Are We Almost Out of Homes For Sale?

Don Davis Ph: 360-652-9994 email: dond@htlnw.com

Wow, in the middle of what could be considered the worst financial time since the Great Depression and foreclosures at high levels, around 5% nationally, who could imagine that there would be a lack of homes for sale.

 As I confer with the leading Realtors in the area we have found that the amount of sellable homes is almost depleted.  Yes there are quite a few “short sales” and some bank owned homes on the market, but those are almost sale proof.  The vast majority of “short sales” will never happen. (this is where the current owner is trying to sell the house for less than he owes and the challenge is getting the mortgage holder to take a loss, thus short of what is owed.  Often time the first mortgage holder will take the deal but the second is losing all their money and either will not take the loss or will not respond for months on end) From the time the current owner determines that they need to sell the house, they are usually behind in their mortgage payments and owe more than the property is currently worth, to the time the bank forecloses can be a year or more.  In the meantime the current owner is not paying their mortgage and in most cases not maintaining the property very well. (Why would they put money in to something they will never get back?) After the lengthy foreclosure process then the bank take possession of the house.  In the vast majority of the bank owned homes the banks are not in the area and they have a lot more than one home on their books.  By this time the house is now abandoned and left in the condition that the previous owner left it in.  It may seem strange, but the banks attitude is usually to do nothing to put the house in a sellable condition.  They will sell the house “as is” with all defects and leave it up to the new owner to bring it in to good condition.  The problem is that the appraisal must come in without conditions. In other words the home needs to be inhabitable.  The roof, siding interior needs to be in good condition.  I spent the time reviewing this because this is where most of the current inventory of homes lay, short sales and bank owned or REO (bank Real Estate Owned). 

Here is what is real today.  If a home is priced right to market and it is good to great condition, it is gone within a week or two! Especially if it is under $300,000. If the roof is in need of repair or the siding needs paint or the floors have no carpet, but should, then the house will be on the market for a very long time as it will not appraise to sell.  If the appraiser calls out any deficiencies then either the buyer or seller need to make the repairs prior to closing the loan. It is possible to have a deficiency where the new buyer (you) agree to make the repair. However, you would need the funds available to do that and the house would have to appraise.  Here is the problem most people face with that. Let’s say the house is valued at $250,000 and it takes $10,000 to repair the home to the appraiser’s satisfaction.  You have just invested that $10,000 in to a home that is still only worth $250,000, see the problem.  If the seller agrees to make the repairs then you are good to go and you have not increased your principle investment in the home.  Most bank owned or short sales will not consider adding to their losses with needed repairs.  So those homes will sit and show as inventory on the market when in fact most are sale proof.  It is estimated that about 80% of the homes available in our market are not traditional sellers (that would be banks).  Of those that remain, it is the owner of the home that has it on the market and can make the decision to negotiate on the sale of their home.  Most, not all, of the real homes on the market are priced to the current market.  What a buyer needs to consider is what is needed make the house livable.  If the carpets, roof, siding etc… are in okay to great condition and no investment is necessary to make the home livable and it has a reasonable price, then expect to act quickly to get your offer in and accepted.  Even now we are starting to see multiple offers on good homes.

Let’s take a look at the numbers; there are currently about 3600 homes for sale in Snohomish County.  If 80% of those are difficult or impossible to sell then that leaves about 707 home available.  This market is selling approx 700 homes per month.  Hmmmm, that looks like a sellers market rather than a buyers market.  It’s just the sellers don’t know this yet. Even if only half the homes were difficult to sell that would leave around 1800 homes available and that would still be under 3 months inventory of homes.  Couple that with the fact that almost no new homes are being built and you can clearly see that we are running out of homes.  The worst case is all of the homes are pristine and able to sell without the problems mentioned above, that would still only be about a 5 month supply of inventory and that is only slightly above the historic average for this market.

We live in a market where the population is still increasing plus every year there are younger people moving out of their parents home and striking out on their own and need a place to live, after a few years they start looking to buy a home of their own as well.  In Snohomish County our population has increased over 1% every year this last decade.  That is about 60,000 added to our population every year.  This is a net increase based on births, deaths, move outs and move ins.

To summarize; over half the homes on the market are unsellable. Builders aren’t building because their banks aren’t lending. Their banks aren’t lending because they can’t. Our population is still growing and need a place to live. There are no new apartments being built, condos and manufactured homes are almost sale proof.  Once the inventory is depleted, then what do you think will happen?

As we emerge from this troubling recession, anyone that currently owns a home or buys one while the prices are depressed and the interest rates are at historic lows, will be very happy in the long run.

Another Reason to Consider Your Home Purchase NOW!

Don Davis Ph: 360-652-9994 email: dond@htlnw.com

As the mortgage world turns, we find yet another change in lending guidelines.  HUD has announced as of April 5^th, all purchases will pay an FHA funding fee of 2.25%.  That is up from the current 1.75%.  The funding fee, of course, can be financed as part of the loan or paid up front.  Either way IT WILL COST YOU MORE to buy a home. 

 

Let me reiterate the reasons to buy a home now.

• Historic low interest rates. Depending on the day right now you could be at 5% or even less.  After March the government will no longer pour money in to the mortgage bond market and the rates WILL rise.
• Home prices have essentially bottomed and have been stable for the last 8 months
• The $8,000 tax credit WILL expire the end of April
• The inventory of available homes IS shrinking.  In the local areas the inventory is below 5 months supply.  If you take the homes that are priced right and move in ready, they last about a week.

 Let me put this in perspective.  Even if in June the price of a home you would consider drops $20,000.  you will still pay more per month to get that same house because 1) you will not get the $8,000 tax credit. 2) If you finance FHA you WILL pay more for mortgage insurance and 3) your interest rate is projected to be at least 1% higher if not even more.  You may have bought for less money for the house but over the life of the loan you will spend Tens of Thousands of dollars more. It is highly unlikely that home prices will fall any further. It is projected that in the next 12 months that we will essentially be out of homes.  Once the current inventory is depleted, there are no more available.  There are only a handful of new homes being built because the local banks that finance the builders ARE NOT granting construction loans, no matter how strong the builder is.

 Your best opportunity to buy a home for the lowest overall cost is RIGHT NOW.

 Don’t believe me?  Wait until May or June but just don’t say that no one told you so.

