In response to recent queries about banks temporarily halting foreclosures to investigate improper procedures, NAR will be issuing the following item in Monday’s Washington Report.
Please keep in mind that banks are unilaterally doing this nationwide. There is no federal policy involved. Washington Report, Monday, October 11 In September and October 2010, several lenders suspended foreclosures in two dozen states due to questions about whether foreclosures were being processed consistent with applicable state law requirements. Concerns are being raised by state and federal elected officials, as well as consumer and fair housing groups, about the validity of ownership of mortgages that have been securitized and resold.
At the center of the controversy is Mortgage Electronic Registration Systems (MERS). This firm is responsible for electronically tracking the transfer of assignment of mortgages. Class-action suits are being brought against MERS alleging that the use of the system circumvents state laws. On October 1, 2010, Fannie Mae and Freddie Mac released statements regarding servicer compliance with foreclosure processing of Fannie and Freddie loans. In the releases, both organizations reiterated that servicers must comply with applicable state laws governing foreclosures.
Although nearly all of the foreclosures in question are expected to be fixed eventually, the current situation is creating difficulties and a new hurdle to the recovery of the housing and mortgage markets. NAR members are reporting that upcoming sales have been delayed indefinitely or cancelled, to the detriment of all involved. Additionally, homes on the market without clear title will make sales much more difficult. While banking executives focus their attention on this problem, it is possible that servicers may be somewhat more receptive to approving loan modifications and short sales, since they avoid the foreclosure procedural problems altogether. NAR has also developed the following talking points that can be used when responding to queries:
There’s no way of knowing what percentage of foreclosures that were improperly processed were, in fact, inappropriate or wrongly taken. The assumption is that for most of them, this may be only a technicality and that the property ultimately would have been repossessed.
For owners who believe their home was wrongly foreclosed, they may wish to contact a real estate attorney to investigate the possibility of a property claim. However, that could prove costly and time consuming – regulations vary by state.
For banks, it may make sense to modify loans or agree to short sales to expedite disposal of inventory.
For buyers, the assumption is that listed foreclosures come with clear property title but they should discuss any necessary contract contingency with their attorney. Foreclosures in limbo are likely to be withdrawn from the market.
It’s too early to tell if there’s an impact on the market but we will be monitoring the situation.
Saturday, October 9, 2010
Tuesday, September 28, 2010
10 Reasons to Buy a Home
Time magazine is being overly pessimistic in its recent cover piece that called into question the benefits of homeownership. In fact, now is a great time to buy. And what's more, tomorrow will be a great time to own, because the fundamental strength of homeownership hasn't changed. Why is now a great time to buy? Here are 10 reasons:
1. You can get a good deal. Prices are down 30 percent on average. They're at a level that makes sense for people's income.
2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.
3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.
4. It'll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?
5. You can get a better home. In some markets, it's simply the case that the nicest places are for-sale homes and condos.
6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.
7. It's risk capital. If the economy picks up, you stand to benefit from that, even if you're goal is just to have a nice place to live.
8. It's forced savings. A part of your payment each month goes to equity.
9. There is a lot to choose from. There are some 4 million homes available today, about a year's supply. Now's the time to find something you like and get it.
10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.
Source: Wall Street Journal, Brett Arends (9/16/10)
Time magazine is being overly pessimistic in its recent cover piece that called into question the benefits of homeownership. In fact, now is a great time to buy. And what's more, tomorrow will be a great time to own, because the fundamental strength of homeownership hasn't changed. Why is now a great time to buy? Here are 10 reasons:
1. You can get a good deal. Prices are down 30 percent on average. They're at a level that makes sense for people's income.
2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.
3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.
4. It'll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?
5. You can get a better home. In some markets, it's simply the case that the nicest places are for-sale homes and condos.
6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.
7. It's risk capital. If the economy picks up, you stand to benefit from that, even if you're goal is just to have a nice place to live.
8. It's forced savings. A part of your payment each month goes to equity.
9. There is a lot to choose from. There are some 4 million homes available today, about a year's supply. Now's the time to find something you like and get it.
10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.
Source: Wall Street Journal, Brett Arends (9/16/10)
Saturday, September 25, 2010
Aaaaargh! This subject is rearing its ugly head again, the mythical 3.8% sales tax on all real estate sales. I'm re-posting the letter to the Verde Independent regarding this issue and my response to it.
8/7/2010 1:29:00 PMLetter: This bill is set to hurt the retiring generation
Editor:Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8 percent sales tax? The bulk of these new taxes don’t kick in until 2013 (presumably after Obama’s re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to hurt the retiring generation who often downsize their homes. Is this Hope & Change great or what? Does this stuff make your November and 2012 vote more important?Oh, you weren’t aware this was in the Obamacare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it either (result of Clandestine midnight voting for huge bills they’ve never read). AND, there are a few other surprises lurking.
Lavone Turnipseed, Camp Verde
8/10/2010 10:57:00 AMLetter: This tired old rumor simply is not true.
Editor: I am compelled to respond to Lavone Turnipseed’s letter to the editor of Sunday, Aug. 8, entitled “This bill is set to hurt the retiring generation.”
Lavone repeats the tired old rumor that “under the new health care bill all real estate transactions will be subject to a 3.8-percent sales tax.” Happily, this is simply not true.
Can I give you some hard facts? The facts are that, yes, certain sales by high-income households will be affected by the new Medicare tax, possibly 1.5 percent of US households. (Not 1.5 percent of the US population - I said households.)
This tax applies only to people with an Adjusted Gross Income (AGI) of $200,000 for a single person or $250,000 for a couple.
The tax only kicks in after you take your capital gains exemption.
How about an example?
A couple with an AGI above the $250,000 limit sells their primary residence for $2 million. They make a $750,000 profit. Capital gains laws protect $500,000 of that $750,000, assuming that they have lived there for two out of the past five years. The 3.8-percent tax applies only to the $250,000 left over. Their tax liability under this new Medicare tax is $9,500. With all of the problems facing America right now, I’m not going to have a lot of heartburn over the fact that somebody in those income brackets profited $750,000 and had to give Medicare $9,500 of it.
Mr. Turnipseed, please don’t be embarrassed that you were fooled. Somebody made this up and then published it, and then somebody else repeated it and it has spread like wildfire throughout certain circles.
To read the Health Care bill, go to http://www.huffingtonpost.com/2009/07/15/house-health-care-bill-fu_n_234372.html
To verify my research, go to http://www.factcheck.org/2010/04/a-38-percent-sales-tax-on-your-home/
Or, http://www.snopes.com/politics/taxes/realestate.asp
Or, http://www.realtor.org/small_business_health_coverage.nsf/docfiles/government_affairs_myth_busters.pdf/$FILE/government_affairs_myth_busters.pdf
Carol Anne Warren
President, Sedona Verde Valley Association of REALTORS®
8/7/2010 1:29:00 PMLetter: This bill is set to hurt the retiring generation
Editor:Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8 percent sales tax? The bulk of these new taxes don’t kick in until 2013 (presumably after Obama’s re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to hurt the retiring generation who often downsize their homes. Is this Hope & Change great or what? Does this stuff make your November and 2012 vote more important?Oh, you weren’t aware this was in the Obamacare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it either (result of Clandestine midnight voting for huge bills they’ve never read). AND, there are a few other surprises lurking.
