The party is officially over. A few weeks ago Congress and the Senate passed a big housing bill to help the flailing housing market. Some of what they did helped, some of it could hurt.
The biggest news: last $0 down "program" in the mortgage world is kaput as of October.
It was a funny deal -- called a Downpayment Assistance Program, it allowed a home seller to give a "gift" to a nonprofit who would turn around and give a buyer that money to use as a downpayment on the house purchase. My lawyer client called it legalized money laundering, but it is (was) legal. And now it is almost gone.
Sooo.... if there is anyone out there that wants to buy a house -- they can use this program now (and I mean, like, today, time is ticking) or they can save up 3.5% for a downpayment next month.
The difference is more than dramatic, to be frank.
Think of it in these terms:
You are a renter. You want to buy a house. You make, say, $50,000 a year. Or you're a couple and make $80,000 or so a year.
You can buy a house NOW for $0 down (well, you do need a few hundred dollars for the inspection and whatnot)
OR
Next month, you will be required to put down 3.5% of the purchase price. On a $200,000 house, that would be $7,000.
All I know is when you are 25 years old and buying your first house, it is not an easy thing to scrape up $7,000.
But you protest:
I already own a house! Why would I care?
Because housing is a trickle down (trickle up?) kind of situation.
People sell $200,000 houses to buy $350,000 houses.
People sell $350,000 houses to buy $500,000 houses.
So if there are no buyers for a $200,000 house, that seller can't turn into a buyer for the next bracket up.
It's really tough out there and it just got tougher.
And -- if you are renting and want to buy something relatively soon and don't have $10,000 sitting in your bank account -- call me today. For reals, today. The house needs to be found, the offers need to be written and at the mortgage office by Friday August 29.
Showing posts with label mortgages. Show all posts
Showing posts with label mortgages. Show all posts
Friday, August 22, 2008
Wednesday, March 5, 2008
Get While the Gettin' is Good
I've had some conversations with some mortgage guys lately (yeah, somehow they are all guys) and lending rules are tightening up.
For the most part, it is making it much more difficult for first time homebuyers to make deals without a big downpayment. The zero down programs are drying up, and the entire Twin Cities area has been tagged a "decling market." (At least the declining market tag no longer just applies to my own ghetto address). The declining market designation means, to the buyer, that they will automatically need to put 5% down to get a conventional loan. (5% of $200k=$10,000!!)
There are still first time homebuyer programs that allow zero down, but they do have income restrictions. The limits are pretty high, but many of my first time homebuyer clients last year did not qualify.
I spoke to Todd Ingebretsen on the phone today. He works for Advisors Mortgage and is definitely very dedicated to knowing all of the little details of as many mortgage programs as possible. Since he is so dedicated to knowing the little details, the poor guy is on overload. Every day he gets piles of emails from the lenders outlining the changes in the mortgage programs.
All I can tell you all is that if you don't have a house now, and want one in the next couple years, do it now.
For the most part, it is making it much more difficult for first time homebuyers to make deals without a big downpayment. The zero down programs are drying up, and the entire Twin Cities area has been tagged a "decling market." (At least the declining market tag no longer just applies to my own ghetto address). The declining market designation means, to the buyer, that they will automatically need to put 5% down to get a conventional loan. (5% of $200k=$10,000!!)
There are still first time homebuyer programs that allow zero down, but they do have income restrictions. The limits are pretty high, but many of my first time homebuyer clients last year did not qualify.
I spoke to Todd Ingebretsen on the phone today. He works for Advisors Mortgage and is definitely very dedicated to knowing all of the little details of as many mortgage programs as possible. Since he is so dedicated to knowing the little details, the poor guy is on overload. Every day he gets piles of emails from the lenders outlining the changes in the mortgage programs.
All I can tell you all is that if you don't have a house now, and want one in the next couple years, do it now.
Wednesday, February 13, 2008
Blinkers
You know how they put blinkers on horses so they aren't distracted by the carnage going on around them?
I think that's how lots of realtors are feeling, like we wish we had blinkers on.
I need a little attitude adjustment. Need to light the real estate candle, tidy up my desk, and focus on the good stuff that's going on. And, there is a lot of good stuff. Maybe it's just January that's getting to me.
I think that's how lots of realtors are feeling, like we wish we had blinkers on.
I need a little attitude adjustment. Need to light the real estate candle, tidy up my desk, and focus on the good stuff that's going on. And, there is a lot of good stuff. Maybe it's just January that's getting to me.