79.9% Interest for a Credit Card? Are You Serious?

Don Davis ph:360-652-9994 email:dond@htlnw.com

Well first of all I would like to thank the brain trust in Washington DC, all of those elected elite who seems to be so damn good at spending our money and helping others rip Americans off. 

There was “REFORM” in the credit card industry that was supposedly to help stem the greed of credit card companies and banks.  Well let me say to congress; “job well done”!  You have once again succeeded to suck blood from a rock and take the hardest hit people in this country and rub their nose in it.  You continue to completely ignore those who you are elected to serve and pander to the people who stuff your campaign coffers.  Congratulations to you all, every single bloody one of you.  There obviously wasn’t a single one of you that had the backbone to stand up to the weasels who continue to prey on the less fortunate.  Of course you have your credit card issues in pure gold or platinum and your staff keeps your books so you don’t have a clue as to what your own rates are on your cards, if you even cared.

Not a single one of you has a clue as to how tough it is for Americans right now and as you thump your chests and spew rhetoric about how you are reforming the government and big business, you continue to make a bad situation even worse.

If any one of you bozos had to live on a working wage, struggle with raising cost of living (who filled and paid the last time you got a tank of gas?) 

You simply closed one door and left the big one open for the card companies to waltz right through.

 Here is the article as it was published in MSNBC and every other financial publication

Newest credit card trick? 79.9 percent interest

First Premier skirting new regulations intended to curb abusive practices

 updated 4:42 p.m. PT, Thurs., Dec . 17, 2009

NEW YORK – It’s no mistake. This credit card’s interest rate is 79.9 percent.

The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It’s a strategy other subprime card issuers could start adopting to get around the new rules.

Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card’s credit line.

In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn’t set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.

“It’s the highest on the market. It’s the highest we’ve ever seen,” said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.

The terms are eyebrow raising, but First Premier targets people with bad credit who likely can’t get approved for cards elsewhere. It’s a group that tends to lean heavily on credit too, meaning they’ll likely incur the steep financing charges.

So for a $300 balance, a cardholder would pay about $20 a month in interest.

First Premier said the 79.9 APR offer is a test and that it’s too early to tell whether it will be continued, according to an e-mailed statement. To comply with the new law, the bank said it will no longer offer the card that has $256 in first-year fees as of Feb. 21, 2010. However, customers will still be able to use their existing cards. The bank said “no final decisions” have been made regarding any rate changes for those cards.

First Premier noted that it needed to “price our product based on the risk associated with this market.”

The bank declined to specify how many people were offered the 79.9 APR card.

According to First Premier’s Web site, the credit cards are serviced by its sister organization Premier Bankcard. The company, based in Sioux Falls, S.D., says Premier Bankcard is the 10th largest issuer of MasterCard and Visa cards in the country, with more than 3.5 million customers.

In a mailing sent to prospective customers in October with the revamped terms, First Premier writes “…you might have less-than-perfect credit and we’re OK with that.” The letter notes that an online application or phone call is still required, but guarantees a 60-second status confirmation.

The letter also states there are no hidden fees that aren’t disclosed in the attached form. That’s where the 79.9 percent interest rate and $75 annual fee are listed. There’s also $29 penalty if you pay late or go over your $300 credit limit.

Even if First Premier doesn’t stick with the 79.9 APR, it will likely hike rates considerably from the current 9.9 percent to offset the lower fees, said Shahani of Synovate.

The revamped terms may not be the only changes; First Premier also appears to be moving away from the riskiest borrowers.

The bank typically mails offers to subprime households, meaning those with credit scores below 700. In the third quarter, however, 84 percent of its offers were sent to subprime households, down from 91 percent the same period last year, according to Synovate.

First Premier could be cleaning up its credit card portfolio since the new regulations will limit its ability to raise interest rates. That could mean First Premier won’t issue cards as liberally to those with bad credit.

As harsh as First Premier’s terms seem, that could be a blow to those who rely on the card, said Odysseas Papadimitriou, CEO of CardHub.com.

“Even when the cost of credit is astronomical, for people in true emergencies, it’s much better than not having access to credit,” said Papadimitriou.

Until Feb. 21, First Premier is still offering its even-higher-fee card online. So the price for credit the bank charges is at least $256 in first-year fees.

Even if your don’t have a First Premier card, this will surely have an impact on what your card issuer will do in the future.  No your representive in Wash DC did absolutely nothing to help you, at all!

With regards to Odysseas Papadimitriou’s comments, all I can say is “you blithering idiot!”

I can hardly wait to see what eventually comes from “health care reform”

Interest Rates On The Rise, Don’t Say “Nobody Told Me”

Don Davis Ph:360-652-9994 email:dond@htlnw.com

Looming on the horizon is the very real prospect of interest rates rising in to the 6% range or even higher. Currently we are at 5 to 5.25% as of today.  This is entirely because the FEDS have been buying mortgage backed securities and keeping interest rates low. 

April 1 will be the first day that the Federal Reserve will end its debt purchase program and allow the struggling U.S. mortgage market to operate unassisted. As a result, the Fed believes mortgage rates will rise about three-quarters of a percent to about 6 percent, Boston Fed President Eric Rosengren said recently.

Fear of a worldwide perception that the U.S. government is simply printing money to use to purchase mortgage-related securities is a big reason the Fed has pulled back, analysts say. If that fear caused a sell-off of U.S. government bonds, it would push borrowing costs substantially higher and derail the economic recovery. “We are still in uncharted waters,” Fed Vice Chairman Donald Kohn said in an unrelated speech Saturday. “We will need to be flexible and adjust as we gain experience.”

Source: Reuters News, Pedro Nicolaci da Costa (01/08/2010)

It will not be until the mortgage bonds go back to the open market that we will see where the rates will really go.  But, everyone expects the rates to climb.  Just don’t say that nobody told you.  If you are even hinting at buying or refinancing a home, NOW is the time.  Even if it is only one point higher than it is right now, that could cost you tens of thousands of your hard earned dollars over the life of the loan.  If we are currently experiencing historic low rates, how long do you think it will be until we ever see them again?  I’m just saying….

How Long Does It Take To Spend a Trillion dollars?

Don Davis Ph:360-652-9994 emaildond@htlnw.com

I came across this today in another article and thought I would share it.  With all the bailouts and stimulus programs and the government spending billions and trillions this looked to put things in to perspective.

