Home Loan Focus

Archive for June, 2008

In reading a recent article in the Washington Post titled, “Avoid a Scam: Thoroughly Vet Offers to ‘Help’ With Your Mortgage” I was struck by the fact that they were very slow to offer what should be the first piece of advice to potential home sellers.

When someone offers to buy your house from you unsolicited, or even when you have your house listed by owner and a company attempts to buy it from you, this is what you should do first.

GO LAWYER UP!

If they are truly a company, then they have a lawyer already and even by talking to them, you are putting yourself at a disadvantage.  Level the playing field and get a lawyer before you utter another breath to them.  They can promise anything to you that they like orally, but they are bound by nothing that is not written down in a contract.

So after you have a lawyer, be prepared to REQUIRE offers in writing.  You should also insure that your new lawyer performs a due diligence on the company to insure that they are a real and legitimate company and not some pop up sham.  The truth is, and its not mentioned in the Washington Post, that the average person can not tell a real company from a false company by reviewing their website or even visiting their office.  Let the Pro’s handle this for you, especially if you are selling yourself with out the help of a realtor as you are even more likely to be targeted by crooks.

It does not actually cost that much more to get the help of an attorney for this type of vetting and negotiation.  It might prevent you from buying some extra memory cards for your camera or even filling up your car with gas a couple times, but that is much better than costing you your home!

If you are ‘fortunate’ enough to own a home that has a value less than $417,000, then you have better than even odds that your home actually is still increasing in value. 

That is because home prices in 56 percent of metropolitan areas, which include 292 cities did increase in the first quarter this year.  What’s the caveat?

The increase in home prices is only happening for homes that are not subject to jumbo loans of $417k or more.  So if your home when sold does not require jumbo financing, then you might still see your home continue to appreciate.

We hear a great deal about home prices coming down, but this is largely because the total numbers are significantly skewed by homes that cost between $500k and $1.5 million.  These are also the homes that have been hit hardest for foreclosure.

To top things up, there are still some markets that are appreciating significantly.  So if you are looking to sell this year, all is not lost.  It may not be a sellers market, but at least you won’t feel like your price has been completely squashed like a fly under a stack of books.

Some markets are appreciating strongly, such as Austin (up 7.7 percent in the past 12 months), Grand Junction, Colo. (up 9.1 percent), Charlotte (up 6.2 percent), and Provo, Utah (up 6.8 percent).

Washington Post

Foreclosure filings were significantly up last month signifying an increase in foreclosures both in the last year as well as within just the last month.

Foreclosure filings last month were up nearly 50 percent compared with a year earlier, according to one company’s count released yesterday. Nationwide, 261,255 homeowners received at least one foreclosure-related filing in May, up 48 percent from the same month last year, and up 7 percent from April, foreclosure listing service RealtyTrac said.

Washington Post

That increase is in the filings related to foreclosure.  Its kind of a measure of the red tape that is filed as opposed to the actual foreclosure itself.  Its akin to measuring the number of divorces by all the divorce related letters, and correspondence of the lawyers involved in the proceedings, which could be measured in feet of paperwork with scores going up like a nightmare version of an xbox 360 game.  Its very similar unfortunately for foreclosures.

However the increase in foreclosures is not just a red tape escalation, but the real deal.  The number of total mortgages in a state of foreclosure as measured in a percentage was 2.47 percent up from 1.28 percent during the first quarter a year ago.

Senator Kent Conrad found himself in a bit of a pickle this week, as it was revealed that he received favorable treatment from Countrywide when financing a Florida vacation home for over $1 million.

The favorable treatment came in two forms and relates to Barack Obama’s most recent scandal.  James Johnson was working for Barack Obama trying to vet Vice Presidents when it was revealed that Johnson used to be a lobbyist and had received sweet heart loan deals himself after leaving one of those companies.

Johnson apparently told Sen. Conrad to call the CEO of Countrywide, one of the companies at the heart of the subprime loan scandal, which is currently being purchased by Bank of America.  The CEO of Countrywide later instructed loan officers at Countrywide to shave off one point from the points paid on the mortgage. 

The dollar value of this transaction was not that great and the Senator after admitting the perspective of possible impropriety has promised to donate about $10,500 to charity.  It points out though that many lawmakers, who may not always get direct benefits in the form of campaign contributions may be getting a lot of smaller perks on the side and through the backdoor.  If a Senator can save $10k on a home loan, what do they save when they buy a car or shop for medical insurance?  Do they pay anything on credit card rates or hotel stays?

