Flash… Lenders DON’T want to modify!

As as Seattle real estate agent who specializes in short sales and negotiating with your bank I am coming to conclusions about the Home Ownership Made Affordable Program (HAMP) effort to help millions of American homeowners in getting their home mortgages modified.  Sadly the numbers are all too revealing.  Another reason why Seattle short sales will increase, over the coming years, as distressed home owners receive more foreclosure notices, it’s simply a smarter choice!

The numbers… the guise of the rubric of everyone wanting to “Help the Homeowners Keep their Homes”, “Save Our Neighborhoods”, “The Banks Care About Their Clients”, “Banks Give a S&*%”.

The numbers show what is happening … The program has enrolled over 850,000 homeowners who are seriously delinquent in their mortgage payments in a trial modification period but has encountered significant problems in converting those trials into permanent loan modifications.

From my experience what I see is that the Government has created a program to help distressed homeowners and banks have adopted a public personal of wanting to work with homeowners under the guidelines of the Government program.  After all, the banks want to resolve the problem also!  But then you get the numbers… The numbers don’t lie.

My next blog will deal with the duplicity of banks in their efforts to abide by the HAMP guidelines while preying upon the lack of understanding of the typical distressed homeowner (who is a lot like a deer in the headlights). An example of a homeowner will show how they have been preyed upon. Come on back!

“The Treasury Department reported Friday that 66,500 of the 902,620 homeowners who had started the trial modification period for its Home Affordable Mortgage Program (HAMP) had completed the three month trial and entered into a permanent modification by the end of December.  Another 46,000 have satisfactorily completed the trial and have been given final documents but have not yet signed and returned them.

Although only a 7.4% conversion rate, this is more than double the 32,400 signed permanent modifications reported at the end of November.”

Seattle / Tacoma and the Greater Puget Sound Area get ready for possible changes mortgage changes

Mortgage write down are being discussed more seriously. This means that if you are upside down on your mortgage, as many Seattle home owners are  and have tried the modification route to no avail there might still be on last gasp effort available to you.  Reduction in mortgage principal is looming on the horizon.  (don’t miss the video below)

The real tragedy is for those of you who have actually lost their homes through bank intransigence during the mortgage modification process.  The good news is that reform of ill conceived programs may be upon us, the bad news is that the horse has been out of the barn for a three years.

A summary of these major events affecting Seattle home owners follows:

1. Fannie Mae and Freddie Mac are on a path of destruction. Many are calling for the GSE’s to be abolished!  Well, abolished is certainly a strong word.  But changes are in the offing.
2. NOW, the GSE’s are providing 75% of all new mortgages.  Which simply means that they have been the dumping ground for banks.  Somebody had to be, how about you and I!
3. There are three proposed options: Nationalization of the GSEs (that’s right you would now own them), Improved GSE structure or turn them over to the private sector (been there, done that).
4. Combined with FHA Fannie and Freddie ARE the mortgage market. Private banks are not lending…no GSE’s….no mortgages.
5. This is astounding…112 BILLION that has been spent..that will never be paid back…and they are expecting another 112 BILLION in upcoming losses! (anyone out there still think we are near bottom?)
6. Principal mortgage writedowns are gaining momentum…10% off all mortgages 25% upside down…and 25% of all mortgages 10% upside down. In the US roughly HALF of all homes are owned…no mortgage. Of the other half…35% are now upside down.
7. Let’s face it.  Something needs to be done.  Housing has been a government priority, just poorly implemented.  The end of government subsidies (with the privatization of FNMA/ Freddie) meant that homeowners would have to compete with corporate America for funds.  This meant that the game was afoot, greed could prevail and bring on the current calamity.

*Actual increase may not be as high  due to data collection changes or improvements
**Collection of records classified as  NOD began in August 2009 because of change in state law
† Collection of some records previously  classified as NOD in this MSA was discontinued starting in January 2009
†† Collection of some records previously  classified as NOD in this MSA was discontinued starting in September 2008

About RealtyTrac Inc.
RealtyTrac (www.realtytrac.com)  is the leading online marketplace of foreclosure properties, with more than 1.5  million default, auction and bank-owned listings from over 2,200 U.S.  counties, along with detailed property, loan and home sales data. Hosting more  than 3 million unique monthly visitors, RealtyTrac provides innovative  technology solutions and practical education resources to facilitate buying,  selling and investing in real estate. RealtyTrac’s foreclosure data has also been  used by the Federal Reserve, FBI, U.S. Senate Joint Economic Committee and  Banking Committee, U.S. Treasury Department, and numerous state housing and  banking departments to help evaluate foreclosure trends and address policy  issues related to foreclosures.