If you were to spend one-million dollars ($1,000,000) every calendar day until you had successfully spent $1 trillion dollars you would be engaged in this endeavor for a little more than 2,739 years.

Numbers Don’t Lie

Don Davis Ph:360-652-9994 email:dond@htlnw.com www.htlnw.com

Numbers don’t lie.  If fact these number tell the truth about home sales in the Puget Sound region.  You can see where the middle of the decade home sales went well above the average for the area.  The four county (Kitsap, Pierce, King and Snohomish) area has averaged 5667 home sold per month in the last ten years! 

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	3706	4778	5903	5116	5490	5079	4928	5432	4569	4675	4126	3166
2001	4334	5056	5722	5399	5631	5568	5434	5544	4040	4387	4155	3430
2002	4293	4735	5569	5436	6131	5212	5525	6215	5394	5777	4966	4153
2003	4746	5290	6889	6837	7148	7202	7673	7135	6698	6552	4904	4454
2004	4521	6284	8073	7910	7888	8186	7583	7464	6984	6761	6228	5195
2005	5426	6833	8801	8420	8610	8896	8207	8784	7561	7157	6188	4837
2006	5275	6032	8174	7651	8411	8094	7121	7692	6216	6403	5292	4346
2007	4869	6239	7192	6974	7311	6876	6371	5580	4153	4447	3896	2975
2008	3291	4167	4520	4624	4526	4765	4580	4584	4445	3346	2841	2432
2009	3250	3407	4262	5372	5498	5963	5551	5764	5825	5702	3829	3440

Remember the dot Com era?  That just about busted the stock market at the end of the 90’s and we were in a major recession starting this last decade (2000 and 2001)  during that time the unemployment rate was about the same locally as it is now.

While many may claim that the “housing bubble” was blamed on the easy sub prime money, and yes that is a contributing factor, it is the employment rate that significantly drives a housing market.  It should be no surprise that the home sales in 2001 and 2009 virtually mirror each other. As the economy recovered through 2002 and 2003 the employment rate decreased and housing sale increased.  It wasn’t until early 2004 that the “exotic” mortgage emerged.  ’05 through July ’07 is where they were the most prevalent.  In August ’07 the s*&% hit the proverbial fan the market tanked.  It wasn’t only the sub prime money that went away.  Almost all lending stiffened and lenders immediately changed their credit guidelines.  The stock market crashed and huge Wall Street firms went out of business almost over night.

That is now behind us. As the economy rebounds and the unemployment drops, the demand for housing will once again increase and with that demand the home prices will also rise.  Experts estimate that the appreciation for the Puget Sound area will be around 5% through this year and 2011.  If you own a home, that will be good news.  If you wait to buy until next year it simply means that you’ll pay more.  Couple that with the expectation that interest rates will be in the 6% if not the 7% range and you might be priced out of the market for the home you really want.

The old saying stand true; “buy low and sell high”

.

Reasons Why Now Is A Great Time To Buy! (Part IV)

Don Davis Ph:360-652-9994 email:dond@htlnw.com

Home Buyers Tax Credit

The current tax of up to $8,000 for first time home buyers and up to $6,500 for repeat home buyers is scheduled to end the end of April 2010 and the loan must close before July.  It was debatable whether or not it was going to get extended last October when congress extended it six month. 

In all likelihood this will be the end of it.  The tax credit itself did very little to stimulate the housing market.  I dare say locally we probably would have sold just about as many homes without it as we did with it.  The government left the marketing of the tax credit to Realtors and most buyers did not understand how it worked or if they would qualify for it.  Personally I only had a handful of clients that even knew about the tax credit and only one person was buying a home because of the credit.  Everyone else was buying a home because they wanted to take advantage of the low prices and low interest rates; the tax credit was only a bonus and not the reason to buy.

It is quite doubtful that the credit will be extended again once it expires in April 2010.  When it’s gone, it’s gone.  And while $8,000 may not seem like a lot when you are buying a home for $250,000 for example, it could mean up to six months of mortgage payments could be put in to savings and used as a buffer should you need it.

I don’t believe that making a decision to buy a home because you get an $8,000 tax credit makes and sense.  The decision should be based on whether you want to own a home of your own and if you can comfortably afford the mortgage versus your rent.  If you are paying $1400 mo to rent a home, have a stable job with stable income and expect to live in the area for five years or more then buying a home with up to a $2,000 payment would probably make sense.  If you are renting for $800 mo and you employment prospects are uncertain, then the tax credit should not be a reason to buy a home.

However if you take all the current market elements, this is an outstanding time to buy a home.  Yes you could get up to $8,000.  Home prices are stable and very affordable.  Interest rates are currently at or very near historic lows, but won’t be for long.  All it takes is any or (gasp) all of these things to change and it could cost you a whole lot more to buy the same house.

If any of the above items change, it could have an impact on what it costs to buy a home, if several or all, which eventually will happen, change then the cost of buying a home later could be very substantial if not prohibitive. 

 We encourage you to contact us and see if this is the right time for you to consider buying a home of your own.

Reasons Why Now Is A Great Time To Buy! (Part III)

Don Davis Ph:360 652-9994 email: dond@htlnw.com

The Housing Market

Washington State has a Growth Management Act (GMA) that restricts the amount of new housing for any county depending of projected growth.  This is why we have never seen 600 or 800 home developments like in California or Las Vegas or Arizona.  The county will only issue permits to developers based on the projected growth in that area in a certain period.  This is why we were not overbuilt when the slowdown occurred.  Several years ago, in the height of the boom, developers did pay too much for land, but the demand existed at the time. 

 The cost of the land is the biggest variable in the price of a house.  If it costs $100 per square foot to build a house, it doesn’t matter where it is located.  A 2000 sq ft home would cost $200,000 to build regardless if that house is in Edmonds or Arlington.  The difference is the price of the lot that house sits on.  If the lot cost $150,000 then that house would be a $350,000 home if the lot cost $50,000 then it would be a $250,000 home for the same house.  This is also why a housing market would bottom out.  The cost to replace or build a new home can only go so low.  If existing homes sell for substantially less than it would cost to build a new one, no on would ever build another new home. One of the biggest reasons that few new homes are not being built right now is the fact that most of the banks the builders would get their financing from are under cease and desist orders from the FDIC.  If the builder can’t get funding to build, then nothing gets built.  Once the inventory of homes decreases and the prices once again appreciate, the banks will free up capital and the builders will get back to work.

