Your Southern Oregon Housing Resource For Home Loans

Foreseeably Harder Approvals: FHA gets tough

American Pacific Mortgage- Karen Cooper, Oregon & California — Fri, 04 Dec 2009 10:40:17 -0600

Ken Cook in Georgia outlines the proposed FHA changes that will lead to further tightening of program guidelines for FHA home loan borrowers. These proposed changes, along with those coming from Fannie Mae/Freddie Mac and some further proposals in the "comment stages" at the Federal Reserve are going to eliminate many first time home buyers, low-to-moderate income borrowers and even investors from the real estate market. Time to tighten our seat belts and hang on - I believe a rough ride is ahead for many real estate markets reliant on the buyers using these loan programs.

Via Ken Cook, FHA Home Loans 678-439-8683:

For many years home mortgage insured by the Federal Housing Administration (FHA) have made home ownership possible for millions of home owners. During the "boom" FHA loans lost a lot of ground in the marketplace because non-conforming loans were often easier to get and cost the borrower less scrutiny and often less out of pocket. (More on Examiner.com from my article this morning.)

Welcome the day when Housing and Urban Development Secretary (HUD) Shaun Donovan stood in front of Congress and reported the reserves of the FHA insurance pool to be only .53% - far below the federally mandated, by law, 2% reserves. As you may imagine Mr. Donovan, in an effort to save his job, is now scrambling for good ideas to get those reserves back to the minimum legal level. Let us all observe as the fireman tries to put out a big fire while his own pants are on fire.

Here are some of the recommendations thus far:

Raise the required minimum down payment from 3.5% to 5%

Lower the maximum seller contribution from 6% to 3%

Establish a required minimum credit score

Eliminate the ability to finance the Up Front Mortgage Insurance Premium (UFMIP) into the loan

Raise the cost of FHA mortgage insurance (higher premiums)

Currently it is much more difficult to be approved for a home loan, purchase or refinance, than it was two years ago or even six months ago. Mortgage brokers are not dropping like flies they have already dropped like flies and the remaining small percentage are having great difficulty getting loans underwritten and closed when they involve lower credit, lower income borrowers. Mid-level lenders are now the ones who are disappearing as they still lose warehouse lines of credit at an astonishing rate. This week saw the demise of LendAmerica.

Judging from the applications I have accepted and closed over the last few months these changes will absolutely impact at least 25% of the borrowers who have successfully purchased or refinanced their homes in the last few months. In fact I have two borrowers today who easily qualify who will likely not qualify if these changes are made. Considering I'm one out of tens of thousands go ahead and do the math.

Just wait ... it's not only FHA - it's Fannie, then Freddie and Ginnie. We predicted it a few months ago that it would not be long until buyers would need a minimum of 5% down, a minimum of a 640 credit score and rates would start to rise.

Are you ready to pay attention even if you don't get CEs for participating in the conference calls? If I were an agent I would be - I would want to be ahead of the curve!

Ken Cook - Georgia - FHA, USDA, VA and Conventional Home Loans (678) 439-8683

Karen Cooper - OR|CA Mortgage Consultant - www.Quality4Loans.com
Providing high Quality, Professional, Ethical service to Oregon and California home buyers and owners since 1983. Whether you are taking out your first home loan or your fiftieth, for your home, your second home or for investment, put my knowledge and expertise to work for you.

Foreseeably Harder Approvals: FHA gets tough

American Pacific Mortgage- Karen Cooper, Oregon & California — Fri, 04 Dec 2009 10:39:36 -0600

Via Ken Cook, FHA Home Loans 678-439-8683:

For many years home mortgage insured by the Federal Housing Administration (FHA) have made home ownership possible for millions of home owners. During the "boom" FHA loans lost a lot of ground in the marketplace because non-conforming loans were often easier to get and cost the borrower less scrutiny and often less out of pocket. (More on Examiner.com from my article this morning.)

Welcome the day when Housing and Urban Development Secretary (HUD) Shaun Donovan stood in front of Congress and reported the reserves of the FHA insurance pool to be only .53% - far below the federally mandated, by law, 2% reserves. As you may imagine Mr. Donovan, in an effort to save his job, is now scrambling for good ideas to get those reserves back to the minimum legal level. Let us all observe as the fireman tries to put out a big fire while his own pants are on fire.

Here are some of the recommendations thus far:

Raise the required minimum down payment from 3.5% to 5%

Lower the maximum seller contribution from 6% to 3%

Establish a required minimum credit score

Eliminate the ability to finance the Up Front Mortgage Insurance Premium (UFMIP) into the loan

Raise the cost of FHA mortgage insurance (higher premiums)

Currently it is much more difficult to be approved for a home loan, purchase or refinance, than it was two years ago or even six months ago. Mortgage brokers are not dropping like flies they have already dropped like flies and the remaining small percentage are having great difficulty getting loans underwritten and closed when they involve lower credit, lower income borrowers. Mid-level lenders are now the ones who are disappearing as they still lose warehouse lines of credit at an astonishing rate. This week saw the demise of LendAmerica.

Judging from the applications I have accepted and closed over the last few months these changes will absolutely impact at least 25% of the borrowers who have successfully purchased or refinanced their homes in the last few months. In fact I have two borrowers today who easily qualify who will likely not qualify if these changes are made. Considering I'm one out of tens of thousands go ahead and do the math.

Just wait ... it's not only FHA - it's Fannie, then Freddie and Ginnie. We predicted it a few months ago that it would not be long until buyers would need a minimum of 5% down, a minimum of a 640 credit score and rates would start to rise.

Are you ready to pay attention even if you don't get CEs for participating in the conference calls? If I were an agent I would be - I would want to be ahead of the curve!

Ken Cook - Georgia - FHA, USDA, VA and Conventional Home Loans (678) 439-8683

Let's Get To The Truth About HAFA- The New Short Sales Guidelines- Rumors VS Facts

American Pacific Mortgage- Karen Cooper, Oregon & California — Fri, 04 Dec 2009 10:15:01 -0600

Nestor and Katerina - THANK you for taking the time to sort through HAFA guidelines and for outlining them for us here. I look forward to your future posts on HAFA.

Via Nestor & Katerina Gasset Realtors® Wellington Florida Luxury Homes (International Properties and Investments, Inc.):

Let's Get To The Truth About HAFA- The New Short Sale Guidelines

Active Rain and the internet has seen a surge in posts and articles written by agents and the media regarding the new HAFA program; the streamlining short sales program rolled out by the U.S. Treasury Department.

Many of these posts were featured. Many of them rang strong with hope for a faster closing time. I will be writing a set of articles along with this one that will go over all of the points in the 43 pages of guidelines and forms. There is just too much to put in one post.

Whenever I see a group of people complaining and wanting something to be changed I want to take a step back to see the big picture.
One sentence comes to mind often, " Be careful what you ask for."

NAR, Realtors® and homeowners around the country shouted, petitioned, discussed, wrote and spoke to their representatives about how long short sales take and how the banks don't seem willing to do them and that they don't know what they are doing.

My first question is:

Who says that a professional small business in Real Estate was going to be a walk in the park? And what makes a business where there is no ceiling, low entry level and can create success beyond one's wildest dreams also expected to be easy. Real estate is one of the highest stress careers but you can have a big pay day.

My second question is:

How many agents that wrote these posts of the blissful future of short sales actually read all 43 pages of the guidelines and forms?

I was tempted to write about HAFA but decided that I better understand HAFA and form an opinion based on facts- the facts that are written in these guidelines. So I spent 8 hours yesterday studying these guidelines and speaking with attorneys about them to get their opinions.

On the NAR website under the HAFA section it states:

"HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline use of short sales and deeds-in-lieu of forecloxure."

Do you see the oxymoron? How do you place the words, COMPLEX and SIMPLIFY in the same sentence?

The first rumor that I want to dispell is that all the short sales are now going to go smoothly. That is NOT the case.

These guidelines are complicated to say the least, there are a lot of ifs, ands and buts going on here.

The second rumor that I want to dispell is that all short sale lenders will have to answer your request for a short sale within 10 days.

This is NOT the case ALL the time and in ALL situations.

These guidelines are NOT for Fannie and Freddie owned loans. Fannie Mae and Freddie Mac will be coming out with their own set of guidelines in the coming weeks.
The guidelines only pertain to servicers who are in the HAMP program now or those who enroll in the HAMP program.
Servicers must offer the HAMP program first before they offer the HAFA program.

The HAFA program is only for:

Principal Residences

First mortgages

The mortgage is delinquent or will be delinquent in the foreseeable future.

The unpaid balance is less than $727,750.

The monthly mortgage payment is more than 31 percent of the borrower's gross income.

