Dan 's Blog

Housing bill to become a reality

Dan Barksdale (USA Title of Alabama) — Mon, 28 Jul 2008 14:03:36 -0500

The rescue housing bill has finally passed the House and Senate. President Bush is expected to sign it into law. There are many aspects of this bill, some good, and some not so good. Looking over the highlights, there is one that will in my opinion, make an immediate impact:

From the WSJ On-line addition:

It also includes tax relief for future homebuyers and current homeowners. First-time homebuyers purchasing a home between April of this year and through June of next year would receive a tax credit for 10% of the value of their home, up to $7,500, while current homeowners who do not itemize their tax returns would be able to deduct up to $1,000 for property taxes.

A tax credit of this size will certainly encourage first time homeowners (those who can still qualify for a loan) to get off the fence and take the plunge. Hopefully, realtors and mortgage bankers will do a good job advertising this provision.

There are many more provisions in the bill that may or may not help the industry, but one thing is for sure, the rules of the game have changed.

Visit again over the next couple of weeks, as I will highlight other provisions in the law. Its vital to stay abreast of the changes that this law will no doubt bring to our industry.

A helping hand

Dan Barksdale (USA Title of Alabama) — Thu, 08 May 2008 15:20:37 -0500

I love to read these types of articles. It shows how our open market economy can find a way to both make a profit and help their fellow man at the same time. With all the talk of the upcoming government bail-out, it is refreshing to see workouts happening without government intervention. Look for these companies to have a bigger role in the near future.

want to see more? www.alhousinginfo.com

Garbage in, garbage out.

Dan Barksdale (USA Title of Alabama) — Thu, 08 May 2008 15:18:51 -0500

I'm sure most of you have heard this expression. I have to say, when it comes to updated information on these home buying or mortgage finder websites, the expression really hits home. I was reading my daily update from Inman News, and they are featuring the web site Homethinking.com The site promotes itself to be a resource for those people wanting to buy a house, or to find a mortgage company in the area. It has a list of realtors that are connected to a given market. It also has a mortgage link that tells you information about the loans that were obtained for the market, including the largest lenders. All of this information is pulled from HMDA data that is mandated by the government for monitoring purposes. Sounds pretty good, right? WRONG. All of the information is pulled from 2006. That's right, 2006. It shows the leading mortgage company in 2006, the top sales from agents in 2006, and statistical analysis from 2006. Why bother? Two year old information on the housing market is not valuable, and in fact, may hurt a person who doesn't see the fine print.

It appears to be another gimmick site that wants to get leads to its vendors. There are multiple places to contact a real estate broker or to get mortgage rate quotes. This site is part of the problem, and shame on Inman for promoting it.

Sales stats for March look good

Dan Barksdale (USA Title of Alabama) — Wed, 23 Apr 2008 15:23:57 -0500

March saw an increase of 19% in the number of homes sold in the Birmingham area, and an increase of 11% for the entire state. The average sales price was up for Birmingham, as was the median price. Here is the link to the Alabama Center for Real Estate web site. Alabama continues to show positive housing stats despite the fear and despair that is being experienced in other parts of the US. Anyone involved in this industry should keep this information handy so we can educate anyone who thinks that the sky is falling.

Housing help may be delayed

Dan Barksdale (USA Title of Alabama) — Wed, 23 Apr 2008 15:22:22 -0500

It looks as if any housing bill may take some time. I'm glad there isn't a consensus on what to do. Everyday I read another article with valid points, interesting solutions, or just insane proposals. Everyday that goes by, people are voicing opinion, and hopefully, someone is listening to them all. I came across this article on a website I don't normally visit. This author makes the case that Congress should set up an advisory committee to assist in making legislation. He suggests an industry veteran that watched it all happen. A person that understands what happened to the borrowers, and which ones were speculating, committing fraud, or just trying to have their families live in a more desirable neighborhood. I would want it to be someone that has been canned from his mortgage job, or that loss his company and has suffered great financial loss. Someone who has both felt the pain, and knows how the game was played. Someone that won't spend time pointing fingers, but instead, offering solutions.

