FHA Flips!

HUD has long required properties to be held for 90 days by the seller before the property could qualify for an FHA mortgage loan. Effective June 9, 2008, HUD has waived the 90 day requirement in regards to homes being sold by lenders who foreclose on a property.

CLARIFICATION: After further review it appears that this waiver will only affect properties for sale by mortgage companies due to foreclosure and the companies that they transfer the proeprties to in order to sell. Investors who "flip" properties may still be subject to the 90 day rule.

This waiver is good for only one year and will expire June 9, 2009.

For more information on how this will impact Charlotte FHA mortgage loans, visit Charlotte Home Loans

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As a HUD approved FHA mortgage lender, Ed Nailor can provide FHA loans for home owners and home buyers in the Charlotte area (including Concord, Gastonia, Matthews, Monroe, Huntersville and Ft. Mill as well as all of North and South Carolina.)

Apply online for your Charlotte area FHA mortgage loan
or call 704-651-8704 for your free mortgage consultation.

What's Your Shtick? You got one, right?

"Oh, so you are a mortgage guy huh? What's your Shtick? What gimmick do you run?"

This was the question laid before me by someone calling themselves a sales professional. I asked, "what do you mean...Shtick?"

"You know... what's your game? How are you different from the rest. I see all those websites out there offering free quotes, no 'hidden' fees (wink wink) and claiming to revolutionize the mortgage world. Where do you fit in? What's your Shtick?"

Wow! Is that what we have become? Is the mortgage world this messed up? Have we relugated ourselves to such insane and insulting levels? Maybe so...

I too see the gimmickry going on. I see the websites offering ways to revolutionize the world! All claiming that for years lenders have been stealing from borrowers and now they will turn the tables. I hear the ads on the radio, "We'll use the lender's own money to get you a better rate!"

Its all a game it seems!

I remember when I was younger and wanted to buy my first home. The real estate agent I worked with suggested we sit down and consult with a local mortgage professional for advice. Gave us his name and number.

We went to visit this guy and he was great. explained how the mortgage process worked, shared with us what we needed to do and offered to help in any way we could. There were no gimmicks.. no trickery, no outlandish claims to beat back the lenders that were out to hurt us! He was simply a professional mortgage loan officer at a small brokerage.

So, what's my gimmick... my "Shtick"? I'd have to say the same thing that loan officer did for me... Honesty, fairness and respect. Treat others the way they want to be treated. If I have to resort to games it may be time for me to quit!

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Buying a home or refinancing your mortgage is not a game, nor something to be played with. If you want a real, honest and solid approach to one of the most important decisions of your life, I invite you to give me a call. If you want a "revolutionary website with promises gallore that will change the face of lending forever," well... that ain't me.

Ed Nailor - Home Mortgage Loans in Charlotte and beyond

704-651-8704 or visit EdNailor.com

My Zillow Beef, as requested

I have posted a few blog entries, and comments about issues I have with Zillow. I have been asked what my "beef" with Zillow is, so I figure I might as well just lay it out there. This is a post explaining my concerns and will leave it open to discussion and allow each person to form their own opinion.

First off, let me state this emphatically... I love this business. I am a mortgage professional. I am not a Realtor or real estate agent, but my business is directly tied to that of the real estate agents. So in general, I love what we do. I love the professionalism that most of us, at least here on Active Rain tend to work within. I love helping a home buyer discover that they can actually buy a home and acheive that dream. I love going to the closing and seeing the smiles and excitement and knowing that I was a key part in that family's happiness. It is an honor to do what I do.

So in that light, and with everything that our industry has gone through, I kinda get concerned when I see things that have great potential to cause our industry harm. That is where I see Zillow, in its current form.

This post will not be a personal attack, but David with Zillow has addressed me directly, so in some of this I will answer his questions. And bear in mind.. this is simply my opinion, so one is free to accept it or dispute it. That is the freedom we all have in this great country!

My concerns:

1. The Positioning of Zillow. Zillow is an advertising medium designed to attract visitors and make revenue off of advertising. Contrary to what David said, I have no problem with Zillow making money. I encourage that, as making a buck is what keeps us all going. I do not hate Zillow, Google or any other website for making money in advertising. I too have made a buck or two in advertising... its a great medium.