The third rumor that I want to dispell is that this is going to happen right now. NOT TRUE.

This program begins on April 5, 2010 and servicers have until December 31st of this year to opt in to the program.
However, servicers may opt to begin the program at any time before April 5, 2010 as long as they can implement a record keeping system.

The fourth rumor that I want to dispell is that all the lenders are now under these guidelines.

The HAFA program is not LAW. The US Treasury rolled out these guidelines to go along with the HAMP program.

This part really gets me!

"The Treasury has selected Freddie Mac to serve as its' compliance agent for HAFA."

You mean the same Freddie Mac that was involved with the huge accounting and fraud scandals?

According to the Chicago Tribune Freddie Mac executives "devised a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass."

We believe in adding value to our sellers. We are good at negotiating short sales. Short sales are much more about good negotiating skills than anything else and programs like these tend to tie our hands in applying our negotiation skills.

We will take longer short sale times with approvals any day over shorter short sale response times that come back with a Rejection mark on them in order to fulfil their accoutability time frames.

We close 98% of ALL of our short sale listings and other agents do also. If we can do it, then you can too. If you are not closing above 80% of your short sale listings than you need to learn negotiating skills. Negotiating skills is what brings value to your clients and your business. Stay tuned for more details on the HAFA guidelines and forms- consider subscribing to our blog to be alerted of new articles.

Contact Nestor and Katerina Gasset today at 561-753-0135-Don't Lose Your Home To Foreclosure!

Find out more about Florida Short Sales by clicking here.No registration required.






Let's Get To The Truth About HAFA- The New Short Sale Guidelines- Rumors Vs Facts- Copyrighted © by Katerina Gasset *2009* All Rights Reserved.

Can I Refinance Even If My Home Value Has Dropped?

American Pacific Mortgage- Karen Cooper, Oregon & California — Tue, 24 Nov 2009 12:55:03 -0600

Many people hear about the extraordinarily low interest rates available on home loans today. At the same time, they hear about the backlog of bank owned foreclosure homes depressing home values. Not a good combination if you want to refinance your home, but there ARE alternatives available even if you have lost some equity with the decline in home values in your area. Are they available to everyone? Unfortunately, no - but they WILL work for many homeowners looking to refinance to today’s low interest rates.

There are still many homeowners out there who took “interim fixed”, “interest only”, “option ARM” loan programs, and have been enjoying the nice low home loan rate they already have. Some homeowners have fixed rate mortgages in the high 5-6% range. Are you one of these homeowners?

Interest rates have been hovering in the 4’s. For example:

$295,000 30 yr conventional fixed 4.50% (4.662% a.p.r.) will recover the expense in 9 months
$205,000 30 year FHA fixed 4.625% (5.564% a.p.r.) gets out of their resetting interest only loan has their monthly payment increase $20 vs. $275
$405,000 15 yr conventional fixed 4.25% (4.496 a.p.r.) shaves 8 years off their remaining loan term while paying $108 less per month

What are you waiting for? It’s a great time to be Thankful about the money you can save…

See you at the closing table!

Investors, Isn’t It Nice To Have Rental Property With Positive Cash Flows?

American Pacific Mortgage- Karen Cooper, Oregon & California — Mon, 23 Nov 2009 18:15:20 -0600

Although some homeowners looking to refinance or sell right now may not like what the volume of distress sale property sales are doing to local real estate values, Investors purchasing homes that run a positive cash flow probably aren’t complaining very much. Here in the Rogue Valley, up until this year an investor purchasing income property had to make a pretty hefty down payment to see their home meet most cash flow expectations.

Now, lending guidelines require bigger down payments from an Investor purchasing rental property using investor real estate loans. We’re seeing properties with only 10-20% down payment at “breakeven” or better, though. And that’s based on an area where the median family income is $55,400 for 2009.

It wasn’t like this the past few years here in Jackson County, Oregon, though. Housing prices far exceeded what many families could afford to pay to buy, so they rented. It was only recently that these families found they could buy a home for close to what they were paying for rent – and did so, driving the vacancy rate up a bit. Investors are finding their monthly PITI expense is lower than the monthly rent they can bring in for many homes in Southern Oregon, and this has been a very busy market segment for us. These investment property buyers are beating out the offers of the first time home buyers that are often competing with them in multiple offer situations we frequently see on the lower price ranges.

Isn’t it nice to be an Investor with rental property that runs a positive cash flow in an affordable area like Southern Oregon?

See you at the closing table!

Going…Going…Gone? How Long Will These Low Home Loan Interest Rates Hang Around?

American Pacific Mortgage- Karen Cooper, Oregon & California — Mon, 23 Nov 2009 12:44:07 -0600

This week, I’m locking in interest rates lower than I’ve ever seen before, lower than I’ve even gotten for my own personal home loans on a wholesale basis. I really did not expect to see 15 year conforming fixed rates back at the 4.25% I locked my own interest rate at several years ago. It’s exciting to see the homeowners I’m working with who have enough equity in their homes to be able to refinance out of resetting adjustable rate mortgages to fixed interest rates at the same level those adjustable rate mortgages were at. Most of them were nervous about waiting as long as they did, afraid their payment would go up more than they would be comfortable with, but not so!

Unfortunately, due to foreclosure and other distress sales like short sale transactions still representing the majority of home sales, values are sometimes too low for a homeowner to be able to refinance their exiting mortgages without having to bring in a pile of money. But, some homeowners are willing to bring cash in to close their loan, knowing the savings is great enough. All depends on how long they plan to stay in their home. Others are choosing FHA loans to be able to borrow more, finding that even with the mortgage insurance cost, there is enough savings to justify the expense.

The way the real estate markets I work in (California and Oregon) have been, many homeowners are going to be staying put for several years. Others are going ahead with their relocation plans, able to rent their existing homes out with the low payments they got when they refinanced a year or more ago. One thing I find most of these homeowners believe – the interest rates won’t be this low for much longer, and the prices are a big incentive to make a move now. We’ll know when looking back if they were right, won’t we?

See you at the closing table!

AFFORDABLE IN ASHLAND! Bank owned ad priced to sell quick. Nice home near Helman School.

American Pacific Mortgage- Karen Cooper, Oregon & California — Thu, 19 Nov 2009 15:26:23 -0600

What an amazing deal for a first time home buyer in Ashland Oregon who thinks they can never afford to do anything but rent in Ashland! The monthly payment probably works out to be less than most Ashland rents, and this area is eligible for no money down USDA home loans!

Via Chris and Kim Knox (Landline Real Estate, LLC of Southern Oregon):

Chris and Kim Knox | Landline Real Estate, LLC | 541-899-8222

127 Cypress Circle, Ashland, OR

AFFORDABLE in ASHLAND!

3BR/2BA Single Family House

offered at $209,900

Year Built 1978

Sq Footage 1,389

Bedrooms 3

Bathrooms 2 full, 0 partial

Floors 1

Parking 2 Car garage

Lot Size 0.18 acres

HOA/Maint $0 per month

DESCRIPTION

Affordable in Ashland! Bring your best offer, quick! Move-in ready, near Helman Elementary School. Nice, single level, 3 bed/2 bath home located in a cul-de-sac. Shows well with lots of natural light, a fireplace, a large covered patio, and a lovely fenced yard with a garden area. Great curb appeal, attractive floor plan, and well maintained yard. Centrally located (less than 2 miles to downtown Ashland or to the Ashland Hospital). Seller has no knowledge of property, sold as-is. Easy to view. Check out the attached virtual tour. Solid value.

see additional photos below

PROPERTY FEATURES

- Central A/C - Central heat - Fireplace

- Living room - Dining room - Dishwasher

- Stove/Oven - Laundry area - garage - Balcony, Deck, or Patio

- Yard

ADDITIONAL PHOTOS

Photo 1

Photo 2

Photo 3

Photo 4

Photo 5

Photo 6

Contact info:

Chris and Kim Knox

Landline Real Estate, LLC

541-899-8222

For sale by agent/broker

Equal Opportunity Housing

Posted: Nov 18, 2009, 3:53pm PST

Send A Gift- Thank You Card To Our Soldiers- Xerox Let's Say Thanks Program

American Pacific Mortgage- Karen Cooper, Oregon & California — Thu, 19 Nov 2009 15:15:20 -0600

This is a worthy program we've participated in before. It's that time again! Thanks for the prompt and the great info, Katerina & Nestor!

Via Nestor & Katerina Gasset Realtors® Wellington Florida Luxury Homes (International Properties and Investments, Inc.):

Thanks to Xerox sending out a Thank You card to our soldiers is simple, fast and free.

At this time of the year we can take some time out to teach our children about giving thanks and living in gratitude.
The best way of course to teach gratitude is by being a good example of being in a thankful state of mind.

