9/15/09
We thought you might find the following interesting.

I was reading today on the CNBC website that the 'forecasters' are predicting an increase in foreclosures over the next two years.  Currently we are seeing close to the highest foreclosure rate in our history, but the forecasters think we are going to see a higher percentage of defaulting here in the in next few years.  This is because of the increase in Subprime lending that took place in 2004, 2005, and 2006. 
If you have one of these loans don't panic.  Please consider talking with a mortgage professional to see what your options are.  Don't believe all the mass media hype!  There are ways that you can change your outcome.  It is especially important that you act now while interest rates and programs are favorable.  Once the 'wave' of foreclosures begins, then it is likely that we will see interest rates rise and programs tighten their belts once again.  Take a look at your situation right now!

June 30th 2009
Why are the banks so scared?

Today I must ask this question.  Why are the banks so scared? 
There are so many things that could cause the banks to be so scared.  Obama's announcements that he is going to require increased accountability within the banking industry; the exodus of top executives who feel they don't deserve a salary cap; the current mortgage and stock
market trends; forecast models; any of these things could be the reason the banks are scared.

12/15/09

Do I get $8,000, or $6,500?  Clearing up the Tax Credit Questions.

On November 6, President Obama signed into law legislation to extend the $8,000 homebuyer tax credit until April 30, 2010 and expand it to include higher income homebuyers. The credit was scheduled to expire November 30, 2009. The new law also creates a new $6,500 tax credit for existing homeowners who have lived in their home for at least five consecutive years out of the last eight, and who wish to purchase a different home as their primary residence. This credit is available for homes purchased after November 6, 2009 and expires April 30, 2010.

The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

The Worker, Homeownership, and Business Assistance Act of 2009 has established a tax credit of up to $6,500 for qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010).

The law defines a tax credit qualified move-up home buyer (“long-time resident”) as a person who has owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.

For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.

The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.

Holding Near Six Month Rate Lows.
Why Float When Rates Are This Low?

by Victor Burek - 11/23/09

Last week ended basically where it began with prices of mortgage backed securities moving sideways near record highs and mortgage rates holding steady near six month lows.   MBS traded in a very narrowing range as the week progressed which allowed lenders to publish base 30 year conventional mortgage rates in the 4.625% to 4.875% range.   While the week ahead is holiday shortened in observance of Thanksgiving, there is still plenty of data to take note of...housing data specifically.

The week begins with Existing Home Sales data from the National Association of Realtors. This release totals the number of previously constructed homes in which a sale closed in the previous month.   Recent reports have shown existing home sales moving higher thanks to near all time low mortgage rates and government stimulus for first time buyers.  Today’s report was expected to show existing home sales moving higher at an annualized pace of 5.70 million following the prior month’s  read of 5.57million annual sales.

The report indicated that existing home sales were much higher than expected in October, increasing to a pace of 6.10 million sales per year, the highest level since February 2007.     Low home prices, low mortgage rates and government stimulus appear to be having a positive effect on the housing sector.   Many economists believe that our economy will have trouble rebounding until the housing sector stabilize, making housing data more relevant to market watchers. 

Reports from fellow mortgage professionals indicate lenders rate sheets to be similar to last week’s closing rates.   The par 30 year conventional rate mortgage remains in the 4.625% to 4.875% range for well qualified consumers.  To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee.

With MBS prices near record highs and mortgage rates near six months, I continue to advise clients and readers to lock. Does anyone feel mortgage rates will move lower? I see no reason to be floating at these mortgage rates.

A message from John L. Scott Maple Valley:

• The National Association of REALTORS

Declaring that the housing market has finally hit bottom is risky business; however it’s hard to ignore the indicators that point toward a recovering market:

• The latest Case-Shiller Index shows that real estate values increased in the second quarter of 2009, the first time we’ve seen a quarter- over-quarter increase in three years.

  


Message from the King County Department of Assessments

May 28, 2009

Dear King County Taxpayer,

The King County Department of Assessments will be mailing out 2009 property value notices over the next few months. These notices indicate the appraised value of property, as of January 1, 2009, for the purpose of 2010 property tax distribution. Property valuations do not determine the amount of overall property tax obligations. Property tax obligations are determined by 160 taxing districts in King County as they create their respective budgets for 2010 and are not determined nor set by the Assessor. Simply put, the "amount" of tax obligation is determined by the taxing districts and the "distribution" of the obligation is determined by property values.