Lavone Turnipseed, Camp Verde
8/10/2010 10:57:00 AMLetter: This tired old rumor simply is not true.
Editor: I am compelled to respond to Lavone Turnipseed’s letter to the editor of Sunday, Aug. 8, entitled “This bill is set to hurt the retiring generation.”
Lavone repeats the tired old rumor that “under the new health care bill all real estate transactions will be subject to a 3.8-percent sales tax.” Happily, this is simply not true.
Can I give you some hard facts? The facts are that, yes, certain sales by high-income households will be affected by the new Medicare tax, possibly 1.5 percent of US households. (Not 1.5 percent of the US population - I said households.)
This tax applies only to people with an Adjusted Gross Income (AGI) of $200,000 for a single person or $250,000 for a couple.
The tax only kicks in after you take your capital gains exemption.
How about an example?
A couple with an AGI above the $250,000 limit sells their primary residence for $2 million. They make a $750,000 profit. Capital gains laws protect $500,000 of that $750,000, assuming that they have lived there for two out of the past five years. The 3.8-percent tax applies only to the $250,000 left over. Their tax liability under this new Medicare tax is $9,500. With all of the problems facing America right now, I’m not going to have a lot of heartburn over the fact that somebody in those income brackets profited $750,000 and had to give Medicare $9,500 of it.
Mr. Turnipseed, please don’t be embarrassed that you were fooled. Somebody made this up and then published it, and then somebody else repeated it and it has spread like wildfire throughout certain circles.
To read the Health Care bill, go to http://www.huffingtonpost.com/2009/07/15/house-health-care-bill-fu_n_234372.html
To verify my research, go to http://www.factcheck.org/2010/04/a-38-percent-sales-tax-on-your-home/
Or, http://www.snopes.com/politics/taxes/realestate.asp
Or, http://www.realtor.org/small_business_health_coverage.nsf/docfiles/government_affairs_myth_busters.pdf/$FILE/government_affairs_myth_busters.pdf
Carol Anne Warren
President, Sedona Verde Valley Association of REALTORS®
Thursday, September 2, 2010
real estate scams
Let’s talk about real estate scams. As homeowners get more broke and desperate the shysters get more innovative. Why do we, the REALTORS® need to know about the schemes out there?
· A bad guy’s preferred method of getting at our people is with our introduction. Yikes!
· When one of our clients gets in the middle of a situation that they have questions about we hope that their first move would be to call us for advice. Our first response has to be to advise them to call their lawyer. They’ll ask “Why?” and then we can explain what it was that raised up the hairs on the back of our necks.
Scam #1: This one ran rampant through our area a few years ago, with a particularly offensive twist. (I’ll tell you about the twist in a minute.) A guy combs through the foreclosure notices in the paper and then contacts the homeowners, telling them everything that they want to hear. This “rescuer” promises to save their homes and their credit. All that they have to do is quit-claim the property to him, because that will confuse the lender and delay the foreclosure. Of course, since it’s still really their house they should send him the payments and he will forward them onto the lender. Sometimes the “Rescuer” takes out a second mortgage on the house, sometimes he rents it out and sends the Sheriff to evict the former homeowners, sometimes he flips it if there’s enough equity. No matter what he does he makes out like a bandit and the homeowners end up with tears in their eyes, credit shot, and no home.
What happened here was even worse – the “Rescuer” was a REALTOR®. (He’s a former REALTOR® now.) He didn’t have to comb through foreclosure notices – he just searched MLS. He billed himself The Savior of The Distressed Homeowner and contacted the list agents and persuaded them that he was there to help. (Bring me your tired, your broke, your in foreclosure clients….) This was a while back, so at the time we didn’t have a lot of clues about how to help distressed clients – this “Rescuer” seemed to be Heaven sent since he had a plan and some answers. The list agents introduced him to their clients and gave him a 50% referral on their listing. He took up-front fees for part of his services, and placed liens on the properties for the rest of his fees and then he sat back and did absolutely nothing. He didn’t negotiate with the lenders, he didn’t return the increasingly frantic phone calls from the agents and clients, he just collected his referral fees and his lien payments if the property sold and said “Oh, well!” if the property foreclosed.
Our REALTOR® community talks to each other, so we figured out what was happening PDQ and somebody called their attorney and somebody else called the Attorney General’s Office and the “Rescuer” got stopped, but he did some damage in the meantime.
Scam #2: An unscrupulous lender advertises (usually on the internet in those annoying little pop-up boxes) that distressed homeowners can re-finance out of their money problems. If they still look good on paper he can get them a re-fi with all of the up-front costs rolled into the loan, plus a little cash in their pockets, plus a month or so with no payment. Since drowning people will grasp at any straw these lenders get lots of takers. People in financial trouble ended up with a new mortgage on their house that carried a payment higher than the one they couldn’t make in the first place and they started defaulting left and right. That was OK with these lenders – hey, they got their origination fee, right? This is why we should always recommend that our people use a local lender that we know from experience is honest and reputable.
Scam #3: A person (one of the pieces of this scam is that they have to use an overseas bank) contacts the list agent on a property. He explains that he saw the property on the internet and absolutely loves it and wants to buy it, cash, quick close. He refuses to use a title company – either he had bad luck with them or he pretends not to understand the concept, but he will use whatever attorney the agent recommends. He also doesn’t understand the concept of earnest money – he wants to offer a huge amount of earnest, if not the entire purchase price right now. (Nice hook, huh?) The agent ZipForms him the contract and he mails it back with this huge earnest money check (drawn on a foreign bank) to give to the lawyer to deposit.
Immediately something horrible happens in his life and he regretfully must withdraw from the contract, as is his right since he’s still in his inspection period. The attorney must wire him his earnest money right this minute!
The attorney does wire him the money back. A few days later the attorney finds out that the earnest money check that the buyer sent has bounced higher than a frog on a hot street. He has now wired funds (that are as good as gold) out of the country to cover a check that isn’t worth the paper it was written on. Oops!
A cute variation of this scam is that the deal is all agreed on and the earnest money is sent two or three or four times, separately. Then the buyer calls and says that his company made a mistake – wire the excess back to him immediately, please and thank you.
The secret to this one working is that the funds have to be wired back before we find out that the check(s) is no good, which is why an overseas bank is necessary. They want an attorney because title companies have systems and ways for verifying funds that they hope an attorney doesn’t.
Thanks to Joanne Holiday of Russ Lyon for the “heads up!” on this one.
Scam #4: A buyer looks at a property. He loves it, he wants it, he’s prepared to pay full price in cash. (Starting to sound familiar?) There’s only one tiny glitch: he has to close the escrow on his property in Florida to get the funds for this one. There’s only one tinier glitch: this property in Florida needs one final thing (survey, elevation study, skunk removal…..) that costs $75,000. There’s always a good story as to why he doesn’t have that $75,000. He proposes some creative financing: if the seller will front him the $75,000 he will be able to close the escrow in Florida and buy their property. Of course, when Florida closes they will be paid off, plus interest, plus the sale. They will get a first mortgage against this multi-million dollar property to secure their trust.
