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Saturday, December 22, 2012

Friday, December 21, 2012

Christmas Cliff or no cliff


Merry Christmas

Merry Christmas and Happy New year! I will be making a conscious effort to wish everyone A Merry Christmas this year ... My way of saying that I am celebrating. The birth of Jesus Christ. So I am asking If you agree with me, Please do the same. And if you'll pass this on to Your friends
Maybe we can prevent one more American tradition from being lost in the sea of "political correctness."
To one and all... Jesus is the reason for the season!

Thursday, December 20, 2012

Under Water on Home loans Maybe something we will keep you posted

"Not enough can be said about the importance of silence!" But there is no silence on rumors that the Treasury Department might try to push through a new initiative, referred to as the "Market Rate Modification Program," which will allow underwater borrowers with non-agency mortgages to refinance to today's low interest rates. That's right, anyone with an Alt-A, subprime, option ARM, jumbo, etc., should pay attention. As one lender wrote to me, "Katy bar the door!" This group has definitely been left out of all the fun, although the Treasury Department, and plenty of major servicers, has determined that borrowers with current LTV's north of 125% who have such loans are more likely to default, despite being current on payments. It is believed that what will be suggested is if a borrower is one of those "Significantly Underwater Borrowers" that is current on mortgage payments, they'll need to do is provide a hardship affidavit with the loan application which is meant to prove a "reasonably foreseeable default" under mortgage securitization rules. And this would supposedly satisfy investors who might otherwise prefer their higher original yield. Each month during the five years after the modification took place, the Treasury would pay loan servicers the difference in interest between the borrower's old rate and new. After the five years are up, the Treasury would stop compensating servicers, regardless of whether said loans were above water or not, and the borrower's interest rate would remain at the lower rate.
Complements Rob Chrisman

Wednesday, December 19, 2012

Expectations and the loan process

Expectations December 2012 Rob Christman the other day wrote.
LOAN Officers often mention how borrowers, who may not have obtained a loan in years, or Realtor's (who do one or two deals a year) seem "misguided" when it comes to realizing what the current lending environment is like. Some borrowers come through it, only to emerge and say they were "brutalized" by the current mortgage underwriting process. Not that I am here to tell LO's how to do their jobs, but if they can lay some groundwork it might help all parties involved. For example, borrowers might be well advised that "sourcing funds" is an extremely important part of our anti-laundering procedures and enforcement is horrendous for the lender/originator. (In large part due to how property flipping can be used to cleans cash deposits.) Most people outside the banking and lending industry don't understand SAR reports. Sourcing funds is also an extremely important part of meeting the new letter of the law of understanding the borrower's ability to repay as well as establishing a savings pattern. Most people purchased homes when mortgage underwriting was a joke. It's important for every borrower to know that obtaining a loan today is a whole different story, especially traditional (non FHA) lending. It seems that successful LO's aren't afraid to tell clients that credit blemishes and credit scores are much more important now than they were. With average credit scores skyrocketing over the last 3 years, what was once a great score like 700+ is now somewhat less than an average score - most non-industry types don't know the trend. Appraisals are more critical than ever before. The lender's underwriter and the investor's due diligence underwriters/auditors read everything - so should the buyer. (Ha!) Appraisers are struggling to do more appraisals for less money, and it is okay for a lender to challenge a finding in an appraisal, but be prepared to pay for a second appraisal or have an inspection to support your challenge. Prepping the borrower is more important than ever and leaving the critical disclosure of today's mortgage lending reality up to the Realtor or processor is foolish and lazy. Referrals come from insight, education, and performance by both the LO and their processor. I am repeatedly told by originators that they set expectations early and often and remember adults need to hear something 6-7 times before it really locks in (just ask my wife).

Wednesday, December 12, 2012

First time buyers nudged out by cash offers.

From one of our commentaries complements of Rob Christman: On Saturday, just in time for Sunday's open houses, the commentary discussed how the first time home buyer had been left out of the recent excitement. Deb S., a top Realtor from California, wrote, "Unfortunately for our overall well-being, those purchasers were investors and first-time homebuyers cannot compete with cash. Period. So, they are scrambling like crazy and running from property to property and simply get beaten out (either due to the terms or they can't even make a decision as quickly as a number-oriented buyer can) every time. I am witnessing HOA being slow to react, with management not well-trained or asleep at that wheel, and they are not making any rules about what % of units must be owner occupied and the result is the complete makeover of many complexes into below 50% owner occupancy and thus, unable to get a loan. The homeowners aren't informed from the management, they have no idea who is buying, what the repercussions are, and they are suddenly in a home they cannot refinance and must sell at a substantially lower price when our market stabilizes and the investors slow down. I can't wait for prices to take a jump up so the market is in balance and homeowners can sell again with some equity and the buyers are a more balanced lot... OR maybe what really needs to happen is for rents to drop off their highs and those properties won't look as appealing. Nothing good came out of the Vegas buyout or the Arizona buyout and they are happening all over again - this time add Reno plus many, many more. And another note regarding Saturday's commentary came from Mike L. who wrote, "I have a comment on the "lack" of first time homebuyers that actually are buying homes. By my experience, it's not for the lack of them trying. I have pre-qualified a multitude of First Time Homebuyers and they are writing offers on homes. Typically they are using either FHA financing or Conventional financing with 5% to 10% down (some even with 20% down). However they are typically writing offers on lower priced "entry level" properties. These properties are also very attractive to investors, so we are getting constantly beat to the punch by investors using all cash or very large down payments. It's hard to blame the seller. Why wouldn't they take an "all cash, higher priced offer" over the lower down payment first time buyer? Some of my first time buyers have been trying for well over a year to have their offers accepted. Combine this with the lack of inventory. See us for more