Category Archives: Seattle Real Estate Stats

A D-I-Y Don't: Divorce

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Legal disclosure:  I am not an attorney, nor do I play one on TV.  Please do seek legal council if you are considering a divorce and before DIY legal documents relating to your marriage or mortgage or real estate.  🙂

I recently met with newlyweds who wanted to start developing a plan to purchase a home together.   The bride was previously married and terminated that union with a do-it-yourself divorce decree and saved money (or thought she did) by not utilizing an attorney.  When they did this several years ago, it made sense to them.  They were amicable and agreed to how they would divvy up their debts and what assets they had acquired at that time.   He would keep the house and the mortgage.   She would sign and record a quit claim deed.    This is where the trouble begins.

A quit claim deed does not remove borrowers from the mortgage and a divorce decree does not remove one’s liability from a mortgage (or other joint debts).

In my clients case, she is now liable for a mortgage on a property she has no interest in except for the debt. 

You would think a borrower could contact the lender and ask to have the mortgage modified by removing one of the ex’s assuming the person retaining the property qualifies for the debt on their own.    This is just not the case.

My client’s ex-husband decided to no longer pay the mortgage.   Foreclosure proceedings are scheduled to begin next month.   Her credit score has plummeted and the mortgage company couldn’t care less about her situation.   She is being sucked into the foreclosure on a property she has not lived in for years.    And she will not be able to qualify for a mortgage at this time.  It is emotionally and financially devastating.

Unfortunately, the only way to safely remove someone’s responsibility to the mortgage is by paying it off.   This can by accomplished by:

  1. Cash (paying off the mortgage)
  2. Selling the property
  3. Refinancing the mortgage

In addition, an ex’s debts from a divorce are factored into the debt-to-income ratio unless the ex has made the payments on time for the past 12 months and the debts are clearly listed in the divorce decree.   If the ex has been late once on an account over the past 12 months, that monthly payment is factored into the debt to income ratios of other ex trying to qualify for a new home.    This isn’t limited to mortgages; it can be joint credit cards, car payments…any joint debts. 

If you own mortgaged property with someone (married or not) and are considering dissolving your relationship, please do not “do it yourself

… And down comes the rain

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After being pummeled by relentless raindrops a couple weeks ago, and as the rain becomes more intermittent, I’ve grown to focus more on embracing Seattle’s warmer temperatures. Luckily, our home was impervious to the floods that left much of Seattle and Southwestern Washington residents feeling like drowned rats. Much of our office, like many, was forced to remain home to cope with the raging floods by siphoning sewage and filthy waters from their soaked basements. And although our townhome (with no basement) escaped the treacherous floods unscathed, the excess water and the damage it wreaked left me feeling rueful for others in our neighborhood who weren’t so fortunate. But in spite of the crippling floods, I must say Seattle’s weather (replete with ample sun breaks) overall is a cakewalk compared with the winter storms that wallop the Midwest.

As I experience my first holiday season in Seattle and with Thanksgiving behind us, I can finally empathize with others who do not have their families nearby during the most cherished of seasons. My Thanksgiving holiday was stung by vapidity, though I cannot say it never has been before, since I have predominantly worked several past turkey days. Though I did take comfort that with my family sprinkled throughout the United States, it was not as if they were hovered around lush, porous cranberries flanked by dark meat poking fun at my absence. However, I am heading back to Chicago (a.k.a. the frozen tundra) for the holidays on Thursday, so although it will be cumbersome dealing with the bitter cold, I am extremely excited to see friends and family that I haven’t seen in some time. Much of the past month my focus has been confined to work and wrapping projects for my class at Seattle University, so it will be invigorating to enjoy a respite from the daily grind, to spend time in the Midwest again, and see so many people I care about again.

Despite the distance from so many loved ones, I am enjoying Seattle and the eye-opening culture that comes with it. Interestingly enough, my roommate said how markedly different I am than I first arrived. My foot-on-the-pedal, fast paced tendencies that I toted with me seem to have abated and it seems my former scales of distress and anxiety have been shed, likely because I have somewhat adapted to the more laid back environment on the West Coast and I’m not tangled in a daily routine I’ve known for too long. Even I have noticed the changes within myself, and I’m not sure if it is just the change of scenery or Seattle, but I am much less prone to panic attacks and much of my stiffness and anxiety has melted when dealing with rough patches lately.

But although I am enjoying my new home, nothing will ever beat going home to Chicago for the holidays!

Kirkland Extreme Makeover – Tonight at 8

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[photopress:070926_kirkand_emhe.jpg,thumb,alignright]I call this “The Little Yellow House That Couldn’t”.  It’s my understanding that the “Makeover” turned into a “Teardown”. 

The show airs tonight, and I will be watching it at The Kirkland Performance Center with a start time of 7:45 P.M. to make sure everyone is in their seats before the show starts.  Sure, I could sit at home and watch it for free instead of $15 (with proceeds to Hopelink), but I want to get a centrally located seat so I can hear the audience reaction.

Will be interesting to see how the show justifies the Teardown vs. Makeover, and hear people’s reaction to what was done over there at The Little Yellow House in Kirkland.  I don’t watch the show, so maybe they always tear them down in order to “make them over”.  Any insight on that from RCG readers would be appreciated.

Major Proposed Changes for Residential Closings in 2008

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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

Fed Funds Rate now at 4.25%

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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

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[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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[photopress:babybath_1.jpg,thumb,alignright]

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.
 

Four plus inches of rain

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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.

Photos:

"Hope Now" program to curb delinquency/foreclosures fraught with problems

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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?

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[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.