What makes the Puget Sound region so unique is that we can really only go north, south and up (high-rises) to build new homes (east is mountains and west is water).  There is virtually no buildable land left in most of King, North Pierce and South Snohomish Counties.  Essentially if any new homes are going to be built the developers need to go to south Pierce or North Snohomish County.

 Unfortunately the news media doesn’t report any detail about our own housing market.  This seems really stupid to me.  We have local newspapers, TV and radio stations and they seem to cite the worst statistics available for the housing market.  They will report on national statistics and default rates.  I defy you to send me a detailed report from the news sources that cite our own local market statistics.  It is not newsworthy.  They aren’t going to be able to sensationalize this market because there is nothing to sensationalize.  While we have seen a modest decline in home prices from the unrealistic highs in late 2007, we have plugged along this year selling down the inventory from an almost nine months supply to almost a four month supply.  At this rate by this time next year we should be under two months supply with few new homes being constructed.  What does 2011 hold in store?  We just might be out of home to sell.  If you own a home you will be very happy, if you are trying to buy a home then you might be kicking yourself that you didn’t buy when the availability and the prices were within your reach.

 If you have ever though about buying a home, you might look hard at doing it soon.  Home prices are low and inventories are high, meaning you have a great selection to choose from.  Interest rates are currently at historic lows.  There is up to $8,000 tax credit.  When any of these things change it could cost you substantially more to buy a home.

Below is a TEN year history of home sales for Snohomish, King Pierce and Kitsap County collectively

While all the news medias would want you to believe that all is doom and gloom, we have outsold last year and are about average for the decade.

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	3706	4778	5903	5116	5490	5079	4928	5432	4569	4675	4126	3166
2001	4334	5056	5722	5399	5631	5568	5434	5544	4040	4387	4155	3430
2002	4293	4735	5569	5436	6131	5212	5525	6215	5394	5777	4966	4153
2003	4746	5290	6889	6837	7148	7202	7673	7135	6698	6552	4904	4454
2004	4521	6284	8073	7910	7888	8186	7583	7464	6984	6761	6228	5195
2005	5426	6833	8801	8420	8610	8896	8207	8784	7561	7157	6188	4837
2006	5275	6032	8174	7651	8411	8094	7121	7692	6216	6403	5292	4346
2007	4869	6239	7192	6974	7311	6876	6371	5580	4153	4447	3896	2975
2008	3291	4167	4520	4624	4526	4765	4580	4584	4445	3346	2841	2432
2009	3250	3407	4262	5372	5498	5963	5551	5764	5825	5702	3829	3440

source: NWMLS

Reasons Why Now Is A Great Time To Buy! (Part II)

Don Davis

Home Prices

 If you have thought about buying a home but are waiting for the home prices to drop even further or hit bottom, you are too late.  They already have, months ago.  The average price of a home in Snohomish County, for example, is about $275,000 and has been for most of the year.

 In mid 2000 the prices escalated faster than incomes, due to demand and a better economy and easier mortgage terms.  By late 2007 the prices spiked and from the end of 2007 to early 2009 the values declined by about 16% (where they were in early 2006).  For most of 2009 the prices have been static throughout the Puget Sound region.  Why is that and why won’t they go lower?

 The answer lies in several reasons. First is employment.  Unlike other areas of the country and even the state we have not suffered the huge decline in employment.  Yes we have a higher than normal rate, but lower than the national statistics and vastly lower than the worst hit areas.  Detroit for example is around 45% unemployment. And ours will recover more rapidly than most other areas due to our diverse employer base, especially in Snohomish County!  Employment is what creates increases in population. The higher the population growth, the bigger demand for housing.  The bigger demand for housing the lower the supply gets. And as the supplies dwindle, the higher the prices go. Second is available land (this is addressed later). Another factor is Affordability vs. income averages (even in this market look at the price of average homes in Southern California)

It is projected that at the current rate, with the current inventory of homes and the projected growth in population that between 16 and 24 months from now we will be out of homes to sell and the shift will once again go to the seller.  Home prices have been stable for months already and as the inventory decreases even further they will only start to climb and sellers will be more reluctant to give up any of the seller concession they are currently giving to get the house sold. 

 Take a climate of firmer prices; less seller concessions (paying for your closing costs), any increase in interest rates and the tax credit ending, buying a home in the future will only cost you a lot more than you could buy a home for right now.

 Information is valuable in making a decision to buy a house.  This is, after all, the biggest financial decision most people make in their life.  Knowing when a great time to buy is essential.

Reasons Why Now Is A Great Time To Buy! (Part I)

Reasons Why Now Is A Great Time To Buy!

Don Davis Ph:360-652-9994 email:dond@htlnw.com

 I’ve broken this down in to several parts so as to not make it to lengthy for one posting.

Interest rates

            It seems incredible that at a 5% range houses aren’t selling like hotcakes.  I know it is fear of the market, and I’ll address that later.

The rates are where they are at because; essentially the government has been buying mortgage backed securities and deflating the rates to keep them low in an effort to stimulate the market.  Frankly it hasn’t done much except spend tax dollars and appeases investor fears.  The federal government pledged to continue to purchase these bonds until the first quarter of 2010.  After that the market will stand on its own, and we will once again enter the world of supply and demand.  As the demand for mortgage backed securities lessens, the rates will increase.  Once full confidence is restored and demand increases the rates will decrease. This is a very simple analogy but it is easier to understand than all of the elements that goes in to what drives rates up or down.

 The reality is once the government stops buying mortgage backed securities, the rates are predicted to rise sharply; presumably to the 6% and even possibly the 7% range.  They will surely not remain in the low 5% range that we have enjoyed for the past year.  Come April and May It is likely the rates will start their climb, just about the time the $8,000 tax credit is about to expire.  One thing all of the experts agree on is that rates will not go lower than the historic lows we have experienced. 

 So what does that mean to you?  Well, on a $300,000 home loan at 5% your principle and interest payment would be $1610 per month at 6.5% the payment would be $1896 per month or a difference of 286 per month that would be $3432 a year, $17,160 for five years, $34,320 for ten years and $102,960 over the 30 year life of the loan.  To put it in perspective, the $1610 per month at 6.5% would buy you a $255,000 home! That is a difference of $45,000 for the same payment (not the same home).  So whatever payment you qualify for if the interest rate goes up, it will only mean that you purchasing power goes down and you’ll be able to buy less home for your money.

