Equity Positioning is a buzz phrase in the mortgage industry today. The concept of equity management came from the book, Missed Fortune, by Doug Andrews. Andrews, a life insurance agent and financial planner, discovered a strategy that extracts equity from your home to fund tax deferred investments. The response was nothing short of remarkable. […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-1343","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-real-estate","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":16276,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16276\/there-is-no-real-estate-inventory-problem-in-oceanside-ca\/","url_meta":{"origin":1343,"position":0},"title":"There is no real estate inventory problem in Oceanside, CA","author":"Brian Brady","date":"January 11, 2013","format":false,"excerpt":"How often had you heard real estate agents complain about \"the inventory problem\" this past year?\u00a0 I used to think their complaints were farcical until these past 3-4 months.\u00a0 I have about a dozen pre-approved buyers out looking for homes.\u00a0 Interest rates are low and the foreclosures are getting snapped\u2026","rel":"","context":"In "Flourishing"","block_context":{"text":"Flourishing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/flourishing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10553,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10553\/the-rates-arent-the-only-thing-that-matters-my-thoughts-on-how-to-create-healing-in-the-housing-market\/","url_meta":{"origin":1343,"position":1},"title":"The Rates Aren’t The Only Thing That Matters….. (My thoughts on how to create healing in the housing market)","author":"Tom Vanderwell","date":"December 14, 2009","format":false,"excerpt":"A couple of thoughts about this article from the New York Times: It\u2019s true.\u00a0\u00a0 Anecdotally, I\u2019d have to say that depending on the day, anywhere from 30-50% of the people who I discuss refinancing with are either not able to do it because their income has fallen or because property\u2026","rel":"","context":"In "Dirty Laundry"","block_context":{"text":"Dirty Laundry","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/dirty-laundry\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/media.cnbc.com\/i\/CNBC\/Sections\/News_And_Analysis\/__Story_Inserts\/graphics\/__REAL_ESTATE\/home_equity.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1387,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1387\/hard-money-buy-at-eight-sell-at-twelve-repeat\/","url_meta":{"origin":1343,"position":2},"title":"HARD MONEY: Buy at Eight. Sell at Twelve. Repeat.","author":"Brian Brady","date":"July 6, 2007","format":false,"excerpt":"Imagine a business with a 50% markup. No employees, no warehouses, some liability, and you can do it from the comfort of your own home. I'm not trying to introduce you to the hottest multi-level marketing craze nor am I trying to convince you to open a franchise. I want\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2708,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2708\/the-beat-goes-onand-the-beat-goes-on\/","url_meta":{"origin":1343,"position":3},"title":"The Beat Goes On…and The Beat Goes On","author":"Brian Brady","date":"March 6, 2008","format":false,"excerpt":"The Fed reported that home equity is at its lowest since World War Two: Homeowners' portion of equity slipped to downwardly revised 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1407,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1407\/interview-with-robert-ashby-cmps\/","url_meta":{"origin":1343,"position":4},"title":"Interview With Robert Ashby, CMPS","author":"Brian Brady","date":"May 14, 2007","format":false,"excerpt":"I interviewed Robert Ashby, a Certified Mortgage Planning Specialist, in this 15 minute podcast. 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Now with recasts\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1343","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=1343"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1343\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=1343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=1343"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=1343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}