Mortgage Refinancing Increases but Some Qualified Borrowers Frustrated, Hopeful

Mortgage Refinancing Increases but Some Qualified Borrowers Frustrated, Hopeful

While bailout money was given to many banks in 2009 to help stimulate the economy, the stricter rules for getting housing loans are making it a tough job for the qualified, self-employed borrower. Interest rates currently remain very low and that has some looking to capitalize on them but they're being met with frustration. "The word stated-income has been blamed along with a few other things for the whole mortgage-market meltdown," says Wallace. "It is not a word that anybody at the Federal government thinks is acceptable anymore. So none of those kinds of loans come through any government entities at all," says Larry Wallace.


But that doesn't mean the need for them has dwindled. And some, who are capable and qualified, are finding there's nothing available for them.

"We can't get the loan even though we have the equity," says Sid Levin, homeowner and self-employed businessman. He runs a two-decade-old theatrical and commercial agency in Beverly Hills, California. And he is not alone. He's searching for a no-doc loan and so far having no luck.

"The last official stated-income lender that I know of was Union Bank. Union Bank always made super conservative loans, they never got aggressive, and they're a portfolio lender—they keep their loans. Union Bank never wanted to get rid of their stated-income loans, the Federal Regulators that oversee them made them get rid of them," says Larry Wallace, a long-time mortgage expert.

"Union Bank had a perfectly performing stated-income product. They didn't have high default rates, nothing. It was perfect. … They did loans where the loan-to-values were really low," says Wallace. According to the Mortgage Bankers Association, three out of four loan applicants are looking to refinance. Many are trying to take advantage of the low rates before any possible increase occurs—some industry experts speculate that won't be for quite some time but others fear the threat of increased rates could come sooner. This abounding uncertainty is part of the nationwide financial uncertainty regarding inflation.

"[Banks] have to have all the documentation from A to Z. We've offered to show them our bank statements for the last two years, we've offered to show them our credit—no good, it has to be the tax returns. They have to see those for self-employed people," says Levin. "I get this call all the time. Sid is a textbook call for me," says Wallace. But there may be hope, "We've got this one lender who says it will do stated. I'm looking into it. But there has not been financing for this segment of the market for a year-and-half," says Wallace.

Levin is in a predicament that other self-employed folks can relate to. "We have a lot of [business] expenses that are tax deductible and we write them off. We legally and legitimately write off our expenses and in return it looks like we don't make as much money but we do; why should we pay more taxes to the government when legally we don't have to?" says Levin. So, he continues his re-finance hunt but feels that the system is penalizing even those who weren't part of the problem. "It's a stereotype or prejudice against people who require no-doc loans. A few people may have lied about them but now they're penalizing the good people," says Levin.

"If you take away small business and people who legitimately and honestly work hard … what's left? It's very frustrating because you bail out the banks that make mistakes and they're forgiven because they have to keep on providing a bank service for the public—they get a free pass and the same money that bails them out is the tax money and the tax money is the people's money," says Levin.

"Why aren't we given a break like the banks are given? I just don't see how that adds up to the public getting anything out of it," says Levin.

Tips for self-employed seeking loans: Make sure your credit report is pristine. Take the time to review it and get any errors on it fixed. If you have some bad marks, realize that cleaning them up will take several months, at least. Score of 720 or higher are best.

Keep very accurate records. The self-employed need to have excellent personal and business financial records; both are likely going to be required for a loan. Profit and loss statements and even proof of a business license showing you've been in business for more than two years should be kept on file.

Think ahead. Know that it may be a long-road ahead before lenders offer stated-income. Look to conserve costs and save where you can. Another tip from experts is to have an audited financial statement prepared by a certified public accountant.

Hard-money loans. These are available but the rates are considerably higher.

January 15, 2010

Location:Cumbre Rd,Temecula,United States

REO Discontent

REO Discontent

houses it's stuck with, but now it's moving to sell off that inventory faster than it has in the past, potentially opening up some interesting opportunities for home buyers and their agents.


In a new policy announcement, Fannie says it will now accept purchase offers for its REO immediately after listing, without notifying lenders or mortgage servicers whose loan files are under review.

Under its previous policy, Fannie gave lenders and servicers fifteen days to find a better purchase offer for new REO they sent to the company following foreclosure.