 If you are waiting for rates to drop any lower, they won’t.  If you are waiting for prices to drop and the market to bottom, it has, months ago.  And in a matter of months the $8,000 tax credit will disappear adding an addition cost to buying a home.

 This is only our opinion, but if you are even remotely thinking about taking advantage of the best buyers market ever, do it now while the choices are immense, the rates are low and the opportunities are huge.  If you wait, and the rates are higher, don’t say no one told you!

FHA To Go From 3.5 to 5% Down Payment?

Don Davis ph:360-652-9994 email:dond@htlnw.com

“The only thing constant is change”

-anon

 There could be no truer statement relating to the mortgage industry than that.  As consumers, it is impossible to keep up with the changes that have taken place in the last year and the next year to come.  It is almost a full time job for us in the business to keep up as rates change daily, lenders change their credit guidelines, lenders continue to go out of business, new appraisal rules, etc…etc…

 Now congress is considering changing FHA again.  Last fall they eliminated DPA’s (Down Payment Assistance) then they changed from a 3% buyer contribution to a 3.5% buyer down payment and now they are considering changing that to 5%. 

 According to the National Mortgage News;

 “Rep. Scott Garrett, R-N.J., said he has drafted a bill that would increase the FHA downpayment requirement to 5% from the current 3.5% level.”There are increasing reports of the likely necessity of a taxpayer bailout for the FHA and this legislation aims to implement reforms to try to prevent such a bailout from occurring,” Rep. Garrett said at a House Financial Services Committee hearing. The Garrett bill also calls for a General Accountability Office study to determine the appropriate leverage ratio for FHA. In the early 1990s, Congress mandated that FHA maintain a minimum 2% capital ratio. A recent audit shows that the federal insurance fund has fallen below the 2% minimum. But FHA officials say the insurance fund should be able to maintain a positive capital position and FHA will not need taxpayer assistance.” Source: National Mortgage News

 In the fore shadow of a teetering housing recovery, this could be a dagger to the entire real estate industry and all the trades depending on the housing recovery.  This will only make it harder for average Americans to afford a home of their own.  Landlords will be dancing in the streets and watch as your rents increase with reckless abandon.  In Snohomish county the average price of a home is just under $300,000 at the current 3.5% down payment that would mean you would need $10,500 down to buy a home with FHA.  The new rule would require you to come up with $15,000 for a down payment.  This begs the question “how will this help the economy to recover?”  While this is only at the bill submission stage, and not policy, it will be interesting to see what kind of opposition occurs and who opposes this terrible increase.  If this doesn’t happen, it would seem that the funding fee and monthly mortgage insurance premium would increase.

 The good news is that this hasn’t happened yet and if FHA is your loan of choice it is still 3.5% down at least for the near future.  Also if you are active military or a veteran of the military you still have the VA home loan option for zero down.  For the rest of you that don’t have this benefit there is the USDA/Rural home loan for moderate incomes to buy homes outside the metro areas that is also a zero down payment home loan.

 As always I welcome your questions and comments.  Fell free to contact me anytime.

Don

How Low Will or Can Housing Prices Go?

Don Davis Ph:360-652-9994 email:dond@htlnw.com

Is it the right time to buy? If I had a nickel for every time I’ve heard that in the last six months! Here is the reality of today’s market. While there may still be some volatility in certain local segments, it is very much a supply and demand. As long as the supply (inventory of homes on the market) remains high the prices will remain soft. That is the reality of today. However, once the inventory decreases to below a 3 month supply the prices will firm considerably. Even more important is when the inventory of existing homes falls below a 30 day supply. How long will that take? Well the short answer is; in a while. What drives a real estate market is employment. Employment affects population increases or decreases and thus controls the need for housing. If employment opportunities exist and continue to bring people in from outside this market then the need for housing will continue to grow. With that said, we are in a  stable employment climate here in the Puget Sound region with some areas stronger than others. This is what creates a housing market. If no one wants to live in a particular area, usually because of lack of employment opportunities, then the property values are low to very low. Conversely if there is a high demand for real estate then the values escalate. A local comparison would be comparing Everett to Omak. Compare the employment opportunities and you’ll see the correlation to housing costs. Once the market is deemed “desirable” then one needs to consider the value of the property itself, the dirt without a home. The value of the lot is the basis cost of what the property with the home will be valued at. An identical home built in Bellevue or Snohomish or Mount Vernon will essentially be the same cost for the structure, it is the cost of the lot that will affect the ultimate cost of the home. This is why a home in North Snohomish County is less than the exact same home in South Snohomish County. When appraised, every appraisal will compare like homes in a relatively close area.  Also on every appraisal is a “cost approach”. This is where the appraiser will determine the value of the land and dwelling and approach the total value using a price per square foot to determine what the home would be worth as if it needed to be built. So in this example let’s say that a 2300sf home would cost $75 per square foot to build. The dwelling itself would cost about $172,500. That includes materials and labor. Add to that the value of the land that it would sit on; let’s say $125,000 and you would have a value of $297,500. Of course the cost of the dwelling would be adjusted up or down depending on what type of materials we used to construct the home. In this example all we used was just an average. In addition to that there could also be “site improvements” this is where landscaping and outbuildings and such would be considered. If a home costs $75 per square foot to build, it doesn’t matter where that house is located, it will still cost $172,500 to build that house. The ultimate cost would be determined by how much the land cost to build the home. Using the above example and the fact that Washington State has a Growth Management act (GMA) where no county can overbuild based on population growth projections; it should be clear as to why this market has remained somewhat stable. Yes homes did appreciate too rapidly a few years ago. But if you bought a home prior to 2005 your home should be worth no less than it was in ’05 or ’06 even though it might have been worth more in ’07 and early’08. There is a finite amount of land available. King County is essentially out of buildable land. Most of South Snohomish County is used up. Add to that the fact that most building has come to a complete stop with very few permits issued in the last year and only a handful of new homes being built and you can see that once the inventory decreases what kind of impact that will have on the values. It comes back to supply and demand. Now, once again using the above example on what it costs to build or value a home, the cost to build the dwelling won’t go down by much even in these tougher economic times. Only the value of the land will adjust. The price of existing homes will almost always be less than that of a brand new home that is why appraisers use similar age homes with similar floor plans to do their comparables. What has decreased essentially with the price of a home is the value of the land it sits on and even in this market some homes actually still appreciate because of the value of the land (try getting a bargain on water front property on Mercer Island) if it can’t be duplicated and they aren’t making more land, then the value will remain as long as there is the stable population to support it. Bottom line; there is a pent up demand for homes in our local market. We have had over 1% population increase every year this decade and projections show that it will continue through 2025 (just look at the Snohomish County comprehensive plan) If builders are not currently applying for permits and most of the new construction is actually remaining inventory from last year, how long will it take to deplete the inventory of existing homes to where we are under a 3 month supply or less? It will take a while, but once reached the demand will do what demand does and start driving the home values back up. That is why now is a great time to buy a home. The market has remained stable for most of this year and we are actually approaching a four month inventory. It won’t take much to drop the inventory even lower. The builder’s banks aren’t lending money for new construction, and won’t be for at least the next couple of years.  And even then they will do it only after the market has fully recovered.  The interest rates for mortgages are still at or near record lows. So if you are looking to buy and live in a home for at least the next five years draw your own conclusion as to when you think the best time to buy is.

