700 Billion Dollar Solutions…

Special thanks to Gabe Houston for his proposed “SOLUTIONS” document on the subject. After months of encouragement, Mr. Houston has memorialized our collaborative thoughts and conversations to paper. The proposed SOLUTION is a response to a letter sent from Leo W. Gerard of the United Steel Workers Union to Treasury Secretary Paulsen, dated October 28, 2008. In this letter Mr. Gerard clearly outlines the short comings of the actions taken by the Congress with the $700 billion dollar bail out.

This document provides an economically responsible and realistic solution that was ignored in the frenzy of the last actions of an exiting administration.

Mr. Houston and I have first hand knowledge of the banking sectors’ unwillingness to take losses and liquidate their non-performing assets. There have been an innumerable amount of investors standing in line offering to buy billions of non-performing REO assets from the banks holding the properties. These investors are simply seeking to assume the risk and gain any potential profit in converting non-performing assets into fully performing investments.

The greed of the banking sector prevailed as banks were unwilling to liquidate their REO holdings for relatively small realized losses. The banks refused offers by fund managers, portfolio managers and individual investors to purchase both individual properties as well as bulk REO portfolios at 50-75 cents on the dollar. The banks to date have refused to liquidate their losses at any amount below 80-95 cents on the dollar. Thus plunging the credit market into what the banks conveniently and erroneously label “liquidity problems”. Lack of liquidity implies there are no willing buyers for a willing seller. The current “lack of liquidity” in the housing market is simply a result of the banks unwillingness to sell their REO holdings to the market at current market prices. Today’s prices are deemed “too low” by the banks. Selling at the current bid price requires the banks to take a loss on their investment as a result of their poor and irresponsible investment underwriting. Instead of realizing these losses, the banks sought and received a governmental bailout on the backs of the U.S. taxpayer. [Read more]

New 2009 Conforming Loan Limit by Zip Code

Here are the new updated conforming mortgage loan amounts as well as jumbo loans.  Please CLICK HERE for a detailed look by zip code.  If you have any underwriting questions please do not hesitate to ask. The guidelines are tight and we may have some great tips for getting the loans to fund.  If you do not have Excel then comment this article with you Zip and I will shoot you back the amount.

Thanks,

Roy Slater / www.Hathaway-realestate.com

Home Sellers Face the Deaded Financing Contingency

The buyer financing contingency has left many sellers bitter and back on the market.  How can this happen?  The buyers had a pre-approval letter.  What went wrong?

As a mortgage broker licensed in numerous states and one that has come from direct lending institutions such as GMAC-Ditech.com and LendingTree.com, this issue is one that I could write a book about.  But I will try to keep it simple and to the point.

The reason why the financing contingency gets used so much is because most Realtors do not have access or foreknowledge of the mortgage process nor do they have access to mortgage lender guidelines to know what the reality is with respect to what a qualified borrower really is.    Couple this to the fact that lender pre-approval letters are all conditional until an underwriter reviews and approves.  Moreover, add in the fact that your loan officer is not an underwriter and his pre-approval may be incorrect..  The summation is a recipe for disaster.

So, how do I avoid this mess as a seller?
Well… you need to choose you Realtor wisely.  Selling your home is not just about a Realtor’s fancy marketing plan.  It is about a Realtor’s ability to also identifying quality offers and in scoring buyer risk should you accept an offer.  It is about having the where-with-all to ask a buyer the appropriate questions in the negotiation process in order to score buyer risk and eliminate financing contingencies.

Within minutes a knowledgable mortgage person can know whether or not a buyer is solid or not.   So, if you can ask for the following items in your buyer counter offer it will help tremendously: (related article click here)

• credit report
• ask how the buyers get paid( w2, 1099, or self employed) key questions to score risk. if there is 1099 or self employed income then risk goes thru the roof.  For more info on this drop me a comment and I will go thru why.
• a copy of asset statement showing down payment.
• require loan officer name, phone number and access to all loan information

This information can really help you sore risk and leave a prospective buyer no out with respect to a financing contingency escpecially when this information is used correctly.  Of course this information is useless unless your Realtor knows how mortgages work, current product guidelines and the knowledge of current programs available.

end

Roy Slater
Hathaway Real Estate
- Charlottesville Real Estate
- Southern California Real Estate

Short Sale and Foreclosure Tax Consequences

This is one of the big questions always asked by clients in these tough situations.  There is a lot of mis-information on this subject which leads to fear.  Fear of the unknown, just compounds these tough situations.  So, I have enclosed a link that should shed more light on the tax consequences of short sales and foreclosures.  This should help clear up confusion and hopefully some of the agony with respect to this “fear of the unknown.”   Hopefully this information will aid you in a most trying time.

