Instructor of the Year
Jillayne Schlicke wins
INSTRUCTOR OF THE YEAR AWARD!!!
from the King County Association of Realtors as voted by the Realtors and Jillayne’s students.
WOOHOO!!!!
C O N G R A T U L A T I O N S !!! JILLAYNE!
YOU GO GIRL!!!!!
9 lbs, 4 oz – perfect – Mom and Dad happy and well.
Savannah Jane Fleck
This is Part Four 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.
In this article we will address current government intervention as well as discuss possible future intervention programs. For other preventative measures, check out the other parts of this series:
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
Current government intervention in the foreclosure process has taken many forms. Some states such as California, Florida, New York, New Jersey, Massachusetts, Philadelphia, and Illinois have discussed, proposed, or passed legislation in favor of a foreclosure moratorium. In order to avoid state mandates, some companies placed a temporary halt on foreclosures over the holidays. These companies include Indymac, Countrywide, WAMU, and loans held in the Fannie/Freddie portfolios. Recall that during the real estate bubble run-up, government backed loans fell out of favor. Many subprime loans are held by lender/servicers in pools of mortgage backed securities. The foreclosure moratorium didn’t reach those homeowners.
State moratoriums give homeowners more time to possibly refinance into a Hope for Homeowners loan or complete a short sale and the moratorium also gives banks more time to get caught up on all the backlog of foreclosure paperwork.
Financial Economics Analyst Edward Vincent Murphy, in his Sept 12, 2008 report “Economic Analysis of a Mortgage Foreclosure Moratorium,
Rhonda has a post over at her Blog regarding the low interest rate environment that prevails today. Rates under 5% are hard to believe even for very seasoned agents, loan officers and those in the title and escrow profession.
The last three weeks have been remarkable and quite frankly Lynlee and I, and I presume many others in lending and title/escrow business, have had little time to breath under the refinance work that came in during December and the Holiday Season. I’m not complaining about work but, only speaking for myself, it was an incredibly difficult (and continues) period because 2008 was the Christmas that really never was. It is the downside of being in the escrow business. Your time.
Lynlee and I worked numerous nights into the wee hours at the office. On the 23rd, we worked until nearly midnight to get funding packages ready for overnight delivery to lenders after a full day work and scrambled for loan officers and agents to get borrowers signed from Tacoma to Bellevue to Everett. Oh, did I mention the snow? It wreaked havoc on FedEx and UPS overnight deliveries for payoff checks and loan documents to lenders all across the country. Some documents are seemingly lost forever, others just arriving this week.
I had to chain up for days to get to get out of my driveway and the hill I live on to get to the office, only to take them off once on the freeways, only to put them back on to get to clients homes in the hills of Bellevue and Tacoma and beyond.
The stories are plentiful of owners of other businesses such as mortgage brokers and title offices who had to pick up staff such as underwriters, processors, funders among others to get them into the office to work on transactions so that loan officer and agents transactions closed on time.
One late evening on my way home I dropped off documents and closing Settlement Statements to a local lender, only to peer into the lower level windows and see funding staff working on files while it snowed hard outside. Glanced at my watch…9pm. Didn’t we receive funding conditions from these gals via e-mail at what time???? Oh yes, it was 5:30 AM ! Still there at 9pm.
Who is going to say “thank you,” to those two ladies and all the others that work behind the scenes to make your transactions go without a hitch, while sacrificing time lost with family during the Holidays.
I did. How about you?
To all the Title Officers, escrow officers, processors (big thanks to them), underwriters (unbelievably slammed), funding depts. and other support staff—those who are never in the limelight, don’t have sales awards or other platitudes adoring their offices, but come with their work ethic, lunch pail and get the job done, all the while wondering about the economy, how prior co-workers are coping with layoffs etc.. ……………..you deserve a great big “Thanks.”
– Tim & Lynlee, Legacy Escrow
#10 – You may lose your job. When you don’t pay your rent, they put you on the street in 20 days. When you don’t pay your mortgage payment, they don’t put you on the street for at least 8 months.#8 – Many a marriage has been saved…by buying a house with two staircases.
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#7 – You just read *page 114* of Harlan Coben’s “Promise Me” (see below), and you live in a “garden apartment”.
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#6 – Your girlfriend is demanding equal treatment to your wife.
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#5 – Your boyfriend is demanding equal treatment to your wife.