You go online to the Ogalalacoochee County records and see that yes, this buyer does own 20 acres there. You go on realtor.com and find a REALTOR® there and call him and find out that that 20 acres is a toxic waste dump that even the gators won’t go near. If you had gone along with this scheme the buyer would have been in the wind with the $75,000 and the seller would have eventually owned that worthless 20 acres.
Scam # 5: A person goes onto the internet and grabs some pictures of an expensive property. Then they go to Craig’s List (or wherever) and post the property for rent. They ask for a ridiculously reasonable monthly rent, plus first and last and cleaning, or whatever is legal in that state. A prospective tenant sends them the money, they execute a lease, and the tenant shows up at the house all ready to move in only to find that the actual owner of the property has never heard of the person that the tenant was dealing with.
This one has also happened with sales, but it’s a little trickier. The trick here is that (again) the seller refuses to use a title company.
Scam #6: Home repair, radon, snakes, mold remediation, ghost removal, siding, methane gas, bugs……..the list goes on and on. A guy knocks on the homeowner’s door, telling them about this great service that he’s offering. Either the price is incredible or he scares them with the horrible things that will happen to them and their family if they continue to live in this contaminated house, or both. This awesome deal is only available this second, and only if they pay at least half up front. The homeowner writes a check and the guy takes it straight to the bank and then leaves town, never to be seen again.
It seems obvious how to protect yourself from this one, doesn’t it? But, even if the homeowner insisted on the time that it takes to check out the guy with the Registrar of Contractors, often the real contractor whose name has been used has never heard of the guy. Same with the Better Business Bureau – it’s easy to get cards and invoices and truck magtnetics printed up with a contractor’s name on them.
Very simply, a good contractor will give them a bid that’s good for at least 30 days, and reputable contractors don’t tend to go knocking door-to-door trying to scare people.
Scam # 7: The buyer sees the property and loves it and wants it and is prepared to pay full price, cash. (Here we go again!) He goes to the seller and explains that he has a certain amount of cash, but the rest of the purchase price is in Euros or yen or peanut butter or gold and the exchange rate is killing him. He proposes to the seller that they make a deal at the amount of cash that he has in pocket and then he’ll give the seller the Euros or whatever under the table.
The seller likes this plan because he only has to pay commission and title fees and maybe taxes on the disclosed amount. Escrow closes, the seller signs the docs and the buyer hands over the goods. The seller goes to the bank or the money exchange or the gold merchant only to find that his goods are counterfeit and the buyer now owns the house for the disclosed amount.
Scam # 8: A former client informs their REALTOR® that they’ve discovered a disclosure issue with the property that they bought through that agent. If the REALTOR® will write a check to “make it good” then the former client won’t file a complaint with ADRE or AAR and won’t file a lawsuit. Give me a break!
As professionals, we can see the red flags in each of these scams. The scary thing is that my Mother-in-law might fall for any one of them. She lives in a kind and gentle world where people don’t do things like this to each other. Her world view is the reason that the elderly are these bastards’ favorite prey.
What are the red flags? The insistence on money up front, on nothing but pretty assurances. Urgency - action must be taken NOW. A deal that’s too good to be true. The feeling that maybe the good guys are finally going to get a break. A proposition that even in a perfect world would be too perfect. Unverifiable funds. The promise that everything will be OK – all they have to do is write one little check.
As a final chuckle, this came at the bottom of a scam email. This sort of tag line would also be a red flag.
PRIVATE: This is Not A Public Communication!This private email message, and any attachment(s) is covered by theElectronic Communications Privacy Act, 18 U.S.C. §§ 2510-2521, and is forthe sole use of the intended recipient and contains privileged and/orconfidential information! To all public servants, including but not limitedto Federal, State, or Local corporate government(s): I accept your oath ofoffice as your firm and binding contract between you and me, one of thePeople, whereby you have promised to serve, protect, and defend me,guarantee all of my unalienable rights, and defend the Constitution for theunited States of America! Any/all political, private, or public entities,International, Federal, State, or Local corporate government(s), privateInternational Organization(s), Municipality(ies), Corporate agent(s),informant(s), investigator(s) et. al., and/or third party(ies) working incollusion by monitoring My (this email) email(s), and any other means ofcommunication without My express written permission are barred from anyreview, use, disclosure, or distribution! With explicit reservation of allMy rights, without prejudice and without recourse to any of My rights! Anyomission does not constitute a waiver of any and/or all intellectualproperty rights or reserved rights! Notice to Principal is Notice to Agent! Notice to Agent is Notice to Principal!
Yep – that sure stopped me from forwarding it to the Attorney General’s Office.
· A bad guy’s preferred method of getting at our people is with our introduction. Yikes!
· When one of our clients gets in the middle of a situation that they have questions about we hope that their first move would be to call us for advice. Our first response has to be to advise them to call their lawyer. They’ll ask “Why?” and then we can explain what it was that raised up the hairs on the back of our necks.
Scam #1: This one ran rampant through our area a few years ago, with a particularly offensive twist. (I’ll tell you about the twist in a minute.) A guy combs through the foreclosure notices in the paper and then contacts the homeowners, telling them everything that they want to hear. This “rescuer” promises to save their homes and their credit. All that they have to do is quit-claim the property to him, because that will confuse the lender and delay the foreclosure. Of course, since it’s still really their house they should send him the payments and he will forward them onto the lender. Sometimes the “Rescuer” takes out a second mortgage on the house, sometimes he rents it out and sends the Sheriff to evict the former homeowners, sometimes he flips it if there’s enough equity. No matter what he does he makes out like a bandit and the homeowners end up with tears in their eyes, credit shot, and no home.
What happened here was even worse – the “Rescuer” was a REALTOR®. (He’s a former REALTOR® now.) He didn’t have to comb through foreclosure notices – he just searched MLS. He billed himself The Savior of The Distressed Homeowner and contacted the list agents and persuaded them that he was there to help. (Bring me your tired, your broke, your in foreclosure clients….) This was a while back, so at the time we didn’t have a lot of clues about how to help distressed clients – this “Rescuer” seemed to be Heaven sent since he had a plan and some answers. The list agents introduced him to their clients and gave him a 50% referral on their listing. He took up-front fees for part of his services, and placed liens on the properties for the rest of his fees and then he sat back and did absolutely nothing. He didn’t negotiate with the lenders, he didn’t return the increasingly frantic phone calls from the agents and clients, he just collected his referral fees and his lien payments if the property sold and said “Oh, well!” if the property foreclosed.
Our REALTOR® community talks to each other, so we figured out what was happening PDQ and somebody called their attorney and somebody else called the Attorney General’s Office and the “Rescuer” got stopped, but he did some damage in the meantime.
Scam #2: An unscrupulous lender advertises (usually on the internet in those annoying little pop-up boxes) that distressed homeowners can re-finance out of their money problems. If they still look good on paper he can get them a re-fi with all of the up-front costs rolled into the loan, plus a little cash in their pockets, plus a month or so with no payment. Since drowning people will grasp at any straw these lenders get lots of takers. People in financial trouble ended up with a new mortgage on their house that carried a payment higher than the one they couldn’t make in the first place and they started defaulting left and right. That was OK with these lenders – hey, they got their origination fee, right? This is why we should always recommend that our people use a local lender that we know from experience is honest and reputable.
