In case the buyer is on the fence, and not sure whether or not to jump in and buy now or later

Here's something to think about (Source: Steve Harney's Keeping Current Matters)

Know What the Experts are Predicting for Interest Rates in 2010

If we look past just the price of a home, we know that the buyer will be concerned with its overall cost. We then realize how important the financing component is to the purchase. Where are interest rates headed in 2010? Here is what people in the know are predicting:
 
HSH & Associates: rates will nudge closer to 6% than 5%
Moody's Economy.com: 6 percent that sounds about right
Washington Post: 6 percent by the end of 2010
Barry Habib of Mortgage Market Guide: It could be as high as 6.5%
Morgan Stanley:7.5 percent to 8 percent

Related articles:

• Morgan Stanley Sees 5.5% Note as U.S. Faces Deficits
• Investors see mortgage rates rising as Fed wraps up buys

And for a historical view of interest rates the past few decades, see:

• National Average Mortgage Rates - Historical Data
• 30-year Fixed Rate Mortgages since 1971

SO....HOW WILL THIS AFFECT THE BUYER?

Scenario: $500,000 purchase price, 1 % loan origination/discount point, conventional loan,  in Alameda CA.

What is your estimated PITI (principal, interest, taxes and insurance) payment per month?

With a 5 % down payment, the difference between a 5% interest rate today, to the lowest predicted increase up to 6% by the end of the year is $298/month more or $3,576/year.

It used to be that to illustrate how little or insignificant the difference is in prices, we compared them to the cost of a cup of coffee --- that's when coffee cost mere "pennies".

Today, it's a different story. So let's use Starbucks coffee.   A "venti" sized coffee at Starbucks costs about $3.50. So taking the cost of $3,576/year for the difference between interest rates of 5% versus 65, that's 1,022 cups a year or nearly 3 cups a day.

Extended Home Buyer Tax credits

And...let's not forget that qualified buyers may receive tax credits if they are in contract by April 30 and close by June 30, 2010:

• First time home buyer tax credit: $8000 tax credit
• Move up/repeat buyer tax credit: $6,500

Hmmmm .....

REALTOR Magazine wanted to know why sales associates like their broker and their company. I am only too happy to tell them why.

I'm happy and proud to participate.

My broker, Michael Studebaker,  and company gave me my first chance to become a realtor. When no one would hire someone who did not have experience as a realtor yet, Gallagher and Lindsey  in (Alameda CA) not only took in other realtors-to-be like me but also provided a whole curriculum to prepare us. We had classes, guest speakers, case studies, and more. They provided training that helped us pass the mandated tests and get our licenses.

My broker frequently invites different people to present during weekly sales meetings. Guests have included real estate accountants, real estate attorneys, city officials, school superintendents, developers, community advocates. With their help, we stay in tune with the community, keep up with development in the real estate industry, and become better informed and knowledgeable --- and hence, better serve our clients and become better members of our community.

Additionally, he holds regular classes on many topics. During regular brown bag lunches, we have an opportunity to share ideas (or vent if we need it).

My broker is eager to embrace new ideas, and encourages us to pursue other ways to market our services. He searches and employs technologies like Docusign and efax, and implements use of various marketing techniques via Vflyer, craigslist, etc. He hooks us up with webinars such as those hosted by ForeclosureRadar.com; shows us how to utilize market metrics/charts we can pull up using Clarus; teaches us how to get connected via Facebook, Twitter, YouTube, Zillow and Trulia.  From time to time, he will even pay for classes like e-PRO, and seminars that we attend such as those by Inman. He subsidizes programs ---- for example, every one of us can customize and enhance our listings on REALTOR.com. Like a proud parent, my broker's focus is on education.

Thus, our team is constantly evolving, learning....we do not stand still.

We are encouraged to be active in community programs, and we do. Some are active soccer coaches. Some participate in Habitat for Humanity and Meals on Wheels. We host Frank Bette Art Center  art exhibits at our office. We volunteer during community events. Every Christmas, the company goes all out to "adopt" a needy family. The spirit of giving is alive and well.

One can walk in our office and can immediately feel the very strong spirit of camaraderie and care. We are all willing to help and look out for each other. Where else can one say, with sincerity, "We've got your back" ?

This is a great place to work!

Is there a magic word? A passkey? Is there a better way to get through? Do you have a success story (and suggestions) with HSBC?

Guess I'm just looking for a teeny-weeny bit of hope that HSBC will cooperate....heck, I'll be happy to get a response!

HSBC holds the second lien. And as expected, they would play hardball. The balance is approximately $100K, and they're demanding a payoff of $40K.

First lender American Home Mortgage at first offered HSBC 10% of loan balance.

After nearly 6 months of no progress because the HSBC negotiatior (or maybe NON-negotiator) won't return phone calls inspite of faxes and voice mails, won't discuss options, etc. the buyer walked.

Persuaded buyer to come back, but buyer offered less than original price. Got American Home Mortgage to raise the payoff to HSBC to 15% of loan balance.

Two weeks of faxes, voice mail messages to HSBC negotiator and her bosses reaped no response.

What's your story?

Help! Help! Help!

