What a lovely weekend, no snow in SoCal! Although I heard there was some outside of Denver, which is to be expected. This week starts with some interesting real estate and lending news plus oddities and thoughts worth repeating.
And you thought it was safe, that BoA was going to help the underwater hapless. Oh, silly you!
Bank of America, the nation's largest mortgage lender, ramped up its foreclosure activity in March, sending hundreds of letters warning delinquent borrowers in the region that it could sell their homes at auction in as little as three weeks, according to North County Times analysis of data from ForeclosureRadar.
http://su.pr/2zTbzb
Of course, we still have the 'Shadow Inventory' question. Is it or isn't it? That is the question, and the banks want to create a 'soft landing'. Some financial institutions can stand higher write offs at this time and are more likely to foreclose and sell right now; others have weaker balance sheets and need to stretch out the write offs that come with the recognition of loss represented by foreclosures. http://su.pr/23li4p
Some good PowerPoint presentation ideas to which I add the following:
1. no more than 6 words per slide
2. add humor
3. no cheesy graphics
4. Keep It Simple, Stupid! (KISS)
and more... http://su.pr/227Ve5
I have been in New Orleans on Fat Tuesday and Mardi Gras when local authorities roll out stories of people dying. Bullets falling from the sky is a New Orleans expectation, but West Virginia? http://su.pr/2E23Lm
And, finally 'Killer Quakes on Rise With Cities on Fault Lines' (Bloomberg) -- Is the world falling apart? Surely it isn’t, though this year’s frequent earthquakes and the occasional volcano have left an exceptional path of ruin and misery, raising concerns that something very unusual is occurring. http://su.pr/22JbcZ
Please let me know if you have any thoughts, all are welcome!
Monday, April 19, 2010
Tuesday, April 13, 2010
Some Thoughts for April 13, 2010
'So many things to write about, so little time.' Anon Blogger
Okay, so I quoted myself and we can now get past that! This week already quite a few things are rearing their heads (both ugly and cute) worth passing along.
First the Ugly - There is a notion in the Halls of Government, both State and Federal, that the way to solve what many now consider a falsehood, 'Global Warming' is to regulate, regulate, and regulate some more. One of the scariest of these upcoming possible regulatory invasions into our lives comes from Cap and Trade legislation.
A License Required for your House (http://su.pr/2WozLe)
Thinking about selling your house - A look at H.R. 2454 (Cap and trade bill) This is unbelievable!
Only the beginning from this administration! Home owners take note & tell your friends and relatives who are home owners!
Beginning 1 year after enactment of the Cap and Trade Act, you won't be able to sell your home unless you retrofit it to comply with the energy and water efficiency standards of this Act. H.R. 2454, the "Cap & Trade" bill passed by the House of Representatives, if also passed by the Senate, will be the largest tax increase any of us has ever experienced.
Second the Ugly - The economy and most specifically the Real Estate Sector has been buoyed by massive amounts of government intervention. In two weeks, a very popular but quite expensive support program to give tax credits to select home buyers will expire.
First time home buyer tax credit is gone, now what? (http://su.pr/2dhIyM)
Home buyer tax credit deadline approaches
There were loud calls from the real estate industry to extend the $8,000 first-time home buyer tax credit when the original Nov. 30 deadline neared. Now we're in shouting distance of the extended deadline -- April 30 to sign a contract -- and it's been pretty quiet. The National Association of Realtors, for instance, tells me it hasn't been lobbying for a re-extension.
But mortgage publisher HSH Associates notes that most of the people taking a poll on its blog "overwhelmingly support" more time. As of 10 p.m. Monday, 84 percent said they were "depending on" an extension.
HSH notes a quote from economist Robert Shiller (of Case-Shiller fame) in a New York Times story about the credit:
"You don't make drug addicts go cold turkey," Mr. Shiller said. "The credit interferes with the market in an arbitrary way, but ending it now would be psychologically powerful. People will be in a bad mood about buying a house." He advocates phasing it out gradually.
Third the Cute Password creation has always been a bugaboo for me and my clients. How do you remember them? Where do you safely store a reminder list? And on and on with worries about losing such important information. Now comes a brilliant solution.
Quick, easy and fun way to create fabulous passwords. (http://su.pr/2lnBbH)
Shift Your Fingers One Key to the Right for Easy-to-Remember but Awesome Passwords
You're constantly told how easy it would be to hack your weak passwords, but complicated passwords just aren't something our brains get excited about memorizing. Reader calculusrunner offers a brilliant tip that turns weak passwords into something much, much better.