You can gather your children around your computer right now and go to this site:

Let's Say Thanks- In Support of our Troops.

All you do is click on the card you want to send and then click on what you want the words on the text side of the card to say.
You don't even have to think to do this because it is all done for you. You just have to choose the card and the text out of the ones on the site.
Then you just click send.

Xerox prints out the postcards and then these cards go into the care packages that Givetothetroops® sends to our soldiers.
What a gift Xerox is giving to the troops. I really appreciate a company setting a great example like this.
The cards have all been designed by children and are patriotic. There are many patriotic symbols and messages to choose from.

There is a link on the site where you can read the responses from soldiers around the globe.
For some of these soldiers, your card will be the only mail they get from home.

Here are some of the comments sent back by different servicemen and women:

To all who have supported us,

I would like to take this opportunity to say thank you from myself and my fellow Marines. Your packages and well wishes have lifted our spirits at a time when we are so far away from our friends and family. I wish you could have seen the bright eyed looks and utter excitement from the Marines when opening the boxes. It was a true blessing that you made happen. It makes us proud to know that our fellow Americans care as much as we do. It makes the sacrifices we and our families make worth every minute we spend here. We Americans can stand shoulder to shoulder in unison on one thing - we're all proud of our country and we're all proud of each other. The effort you make on behalf of the troops is just as important as the work we are doing here and around the world.

- A Gunnery Sergeant

As I was leaving an un-eventful Valentine's Day today, one of the mail clerks yelled "Adams!! You have a package!!" A package, I thought to myself. I'm not expecting anything. What could this be? I took the box into my office and closed the door. As I opened the box, a flood of joy came over me as I looked over the cards from you and the young ones, one of my co-workers walked in to see tears rolling down my eyes. I had never received a gift with this much love, packed into one little place from someone that I've never known.

As I thought about what the cards talked about with soldiers giving their lives and privileges up to ensure the freedom of Americans, it was nice to know that someone out there does not take it for granted. I don't know who you are, but you are truly a gift from God. The gift that gives me the drive to serve my country proudly. As you pray that the Lord keeps the soldiers here safe and brings us home, I pray to the Lord that people like you do not die off from this world. Your contributions are nowhere near inadequate. Please never forget what this means to a soldier. Thank you for your love and thoughts.

Please be kind- take a moment out of your day to send a card for free to a soldier today. Please Reblog!

Medford Oregon Neighborhood Stabilization Buyer in the News

American Pacific Mortgage- Karen Cooper, Oregon & California — Wed, 18 Nov 2009 11:25:59 -0600

Working with a lot of first time home buyers over the years prepares one to expect challenges in the mortgage process. One recent transaction that should THANKFULLY close before Thanksgiving was probably at the top of the challenging range. I found out some things on the journey with these buyers. Some of these things make sense to me, others were like being blindfolded and poked with a sharp stick repeatedly:

Patience is not only a virtue, it is the key to these buyers successfully closing on their first home purchase
Neighborhood Stabilization Program guidelines and provisions were not carefully thought out
Real estate brokers handling the listing for bank owned foreclosure homes are not supportive of the Neighborhood Stabilization Program, and if they have an offer from a buyer not using NSP, they will choose it first
The lender support the State of Oregon thought they had does not exist
Diligent efforts of SOME of the parties to a transaction cannot trump other parties dropping the ball – the whole team has to work together, or we lose the game
Expect the unexpected – over and over and over again! Trained NSP coordinator transferred to another position; new NSP coordinator doesn’t have lending background, so has a sharper learning curve to get up and running; three consecutive local NSP contacts – one fired but is appealing that decision, one goes out on vacation, the third gets to start from scratch trying to carry the ball forward until the 2^nd one returns; NSP application accepted, but documentation not reviewed for 6+ weeks with no mention of this during repeated fund requests; three inspectors do not require repairs, FHA underwriter does; FHA lender closes office due to the commercial building they are located in being foreclosed upon; chaos reigns with the merger of lender’s operations centers; notified lender’s corporate center has reviewed and approved NSP program as an acceptable down payment assistance program, but approval is retracted; lender’s rep goes out on maternity leave early; FHA lender’s underwriting approval is three pages long, but only two pages are provided; the missing 3^rd page contains additional FHA underwriter required repairs

This family WILL be recipients of Neighborhood Stabilization Program funding, as will roughly 7 others in the City of Medford. I cannot afford the time investment this program requires, and will only help this one family, having referred the other I had to another lender. God Bless this first family and the families that follow them…

Thank you, Damien Mann of the Medford Oregon Mail Tribune, for responding when this family reached out to you to share their story. It needed to be told.

See you at the closing table!

Will Mortgage Insurance Still Be Tax Deductible After December 31 2010?

American Pacific Mortgage- Karen Cooper, Oregon & California — Wed, 18 Nov 2009 10:15:16 -0600

With all the rapid changes we’re seeing in the mortgage industry, those that have been instituted and many coming down the pipe, I haven’t heard anything about the tax deduction for Mortgage Insurance Premium that expires 12/31/2010. Right now, eligible taxpayers may deduct their eligible mortgage insurance premiums, including FHA upfront mortgage insurance and monthly mortgage insurance premium, USDA guarantee fee, and VA funding fee as well as the private mortgage insurance premiums required on conventional Fannie Mae|Freddie Mac vs. government loans.

Although these mortgage insurance premiums are not nearly as much as the mortgage interest taxpayers deduct, they can add up! Up until the demise of the “piggyback mortgage” – concurrent first and second mortgages broken up to 80% of the purchase price or less, with the remaining amount financed put in a second mortgage – homeowners took the cost, and tax deductibility (or lack thereof), of mortgage insurance premiums in to consideration on how to structure their financing.

For example, a buyer choosing to use an FHA loan as the finance tool to purchase their home because they are putting 3.5% down on a home that costs $175,000 will pay (and/or finance) an upfront mortgage insurance premium of almost $3,000 plus another $900+ per year with the monthly mortgage insurance premium for at least 5 years, or until their original loan balance is paid down to 78% of the original purchase price. A USDA Guaranteed Rural Housing or VA loan would have roughly the same in upfront guarantee/funding fees.

Most home buyers chose a “piggy back” to avoid the mortgage insurance costs they could not deduct on their income tax return, finding this structure was more affordable.Then, these costs were temporarily made tax deductible for buyers meeting the income criteria and the acquisition criteria. Now that home buyers don’t have that choice, we once again see them paying the cost of mortgage insurance premiums whenever they will have less than 20% equity/down payment.

Barney Frank and the “boys” must be busy with all the other stuff they’re putting forward. Maybe they should look at the expiring tax deductions, too – or maybe they shouldn’t…

What do YOU think?

See you out there!

Will realtors ever stop saying "Now is the time to buy and sell real estate". Just give us the facts, ma'am.

American Pacific Mortgage- Karen Cooper, Oregon & California — Tue, 17 Nov 2009 10:43:31 -0600

Like "location, location, location", "timing can be everything" is part of the equation when a buyer is determining the "right time to buy". Is it the right time to buy - FOR YOU?

Thanks for posting some great points in the decision making process, Pacita!

Via Pacita Dimacali - e-PRO, SRES, CDPE, MBA East Bay, North CA real estate (Gallagher & Lindsey):

Is it a good time to buy and sell real estate?

The perception is that REALTORs are always trying to convince their clients to buy or sell real estate each and any time. But the reality is that when the buyers or sellers are on the verge of making a decision, they are the people who make that decision based on the information they have, and how they process that information.

As such, it is always a good idea to stay abreast of the real estate market movement and factors that are affecting --- or effecting --- that movement.

Affect versus Effect

There is a difference when used as a verb:

Affect means: to have an influence on; to act on the emotions of; to attack or infect

Effect means: to bring about to produce an outcome to achieve a result

How to we apply this to real estate and to answer the question of whether or not it's a good time to buy or sell? The answer lies in how people process, interpret and take action on the information they know about the current situation.

Tax credits

The National Association of REALTORS helped to effect(cause to happen) the extension and expansion of the tax credits by encouraging its membership to contact their legislators to pass the bill and encourage President Obama to sign it.

Who are affected by the bill when it was signed? The first time home buyers and repeat buyers who have until April 30 2010 to get into contract, and have 60 days to close escrow to qualify for the tax credit.

Short sales and Foreclosures

The four largest lenders are staffing up their short sale department to effect a simplification of the short sale process

Homeowners who are suffering reduced incomes and drop in home market values are facing foreclosure, and are directly affected by the economic downturn. Market observers like Steve Harney say that "if anything, future foreclosure inventor is underestimated, not overestimated."