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#4 – Your mother-in-law just bought a 1 way ticket to your apartment
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#3 – Your bank account is bigger than your home office
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#2 – God said: Your real estate agent, banker and mortgage rep all need you to buy a house, right NOW!. This is a direct message from God. No kidding.
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NUMBER ONE: Your 4 year old is riding the dog, and dragging the baby around like a pull toy, because she needs a yard and swing set.
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*Page 114* “lived alone in the same crappy “garden” apartment for more than a decade…they call them “garden” though the only thing that seemed to grow was the monotonous red brick…sturdy structures with the personality of prison cells, way stations for people on their way up or down and for a few, stuck in a certain personal-life purgatory.”
Frustrated Home Buyer
Remember when JFK said we would go to the moon? Remember the excitement of being part of something new!? Let’s create a big, fat wish today that we, in the Seattle area, want to constantly be the prototype for the Country with regard to an MLS and how it functions.
We are the trendsetters (we being Seattle) as to The Internet and how people use it.
Here’s a “workshop” post. I think “the mls” is “broke” and it needs fixing. You decide for yourself after reading this. We all “accept” that people start their search on the Internet…right?
Let’s all take a good, hard look at HOW they start their search on the internet.
OK…I’m Average Joe and I think I want to move to Kirkland. I go to the internet and I Google “Kirkland” and I find this super-duper site provided by The City of Kirkland. It tells me:
It gives an an “on demand” video stream of all of the Kirkland Council meetings and provides the minutes of the meetings, so I can see if it’s the kind of place I might like to live.
There’s even a link to Kirkland TV on every topic I might be interested in…WOW! I like this place called Kirkland. They certainly care about keeping everyone informed, and they clearly embrace new technologies. My kind of place.
Bur where in Kirkland might be the best place for me? OK…lets Google “Kirkland Neighborhoods”. I find this great link to everything I ever wanted to know about Kirkland Neighborhoods. I find the cool Explore Kirkland site and even Walking Maps sorted by the various Neighborhoods. Wow! Every Neighborhood in Kirkland has it’s own Association! What a wonderful sense of community, and they certainly take their Neighborhoods seriously!
Isn’t this Super-Cool!!! I can figure out everything I need to know in my jammies, without leaving the house…at 1 a.m! That’s the kind of place I want to live in! They have embraced Technology! Woohoo!
My world’s a better place because the City of Kirkland cared enough to make everything they do, and everything I need to know, accessible on the Internet! I’m going to buy a house in Kirkland! YAY!!!
SO JOE TAKES THE KIRKLAND NEIGHBORHOOD MAP (that he found on the Internet) TO A REAL ESTATE OFFICE, because he doesn’t know which Neighborhoods of these he can afford to live in.
BEFORE looking at houses on the Internet…he has a few questions.
Agent: Can I help you?
Joe: Can you please hit a button on your computer over there, and tell me the median price of a home in each of these neighborhoods?
Agent: What’s your price range? I’ll be happy to show you some homes right now!
Joe: Well..no…I really just want to know which of these neighborhoods on this map here from the City I can afford to live in. I’m not ready to look at homes yet.
Agent: Do you have a pre-approval letter? I’ll be happy to get our lender over here and tell you how much you can afford.
Joe: (starting to get angry) Lady, I just want to know the median price of these neighborhoods! Can you help me or not!? OK…let me make this easier for you (you idiot). Just tell me the median price of this neighborhood. This one. Here on the map of Kirkland Neighborhoods. “Lakeview” Just go over to the computer and hit a couple of buttons and tell me what the median price of Lakeview is, PLEASE!
Agent: Well, you don’t need to get angry, sir. I am more than happy to help you, but you OBVIOUSLY don’t know what you are doing, because the mls doesn’t HAVE a neighborhood called “Lakeview”, (Mr. Smartypants).
Joe: Hmmm? How about this one over here…”Norkirk”?
Agent: “We” call that East of Market. kindof. When you get down here some agents call that “Downtown”. Some agents just put in Kirkland for all of it. Would you like me to do a search by Zip Code?
Joe: NO! I don’t want you to do a search by Zip Code! According to this great map the City “gave me” there are a dozen neighborhoods! I don’t want TWO zip code answers! I want TWELVE median price answers you freakin’ moron! One for each of these REAL Neighborhoods!!!
(Joe leaves in a huff. Agent says to agent next to them in the office, “one of those Microsoftees. Boy are they a pain in the ass” They think they know everything.)