Scam #3: A person (one of the pieces of this scam is that they have to use an overseas bank) contacts the list agent on a property. He explains that he saw the property on the internet and absolutely loves it and wants to buy it, cash, quick close. He refuses to use a title company – either he had bad luck with them or he pretends not to understand the concept, but he will use whatever attorney the agent recommends. He also doesn’t understand the concept of earnest money – he wants to offer a huge amount of earnest, if not the entire purchase price right now. (Nice hook, huh?) The agent ZipForms him the contract and he mails it back with this huge earnest money check (drawn on a foreign bank) to give to the lawyer to deposit.
Immediately something horrible happens in his life and he regretfully must withdraw from the contract, as is his right since he’s still in his inspection period. The attorney must wire him his earnest money right this minute!
The attorney does wire him the money back. A few days later the attorney finds out that the earnest money check that the buyer sent has bounced higher than a frog on a hot street. He has now wired funds (that are as good as gold) out of the country to cover a check that isn’t worth the paper it was written on. Oops!
A cute variation of this scam is that the deal is all agreed on and the earnest money is sent two or three or four times, separately. Then the buyer calls and says that his company made a mistake – wire the excess back to him immediately, please and thank you.
The secret to this one working is that the funds have to be wired back before we find out that the check(s) is no good, which is why an overseas bank is necessary. They want an attorney because title companies have systems and ways for verifying funds that they hope an attorney doesn’t.
Thanks to Joanne Holiday of Russ Lyon for the “heads up!” on this one.
Scam #4: A buyer looks at a property. He loves it, he wants it, he’s prepared to pay full price in cash. (Starting to sound familiar?) There’s only one tiny glitch: he has to close the escrow on his property in Florida to get the funds for this one. There’s only one tinier glitch: this property in Florida needs one final thing (survey, elevation study, skunk removal…..) that costs $75,000. There’s always a good story as to why he doesn’t have that $75,000. He proposes some creative financing: if the seller will front him the $75,000 he will be able to close the escrow in Florida and buy their property. Of course, when Florida closes they will be paid off, plus interest, plus the sale. They will get a first mortgage against this multi-million dollar property to secure their trust.
You go online to the Ogalalacoochee County records and see that yes, this buyer does own 20 acres there. You go on realtor.com and find a REALTOR® there and call him and find out that that 20 acres is a toxic waste dump that even the gators won’t go near. If you had gone along with this scheme the buyer would have been in the wind with the $75,000 and the seller would have eventually owned that worthless 20 acres.
Scam # 5: A person goes onto the internet and grabs some pictures of an expensive property. Then they go to Craig’s List (or wherever) and post the property for rent. They ask for a ridiculously reasonable monthly rent, plus first and last and cleaning, or whatever is legal in that state. A prospective tenant sends them the money, they execute a lease, and the tenant shows up at the house all ready to move in only to find that the actual owner of the property has never heard of the person that the tenant was dealing with.
This one has also happened with sales, but it’s a little trickier. The trick here is that (again) the seller refuses to use a title company.
Scam #6: Home repair, radon, snakes, mold remediation, ghost removal, siding, methane gas, bugs……..the list goes on and on. A guy knocks on the homeowner’s door, telling them about this great service that he’s offering. Either the price is incredible or he scares them with the horrible things that will happen to them and their family if they continue to live in this contaminated house, or both. This awesome deal is only available this second, and only if they pay at least half up front. The homeowner writes a check and the guy takes it straight to the bank and then leaves town, never to be seen again.
It seems obvious how to protect yourself from this one, doesn’t it? But, even if the homeowner insisted on the time that it takes to check out the guy with the Registrar of Contractors, often the real contractor whose name has been used has never heard of the guy. Same with the Better Business Bureau – it’s easy to get cards and invoices and truck magtnetics printed up with a contractor’s name on them.
Very simply, a good contractor will give them a bid that’s good for at least 30 days, and reputable contractors don’t tend to go knocking door-to-door trying to scare people.
Scam # 7: The buyer sees the property and loves it and wants it and is prepared to pay full price, cash. (Here we go again!) He goes to the seller and explains that he has a certain amount of cash, but the rest of the purchase price is in Euros or yen or peanut butter or gold and the exchange rate is killing him. He proposes to the seller that they make a deal at the amount of cash that he has in pocket and then he’ll give the seller the Euros or whatever under the table.
The seller likes this plan because he only has to pay commission and title fees and maybe taxes on the disclosed amount. Escrow closes, the seller signs the docs and the buyer hands over the goods. The seller goes to the bank or the money exchange or the gold merchant only to find that his goods are counterfeit and the buyer now owns the house for the disclosed amount.
Scam # 8: A former client informs their REALTOR® that they’ve discovered a disclosure issue with the property that they bought through that agent. If the REALTOR® will write a check to “make it good” then the former client won’t file a complaint with ADRE or AAR and won’t file a lawsuit. Give me a break!
As professionals, we can see the red flags in each of these scams. The scary thing is that my Mother-in-law might fall for any one of them. She lives in a kind and gentle world where people don’t do things like this to each other. Her world view is the reason that the elderly are these bastards’ favorite prey.
What are the red flags? The insistence on money up front, on nothing but pretty assurances. Urgency - action must be taken NOW. A deal that’s too good to be true. The feeling that maybe the good guys are finally going to get a break. A proposition that even in a perfect world would be too perfect. Unverifiable funds. The promise that everything will be OK – all they have to do is write one little check.
As a final chuckle, this came at the bottom of a scam email. This sort of tag line would also be a red flag.
PRIVATE: This is Not A Public Communication!This private email message, and any attachment(s) is covered by theElectronic Communications Privacy Act, 18 U.S.C. §§ 2510-2521, and is forthe sole use of the intended recipient and contains privileged and/orconfidential information! To all public servants, including but not limitedto Federal, State, or Local corporate government(s): I accept your oath ofoffice as your firm and binding contract between you and me, one of thePeople, whereby you have promised to serve, protect, and defend me,guarantee all of my unalienable rights, and defend the Constitution for theunited States of America! Any/all political, private, or public entities,International, Federal, State, or Local corporate government(s), privateInternational Organization(s), Municipality(ies), Corporate agent(s),informant(s), investigator(s) et. al., and/or third party(ies) working incollusion by monitoring My (this email) email(s), and any other means ofcommunication without My express written permission are barred from anyreview, use, disclosure, or distribution! With explicit reservation of allMy rights, without prejudice and without recourse to any of My rights! Anyomission does not constitute a waiver of any and/or all intellectualproperty rights or reserved rights! Notice to Principal is Notice to Agent! Notice to Agent is Notice to Principal!
Yep – that sure stopped me from forwarding it to the Attorney General’s Office.
Monday, August 30, 2010
borrower heads up part 2
Lender panels re-cap, Part 2. Part one is further down the page.