More short sales and foreclosures may adversely affect the market values of neighboring homes. So if property owners are contemplating selling their home, they should factor the projected increase in distressed properties. How can they compete? Price their homes aggressively so that they move fast and ahead of the market. Assume

Assume $500,000 home in November 2009, and owner has an outstanding loan of $400,000 at 6% interest.

Selling now for $500,000 with projected close of escrow by April 30, 2010: $64,600 net at closing

Waiting until June 2010 when more foreclosures and short sales are expected to come on the market, the value of his home may be affected by as much as 10% or down to $475,000. Projected close of escrow 90 days: $61,873 net at closing

Interest rates and FHA down payment

Historically speaking, the current rates are still some of the lowest they've ever been in 40 years. See FreddieMac for a peek at 30-year rates since 1971.

Interest rates may rise by 1 - 2% by next year. A concern for increasing rates may effect renewed interest in buying property, coupled by a desire to meet the tax credit deadlines.

When interest rates rise, this may affect the buyers' ability to qualify for a loan if the monthly mortgage payments based on the higher interest rates are higher than what their current income level can support. It is important to relate the cost of buying a home --- if prices decrease by 10%, but the interest rate increases by 1% --- how will that affect your monthly payment? Assume 30-year mortgage with 20% down payment , in Oakland CA

$500,000 purchase price at 5% interest rate: $2,814/month

Reduced purchase price by 10% or $475K, with increased interest rate to 6%: $2,912/month, or $98 higher

Now, about that FHA down payment....

Keep your eye on this bill H.R. 3706 that proposes increasing down payment for FHA insured mortgages from 3.5% to 5%. Reactions are mixed regarding the pros and cons of this bill and what its effect will be (more bailout?) and how it will affect buyers (more difficult to qualify to buy).

According to Wall Street Journal, the agency opposes this bill. David Stevens, the commissioner of the FHA, warned that "the biggest mistake" the agency could make is to "overcorrect."

Can one say information overload? Political intervention and interference? Who do we believe? What can we expect?

Clash of the Titans | Bank Owned Foreclosure Homes vs. FHA |VA| USDA Home Loans PART 2 OF 2

American Pacific Mortgage- Karen Cooper, Oregon & California — Mon, 16 Nov 2009 10:37:10 -0600

Really what this boils down to is one question. Banks selling Foreclosure Home Inventory… why do you accept the offer of a buyer using FHA or USDA home loan financing programs if you are unwilling to negotiate their lender’s required repairs?

Yes, we all read in the MLS sheet the “As Is” provisions. Saw all the “As Is” provisions and warnings in your addendum to the purchase contract. We read about all the other provisions that were negotiated before the buyers went under contract with you, too. Why, may I ask, are we experiencing this clash between your “As Is” sale expectations and the known requirements of the buyer’s financing terms AFTER the buyer has paid their whole house inspection and appraisal fees? And maybe after they’ve paid to de-winterize/re-winterize your REO home, too? This is $1,000 or more the buyer paid! When you accepted an FHA| USDA| VA buyer, did you not just make those provisions null and void? Shame on you Bank REO Seller – YOU should KNOW better!

Did you read the part in that same purchase contract about the buyers using FHA home loan financing? Using USDA home loan financing? Do YOU know, as a bank| lending institution that there are HUD required Minimum Property Standards for an FHA or USDA or VA home loan? Just in case, here is a link to those HUD minimum Property Standards in case the time has come for you to refresh your memory. Don’t have time to read all that? Here’s a General Summary that can be found as of today on HUD’s website:

CHAPTER 2

GENERAL ACCEPTABILITY CRITERIA

200 GENERAL

These general acceptability criteria apply to existing as well as new construction.

201 REAL ESTATE ENTITY

The project site shall comprise a single plot, except that two or more parcels separated by other parcels or a street or streets may be acceptable provided the resulting parcels comprise a readily marketable real estate entity. In either case, the property shall be sufficiently grouped to assure that convenient and efficient management during operation can be expected.

202 SERVICES AND FACILITIES

202-1 TRESPASS

The property shall be so designed that it can be used and maintained without trespass upon adjoining properties.

202-2 UTILITIES
Utilities and other facilities shall be independent for the property, without dependence upon other properties.

203 SITE CONDITIONS

HAZARDS

The property shall be free of those hazards which may adversely affect the health and safety of the occupants or the structural soundness of the improvements or which may impair the customary use and enjoyment of the property. These hazards include toxic chemicals, radioactive materials, other pollution, hazardous activities, subsidence, flood, erosion, expansive or compressible soils, inadequate drainage outfall,

landslides or mudflows, and deposition of suspended solids or others located on or off site. Projects with potentially significant hazards may be acceptable if any such hazards are effectively mitigated.

203-2 UNFORESEEN CONDITIONS

When special conditions exist or arise during construction which were unforeseen and which necessitate precautionary measures, the HUD Field Office may require such corrective work as may be necessary to meet the

special conditions. Special conditions include rock formations, unstable soil, high groundwater level and springs.

204 ACCESS

204-1 STREETS

Each property shall be provided with vehicular access by an abutting public or private street. Private streets shall be protected by a permanent easement.

204-2 ACCESS TO THE BUILDING AND THE NONDWELLING FACILITIES

204-2.1 Each building shall have safe and convenient pedestrian access from project parking areas.

204-2.2 Each building shall have convenient access for service and, when necessary, for delivery of fuel.

Still too much, Bank REO Seller? Did you know you could hire a forward thinking appraiser, such as one we have here in Southern Oregon, who will do a preview of a property for $75 to let you know what repairs likely would be called out on an appraisal for a buyer using financing subject to HUD’s minimum property standards? Yes, I know how fee conscious you are Bank REO Seller, but I’d say that would be $75 well spent – before I log that FHA home loan appraisal and the information on your foreclosure home becomes of record.

Wouldn’t it be nice if a buyer using FHA| VA| USDA home loan financing could know before they spent $1,000 in initial fees that the repairs on your Bank Owned Foreclosure Home would exceed their budget? Think the buyers that did that only to find out they can’t afford your home are ever going to want to bank with you? Is it not part of your business practices to build goodwill with the community members your banks| branches are located in?

Since your bank owned foreclosure homes represent such a large percentage of the inventory of available homes for sale in our area, I think the time is overdue for you to ease some of our pain in this community. Be PROACTIVE about fulfilling market needs! If you KNOW a large percentage of your buyers will be using home loan programs that will require your property meet HUD’s minimum property standards, why not spend the $75 and get repair estimates in advance so these issues may be hit head on?

Just a thought…

See you at the closing table!

Clash of the Titans | Bank Owned Foreclosure Homes vs. FHA VA USDA Home Loans Part 1 of 2

Clash of the Titans | Bank Owned Foreclosure Homes vs. FHA|VA|USDA Home Loans PART 1 OF 2

American Pacific Mortgage- Karen Cooper, Oregon & California — Mon, 16 Nov 2009 08:46:18 -0600

In this battleground home buyers and sellers find themselves on in today’s real estate market, it is often necessary to work our way through conflicting goals to reach the ultimate goal, a successful closing on the sale of a bank owned foreclosure home to a ready, willing and able buyer. That bank’s goal is to get the home sold as quickly as possible at the lowest possible cost to them, which doesn’t necessarily mean the highest possible price they can obtain, as is the case in a traditional private party transaction where individuals are selling the home vs. institutions. Banks are factoring in the more traditional costs of a sale, such as selling commissions and closing costs, negotiating the lowest price they can get these fees to while passing as many as possible on to the buyer. But, unlike a traditional private party seller, the institution seller (bank) is factoring in their employee costs, legal costs, asset management costs and maintenance costs of an abandoned home. Let’s not even get in to the bank’s focus on their balance sheet and reserve requirements! Bottom line is, the bank| institutional seller is focused on money, not service or win| win negotiations and no emotions come in to play here.

Every real estate market can be a little different... sometimes, a LOT different. Let’s look at Southern Oregon’s market. Here in Southern Oregon, a large percentage of the home loans buyers are choosing as the tool to purchase their home are FHA, VA and USDA loan programs. Based on the reports I’m reading, these three loan types, FHA, VA and USDA, have vastly increased their market share in the past 24 months. Why? Because they have low| no minimum down payment requirements, and with the deterioration of the private mortgage insurance industry and their corresponding tightening of underwriting criteria, conventional loans which require private mortgage insurance if a buyer is putting less than 20% down cannot meet the needs of the market. Entry level buyers and investors are driving the market here, and the entry level buyers are almost all using FHA, VA and USDA loans as the financing tool of choice to buy their homes with. If my pipeline is any indication of what other markets are experiencing, 99% of the home loans I am working on for California and Oregon home buyers are FHA, VA and USDA loans, and 99% of my pipeline is purchase transactions, because most of the existing clients in my database who would benefit from refinancing have already done so – or can’t, due to current market values being driven downward by the vast percentage of distress sales such as these bank owned foreclosure sales.