That policy affected all repossessions where Fannie demanded the loan file on the house - potentially exposing errors in underwriting or servicing, and requiring reimbursement for losses by the lender.

But that policy also had a negative impact on Fannie's ability to move its REO out the door quickly. The fifteen day time-out slowed down the works - and sometimes kept properties out of reach of ready and willing buyers.

Partly as a result, Fannie's portfolio of unsold acquired real estate has been ballooning lately. According to its most recent securities filing, the company, now under federal control, took in more than 98,000 properties following foreclosures during the first three quarters of 2009.

During the same time, it sold about 90,000 houses.

But because of a widening imbalance of REO in and out the door dating to prior years, Fannie was sitting with 72,000 unsold houses -- about a 7 percent jump from the same period the year before.

Fannie's response to this REO bloat? Sell off the houses faster by accepting purchase offers through its network of real estate listing agents earlier.

In the company's memo to lenders and servicers, it basically said this: We're now going to market houses as soon as they come in the door and we've established a current value.

No more fifteen day time out period for lenders whose REO we've selected for loan file reviews.

As soon as Fannie lists an REO property, it will be fair game for home buyers. And if Fannie ultimately sells for a loss -- and the loan file review turns up bad underwriting or other problems -- Fannie plans to stick the lender with the loss.

Bottom line for home buyers and agents under the policy change: Look for earlier access to REO properties, and earlier decisions on purchase offers.

Fannie is determined to slim down its REO portfolio in 2010, and that just might provide opportunities for heads-up buyers and agents looking for deals.

Published: January 11, 2010

Location:Temecula,United States

NATION'S HOUSING Obama's standardized short-sale plan could help troubled homeowners

NATION'S HOUSING
Obama's standardized short-sale plan could help troubled homeowners

By Kenneth R. Harney
December 13, 2009


Reporting from Washington - If you're in trouble on your mortgage and can't get a loan modification, check out the Obama administration's standardized short-sale plan that's scheduled to roll out in the next several months.

The program, outlined Dec. 1 by the Treasury Department, is an attempt to streamline what has traditionally been a contentious, time-consuming process by requiring lenders and others to use nationally uniform documents, timelines and financial incentives.

A short sale involves a lender or investor agreeing to collect less than the balance owed on a mortgage debt out of the proceeds of a negotiated sale of the property. Often a short sale is the last alternative to foreclosure available to distressed homeowners and banks. Say you've lost your job and fallen behind on mortgage payments. With little or no income, you can't qualify for a modification program.

In this situation -- grim as it is -- your best move may be to see whether your lender will accept a short sale. Though the idea sounds straightforward, in practice it is not. First, the bank needs to be convinced that a short sale would yield it more money at the bottom line than a foreclosure would.

This usually means you need to bring in a real estate agent who knows the ropes and can pull together the key information needed by the bank: recent comparables on closed sales, local market trends and the likely selling price of your house.

You'll also need a buyer for the house -- one who'll pay a price acceptable to the bank and has financing to close the deal. If you happen to have a second mortgage or home equity credit line on the property, you'll also need to negotiate how much that lender will receive from the sale proceeds.

That can be tricky. In depressed real estate markets, the second-lien lender may be holding a note that's worthless in a foreclosure because plummeting property values have wiped out the collateral. Yet that same bank is in a pivotal position: It has the legal power to block the short sale by refusing to sign on to the deal.

Equally troublesome in short sales is the fact that banks, mortgage servicers and bond investors often have conflicting requirements for documentation and financial yields that can complicate and drag out the haggling for months.

Enter the Obama administration's new streamlining plan. Besides requiring lenders and servicers to use uniform documentation, pre-approved short-sale terms and accelerated turnaround times, the plan provides financial incentives for key players:

* Homeowners who successfully complete a short sale under the program receive $1,500 to defray relocation costs.

* Mortgage servicers can receive $1,000 per case.

* Investors get $1,000.

* Second-lien holders receive up to $3,000 from the sale proceeds.

Even real estate agents get something: The rules prohibit banks from forcing them to cut their commissions from the listing agreement as part of the final deal.

