Alternative sexier titles to this post are: “Your Escrow Officer is a NARC” or “No More Quicky Closings” or how about “The Escrow Hills have [photopress:detctive_1.jpg,thumb,alignright]Eyes”. There are some major changes brewing with how escrow will be practicing their business in 2008. Escrow companies may become “undercover
Monthly Archives: December 2007
Fed Funds Rate now at 4.25%
The FOMC announced that the Fed Funds Rate and Fed Discount Rate are both being reduced by 0.25%. Remember (I can never say this enough) this has no direct impact on your mortgage interest rate EXCEPT for home equity lines of credit which are based on Prime Rate. If you have a HELOC, your rate will decrease by 0.25%. Lucky you!
Mortgage rates are based on mortgage backed securities (bonds) and will adjust based on how the markets react to this adjustment. The 0.25% drop is pretty much what was being anticipated by the markets and has been priced into mortgage rates. This is why I’ve been urging borrowers to lock in before today and last Friday’s Jobs Report since mortgage rates (bonds) tend to react negatively to inflation.
What will happen now is everyone will be interpreting what the future may hold based on the Fed’s Statement. Although this cut is what they expected, many are disappointed with the statement:
“Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending…. core inflation have improved modestly this year, but elevated energy and commodity prices, among other factors, may put upward pressure on inflation.”
The closing comment suggests they are prepared to cut again or do what ever they feel is needed:
“The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.”
The Fed has now cut rates a full point since September. Currently the stock market is reacting negatively. I will update this post should we see dramatic changes to mortgage rates following this action by the FOMC.
Adventures In Articulated Transportation
[Editor’s note: Today, I’m excited to introduce Mike Schwagler as the newest contributor to Rain City Guide. Mike currently wears two hats in that he is an agent for John L. Scott in Redmond and also the founder of Write For Sales Copywriting. I’ve had an email dialog with Mike for a while now and I’m confident he’ll be a great contributor to the site! Mike can be reached at 425-861-1588 or writeforsales@comcast.net]
My wife, Diane, and I have lived on the Eastside for over 20 years and never tire of going to Seattle. Well, perhaps the verb going is misleading. We like being in Seattle…at least once we get there! The hubbub, the energy, the cultural activities, the people on the street, everything about it is wonderful. Seattle truly is a great city!
Going there, however, has always been the issue. In fact, I’d bet there were 10 years when we only got downtown once a year. Driving in, along with the issues of parking and navigating the downtown streets had been enough of a hassle to discourage a lot of our visits.
About a year ago Diane took a position with Virginia Mason, working downtown, and discovered something quite remarkable – our public transportation system. At first we were a little bit hesitant about this whole bus thing, so on the Saturday morning before she started her new job, we took the bus downtown. It was a dry run to figure out the best stops for her to get off and the best routes for her to walk to her new offices. Once we were comfortable with all of that, we walked a few blocks to the shopping district and ended up hanging out in downtown Seattle all day. It was a blast!
When we were done, we hopped onto the “545” (one of those long, articulated express buses) at Westlake Center and 23 minutes later we got off at the Redmond park and ride. Who needs a car?
Diane takes the bus to work every day and with the exception of a storm-related adventure last winter (which could’ve had serious consequences had she been driving a car), she has been having a great experience. She’s developed a group of bus-buddies and always has an interesting story about someone new she met on the bus. That doesn’t happen in your car unless you crash into someone.
As for me, I’ve used Metro and Sound Transit to get downtown at least fifteen times, for seminars, shopping and just for fun. I hop onto the “545” right outside my office here in Redmond (how convenient is that?), do what I have to do downtown, and then meet Diane after work for a bite to eat or to just stroll around with my gal in the Emerald City.
The Baby or the Bathwater
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Are we throwing out a program that works, the FHA Down Payment Assistance Program, in this case the baby, while trying to fix the sub prime mess, the bathwater? I guess it all boils down to how valuable home ownership is and how well it helps drive a healthy economy.
A lot of realtors, including myself, have used an FHA non profit down payment assistance program (NDPA) with borrowers that want to own a home but can’t save a down payment fast enough to keep up with rising home prices. FHA programs, like Nehemiah or AmeriDream, allow more options for buyers, including the gifted down payment portion, and now that zero down payments are hard to find, this program is needed even more.
The non profit down payment assistance programs are going to be stopped in February unless Congress votes to extend the program. In the HUD Appropriations bill, congressional members are being influenced by a study done by HUD that shows that the default rate from the non profit down payment programs is 1% higher than other down payment assisted loan programs.
However, there is a further study by George Mason University that contradicts the HUD study and calls into question the validity of that statistics. For instance, the HUD sampling was limited to four US cities that had a higher than normal use of the programs and decreasing home values. Because of this study, the bill extending the programs may not pass.
The George Mason University study as well as the HUD bill is available by emailing me. It is long and takes time to get through, but here are the key findings, extremely edited!
1. 627,000 NDPA loans in 5 years.
2. National economic benefits as a result of these loans in the same time period is 4 times the estimated costs.
3. Those using this program had total wealth growth of 9.6 billion of this period.
4. NDPA homeowners contributed 228 million in property taxes in that time period.
5. NDPA homeowners generated 7293 jobs just in using more utilities due to their home ownership
6. Spending on household items created 60794 jobs, 1.8 billion in personal income, and 5.8 billion in total economic output.