Housing help may be delayed

Dan Barksdale (USA Title of Alabama) — Wed, 23 Apr 2008 15:22:10 -0500

A closer look

Dan Barksdale (USA Title of Alabama) — Wed, 09 Apr 2008 11:04:12 -0500

I have linked a page that summarizes the proposed laws for the foreclosure prevention act of 2008. I am pleasantly surprised with the fact that I don't see any "get out of jail free" cards to borrowers, mortgage companies, or Wall St. firms. I don't see any major moral hazards in the bill, and the modernization of FHA will help, since it will become more and more valuable program as we go through this down cycle. I hope this bill will pass as it is.

Politicians to the rescue?

Dan Barksdale (USA Title of Alabama) — Thu, 03 Apr 2008 16:12:05 -0500

Like it or not, some sort of borrower bail-out law is on the way. There is some good news about the recent Senate proposal in that the bankruptcy cram down provisions have been dropped. Also, the proposal to have FHA buy up mortgages at a reduced balance has been omitted. The rest of the law, however, will have a negative effect on the housing recovery. The law may help some homeowners stay in their houses, but doing this will prolong the declining values, and keep the banks very tight on credit. It was inevitable that a some sort of law was going to be passed, as it is an election year. Hopefully, this one won't do more harm than good.

I linked the LA Times version because it seems to be in favor of the bankruptcy "cram down" provision that would allow bankruptcy judges to alter interest rates and terms on exisiting mortgage debt. This is by far the most dangerous and careless idea that has been proposed. Allowing this to happen would undermine the entire financial system and bottleneck the courts with undeserving borrowers looking for a better rate on their mortgage.

February was a winner

Dan Barksdale (USA Title of Alabama) — Thu, 27 Mar 2008 10:37:01 -0500

Despite the headlines, February was a very positive month for Birmingham area housing sales. Sales were up 5% from the previous month, and days on the market were down dramatically. Now, if we could just convince the news reporters to provide more accurate headlines. This link on the Birmingham Business Journal is just one example. They chose the report the numbers as a negative since February's numbers were down from February of last year. I know this is normally a popular way to read the stats, but everyone knows we are in a down market, and it will take until 2009 for monthly numbers to exeed previous year's. An article that had a positive headline would have attracted more readers.

Birmingham is top 3 most affordable housing market

Dan Barksdale (USA Title of Alabama) — Thu, 27 Mar 2008 10:35:36 -0500

This is by far the most encouraging article I have seen in months. Finally, someone took the time to look at the affordability of a market, not just median values, which have fallen everywhere. Birmingham ranks 3rd in the US for most affordable housing. The index takes into consideration two major factors that most analyst miss: property taxes and personal income. Here is a link to the story.

I hope the local media will pick up on this story and promote the city. This should be included in every real estate agents newcomer guide and promo material.

The article also shows how out of whack the housing market is in California. I think the housing bubble will be bursting there for another year or two. You can look for mortgage lenders and MI companies to adversely select these markets even more so that they do today.

From Sewers to Subprime

Dan Barksdale (USA Title of Alabama) — Fri, 07 Mar 2008 10:13:25 -0600

Jefferson County's "dirty little secret" hit the national news today. The WSJ featured the article on their front page summary this morning. Jefferson county has told the banks that want an additional $200 million to back a derivative trade that they won't be paying. This story is a poster boy for the trouble other municipalities may face in the upcoming months. The difference being that Jeff Co acted like they were on a 4 day binge in Vegas, gambling tax payers money. The municipal bond markets have suffered due to the subprime fallout, but the leaders of Jefferson County went over and beyond what most cities were willing to risk.

This blog link tracks the story back to its beggining: WSJ Econ Blog

Here is the WSJ link (paid site)

I would like to know who advised the city to be this reckless and more importantly, where are the kickbacks to the commissioners for playing along. This will be a scandal that will have far reaching effects before it is over, and I feel without a doubt will result in criminal convictions along the way.

The black eye for Birmingham as well as the probable bankruptcy for Jefferson County, will have a negative effect on the housing market. If basic services such as sewer, law enforcement, or trash service suffer in any way, the housing market in Jefferson county will suffer along with it. Even if the county can manage to keep it together, the publicity could keep people relocating to the area from buying in Jeff Co.

For what it is worth, I am glad to see the WSJ pick up this story. Hopefully, it will force the local media to hound the story more and uncover any criminal activity that may have occured.