Joe goes into a different real estate office:
Joe: Can you please hit a button on your computer over there, and tell me the median price of a home in each of these neighborhoods? Joe hands the agent the same great map the City of Kirkland “gave him” on their cool site.
Agent: Here’s “our” map. This is the one “WE” use. It’s broken down by all of these code numbers that only agents know.
Joe: Can you give me a few minutes to study this thing, because all of my research so far geared me to searching by the neighborhoods. The real neighborhoods. The one’s the City and the people who live here use. (Joe realizes he’s not going to get anywhere until he figures out this stupid “code map”, so he gives it a quick study.)
Agent: Do you have a pre-approval letter? Do you want to go see some houses today, because it’s really a Great Time to Buy! Can I make some appointments while you study “our” map? How many bedrooms do you want? Do you have children? Pets? Where do you work? Here’s some testimonials from some of my clients who love me. Here’s a link to my website with lots of useful information. Here’s a Buyer’s Guide to help you understand all the things I’m going to be doing for you.
Joe: (I wish this agent would shut the fck up, so I can look at this map.) You know what. I think I’m going to go get something to eat. Can I borrow this code map to read while I’m eating?
Agent: What’s your price range? I’ll line up a few houses to see while you’re eating lunch!
Joe: $750,000
(Joe leaves with the secret code map and never returns. Agent says to agent next to him, “Well…what the heck is wrong with that guy? Where IS he? I’ve made five appointments to see these houses. What am I going to do?” Other agent, “You know what they say, “Buyers are Liars”.)
Joe tries to decipher the secret code map.
Joes’ Wife: Honey, did you figure out which neighborhoods we can afford in Kirkand?
Joe: Well, I’ve spent all day in two different real estate offices, and I can’t get a straight answer out of anyone! This stupid realtor code map doesn’t help at all!!! They are calling ALL of Kirland, Area 560!
Joe’s Wife: Honey…I know you’ve wasted a whole day with this stupid real estate agent stuff. We don’t need an agent! Let’s just go Google “mls Kirkland”and look at some houses and calm down, OK?
Joe: OK. Sorry. I didn’t mean to take it out on you. I’m just SO FRUSTRATED!
Joe Googles “mls Kirkland”. He finds Kirkland Home Search – The MLS Online He clicks “home search”. He changes the drop down to “King County”. He clicks on “Kirkland”. He puts in his real price, not the lie he told the agent to get the heck out of that office. He puts in minimum of 3 bedrooms. It says “10 Actives Found”.
Joe: This site says there are only 10 houses in Kirkland priced between $500,000 and $525,000. I thought there was a record number of houses for sale? This can’t be right!
Joe’s Wife: Try $450,000 to $550,000.
Joe: OK. That’s better. It says 58. Still, not as many as I was expecting based on what I’ve been reading in the paper. A whole City only has 58 houses in our price range? Let’s see if I can figure out which of these Neighborhoods they are in. (He clicks “View Actives List”.) Honey? What do you think “active” means? Can’t they just say For Sale!?
Joe’s Wife: Now down’t get started. Just get to the houses, OK? What do you see?
(Joe says FCK…it’s starting at the most expensive house at $550,000. I don’t want her to see this. Good, here’s a re-sort button from lo to hi.)
Joe: One second, honey. OK…here’s a really nice one for $450,000.
Joe’s Wife: That looks nice. What’s a “split-entry”?
Joe: I don’t know. Can’t these G’damn agents speak English!!!
Joe’s Wife: Calm down. What neighborhood is it in?
Joe: I’m looking at the pictures. It has wood floors. Those look like new windows. Looks pretty nice.
Joe’s Wife: What neighborhood is it in?
Joe: It doesn’t say. It says “Kirkland”. Here’s a map of where it is…I can see a train track. FCK…THIS ISN’T WORKING!!!
Joe Wife: Honey, I think we really DO need to get an agent.
Joe: NO! Fck that! That’s why they are doing this! They are making it impossible for me to do anything! All I wanted was the median price of the neighborhoods in Kirkland. Is that too much to ask!?!? No. No agent. They are not going to win! NO!
Joe’s Wife: (Crying)
Joe: (turns on the football game.)
I think it’s broke and needs fixing. What do you think?
I recently heard the term “balloon frame” from someone on Twitter discussing the fire hazards and potential dangers to firemen. It was a local person, and so it caught my attention. I have never heard a home inspector advise a home owner that they were buying a home with a “balloon frame”. Nor have I ever heard a home inspector note the potential hazards.