Senator Patty Murray has voted against this bill possibly because of the influence of the HUD study. I hope she changes her mind. Since over 95% of all homebuyers using this program have not defaulted, we would be punishing those hopeful buyers and throwing out a wonderful and productive program.
Wow! What a ride!
About an hour ago I walked out of Move’s offices for the last time as an employee. For those of you who’ve been around RCG for a while, you’ll remember that I took a position as Director of Consumer Innovations at Move with great enthusiasm back in April of 2006. Taking the position was a huge deal for me and my family and now that I’ve decided to leave,
The amount I learned working with the people at Move was incredible. I enjoyed learning a tremendous amount about product development, marketing, PR, corporate development and much more in little over a year-and-a-half. I was laughing with another employee earlier today because we both felt we had gotten an MBA’s worth of education in an incredible short-time period.
Interestingly, I’m actually more bullish on Move now then at any time since I started getting my hands dirty at the company. The new members of the executive team are bringing on top-notch talent and starting to make some hard, but necessarily, decisions around product development and business models. My decision to leave had very little to do with the long-term prospects of the company and much more to do with the role that I would be able to play in these changes. (Plus, it didn’t hurt that some opportunities opened up in the world of consulting that were just too good to pass up.) 🙂
Talking of outside opportunities… Now that I’m no longer affiliated with Move, I plan to talk (a lot) more about ways that real estate professionals can engage consumers using online technologies. But rather than clutter up this perfectly good blog about Seattle real estate with my industry rambles, I’ve decided to focus those conversations on 4realz.net.
Please consider joining me on 4realz.net. I promise to be interesting enough that it will become a must-read (and a must-feed) for anyone interested in the future fringes of the real estate industry.
Four plus inches of rain
It was a wet day yesterday, what with landslides and 4+ inches of rain (7+ near Bremerton). Four inches is a little over 11% of Seattle’s annual 36 inches of rainfall. I know of at least a couple of people who were pulling soggy belongings out of their basements last night. My stuff: not on the floor of my basement. I learned that one early on. If you’re collecting your damp belongings from your basement, you can count your blessings that you can still get into your home and there is still stuff there – some people aren’t so lucky.
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"Hope Now" program to curb delinquency/foreclosures fraught with problems
The Hope Now program currently being proposed in the other Washington is designed to assist current homeowners with Adjustable Rate Mortgages (ARM’s) in which their ARM’s may adjust upward causing financial hardship. An issue of immense concern is how do you sift through the thousands of homeowners and qualify those who’s mortgages are about to recast to some ugly interest rate? Further, how do all the stakeholders and investors of these mortgages see this playing out—that’s the part Attorneys will have to fight about (what say you Attorneys?).
If the Government players in this program, including one of the lead Conductor’s in this orchestra, Treasury Secretary Paulson, have their way, the investors of these loans will have to be a good sport and play along, never mind losing copious amounts of money, nor the other legal implications.
‘The modification of existing contracts, without the full and willing agreement of all parties to these contracts, risks significant erosion of 200 years of contract law,’ said Joshua Rosner, managing director at an independent research firm in New York.
Which St. Joseph statue?
[photopress:st_joseph.jpg,thumb,alignright]A couple of weeks ago I was contacted by one of the producers of The Story with Dick Gordon to do a radio show on the practice of burying St. Joseph statues. The call came to me as a result of a brief interview and quote of mine in The Wall Street Journal. You may have seen it in The Seattle Times when they picked it up and ran it on more than half of the of the Real Estate section’s front page. I’ve even seen articles complaining that WSJ’s original article was the most emailed link, over and above many more “important” articles.
I’m not going to rehash the story of whether or not you should. The link to the radio program gives my general feelings on that issue. This post is to help with the confusion of which statue one should use. You will notice that the photos in The Wall Street Journal’s piece show two completely different St. Joseph statues. The first one is more like the one on the left. The image further down in the article is like the one on the right.
Can you order St. Joseph Online? Or do you have to make the trek to Kaufer’s at 9th and Harrison and get the statue shown on the left, sold separately in the box on the lowest shelf, and not the version sold in the kits?
I recently accompanied an agent to Kaufer’s who needed two statues for two homes and advised her to buy one of each. St. Joseph is one of the saints who has more than one cause for intercession. He is the Patron Saint of Families and he is the Patron Saint of Workers. For those with a more curious interest here is a list of the Patron Saints of various endeavors and maladies.
So if the Father of the family has been relocated and his concern is for the separation of his family, then the statue of St. Joseph holding Jesus may be more appropriate than the one sold in the kit. If the family is in distress as a result of the home sale or purchase, then St. Joseph as Father of Jesus shown on the left is the statue to use. If you are an agent who wants to sell the house as a result of your hard work and efforts, then you would use the statue on the right. This is the one sold in the kits and the one an agent would use most of the time.
For flippers who have done everything well and right within their power to improve the home, and have been reasonable in your sale price expectations, well then possibly St. Joseph on the right will do the trick. But if you have piled up the carrying costs to the point where selling anywhere near the price needed to make you whole is even remotely possible, you may want the statue sold just to the left of St. Joseph on that bottom shelf at Kaufer’s. It is the Statue of St. Jude. The Patron Saint of Lost Causes.
Snowing in Seattle
Seems hard to believe that just last week it was sunny and bright with not the faintest hope of snow. One of my Thanksgiving houseguests from California was hoping to see snow falling, something he has never seen in his life.
I snapped a couple of shots for Mike to show that his prayers were answered. Just a week or so late.
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