Sorry, your home equity line is closed

Dan Barksdale (USA Title of Alabama) — Thu, 28 Feb 2008 10:17:18 -0600

Believe it or not, some very large banks and mortgage companies are freezing equity lines and not allowing any additional draws. MSN money has the article here. I know why the banks are doing this, but I still find it offensive. Banks are concerned about future losses from clients who get "upside down" in their homes. They also are guarding against any borrower looking to cash out and walk away from the home. There are even some more complicated issues over a concept called rapid amortization. That concept is discussed in detail on the Housing Wire here.

I have an equity line on my home and the thought of the bank "freezing" it both scares me and makes me mad. Here is what I plan to do to stay out of the bank's crosshairs.

1. Avoid maxing the line out. Anytime you get to the limit of the line, the bank will consider it a greater risk

2. Make more than the minimum interest payment. Show the bank that you have the income left to make extra payments.

3. Pay a few days before the payment is due.

Hopefully the banks will keep this practice contained to California and Florida. But I plan to be prepared if they don't.

A Fine Job

Dan Barksdale (USA Title of Alabama) — Wed, 27 Feb 2008 15:54:40 -0600

I came across an interesting article this morning entitled: "The subprime mortgage mess, 5 myths put to rest". It is rare when a reporter actually digs in and finds the truth. Kudos to the Pittsburg Tribune-Review and Carl Prine for an outstanding piece. See the link here

I especially like myth #3. The media and Congress have put the banks and mortgage lenders in the "evil corporate greedy empire" category for foreclosing on so many houses. Congress needs to read myth #3, and then read it again. You would think that a member of Congress would understand this, but apparently some don't

State of Maryland to bail out borrowers

Dan Barksdale (USA Title of Alabama) — Wed, 27 Feb 2008 15:51:03 -0600

I just read this story in the Washington Business Journal. The State of Maryland has decided to bail out some troubled borrowers with interest free loans to catch them up on the past due mortgage payments. This "bridge to hope" sounds alot like mortgage welfare. Giving someone 3 months of payments on a home they can't afford, will result in a delay of the foreclosure by those 3 months. I can't really see any situation other than a temporary job loss of three months (isn't that why you save money and have unemployment insurance?) that could justify handing someone who is about to lose their home a "get out of jail for three more months" card. This program will cost the taxpayers of Maryland some serious cash and put even more strain on the state budget.

If the state was really concerned about keeping people in their homes, and they just had to spend some of the taxpayers' money, they could subsidize investors to come in and purchase these properties, with the understanding that the current home-owners could stay and pay rent. At least then the borrowers would have a reduced monthly payment and could avoid the expense of moving.

Let's hope that this type of "help" doesn't catch on in Alabama. I don't want my state tax dollars going to these types of programs.

More Good News for Alabama

Dan Barksdale (USA Title of Alabama) — Wed, 27 Feb 2008 15:49:25 -0600

Foreclosures dropped 16% last month in Alabama. Here is the link from the Birmingham Biz journal. This is a positive sign considering the nationwide trend that is still rapidly increasing. The best news is that the total number is down 12% from January 2007. For the entire nation, foreclosures are up over 57% from January 2007. This shows that Alabama is bucking the nationwide trend of rapid foreclosures. Fewer foreclosures will ultimately help stabilize prices in several markets

Higher loan limits for FHA and Fannie? Really?

Dan Barksdale (USA Title of Alabama) — Sun, 17 Feb 2008 16:57:49 -0600

We all know about the recent legislation that just passed that would raise loan limits on conforming and FHA loans. I have done some research on the law and the news mixed for Alabama.

Fannie and Freddie will only be raising their conforming limit in "high cost areas". This means the median home price must exceed $334,000. We are no where near that in Alabama. Only the extremely expensive areas in CA, NY, and FL will see any increases. I don't believe pricing on Jumbo loans will be coming down anytime soon, and this will continue to put strain on markets with more expensive homes.

FHA, however, will see an increase. According to the website Alabama is in a low cost area, so the FHA limits will go from 48% of the conforming limit of $417,000 to 65% of the conforming limt. This means that FHA limits will go from $200,160 to $271,050 for a single family unit. The pending legislation also would reform the mandatory 3% down to offer more "flexible" down payment options. This could also mean refinances of 99 or 100% LTV instead of the current 97%.