Homeowners will see a reduction in assessed value:
The real estate market in King County has shifted dramatically in the past year. Historically, the Department of Assessments has taken a conservative approach when assigning values. In rising markets, this was accomplished by using two or three prior years of sales in the analysis and not trending the prices upward to the latest market-levels. This approach removed speculative value and market spikes, resulting in a conservative valuation level.

In the recent declining market, this approach was not an option. Instead, sales occurring prior to January 2009 were adjusted downward for use in the analysis process. An additional downward adjustment was warranted to account for lack of sales and the influence of distressed sales on the housing market. Most homeowners will see a significant reduction in the assessed value of their home.

We invite you to compare the notice you receive to the current market value of your property. By utilizing our eSales Search System you can compare your valuation to recent market sales in your neighborhood and to properties sharing similar characteristics. Information regarding exemptions and appeals can be found on this website and the value notice.

We hope this information is useful to you and we invite you to contact us with any additional questions.

Thank you,

Rich Medved

Acting Assessor
http://www.kingcounty.gov/Assessor.aspx

 

July 8th 2009
Subprime Turnover

My secondary question is:  Is this fear well founded?  Have any of you taken all of your money out of your bank?  Have any of you switched to using 'mattress' money instead of the local bank?  Is the world market so bad that banks are losing on every front?  None of these things are obvious to me.  Sure, there are signs and indications that each of these things has happened on a small scale, but not globally and certainly not catastrophically.

Allow me to share a little story regarding a bank in America that we are all familiar with.  Like most banks, they have been active in encouraging Americans to use their credit lines, and to take advantage of balance transfer opportunities.  Like most banks they have made quite a bit of money off transfer fees and reinvesting the money that they are holding for you.  Recently someone I know (we'll call him Dave) contacted this bank to follow up on a teaser ad he recently received for an existing credit line he has with them.  Dave was interested in a balance transfer to move a credit balance from one credit card to another to save a little in interest while paying the balance down.  When Dave called the bank and spoke with the service representative, they were very friendly and excited that Dave wanted to take advantage of the balance transfer opportunity.  Dave knows he has an excellent credit score and hasn't missed a payment on anything in over seven years, and wants to request a small (less than $5000) credit limit  increase in order to keep some available balance on his card.  This will ensure Dave that  his credit score will not go down after doing this balance transfer.  All of this is  something that Dave has done before without any trouble.  The nice service representative asks all the appropriate questions and lets Dave know that he will have to talk to a credit analyst first because they cannot authorize the credit limit increase.  Dave agrees to talk with the analyst.  The analyst asks the same questions that the service representative asked.  After a short conversation, the analyst lets Dave know that he is ineligible for the credit line increase, in fact they are going to lower his current limit to his available balance.  Flabergasted and feeling betrayed, Dave responds by saying 'If that is what you feel you need to do.'  The analyst quickly responds 'Yes' and hangs up on Dave.  Dave puts his phone
down wondering how his bank can do exactly the opposite of what he wanted to him when he has such great credit and has been with them without issue for over three years.

Is that where we are at as a financial community that we can sting the 'little' guy without regard?  I wonder how far such fear has run through the banking community?  Care to share your story?  I would love to hear from you if you have experienced or noticed something similarly dissapointing.


June 17th 2009
Obama Releases Statement Regarding New Regulations

Today Obama releases his statements regarding the plan to recover our financial stability as a country.  The plan calls for increased accountability and revitalization of the free market.  It also calls for increased monitoring.  Regardless of how you feel about the method, we all feel that things must change somehow.  I am looking forward to seeing just what will be agreed upon by the government and how this will affect the mortgage industry as a whole.  If things go perfectly then we should see rates stay affordable and lending will be available for those who should are qualified.

Here are some quotes that I picked from Obama's statement:

"Millions of Americans who have worked hard and behaved responsibly have seen their life dreams eroded by the irresponsibility of others and the failure of their government to provide adequate oversight. Our entire economy has been undermined by that failure."

"With the reforms we are proposing today, we seek to put in place rules that will allow our markets to promote innovation while discouraging abuse. We seek to create a framework in which markets can function freely and fairly, without the fragility in which normal business cycles bring the risk of financial collapse; a system that works for businesses and consumers."

In the meantime we all watch and wait.

Starting last week we began to see rates climb up from the high 4% to where they waver now in the low to mid 5% range.  I would say don't panic.  We must all keep the big perspective in mind.  Yes, rates are higher than they were a week ago.  However, rates are still some of the lowest rates we have seen in the last 60+ years.  You can still buy a $300k home and have a payment less than $2k!  In the end, the small climb that the rates have taken will lead most of you to a payment difference of less than $30/month.  In my opinion that is a very small change.  I would love to talk with you more about what today's amazing rates can do for you.   Never hesitate to call.