FHA has been there providing Seattle home buyers with their home mortgages.

An increasing number of Seattle short sales or foreclosures may be the result of any changes in the FHA guidelines.

I remember back in 1977 I was buying homes with FHA mortgages.  FHA appraisers were in the nasty habit of calling out all kinds of deficiencies in homes which forced us to bring Seattle homes up to a standard which caused improvements in neighborhoods.  It was a good thing.

As time went by, so did FHA financing.  It virtually disappeared.  The FHA saw its share of the mortgage market fall to 2% in 2006.  When the housing market was booming, sub-prime lenders drew away many of the borrowers who traditionally used FHA-backed loans by offering even more favorable terms. Unlike the FHA, sub-prime lenders didn’t require borrowers to document their incomes.

With the collapse of the sub-prime market FHA took on a role as lender of last resort.  Suddenly, the FHA had an enormous chunk of the market.  Average credit scores of FHA borrowers dropped sharply at first. In last year’s third quarter, the FHA insured 25% of mortgages.

FHA-insured mortgages made in 2007 and 2008 are largely responsible for the agency’s precarious position, with default rates approaching 24%.

At a conference in November, Robert Toll, chief executive of luxury-home builder Toll Brothers Inc., referred to the FHA as “the new sub-prime” and “a definite train wreck” that will soon need a bailout, according to a transcript of his remarks.

Changes may well be in the offing.

So, what does this mean for Seattle area home buyers and sellers?

Short answer, sales will be detrimentally affected.  With fewer buyers qualifying for any loans, let alone an FHA loan with it’s 3.5% down payment, home prices will be held down and maybe even driven down.  Buyers will have to save more money for a down payment, home sellers will have to wait longer for a buyer and lower their prices if they want to sell sooner than later.  All we need now is for interest rates to increase, thus decreasing the amount of mortgage the first time home buyer (FHA’s target market) can afford.

Does this mean that home owners will be further under water?  Will this increase the number of home owners seeking relief from their over encumbered homes?  Do you think that there will be an increase in short sales?

Contact Us to discuss your situation.  There is no cost and you will walk away with insights into what you need to do.

The Federal Loan Modification Program-US Treasury Department

As a Certified Short Sale Specialist in the Seattle real estate market the current horror we are all living through has been in the works for a number of years.  Seattle homeowners came into the irrational exuberance rather late in the game and therefore our prices didn’t rise as rapidly before the collapse hit homes in my market of King and Pierce counties.

This is about the good intentions of a program that went nowhere.  But more on that later.

If you might be a distressed homeowner thinking about a Short Sale, Contact Us.

Hey, I have been working with real estate, providing mortgages to homeowners statewide and investing in Seattle real estate for over 30 years.  I enjoy talking about our local market, how we got here and especially would enjoy your comments or questions.  We learn from the interplay of ideas and comments, so play with me!

This begins a series of blogs designed to educate and update Seattle- Tacoma distressed home owners on what government programs are available and how those programs are faring, rather how Americas distressed homeowners are faring under these guidelines. 

The below video explains the details of the Federal Loan Modification Program implemented March 4 2009 by the US Treasury.  If you would rather see a good written explanation try this US News article “Obama’s Loan Modification Plan: 7 Things You Need to Know“. 

More to come.

One Seattle Short Sale specialist opinion, everybody has one.

This is the first of a series of blogs which deal with the duplicity and greed of many of America’s largest banks and brokerage houses.  I have followed the finance industry as a mortgage banker and Seattle to Tacoma and Bellevue WA real estate agent for over 30 years.  As a Seattle short sale specialist I have a unique understanding of the way that banks work, how to negotiate short sales with them and how to help families facing foreclosure, helping homeowners avoid foreclosure and limit the damage to their credit.