His clever solution: Stick with your weak, dictionary password if you must; just move your fingers over a space on the keyboard.
That's it, onward through the week! Be well.
Okay, so I quoted myself and we can now get past that! This week already quite a few things are rearing their heads (both ugly and cute) worth passing along.
First the Ugly - There is a notion in the Halls of Government, both State and Federal, that the way to solve what many now consider a falsehood, 'Global Warming' is to regulate, regulate, and regulate some more. One of the scariest of these upcoming possible regulatory invasions into our lives comes from Cap and Trade legislation.
A License Required for your House (http://su.pr/2WozLe)
Thinking about selling your house - A look at H.R. 2454 (Cap and trade bill) This is unbelievable!
Only the beginning from this administration! Home owners take note & tell your friends and relatives who are home owners!
Beginning 1 year after enactment of the Cap and Trade Act, you won't be able to sell your home unless you retrofit it to comply with the energy and water efficiency standards of this Act. H.R. 2454, the "Cap & Trade" bill passed by the House of Representatives, if also passed by the Senate, will be the largest tax increase any of us has ever experienced.
Second the Ugly - The economy and most specifically the Real Estate Sector has been buoyed by massive amounts of government intervention. In two weeks, a very popular but quite expensive support program to give tax credits to select home buyers will expire.
First time home buyer tax credit is gone, now what? (http://su.pr/2dhIyM)
Home buyer tax credit deadline approaches
There were loud calls from the real estate industry to extend the $8,000 first-time home buyer tax credit when the original Nov. 30 deadline neared. Now we're in shouting distance of the extended deadline -- April 30 to sign a contract -- and it's been pretty quiet. The National Association of Realtors, for instance, tells me it hasn't been lobbying for a re-extension.
But mortgage publisher HSH Associates notes that most of the people taking a poll on its blog "overwhelmingly support" more time. As of 10 p.m. Monday, 84 percent said they were "depending on" an extension.
HSH notes a quote from economist Robert Shiller (of Case-Shiller fame) in a New York Times story about the credit:
"You don't make drug addicts go cold turkey," Mr. Shiller said. "The credit interferes with the market in an arbitrary way, but ending it now would be psychologically powerful. People will be in a bad mood about buying a house." He advocates phasing it out gradually.
Third the Cute Password creation has always been a bugaboo for me and my clients. How do you remember them? Where do you safely store a reminder list? And on and on with worries about losing such important information. Now comes a brilliant solution.
Quick, easy and fun way to create fabulous passwords. (http://su.pr/2lnBbH)
Shift Your Fingers One Key to the Right for Easy-to-Remember but Awesome Passwords
You're constantly told how easy it would be to hack your weak passwords, but complicated passwords just aren't something our brains get excited about memorizing. Reader calculusrunner offers a brilliant tip that turns weak passwords into something much, much better.
His clever solution: Stick with your weak, dictionary password if you must; just move your fingers over a space on the keyboard.
That's it, onward through the week! Be well.
Thursday, April 8, 2010
The short-sale wrinkle
'And the people on the bus go up and down...' -Children's song
Are you wondering why it takes so long to get short sales approved? The real reasons may be very different from what you might believe. And what you believe is...well, beyond the pale of understanding!
In a recent article by Bernice Ross in Inman News, she lays out the logic path so many lenders in both first and second lien position are taking. That is, 'Nobody should get anything from a short sale but us!' So first lien holders have a cap on what second position interests may want, and so on down the line. The upshot of it all is that with nobody willing to play ball, the short sale process is inordinately long, cumbersome, painful and unnecessary.
As she states, 'One of the biggest issues in closing short sales is secondary financing. If the holder of the first mortgage is going to have to take a loss, it usually is reluctant to give any type of payoff to another lender who is in second position.
The holder (or holders) of the secondary financing can refuse to cooperate unless it receives part of the sale proceeds.
A common request that many secondary lenders seem to be making is for 10 percent of their loan amount. If the loan goes to the loss recovery department, the request can be $5,000 plus 10 percent of the loan balance.
What's messy here is that the holder of the first mortgage may have a cap on what it will allow to be paid to any secondary lien holders.'
You see there is no honor among thieves!
Now enters the PMI that has insured the individual liens. Ross continues, 'Complicating issues even further, many borrowers who placed less than 20 percent down on their property have private mortgage insurance (PMI).