Stay tuned!

A new record for days on the market

Dan Barksdale (USA Title of Alabama) — Thu, 07 Feb 2008 14:20:20 -0600

Birmingham area real estate hit a record high mark for days on the market in December. The average number of days reached 115 in December, which ties the record set in July of 2007. Sales were off by only 12 units from November, but still off over 19% compared to December of 2006. The number of listings dropped again for the 4th consecutive month to 12,642 units. I would classify these numbers as "stable". The number of days of market last month was 112, and the Birmingham market hasn't seen this number under 100 days in over 2 years. January is a historically low month for sales for the past several years, so next month's numbers could give us some clues as to the direction of the market.

You can see the entire report here

Alabama representin' in Forbes Mag

Dan Barksdale (USA Title of Alabama) — Sun, 03 Feb 2008 16:47:04 -0600

Alabama had three cities on Forbes list of fastest growing small metro areas. Mobile was ranked 1st, Huntsville 4th, and Auburn-Opelika 6th. Here is the link to Forbes.com.

http://www.forbes.com/business/2008/01/30/economy-cities-alabama-biz-cx_bw_0130econcities.html

Another notable ranking by Forbes, was the top cities to find a job. Birmingham ranked 12th in this study. Here is the table of results:

http://www.forbes.com/careers/2008/01/11/jobs-economy-growth-lead-careers-cx_mk_0110cities_table.html

This doesn't tell us that Alabama is immune to the housing downturn, but it certainly tells me that we will suffer less and recover faster than many other areas. It is also great exposure to the rest of the country that Alabama is a viable place for people all over the country to live and work.

Less Competition?

Dan Barksdale (USA Title of Alabama) — Wed, 30 Jan 2008 13:12:41 -0600

It has been hypothesized that there are many fewer mortgage brokers and retail lenders competing for the business these days, what with the "market collapse". A recent article in the Birmingham News had one Mortgage professional estimating that over 50% of his competition had disappeared. Here is the link to the story:

http://www.al.com/business/birminghamnews/index.ssf?/base/business/1201338920172750.xml&coll=2&thispage=2

While it seems logical that a ton of people may have found new professions, the number of active mortgage broker and lender licenses haven't decrease anywhere near 50%. At the end of 2007, there were 530 active offices on the web site. Today, there are 508, but over 50 still show an expiration of 2007. Assuming the worst, and that all 50 of these offices go out, that still only a reduction of about 80 offices, or about 15% less than 2007. The fact is that we will never really know how many people have left the profession, since individuals are not required to be licensed. Hopefully, this will change soon, and everyone that touches a loan will be required to register or be licensed by the state, but that's a topic of discussion for another day.

Here come the vultures

Dan Barksdale (USA Title of Alabama) — Wed, 30 Jan 2008 13:04:24 -0600

I was reading my Housing Wire blog today and he had an interesting web site commentary. The site is selling "foreclosure kits" to borrowers for $995. For this hefty fee, a borrower will get information regarding how to go through the foreclosure process. My guess is that the information will tell borrowers how to stay in their home as long as possible, while going through a foreclosure. These people make you want to scream.

http://www.youwalkaway.com/kit.php

Here's hoping that most borrowers won't fall for this scam.

A new beginning

Dan Barksdale (USA Title of Alabama) — Mon, 07 Jan 2008 14:52:22 -0600

USA Title of Alabama opened its doors on November 15, 2007 in Hoover, AL. We are a full service real estate title and closing agency for the entire state of Alabama.

I have been asked more than once, "Why would you start a title company in such a poor real estate market?". We believe that this is a good time to start a business, if you have the correct business plan and a proper work ethic. Many successful businesses have been founded during a down market. Fortunately for us, we have relationships with our clients that goes beyond just closing a loan or sending a title binder. We make a difference to our clients business. We do this by being a consultant, a friend, a mentor, and advisor. I am only interested in one goal: The success of our clients. Without their success, we would not be in business. The principles of B2B sales never change: Assist your clients by providing your service, and do it better than anyone else.

If you haven't already, take a moment to visit our web-site. You can find us at http://www.usatitleal.com/. I have linked several industry related web sites you may find helpful.