Sounds like a formula for encouraging a lot more short sales, right? The jury will be out on that for months, and most major lenders are still studying the fine print of the Obama program. But early reactions from big banks appear to be positive.

Dave Sunlin, a senior vice president for Bank of America Corp., said: "We're very pleased. We welcome any effort to reach standardization for all parties" involved in short sales.

Faith Schwartz, executive director of Hope Now -- a Washington-based group representing the country's largest banks, mortgage servicers, bond investors and consumer counseling organizations -- said the plan should bring "uniformity and standards" to a process usually characterized by "mayhem" among the negotiating parties.

Scott Brinkley, a senior vice president for First American Corp., a firm that provides market data for banks, said, "You're going to see a lot of cooperation" by lenders and investors.

But there could be a major pothole: The Obama plan tilts to consumers by requiring second-lien holders to drop all financial claims against short-selling borrowers beyond the $3,000 they take out of the deal.

Travis Hamel Olsen, chief operating officer of Loan Resolution Corp., a Scottsdale, Ariz., consulting firm, says the $3,000 payment won't be enough for many second-mortgage lenders. Today they frequently obtain additional short-sale compensation from sellers as the price of their participation -- in cash or through promissory notes -- far beyond $3,000.

"I'm concerned that that could limit participation" by second-lien holders, Olsen said.

Bottom line for homeowners who might benefit: Don't have wild expectations, but definitely ask your servicer whether it plans to participate and whether the forthcoming standardized plan for short sales might work for you.


-- Posted from my iPhone

Location:Cumbre Rd,Temecula,United States

Short Sale need to guard

Short Sale Sellers Need To Guard Against "Double Whammy" By Bank and I.R.S.

Short-sale sellers and their agents have plenty to think about, and it is understandable if they are annoyed by the reams of paperwork that may come their way. Nonetheless, it really is important not only to pay attention to what is in the paperwork but also to be sure to retain it for possible future use. This is because of bad consequences that the seller may experience sometime after the sale has taken place.


Bad enough that a short sale involves the loss of one’s home with no equity to show for it, and a credit negative that may last for years; it also has the potential to produce two very bad after-effects. One is that the lender, or the lender’s assignee, may continue to pursue the beleaguered seller for the remainder of the debt. The other is that the I.R.S. may come knocking on the seller’s door, seeking tax on the amount of debt that was unpaid.

The first possibility is often contained in the paperwork that goes along with the seller’s ok of the short sale. The borrower may be required to sign a promissory note for the difference between the debt owed and the short sale proceeds received by the lender. Or, a lender may require the borrower to sign a paper acknowledging that the lender reserves its right to pursue the borrower for this amount.

The second possibility resides in the fact that, if a debt is forgiven, the borrower may be taxed on the amount he didn’t have to pay back. (see I.R.S. publication 4681). To be sure, there may be short sales where the debt that is unpaid is not taxable. For those exemptions, see a tax accountant.

The point here is that the short-sale seller may suffer one of those unpleasant consequences; but he ought not to suffer both.

The point is raised because here is what can happen: In allowing the short sale, the bank requires the borrower to sign a note for the difference, or to acknowledge that the bank has the right to take action to collect that amount. Also, probably sometime later, the bank sends out a 1099-C, informing the I.R.S. that a certain amount of debt had been cancelled.

NO ONE who has dealt with a short sale would raise the question: “How could this happen? The two actions contradict each other!” That is because anyone who has been through the process knows that it is common for the right hand of the bank not to know what the left hand is doing. Indeed, it is not uncommon for the right hand not to know what the right hand is doing.

This is why it is important for the seller to be sure to keep his paperwork. If he signed a document to the effect that the bank was going to pursue its unpaid interest, he should hang on to that. Then, if he receives a 1099-C saying that the debt was forgiven (and, therefore, taxable), he will have support for the claim that the 1099-C is incorrect.

Conversely, suppose that there was no specific release of the debt and that the paperwork contained no reference to it. Then, if the seller receives a 1099-C, saying the debt was cancelled, he should keep that, just in case the bank, or its assignee, comes calling a year or so later, trying to collect the debt.

None of what has been said here should be construed as tax or legal advice. I am not certified to do that sort of thing. But I hope this little piece will encourage short-sale sellers to consult with their appropriate advisors about these matters.