The buyers I am working with are in the market right now because they can buy a home for about what they have been paying for rent with little to no cash outlay. They see some amazing deals, and are attracted to the bank owned foreclosure inventory which is being put on the market at below market prices…below market for now, since as soon as those bank owned foreclosure home sales close, they become the market price for everyone since appraisers will use them as sales comparables until private party sales percentages pick back up again when the bank inventory of foreclosure homes sells through and distress sales no longer determine market values. These buyers are qualifying for such low interest rates, AND are getting tax credits for purchasing a home, so they have been coming out in droves these past 9 months. The naysayers say this is just the set up for the next real estate market crash, buyers going in to these homes without enough “skin in the game”. I say I’m sure there will be some of that out there, but since the home buyers I work with choosing FHA | USDA| VA home loans have analyzed their budgets, investigated the various loan programs available to them, and are planning to purchase these homes to live in for 5+ years, I suspect the default rate for these buyers will be as low as it has been for ALL the first time home buyers I have worked with since 1983 who have taken the time and made the effort to prepare for sustainable homeownership, none of whom have “strategically defaulted” on their home loans that I am aware of, although many have experienced financial hardship driving them to try to find solutions to help keep them in their homes.

Horns are locked and the battle is on! So what is the battle over? The battle is over the bank’s “As Is” provisions vs. the Minimum Property Standards required by HUD for FHA | VA loans which most banks and lenders adopt for USDA home loans, too. After 9 months of frenzied buyers snatching up REO inventory, we’re finding a lot of the homes on the market aren’t in the same condition some of the first waves of REO’s were in. Part 2 of Clash of the Titans | Bank Owned Foreclosure Homes vs. FHA|USDA|VA Home Loans will highlight the respective positions of the bank vs. the FHA| USDA| VA buyer in these foreclosure home sale transactions.

See you at the closing table!

Almost Speechless Sunday - Transitions...

American Pacific Mortgage- Karen Cooper, Oregon & California — Mon, 16 Nov 2009 08:37:27 -0600

From the roses in full bloom to the winter berries... from the still turning autumn leaves to the bare branches of winter. There is no doubt that fall has arrived here in Southern Oregon. And Winter isn't far behind...

See you out there...even if I am all bundled up!

A Hard Look At Reality: When Has The Federal Deficit Been This High?

American Pacific Mortgage- Karen Cooper, Oregon & California — Sat, 14 Nov 2009 12:08:03 -0600

Ouch, Mike! Sometimes the truth hurts, but I'm glad you are letting it be seen.

Via Mike Jones (SUNSTREET MORTGAGE, LLC):

A picture graph is worth 1,000 pages of congressional lawmaking.

The chart on the left was compiled by Bloomberg, and shows the budget surplus / deficit as a percentage of Gross Domestic Product.

I came across this chart this morning, and mentally did an overlay of historical events. That led me to wonder what a longer historical perspective would show.

Deficits since the Civil War

I found the most interesting and interactive website to help me with this. The chart below shows the Federal Deficit as a percentage of Gross Domestic Product since 1860. You'll want to note some significant events that have taken place in our nation since that time, and overlay the events on the chart.

The American Civil War

1861 to 1865

US Involvement in World War I

1917 to 1919

US Involvement in World War II

1941 to 1945

The First Gulf War

1990 to 1991

The Iraq War

2003 - 2009

And that leads me to wonder this: To what event will history attribute that blue spike on the right, a deficit never equaled except in a time of world war?

Back to that first chart...

From the TARP bill to the current legislation passed over the weekend under the heading "health care reform," it's apparent that none of the elected representatives we voted into office take the time to READ, EVALUATE, and UNDERSTAND the legislation they enact into law.

"There wasn't time," I've heard lawmakers say on CNN, "the crisis was so great that we had to act..."

I beg to differ.

You can't run your real estate business like that.

You can't operate your household like that.

We ought not to let our representatives run our country like that.

The Voter Revolution

2009 to ...

___________________

I'm Mike in Tucson, and I blog here on the Active Rain Real Estate Network just about every day.

I'm an internet-based mortgage lender who happens to reside in Tucson, Arizona. Read my blog, and get to know me. The internet allows me to perform at the highest level of trust and productivity.

Sunstreet Mortgage is a correspondent bank.

Click the Active Rain link below to see my guarantee of service.

SUNSTREET MORTGAGE, LLC
a correspondent banker
Call me if I can help you or someone you know
with a purchase or refi mortgage.
(520) 349-9090

"I'm mad as hell and I'm not going to take this anymore!"

American Pacific Mortgage- Karen Cooper, Oregon & California — Sat, 14 Nov 2009 11:31:23 -0600

Greg Cook has shared the information received from a directive Chase Finance is giving to strong arm buyers in to using their services, whether it is in their best interest or not. Thanks for getting the word out, Greg! I believe it is important that buyers understand the many hidden undercurrents leading to unexpected and/or unnecessary costs when a buyer is considering the purchase of a bank owned foreclosure home.

Via Greg Cook (First Time Home Buyer Network):

In the movie classic Network, Howard Beal, played by Peter Finch in one of the iconic moments in movie history gives us the classic line: "I'm mad as hell and I'm not going to take this anymore!"

I'm wondering when we as Realtors and our clients as consumers are "not going to take this anymore!"

Those of you who believe that the banks/lenders who control the REO properties are going to negotiate fairly and protect your client's interest, can probably stop reading here.

If you think, your job is to protect your client's best interest and negotiate the best possible terms for them, might want to read on.

If you haven't heard about it yet, you will. Chase Bank in a memo to its Asset Managers, announced the Chase Finance Initiative. In an attempt to capture more of the loans that are being done on their REO properties, Chase is encouraging their asset managers to promote Chase financing.

Problem is, they are in violation of RESPA and FTC guidelines and more importantly putting your clients at a serious disadvantage in the negotiation process.

I'm going to quote directly from RESPA Section 9 and FTC Guidelines for Antitrust Laws, so bear with me if it's a little dry. I'm also going to quote directly from the Chase memo that outlines their Chase Finance Initiative.

RESPA Section 9 - "Section 9 prohibits home sellers from requiring home buyers to purchase their settlement services from a particular company either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times for all charges made for the title insurance." "Settlement service means any serive provided in connection with a prospective or actual settlement including but not limited to any one of the following: Origination of a federally related mortgage loan...Rendering of services by a mortgage broker..."

FTC Guide to the Antitrust Laws - "For competitive purposes, a monopolist may use forced buying, or "tie-in" sales to gain sales in other markets where it is not dominant and to make it more difficult for rivals in those markets to obtain sales. This may limit consumer choices for buyers wanting to purchase one ("tying") product by forcing them to also buy a second ("tied") product as well. Typically, the "tied product may be a less desirable one that the buyer might not purchase unless required to do so, or may prefer to get them from a different seller. If the seller offering the tied products has sufficient market power in the "tying" product, these arrangements can violate the antitrust laws."

Refusal to Deal - Sometimes the refusal to deal is with customers or supplier, with the effect of preventing them from dealing with a rival: "I refuse to deal with you if you deal with my competitor".

Chase's plan? "3. Sell the fact that buyers are more likely to receive seller assistance with closing costs by using Chase financing" "8. In multiple offer situations, advise the agent that the seller will generally put more weight" on an offer with Chase financing than any other offer."

As a Realtor, you're really going to like this section from the Chase Finance initiative: "With Chase as our primary client, (asset manager name withheld) must work with Realtors who understand the importance of Chase financing on Chase owned properties and we will begin to limit our relationships to those who can adhere to these guidelines."

I'm sure there are more examples but here are three brief ones, that amplify the disadvantage your clients would have when negotiating with Chase:

1) The lender selected by your client has a more favorable interest rate than Chase, but in order to get their offer accepted, they will have to take the higher rate by using Chase.

2) Your client asks for closing costs to be paid by Chase, but in reviewing your client's financials determines your client has the ability to pay them, and Chase counters accordingly.

3) Your client makes an offer on a Chase home that is priced below the maximum amount for which they qualify. Even though your buyers are making a prudent financial decision, Chase can counter to a higher amount solely because they know your buyer can qualify for the higher price. Think your buyers might accept the higher price if they've already written 20 offers?

This probably isn't something that can be won in a court of law, but perhaps it can be won in "the court of public opinion".

Pass the word, reblog, protest, make t-shirts, just do something. As other banks follow this lead it will be more difficult for us to best represent your client's interest.