May 27th 2009 REFI + Revisited

June 8th 2009
Rates Take a Hike

As REFI + has begun to effect those who qualify in America, we as mortgage loan officers have started to take a look at the program's usefulness.  The good thing is that we are not the only ones looking reevaluating the program.  The limitations are obvious.  Only those without mortgage insurance qualify, and the loan has to be a Fannie Mae loan.  While over 50% of loans in America are owned by Fannie Mae, a large percentage of those loans have mortgage insurance.  This leaves the few people who did the safe thing when purchasing and/or refinancing and left themselves 20% equity on the property available for REFI +.  It truly is a great program, it is just a little limited on who can qualify for the program.  If you want to know if your home loan is owned by Fannie Mae you can check this website: 

http://loanlookup.fanniemae.com/loanlookup/

There is talk that Freddie Mac borrowers will have the same REFI + capabilities in the near future.  To see if your home loan is owned by Freddie Mac please visit this website: 

https://ww3.freddiemac.com/corporate/

I have moved the post from April 7th up to the top so you can reread it if you wish. 

 April 7th 2009   Announcing REFI +

Has the thought crossed your mind lately, “I really wish I could take advantage of today’s great rates, but I know I could never qualify with my home’s recent devaluation?”  Things may not be as bleak as they seem. 

Here is how REFI + works:

You can refinance your home with one of today’s great interest rates, thus lowering your monthly payments and stabilizing your mortgage.  This is especially effective if you have an adjustable rate mortgage and just want to get a fixed rate.  The lender will allow you to borrow up to 95% of your current homes value without the penalty of paying mortgage insurance.  For many, this mortgage insurance could be as much as $250/month, but instead you will not have to pay anything. 

For example:  Let’s say you purchased your home for $200,000 in 2006.  You took out a loan at the time for $190,000 with an adjustable interest rate(ARM) fixed at 6.0% for five years, and were paying $150/month in mortgage insurance(MI) at the time.  In 2007, your home had reached a value of $250,000 and your mortgage servicer cancelled your need to pay mortgage insurance because of your value increase.  At the time your mortgage payment went down because you no longer needed to pay the $150/month in MI.  You were happy.  Then in 2008 your home’s value started to dip, and now in 2009 your home is worth $200,000 again.  You are still paying $150 less per month than when you started, but your mortgage payment will start to adjust in just two years and you are worried rates will not be what they are today.  You may have talked to a Loan Officer who sadly informed you that to refinance your home, even at today’s remarkable rates, would leave you paying mortgage insurance again and actually raise your payments.  Who would want to do that?  That is where REFI + comes in.  You can refinance your house without the mortgage insurance and with some of the lowest rates we have ever seen!

Here are the main qualifications that you need to know about.

If you do not have mortgage insurance built into your current loan then you should be eligible.  There are two ways this can happen.  If you started your mortgage at less than 80% of the homes value, or if you paid your mortgage down until Mortgage Insurance was cancelled or terminated.  Your principal balance cannot exceed 95% of the current value of your home.  The loan will be required to be rate and term only, no cash out allowed.  All of the standard loan application requirements will still apply (credit score, employment, assets).

You can take the quick online eligibility questionnaire at www.makinghomeaffordable.gov to see if you might be eligible for a refinance.

If you think you might be eligible for such a program, don’t wait.  Call now and stop paying more than you have to.   I will be glad to walk you through the whole REFI + process.

October 10th, 2008

Why are we in the mess we are in?

One of the questions we have received the most over the last few weeks is, "Why is our economy in the mess that it is in?"  In order to help you understand we have posted a video that explains the details of how everything got so bad.  This video is only 12 minutes long, but is very enlightening and it will help you understand our financial crisis much more, or at least how we got to this place. 

Ben Hardebeck

October 7th, 2008
What ever happened to personal accountabity?

As we are staring down the barrel of the worst financial crisis in recent memory I am hearing everyone point a finger at everyone else and say “it’s your fault!”  I am going to be careful not to get partisan here one way of another but the politicians are the worst at this.  I am not even going to go there as to which party is more to blame or who is more responsible, gut I am going to point out that everyone, and I mean everyone, was very happy to contribute to the mess from a mortgage standpoint that we now find ourselves in.

