The End

Don Davis email:dond@htlnw.com

Hello to all of you,

Needless to say this has been a very difficult last three years for the real estate business in general and the mortgage business specifically.  Virtually everyone associated with homes have suffered greatly.  That includes real estate agents, appraisers, title companies, escrow companies, builders, contractors, subcontractors and all of their suppliers.  There are hundreds of thousands of  people associated with the housing industry that are out of work and searching for something to make an income to support their families. They are good people that build this country.  The unemployment numbers rarely indicate how deep this runs because unemployment claims are shown essentially for W2 employees.  So those numbers don’t show how it has affected the self employed people who build and sell the homes that we buy.

After a long and protracted downturn in the housing industry and the expected time of a real turn around (up to five more years) I have decided to move on.

In this last year I have had to tell so many people “no” they can’t get a mortgage that it is depressing.  The lenders have tightened their lending guidelines to a point that it will be very difficult for 60% of the population to get a mortgage anymore.  Not only credit scores but credit history is scrutinized beyond belief.  Appraisals are re-appraised and sometimes re-appraised again, costing the potential home buyer so much more money than is necessary.  Lenders are afraid to make decisions on good files because they are liable for so many things that could result in them having to buy the loan back.

The lenders are far more conservative than ever before, and that includes prior to the introduction of sub-prime loans.  Thos sub-prime loans didn’t even come in to being until almost the mid 2000’s and lasted only a few years.  But, the lenders are even tighter than they were in the 90’s.

In the last three years I have had over 1800 opportunities to help you get a home loan and live the American dream.  There has been a $8,000 tax credit to help “stimulate” the home sales (HUGE mistake by the government) an out of all of those I have had to say “no” to all but a handful.  It isn’t just because of credit issues.  Some made offers on “short sale” homes that the mortgage holders couldn’t make a decision even after 9 months.  Others were buying a “Bank Owned” home and were not habitable and the appraiser pointed out every deficiency.  Others couldn’t prove their income (self employed) and thereby weren’t able to qualify for any mortgage.  Some had minor credit issues that were long resolved. The list goes on and on. 

And so the time has come for me to move on.

It is with mixed emotions that I leave.  I have really enjoyed working with you over the last 12 or so years and I can truly say that I have made some very good friends.  I have helped people understand and manage their credit scores so they will never again be a victim of such an absurd system. I also look forward to a new challenge as I turn another page. 

Feel free to drop me an email with your thoughts.

Thank you for your letting me be part of your lives. Thank you for the friends that I have made and thank you for your trust.

Don

What You Want To Hear?

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

I know it’s been a while since I last posted and for that I am sorry.  I will endeavor to be more consistent in the future. 

I have been working on a lot of different things lately as well as getting great financing for great people.  I will share some of those stories in the near future.  However, this brings me to what prompted me to write this post.

In this environment, while everyone expected rates to increase once the FEDs stopped buying mortgage backed securities, rates have decreased.  Last week it was possible to lock your rate (on a purchase that would only be possible if you were under contract) for under 5%.  Yes that would mean that there would have been a 4 as the first number and point something something. That would be for a 30 year fixed rate mortgage.  Unbelievably there were ads on radio and on the internet for rates under 4%!  In fact there were several in the 3% range, stating that they were fixed rate loans.  Today as I write this rates are bouncing in the upper 4% to lower 5% range and that is the note rate NOT the APR which is always going to be higher because it takes into account the fees associated with your loan.  In the mortgage business if you are quoted an interest rate you also must be given the APR as well or whoever quoted the rate is in violation of a very basic FTC rule.  I also feel that the disclaimers at the end of every ad should be spoken or written in plain English and very visible (now I’m dreaming). 

I did look and saw that I could do a fixed rate loan in the 3% range.  It would be fixed for the first three years and then subject to adjustment for the remaining 27 years.  I could also show discount points (buy down the rate) and you could lower your rate that way as well.  All you would be doing is pre-paying the interest up front.  That is why disclosing the APR is critical, because the more you spend up front the higher the APR would be.  To take a 5% rate and buy it down to 4.5% on a $250,000 loan would cost approx $12,000 up front PLUS the normal closing costs.  And all you did was pay the interest up front instead of over 30 years.

Those of you who have done business with me through the years never came to me because I advertised low rates.  I will work to get you a fair and competitive rate but even if I had quoted you a rate it almost would never be the rate you would end up with.  That would not make for a very good business relationship. 