As Howard Beal said: "I want you to get up right now! and go to the window, open it, stick your head out and yell I'M MAD AS HELL AND I'M NOT GOING TO TAKE THIS ANYMORE!
Greg Cook

First Time Home Buyer Specialist

First Time Home Buyer Network

951-265-4532

greg@homebuyerhelpnetwork.com

http://firsttimehome.us

The Road To Homeownership – 5k, 10k, Marathon, Triathlon…

American Pacific Mortgage- Karen Cooper, Oregon & California — Fri, 13 Nov 2009 15:19:36 -0600

The road to homeownership is different for each buyer. For some, it may be a walk in the park filled with wonder and beautiful sights along the way – a quick, uneventful, on-time closing. An experience, learning about the various species found, or re-visiting a favored path– learning about loan programs, different types of inspections involved, insurance policies, etc. for the first time home buyer; re-familiarizing themselves with the process and up-to-date changes for the move-up buyer and investors.

Some home buyers, they may find their road to homeownership is like a 5k run. A bit of effort involved to cross the finish line – changing underwriting criteria requiring more documentation, inspection issues, nothing insurmountable - but a sense of reward upon completion. At the end of the race, they have fond memories of a race well-run.

Some home buyers find the road to homeownership most like a 10k run. They need to do some training before they enter the race – work on items on their credit to increase their credit scores, reduce balances owed, wait until they can meet the job/self-employment requirements, save more for a down payment – they need to build up strength in order to successfully complete the race.

Some home buyers are engaged in a full-on marathon race. Their mind is focused on the ultimate goal to reach that finish line – close on their dream home. They’ve been diligent about their training and preparation – obtaining all required documentation even when additional items are requested or guideline changes crop up along the way, quickly getting out to see homes in their price range as they come on the market knowing they’ll be competing with other buyers to get it - and are prepared for many unforeseeable circumstances with the drive to work through them – low appraised value, increased down payment requirements, loan program change mid-stream, repairs required, late closing; prepared to get back out there and find another home if a cash buyer comes in on the one they want. By golly, they’ve trained to complete this race, and they WILL cross that finish line!

Some home buyers find the road to homeownership is a Triathlon. They are fully prepared for a tough race, have realistic expectations, have mapped out their plan of action and are ready to take on the many challenges. They understand what limitations they may have, working hard to overcome them before entering the race. Hurdles arise throughout the race – underwriting guidelines change making their loan of choice unavailable to them, players in the transaction drop the ball with their responsibilities, players are unknowledgeable /inexperienced/ inept, delay after delay to their closing occurs – and they keep moving forward, taking each hurdle on as it comes, their sideline coaches cheering them on and giving them the tools they need, methodically pushing themselves beyond what they ever thought they could do to reach that finish line.

Come with me for a marvelous walk in the park. Or, if this is what’s needed for you to reach your goal, I’ll be your partner for your 5k, 10k, or Marathon Race. Taking on a Triathlon? I’ll climb that mountain with you - after I recover from this last one I just participated in. A few walks in the park would be very enjoyable during my recuperation…

See you at the closing table!

Beware of Hidden Costs in Your Home Purchase Transaction

American Pacific Mortgage- Karen Cooper, Oregon & California — Tue, 10 Nov 2009 10:22:02 -0600

After a series of winter-like storms rolling through our corner of the world, the latest in a stream of “hidden costs” associated with the purchase of bank owned foreclosure sale transactions came to my attention. Working with a lot of first time buyers who often work very hard to come up with their required cash contributions to purchase their first home, I’ve learned to be diligent in watching their costs so they know going in to their first home purchase exactly what to expect. In the past couple of years, as bank owned foreclosure sales became more prevalent in our area, there are several issues that have come up (I won’t talk about the obvious “as is” provisions the banks have on their REO transactions since they have not occupied the properties) here are some that have come to light:

On Fannie Mae owned homes, a provision of the Fannie Mae Purchase Addendum to their accepted contracts is that the buyer pay certain escrow/title charges that are "usual and customary SELLER charges". These charges equate to about $700, which can be quite a burden for the unprepared buyer who finds this on their Estimated Closing Statement vs. their initial Good Faith Estimate of closing costs.

REO agents for bank owned foreclosure homes will “winterize” a property per the bank’s request. Often times, a buyer’s inspector shows up to do the whole house inspection, only to find they cannot do their job and need to come back. Because this has become more prevalent, these inspectors are charging for their time as well as their expertise. This just happened on one transaction where the whole house inspector had to come back after the Fannie Mae REO had been “de-winterized”, and the buyer was told they will be charged the $150 to “de-winterize” and “winterize” again. This process took place before the appraiser was scheduled in to do their inspection, and guess what? Another $150 AND the $50 re-inspect fee the appraiser will charge, even after the appraiser asked the real estate broker if all utilities were on at the subject property so they could do their job. $350 of unnecessary, undisclosed charges to the buyer.

A first time buyer was interested in purchasing a home that backed to a creek, one that was dry and overgrown at the time the buyer decided to make an offer on this bank-owned foreclosure home. Although the need for flood insurance was not listed on the MLS listing for this property, the buyer’s very diligent real estate broker knew that the property was located in a flood hazard area. As it turned out, a very expensive flood hazard area, as the flood insurance premium for this property would add $1,200 per year to the buyer’s costs.

Caveat emptor is Latin for "Let the buyer beware."

Buyers - choose your professional representation CAREFULLY!!!!!

See you at the closing table!

Even the Rich Are Treating Their Houses Like Piggy Banks | Valerie Fitzgerald | Beverly Hills & West L.A. Real Estate

American Pacific Mortgage- Karen Cooper, Oregon & California — Sat, 07 Nov 2009 17:07:08 -0600

Here in Southern Oregon, super jumbo mortgages are not commonly seen. I found this an interesting read, getting a glimpse in to the motivation these homeowners had in taking out their multi-million dollar mortgages. Used to see this a lot more in my Southern California days...

Via Valerie Fitzgerald | Beverly Hills & West L.A. Real Estate (Coldwell Banker Residential Brokerage):

In recent years, millions of Americans looked at their houses and saw big, fat piggy banks. And it occurred to them to take out big, fat new mortgages.

Few did it on the scale of Ronald Burkle.

Mr. Burkle, the grocery-store billionaire, has $56 million in loans against two houses, including $9 million added last year. One is his iconic Beverly Hills mansion, "Green Acres," a 44-room Italian Renaissance palazzo built in the 1920s by silent-film star Harold Lloyd that more recently was a favorite overnight rest stop for Mr. Burkle's buddy, Bill Clinton.

Mr. Burkle declined to say how he is using the money. There is no indication he needs it to pay the water bill.

Traditionally, the super-rich didn't really bother with mortgages. Home loans were for people who carry lunch buckets, not captains of industry.

That changed in the boom years -- and it is still going on. Recent big-time home borrowers include fashion entrepreneurs, hedge-fund titans and baseball-team magnates.

Home loans "are a really good source of cheap capital," says Robert Maguire, a real-estate tycoon who built some of the tallest officer towers in L.A. He has borrowed some $50 million against several properties, including his beach house, which features huge picture windows framing the Pacific near Santa Barbara, Calif.

He has been raising money with an eye toward regaining control of his property firm, Maguire Properties Inc., which he lost during the real-estate bust. Even as he borrows against his beach retreat, Mr. Maguire is trying to sell it for $29 million.

By hocking the house, so to speak, he and others say they are simply borrowing low in hopes of investing in something they believe will yield a high return.

And mortgage rates are near historic lows. In April, Mr. Burkle renegotiated his $56 million in adjustable-rate mortgages down to 3.25%, which was in line with adjustable home loans of a more mortal size. Recently, his rate adjusted down to about 2.25%, based on publicly available documents.

It puts Mr. Burkle's mortgage interest charge at $105,000 a month, give or take.

Like ordinary home loans, megamortgages flourished during the boom earlier in the decade. The number of home mortgages in the $3 million-and-up category soared to about 3,000 in 2007, from only 1,100 or so in 2004, according to LPS Applied Analytics, a unit of Lender Processing Services Inc.

Not surprisingly, mammoth home loans got scarce during last year's near-unraveling of the world economy. But now they are showing signs of coming back.

U.S. Trust, which is the private wealth-management arm of Bank of America Corp., has seen a 33% rise this year in home loans, compared to last year, with the average size over $3 million. Jan Reuter of U.S. Trust says clients are using the cash to buy stocks and other assets. Other major lenders tell a similar story.

The federal tax code doesn't smile upon giant mortgages. It allows mortgage interest to be deducted only on home borrowings of about $1 million or less.

But there are ways around that, says David Adamo of Luxury Mortgage Corp., a mortgage-banking firm in Stamford, Conn. If the cash is used for investment purposes, the loan interest could be used to reduce taxes on income from the investments, he says.