Conrad (D-N.D.) said yesterday that he sees nothing wrong with calling Mozilo, the chief executive of the nation’s largest mortgage lender, Countrywide Financial. And the Senate Budget Committee chairman is adamant that he received no special deals.

But by reaching out to Mozilo, Conrad became another VIP enrolled in the “FOA” — Friends of Angelo — loan program.

“[T]ake off 1 point,” Mozilo instructed a subordinate in a March 17, 2004, e-mail obtained by Condé Nast Portfolio magazine. In another e-mail that April about a Conrad loan, Mozilo wrote: “Make an exception due to the fact that the borrower is a senator.”

The US has hit a need velocity in foreclosure rates.  There are currently 1 million homes in the que going through the foreclosure process.  This is not a reference to total foreclosures since the housing crisis. This is just the current homes pending foreclosure.

This is definitely a dubious milestone in the housing and mortgage crisis and one that is going slightly unnoticed while Oil is spiking close to $140 a barrel with predictions of hitting $150 before the Fourth of July.

If gas rates hit $5 or $6 per gallon this summer, it sure will not help any of the unfortunate homeowners trying to save their homes from foreclosure. It won’t even help the banks trying to minimize their losses, and it definitely won’t help banks offer new loans to people to buy homes and help the market actually begin to hear.

There was a time when it appeared that the mortgage crisis might abate and markets could recover within a year or two. We are now coming up on what some would consider the one year mark, things are rapidly getting more desperate and the solutions put forward so far . Possibly even more troubling could even be the number of people that are beginning to give up on entering or staying in the housing market. With potential homeowners actually leaving the marketplace and opting to rent instead, the housing market will continue to contract faster than waistlines trying to determine the answer to the question does Hydroxycut work.

For months the Federal Reserve has been cutting the rates that banks pay to borrow money, but this month those drops only translated to about 0.125 percent.  Banks would seem to be pocketing the difference to either pay for their past losses or to try and lure investors back into the mortgage backed security market with higher yields.  You might hope for a better rate, but you’ll be doing good to get approved for a loan let alone a gift baskets the way things are going in the mortgage market these days.

The average rate on a 30-year U.S. mortgage with no upfront points declined 1/8 percentage point to 6-3/8 percent on Monday, according to BestInfo Inc.

The 30-year mortgage rate with one upfront point dropped 1/8 percentage point to 6-1/8 percent.

US mortgage rates drop 1/8 pt on Monday

HSBC Finance is increasing the length of time that it gives homeowners with HSBC mortgages to get reorganized and get their debts back in balance.  That is in part because like many home owners, HSBC Finance can’t sell homes (even after foreclosure at foreclosure prices!) much better than your average home owners.

HSBC Finance, which typically holds its mortgages on its books, ended 2007 with 9,627 foreclosed properties, up from 8,809 at the end of the third quarter, company records show. While the average number of days to sell a foreclosed property has dipped from 186 to 183

Developments : HSBC’s Mortgage Modification Methods

People are staying in their existing home or more often opting for rental possibilities.  Many people still have the ability to pay monthly rates, and if the banks won’t given them credit, they would just as soon rent a place and get back to their jobs and life in general.  Why waist time trying to convince a mortgage broker that your credit can make the grade when your credit situation and income haven’t changed, but the metric for good credit and bad credit has changed.  Renters can resume their lives and spend all that extra time and money picking up good flight deals and traveling a bit while the mortgage industry sorts out its self made problems.

A few years ago consumers were trying to figure out how to add every conceivable amenity from 3 and 4 car garages to home theater seating to their homes and then flip them making a profit and moving on to something even better.  These days they are doing good just to get financing at all not only in the US but also in the UK.

The Bank of England reported that the number of new mortgages being approved for people buying a home was just 58,000, the worst monthly figure since the Bank began collating the data 15 years ago, and only about half the recent peak of 115,000 witnessed in May last year.

Observers had expected a small rebound after the severe crisis the credit markets experienced in March, when Bear Stearns had to be rescued by the US Federal Reserve.

Mortgage approvals fell to new low in April – Mortgages, Money – The Independent

Almost no state is immune from the drop in home prices that is sweeping back and forth across the United States where in the first quarter home prices in total dropped 3.1 % in the first quarter and 0.45% in the 4th quarter of 2007.  The price drops have swept the country from Boca Raton to San Diego to Las Vegas to Corpus Christi real estate and back again.

Prices fell in 43 states, with California and Nevada showing the biggest declines. Home prices dropped by more than 8 percent in those states.

Home Prices Drop Most in 17 Years – washingtonpost.com