Denise Dedrick of M & I Bank, 928.203.4484
Jim Hostler of Lender’s Direct, 928.225.7418
Mark Miskiel of The Lending Company, 928.634.7987
Shelly White-Collier of Northern Arizona Mortgage, 928.634.4251
Shelley Williams of People’s Mortgage, 928.821.0782 (Cell)
Let’s talk about credit, shall we? Our panels sure talked about it a lot, so we will, too.
“Credit is King.” That statement was repeated, well, repeatedly. Our panel members agreed that all of the other components of a loan don’t much matter if the borrowers have a remedial credit score. If it’s under 620 they’re going to have a problem.
Here are some of the very important points that were made about credit:
· It doesn’t matter how golden the Buyers are, it doesn’t matter if they have a credit score of over 800, it doesn’t matter that they have a big down payment, it doesn’t matter that their income to debt ratio is better then perfect – everybody gets put through the wringer. Everybody.
After they’re approved and gotten through the wringer DO NOT LET ANYTHING CHANGE! Advise your clients to wait until after close of escrow to buy the new furniture and washer/dryer. They should absolutely not spend any of the funds that were considered during the process, and they sure shouldn’t run up the credit cards. Bank balances could be checked at the last minute, a final credit check might be pulled. People have been denied because they got all excited and ran out and bought the materials for the new deck and now they’re denied.
Here’s a good one: There have been instances where that final last-minute credit check lowered the buyer’s credit score by the few points that it took to make them suddenly unable to qualify for the loan that they just got approved for. Doh! We can remind the lender to “refresh” the credit report as opposed to re-pulling it – a refresh doesn’t count as a hit.
The Buyer will be required to sign a 4506-T form, which authorizes the lender to get copies of their taxes straight from the IRS. The days are over when a Buyer could present the lender with “copies” of taxes that say exactly what the lender wants to see. After close, taxes may be pulled and re-pulled from the IRS and scrutinized and re-scrutinized. Why? So that the lender can see if maybe the borrower has amended the pack of lies that was actually filed with Uncle Sam in order to qualify for the loan. This happens a lot in the case of a default – the lender is looking for fraud so that they can make the originator buy back the loan.
If the Buyers want to shop around for a loan officer, that’s great. As they talk to Loan people, they should never authorize that their credit be run until they’ve settled on somebody. A bunch of inquiries hitting their credit could be enough to tip them out of an acceptable credit score and “Go buy a house!” into “Forget about it, Bub!”
If a disputed debt comes up on a buyer’s credit report it must be cleared up. “But it isn’t mine! That’s some other guy!” doesn’t cut it. The underwriter will insist that a dispute be cleaned up or removed because they want to know for sure that the Buyer won’t have to pay it, which would change the income-to-debt ratios.
Request that your lender pull a “soft” credit inquiry as opposed to a “hard” inquiry. Soft inquiries don’t impact credit – hard ones do. What’s the difference? I don’t know. That’s what they said – ask the lenders.
The initial credit check can be an alert to a borrower’s creditors, since they do keep track of inquiries. If they see a credit check from a mortgage company they sometime hurry up quick and report or re-report a bad debt that they might have actually given up on a long time ago. They figure that the debt has a good chance of getting paid off if somebody wants to buy a house.
We live in the information age. Encourage your Buyer to be absolutely up front and honest with their lender. If the lender knows about issues in the beginning they can figure out how to structure the deal and how to best advise everybody involved.
Believe that glitches and blips and cover-ups will be discovered. I trust our panel when they tell us that if there is fraud on the loan application or letters of explanation it will be caught, the loan denied and the Buyer possibly prosecuted. It’s just not worth it.
Some good questions came up at both of the meetings.
Q: Will the banks have to adjust their standards in the future to take into account what has happened to so many people lately, credit-wise?
A: They’re going to have to if they want to lend money. This is just common sense, but no concrete plans have been announced.
Q: Have Arizona’s non-recourse laws affected the number of foreclosures?
A: Non-recourse means that on the first mortgage on primary residences, the lender can take back the property in the case of default, but that’s about it – they can’t go after the borrower for any deficiency. Of course non-recourse has affected the thought processes of homeowners who are in trouble or upside-down. They’ve also put a big red flag on Arizona loan files.
Q: Are there really 3.75% 30-year fixed conventional loans available?
A: Yes, but to get that rate the borrower is going to have to pay some points. If they can live with 4% there are no points.
Q: Wow! Who is offering that?
A: We all have pretty much the same products available.
(Note from Carol Anne: I got emails from a lot of lenders who weren’t on the panel, saying that they do 203k rehab loans. Shelley Williams of People’s Mortgage does 203k rehabs, and Denise Dedrick of M&I says that they are getting set up to do them. This was cool because I thought that 203ks had gone the way of the dodo. Some lenders do FHA or Rural Housing or VA and others don’t. Jim Hostler does manufactured home loans and Mark Miskiel is all over USDA. It looks like what one guy won’t touch is the other one’s bread and butter. Ask your favorite lender – if they don’t deal with a program they know who does and they will be generous with that knowledge.)
Q: Are lenders bombarded with homeowners trying to take advantage of the low interest rates by refinancing?
A: No. You have to have equity to refinance and a lot of people don’t have the equity needed.
Q: What about these astonishing interest rates that I see advertised? Like, half a point?
A: That’s probably a “teaser” rate. It might go up after a certain amount of time, or costs are passed on to the borrower up front or it’s a bait-and-switch.
Q: I have an ARM (Adjustable Rate Mortgage) on my house that re-sets at the beginning of the year. When should I re-fi?
A: You might not want to. If it re-sets to 3.5% (which some of them are) your payment will go down.
Q: How hard is it to re-fi if I have enough equity?
A: The process is the same, whether for a new loan or a re-fi.
Q: What motivates you guys? It sounds like it’s as hard to be in the mortgage business as it is to be a REALTOR® right now.
A: We’re motivated by the same things that REALTORS® are - the satisfaction of doing a good job. We take these people personally, the same as REALTORS®. We care about the buyers and want to see them in a home. Denise Dedrick said, “The lenders do take it to heart when a deal falls apart. We work hard from pre-approval to processing to underwriting to closing to make it a smooth process for the REALTOR® and client. To say it stinks when a deal dies is an understatement.”
Q: Who is your favorite type of borrower? (I expected them all to say “Jumbos” but not one of them did.)
A: (in alphabetical order by last name)
· Denise Dedrick of M&I loves the challenge of a “different” loan.
· Jim Hostler of Lender’s Direct loves the self-employed and investors.
· Mark Miskiel of The Lending Company loves the coaching, helping people get ready to borrow.
· Shelly White-Collier of Northern Arizona Mortgage loves working with young couples.
· Shelley Williams of People’s Mortgage loves 1st time home buyers.
Q: What’s the secret? How do you guys get the loans approved after the internet lenders give up?
A: Online doesn’t have the human element. The guy dealing with borrowers that he’s never met just can’t care enough to be like a little terrier (That was Shelly White-Collier who said “We’re like little terriers.”) worrying at the details until it works. Our job is to make the buyers real to the underwriter. These borrowers have to be seen by the underwriter as Tom and Alice and their 2 kids and their dog, not file number such-and-such.