My problem is in how Zillow has positioned itself. Call it great branding, but Zillow has positioned themselves to appear to be an information portal. They are working diligently to offer free "tools" to help "educate" consumers to make good choices in real estate. However, the tools they offer are often grossly inaccurate and very misleading. Their own disclaimers tell you this, if you read the numbers. However, most Americans do not read the disclaimers. We breeze through the license agreements when installing software. We assemble things without the instructions. It's our nature. So Zillow can get by without too much issue here because people don't take the time to read it.

If you are going to position yourself as something that offers advice, especially on something as important as property values, you better have your stuff together. This is not predicting the weather. People have lost millions due to the abundance of misinformation, and the gross inaccuracies with Zillow's "zesitimates" are a major concern. I hope they get this fixed and quick.

2. Lack of Accountability. If an appraiser miscalculates the value of a property, he can lose his license. If a Realtor misrepresents information on a property, they can lose their license. If Zillow gets it wrong, oh well. Yet, they have positioned themselves to be the "edge in real estate." In my opinion, you can only be an "edge" in anything if you are an expert, and experts usually get it right most of the time. This is where Zillow fails. And without accountability they can be off and it doesn't matter. However, Realtors and lenders have to deal with the mess. We constantly have to explain values and the inacuracies of Zillow's tools.

Side Note Realtors: How does it appear to a consumer if as a Realtor you are trying to explain how "off" and inaccurate Zillow is on a property's value, yet you feature your properties there? Mixed message I think... just my opinion.

I would love to see some sort of accountability here. David at Zillow has claimed that they are no different than other real estate websites out there that show properties for sale. This is something I disagree with. Other websites, like Trulia for example (also an advertsing medium) list every home they can find for sale in one great place. The difference... they don't express opinions on the values of those homes. This is a KEY difference. Zillow tells your clients how much the home is worth, in most cases in direct conflict with what you as the actual professional have determined.

The arguement that visitors would require substance on the website to keep coming back is not valid. Sorry. There are way too many websites and companies in existence that offer no substance, yet get major traffic. Even Paris Hilton gets attention, and we all know substance is severly lacking there!

3. Mortgage Marketplace. Now this one hits near a sore spot for me, sorry. As a professional mortgage lender, I strive to provide real numbers and quotes to my clients. This is after I have gathered enough information to do so. I do not use rates in any of my advertsing simply because by being honest, I will always be higher than other ads out there. Zillow's Mortgage Marketplace allows one side of the equation to not only be anonymous, but also allows this anonymous side to rate their experience with the lenders. (we'll cover that in concern #4) This is no different that a borrower calling 10 lenders on the phone and saying, "I got excellent credit... what's your best rate?" Well, it is different. They get to post that and have the lenders clammor to tell them.

Do you think there is much reality happening here? You have an anonymous borrower that is anonymous for a reason. In this situation, the only factor for making a decision is a rate and some fees. But there is SO MUCH MORE to a mortgage than a rate. Of course, with mortgage rates having been so low for so long, the general public has lost the idea that there is more to it than a rate. And now with rates increasing everyday and changing 5 times a day, it is almost impossible to quote a rate and still honor it an hour later! But this can lead to feeling ripped off, lied to, misquoted, baited and switched... all the stuff that we as an industry need to STOP if we ever want be held in any high regard again. Zillow's system feeds the negative view much more than the positive view we as an industry need and want.

4. Feedback system. I believe it was David (but could have been Sara) that claimed the feedback system on Zillow is like that of Ebay, allowing borrowers to rate lenders based on their experience much like Ebay's buyers and sellers can rate each other. The issue here is that one side of Zillow's system is anonymous and only the anonymous side gets to rate the other. This is unfair and makes the system fallible. Although David has stated several times that borrower's can not rate a lender unless they have made contact, this CAN, and in fact has happened. The problem here is that Zillow relies on the anonymous borrower to "warranty" that they have contacted the lender before rating them... but as of now Zillow has not provided a real way of stopping them if they have not in fact done so.

If the borrower has indeed rated a lender wrongly, Zillow can remove the feedback. But what good is this? Imagine a bad lender claiming viable ratings as inaccurate. Or worse, imagine a lender that consistently offers real numbers (Mike Muller for example) getting negative feedback over and over because his quote was just higher. After a while someone at Zillow would probably say something like... "Come on, they can all be unjustified!" But what if they are? This system needs to be fixed... it is seriously flawed.

If Zillow wants to compare their feedback to Ebay, then follow Ebay's example. Both sides have to be visible (no anonymous parties) and there must actually be a transaction to rate, not just some random quote. Ebay will not permit feedback unless you have been involved in a transaction with the other party, period. Just because you bid on an item, you can not rate the other party. It's just not an option!