I could spend hours writing about this topic and how it all works.  What I can do is suggest you find a trustworthy loan officer that speaks in plain English and explains how the process works and all the documentation involved.  Also I hope that they explain how rates are determined and demonstrate the ability to get you a competitive rate. 

If you ever feel uncomfortable or feel misled, don’t walk but run and find some one you trust!

you might find this interesting as it is written by one of our industries continuing education leaders. http://mortgagefiduciaries.com/2009/05/paramount-equity-consent-order/

Fixer Upper Financing!

Don Davis

A little while ago I wrote about “Homes for Sale—Not to You”.  Well here is a great solution to that dilemma.  It is “FIXER FINANCING”!

Yes,  just as the name implies it is a home loan designed to accommodate the purchase of the home and to do some of the necessary repairs or remodeling needed to clear the lenders underwriting. www.FixerFinancing.htlnw.com

While we have been doing this kind of loan for quite a while, I have found that most people don’t know it exists.

It does require a critical eye when looking at a house that has some issues and trying to see that house as if the needed work was already done.  The home might need a new roof for example or the siding may need to be repaired or replaced.  The home might need new carpets or flooring and so on.  With this loan the sellers will almost always accept it as acceptable when making a offer on a home.

The great part about this particular home loan is that it doesn’t mean that it can only be used for “fixer uppers”.  Consider this, you are looking at a home that is in pretty good shape and you think that if it only has a remodeled/updated kitchen then it would be perfect.  This loan will work for that!  Remodel the kitchen, install new counters and cabinets, install new appliances and finance all of this in you loan with the proceeds of the loan funding the remodel!

To get more complete information and terms and conditions please go to www.FixerFinancing.htlnw.com

 Don

Is Your Rate Locked Or Are You Floating?

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

Rates, rates, rates!  What is difficult to predict is what rates are going to do week to week let alone day to day.  I have seen the rates change up to five times in just one day and change up or down by over 1%!

 In today’s market, often times your rate isn’t locked on the day you sign.  The reasons are varied.  Sometimes a loan needs to be registered with the lender in order to lock the rate.  Other times the trends may be shifting downward and you would want to wait a few days or even a few weeks to lock at a lower rate. 

 With the GFE (Good Faith Estimate) you will clearly know if you have locked your rate or not.  If you have not, your rate can change up or down from the rate that is used to estimate your costs and payments.  Make certain you understand the terms illustrated on the GFE.  Sometimes your GFE will show a rate, but it is not the rate you’ll get.  This is because a rate needs to be used (it cannot be left blank) and may of us typically use a higher rate just to be conservative if the rate cannot be locked that day.  Let’s say for example that when you sign your disclosures that a rate of 5.25% is used, but it can’t be locked because the loan has to be registered with the lender.  The GFE will show that that rate is only good that day, usually for a couple of hours and that you must lock your rate sometime during the loan process.  Now let’s say that rates have gone down to 5% a few days later.  Your loan officer will contact you and advise you of your options (lock or continue to float).  Once your loan is locked, it will be good for a specific period (usually 30 days).  Until your rate is locked, it is not necessarily the rate you’ll get.  Only when the rate is locked can you know what your rate will be.

There are a lot of documents that you sign when you sign your disclosures and a lot of information is given. It is easy to get overwhelmed or even confused by the sheer amount of documents and information.  Just understand that if you are able to lock you rate at that time, that will be your rate or if you choose or have to wait to lock that the rate can and usually does change, most of the time for the better.

 If you have any questions about your rate or any terms of your loan, DO NOT leave your loan officers office until you are satisfied with the answers.  If you are not satisfied, DO NOT sign anything!

 It is always advisable to find a local professional that explains the process, the documents and rates and terms in words that you understand.  This is something that they do every day and you only do a few times in your life.  You owe it to yourself to be comfortable with the people you work with.  Any questions?

Don

Homes For Sale?___Not To You!

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

Un-sellable Homes?  I don’t know if “un-sellable” is a word or not, but this would be a house that is sale proof, not sellable etc…. there are currently two kinds of homes that fall under this category.  One is the “short sale”.  These are homes that the current owner is trying to avoid foreclosure by offering the home at a price that is less than they owe on their mortgage, thus Shorting the mortgage holder of the amount owed.  In the vast majority of the homes that are selling short, the lender has not approved the sale price; in fact most don’t even know that it is for sale.  You make an offer, the agent submits it to the owners mortgage company(ies) and everyone waits for an answer.  This could take months and often even if it is a “full price” offer the bank comes back with either a decline or a higher counter offer.  The sad part about this is the selling agent did not do their homework and usually has absolutely no idea what the owners mortgage company will accept, if anything.  When the home doesn’t sell “short”, the lender forecloses and now it becomes REO (real Estate Owned) or “Bank Owned”.