Wednesday, December 12, 2007
Realtors and Mortgage Originators Working Harder than Ever
I know, realtors and mortgage people don't have a very good reputation right now.
But the good news is that this mortgage mess and housing slowdown are doing good things to the industry.
Last year the State of MN implemented a licensing program for mortgage originators. Believe it or not, in the past, there was no requirement to have a license. Now all mortgage people need to get training, hold a license, and even have a net worth of $250k in their business. This is good news.
Already the number of people working as mortgage originators has fallen. And it has fallen a lot. So hopefully the bad eggs and the part timers are getting out of the business, leaving the work to be done by the pros.
Same thing is happening to Realtors. We are losing Realtors. There are lots of Realtors that do one or two transactions per year -- which isn't enough to cover the costs of the required continuing ed and the annual dues to the local Realtor's Association (which is required to do the job -- it gives access to the MLS).
Doing one or two transactions per year just does not allow a Realtor to stay up to date on all of the latest laws and trends in real estate.
So when the annual Realtor's Association board dues came around in November -- $398 -- about 400 Realtors decided not to renew their license.
It's just going to be harder. Harder for mortgage people and Realtors that used to make lots of "easy money" in the boom years. Clients are taking more time, and spending less, than they used to. Realtors and mortgage people will feel this in the pocketbook. And many of them will quit. Or sell their homes and Lexuses.
There are also rumors of entire real estate offices closing. I don't have good information on this yet, but you will hear it here when I know for sure.
(For the record I am still going gangbusters and am currently shirking a thousand responsibilites by writing this post.)
But the good news is that this mortgage mess and housing slowdown are doing good things to the industry.
Last year the State of MN implemented a licensing program for mortgage originators. Believe it or not, in the past, there was no requirement to have a license. Now all mortgage people need to get training, hold a license, and even have a net worth of $250k in their business. This is good news.
Already the number of people working as mortgage originators has fallen. And it has fallen a lot. So hopefully the bad eggs and the part timers are getting out of the business, leaving the work to be done by the pros.
Same thing is happening to Realtors. We are losing Realtors. There are lots of Realtors that do one or two transactions per year -- which isn't enough to cover the costs of the required continuing ed and the annual dues to the local Realtor's Association (which is required to do the job -- it gives access to the MLS).
Doing one or two transactions per year just does not allow a Realtor to stay up to date on all of the latest laws and trends in real estate.
So when the annual Realtor's Association board dues came around in November -- $398 -- about 400 Realtors decided not to renew their license.
It's just going to be harder. Harder for mortgage people and Realtors that used to make lots of "easy money" in the boom years. Clients are taking more time, and spending less, than they used to. Realtors and mortgage people will feel this in the pocketbook. And many of them will quit. Or sell their homes and Lexuses.
There are also rumors of entire real estate offices closing. I don't have good information on this yet, but you will hear it here when I know for sure.
(For the record I am still going gangbusters and am currently shirking a thousand responsibilites by writing this post.)
Tuesday, September 18, 2007
The 80/20 gets 86'ed
Word on the street is that Wells Fargo is no longer offering the 80/20 loans that many first time buyers use.
(For those of you that don't know what an 80/20 is: It is a first mortgage that pays for 80% of the house and a second mortgage that pays for the other 20% of the hosue. It is used to avoid paying the pesky mortgage insurance.)
That's not such good news. Getting a mortgage is getting harder. Other lenders are still offering 80/20s, so that's still a possibility, but options are drying up.
I think one of the reasons Wells Fargo stopped offering this is that it is actually a pretty risky kind of loan. They are financing the house 100%.
If the buyer goes into foreclosure, the first mortgage gets paid off first and the second mortgage gets extinguished. So all banks that do second mortgages take a risk-- the loan is tied to the property, but if the first mortgage goes bad, they take the house and the second mortgage is left with nothing.
How did we get here? Well, they started doing 80/20s in the past 5-10 years. They started doing them because who in the heck can save up $40,000 as a downpayment on a $200,000 house? No one.
(For those of you that don't know what an 80/20 is: It is a first mortgage that pays for 80% of the house and a second mortgage that pays for the other 20% of the hosue. It is used to avoid paying the pesky mortgage insurance.)
That's not such good news. Getting a mortgage is getting harder. Other lenders are still offering 80/20s, so that's still a possibility, but options are drying up.
I think one of the reasons Wells Fargo stopped offering this is that it is actually a pretty risky kind of loan. They are financing the house 100%.
If the buyer goes into foreclosure, the first mortgage gets paid off first and the second mortgage gets extinguished. So all banks that do second mortgages take a risk-- the loan is tied to the property, but if the first mortgage goes bad, they take the house and the second mortgage is left with nothing.