Of course, plenty of rich people still avoid home loans. Partly, it is an image thing. Maria Elena Lagomasino of GenSpring Family Offices LLC, a Palm Beach Gardens, Fla. wealth-management firm, says a mammoth mortgage implies to her that someone is "borrowing because they have to."

One rub for zillionaires who value their privacy: Mortgages are a matter of public record.

One of New York City's classiest new addresses is 15 Central Park West -- which along with the requisite pool, health club and movie-screening lounge, offers "30 climate-controlled wine rooms" with "solid oak cabinetry." Since the start of last year, five buyers there have taken out mortgages ranging from $10 million and $35 million, according to public information collected by First American Corps.' RealQuest data service.

Not all megamortgages have happy endings. Since mid-May, about a dozen home loans of $3 million to $9 million have been involved in default or foreclosure actions in Malibu, Beverly Hills and other fancy areas around Los Angeles, according to public data gathered by First American. None of the giant mortgages over $10 million examined in detail are in default.

Max Azria, chief executive of privately held BCBG Max Azria Group Inc. clothing company, took out a $25 million mortgage in April 2008 on a 12-bedroom, 13-bath West Los Angeles mansion, once home to the late TV producer and novelist Sidney Sheldon, according to public records. He bought the house in 2005 for about $16 million.

Last year, Moody's Investors Service, the credit-rating company, said BCBG could face a cash crunch without financial help from Mr. Azria. A BCBG spokesman said Mr. Azria used the mortgage money for renovations and "additional personal liquidity," and that the company restructured and improved its finances this year without funds from him.

Israel Englander, who runs the Millennium Management LLC hedge-fund operation in New York, last year pledged a home in a wooded, estate-filled section of Greenwich, Conn., as part of the collateral for a revolving credit line of up to $100 million.

Mr. Englander declined to comment. There is no indication he needed the money for anything other than investment purposes.

Besides signing multimillion-dollar baseball players, Frank and Jamie McCourt have accumulated homes with multimillion -- dollar mortgages since moving to Los Angeles in 2004 to run the Los Angeles Dodgers. They bought homes and adjacent properties in both West Los Angeles and Malibu.

Their 15,000-square-foot, 10-bath L.A. manse, located in the prestigious Holmby Hills neighborhood across the street from the Playboy Mansion, was purchased in 2004 for about $20 million. For good measure, the McCourts spent $14 million to upgrade the place, including tearing out the tennis courts to install an indoor, Olympic-size swimming pool.

All told, the homes carry some $28 million in mortgages. The houses, which are in Mrs. McCourt's name, are now part of a nasty divorce battle between the couple, who are fighting for control of the Dodgers.

The McCourts declined to comment.

Amid the acrimony, the estranged couple did agree on one housekeeping matter at a court hearing Thursday: Mrs. McCourt could have exclusive access to the indoor Olympic pool. Swim hours for her are between 6 a.m. and 2 p.m.

—Jonathan Karp contributed to this article.

Write to John R. Emshwiller at john.emshwiller@wsj.com

Cold vs. H1N1 - Know the Difference!

American Pacific Mortgage- Karen Cooper, Oregon & California — Sat, 07 Nov 2009 17:02:14 -0600

This is some great information put together by Debi Boucher, Woodland Park photographer about the differences between a cold and H1N1. Great info!

Via Debi Boucher - "Realtor Showcase" Real Estate Slideshows/ Photographer (Memories DVDs - Realtor Showcase Slideshows):

Cold vs. H1N1 - Know the Difference!

I heard on the news the other day that the seasonal flu hasn't really even hit yet - That means, according to the report, that nearly all cases of the flu so far are H1N1. The government has declared the H1N1 pandemic a national emergency. According to the Washington Times, as of October 25th, there have been more than 1000 deaths, 100 of them pediatric. (The synopsis below reports 22 pediatric deaths as of Oct. 24). And we are woefully short on vaccines. We all know the steps we should take to help prevent getting the flu, but do we all know the symptoms? When is going to the doctor warranted? Or the emergency room? I have to wonder how many deaths can be prevented by not waiting too long to get medical care.

A co-worker had the flu last week. I asked her if it was H1N1, and she said she didn't know for sure. It is too expensive to have the tests done, so she didn't have it confirmed. Are the statistics we see on how many cases there have been based on 'tested' cases? If that's so, then the numbers must be much higher than reported.

This information is from the CDC:

Synopsis:

During week 42 (October 18-24, 2009), influenza activity increased in the U.S.

8,268 (42.1%) specimens tested by U.S. World Health Organization (WHO) and National Respiratory and Enteric Virus Surveillance System (NREVSS) collaborating laboratories and reported to CDC/Influenza Division were positive for influenza.

All subtyped influenza A viruses being reported to CDC were 2009 influenza A (H1N1) viruses.

The proportion of deaths attributed to pneumonia and influenza (P&I) was above the epidemic threshold.

Twenty-two influenza-associated pediatric deaths were reported. Nineteen of these deaths were associated with 2009 influenza A (H1N1) virus infection and three were associated with an influenza A virus for which the subtype was undetermined.

The proportion of outpatient visits for influenza-like illness (ILI) was above the national baseline. All 10 regions reported ILI above region-specific baseline levels.

Forty-eight states reported geographically widespread influenza activity, Guam and two states reported regional influenza activity, the District of Columbia and Puerto Rico reported local influenza activity, and the U.S. Virgin Islands did not report

Know the Difference between Cold and H1N1 Flu Symptoms

Symptom

Cold

H1N1 Flu

Fever

Fever is rare with a cold .

Fever is usually present with the flu in up to 80% of all flu cases. A temperature of 100°F or higher for 3 to 4 days is associated with the flu .

Coughing

A hacking, productive (mucus- producing) cough is often present with a cold.

A non-productive (non-mucus producing) cough is usually present with the flu (sometimes referred to as dry cough) .

Aches

Slight body aches and pains can be part of a cold .

Severe aches and pains are common with the flu .

Stuffy Nose

Stuffy nose is commonly present with a cold and typically resolves spontaneously within a week .

Stuffy nose is not commonly present with the flu .

Chills

Chills are uncommon with a cold .

60% of people who have the flu experience chills .

Tiredness

Tiredness is fairly mild with a cold .

Tiredness is moderate to severe with the flu .

Sneezing

Sneezing is commonly present with a cold .

Sneezing is not common with the flu .

Sudden Symptoms

Cold symptoms tend to develop over a few days .

The flu has a rapid onset within 3-6 hours. The flu hits hard and includes sudden symptoms like high fever, aches and pains .

Headache

A headache is fairly uncommon with a cold .

A headache is very common with the flu, present in 80% of flu cases .

Sore Throat

Sore throat is commonly present with a cold .

Sore throat is not commonly present with the flu .

Chest Discomfort

Chest discomfort is mild to moderate with a cold .

Chest discomfort is often severe with the flu .

If you know someone who lives alone, keep an eye on them! They may not be able to get the care they need if they are too sick to seek it out....

DBoucher Photography

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"How To Get Rich In This Market"

American Pacific Mortgage- Karen Cooper, Oregon & California — Fri, 06 Nov 2009 18:05:46 -0600

I’m thanking God it is Friday. This week has so drained my energy. I’m looking forward to it being revitalized by family, friends and church this weekend. I will not be taking any business related calls this weekend, because I desperately need to recharge. Have you ever felt like that?

A “funny” thing happened this week, though. In the heat of trying to prod government and major bank employees along to get a first time home buyer’s transaction closed before their extended closing date passed us by, I inadvertently addressed a fiery e-mail to the previous CEO of Carteret Mortgage, one of our nation's largest mortgage brokerage until they closed down with the rapid disintegration of the mortgage industry. I can’t tell you how this “divine intervention” “coincidence” - whatever you wish to label this experience – did to help take my focus off an imploding file, taking me out of battle mode for a few moments so I could contemplate how the myriad of changes we’ve been facing in the mortgage industry have effected this gentleman, Mr. Eric Weinstein (not Everlyn Williams, whom the e-mail was intended for! :->).

The dialog between Eric Weinstein and I went back and forth a bit, but here is an article by Eric Weinstein, formerly CEO of Carteret Mortgage, that I found soothing in this crazy week:

“How to get rich in this market” by Eric Weinstein

“I must say, as the former owner of one of the largest mortgage brokers in the country, I have a new found respect for all the crap my loan officers must have gone through when I was at the top making policy at Carteret Mortgage. Literally, four of my last 5 borrowers in the last two weeks did not qualify where less than a year ago, they were golden. I never had these problems when I was taking loan apps fifteen years ago, typing the 1003 on my trusty Smith-Corona and using some sort of “special machine” to run my credit reports. You old timers, like me, will remember the days before LP, before anyone had an LOS that merged the liabilities into the second page and when basically anyone breathing qualified for a loan.

