Category Archives: Investing

Foreclosure; Letting Go and Rebuilding

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This is Part Five of a series of articles on foreclosures.
This article does not constitute legal advice.
Foreclosure laws vary from state to state.
Homeowners in financial distress should always hire legal counsel. Call your local state bar association for a referral.  Reduced or free legal aid may be available in some states. Ask for a referral from your state Bar Association or through a LOCAL HUD-Approved Housing Counseling Agency.

Part one: Foreclosure; Losing the American Dream
Part two: Options for Homeowners Facing Foreclosure
Part three: Loan Modifications
Part four: Government Intervention in Foreclosure
Part five: Foreclosure; Letting Go and Rebuilding

In part five, we visit Cap and Maria, who went through the foreclosure process and began rebuilding their lives.

The Captain and Maria purchased a house in 2006 using a Pay Option ARM from Wachovia.  Their mortgage broker explained the “pick a pay

Fannie Mae Increases the Allowance for Financed Properties Owned

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It is really challenging to keep up with our constant changing guidelines.   Just this morning I was commenting over at the Seattle PI Real Estate Blog about the conventional guidelines permitting only four financed properties at a time for a borrower (more than four financed properties–no conventional mortgage for you!).    Moments ago, I received this updating Fannie’s guidelines (Announcement 09-02):

Multiple Mortgages to the Same Borrower
To support prudent lending for housing investment, Fannie Mae is changing our current limit of four financed properties per borrower. We will allow five to ten financed properties per borrower, with certain eligibility and underwriting requirements, including a 720 minimum credit score and 70-75% maximum LTV/CLTV/HCLTV (depending on the transaction and property type). The requirements apply to any loan being delivered to Fannie Mae, regardless of whether Fannie Mae is the investor on the borrower’s other mortgages.

Just a reminder that any mortgage guidelines that you find on the internet may no longer apply!

I better hop on over to the PI and correct my comment from this morning.  🙂

What will they say in 20 years about today's new homes?

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rcg1When I look at new construction for sale I often wonder if the architect and the builder ever spoke or better yet, if the architect or the builder would ever live in the house they designed/built (I am a builder). I seem to be asking myself that question even more lately as I tour homes built from about 2005+.

I wonder, besides the financial crisis, what will this era’s theme of houses be?
It will for sure be about townhomes, but (on average) I am afraid it will also equate to poorly designed and constructed too.

I was touring a home today that made me wonder if the builder ever asked the question, “where will the couch go

Buyer Beware!!! – $8,000 Tax Credit?

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UPDATE: signed and passed 2/17 at $8,000. See more details here.

Original post below does not indicate the change to “must not have owned a home during the last 3 years” which was added to the final bill before it was passed.

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If you are currently in the process of buying a house, be aware that there is a $15,000  ($8,000) Tax Credit in the new stimulus bill which may, or may not, pass tonight. Then it has to be signed, hopefully by President’s Day they are saying.  Then we have to watch the effective date closely “for homes closed on or after ?” Likely that will be on or after the day the bill is signed, which presumably will be some time during the month of February.

Just a day or so ago an RCG reader asked if she could take the old credit on this return, and she bought ONE DAY too early to get the credit!  Aaaargh…you don’t want that to be you, especially since this credit in this stimulus package is not a loan and is doubled (as of last night) to $15,000 as it stands right now!

That’s a lot of moolah to forfeit by closing one day too early!

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There are a lot of discussions all over the internet, the news and Twitter about the pros and cons of this, but very few warning buyers who are currently in escrow or looking at houses today!  Watch this closely, and sellers should be prepared to move the close date a day or two, if needed.  NO ONE wants to be responsible for a buyer losing out on a $15,000 (an $8,000) credit!

This is like every SELLER getting a $15,000 (an $8,000) price reduction, complements of Uncle Sam and President Obama!  Big NEWS for both buyers AND sellers of homes. Watch the news VERY closely in the coming days.

Kids and Foreclosure

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This morning I received an email of a poem that my niece wrote for a school assignment she read to her classmates.  

Just Maybe

I came home from school to a notice on the door. 

It’s not the first time, it’s been happening more and more.

This time it’s our water, last month the gas

Who knows what it’ll be next time, the money just doesn’t last.

This month we’ll make the car payment, we’ll hold off on cable for now.

Next month, we’ll work on credit cards, it’s hard, we’ll have to figure out how.

Maybe that will be enough to save the house.  Just maybe.

Don’t cry, honey, and don’t answer the phone.

Maybe I can get a second job, or maybe a family loan.

I can sell my pet hamster, one less mouth to feed.

I will baby-sit, mow lawns, go without, whatever you need.

Don’t worry, she says, tears on her face,

You shouldn’t have to struggle to save this place.