Here are a couple of links regarding balloon homes and firemen that the Twitterer was kind enough to send me.
I would appreciate comments from anyone having knowledge on this topic.
Thank you.
We have a few hours to go before we ring in the New Year of 2009. But I wanted to take a few moments to thank all of our readers, my fellow writers, and the many people who comment here, for making Rain City Guide the special place that it is.
Tomorrow will mark my third anniversary of blogging. Honestly, I can hardly imagine my world without it. It’s been a rewarding experience and, I value my “blogfriends” and my “blogclients” more than…well, more than lots of things.
Tonight at midnight, I’ll take a cup of kindess, probably hot chocolate, and think of all the special people in my life. Not the least of which being, Dustin and Anna Luther, Jillayne Schlicke, Rhonda Porter, Tim and Lynlee Kane, Robbie, Steph and Harrison Paplin, Galen Ward, Deborah Burns…these wonderful people are part of my extended family.
And as the Coke/Walmart young man said: “When you stock up on Joy, there’s enough to go round”.
Thank you everyone, for being part of the Joy of my Life. Many Happy Returns…
I recently received an email from Christoper Hain of Terra Firma L.A., which caused me to view the chart below. Often people try to take general median percentages and apply them in the wrong place.
The current median 12 month change in King County is down 12%. But if you get a house for 12% less where it is down 30%, that’s not a great buy. If you get a house for 12% less where it is only down 7%, that’s a good (not great) buy.
Chris’ article drives home the point that in one agent’s “service area”, which is not really very big, there are areas down 7% vs. 42%…HUGE SPREAD!!!
Plus he asks the question that is not discussed often enough:
“You could read either end of this chart in completely opposite ways. Perhaps, the ones that have fallen furthest are the ones you want to buy in 2009. Or perhaps, the ones that have held their value best are the ones to bet on long-term.”
I’ll be doing some neighborhood breakdowns for Seattle and Eastside today, and finding our highs and lows in my service areas. I’ll post a graph similar to the one for L.A. below, as related to our immediate area.
Look at Beverly Hills, as example. Even in that small area (which due to the TV show most think of as 90210) there is a variance in % down for the three different Beverly Hills Zip Codes of 90210, 90211 and 90212. Big difference between 24% down and 42% down…in one small area.
I’m going to try to do the neighborhoods accurately, vs. Zip Code. i.e. Wallingford, Green Lake, East of Market, West of Market, etc… I have to use a polygon search feature for that. It’s time consuming, but given this is still “the holidays”, now would be a good time for me to expend the excess effort, and the results will be of value in tracking changes during 2009.
7% down to 42% down…it boggle’s the mind. Here’s Chris’ chart:
Housing prices down 7%? or 42?
This may seem like an odd analogy, but I remember this story about my Mom when she was having her 7th baby. She was in “a ward” with only curtains drawn around each bed. She overheard some people telling the lady in the bed next to her that she should have “her tubes tied”. They were explaining the procedure to her. My Mom jumped out of bed, ripped open the curtain of the woman next to her and yelled “I want one of those!!!” The people were embarassed and said, “I’m sorry but we’re only allowed to offer these to single women on welfare having their third child. You weren’t supposed to hear that.”
Yes…I’m suggesting that to some extent The Information Age is in part responsible for the Subprime Crisis. Subprime loans did not come into being in late 2003. 2003 is the year more people said “I want one of those!!!”
Couple that with the fact that the World as it IS has come to the conclusion that spinning words (like Death Tax vs. Estate Tax) is a persuasion tool. We used to say, “You can’t get a good loan, but we can find you a BAD loan, if that’s what you want.” Most people said, “No, thank you…we’ll wait.” Loans had letters that were easy to understand. A Paper = most lenders. B through D Paper was a different lender for buyers with one or a few correctable issues over the short term. Z Paper was basically the Mob with a license to lend.
People understood the alphabet, and they knew that a C-Mortgage was not as good as an A-Mortgage. Life was more Transparent back then. The need for Transparency today is largely due to the fact that professionals hide truth behind more persuasive language. Don’t get me started on Listing Agent vs. Agent for the Seller. Everytime I hear a buyer say “The listing agent was MY agent, looking out for me (and I heard it twice in the last 4 days) I want to scream. How the heck can you believe that “the agent for the seller” is looking out for you, the buyer? Maybe because they use the words “listing agent” for that reason. But that’s a different, though related, subject.
