Washington State Legislative Alert: SB 6381 and SB 6452

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Two Senate bills have been introduced into the state legislature this session.

The first bill, SB 6381 (link opens a 2 page PDF) will change the state’s Mortgage Broker Practices Act to require that mortgage brokers owe fiduciary duties to consumers.  In order to make fiduciary duties meaningful, they must be extended to include the loan originators that work under a mortgage broker. The legislature should make that crystal clear.  Many LOs work out of branch offices and are unsupervised on a day to day basis by their broker, who may be located in a different office or in a different state. 

[photopress:capital.jpg,thumb,alignleft]I recommend that the state legislature also include not only mortgage brokers but businesses licensed under the state’s consumer loan act.  We must not forget that the two largest predatory lending lawsuits in the United States were settled with companies that were NOT mortgage brokers but consumer loan lenders: Household Finance and Ameriquest.  If we do not make this change, unscrupulous mortgage brokers may just change the way they’re licensed. This loophole should be closed now.

The second bill, SB 6452 (link opens an 11 page document) also changes the state’s MBPA in an interesting way. At the bottom of page 3, this bill would remove a mortgage broker’s ability to quote a Yield Spread Premium range.  Recall that brokers can see the wholesale cost of mortgage money, and elect to quote a higher interest rate to the consumer and earn the difference as profit.  Sometimes, when a borrower wants a “no cost loan

Round-up of Seattle Neighborhood Blogs

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What neighborhood bloggers are saying is happening in their Seattle area neighborhoods….

“Car-free” and happy on Broadway Seattle , and “parroting” similar sentiments on Capitol Hill …. 

Capitol Hill Triangle “toasts” with an Elysian Immortal IPA to celebrate a Grand Re-opening.

“Home (less)” thoughts in Cosmo Seattle  and more social issues when “trash” raises its’ ugly head in Red Brick Blog

Happy 2nd Birthday to Kirkland Weblog! blog games when Mid Beacon Hill starts a game of where am I? 

Miller Park Neighborhood Association  gets a “bright idea” for improving safety in Capitol Hill, and the Outer Limits: The Lake City Blog finally wakes up after a long blog snooze and tells us about breakfast at LC’s 

Bug alert for mom’s in SammaMishmash , and Super 8 Film Fest in Blogging Georgetown

Exotic Cat capture in West Seattle Blog  and finally…Moon over Seattle in Beach Drive Blog

Lock It or Lose It

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Mortgage rates have been very volatile these past few days.   Yesterday morning, I posted that the 30 year conforming fixed was under 5% and by the end of yesterday, mortgage rates had increased by 0.375% to rate or around 1% in fee. 

Rate shoppers lost out big time if they did not lock.

Rates are continuing to rise at this time.  Please don’t dilly dally with your mortgage interest rates.  There are fewer Mortgage Professionals to assist you in our current market and many of us experienced (and I’m still seeing it today) banks being “clogged” with people trying to lock…websites “down for maintainance”…etc.  By the time a Mortgage Professional can get through to lock in a loan, the rate is gone.  Bam.

Next week has offers a full menu of events that promise to impact mortgage interest rates:

  • FOMC Meeting on Wednesday, January 30th.   (If the Fed drops the Funds Rate…mortgage rates may rise).
  • Thursday, January 31 will bring us several economic reports which will indicate inflationary levels such as the PCE and the Chicago PMI.
  • And as next Friday is the first Friday of the month, we will wrap up the week with the Jobs Report.

Again, I highly recommend that you lock in your interest rates for conforming loans and make sure it’s for enough time for your transaction to close.   A possible bright spot:  the conforming loan limit may be increased…no promises but this will be great help for the JUMBO market from $418,000 – $620,000.

Bye for now! 

Update January 24, 2008 at 2:55 p.m.:  I just priced the 30 year fixed conforming at 1% origination/discount…I can barely lock in 5.5% (APR 5.642%) based on my usual criteria for “Friday’s Rates” (which I will be posting tomorrow).   Is it 5 yet?  😉

Happy Birthday, Dustin!

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I just wanted to take a moment to highlight Dustin’s birthday and to thank him for creating this site. It’s clearly gone beyond his initial expectations and it’s a great tool for many people who are trying to learn more about the local real estate market and industry (including related fields).

Best wishes on a marvelous day to you, Dustin!