Below is a chart of homes sold in the four county Puget Sound region for the last 9 years.  We are at or above the statistical average for amount of homes sold per month!

2000 to 2009 break down of sales per month

  

 

 Above is the statistics from Northwest Multiple Listing for King, Pierce,Kitsap and Snohomish Counties. If you look at home sales over the last nine years, remember we came out of the last recession the first part of the decade, you can see where we are at compared to previous years. The statistics are compelling and as people become more comfortable with the emerging economy and taking advantage of the affordable prices and interest rates, I think you’ll find this to be a very appealing market, if you’re a buyer!

Questions? Comments? Feel free to contact me any time.

Don

$8,000 First Time Buyer Tax Credit

Don Davis Ph:360-652-9994 email:dond@htlnw.com

It is unclear at this point as to whether or not the Federal Government will extend the $8,000 first time buyer tax credit.  So as far as any of us are concerned we have to believe that it will come to an end on the 30^th of November 2009.

With that said, you should be mindful that if your home purchase is not completed by then you could be in jeopardy of not receiving it at all.  That really only leaves about a month and a half to find the home you want so it will close in time.  If you are purchasing FHA/VA or conventional it takes about 45 days to close a transaction from the time the Purchase/Sale agreement is mutually accepted.  If you are buying USDA/Rural add about another 30 days on top of that because the USDA/RD regional office is that backed up with applications.

The $8,000 tax credit is for first time buyers as defined by “if you have not owned a home in the last three (3) years.” It doesn’t matter how many you owned prior to that it is just the last three.

So, cowboy, if you ‘er a lookin to git that house ‘fore the deadline, git on yer horse and ride.  In other words you better “Git ‘er done.”

Feel free to contact me with any questions or comments.

Don

Don’t Let Your Mortgage Payment be Reported Late!

Don Davis Ph:360-652-9994 email:dond@htlnw.com

 I have had numerous calls since the demise of Taylor Bean Whitaker, mostly those that have been making payments on line.  The problem seems that the day they were shut down by HUD, they also shut down their computer systems and any employees left were just a mere skeleton crew.  HUD took over operations of TBW but I’m certain someone was unhappy by the sudden and rapid closure that they maybe did a little sabotaging of their computer systems.

 If you have a loan with TBW, I suggest that you mail your mortgage payment in as early in the month as you can.  Since it appears that the on line system isn’t working or back up yet, you will have to mail it.  Let me recommend that you send it certified mail with receipt of destination.  This is not the time to have someone screwing with your credit because they screwed up.  You want to make certain that your payment is received on time and that you have documented proof.  Who knows what standards that they have to provide for the mess that TBW is in and you should not be a victim of somebody else’s problem or inattention.

 I’m sure that in the next few week that there will be some kind of correspondence as to where and to whom you’ll be sending your mortgage payment to. In the meantime, mail it in certified or registered mail and protect yourself and your good credit!

 If you have any questions or concerns feel free to contact me.

Don

Death of a Lending Giant!

Don Davis ph:360-652-9994 email:dond@htlnw.com

As we enter August, lenders around the country were stunned, including me, when we heard the new that Taylor, Bean Whitaker had been shut down.  To the laymen, Taylor, Bean Whitaker (TBW) may not be a household name, but they are one of the largest independent mortgage lenders in the country,  they are the third largest FHA lender in the U.S. and overall 12^th largest in all total mortgage volume.

 FHA, HUD, suspended TBW and will no longer accept loans from TBW.  Ginnie Mae will take control of the company’s nearly $25 billion portfolio of its loans, HUD said.  For all intends and purposes TBW is finished and may never fund another loan.

 TBW was one of the last lenders to have the least stringent underwriting guidelines.  They were more lenient than most if not all lenders.  They were also one of the few that would loan on manufactured homes for VA, FHA and conventional financing as most other lenders left that segment of the market months if not years ago.

 The impact of this will have a HUGE a ripple effect.  First of all anyone who has been waiting for a TBW underwriter to look at their file will have to find somewhere else to place their loan application.  This is profound in this market because it will surely add to the cost of that loan or the ultimate denial. If the loan is doable elsewhere it will surely extend beyond the close date on the buy/sell contract.   Fortunately for me and my clients, I currently have no loans with TBW.  I do feel sorry for those that do as they will probably not get done at all.

 The existing volume and near future volume of loans that was going to TBW will now go to the other lenders that are still around.  TBW was approaching two months backlog in underwriting.  That is a huge number of loans that were waiting to be reviewed and cleared to close.  They now have to go somewhere else which will surely back up the other lenders that receive them.

 It will be even tougher now to get loans closed.  This is just another in a long list of lenders who have gone away and the ones that remain have less competition and will be looking for even stronger files to close.  If you don’t have a competent loan officer, this will spell disaster for you.  Loan professionals need to understand how to get loans done in this market.  If there is even a small issue with a file, it could cause it to be declined.  Credit issues are the number one reason lenders will turn a file down.  Not only will the scores need to be higher but past credit issues will have to be addressed.  Your mortgage professional needs to competent and clear how to help you address these issues.