Maybe that will be enough to save the house.  Just maybe.

I came home from school to moving trucks outside.

My belongings in boxes, my tears I try to hide.

We tried in vain, and tried so hard

New house, new school, new friendships to start.

I’m nervous and scared, but cover it with a smile

I’ll be back on my feet, but it may take awhile.

Just wasn’t enough to save the house.  Just wasn’t.

by Shayann ~ 16 years old

Her words touch me…yes, she’s my sweetie-pie and I’m so sorry that her family lost their home last year.   I wonder how many other classmates of Shayann and kids like her are feeling the pain of foreclosure.    

Virtual Discrimination by Real Estate Brokers

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A real estate broker who operates in 23 states has filed a complaint with Federal authorities against the local MLS for “restraint of trade” practices, according to Inman News. Ryan Gehris, who is a broker of record for flat-fee real estate company Housepad.com in 10 of those states, alleges that the North Carolina MLS’s requirement to physically attend specific MLS orientation classes discriminates against non-traditional web-based brokerages. I think he has a point.

handcuffed to laptop

Do I have to be here?

While I can see an argument for the advantages of attending specific events, I think that the mandatory requirement of attendance takes it too far. I think of it like networking – It makes sense to do it, but if you don’t it’s your business that is likely to suffer and that’s your choice.

In this age of WebEx, Skype or UStream.TV online meetings, it just isn’t necessary to physically go somewhere for most types of training, especially computer training. And the cost and time concerns associated with attending far away events can make it prohibitive, especially for agents that have other obligations and commitments.

The spokesperson for the MLS said the training is “not intended to be a burden to participants and is required because of the substantial changes in technology.” But if people can get a college degree with online training, it’s hard to imagine why basic MLS user training requires someone’s physical presence to be effective.

The real reason may be that the MLS would like to make it hard for non-brick-and-mortar business models because they do not like the competition. I say let their business model succeed or fail on it’s own merits, not because of discriminatory road blocks put in their way.

Should builders and banks receive an excise tax exemption as WA State faces a budget deficit?

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House Bill 1495 has been introduced into the legislature and is now in committee.  In these times filled with hope, I am hoping this bill dies or at least comes out looking substantially different.  Let’s take a look.

AN ACT Relating to real estate excise tax exemptions to stabilize neighborhoods…

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
The legislature finds that there is a substantial inventory of unsold or foreclosed vacant homes on the market that is driving property values down and destabilizing neighborhoods. These homes also present an opportunity to provide affordable homes to low-income families, addressing some of the unmet need for affordable housing in the state of Washington. The legislature also finds that providing targeted incentives to housing developers will stimulate the sale of these vacant homes to low-income buyers now and stabilize neighborhoods affected by this growing inventory. The legislature intends to provide such incentives through excise tax relief on sales of homes to low-income first-time homebuyers.

I’ve been asking Realtors in all my classes to begin watching the percentage of financially distressed sellers with homes for sale in their market area.  Agents can do an MLS keyword search using terms such as “short sale,

How to stop escrow madness in an instant

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The most wonderful, beautiful and innocent thing stopped the frenzy,  processes and insanity of end of month escrow transactions in an instant.  That thing was the glow of a sharply dressed very elderly woman who happened to find her way to our office and came to our front reception counter and said,

“Hi, can you help me, I’m lost and I can’t find my way home.”

In the midst of all the domestic and world issues, real estate problems, war conflicts, economic woes, layoffs, stock market crashes, corruptness of Bank and Investment CEO’s, politicians and everything else that batters our minds;  for me, it all became meaningless and subordinate to this gracious lady and her memory ailment. At that point I didn’t care about anything but her and helping her find her way home, which I did.

Escrow.  You just never know what each day will bring.

And the Fed…

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With the Fed’s key rates all ready at a rock bottom 0-0.25%, no one anticipates rates to be lowered.  Any reaction will be from the release of their announcement which is anytime. 

Dan Green, one of my favorite mortgage bloggers, is documenting the impact of today’s Fed announcement to mortgage rates via Twitter.   Check it out.

I’ll update this post in a few moments with my two cents following the FOMC announcement.

Update 11:20 am.  

The Fed leaves the Funds Rate unchanged stating that “the economy has weakened furthe”r since their last meeting in  December.   They also reaffirmed their committment to continue buying mortgage backed securities:

“The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. The focus of the Committee’s policy is to support the functioning of financial markets and stimulate the economy through open market operations and other measures that are likely to keep the size of the Federal Reserve’s balance sheet at a high level. The Federal Reserve continues to purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand the quantity of such purchases and the duration of the purchase program as conditions warrant.”

Click here for today’s FOMC Statement and be sure to follow Dan Green’s reporting on the reaction of mortgage backed securities.