5. The fact that this is all built on the backs of real estate and mortgage Professionals. Sure, we don't have to pay them for advertising homes or mortgages on their website. And they don't pay us. However, we end up here with the short end of the stick, having to overcome "zestimate" values that are way off, and mortgage rate quotes that are minimialized at best. Zillow makes money (again, good for Zillow) at the expense of our jobs. Our jobs get harder, not easier. Bottom line is that OUR reputations are the ones at stake... Zillow is just a website.

Sure, there will be success stories and to those people I wish congrats! But Zillow has some serious issues it must address. I will give them kudos for the branding image they have created. All I really want is to see them actually live up to the image.

So there you have it. Those are my beefs. Again, this is not a personal attack. I think Zillow has the potential to introduce some really cool suff, but they really need to get these items addresses quickly. Otherwise, we in our industry that are licensed professionals may very well suffer.

Zillow... Make up your own mind

Its no secret that I am not a Zillow Fan. As many of you have seen, I have had several exchanges with the folks from Zillow and have stated my opinion.

That being said, I am not out to start some crusade against Zillow. So I will leave that topic to die on its own and move on to more important topics.

I do challenge everyone that reads my posts to seriously consider the impact that websites such as Zillow might have on your business. There is a saying that even bad exposure is exposure. I am not a big fan of that saying, but then again I am not a star in Hollywood!

Just be aware of where you are looking to place the properties you sell and the services you offer. The medium in which you push your wares will reflect on yourself no matter what you do.

Personally, I feel Zillow is out to make money selling ads off the efforts and good intentions of an industry I love. I feel they are using that industry to serve themselves and putting flawed gimmicks out there simply to attract visitors. When things do not go as the visitors feel they should due to the bad information provided, they will not turn to a website for accountability.. that my friends will fall on us, the professionals.

Make up your own mind, but do not go blindly.

Zillow... I leave you in peace to do as you will anyway.

Ed Nailor, Charlotte Mortgage Lender

AVMs, ZILLOW, and REALITY

AVM: Automated Valuation Model. A system by which public data is interpretted to come up with an estimation of a property's value. Many lenders rely heavily upon AVMs. IN the past, some lenders used ONLY AVMs in their lending decisions, a practice that has left many of them facing major defaults and losses. Today, AVMs are more typically used by lenders to validate the value of an appriasal. If the appraised value and an AVM value are dramatically different, the lender will require a review of the apraisal, or a second appraisal. To ensure the validity of the AVM, lenders actually pay for the AVM program and have some sort of insurance built in. This keeps the AVM companies working hard to enure as accurate a product as possible.

ZILLOW: Real Estate Website Portal. Zillow is a website that bills itself as providing an "edge in real estate." They offer free tools to the general public, most noteably the Zestimate. The Zestimate is Zillow's branded verison of an AVM. Taking information provided to the general public, Zillow's claims to be able to estimate the value of a property. According to Zillow's disclaimer on the values, they are only accurate to within 5% of a home value roughly 26-28% of the time. The values are only accurate to within 10% of the home's value 49-53% of the time. The estimates are within 20% of the actual value 68-70% of the time. Although they claim a "median average" of error as only roughly 10% (interesting math), the numbers they claim above would indicate that they are pretty far off at least half the time. The service is free and offers no insurance or guarantees. They make money on selling ads.

Reality: The difference between hype and what you really get. When considering Zillow as something to base any idea of value on, one should remember that the information they offer is free, comes with no guarantees or insurance, and is off by at least 10% half the time. AVMs offered by real companies trusted by Lenders will be much more accurate and offer assuances on their values. Lender's stake MILLIONS of dollars on the accuracy of AVMs provided by these companies.

My Conclusion: Zillow is simply an advertising medium, offering a free (and flawed) estimation of real estate property values.

Feel free to draw you own conclusions. However, I will leave you with the 3 questions that I can not shake, as follows:

1. What would happen if Realtors lived by Zillow's standards and were considerably off the mark 50% of the time? Would they lose their license? Be open to lawsuits? Go out of business as a whole?
2. How many Lenders are willing to risk Millions of dollars on Zillow's 50% accuracy rate? What would happen if they did? Even if it saved them a few bucks on the cost of an AVM, how much would it cost them in losses?
3. If Lenders and Realtors would be on the losing end by employing Zillow's standards, why in the world would home buyers and home sellers even consider placing any validity on this website when it comes to the single largest purchase of their lifetime?