These blogs, in particular, are to help develop a mindset.  BTW… not a wacko here, just like to think how about you?

It just keeps going on, much like peeling open an artichoke in order to get to the heart of the matter.  At least in an artichoke you know that there is a heart.  In our banking industry it appears there is also a heart at the center, a cold stone heart.

Banks and brokerage firms bonuses loom big in the sights of the governments efforts to ameliorate the public ire at the situation that we all find ourselves in.

Recently I heard that the Europeans were considering taxing the banks to the tune of 50% of the bonuses that the banks pay themselves.  Like in the U.S., there is the threat that the banks would leave a jurisdiction which would attempt to restrict their compensation in any way.  You hear it all the time “Banks fear an exodus of talent if compensation levels are interfered with”.  I have always wondered “Where else would they go in order to earn such bonuses?”

Here is an interesting thought on the above.  Where could the banks go the top executives?  The banks could take their business to foreign countries, as many other American companies have done over the years, where they could continue to operate with minimum oversight and maximum greed.  How would that affect us who remain behind?

The actual reason that banks will continue operating in the U.S. will be for their own self interest.  They could move lock, stock and barrel to some safe haven, but who would be there to bail them out when their irrational exuberance brings on the next big bubble to threaten their existence?  Who would give them the billions needed for their survival then?  It would be shear insanity for the banks to hightail it out of Dodge.

I guess that we are stuck with them.  By the way there is a very interesting book out there titled “The Creature from Jeakyl Island” which deals with the formation of the Federal Reserve (video here).  The book is a real tome and requires a bit of perseverance, but it does makes you think.

Contact us today for a free Short Sale consultation.

Your credit has been severely impacted!

Have you noticed?  This is serious business.  In the past we might talk about credit and get a “Ho Hum”.

• Have you checked your credit score lately?
• Do you know what credit score you now need in order to buy a home?
• A car?  Something you have been waiting to buy?
• Credit cards interest rates looking frightening?

Well it may be time to become a bit of a student of credit issues.  Forewarned is forearmed.

Check out the below video and then sign up for our FREE newsletter from the experts.

Sign up for our FREE Credit Newsletter

As a financial professional I have watched as credit scores have emerged as one of the single most important factors in determining a person’s ability to get the best value from every financial commitment they make.

• Everyone knows that a strong credit score is the key to a favorable home loan or car loan, but did you know that insurance companies now pull your score to determine the type of policy to offer you?
• Did you know that prospective employers may very well use your credit score as a deciding factor a factor for whether or not you will be offered a job?

The decision-makers who have the power to positively impact your life and your finances all use your credit score as the main decision-making tool.

• As a result, your understanding of the makeup of your credit score and the factors that impact that score is crucial.
• In response to the increasing weight the credit score carries, I have elected to educate myself on the subject of the credit score and methods for its improvement. In doing so, I will become a credit specialist who will provide you all of the important information you need to understand your credit score and how you can improve it.
• Additionally, I have done extensive legwork to get access to the most current and accurate credit improvement information available today.

Beginning the first of next month, I will send you the first of a monthly (or bi-monthly, quarterly, etc.) newsletter that focuses on a specific theme regarding credit. Some of the aspects I will cover in the newsletters include:

1. what makes up the credit score,
2. how spending affects credit,
3. preventing identity theft,
4. how to recover from a mortgage or financial crisis,
5. and most important how to improve and maintain strong credit reports and scores.

Each issue of the newsletter will be packed with tips, advice and the primary steps you can take to protect your credit.

I am looking forward to helping you learn more about the components that make up your credit report and how you can improve and maintain the best possible credit score to realize your financial dreams.

NEWS FLASH!  Seattle wakes up to a new credit world.  Did you know that?  Read on… (part one)

Knowing your credit score a must in today’s mortgage market.

Many of our families have experienced late payments and short sales, which of course have a negative impact on their credit scores.  A short sale can prevent you from obtaining a mortgage for about two years.  Much better than a foreclosure which might affect your ability to own a home again for as long as five years.  You need to begin working on your credit NOW!