How did we get here? Well, they started doing 80/20s in the past 5-10 years. They started doing them because who in the heck can save up $40,000 as a downpayment on a $200,000 house? No one.
Thursday, August 16, 2007
Don't Call It a Comeback
I'm really fascinated by the financial news today.
Countrywide, the biggest lender in the country, is struggling. They've borrowed $11 billion to cover their butts. The analysts are not happy and are downgrading Countrywide's credit rating, and investment-worthiness ratings.
Earlier this week, Yun, the guy that does all of the commenting for the National Association of Realtors, says this is the bottom.
I think we've heard that one before.
All of the mortgage guys I work with are sending out "all clear" type emails to let us know the local firms are doing fine. One called me yesterday, just to chat about it all. I think everyone's a little scared.
One of my mortgage guys sent out an email talking about his take on "the bottom." Here's what Todd wrote:
From my perspective or explanation for the volatility is that we are bottoming out. One major key component or characteristic of a bottom is bouncing off of the floor. In this case I am talking about the bottom of the real estate slump. It is pubic knowledge and all over the newspapers and internet of the collapse of the secondary market for certain types of mortgage products such as sub prime which is no longer around. If this is the bottom now we must start the long climb upward. Granted there is a lot of foreclosures taking place and that will be a lengthy process to filter out. The climb could and should be shortened with some help from the FED regarding rates. This past weeks meeting showed that the FED is starting to take notice of the risk of the credit crunch and they followed quickly by adding liquidity to the markets almost $20 million worth. Many economists now believe that the stage is set for the FED to lower rates more quickly than they thought.
I really hope Todd is right, I really do. However, I just wonder if all of the flailing about is really about uncertainty -- will some of the biggest lenders in the nation topple? Thornburg? Countrywide? Countrywide, really??
Interest rates have also been steady, and some in the mortgage industry think Bernanke is holding rates to pacify the larger market to the peril of the mortgage and real estate industry. (Where does the middle class hold wealth? Real estate.) If the Fed pulls down rates, it may trigger a small, and probably short-lived, rally in buyers of real estate.
How did the mortgage industry get into this pickle? Some say they are a victim of their own success. They sold anyone and everyone a mortgage, in the name of the "American Dream."
I am a Realtor, and bought my first house at 22, and really believe in that "American Dream." However, I once heard someone say, "He's just not cut out to be a homeowner." And I think that's really true. Not everyone has the dedication and financial stability and responsibility to do it.
But in the go-go times of recent years, anyone and everyone could get a mortgage. People with bad credit, people just out of (and probably in) bankruptcy, people with eyes bigger than their stomachs got into big mortgages. Too big. And now they can't pay, and the banks end up getting the properties back.
Much of that property was bought at the height of the market, and the bank now holds a house that isn't worth what it was when it was purchased.
Todd is right -- it's going to take a long time to sell of the foreclosure inventory, and for the banks to tally up the losses they took on those properties. It's going to be huge. And on top of that, the banks have a terrible liquidity problem right now that goes beyond the mortgage industry and into the whole economy.
TheStreet.com has a great article about the lenders today:
http://www.thestreet.com/_mktwrm/s/why-mortgages-blew-up/newsanalysis/realestate/10374658.html
Countrywide, the biggest lender in the country, is struggling. They've borrowed $11 billion to cover their butts. The analysts are not happy and are downgrading Countrywide's credit rating, and investment-worthiness ratings.
Earlier this week, Yun, the guy that does all of the commenting for the National Association of Realtors, says this is the bottom.
I think we've heard that one before.
All of the mortgage guys I work with are sending out "all clear" type emails to let us know the local firms are doing fine. One called me yesterday, just to chat about it all. I think everyone's a little scared.
One of my mortgage guys sent out an email talking about his take on "the bottom." Here's what Todd wrote:
From my perspective or explanation for the volatility is that we are bottoming out. One major key component or characteristic of a bottom is bouncing off of the floor. In this case I am talking about the bottom of the real estate slump. It is pubic knowledge and all over the newspapers and internet of the collapse of the secondary market for certain types of mortgage products such as sub prime which is no longer around. If this is the bottom now we must start the long climb upward. Granted there is a lot of foreclosures taking place and that will be a lengthy process to filter out. The climb could and should be shortened with some help from the FED regarding rates. This past weeks meeting showed that the FED is starting to take notice of the risk of the credit crunch and they followed quickly by adding liquidity to the markets almost $20 million worth. Many economists now believe that the stage is set for the FED to lower rates more quickly than they thought.