The floor for discussion is open....

Ed Nailor, Charlotte Mortgage Lender

Zillow and the Joke that it Is!

Come on Zillow. I have had enough! I am calling you out!

Zillow recently posted an article indicating that if a listing real estate agent does NOT post their listings to Zillow, they may not be doing their job properly! Oh, and they did not make it open to the general public so that regular people wouldn't see through them! (Don't worry Zillow, this is made public for them.)

One of my favorite real estate agent bloggers RENEE BURROWS wrote a fantastic response and raised a question that I wanted to address:

Why aren't highly branded websites (and other advertising mediums) held by the same standards of conduct and ethics that Realtors are sworn in and licensed to protect?

This is because they are not selling the homes. They do not recieve commissions or fees for the sale of any property. Even if they charged a fee to advertise the home, they are not an agent in the transaction, simply an advertising medium.

The focus of websites like Zillow is to SELL ADS! They don't give a rip if the information on their website is acurate or authentic. They just want to sell ads. YOu sell ads by showing the advertisers that you have a lot of traffic. You get a lot of traffic by offering free tools... and the tools don't have to be realistic.

The general public that has no idea of what a property's value is will be mislead by Zillow. Plain and simple. Why doesn't Zillow change this? They don't care... if they make a buck off the ad placed next to the misleading property info, then it was successful!

Zillow now offers Mortgage Quotes as well. Of course, these are completely anonymous. The potential borrower puts in as much or as little info as they want. It doesn't have to be accurate either. But they get to have lenders compete by giving them quotes based on meaningless information. If they don't like the quotes, they can give the lender a bad rating! What the heck is that?

Have we lost common sense?

Zillow is bad for real estate. We don't need ANOTHER real estate website to promote homes for sale. I can do a Google search for real estate in ANY market and get thousands of websites... if I want to find a home, I can find a home.

So what value does Zillow bring? Only that which they can line their pockets with in ad revenue. It is self serving and all around (in my humble opinion) a joke that anyone takes them seriously.

And please Zillow employees... don't call me this time asking me to "just give us a try." I'll make you a deal... if your Zestimate is so damn accurate, buy MY home right now for the amount you think it's worth! I'd gladly sell for the price YOU think it's worth. No one else would buy it at that price!

What's Your Opinion? Who's wrong here?

I recently heard a case in which I personally believe an appraiser is being overly picky and troublesome. Here's the scenario, and I'd like to hear your opinion on this....

Purchase of townhome between two people that know each other in a FSBO transaction with FHA financing. In the initial appraisal, the appraiser marked the property type as detached, when in fact it was attached. (small technicality that must be corrected.)

The appraiser also noted some tile in the bathroom floor as cracked. While it was not coming up, it was cracked, located at the entry door to the bathroom. The buyer is ok with it as is and is not requesting the seller to fix the floor. However, the appraiser indicated that it should be fixed and estimated a cost to cure of $500. The notation of "cost to cure" could result in the requirement by an underwriter that this be fixed prior to closing, in which case the buyer and seller have to determine who does it and things get delayed until fixed. More of a mess than needed over something so small.

So upon review of the appraisal, the loan officer asked the appraiser to correct the property type and if they could remove the comment of the cost to cure since it is such a small amount and the buyer is ok with it. This is not anything that affects the safety, functionality or value of the home. The LO did not request they remove the comment of the cracked tile itself, nor hide it. But a "cost to cure" indicates a deficiency that must be addressed, which isn't really the case here. But in no way was the LO asking for some modification, inflation or change to the appraised value, nor requesting to remove anything of consequence.

The appriaser not only decided NOT to remove the cost to cure, but also added a note that the lender requested the note of the cost to sure be removed and provided further argument that in their opinion "a buyer would want this fixed before buying" it so the appraiser felt it should be mentioned and would not remove the cost to cure as requested.

In asking the appraiser this question, the LO did nothing wrong and a simple no would have sufficed. But to go further and make a note on the appraisal basically renders the appraisal potentially worthless! And the LO can't submit the original appraisal because the appraiser mismarked the property type. So now that the property type is corrected, this notation attached as well. Submitting an appraisal with this type of notation could raise red flags that cause all kinds of slow downs on this deal (and others to come.)