Q: How do you keep a borrower hanging in there while they jump through all of the hoops?
A: Keep reminding them that it will be worth it. Mark Miskiel said it well: “While loans are more difficult, we don’t want to scare off buyers. Prepare them for the increased paperwork and scrutiny but remind them that a buyer today is saving huge amounts of money both in the purchase price and historically low interest rates. Those savings are worth the extra work needed to purchase a home. If you broke it down to the amount of extra hours a buyer has to put into the transaction versus the savings that they’ll put in their pocket, it’s thousands of dollars an hour for the extra work. Not bad!”
Q: Is the market stabilizing?
A: Pretty much. There are still pockets where prices are going down, which forces the appraisers to label Arizona a “declining market.” This freaks out the Far Away lenders and underwriters.
Q: Are loan modifications working?
A: No. 60% of loan mods default, often because the so-called modification has a higher payment than the one that the borrowers couldn’t make in the first place. The result is that more home in the US are now owned by banks than by the public. Yikes!
And on that happy note, I wish y’all a good weekend. Holler if you have any questions!
Denise Dedrick of M & I Bank, 928.203.4484
Jim Hostler of Lender’s Direct, 928.225.7418
Mark Miskiel of The Lending Company, 928.634.7987
Shelly White-Collier of Northern Arizona Mortgage, 928.634.4251
Shelley Williams of People’s Mortgage, 928.821.0782 (Cell)
Let’s talk about credit, shall we? Our panels sure talked about it a lot, so we will, too.
“Credit is King.” That statement was repeated, well, repeatedly. Our panel members agreed that all of the other components of a loan don’t much matter if the borrowers have a remedial credit score. If it’s under 620 they’re going to have a problem.
Here are some of the very important points that were made about credit:
· It doesn’t matter how golden the Buyers are, it doesn’t matter if they have a credit score of over 800, it doesn’t matter that they have a big down payment, it doesn’t matter that their income to debt ratio is better then perfect – everybody gets put through the wringer. Everybody.
After they’re approved and gotten through the wringer DO NOT LET ANYTHING CHANGE! Advise your clients to wait until after close of escrow to buy the new furniture and washer/dryer. They should absolutely not spend any of the funds that were considered during the process, and they sure shouldn’t run up the credit cards. Bank balances could be checked at the last minute, a final credit check might be pulled. People have been denied because they got all excited and ran out and bought the materials for the new deck and now they’re denied.
Here’s a good one: There have been instances where that final last-minute credit check lowered the buyer’s credit score by the few points that it took to make them suddenly unable to qualify for the loan that they just got approved for. Doh! We can remind the lender to “refresh” the credit report as opposed to re-pulling it – a refresh doesn’t count as a hit.
The Buyer will be required to sign a 4506-T form, which authorizes the lender to get copies of their taxes straight from the IRS. The days are over when a Buyer could present the lender with “copies” of taxes that say exactly what the lender wants to see. After close, taxes may be pulled and re-pulled from the IRS and scrutinized and re-scrutinized. Why? So that the lender can see if maybe the borrower has amended the pack of lies that was actually filed with Uncle Sam in order to qualify for the loan. This happens a lot in the case of a default – the lender is looking for fraud so that they can make the originator buy back the loan.
If the Buyers want to shop around for a loan officer, that’s great. As they talk to Loan people, they should never authorize that their credit be run until they’ve settled on somebody. A bunch of inquiries hitting their credit could be enough to tip them out of an acceptable credit score and “Go buy a house!” into “Forget about it, Bub!”
If a disputed debt comes up on a buyer’s credit report it must be cleared up. “But it isn’t mine! That’s some other guy!” doesn’t cut it. The underwriter will insist that a dispute be cleaned up or removed because they want to know for sure that the Buyer won’t have to pay it, which would change the income-to-debt ratios.
Request that your lender pull a “soft” credit inquiry as opposed to a “hard” inquiry. Soft inquiries don’t impact credit – hard ones do. What’s the difference? I don’t know. That’s what they said – ask the lenders.
The initial credit check can be an alert to a borrower’s creditors, since they do keep track of inquiries. If they see a credit check from a mortgage company they sometime hurry up quick and report or re-report a bad debt that they might have actually given up on a long time ago. They figure that the debt has a good chance of getting paid off if somebody wants to buy a house.
We live in the information age. Encourage your Buyer to be absolutely up front and honest with their lender. If the lender knows about issues in the beginning they can figure out how to structure the deal and how to best advise everybody involved.
Believe that glitches and blips and cover-ups will be discovered. I trust our panel when they tell us that if there is fraud on the loan application or letters of explanation it will be caught, the loan denied and the Buyer possibly prosecuted. It’s just not worth it.
Some good questions came up at both of the meetings.
Q: Will the banks have to adjust their standards in the future to take into account what has happened to so many people lately, credit-wise?
A: They’re going to have to if they want to lend money. This is just common sense, but no concrete plans have been announced.
Q: Have Arizona’s non-recourse laws affected the number of foreclosures?
A: Non-recourse means that on the first mortgage on primary residences, the lender can take back the property in the case of default, but that’s about it – they can’t go after the borrower for any deficiency. Of course non-recourse has affected the thought processes of homeowners who are in trouble or upside-down. They’ve also put a big red flag on Arizona loan files.
Q: Are there really 3.75% 30-year fixed conventional loans available?
A: Yes, but to get that rate the borrower is going to have to pay some points. If they can live with 4% there are no points.
Q: Wow! Who is offering that?
A: We all have pretty much the same products available.
(Note from Carol Anne: I got emails from a lot of lenders who weren’t on the panel, saying that they do 203k rehab loans. Shelley Williams of People’s Mortgage does 203k rehabs, and Denise Dedrick of M&I says that they are getting set up to do them. This was cool because I thought that 203ks had gone the way of the dodo. Some lenders do FHA or Rural Housing or VA and others don’t. Jim Hostler does manufactured home loans and Mark Miskiel is all over USDA. It looks like what one guy won’t touch is the other one’s bread and butter. Ask your favorite lender – if they don’t deal with a program they know who does and they will be generous with that knowledge.)
Q: Are lenders bombarded with homeowners trying to take advantage of the low interest rates by refinancing?
A: No. You have to have equity to refinance and a lot of people don’t have the equity needed.
Q: What about these astonishing interest rates that I see advertised? Like, half a point?
A: That’s probably a “teaser” rate. It might go up after a certain amount of time, or costs are passed on to the borrower up front or it’s a bait-and-switch.
Q: I have an ARM (Adjustable Rate Mortgage) on my house that re-sets at the beginning of the year. When should I re-fi?
A: You might not want to. If it re-sets to 3.5% (which some of them are) your payment will go down.
Q: How hard is it to re-fi if I have enough equity?
A: The process is the same, whether for a new loan or a re-fi.
Q: What motivates you guys? It sounds like it’s as hard to be in the mortgage business as it is to be a REALTOR® right now.