I Love Brian Brady's Twitter – You Will Too

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I wish I could save this post for Valentines Day!   Earlier this month, fresh from Inman NY, Brian announced that he is going to start posting tidbits of rate info on Twitter.   If you subscribe to Brian’s Twitter, Mortgage Report, you’ll be notified if he feels you should be locking or floating…this is similiar to what I receive by investing my subscription to Mortgage Market Guide (bond quotes).  However, this service is free and priceless!  

Here are the alerts I received from Brian just today (which was an exceptional day):

  • 5:10 a.m. Stock futures are down 5%.  Good for mtg bonds and rates – FLOAT long purchases, LOCK all others – update later
  • 5:48 a.m. Emergency Fed Cut
  • 7:05 a.m. Mortgage bonds up close to half a point.  Expect lenders to offer 30YFRM below 5.5% today (conforming limit)
  • 1:37 p.m. FYI: I locked a 30YFRM at 5.25% with 1 point for a 5.53% apr today.  Expect ARMS to drop this week
  • 6:11 p.m. FLOAT loans closing >15 days, LOCK loans closing <15 days.  Wild day today, tomorrow promises to be as nuts.   You will hear it here 1st

This is simply a brilliant idea and a huge commitment from Brian Brady of Mortgage Rates Report and Bloodhound Blog.   If you can’t wait until the end of the work week for “Friday’s Rates”, subscribe out Brian’s Twitter!  You’ll be twitterpated.  😉

Surprise! Fed Cuts Funds Rate by 0.75%

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We took our boys snowboarding last night at Snowqualmie where I began to receive text message alerts on my Treo about various markets being slammed from around the world based on fears of a US recession.   The Fed met last night deciding to make an intermeeting cut to the Funds Rate to 3.5%.  This is the biggest single Fed Funds rate cut since 1984.   

“The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth.  While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households.  Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.”

The Fed also reduced the Discount Rate to 4.0% (this is the rate banks can borrower directly from the Fed) in an attempt to add liquidity to the markets.

Unless you have a HELOC, this will not directly impact mortgage rates except for how investors react to the cut.  Should they seek the safety of bonds (like mortgage backed securities) rates will go down as they have slightly this morning.   The markets are all ready off their low lows of this morning.  Mortgage rates will continue to be very volatile.

Remember, the Fed is scheduled to meet on January 30 where another rate cut is still heavily anticipated.  

Update 1/22/2008 1:00 p.m.:  Here is a graph that I came across compliments of my subscription to Loan Tool Box which shows the impact to mortgage interest rates when the Fed has recently cut the Funds rate.

[photopress:Rate_Chart.jpg,full,alignright]

I empathize with ya, Chicago

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Part of me wants to stray away from writing this post, but I don’t want to withhold my nagging questions just because I’m a former Chicagoan. So many Seattleites have me snickering when I hear them lament about how frigid it is here. Makes me want to mutter back, “You have no idea!” Oh no, it’s in the upper 30’s or 40’s in Seattle – that’s nearly summer compared with what I’m typically accustomed to this time of the winter.

  • Are any of you former Chicagoans or Midwesterners who simply revel in the warmth in Seattle?
  • What are your thoughts on Seattle winters vs. Chicago winters? I love Chicago in so many respects, but the weather is extreme – times 10 in the winter.

My parents’ poor puppy back home can barely place her paws outside it’s so brutally cold, and so I’m trying to convince them they need to to fly somewhere tropical to thaw out since they are no spring chickens and I shudder the thought of them shoveling snow in such wicked conditions. 

Not sure how I survived so many winters there.  Take care, Chicago!

Sunday Night Stats

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So far it looks like sellers have a 50% chance of selling vs. last year.  I’ll keep tabs on that as we go.  You were twice as likely to sell your house last year as this year, if you put it on market.  For those of you who think it’s a new year and if it didn’t sell last year it’s time to raise the price…I’d rethink that.  Hopefully low interest rates will improve the stats moving forward.  But I wouldn’t count on the improvement being more than a 66.6% chance of selling.  We’re not talking about selling at the price you want.  We’re talking about selling at all.  Not a good time to be stubborn or overly optimistic.  You have until 4/1/08 to get real with your pricing, or possibly be back on market in 2009.  Stop pricing off what other people are asking.  Stick close to the comps this year.  No more than 5% over the comps is a good rule of thumb.  And don’t skimp on condition.  Condition will be the MOST important factor in 2008, second to not pricing more than 5% over the comps.