So my question is this... What is your opinion on how the appraiser handled this? Or do you feel the LO was wrong for even asking?

Yes, REALTORS are missing the boat with Lenders too.

Recently, Jonathan Osman wrote a well pointed piece about how mortgage professionals are missing the boat when it comes to working with Realtors. I agree 100% with what he said, but wanted to bring another perspective to this topic.

Realtors are missing the boat with Lenders as well. Sure, there are 100's of lenders to call on that can write a mortgage loan for your buyers. And we all know that spam effect of the lenders emailing you constantly about sending business their way. But there are a couple things Realtors and real estate professionals should be aware of too.

I work damn hard for the agents I work with. As a matter of fact, I truly do my hardest to work WITH the agents I have relationships with as I know this is a partnership. Yet there are times when Real Estate professionals can show that they really don't get it.

For example, I recently began working with a buyer. When I first began working with that buyer, they had no agent and really no clue. I took time to work with them, get them in the position to get them approved and once they were able to qualify, I asked them if I could refer them to an agent to help them find a home. Of course, they had a friend of a friend's brother that was going to show them a couple homes.

I spoke to the agent and introduced myself. Right off the bat I knew we would have trouble as he didn't care to know anything about the qualifications or what these folks and I had been through. Almost immediately he began pushing them towards the "in house" lender which unsettled the buyers.

I now find myelf in a tough spot... Do I fight to keep the clients and let the buyers get pulled in 30 directions, or do I let them go knowing they will get crappy service (I know who the "in house" guy is and holy cow... enough said.) I am not one to just give up, but I also don't want the most exciting experience in these people's lives to become something they dread. So I gave it a good shot to keep the loan without creating a negative feeling. However, the other agent wasn't so kind and really tried to slam me (remember, he has never worked with me before.) Not too long, the buyers tell me they are torn but feel compelled to work with the agent's loan officer (as if he owns the LO) so that the agent won't drop them on the home of their dreams.

A couple weeks later, the deal falls apart. The "in house" guy doesn't take the time to really get to know the buyer's needs and eventually drops the ball. With such a negative outcome, they have decided to hold off on buying for the next year or so!

Now, if this agent had realized that the buyers were happy and comfortable with me, and taken the time to get to know me, he would have seen that I would have delivered to him happy, satisfied and CLOSED buyers and who knows what would result of that in the future. But because the real estate "professional" decided he knew mortgages better than the professionals, things go screwed up and he lost the deal and I will never work with him again.

So please understand that lenders are not a dime a dozen anymore. Too many lenders have dropped out because they could not do the right thing. Those that are fed the in house leads can cherry pick. But those of us out there working hard that understand the value in relationships will be your best ally in getting things done. Quit comparing lenders by a worthless good faith estimate or by empty promises. Evaluate a lender by their knowledge, their experience and most importantly the way they can make YOUR clients feel!

Ed Nailor, Charlotte Mortgage Lender (Charlotte FHA mortgage approved!)

Forget Timing, Choose the Right House

Waiting on the Right Time to Buy a Home? How about finding the right home to buy now?

Money Magazine punlished an article recently that echos what I have been saying for quite some time. Too many people are waiting for the perfect time to buy, thinking they can time the "bottom" of the market to get the best possible home. Yet even Money Magazine, one of the most trusted magazines about finances says this is not a wise move!

Check out more about this article at Great Home or Great Timing

Who knew I was as smart as those Money Magazine folks? LOL

Ed Nailor, Charlotte Home Mortgages

Apply online for a Charlotte Mortgage Loan or call 704-651-8704

Its your Fault Jonathan!

Jonathan Osman.. I am calling you out!

Seriously... it's your fault!

A while back Jonathan commented on one of my posts saying he was going to try to catch me and pass me in points. Everytime he'd get close, I'd jump back ahead... don't you love competition?

I actually took the time to talk to Jonathan and we had lunch. He is very intelligent and actually gets this whole real estate thing! From there I have been looking for ways to do business with Jonathan.

For the past couple months though, I have been somewhat quiet on AR. Work and life have just gotten in the way and there are times when you just need to get inspired again... well, now its done! Jonathan reminded me that he was wanting to pass me and I just looked at his points.. HOLY COW.. He's close! LOL

So I need to get busy again and get stuff posted. So here I come.. it's on! LOL

Thanks Jonathan for giving me a kick in the butt and inspiring me to get back to it again... and let's get lunch soon!

Ed Nailor, Charlotte Mortgage Lender