You hear all the time how it is all the subprime loans that were issued in the past seven years that have destroyed our banking system.  Now there may be some truth to that but lets evaluate how we got in this mess in the first place.

1.        First banks got greedy and wanted to make more loans so they could collect more interest.  Do I blame them?  No that is the job of a bank to try and be profitable.  Did they make a poor decision that ultimately came bake to bite them, of course they did.

2.       Second you have all the mortgage brokers out there that were presented these loans and told that if people with these criteria wanted to buy a home they could.  Is it the mortgage brokers fault that those people were out there, and by golly they did want to own a piece of the American Dream which is home ownership.  Of course not we were told we do these loans now and so we offered them to our clients.  Have a good chunk of those loans folded today?  The answer is yes, were subprime loans a mistake?  That I am not ready to say for sure yet.  Depending on what statistic you look at less than 10% of the subprime loans out there are in trouble.  Most people in a subprime loan are making there agreed payment with no problem.

3.       Next let’s talk about the borrowers that applied for these loans.  I mean the banks told them you qualify for a loan to buy a house would you like one?  How many people do you know that would say, “I am qualified, but I don’t think so”.   Real Estate is the greatest investment you can make but you are not going to take the opportunity when it arises.  Can we blame the people for taking what they had been told was not a problem at all, I don’t think so.  Are they free from blame for getting in over their heads not at all.

My whole point here is, I am at the point that we need to all look into a mirror and say “you know what this is a mess, and I take responsibility for my part.”  As for me I am personally in a subprime mortgage through Washington Mutual.  I make my payments and have no trouble with my mortgage.  I don’t blame the lender for giving me the loan, I don’t blame the broker for selling me the loan and I don’t blame myself for getting the loan.  At the time it was the best way for us to buy a home so we chose that option.  Subprime is not the core issue to address here.

Last week I had someone in the industry take a shot at me knowing my history in the industry.  To clarify I used to be in the subprime side of the market.  The comment was it is people like that (me) that got us into this mess in the first place.  Well I have news for you.  That same person (who never sold a subprime loan) has done several conventional stated income loans (saying your income is more than it really is) that were not good loans and have come close to foreclosure themselves.  My point is we are all in a mess, and we all got ourselves here.  Remember this is just my opinion.

Clark Davis

April 17th 2009  Foreclosure Scams

There is a lot of talk about Foreclosures and Short Sales right now.  If you are in or considering being in one of those situations I would advise you to do your homework first.  There are many distractions, scams, and false advertisements everywhere right now.  First I want to say that the government is doing as much as they can to help as many people as they can.  I believe firmly that they are helping, but they are not the answer.  Being in a Foreclosure/Short Sale situation is very stressful.  No one wants to lose their home.  However, we as human beings, tend to make poor choices when we are stressed.  There is a wisdom in a multitude of counselors, so before you do anything make sure you have taken the time to ask questions.  I would be more than glad to talk to you about your options.

April 13th 2009  Spring is Coming

Spring arrives soon.  The sooner the better.  With spring, we usually see a flurry of activity in the real estate market.  Let's face it, who wants to move in the rain anyway?  With that in mind I wanted to include a few thoughts, and a little encouragement.

I believe there are still plenty of people in position to take part in this incredible home market.  These people range from those who are just becoming eligible for purchasing a home to those who are considering their fifth or sixth home.  In the Seattle market in the last five years, how many times where you able to find a nice 2500 square foot home for less than $300,000?  For many people the opportunity to upgrade their home is right in front of them, they just need to be willing to take advantage of this unique opportunity.  It is incredible how many homes are up for sale right now.  It is also incredible how many gems are on the market waiting for the right person to see them for what they are worth.

If you haven't recently, take a look at a John L. Scott website and peruse some of the homes listed there.  Interest rates have never been better, and we all believe the market can only get better.  What is the best time to buy?  When the price is lowest and most affordable.

There are several factors driving these upward trends, among them are the first-time home buyer tax credit, historically low interest rates, and increased affordability in all price ranges.

Evidence of this upsurge in sales activity is best seen in the inventory of homes in the more affordable price ranges. As you can see in the table above, months of inventory are now much closer to what they were during the peak of the frenzied housing boom in 2006.

Over the past 50 years, increasing strength in the more affordable housing market has signaled a turn toward the positive for housing throughout all price ranges. The reason for this is that those who sell their homes to first-time buyers often become move-up buyers, which leads to a chain reaction of sales up the price points. Therefore, current sales activity in the more affordable price ranges is a strong indicator that the overall real estate market is indeed on the rise.