RELATED LINK

HSBC Attitude about short sale clearly documented here: HSBC complaints

In case you missed this....The Washington Post published the winning submissions to its yearly neologism contest, in which readers are asked to supply alternate meanings for common words.

The winners:

      1. Coffee (n.), the person upon whom one coughs.

      2. Flabbergasted (adj.), appalled over how much weight you have gained.

      3. Abdicate (v.), to give up all hope of ever having a flat stomach.

      4. Esplanade (v.), to attempt an explanation while drunk.

      5. Willy-nilly (adj.), impotent.

      6. Negligent (adj.), describes a condition in which you absentmindedly answer the door in your nightgown.

      7. Lymph (v.), to walk with a lisp.

      8. Gargoyle (n.), olive-flavoured mouthwash.

      9. Flatulence (n.) emergency vehicle that picks you up after you are run over by a steamroller.

      10. Balderdash (n.), a rapidly receding hairline.

      11. Testicle (n.), a humorous question on an exam.

      12. Rectitude (n.), the formal, dignified bearing adopted by proctologists.

      13. Pokemon (n), a Rastafarian proctologist.

      14. Oyster (n.), a person who sprinkles his conversation with Yiddishisms.

      15. Frisbeetarianism (n.), (back by popular demand): The belief that, when you die, your Soul flies up onto the roof and gets stuck there.

And the pick of the literature:

      16. Ignoranus (n): A person who's both stupid and an asshole.


The Washington Post's Style Invitational also asked readers to take  any word from the dictionary, alter it by adding, subtracting, or changing one letter, and supply a new definition.

      This year's winners:

      1. Bozone (n.): The substance surrounding stupid people that stops bright ideas from penetrating. The bozone layer, unfortunately, shows little sign of breaking down in the near future.

      2. Foreploy (v): Any misrepresentation about yourself for the purpose of getting laid.

      3. Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period.

      4. Giraffiti (n): Vandalism spray-painted very, very high.

      5. Sarchasm (n): The gulf between the author of sarcastic wit and the person who doesn't get it.

      6. Inoculatte (v): To take coffee intravenously when you are running late.

      7. Hipatitis (n): Terminal coolness.

      8. Osteopornosis (n): A degenerate disease. (This one got extra
      credit.)

      9. Karmageddon (n): its like, when everybody is sending off all these really bad vibes, right? And then, like, the Earth explodes and it's like, a serious bummer.

      10. Decafalon (n.): The grueling event of getting through the day consuming only things that are good for you.

      11. Glibido (v): All talk and no action.

      12. Dopeler effect (n): The tendency of stupid ideas to seem smarter when they come at you rapidly.

      13. Arachnoleptic fit (n.): The frantic dance performed just after you've accidentally walked through a spider web.

      14. Beelzebug (n.): Satan in the form of a mosquito that gets into your bedroom at three in the morning and cannot be cast out.

      15. Caterpallor (n.): The color you turn after finding half a grub in the fruit you're eating.

 

Good payment history and credit score of 820 don't mean a thing

Homeowner is current on her payments. Was late just once, and paid the late fee. Her most recent credit score is 820. Being self-employed, her income dropped the last year, while her adjustable rate re-set and increased by nearly $500/month.

She applied for loan modification. Completed her paperwork. She indicated she wants to keep her home,  but is asking for relief, and hoping her monthly payments will be adjusted to give her some breathing room.

Application denied!

Loan modification respondent denied her request, said that the homeowner doesn't make enough money to cover her mortgage. Adding salt to her wounds, the respondent told her to do a short sale.

That's it. No further discussion. No effort to do a work-out plan even on a trial basis. No review of the financials. Although the homeowner had a good track record and her payments are current, it didn't matter.

There seems to be a lack of sensitivity and finesse from people who receive and handle loan modification applications.

Any suggestions?

What next? With the proliferation of do-it-yourself and hire-a-loan-modification-expert information on the net, this homeowner is unable to decide which lifeline to grab.

Will begging work?

Headline: Government Mortgage Plan Aids 7% of Borrowers

"The rest will either won't send back all the required documents or will be deemed ineligible according to the government's formula."

Headline: Flaws plague foreclosure relief program

What is the government's formula?

If you've run into the situation wherein the second or junior lien holder asks for more money than what the first will give towards pay off, keep this in mind: get approvals from both lenders, put this in writing, and on the HUD.

From our attorney:

Question and Answer Regarding Junior Lienholder's Demand For Compensation

Question:    I am a listing agent on a short sale with two (2) loans secured against the property. The senior lender has issued an approval of the short sale and specified the amount the senior lienholder is requiring that it be paid. It has also specified the amount which may be paid to the junior lienholder. The junior lienholder is requiring additional amounts be paid to it without notice to the senior lienholder.

Is this legal? Does it expose the seller or me to liability? How do I handle this situation? Can I force the junior lienholder to accept less money and close the transaction?

Answer:    A short sale is a voluntary process on the part of the lenders to accept less money than the amounts of the loans. You cannot force any lender to accept a short sale. When a senior lienholder issues an offer to accept a short sale and specifies the terms, those terms must be complied with or there is a breach of contract.