A: We’re motivated by the same things that REALTORS® are - the satisfaction of doing a good job. We take these people personally, the same as REALTORS®. We care about the buyers and want to see them in a home. Denise Dedrick said, “The lenders do take it to heart when a deal falls apart. We work hard from pre-approval to processing to underwriting to closing to make it a smooth process for the REALTOR® and client. To say it stinks when a deal dies is an understatement.”
Q: Who is your favorite type of borrower? (I expected them all to say “Jumbos” but not one of them did.)
A: (in alphabetical order by last name)
· Denise Dedrick of M&I loves the challenge of a “different” loan.
· Jim Hostler of Lender’s Direct loves the self-employed and investors.
· Mark Miskiel of The Lending Company loves the coaching, helping people get ready to borrow.
· Shelly White-Collier of Northern Arizona Mortgage loves working with young couples.
· Shelley Williams of People’s Mortgage loves 1st time home buyers.
Q: What’s the secret? How do you guys get the loans approved after the internet lenders give up?
A: Online doesn’t have the human element. The guy dealing with borrowers that he’s never met just can’t care enough to be like a little terrier (That was Shelly White-Collier who said “We’re like little terriers.”) worrying at the details until it works. Our job is to make the buyers real to the underwriter. These borrowers have to be seen by the underwriter as Tom and Alice and their 2 kids and their dog, not file number such-and-such.
Q: How do you keep a borrower hanging in there while they jump through all of the hoops?
A: Keep reminding them that it will be worth it. Mark Miskiel said it well: “While loans are more difficult, we don’t want to scare off buyers. Prepare them for the increased paperwork and scrutiny but remind them that a buyer today is saving huge amounts of money both in the purchase price and historically low interest rates. Those savings are worth the extra work needed to purchase a home. If you broke it down to the amount of extra hours a buyer has to put into the transaction versus the savings that they’ll put in their pocket, it’s thousands of dollars an hour for the extra work. Not bad!”
Q: Is the market stabilizing?
A: Pretty much. There are still pockets where prices are going down, which forces the appraisers to label Arizona a “declining market.” This freaks out the Far Away lenders and underwriters.
Q: Are loan modifications working?
A: No. 60% of loan mods default, often because the so-called modification has a higher payment than the one that the borrowers couldn’t make in the first place. The result is that more home in the US are now owned by banks than by the public. Yikes!
And on that happy note, I wish y’all a good weekend. Holler if you have any questions!
Tuesday, August 24, 2010
Every year, English teachers from across the country can submit their collections of actual analogies and metaphors found in high school essays. These excerpts are published each year to the amusement of teachers across the country.
Here are last year's winners:
1. Her face was a perfect oval, like a circle that had its two sides gently compressed by a Thigh Master.
2. His thoughts tumbled in his head, making and breaking alliances like underpants in a dryer without Cling Free.
3. He spoke with the wisdom that can only come from experience, like a guy who went blind because he looked at a solar eclipse without one of those boxes with a pinhole in it and now goes around the country speaking at high schools about the dangers of looking at a solar eclipse without one of those boxes with a pinhole in it.
4. She grew on him like she was a colony of E. Coli and he was room-temperature Canadian beef.
5. She had a deep, throaty, genuine laugh, like that sound a dog makes just before it throws up.
6. Her vocabulary was as bad as, like, whatever.
7. He was as tall as a six-foot, three-inch tree.
8. The revelation that his marriage of 30 years had disintegrated because of his wife's infidelity came as a rude shock, like a surcharge at a formerly surcharge-free ATM machine.
9. The little boat gently drifted across the pond exactly the way a bowling ball wouldn't.
10. McBride fell 12 stories, hitting the pavement like a Hefty bag filled with vegetable soup.
11. From the attic came an unearthly howl. The whole scene had an eerie, surreal quality, like when you're on vacation in another city and Jeopardy comes on at 7:00 p.m. instead of 7:30.
12. Her hair glistened in the rain like a nose hair after a sneeze.
13. The hailstones leaped from the pavement, just like maggots when you fry them in hot grease.
14. Long separated by cruel fate, the star-crossed lovers raced across the grassy field toward each other like two freight trains, one having left Cleveland at 6:36 p.m. traveling at 55 mph, the other from Topeka at 4:19 p.m. at a speed of 35 mph.
15. They lived in a typical suburban neighborhood with picket fences that resembled Nancy Kerrigan's teeth.
16. John and Mary had never met. They were like two hummingbirds who had also never met.
17. He fell for her like his heart was a mob informant and she was the East River.
18. Even in his last years, Granddad had a mind like a steel trap, only one that had been left out so long, it had rusted shut.
19. Shots rang out, as shots are wont to do.
20. The plan was simple, like my brother-in-law Phil. But unlike Phil, this plan just might work.
21. The young fighter had a hungry look, the kind you get from not eating for a while.
22. He was as lame as a duck. Not the metaphorical lame duck, either, but a real duck that was actually lame, maybe from stepping on a landmine or something.
23. The ballerina rose gracefully en pointe and extended one slender leg behind her, like a dog at a fire hydrant.
24. It was an American tradition, like fathers chasing kids around with power tools.
25. He was deeply in love. When she spoke, he thought he heard beeps, as if she were a garbage truck backing up.
Here are last year's winners:
1. Her face was a perfect oval, like a circle that had its two sides gently compressed by a Thigh Master.
2. His thoughts tumbled in his head, making and breaking alliances like underpants in a dryer without Cling Free.
3. He spoke with the wisdom that can only come from experience, like a guy who went blind because he looked at a solar eclipse without one of those boxes with a pinhole in it and now goes around the country speaking at high schools about the dangers of looking at a solar eclipse without one of those boxes with a pinhole in it.
4. She grew on him like she was a colony of E. Coli and he was room-temperature Canadian beef.
5. She had a deep, throaty, genuine laugh, like that sound a dog makes just before it throws up.
6. Her vocabulary was as bad as, like, whatever.
7. He was as tall as a six-foot, three-inch tree.
8. The revelation that his marriage of 30 years had disintegrated because of his wife's infidelity came as a rude shock, like a surcharge at a formerly surcharge-free ATM machine.
9. The little boat gently drifted across the pond exactly the way a bowling ball wouldn't.
10. McBride fell 12 stories, hitting the pavement like a Hefty bag filled with vegetable soup.
11. From the attic came an unearthly howl. The whole scene had an eerie, surreal quality, like when you're on vacation in another city and Jeopardy comes on at 7:00 p.m. instead of 7:30.
12. Her hair glistened in the rain like a nose hair after a sneeze.
13. The hailstones leaped from the pavement, just like maggots when you fry them in hot grease.
14. Long separated by cruel fate, the star-crossed lovers raced across the grassy field toward each other like two freight trains, one having left Cleveland at 6:36 p.m. traveling at 55 mph, the other from Topeka at 4:19 p.m. at a speed of 35 mph.
15. They lived in a typical suburban neighborhood with picket fences that resembled Nancy Kerrigan's teeth.
16. John and Mary had never met. They were like two hummingbirds who had also never met.
17. He fell for her like his heart was a mob informant and she was the East River.
18. Even in his last years, Granddad had a mind like a steel trap, only one that had been left out so long, it had rusted shut.