Link to tax article: Go >>>>

Important:  Always consult a licensed professional if you are not sure about your situation.  Remember, a Realtor is not a CPA or an attorney.  So unless they are, always direct your technical question to a licensed professional.

New Conforming Loan Limit Calculator by Zip Code.

This article is outdated..  For the NEW 2009 Conforming and Jumbo Loan limits please CLICK HERE

We are now getting a glimpse of how investors(mortgage providers) will be treating the new Fannie Mae/Freddie Mac conforming loan limits which were part of the national stimulus package. The first of many investors are coming out with general underwriting guidelines. It appears they are moving cautiously. This may speak volumes on their attitudes on the subject of increased loan amounts. Moreover it appears that they will be categorizing these loans in a different conforming product bucket. (Conforming Jumbo Loans)Below is a conforming loan limit calculator as well as some highlights of the guidelines.

Calculate your new mortgage loan limit by Zip Code. Click Here

[Read more]

Your Mortgage Crisis Does and Dont’s

Unfortunately this is an extremely difficult subject for homeowners. With the emotionals ties to the home and in many cases a strong moral convictions to abide by the rules; good people still find themselves [Read more]

Top 10 Stupid Mortgage Loan Officer Questions

I received this joke email and I thought I would share it. Although this is a joke email, these questions are asked by borrowers and loan officers on a daily basis. Moreover, some loan officers actually commit loan fraud by structuring deals with these bits of logic. Below are the “10 Stupid Questions” and reasons why [Read more]

New Conforming Loan Limit Increase Has Too Many Strings

After reviewing Fannie Mae’s and Freddie Mac’s Jumbo Conforming loan guides, it appears that they have come up with an extremely cautious plan to administer the new Jumbo Conforming limit increase. Let’s be clear, this is not what Americans thought it was going to be. (Fannie Mae Guides & Freddie Mac Guides)

The GSE’s have created a new hybrid program for consumers. It is not a Conforming loan. This new program is purely and simply all but a symbolic gesture of help. It is tailored to dissuade refinances through ultra-tight underwriting guidelines while being some-what attractive to new home buyers, assuming you have perfect credit and a 10-25 percent down payment.

Unfortunately, many of the loan origination calls coming into lenders for this new loan product are for refinances. These consumers just cannot qualify. Of course you would assume they do not qualify because of income or debt ratios, but loan originators do not even need to get that far into the loan application process to decline these borrowers. In most cases their first mortgage exceeds 75% of the value of the home. The deal is immediately dead.

As far as rates are concerned, the rates follow closely to the normal conforming products. So a relative thumbs up with respect to rates. The new Jumbo Conforming product is about .125%-.375% higher in rate compared to the old standard conforming loan across different lenders. Below is a quick rate comparison based on today’s rates.

Conforming 30YR Fixed
5.75% / 0 points

Jumbo Conforming 30YR Fixed
6% / 0 points

So if you were applauding this portion of the stimulus package, I would not applaud quite yet. This new hybrid, conforming product may not have the impact on the economy lawmakers may have suggested. Not surprising as we have seen this occur on some of the initial consumer foreclosure bailout policies rolled out early in the credit crunch.

One quick side note: I do want to applaud Freddie Mac for at least offering a refinance cash-out option as Fannie Mae did not. Although the guidelines are tight, they did put it in the guides.

Please feel free to put your loan scenarios in the comments so we can illustrate some of the challenges loan originators face with the new Jumbo Conforming product.

Calculate your new mortgage loan limit by Zip Code. Click Here

Foreclosure and Bank Owned Real Estate Auctions

Thought I would address this topic as the question comes up quite often. The general public is extremely curious about this topic. An auction if executed correctly and ethically is the best way to buy and sell a home in any market. Moreover, the auction method of sale is not only for foreclosures and distressed situations. This is important to know because auctions styles and protocols for consumers are very different depending [Read more]

Mortgage Servicing Loss Mitigation Contacts

With more than 50% of foreclosures being prevented, the first step a homeowner can take is to call their Mortgage Company and ask to speak to someone in the “ Loss Mitigation Department. ” If your lender is not listed below, [Read more]

Next Page »