Here's an example of PMI: Assume that a borrower is putting 10 percent down and obtaining a 90 percent loan. The lenders normally would require a 20 percent downpayment and would give an 80 percent new loan. PMI insures the 10 percent "difference" between the borrower's down payment and what would have been an 80 percent loan amount.
What seems to be a common source of frustration for both agents and consumers is that the PMI companies have joined the lender in asking homeowners to sign a promissory note for the shortfall amount.
PMI companies are insurance companies. Like other insurance companies, it's simply good business for PMI companies to limit their losses and payout. If the consumer will agree to the promissory note, then that reduces the PMI company's losses, which looks better on its balance sheet.
On the other hand, if the PMI company agrees to the short sale, it has to make an immediate payout on the lender's claim. By refusing to approve the short sale, the PMI company forces the lender to foreclose on the property.'
Knowing this information ahead of time is critical if you want to avoid wasting your time on a transaction that won't ever close if you are a real estate agent, seller or buyer.
This may explain why so many holders of secondary financing are unwilling to agree to a short sale and prefer a foreclosure instead.
Good luck!
Are you wondering why it takes so long to get short sales approved? The real reasons may be very different from what you might believe. And what you believe is...well, beyond the pale of understanding!
In a recent article by Bernice Ross in Inman News, she lays out the logic path so many lenders in both first and second lien position are taking. That is, 'Nobody should get anything from a short sale but us!' So first lien holders have a cap on what second position interests may want, and so on down the line. The upshot of it all is that with nobody willing to play ball, the short sale process is inordinately long, cumbersome, painful and unnecessary.
As she states, 'One of the biggest issues in closing short sales is secondary financing. If the holder of the first mortgage is going to have to take a loss, it usually is reluctant to give any type of payoff to another lender who is in second position.
The holder (or holders) of the secondary financing can refuse to cooperate unless it receives part of the sale proceeds.
A common request that many secondary lenders seem to be making is for 10 percent of their loan amount. If the loan goes to the loss recovery department, the request can be $5,000 plus 10 percent of the loan balance.
What's messy here is that the holder of the first mortgage may have a cap on what it will allow to be paid to any secondary lien holders.'
You see there is no honor among thieves!
Now enters the PMI that has insured the individual liens. Ross continues, 'Complicating issues even further, many borrowers who placed less than 20 percent down on their property have private mortgage insurance (PMI).
Here's an example of PMI: Assume that a borrower is putting 10 percent down and obtaining a 90 percent loan. The lenders normally would require a 20 percent downpayment and would give an 80 percent new loan. PMI insures the 10 percent "difference" between the borrower's down payment and what would have been an 80 percent loan amount.
What seems to be a common source of frustration for both agents and consumers is that the PMI companies have joined the lender in asking homeowners to sign a promissory note for the shortfall amount.
PMI companies are insurance companies. Like other insurance companies, it's simply good business for PMI companies to limit their losses and payout. If the consumer will agree to the promissory note, then that reduces the PMI company's losses, which looks better on its balance sheet.
On the other hand, if the PMI company agrees to the short sale, it has to make an immediate payout on the lender's claim. By refusing to approve the short sale, the PMI company forces the lender to foreclose on the property.'
Knowing this information ahead of time is critical if you want to avoid wasting your time on a transaction that won't ever close if you are a real estate agent, seller or buyer.
This may explain why so many holders of secondary financing are unwilling to agree to a short sale and prefer a foreclosure instead.
Good luck!
Wednesday, April 7, 2010
They Say They are Helping Underwater Homeowners, are they really?
Yesterday, while at my local WaMU cum Chase branch, I was kibbitzing with the manager and asked about the company's current efforts to aid underwater homeowners. She said she hadn't a clue. And when I asked about local or regional staff available to help these unfortunates, she said there was one person called a 'floater', who comes to the branch about once a week to help with new loan applications. OK, that is for new business origination only. (A quick side note: rumor on the street says the Chase is no longer originating loans)
Again I wondered about what the bank is doing with its huge portfolio of non-performing (eg. defaulted) real estate loans (see Recent Loan Defaults and newly redefaults? So, I went to the corporate website (JP Morgan Chase) and searched all of the terms I could think of relating to defaults to see what jobs were being posted. None! Zip! Nada! Nyet! How can that be?
The situation begs for lenders who are incentivized, and protected by Treasury against losses, to help get us out of this quagmire that some estimate to comprise more than 7.0 million homeowners in distress. And one of the largest holders of defaulted assets in the nation doesn't have a single job opening posted on its website.
Go figure!