If payments are made to the junior lienholder without notice to the senior lienholder, the agents as well as the seller may be exposed to liability for defrauding the senior lienholder.

In addition, the title company, to the extent the title company was aware of the payments, also may be held liable to the senior lienholder for not following proper escrow instructions. In order to facilitate a short sale without liability, the senior lender needs to be notified of the amounts paid to the junior and approve those amounts.

In addition, all payments to all parties relating to a short sale must be disclosed on the HUD-1 approved by the lenders.

If you didn't see this news article, you may want to check it out. Big Banks Accused of Short Sale Fraud  http://www.cnbc.com/id/34877347

Identical situations ---- well, almost.

Two property owners have identical home floor plans, different elevations, different upgrades. Both paid nearly $1M for their respective homes when they bought them brand new from the developer 3 years ago.

The developer had sold for $680K or 30% less, its last property that the same floor plan just last year. Other homes in the community have also fallen in market value because they were adversely affected by recent sales of short sales and foreclosures.

Both these property owners need/want to sell now. Both don't want to do a short sale because they want to protect their credit.

• Seller A is a young couple. This is their first home. They may need to relocate, and have to sell. They are aware of the market  change, what their home is worth today. So they decided to take the hit and accepted offer for approximately $750K  (before selling expenses). So they are losing what they put into the house, and then have to shell out additional funds for expenses.

• Seller B is an investor with other properties. This is one of their homes. But they vacated the home, moved to another. Their initial list price a year ago was for nearly what they paid for it. Over the course of the next few months, they have re-listed and reduced the price trying to catch up to similar and larger homes taht sold for less in the same neighborhood. Their current list is higher that Seller A's even though Seller B's property has fewer and less expensive upgrades.

Seller B finally receives an offer, but refuses to accept anything less than list price. And so it sits....and sits....and sits.

In the meantime, they make monthly payments of nearly $6k.

Their insurance company may question their rate because the home is vacated, and as such, unprotected.

There is no correct answer to the question on whether or not it would have been better for them to do a short sale, take a hit on their credit score,. Either way, they would have lost 20% of market value.

But what is their next objective?

By doing a short sale, they would lose what they put into the house. And they will see a significant drop in their credit score which they can repair in 2 years or less and enable them to buy another property after that time. Neither homeowner may qualify to buy another property during this time or "repair".

By not doing a short sale, they not only lost market value, but also more $$ out of their pocket. BUT, if they have liquid assets and can qualify to buy another home without waiting for 2 years This may also present them with the opportunity as move-up buyers.

Do both lenders prefer to foreclose versus short sale? It sure seems that way!

August 2009. Short sale listing at $475k. Got multiple offers. Highest offer at $571K. Back up at $550K. Even with this high offer, after selling expenses, payoff of delinquent taxes, etc, we would have been short of funds

Hired third party negotiator. Submitted complete package end of August.

Sellers have two loans: American Home Mortgage (payoff $502), and HSBC (pay off $98K)

• American would have been paid off with this offer As such, they don't have or want to do a short sale. They offered to give HSBC $9K (or 10% of what is owed to HSBC). They had property appraised for $550K.

• HSBC wants $39k, and will only approve the short sale at that amount. HSBC negotiator's mail box always busy. She doesn't respond to calls/faxes. Had to send letter complaining to her boss. Her boss gives the complaint for her to handle, to no success.

January 2010. Third party negotiator threw her arms up in surrender over HSBC's loan negotiator's stubbornness, unresponsiveness, refusal to work with us by agreeing to $9K payoff.

Does HSBC prefer that the property foreclose where they won't get anything?

In the meantime, buyers walked. Either I surrender too, and let it be foreclosed, or chase after buyers, or get new offer. But now, property may appraise at less, maybe $525K, and less than what seller owes. So it has to be a short sale.

Will American stop its posturing and agree/accept lower offer that WILL put it in short sale?

Do both lenders prefer to foreclose versus short sale?

So frustrated and bordering on tears of dismay and anger.

What happened to service with a smile? Bad attitude emanates from the top. If the managers behave badly, their hired help will, too.

Can't believe I got into a fighting mode at a parking garage!

I took my Dad to Kaiser Permanente on Piedmont Ave in Oakland today. Because parking is so problematic, I headed to the parking lot across the building, where cars are valet parked.

The parking attendant asks me, "How long will you be here?"

When I told him that I don't know how long it will be, he said "I won't park your car because I'll be here only until 5 pm." It was only 2:30 pm at that time.

I tried to reason with him, telling him my dad's appointment should be over in a couple of hours, and that there's plenyy of space at the lot anyway...but he took this to be arguing.

What was I supposed to do: beg?

So I asked to speak to his supervisor who turned out to be no better. They told me to park elsewhere. Since this was the only parking lot across the hospital, they know they're the only game in town, and therefore, they call all the shots. Wonder if the owner knows this is how their hired help treats their customers?

I decided that I'd rather walk a mile than give these folks my money. Fortunately, a spot opened on the street.

But I was fuming.....

When service personnel treat me badly, I should just let my wallet do the talking and keep on walking!