Incorrect and Incomplete MLS Entries: Chance of Sale is Lost Forever!

Incorrect and Incomplete MLS Entries: Chance of Sale is Lost Forever!

Many in real estate delude themselves if a home has the right price it overcomes all objections and will sell if placed in the MLS. I disagree. My proof are the thousands of MLS listings that expire or withdrawn every day without ever selling. Since I specialized in expired listings for a long time I have found there is always a reason why homes do not sell. Contrary to what many believe in our business, it isn't always the price that prevents a sale.


Sometimes the listing languishes on in the MLS system for years and -- no sale, and the reason? The listing is totally flawed! Incorrect data, price, directions, wrong MLS areas, and missing data prevent anyone from finding the listing.

Sellers do not understand that other agents cannot notify them of the mistake. Since they are already listed with another licensed real estate agent, and to do bring the error to their attention would be considered a solicitation of that listing.

That is a violation of real estate license law. Seller's should personally review the MLS listing and check it for errors and completeness. They should question any missing data fields and check their address and city for typos and errors. Agents should request a dated and initialed copy along with corrections to be placed in their clients file when the errors have been corrected.

Placing a new listing in the MLS is just passive marketing if it's done with the belief the entry alone will sell the home. The new listings, many of which are short sales and foreclosures are entered with little or no accompanying data or photos. A shoddy listing entry that is void of detail only ensures the home will never sell or sell at a greatly depressed price. Agents or brokers that believe that details are not important and that MLS entry itself will sell the listing if priced right are dead wrong. Listing agents that act this way obviously do not understand marketing on any level. There more persons that are interested in a property, the higher the bid price will be. This is the day of the Internet and custom searches by consumers to find and preview homes and properties online. However, if they entered incorrectly, no one will ever find them. Personally I believe that our industry is pre-occupied with fear and not doing the job the way we used to. As an industry we're reeling from a bursting real estate bubble and we're obviously not policing our own to ensure sellers get their homes sold and buyers can find what they are looking for.

Homes these days are being entered so poorly into the MLS system that no one will ever find the listing. They simply cannot be found. It does not matter the shape of the home, the upgrades or the price. The listing is in limbo if entered incorrectly or with only sparse data! There should be a law against this called "Criminal stupidity!" Think about it. Sellers that are relying on the broker to sell the home…will never have a chance of anyone finding the listing. This is an inexcusable offense, and the MLS systems that allow listings with loads of errors, or omitted data to be placed into the system is in big trouble. It is conceivable that you could list the perfect home, and no one will ever find it.

The MLS coupled with IDX allows buyers across many portals to search for homes. They all rely on the original data entry to make this viral marketing work. An MLS should never allow fields such as schools, and MLS area should never be allowed to be entered blank, or incorrectly. We all know there is manipulation of fields – listing a home in another city or school district to warrant more exposure or a higher price. Misinformation - really borders on illegal, and fraudulent since it tends to deceive and manipulate unsuspecting buyers.

Ages of homes should be filled in. Many buyers will search for a home or property by zip codes or by schools, city or map. If the listing is entered without schools, or correct cities … what chance is there ever of finding it? Agents that do this should leave the business, be fined, or have their incomplete or erroneous listing pulled. Just because an agent has no interest in entering what they consider minor details - they cannot overlook the fact that their actions may ruin the life of a home owner or seller forever. They are depending on us to get the home sold! There is no bigger abuser of this right now than those listing short sales, foreclosures, and bank owned properties. The losses to the sellers are criminal!

Examples of MLS entries that should never be allowed:

Wrong addresses
Partial Addresses
Age of home should be filled in - as opposed to wild cards or "unknown!”
Wrong City
Wrong Zip Code
Wrong MLS area
Schools not listed
Acreage
Room dimensions where required
Wrong Schools listed
Wrong number of bedrooms / baths
Missing features
No photos
No Virtual tours
No descriptions / remarks
Wrong directions
Wrong features
Wrong photos
Wrong price
Wrong Map coordinates
Wrong Subdivisions
Misspelled Subdivisions
No Map Coordinates

National Average Long-Term Mortgage Rate Rises to 5 Percent

National Average Long-Term Mortgage Rate Rises to 5 Percent
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.00 percent with an average 0.7 point for the week ending October 22, 2009, up from last week when it averaged 4.92 percent. Last year at this time, the 30-year FRM averaged 6.04 percent.