As a mortgage bank owner I remember clients, with really high FICO scores, commenting on how unfair it was that they had to pay the same interest rates as borrowers with much lower scores.  It was just the way it was.

Well that has changed.  And that is why you need to .  My Credit Newsletter will help you manage your credit with timely credit specific information.  You need to plan your credit future and save thousands of dollars.

Sign up for our FREE Credit Newsletter

Whatever your credit score, you now need to monitor your credit score -just like you monitor your other assets!

That’s right, here on out there is no such thing as making an application for credit without knowing what your credit score is.  Why is that?

Everything has changed due to the past few years of crisis.  A new era of credit management has been ushered it.   By monitoring and managing your credit you will be better prepared for any future application which is credit dependent.  Being prepared has the potential to save you thousands of dollars every year.

How Much Is Your Credit Score Costing You?

In the past, the credit report was instrumental in determining whether a consumer had the ability to purchase big-ticket items such as homes, cars, and appliances. This is no longer the case. Today your credit report is pulled even when you start a new account for your telephone, electricity and other utilities. And it doesn’t stop there, not by a long shot. When your credit scores are low, you pay more for everything.

No one has unlimited income, and no one wants to work forever. Every opportunity you have to reduce what you pay for your mortgage, your car, and your credit cards is money you can use to fund your retirement, pay for college education, and use for a brighter future. It’s money you can use to establish a more solid financial footing so that you can be more comfortable and worry less.

How Credit Scores Affect Mortgage Payments

Here’s a short list of how much low credit scores can cost when it comes to a mortgage:

1. You May Never Own A Home AT ALL, AGAIN, or FOR YEARS

Whether or not you’ve always had poor credit, or have just suffered from the recent mortgage crisis, this is a very real possibility for individuals. If you have low scores or problematic reports, lenders will either deny you flat out or penalize you with such exorbitant rates that the outcome ranges from completely undesirable to impossible.

2. You Will Pay Higher Interest Rates

It just makes sense that if you have higher credit scores, you will pay a lower interest rate on your mortgage loan and will have to put less down. Fair Isaac’s consumer website at http://www.myfico.com offers a mortgage payment calculator that is updated regularly to show consumers how their FICO score can affect their interest rate.

Per myfico.com, if your credit scores are under 620, consumers could pay $1420 more per month than someone with a 720 credit score for a 30-Year Fixed Rate Mortgage with a loan principal amount of $300,000. That’s an additional $17,040 per year, and approximately $511,151 over the life of the loan.

Of course, interest rates are determined by many factors but the bottom line is that individuals with low credit scores will pay nearly three times more in interest than those with strong credit scores.

3. Now You Will Be Subject To Loan Level Price Adjustment Fees (LLPA’s) when applying for a conventional mortgage.
Consumers with a middle score of less than 719 will now be charged an LLPA fee which was implemented by Fannie Mae and Freddie Mac in March of 2008. See the following chart to see where your scores fall (2):

FICO Score                              LLPA You Will Pay
Below 620                                         2.750%
620-639                                            2.250%
640-659                                            1.500%
660-679                                            1.000%
680-719                                            0.250%

For people experiencing the worst-case scenario, carrying a middle credit score of less than 620 could cost you an extra $8,250 upfront on a $300,000 loan amount.

4. You Will Pay More For Private Mortgage Insurance (PMI)

PMI is insurance that mortgage lenders require from most homebuyers who have less than a 20% down payment on their property. If your credit scores are marginal, your private mortgage insurance rate might be hundreds of dollars higher per month than you expect, and you usually don’t find this out until closing.

5. You Will Compromise Your Ability To Refinance For “Cash Out”

As you build equity in the ownership of your home, you may decide to borrow against that equity for the purpose of home improvement, debt consolidation, or even to pay college tuition for your children. Lower credit scores will not only affect your ability to take out a home equity line of credit (HELOC), but you will also have to pay higher interest rates and other upfront costs if you are approved.

See Part 2 soon.

Seattle – Tacoma home owners want to know…

As a Seattle area short sale specialist I have helped families overcome the realization that a mortgage modification really wasn’t going to happen.  When that realization finally hits home, time turns out to be the unexpected enemy to avoiding foreclosure.  You need time in order to get your home sold.  That is something to keep in mind while you do everything that you can in order to stay in your home.