Which brings me to number two; bank owned “un-sellable”.  The owner didn’t make their mortgage payments and couldn’t sell short, the home didn’t sell at auction (none of them do anymore) so now the bank owns the home and is trying to get it sold.  In most cases it take about a year from when the owner ran in to trouble to the time the bank ultimately owns the home.  In that time the owner did little if anything to maintain the home and once foreclosed the home is vacant.  Now here is the problem; most of the banks that own these homes are unwilling or unable to repair any deficiencies in, on or around the home.  Windows may be broken. Siding might be peeling or deteriorating. Flooring might be missing or built in appliances missing.  The roof might need attention or replacement and the list goes on.  What is beginning to surface is the bank (the current owner) will only accept offers on the house for cash or conventional financing only.  Offers made where you have obtained a pre-approval for financing with FHA, VA or USDA loans are being turned down because the bank will only sell the house “as is” and not consider repairing any problems.  Once an appraiser goes out to look at the house and appraise its value, they will look for any obvious problems.   If they see a problem like siding that is rotting, moss on the roof, no carpet in a bedroom just sub-floor and so on, they have to indicate on the appraisal the problem conditions that exist.  Your lenders underwriter will not make the loan on the house until these problems have been addressed and repaired.  The loan will not fund until repairs are made.  You, as a buyer, won’t fix these things before you own the home and the bank that owns the house won’t make the repairs because they don’t want to spend the money, regardless of how sweet your offer might be.  They say that they will accept conventional financing offers but I can assure you that it will be treated the same an FHA, VA or USDA appraisal in that the appraiser will not ignore issues with the home because of the type of financing arrangement you have.  So essentially the home is offered as cash only.  Ironically FHA does have a “rehab” loan program that will allow for any and all deficiencies to exist.  The rehab loan takes in to consideration that repairs might be necessary and will finance not only the home but the repairs as well.  The bank that owns the home isn’t accepting offers with FHA financing so even though you are willing to buy a “project” and accept the house as is and your lender is financing repairs, your offer will be rejected.  This is happening daily.  I have many clients that are currently out seeking a home to buy and their offers continue to be rejected because they are not privileged enough to pay cash for the home and ignore any existing issues.

To me this is counter intuitive.  We have all of these houses out there for sale and most of them are sale proof.  They will sit on the market for a very long time and skew the statistics.  Home owners are reluctant to put their homes on the market because they feel that the price they ask has to compete with the sale proof homes.  Prices on “short sales” are often times ridiculously low and “bank owned” homes are priced below market, but have problems and are essentially sale proof as well. Buyers are getting frustrated because they can’t make offers or their offers are rejected.  Time is running out on the tax credit and interest rates will soon be rising.

Most of the banks that own the homes have received bailout money, Wachovia/Wells Fargo for example, received BILLIONS of tax payer money to bail out of their mistakes and they are now making it virtually impossible for you to buy a house they own.  This sits on their books as “toxic assets” while their executives pull in huge bonuses.  Pretty weird, huh?

 The agents that list these homes, in my mind, should be punished for “bait and switch”.  They list these homes knowing full well that they will not sell and that the owner either will not accept the offer or the financing terms that you have been approved for.  The listing agent lists these homes as a marketing tool to make contact with you.  They usually explain that the house won’t qualify for your offer and they will proceed to then show you homes that are available.  You have been duped!  You came in looking for a bargain only to find out that you’ll never be able to buy that one and for the price you either must consider a home that is smaller, further away or more expensive.  Sounds like bait and switch to me.  There are a lot of agents struggling to get clients and some will do anything to do so.  A good agent in this or any market understand what is right for their clients and are able to take care of them and not lure them in on false pretenses.

 My recommendation is to always be represented by a “buyer’s agent”.  This agent is on your side and will look after your best interests and sift through the plethora of bogus deals on the market today.  When you find a home that meets your needs and will qualify for the financing you have chosen, be prepared to submit your offer quickly and be reasonable.  Your agent can run CMA’s (Comparative Market Analysis) to assure you the price range is valid for the market.  It can be a confusing market, but with the right help you can buy right and eliminate hoping to buy a home that will never sell.

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 6,000 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