Again I wondered about what the bank is doing with its huge portfolio of non-performing (eg. defaulted) real estate loans (see Recent Loan Defaults and newly redefaults? So, I went to the corporate website (JP Morgan Chase) and searched all of the terms I could think of relating to defaults to see what jobs were being posted. None! Zip! Nada! Nyet! How can that be?
The situation begs for lenders who are incentivized, and protected by Treasury against losses, to help get us out of this quagmire that some estimate to comprise more than 7.0 million homeowners in distress. And one of the largest holders of defaulted assets in the nation doesn't have a single job opening posted on its website.
Go figure!
Thursday, April 1, 2010
Stop Blaming Until You Know!
From a recent introffice memo:
When you do a conventional loan, odds are great that a review of the appraisal has to be done. More often than not, the value gets cut, due to that review.
Many question as to "why" this is, when you hear of the recovery of the housing market, or the "stability" of your particular geographic area. The short answer is held within "supply and demand" [equation]. There is a rather large supply that is not counted in the "official" inventories that are spewed forth by the media. That is why distressed sales are counted, and emphasized, as market sales. The distressed market inventory is huge, and the only reason that we are not currently watching a free fall in prices is due to the fact that this supply is being manipulated by the firms that hold them. (A recent Fox News report put that figure at 11 million 04/01/2010).
So, please stop blaming the underwriter, or the review appraiser. It is not their "fault". It is a fact of our lives in these times.
Read below:
Housing – ‘Shadow Inventory’ & Defaults Provide Endless Supply ‘Why do values keep falling when sales have picked up and there is less inventory?’ I get asked that question constantly. Part of the answer is ‘shadow inventory’, which real estate associations, banks and FDIC don’t count.
Shadow inventory is REO [Real Estate Owned by banks and lenders] on the shelves of banks and servicers not listed with a real estate broker. Because the ‘months supply’ figures are given out by the real estate associations based upon listed homes and most REO is not listed, the supply figures have been incorrect for over a year. To accurately estimate supply you must track the foreclosure market and add back in foreclosures as supply, listed or not.
The real estate associations do not do not add back REO inventory into the supply. As a matter of fact they take the present month sales, multiply by 12 then divide by the amount of known listed inventory. They then throw on some magic ‘seasonal adjustments’ to make everything ‘alright’. This leads to press releases like the CA Assoc of Realtors put out this week citing 545k annual home sales and 5.6 months supply in CA. This is as far from reality as any report I have ever seen on housing.
So, what is the answer? FHA and VA, as well as USDA (for those areas that are eligible). Those appraisals are NOT subject to outside review.
When you do a conventional loan, odds are great that a review of the appraisal has to be done. More often than not, the value gets cut, due to that review.
Many question as to "why" this is, when you hear of the recovery of the housing market, or the "stability" of your particular geographic area. The short answer is held within "supply and demand" [equation]. There is a rather large supply that is not counted in the "official" inventories that are spewed forth by the media. That is why distressed sales are counted, and emphasized, as market sales. The distressed market inventory is huge, and the only reason that we are not currently watching a free fall in prices is due to the fact that this supply is being manipulated by the firms that hold them. (A recent Fox News report put that figure at 11 million 04/01/2010).
So, please stop blaming the underwriter, or the review appraiser. It is not their "fault". It is a fact of our lives in these times.
Read below:
Housing – ‘Shadow Inventory’ & Defaults Provide Endless Supply ‘Why do values keep falling when sales have picked up and there is less inventory?’ I get asked that question constantly. Part of the answer is ‘shadow inventory’, which real estate associations, banks and FDIC don’t count.
Shadow inventory is REO [Real Estate Owned by banks and lenders] on the shelves of banks and servicers not listed with a real estate broker. Because the ‘months supply’ figures are given out by the real estate associations based upon listed homes and most REO is not listed, the supply figures have been incorrect for over a year. To accurately estimate supply you must track the foreclosure market and add back in foreclosures as supply, listed or not.
The real estate associations do not do not add back REO inventory into the supply. As a matter of fact they take the present month sales, multiply by 12 then divide by the amount of known listed inventory. They then throw on some magic ‘seasonal adjustments’ to make everything ‘alright’. This leads to press releases like the CA Assoc of Realtors put out this week citing 545k annual home sales and 5.6 months supply in CA. This is as far from reality as any report I have ever seen on housing.
So, what is the answer? FHA and VA, as well as USDA (for those areas that are eligible). Those appraisals are NOT subject to outside review.
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