King County – Residential

For sale – 8,508 – UP 132

In Escrow – 1,906 – UP 97 – 6.5% of those are contingent contracts

Closed month to date – 439 – UP 203

 

King County – Condo Market

For sale – 2,929 – UP 59

In escrow – 798 – UP 18 – 2.6% of those are contingent contracts

Closed month to date –  144 – UP 75

UP means over last Sunday’s data.  Sales of single family homes kept pretty good pace against homes coming on market this week.  But still running at about half the pace of this time last year.  Let’s assume 1/3 of the buyer pool is gone and that this year’s sales will be 2/3rds of last year in total number of properties sold.  That’s my prediction based on what we’re seeing so far.

“Statistics not compiled or published by NWMLS.

Are any homes worth buying?

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While it seems to be a fad to track inventory, reality is that most times in January, and this year is no exception, there are plenty of buyers. They simply do not want the homes that are currently listed for sale for a myriad of reasons, nor should they.

Last Thursday a group of us went to Broker’s Open Houses. We did not see any homes on the tour that we would recommend to our clients. We did pick the ones we thought would sell first, even though we would not likely suggest that our clients buy them.

Here’s how it played out:

House #1 – We all walked in, it took about 3 minutes to determine that it was not priced right and was not good at any price for any of our clients. There was a busy street close enough to be visible from the home. The house was very “cookie cutter” and not “commanding” the asking price by style alone, before considering the busy road negative. Tacking on the busy road issue, we went upstairs. The master suite was on the busy road side. Had the master suite been on the quiet side and the odd bedroom on the busy road side, the value would have been different.

A few agents talked about the quality of the windows, the gorgeous granite counter tops, when I started clapping my hands and saying: Out of Here…NEXT! It’s $200,000 over on the asking price and there are better houses to be had at this price. Not necessarily for sale today, but clearly within any buyers future timeframe.

It’s a NO! Let’s GO! (the open house agent was not present nor were any agents from other offices, so we could speak freely like this at the first one, since we were early and the Open House hadn’t started yet.)

House #2 – Great house; how much is it? Too much. But a great house if it were priced $75,000 less. NEXT! Agent asked about the old windows. I said irrelevant. Lots of updates needed, so price it at good condition in need of updating. No need to calculate each why and how much, let’s go, it will be a long time before this seller gets real, and you can’t make an offer until the first number is a 6 and not a 7, you will still be $35,000 over value even with the best of negotiation skills. Start price has to be lower, wait for the price reduction.

House #3 – We got out of the cars and everyone proceeded to the front door of the house. I stayed standing in the middle of the street. I told everyone to come back and stand with me and tell me what they observed. Big dog barking incessantly. I said if the dog is in the yard of “the subject house”, no biggeee as he’s moving. No, it was a vacant house. So Big Dog Barking is next door. Everyone made a note of it in case they had a buyer client at a time when the dog was sleeping or not home. We then proceeded into the house.

I stayed at the front window. What is THAT?! Elementary School and Middle school next to it. Every Mom and Dad dropping off kids would be line up out front every day. Car doors slamming. Shouts of “You forgot your lunch!” Envision what isn’t visible. NEXT!

House #4 – Gorgeous remodel. Great price. Open House agent present. Directly behind the Open House agent I could see out the window. The next door neighbor’s house, or part of the accessory of it, was smack up against the fence of this house. The Open House agent should not have planted himself at the home’s worst negative. I couldn’t even concentrate on what he was saying because of the view behind him. I said that’s tough; he said yeah. NEXT!

WHTF house (investor bought “Wrong House to Flip”). Now we can just say WHTF on any similar houses. Saves on time. Walk in say Great Remodel BUT “WHTF”. Still, all in all, I dubbed it my pick for “Best House of Day” as it was priced well and looked good and the cheapest good home in all of Bellevue at the moment.

I picked it as the house that would sell first without a price reduction needed. These “picks” go into an envelope, and we check back on them later to see how well we evaluated the properties. The agent who picks the most right gets a prize, they get to become a really good agent and stay that way.

There were two other houses, similar to house #2. Good houses, but priced out of range. One only needed a $10,000 reduction to get in range, so that was my second pick and some other agents’ first pick.

Even if you have been in the business for over 17 years, like me, you never stop doing Broker’s Opens to stay on top of the market and keep sharpening “the tool”.

Buyers can do this with Sunday Open Houses. It’s great fun and a valuable exercise.