 In a market where the government is spouting off about how they want to help home owners and home buyers, and get the housing market going again, they continue to make lending on a home more and more difficult.  The government continues to change FHA, VA and USDA guidelines.  They change appraisal guidelines. They change disclosures and add to the already confusing stack of documents you already have to sign.  They close down major lenders instead of finding ways to correct problems.  And as a result of TBW going down they will surely find new ways to complicate a fragile market.

 This is just another challenge we need to face and once again, with competent help from a mortgage professional, you can still take advantage of what is undoubtedly the best  Buyer’s Market in history.  Iif you have questions or concerns feel free to contact me.

 Don Davis

Guilty, Guilty, Guilty Until Proven Innocent!

Don Davis Ph:360-652-9994 email:dond@htlnw.com

 You are guilty until proven innocent is the way the credit reports work. It doesn’t matter if the account isn’t your and it doesn’t matter if you can even prove it. If it is on your report… it must be yours. It doesn’t matter if it is reported in error. It doesn’t matter if it isn’t yours. It doesn’t matter if you never missed a payment and it shows you have. If it is on the report…guilty! These are the kinds of errors that exist on credit reports today. Because it is on YOUR report means that it must be yours. This can be an account that is listed as yours but you don’t have what ever it is. For example, I have a client who has an account listed from Honda Finance. This is not his account. It belongs to some one else with the same name. They live in different states and have entirely different social security numbers. It is listed in error on my client’s credit report! I can supply documents that show this belongs to a different person, including phone number, address and everything that clearly shows this doesn’t belong to my client. But it is on the credit report and the lender takes that as the gospel truth, despite documents stating otherwise. Because of this it is preventing him from obtaining financing to buy a home.

Do you think the credit bureau cares? Do you think Honda Finance cares? No. In fact Honda customer service states that they have no mechanism to refute an erroneous entry. Yes they are the ones reporting to the credit bureau and no they don’t have any way to change it. I have personally spent hours on the phone with Honda to correct this problem and to no avail. They can verbally say that the account doesn’t belong to my client with the social security number I gave them, but they cannot put anything in writing! They suggest that we send a request to the credit bureau to correct the error.

Okay, here’s how that one goes. I supply the credit bureau the information to request that the erroneous account be removed. The credit bureau responds with “account verified”. This is because Honda Finance is the one supplying the information. The credit bureau’s computer sends Honda’s computer the challenge as well as the information that it is reporting. The Honda computer compares that with what they send to the credit bureau (how do you think the bureau got the info in the first place) and the account comes back “verified”. That is because it is the same, erroneous information.

So we contact Honda once again and explain that until they correct the information they are reporting, it won’t change the outcome. They say “we’re sorry, we can’t do that”!

A vicious circle

This is a system that is screwing with peoples lives. This particular client has been haunted for years, just because his name is the same as someone else. And it isn’t fixed yet.

As a mortgage professional I do have solutions. This is only available to mortgage lenders and not to the general public or to any other types of lenders. I can get a credit supplement or a rescore. All I have to provide is the documents proving that, in this case, the account belongs to someone else along with supporting documents and in three to seven business days the problem is cured. This is unlike what it would take you to fight this. In fact this same client had spent over two years clearing some other accounts that were listed on his report that were the other person’s accounts. It would have only taken me days. The key is that there needs to be proof that it belongs to someone else. Or in other instances that an account is being reported in error or that the account is paid off or there are no late payments. In virtually every instance, if I have documented proof, it can get remedied in a matter of days.

I have a very big distain for the credit reporting agencies. While everyone may think that their business is reporting, fairly and accurately, your credit history, in fact their main source of revenue comes from selling your information to marketers. Around 50% of their entire income source is generated from selling your information. This is where their time and energy is really spent, making money off of the information they collect about you.

So next time you think the credit bureau should care about you and a fair and accurate report about your credit history, think again.

Questions, comments? Let me know what you think!

Don Davis

dond@htlnw.com

360-652-9994 ext 1

Just A Reminder

Don Davis Ph:360-652-9994 email:dond@htlnw.com

I was going to repost this but didn’t really find it necessary.

 I just want to remind everyone that the clock is ticking on the $8000 tax credit the is set to expire (no one knows if it will be extended or not, why take the risk) November 30^th. 

What that really means is that in order to qualify to get the refund, amend your `08 taxes or wait until you do your `09, you need to have the loan closed.  To assure that will happen in time it really means that you have until the first part of October at the latest.  It is already end of June first of July and that will only leave a few months to take advantage of $8,000 free money.  Of course if you have no ambition to buy a home then this is meaningless.  But if your desire is to own, then you might want to get a move on, pardon the pun.

 If you have any questions or need any help, don’t hesitate to contact me.

 Don Davis

Credit Reports; Garbage In, Garbage Out

Don Davis email: dond@htlnw.com Ph: 360-652-9994

 It seems incredible that something that can control your financial future is   devoted primarily to an automated system.  But yet it seems that this is the way the credit reporting system is designed. 

Somewhere a clerk (data entry, typically not a high paying job) at the lender or creditor sets up your account and what gets reported to the credit bureaus.  Sounds simple enough?  They just make sure that your account is reported with the correct information and you would have to think that they double check things like the spelling of your name, social security number, address and so on…against the information you have listed in your credit report.  WRONG! 

Somewhere the credit bureau receives this information and surely someone would check it against what is on your credit report.  Things like the spelling of your name, address, social security number and so on…WRONG!

 Here’s the way it usually goes.  A clerk enters the information in to a data base that gets sent to the credit bureau.  Never mind that they spelled the name wrong or that it may not even be your account, it just goes in.  Next the credit bureau receives that information and compares it against other people with similar names, address and social security numbers (not necessarily all of those and not necessarily in that order). Sometimes if it seems close the credit bureaus computer puts it on your report.

This is what happens daily and why there are almost 80% of the credit reports with errors.  Almost 30% have errors serious enough to deny credit, even though the report is completely wrong.