I really hope Todd is right, I really do. However, I just wonder if all of the flailing about is really about uncertainty -- will some of the biggest lenders in the nation topple? Thornburg? Countrywide? Countrywide, really??
Interest rates have also been steady, and some in the mortgage industry think Bernanke is holding rates to pacify the larger market to the peril of the mortgage and real estate industry. (Where does the middle class hold wealth? Real estate.) If the Fed pulls down rates, it may trigger a small, and probably short-lived, rally in buyers of real estate.
How did the mortgage industry get into this pickle? Some say they are a victim of their own success. They sold anyone and everyone a mortgage, in the name of the "American Dream."
I am a Realtor, and bought my first house at 22, and really believe in that "American Dream." However, I once heard someone say, "He's just not cut out to be a homeowner." And I think that's really true. Not everyone has the dedication and financial stability and responsibility to do it.
But in the go-go times of recent years, anyone and everyone could get a mortgage. People with bad credit, people just out of (and probably in) bankruptcy, people with eyes bigger than their stomachs got into big mortgages. Too big. And now they can't pay, and the banks end up getting the properties back.
Much of that property was bought at the height of the market, and the bank now holds a house that isn't worth what it was when it was purchased.
Todd is right -- it's going to take a long time to sell of the foreclosure inventory, and for the banks to tally up the losses they took on those properties. It's going to be huge. And on top of that, the banks have a terrible liquidity problem right now that goes beyond the mortgage industry and into the whole economy.
TheStreet.com has a great article about the lenders today:
http://www.thestreet.com/_mktwrm/s/why-mortgages-blew-up/newsanalysis/realestate/10374658.html
Wednesday, August 15, 2007
Trouble in MortgageLand
There has been a lot of press in recent months (heck, years) about the stagnating (heck, dropping) prices of residential real estate.
Well, that was bad but not as bad as the current state of the mortgage industry, in my opinion.
Here's a snip from a story on Marketwatch.com:
Several lenders such as American Home Mortgage Investment Corp. and New Century Financial Corp. have already filed for bankruptcy after facing margin calls. Now, other mortgage REITs such as Thornburg Mortgage Inc. and NovaStar Financial Inc. are struggling to survive.
Struggling to survive???? Some big, publicly-traded, reputable mortgage companies are "struggling to survive"? These companies don't do just the sub-prime loans, either.
This shakedown could get bad, and could affect all of us in a really dramatic way. If the bigger mortgage companies start to go under, or if it becomes more risky for investors to buy mortgages, it becomes more expensive for banks and brokers to sell mortgages. That means rates and fees could increase for everyone.
All I can say is if you are a buyer on the fence, not sure if you should buy or not, I will tell you that rates aren't going to get any better.
There's also a good story on this topic at WSJ:
http://online.wsj.com/article/SB118713766031197962.html
And Bankrate.com always has great articles. They have one about a tough situation: if you were preapproved and the lender goes bankrupt. Yikes!!
http://www.bankrate.com/brm/news/mtg/20070607_pre-approval_lender_bankrupt_a1.asp
I think this is going to be a major, major story this fall.
Well, that was bad but not as bad as the current state of the mortgage industry, in my opinion.
Here's a snip from a story on Marketwatch.com:
Several lenders such as American Home Mortgage Investment Corp. and New Century Financial Corp. have already filed for bankruptcy after facing margin calls. Now, other mortgage REITs such as Thornburg Mortgage Inc. and NovaStar Financial Inc. are struggling to survive.
Struggling to survive???? Some big, publicly-traded, reputable mortgage companies are "struggling to survive"? These companies don't do just the sub-prime loans, either.
This shakedown could get bad, and could affect all of us in a really dramatic way. If the bigger mortgage companies start to go under, or if it becomes more risky for investors to buy mortgages, it becomes more expensive for banks and brokers to sell mortgages. That means rates and fees could increase for everyone.
All I can say is if you are a buyer on the fence, not sure if you should buy or not, I will tell you that rates aren't going to get any better.
There's also a good story on this topic at WSJ:
http://online.wsj.com/article/SB118713766031197962.html
And Bankrate.com always has great articles. They have one about a tough situation: if you were preapproved and the lender goes bankrupt. Yikes!!
http://www.bankrate.com/brm/news/mtg/20070607_pre-approval_lender_bankrupt_a1.asp
I think this is going to be a major, major story this fall.
Subscribe to:
Posts (Atom)