Couple that with small businesses (who only offered Sub-Prime loans) getting gobbled up by larger “one stop shops”. All of a sudden the lender could give you an A Paper loan or a C Paper loan without a loan denial in between. When there was a loan denial in between, the buyer had a legal out with the Finance Contingency. When the approval came…but it was for “a bad loan”, the buyer was locked into the transaction with no legal out.
Couple that with Real Estate Agents only caring if the buyer could get a loan, period…without caring on what basis. Couple all of THAT with the fact that many Finance Contingencies did not give a buyer “a legal out” if they could not get a conservative “A Paper” loan, but could qualify for a SubPrime loan.
There are many factors that contributed to this mess. Perhaps a fuller understanding of how the world changing in many and small ways led do the catostrophic consequence, will help all people who played a small part in the Country’s demise, change their small part in The Crime of the Decade. In the end it was mostly No victims; no villains, just a lot of small tweaks and changes that snowballed into a Crisis Situation.
Let’s go back to the world as it was for a minute.
1) Conventional Loan = 20% downpayment, 28% of gross income for housing payment, 36% of gross income for total recurring debt including the housing payment. An 8% spread for debt payments. If debt payments equalled 10%, then the housing portion was reduced to 26%. There were no Credit Scores. All credit issues were underwritten by hand and each and every negative item was explained by the buyer, in writing. A separate letter for each negative item.
2) FHA Loan = slightly more lenient terms and dramatically reduced downpayment requirement. The biggest reason to use FHA vs. Convential being the downpayment requirement, not the looser standards as to ratio and credit issues. Almost no downpayment – 3% vs. 20% at the time.
The first change was a long time ago! It started as a quiet whisper, like the people talking behind the curtain in the next bed from my Mom. Some people were getting loans with only 5% downpayment, conventional. When I started in real estate in 1990, most people’s perception was that they needed 20% downpayment or FHA. Few knew that they could get a 5% down conventional.
The beginning of all of these problems goes all the way back to there. Conventional lending guidelines made FHA less desirable. The primary purpose of FHA was low downpayment…no longer a big spread between the two.
THEN in the early 90s, the lenders started stretching ratios from 28% to 33% of gross income on “the front end” BUT the back end was only stretched to 38%, at first. Stretched ratios entered the scene ONLY for people with little or no debt payments (just like tubal ligations being only for single women on welfare). It had a stated and targeted “appropriate” audience.
When cars started costing more, lenders had to start figuring out a way for people to buy a house who already owned a car. In many cases in the early nineties (before car leasing became popular, and probably why car leasing became popular) most young couples who each owned a car, could not buy a house. The two car payments sucked up their whole back end ratio and subtracted from their front end ratio. “I thought we could get a mortgage for 28% of our gross income or 33% of our gross income?” “Well, yes…but the combined value of your two new cars is almost as much as the house you are trying to purchase!”
Everyone agreed that people needed both cars and houses…so ratios grew and grew and grew. So, Sniglet, the changes in FHA are NOT fascinating at all. In fact FHA hasn’t changed all that much. What’s happening is that lending standards on the Conventional side are creeping back to “The Way We Were”, putting the spotlight back on FHA, which is closer to the way IT was IF you cut out “automated” approvals.
Before you even think about buying a house, get your “other debt” issues down to no more than 10% of your gross income. If you make $45,000 a year and your wife makes $25,000 a year, and you each have a car with a $400 monthly payment, you are spending 14% of your gross income on car payments!
Of course this Rise and Fall story would clearly fill a book. But until everyone understands that a bailout or bandaid in ONE area only (or two) is not going to fix what ails this Country, we cannot have HOPE…and HOPE is what we need more than bailouts and fixes.
As I said in one of my previous posts: “2009 will not be a year of great change. It will be a year of Great Hope for Change, one small step at a time, via you and me acting the best we can in each moment.” Falsely creating hope with “Talking Points” and “Good News” articles is NOT the solution. Expecting any one source to be the Messiah, is NOT the solution. Every single person doing their part to improve the situation…is the only long term solution. That means YOU!
Stop looking for someone else to come up with an answer. Get out your teacup, and start emptying out your own little piece of the ocean.
I kissed a girl once. I was almost 50 years old and was in the middle of a divorce from a 20 year marriage. I just wanted to make sure before I started over again, that I wasn’t starting out on a faulty premise that had been “fed” to me. 2009 is the year to test your foundations…so that when “The Rocovery” does come…it isn’t the old mess wrapped up in a bright shiny red bow.