Don’t let time use you, you use time.

These are difficult times for many homeowners in the Greater Seattle area.  Of course most of us want to continue living in our family homes.  However we are uncertain where to turn to for good advice and then, interestingly, what is the reality of that advice.  Is there really hope, or just blah, blah, blah?  Or is your reality a Short Sale?  Foreclosure?

Riding in on the White Horse comes the Obama administration with the Homes Affordable Modification (HAMP) program which will allow many Seattle area homeowners to work out a modification with cooperating banks.  How well this is working will be the subject of future blogs.

The first steps toward mortgage modification would be to determine if you even qualify for the HAMP program, would be to see who owns your mortgage (your investor).  Then look at the guidelines to determine if you actually do qualify.

FannieMae-insured loans / FreddieMac-insured loans or your lender owns the loan

In order to know what your options are you need to know who owns your mortgage.  Your mortgage may be owned by the Freddie/ Fannie companies or by individual banks.  If your home mortgage is owned by Freddie/Fannie you are going to have to qualify for their programs, the HAMP guidelines are very specific as to who qualifies.

If you can’t find your mortgage at either of the sites below, your home mortgage is owned by your lender (IE.  Bank of America, Wells Fargo, etc.).  Your loan servicer’s website is the place to begin your quest for a mortgage modification.  You will be able to find a link which states what the bank needs in order to get your modification started.  It is a lot like applying for a mortgage, just a few more requirements.

Whether Fannie/ Freddie or bank owned you will be dealing with the same type of people over the phone and expect it to be the most irritating experience you could imagine.

FannieMae-insured loans

Does FNMA own my mortgage? Check here.

Am I eligible for a Homes Affordable Modification?  Answer these five questions:

Modification Evaluator for Home Affordable Modification

# HomeSaver Advance program: a HomeSaver Advance™ (HSA) is an unsecured personal loan designed to help eligible borrowers cure their first lien mortgage loan delinquencies.

FannieMae Home Affordable Modification Program (HAMP) Resources

# Making Home Affordable program

# Home Affordable Refinance program

FreddieMac-insured loans

Check to see if FreddieMac owns your loan

# Home Affordable Refinance program: Are you current on your mortgage payments?  Do you currently owe more than your home is worth? You may be able to refinance to a lower or more stable rate through a Home Affordable Refinance, part of the federal Making Home Affordable program.

# Home Affordable Modification program: Are you behind on your mortgage payments?  Current, but about to default on your payment as a result of a recent hardship?   In the foreclosure process?   You may be able to modify your loan to a lower rate through the Home Affordable Modification Program.

Contact us today for a free consultation

RealtyAndAMortgage has a new look

It is good to see you here.  If you have been following us on our old blog, hopefully you will find the new format and focus an improvement.  It’s like starting all over again, RealtyAndAMortgage has a new look and an old mission – helping families.

New to RealtyAndAMortgage? Well we are not new to the Internet world and providing timely and valuable information (go ahead Google RealtyAndAMortgage and you will find 416 references, today).   We have made a habit of providing a timely interpretation of the real estate and mortgage markets in Seattle – Tacoma  and their surrounding communities

Realty and a mortgage is a 10 year old real estate and mortgage site.  Our goal from day one was to provide assistance to families in one of  the most significant financial transactions in their lives, purchasing a home and its mortgage.

Due to the current real estate market we find that our knowledge and experience needs to be focused on helping as many families as possible figure out what their choices are, and the impact of their decisions, on their families and their future.  We participate with “Helping a Million Homeowners” project, one family at a time.

The below video demonstrates the horror of the situation we find ourselves in:

Help A Million Homeowners came from the goal set by a group of real estate professionals who want to make a difference in today’s economy. We feel that if the market is going to get back on it’s feet again it’s going to be because real people help families avoid foreclosure through short sale or loan modification.

Please take a moment and look over our new site.

1. Sign up our Credit Newsletter.
2. Request your copy of our Co-Authored book “Should I Short Sale My Home?“

A  Homeowner’s Guide:  How To Survive The Worst Real Estate Market In History

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