19. Shots rang out, as shots are wont to do.
20. The plan was simple, like my brother-in-law Phil. But unlike Phil, this plan just might work.
21. The young fighter had a hungry look, the kind you get from not eating for a while.
22. He was as lame as a duck. Not the metaphorical lame duck, either, but a real duck that was actually lame, maybe from stepping on a landmine or something.
23. The ballerina rose gracefully en pointe and extended one slender leg behind her, like a dog at a fire hydrant.
24. It was an American tradition, like fathers chasing kids around with power tools.
25. He was deeply in love. When she spoke, he thought he heard beeps, as if she were a garbage truck backing up.
Monday, August 23, 2010
I have a revision to my last Bits N’ Pieces. I incorrectly identified the writer of the letter to the editor that I was responding to as Ms. Lavone Turnipseed. I have been informed that Lavone Turnipseed would be MR. Turnipseed to me. I made an assumption, and you know what they say about assumptions.
I am not sending this correction to the paper – Mr. Turnipseed did not mention it in his rebuttal letter in the Verde Independent, so I’m leaving it alone there.
To read what I'm referring to, go to http://www.verdevalleynews.com/main.asp?Search=1&ArticleID=37732&SectionID=36&SubSectionID=1192&S=1
and my reply at
http://www.verdevalleynews.com/main.asp?Search=1&ArticleID=37732&SectionID=36&SubSectionID=1192&S=1
*****************************************************************
Last week we invited a panel of mortgage brokers and bankers to speak at both the Cottonwood and Sedona MLS meetings.
In alphabetical order, our panel consisted of:
Denise Dedrick of M & I Bank, 928.203.4484
Jim Hostler of Lender’s Direct, 928.225.7418
Mark Miskiel of The Lending Company, 928.634.7987
Shelly White of Northern Arizona Mortgage, 928.634.4251
Shelley Williams of People’s Mortgage, 928.821.0782 (Cell)
I chose the members of the panel with my customary scientific precision. At the Tuesday morning MLS meeting in Cottonwood one day, somebody said how great the appraiser panel had been a few weeks before, and why didn’t we get together a lender panel? I yelled across the room at the 5 lenders present at the meeting, “Hey! Y’all want to do a lender’s panel?” They said “Yes! Yes, they did.”
Following is my re-cap. I have taken some poetic license and amalgamated similar points into one (I assume) coherent sentence. This turned into a very long report so you’re getting a two-parter, half this week and half next week.
***********************************************************
The points that were made during the panels seemed to consist of 3 separate threads:
1: What do we as REALTORS® need to understand about the loan process?
And,
2: What can we as REALTORS® do to help the process of getting our Buyers a loan or selling our listing to a Buyer who needs a loan?
And,
3: What do our Buyers need to understand before getting involved with today’s loan process? What are their expectations versus the current reality?
Our panel felt that REALTORS® need to understand and accept that the lending process has changed in a big way.
A good straightforward vanilla loan will take 45 days to complete, and that’s after the preliminary work to get a bona fide LSR has been done. An intricate loan can take much longer.
It can take weeks to get our hands on an Loan Status Report because there is now so much more that a lender has to know about the borrower before they can issue one. Because the brokers and bankers are now licensed, the days of them just willy-nilly shooting out an LSR (just because we want one) are over.
Get your Buyer pre-qualified up front. When the lender tells you the maximum that the Buyer can pay for a house don’t try to push it higher. This max can change overnight depending on interest rate fluctuations and changing guidelines. The program that your Buyer just got pre-qual’d for could be gone tomorrow.
Communicate, especially in the beginning! Communicate with the buyer, communicate with the lender. The REALTOR® is the go-between and sometimes the translator from mortgage-speak to English. We are all a team, working towards the same goal. As the facilitator, remember that reminding is fine while nagging just takes up valuable time.
Make sure that the lender knows up front about property condition. A house has to be habitable to get a loan because they all made crosses with their fingers at the mention of 203K rehab loans. Private roads, unpermitted additions, property flips, humongous seller proceeds when the seller hasn’t owned the house for very long – these can all take time to explain and resolve.
If your Buyer lives in Far Away, allow an extra 15 days for sending docs back and forth.
Out or state buyers are loaded with fraud red flags; they’re automatically suspected of perpetrating “buy and bail” schemes (Buy a new house at today’s prices and interest rates and walk away from the old, possibly upside-down house.) and are scrutinized even more closely than locals.
Flips: we absolutely have to disclose property flips. If the seller purchased the property less than 18 months ago the lender needs to know that – it will require extra documentation and possibly 2 appraisals.
Short sales: can anything be done by the Buyer’s lender to facilitate a short sale? No, not really. A Borrower can get a loan in certain circumstances in as little as a year after short selling a house. This requires tons of documentation regarding the hardship that caused the short sale, and why that hardship is no longer valid.
Don’t encourage a Buyer to try for a stated income or Non-qualifying loan – they no longer exist. If they are self-employed check to see if they’ve filed their taxes on time and if they have voluminous documentation to back up those taxes. Getting a loan for a self-employed person is going to be like being audited. (When we asked the panel about stated income loans, they all had a hearty laugh.) I was later contacted by one of our Affiliate lenders who told ne that he does do rehab loans. Getting your ducks in a row is critical if you're going to advise your client correctly.
Use local lenders. The Buyer’s personal banker in Kansas is not going to know the answer to the questions that the underwriter who lives in the basement in New Jersey is going to ask.
Speaking of underwriters, we all need to understand their mentality. Before these panels I always considered underwriters to be a bunch of dribbling idiots. I now understand that an underwriter (or asset manager or bank loan modification guy) might have been flipping burgers at McDonald’s just last week.
Did you know that if an underwriter approves a loan that subsequently defaults they could be fired? Yep – just like that. Yes, some of them might be idiots, but that’s not the main thing that we’re dealing with – they’re scared. Don’t get me wrong here – all underwriters are not morons. Most underwriters are smart professionals, trying to do a good job. As always, one unprofessional apple gives the whole barrel a bad name. I’ve mixed my metaphors, but you know what I mean.
Underwriters have pet peeves. One guy might insist on P & Ls every time no matter what, another might get wadded up about whether the borrower’s taxes were filed on time without extensions, another might get upset that the borrower hasn’t been on the job for 20 years, another might not like that somebody has gotten married and changed their name more than once.
Every loan is subject to a thing called buy-back. Buy-back is a Big Deal. An underwriter approves a loan, and the originator sells it to an investor. The loan defaults. The investor then goes through the file with a fine toothed comb, desperately looking for a mistake or fraud or any sort of loophole. If he finds one (and before, he always found something) he can make the originator buy the loan back. This has happened a lot in the past few years – buy-backs have caused quite a few companies to go under, and the possibility of being hit with a buy-back is one of the thing that makes the underwriters so hard to get along with.
Remember: default = fired. Buy-back = fired. Underwriter = occasionally unprepared and afraid.
This opens the discussion of the “layers.” Even though one lender has certain guidelines, they always have to keep in mind that they’re going to have to sell the loan to an investor. So even though one company’s guidelines are not as strict as another’s, they’re all protecting their exit strategy on that loan and the strictest guidelines will prevail.
Tune in next week, same time, same channel. Thanks!
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