King County Single Family Home Prices. Just a couple of quick graphs tonight. First week in April 2009 compared to first week of each month so far this year. The first graph is $ in thousands, the second graph is median price per square foot.
(required disclosure) Stats are not compiled, posted or verified by NWMLS.
A few weeks ago, a home buyer shared some pricing scenarios a fellow mortgage originator was offering to them.
Scenario 1 looks like the mortgage originator wants the borrower to believe they’re only making a half point in loan fees and the borrower is paying an additional 0.625% to buy down the rate further. How the borrower should look at this is that if they select Scenario 1, they are paying 1.125% to have 4.50% for a rate. (This was provided to me in mid-March and does not reflect current pricing).
On most current Good Faith Estimates have the following lines designated for “points”
In all my years (9 as of April Fools) of mortgage originating, I’ve never seen an estimate with 0.5% origination and 0.625% discount points. It just seems silly to me. This really illustrates why a consumer should just add up the points paid regardless of if they are entered as discount or origination–if you’ve paid either, you’re paying points. In fact, as I’m sure I’ve mentioned before (but it’s worth repeating) you should add up all closing costs disclosed in Section 800 of your Good Faith Estimate to see what you are paying for interest rate. Some lenders may have additional fees, such as processing, underwriting, funding…etc. Unfortunately, APR is not a fool proof way to compare interest rates.
While I’m dishing out advice, selecting a Mortgage Professional by interest rates–when we are currently receiving a new rate sheet ever 5 hours is crazy. Odds are, you’re not comparing apples to apples and rate quotes don’t mean anything unless you’re locking in at that moment.
In this current market, make sure:
Dow breaks 8,000 April 2, 2009
Whether you are talking about the stock market or the housing market or the economy in general, it is very interesting to watch the discussions of “bottom” and “a recovery”. Today the Dow is peeking into the 8s, with headlines of “Dow Crosses 8,000 in Broad Rally”. I was surprised by this sentence in that article:
“We have more and more evidence that the economy is heading for some stabilization, and we see some leading indicators that show that the bottom could be near,” …
I admit I am confused by that statement. If the market does stabilize from here out, wouldn’t that make “the bottom” behind us vs “near”? If we never get there again, wouldn’t March 9th when the Dow closed at 6,547 be “bottom” vs some date in the near future? Does “bottom could be near” mean we will shortly be under 6,547? I’m pretty sure that is not what they mean. I think they mean bottom isn’t bottom, until “they” choose to declare it as bottom at some point in the near future.
I expect some will see stabilizing as “a recovery” while others won’t view the market as “in recovery” until it is up past it’s historic high point. I clearly don’t expect home prices in the Seattle Area to be significantly higher in May of 2010, than they are in May of 2009. I expect to be “at bottom” for at least 3 years.
So what does “at bottom” mean to you? What does “a recovery” look like to you? I find it very interesting to study the various differences in people’s perspectives on these two concepts.
I have been focused on what the big banks are doing to the mortgage broker industry because as someone who works for a correspondent lender, it’s closer to home. I am convinced that the big players are attempting to wipe out the mortgage broker industry while smearing it with mortgage meltdown blame so they can keep their hands clean. (If anyone can provide proof of a bank admitting they created mortgage programs and guidelines that were instrumental in creating our current climate, I’d appreciate it). I believe some major banks see this period in history as a grand opportunity to grab as much mortgage market-share by stepping on the little guy. And it appears they may be doing it to their own mortgage originators who are employed at home loan centers.
Over the weekend, The Seattle Times covered a local story about how a group of employees from JP Morgan Chase’s home loan center in Bellevue “made some mistakes” when they “jumped ship” for a mortgage company. What struck me, besides what it’s reported the employees did, was their reason for leaving:
“What prompted the mass migration. According to written statements from the lending officers, last fall it got increasingly difficult to complete the deals they lined up after Chase moved it’s loan processing from Bellevue to Tempe, Ariz. And in January they were told their work would be shifted into the bank’s branches….”
JP Morgan Chase has a much larger local presence with the acquisition of WaMU and their network of bank branches. Will Bank of America do the same with Countrywide’s home loan center loan originators? I’m assuming that loan originators located inside a bank branch are not compensated the same. Banks could employ people with less experience and originators who do not have their own client base…they’re counting on consumers to just walk on in and apply for a mortgage….just trust “the bank”.
I know that if I worked for a mortgage bank loan center, I’d bone up on my Teller skills.
The National Association of Realtors has announced a new community service outreach plan “Operation Home Rescue.” Realtor members will be opening their homes to families who have been displaced by foreclosure. Each NAR member will offer their basement, family room, third bedroom, and in the case of an already full house, their garage to families who may otherwise be homeless due to their own foreclosure. “We have a duty to help those less fortunate and in this case, some of these folks will likely be our past clients” said an NAR Spokesman. “We won’t be going out of our way to make their stay to terribly comfortable,” he said, “because these are our future homebuyers!” When asked about how a recent foreclosure effects a person’s ability to obtain a mortgage again, he said, “pretty soon, the lenders won’t have anyone else to lend money to, so they’ll have to take these homebuyers back again.” NAR representatives were not sure how the plan would work when the foreclosing homeowners are Realtors. “Frankly, I’d rather volunteer to take in their abandoned dogs or cats instead of taking in one of my competitors” said Sean Q., a real estate agent. Homeowners in foreclosure should contact the Realtor who sold them the home for more details.
In addition, a Realtor spokesman explained that a motion was made at the previous convention to add an article to the Realtor Code of Ethics which would have made it a Realtor’s ethical duty to make sure the homebuyer could actually afford the mortgage payments but the motion was defeated. “NAR is on record as being against banks getting in to the real estate business so we figured it was a good idea if we stay out of the banking business.”
NAR’s Operation Home Rescue outreach program provides a dual benefit of rescuing foreclosed families and then selling them another home which will help to clear out the inventory of homes for sale.