Such is the case with Mr. John Spanger (changed the name for privacy reasons, but its close) John Spanger lives in Bothell, Washington and works in Redmond.  There just so happens to be another John Spanger who lives in Idaho (in a suburb outside of Boise).  The Idaho Spanger has a motorcycle loan and two credit cards that are listed on John Spanger of Bothell’s credit report.  Two years ago John Spanger of Bothell mailed and emailed the credit bureaus the errors and asked that they “investigate” and clear the Idaho Spanger items from his credit report. The bureaus send an account challenge to the creditor and the creditor compares what the bureau says and what they say.  Unfortunately the info the bureau has and sent the creditor is what the creditor sent the bureau, so guess what?  They match and the account stays the same.

In this real life instance, John Spanger of Bothell is trying to buy a home.  The motorcycle and credit card of John Spanger of Idaho are paid on time and the payments are not enough to substantially increase his debt load so the application is submitted simply with a letter of explanation stating that the motorcycle loan and the credit card aren’t his. But he has no proof.  The application is submitted, he finds a home and the file is sent to an underwriter to clear the loan and get it closed.  Even with the erroneous accounts there shouldn’t have been a problem.  But, alas, the snake came out of the grass and bit him.  John Spanger of Idaho missed a payment on his motor cycle that showed up when the underwriter pulled a credit report just prior to clearing the loan. (The underwriters do this to make sure that nothing has changed in the borrowers financial life that would add more debt or missed any payments that may lower a score).  The original credit report was clean without any late payments on any account.  5 weeks later the credit report had updated for the prior month and now shoed a 30 day late on the motorcycle.  LOAN DENIED.  

This file isn’t closed yet as this gets written.  We are fighting with the credit bureaus, creditor and underwriter to prove the account is not his.  we have provided each of them information provided by John Spanger of Idaho to help prove the account is not John Spanger of Bothell.  Incredibly the information provided is an entirely different social security number and since John Spanger of Bothell is in the Washington State National Guard we have also provided a history of where he was posted.  Of course the Washington National Guard doesn’t post personnel in Idaho and all the postings and residential addresses were entirely in central and western Washington State.  Was this good enough for the creditor and the bureaus? Not yet.  The challenge once again came back that the account belonged to John Spanger and it remained on both John Spanger’s credit reports.  We are however pretty certain that the underwriter now can see a clear picture and has the original contract from John Spanger in Idaho and it appears that the loan may actually close, albeit a couple of weeks late and an added cost to both the buyer and seller.

The moral of the story is; check your credit reports often.  Make certain absolutely everything on the report is yours.  If there are ANY ERRORS start working to get them corrected now.  Do not give up until the credit report reflects an actual image of what you have and the accounts are yours and yours alone.  If you wait or hope the errors go away, you may wait a very long time.  It can also cost you if any of the information can hurt your score or your chance to obtain credit or insurance or even a job.

 

Don Davis

Why It Is Impossible To Quote You The Interest Rate You’ll Really Get

Don Davis email: dond@htlnw.com Ph: 360-652-9994

I constantly get requests for rate quotes.  Here is the problem with rate quotes, it is fiction.  It does not matter what rates are today. In almost every instance you will never get today’s rates unless you are in the middle of financing your loan.  This means that if you are purchasing a home, you have all the paperwork filled out with the lender, and you have mutual acceptance on a purchase/sale agreement on the home you want.  If you are refinancing, you have filled out and signed all of the initial loan documents.

If you haven’t done any of that yet, you cannot lock a rate and will be offered the rate that is available at the time you have completed those things.

Mortgage interest rates change daily.  Sometimes several times a day and if I quote you a rate that is good right now, even a couple of hours later it might be lower or higher.

There are also several other factors that go in to what rate you might receive. What kind of loan are you getting? Is it conforming, conventional, FHA, VA or USDA?  What are your credit scores (lower scores means often higher rates)? How much are you putting down (lower LTV’s often mean better rates)? What is your Debt to Income (DTI)?  While you may be able to get a loan with a high DTI the rate may also be higher as well.

And then there are the ads you hear and read about. More times than not those are “teaser rates” (more like bait and switch).  If everyone is offering somewhere around 6% and there is this “special rate” at 5.%, there is some catch (if it seems too good to be true…).  It is usually a buy down rate that requires the interest to be pre-paid to get the lower rate.  This can be and usually is an expensive option.  It could also be (depending on the market) a ARM rate.  I’ve heard so may Ads say we have a “fixed rate” at 5%.  They didn’t say 30 yr fixed, just fixed.  With a 5year ARM the first five years are fixed.  So while it may be true that they have a 5% “fixed rate loan”, it is misleading and most people think it is a 30yr.

I can give you many more examples but I think you get the point.

The reality is, find a lender that you trust and have confidence in to help you get a good loan with a good rate.  With the volatility in the rate market changing daily, take your mortgage professional’s advice and lock at the rate that is good for you when you can.  But if you base your home loan shopping for who quotes you the best rate before it can ever be locked in, you are basing your most important financial decision on the wrong thing and you will surely be disappointed when you really can lock in your rate.

 

Don

The Credit Bureaus, Who is Their Customer, Really?

Don Davis www.htlnw.com 360-652-9994

 When it comes to the credit reporting agencies (CRA’s), Equifax, TransUnion and Experian, do you ever wonder how much they care about you and the information they carry about your entire financial life?

Well in reality they don’t care much, if at all.  You are really not their customer. You are profitable data. 

The creditors, lenders, collection agencies and those looking to buy their lists of your information are their customers, NOT you.  You are a commodity to the CRA’s whose main business, contrary to popular belief, is to sell your information.  One of the CRA’s makes almost half of its income from the sale of data lists.

You, in fact, are a cost to them not an income stream.  If you have issues with the information that the CRA’s use to determine your credit score and challenge the report(s), it costs them money to let you be heard.  There are laws that require your information be accurate (as much as 79% of all credit reports contain wrong information).  But enforcing those laws requires you to file suit if the information isn’t changed when you submit the challenging documents. 

A lot of people are surprised when they find out that the CRA’s are just companies that answer only to their shareholders to maintain profitability and a return on their investments not a government agency.  I dare say that nothing in their business plan has anything to do with making you a satisfied Equifax, TransUnion or Experian customer. And their “Customer Service” departments that service your requests are often outsourced somewhere over seas to further reduce costs (and increase your frustration).

So when it comes to your credit report and the CRA’s and their interest in you and doing the right thing by making certain that those three little numbers that determine your financial character is correct, do you think they really care?  After all a customer is someone who pays for a service and by paying for that service they can expect “customer service”.  So now do you still think you are their customer?

Don