So here I am, a time traveler thrown back fifteen years, to when I was a loan officer just starting out in the business. Back then, all we had was agency and government loans, just like to day. At least we had MI back then. Yes, technology has made inputting the loan faster, but now we have to worry about appraisal reviews and ever changing guidelines.

What I am saying is…”It’s always something.” The market is tough now, but hey, old timers like us have been through stuff like this before. The market is bad, then it’s good, then it’s bad again Underwriting is hard, then it’s easy, then it’s hard again. Life sucks, then you are on top of the world and then it sucks again. So what is the secret to being rich in this crazy market?

I love the bumper sticker “He, who dies with the most toys … is STILL DEAD.” The best way to get rich in this market is to count your blessings, Realize you still have your health, your family and you are still breathing on this earth. Life is the greatest gift and if you are reading this, there is a good chance you are not dead yet. Rejoice at just being alive and the rest is just the price you pay for the privilege. Right now, you are the richest person at the cemetery. So, just say a little” thank you”, and get back to work.”

Eric – thank you! I’m counting my blessings…and getting rich!

See you out there!

Wordless Wednesday - When You've Gotta Go, You've Gotta Go

American Pacific Mortgage- Karen Cooper, Oregon & California — Tue, 03 Nov 2009 23:08:32 -0600

High Offers Offset By Low Appraisals - Fair And Balanced? Or Unfair?

American Pacific Mortgage- Karen Cooper, Oregon & California — Tue, 03 Nov 2009 19:41:12 -0600

We're seeing a lot of accepted offers way over the listed price on bank owned foreclosure homes in our local markets, too. I haven't seen any low appraisals, although we've been seeing lots of repairs called out. Lisa brings to light an issue I hadn't considered. Thanks for the food for thought, Lisa!

Via Lisa Udy Realtor Utah Real Estate Specialist (Logan Utah Real Estate Immaculate Homes):

With the amount of offers coming in on REO properties(Bank Owned Properties), there has been a new trend among buyers. The trend is to just offer as high as possible to get the property under contract. After the contract is accepted by the bank, they have to get an appraisal for the loan.

The appraisal comes in quite a bit lower then their original offer price, which means the buyers won't be able to get the financing. These buyers then have the right to withdraw from the contract based on the appraisal contingency. The deal is dead right?

Not so fast. The buyers agent has been planning this all along. The agent and the buyers will submit an addendum to the price to meet the appraisal, and will re-submit to the bank.

Now, the bank wants to get this deal done, and knows the same thing will happen with any other buyer. The appraisal has already been done. So, the bank just accepts the lower price, and the buyers get away with it. They knew the appraisal would not meet the original offering price, and they get a great deal.

With the new appraisal guidelines, this is happening more and more. Appraisals are coming in low, buyers are aware this is what's happening, they are offering high to get the property over the competition, and just wait out the appraisal to get a great deal.

How fair is it to the buyers that put in an offer closer to asking price? Is this fair and balanced? Is it unfair to the other buyers that put in a reasonable offer? Or is it a smart way to get your buyers the house they wanted?

Know Your Forms - New RESPA Closing Documents On The Way!!!

American Pacific Mortgage- Karen Cooper, Oregon & California — Tue, 03 Nov 2009 19:26:23 -0600

Gary Woltal has highlighted the new Good Faith Estimate and its 2010 proposed changes very well. Hopefully, this will be the final form that is eventually released in January, as many revisions have taken place. Thanks, Gary!

Via Gary Woltal - Associate Broker REALTOR® Dallas Ft. Worth (Keller Williams Realty):

Come January 1st, 2010, as a REALTOR or a consumer at the closing table things are about to change as far as the Good Faith Estimate (GFE) and Settlement Statement (HUD-1). Links below will allow you to print these out to familiarize yourself with them. Both now are three pages in length. The highlights:

Revised Good Faith Estimate (GFE)

GFE tolerances on settlement costs (1/8 point allowed to be in error)

Revised Settlement Statement (HUD-1)

Revised definitions for application, Good Faith Estimate, and Mortgage Broker

Additional definitions for changed circumstances, origination services, loan originator, prepayment penalty, third party, title service and tolerance

Elimination of 1% origination fee cap on FHA loans

RESPA (Real Estate Settlement Procedures Act) forms apply to federally insured or backed loans such as FHA/VA/Conventional and NOT cash deals. There is also a 30 day cure period to give lenders after closing the ability to meet the tolerance. The closing script is eliminated as it is contained in the revised HUD-1. Average charges can be used by service providers and is not limited to loan originators.

Bottom line is it looks like the new GFE and HUD-1 want the borrower to be as crystal clear on everything related to the loan. It looks like the fastest you could go from app to close is about three weeks. On page three of the new HUD-1 boxes compare GFE and HUD-1 costs. On page 3 of the GFE they clearly in the instructions state what charges CANNOT increase past the GFE, can increase up to 10%, and what charges can change. It is VERY clear. The only thing weird I saw on both the new HUD-1 and GFE is it never clearly says the PITI monthly payment but just principal, interest, and mortgage insurance in the loan terms.

It looks a lot different for most of us, but print yourself out a copy and take a look. January is NOT that far off.

Revised Good Faith Estimate (GFE)

Revised Settlement Statement (HUD-1)

With closings averaging 130 pieces of paperwork both the REALTOR and the consumer need to know about these documents ahead of time. One last tip for both groups in this area, be sure to show up at the table with a U.S. government issued ID with a picture and your signature. This is mandatory for identification purposes. Good luck and happy closings!!!

Out With The New/Old, In With The Old/New…Oh Whatever!

American Pacific Mortgage- Karen Cooper, Oregon & California — Tue, 03 Nov 2009 18:31:54 -0600

2008 and 2009 have been phenomenal funding times for FHA loan financing for buyers purchasing real estate. This is because FHA guidelines are broader, making this financing tool more suited to today’s homebuyers’ needs. FHA guidelines allow the buyer to receive gift funds for their down payment/closing costs, which is what many first time home buyers are doing these days.

Prior to FHA financing’s comeback, conventional loans were the tool of choice for first time home buyers because they could choose “piggyback financing” – two loans, holding the amount borrowed on the 1^st mortgage to 80% or less, financing the rest in the 2^nd mortgage, thereby eliminating the need to obtain private mortgage insurance which until the past few years was not tax deductible. Automated underwriting made for easy processing of these loans, limiting documentation requirements and making for faster closings.

Now, proposals are moving forward to increase the down payment requirements on FHA financing to at least 5% down. I’ve received word that Fannie Mae and Freddie Mac are reviving 3% down on certain programs for home buyers with credit scores of 680+, because they have a private mortgage insurance carrier that will agree to insure these loans. These programs are priced higher than FHA financing, making it an unlikely substitute if the down payment requirements are raised on FHA loans.

In 2010, the tax deduction for private mortgage insurance is set to sunset. I haven’t heard about any proposal to extend that tax deduction. Guess it’s time to start another letter writing campaign to my elected officials on THAT issue.

Welcome to my world where the new is old and the old is new…it’s like watching professional ping-pong.

See you out there!

Symptom	Cold	H1N1 Flu
Fever	Fever is rare with a cold .	Fever is usually present with the flu in up to 80% of all flu cases. A temperature of 100°F or higher for 3 to 4 days is associated with the flu .
Coughing	A hacking, productive (mucus- producing) cough is often present with a cold.	A non-productive (non-mucus producing) cough is usually present with the flu (sometimes referred to as dry cough) .
Aches	Slight body aches and pains can be part of a cold .	Severe aches and pains are common with the flu .
Stuffy Nose	Stuffy nose is commonly present with a cold and typically resolves spontaneously within a week .	Stuffy nose is not commonly present with the flu .
Chills	Chills are uncommon with a cold .	60% of people who have the flu experience chills .
Tiredness	Tiredness is fairly mild with a cold .	Tiredness is moderate to severe with the flu .
Sneezing	Sneezing is commonly present with a cold .	Sneezing is not common with the flu .
Sudden Symptoms	Cold symptoms tend to develop over a few days .	The flu has a rapid onset within 3-6 hours. The flu hits hard and includes sudden symptoms like high fever, aches and pains .
Headache	A headache is fairly uncommon with a cold .	A headache is very common with the flu, present in 80% of flu cases .
Sore Throat	Sore throat is commonly present with a cold .	Sore throat is not commonly present with the flu .
Chest Discomfort	Chest discomfort is mild to moderate with a cold .	Chest discomfort is often severe with the flu .