The 15-year FRM this week averaged 4.43 percent with an average 0.6 point, up from last week when it averaged 4.37 percent. A year ago at this time, the 15-year FRM averaged 5.72 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.40 percent this week, with an average 0.6 point, up from last week when it averaged 4.38 percent. A year ago, the 5-year ARM averaged 6.06 percent.

The one-year Treasury-indexed ARM averaged 4.54 percent this week with an average 0.6 point, down from last week when it averaged 4.60 percent. At this time last year, the 1-year ARM averaged 5.23 percent.

"Following bond yields, long-term mortgages rates edged up slightly this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Although rates for 5/1 ARMs and traditional 1-year ARMs are around half a percentage point below 30-year fixed mortgages, consumers appear to be seeking the stability of fixed-rate mortgages. According to the Mortgage Bankers Association, ARMs averaged only about 6 percent of the number of mortgage applications in September and October thus far."

"The housing market is still trying to recover in the second half of the year. The Federal Reserve reported in its October 21st regional economic review that housing market conditions improved in recent weeks, primarily from a pickup in sales of low-to medium-priced houses. However, residential construction activity was reported to remain weak in most areas. New construction of single family homes rebounded in September, rising at a 3.9 percent annual rate, but did not erase all of the declines set in August, based on figures released by the Department of Commerce. Moreover, homebuilder confidence, as measured by the National Association of Homebuilder's Housing Market Index, fell slightly in October and marked the first decline since January of this year."

Defending Your Home Base Against Foreclosure

Defending Your Home Base Against Foreclosure

Throughout Florida, we see the number of foreclosures continue to rise. While Winter Park may have been more stable when the housing crisis began, the community is now feeling the impact of the foreclosure wave that is washing over our state and nation.


A recent report by RealtyTrac, Inc. found that Orlando's four county region, including the city of Winter Park, had nearly 8,000 homes with a foreclosure filing, notice of foreclosure or repossession by a lending group. This figure has doubled since last year's data collection. Now, more than ever, I hear from worried homeowners asking questions like: "What should I do if I can't pay my mortgage?" and "What should I do if I'm served a foreclosure notice?" People think there is little that can be done to defend against foreclosure. Good news that is absolutely not true.

Understand that many people, including elected officials and community groups at all levels, are working tirelessly to slow the rate of new foreclosures. There are, however, a few attempting to take advantage of scared, inexperienced homeowners who are faced with losing everything. My Advice: don't be afraid, get informed.

The most critical first step for individuals faced with mortgage foreclosure is to find and secure the services of an experienced attorney, familiar with these issues. A foreclosure filing should be viewed like a lawsuit, and you'll need someone who can successfully litigate your case. A thorough understanding of your mortgage right, which include, but are not limited to, loan modifications, is of the highest importance.

Be wary of non-attorneys offering assistance as they have no leverage in dealing with lenders. In the end, they cannot do anything to help their clients if a foreclosure case goes to court. Lenders have become keenly aware of this deficiency, and they will exploit your team's weakness.

There are a number of benefits linked to working with a reputable foreclosure attorney who can who can lead a dynamic defense. Your attorney will work to delay or stop foreclosure, and you will be able to set aside funds that can be used when seeking reinstatement. Furthermore, people who put up a strong defense have an extra leverage and are well positioned for future reinstatement. Working with a defense attorney, borrowers affected by foreclosures can use the legal process to achieve fair loan modification – a solution that allows people to keep their homes. This route reworks the terms of an existing mortgage, thereby lowering monthly payments and making the loan more affordable.

This can play out in various ways, including; the principal balance of the loan can be reduced; the interest rate lowered, and some or all of the past-due payments can even be eliminated. Essentially, homeowners get a new start on their credit report and improve their credit scores over a matter of months. Each situation is a different, and you must work with your trusted advisers to decide the best course of action for you and your family.

While the process may seem overwhelming, the bottom line is … a reputable attorney will be able to set you on the right course toward keeping your home. If you're in trouble, unable to make your mortgage payments or if a foreclosure complaint has already been filed against you, please do your homework and find experienced legal representation.