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INSTITUTIONAL HOME LOANS WILL BECOME MORE EXPENSIVE WITHOUT PRIVATE MORTGAGE INSURANCE

By
Real Estate Broker/Owner with Note Builders, Inc. Keller Williams

HOME LOANS WILL BECOME MORE EXPENSIVE WITHOUT PRIVATE MORTGAGE INSURANCE

On Monday October 24th, it was announced that two PMI insurance companies were taken into conservatorship by the Arizona Department of Insurance. Claim payments will be mad at 50% with the other half deferred as a policy claim. It seems as though things are continuing to get worse for institutions that bet on the mortgage markets and failed to hedge against the possible negative ramifications.

Interest rates will be kept low in the near term. Bernanke has stated that the rates will stay low until
summer 2013. He’s also stated that he will give clarification on that issue. It’s inevitable that the rising
costs of doing business and originating loans will be passed on to consumers. Loans without mortgage
insurance will become extremely and possibly prohibitively expensive to originate. The proposed QRM
rules in Dodd Frank will ostensibly prevail and 20% down will be the norm again.

Once again, seller financing has and will come to the forefront of the mortgage space. Taking the
power away from institutions and placing it in the hands of the principals of the transaction will add
more liquidity to the marketplace than any government plan. The time, cost, and anguish of obtaining
institutional financing has pushed many parties to utilize this technique. Seller financing is and will
continue to be the way to close transactions in this tumultuous market. Note Builders is here to
facilitate those transactions!



 

Posted by
Terry Lewis COO
NMLS #517367 DRE#01898702
Yes@terrywlewis.com

Keller Williams, Yes Team
Owner, broker #00686433
Yes@TerryWLewis.com
Cell: 858-699-3139
Fx: 858-345-3726
Craig Cooper
Chase International Real Estate - Tahoe City, CA
Creating-Preserving-Growing Wealth in Real Estate

Terry, surely some seller financing must become one of the financing alternatives in the future, however one thing still puzzles me. Where will the seller's get the money to float these transactions. If sellers are simply to hold on to their equity to provide financing to the next buyer, where will the seller get the financing to move into their next property?

Oct 30, 2011 05:40 PM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Well it depends on what you are classifying as more expensive. Is adding 100 more, are you talking about 500, 1000, how much?? HVCC is more expensive by adding 150 to the average cost of an appraisal. If the first one is bad then the borrower gets to pay for a 2nd one? Now they are 900 or so deep and still haven't even been assured of the loan. HERA ensures a slower process and adds nothing to the deal other than to impede it. The new LO Comp Plan has taken away any credits that used to be able to be given to the borrower for unexpected loan costs, how much is that COSTING THE BWR 100,500,1000??. The fed HARP and HASP style programs are decent in theory but still carry substantial costs and only help a very small number of people. Then you have banks that we bailed out that wont honor the fed programs??? The whole thing is a mess no doubt but also not a shocker when the government is involved. 

Oct 30, 2011 05:47 PM
Terry Lewis
Note Builders, Inc. Keller Williams - La Jolla, CA
Seller Financing, Lending, Broker

Thankyou for the input,

As professionals in the industry we need to do what we can to work within the laws and create our own market for seller financing and a secondary market for the notes that the sellers wish to sell to get their cash out.

Nov 06, 2011 01:26 PM