I have personally seen a trend from the mortgage note holders on my short sale listings to start to pull back from approving short sale transactions. Instead now they are approving loan modifications which were initially turned down the first time the homeowner/seller called the Home Retention Department for assistance in a loan modification. This is a frustrating experience for me as a Listing Agent, as I end up losing listings that I have managed to market and get viable offers for. This of course depends on the lender with whom we are dealing with, some lenders are still co-operating with us towards a successful short sale transaction. This new trend for short sales is beginning to show that they will not be the 1st priority of the lender/mortgage note holder until they have exhausted the new options of the Loan Modification departments that now have federal subsidies to buy down the original mortgage note to what the actual current appraised value is, which is an incredible deal for the financially strapped homeowner.
I have one client that was nine months behind on their mortgage, was initially turned down for loan modification. We had several viable short sale offers in to the bank for approval and the seller tried one last time to see if the new bailout program gave them a second chance. They have been given the wonderful news that they have been accepted to have the loan modified and the original note amount reduced to current appraised value. This family deserved this, I was happy to hear the news, despite my losing a transaction. They truly loved their home and tried desperately to keep it despite their worsening financial conditions.
The upside of this is that I see that the government’s recent actions to promote stimulus for the mortgage lenders to negotiate with homeowners to retain properties in default or that are likely to go into default has begun to work and move in the right direction. I feel that the inventory of short-sale and foreclosure properties will be coming to an end. This new housing trend is something I look forward to in the near future. As a professional Realtor dealing with the banks and mortgage lenders on these financial issues it is a time consuming and sometimes challenging process.
I have included below the Interest Rate update report from my preferred lender Aaron Gordon at Countrywide Home Loans. This last Wednesday we again saw a large drop in the interest rates to 5.75% with one point paid to the lender; an incredible deal in this market when home prices are at historic lows. To be able to buy during the perfect storm of low rates and low home prices is one that I know will not last forever. I recommend that buyers that have been on the fence to buy, take the time to get online and keep updated of the market conditions so that they can take advantage of the incredibly priced deals available today. If we all had crystal balls we would have known exactly when the last market upswing was going to peak, but we don’t and so looking back we should learn that even the media is usually late to report when the market conditions have changed, usually the news is late to report on average six to eight months.
Morgan Stanley just announced this week to its international investors that it was time to get back into the stock market again. It is a New Year coming and a whole new government will take over on January 20th, 2009. I feel a new optimism for the coming year. I just purchased a bank owned home that I feel was a super steal for the quality of home that I was getting. The home I purchased was selling for $850K in 2004, and I bought it for $529K including closing costs that included rate buy down and money for repairs as well. I invested in new carpet, paint and appliances; and my appraisal came in at $590K at close of cscrow. I feel that the home is worth $650K already due to the rehabilitated condition. I made this investment NOW as I believe the time is right to invest again and that I will not be saying to myself next year that I wish I had, but I am glad I did!
I again will adjust my business to adapt to the changes of this evolving market, and continue to keep myself updated and educated on the changes still to come, so that I can serve my clients the way they deserve to be represented.
Please feel free to call and discuss any questions you may have with me. I always appreciate any referrals you have for buyers and sellers that need professional assistance in the Las Vegas and Henderson Real Estate Market.
I also have a new Website dedicated to understanding the Foreclosure Market, please visit or refer it to anyone that is in need of clarification of this complicated Foreclosure Market. http://www.understandingforeclosureslasvegas.com
Gordon Team - Weekend Rate Report – November 7, 2008
"INTEREST RATE DROP ALERT!"
Here we go again!! Rates have come down substantially since Monday.
CONFORMING 30 YR FIXED RATE
5.500% with 2 points
5.625% with 1.5 points
5.750% with 1 point
5.875% with .250 points
6.000% with no points
FHA / VA - 30 YR FIXED
5.500% with 2 points
5.750% with 1.5 points
5.875% with 1 point
6.000% with .250 points
6.125% with no points
NOW is a great time to lock or shop around for a better rate!! Let's hope they stay this way for a while but don't chance it. LOCK TODAY!!
WEEKLY RATE REPORT:
Rates are down from last week. Consumer spending is down and we are facing a weaker job market. This made rates go down. However, don’t plan on them staying that way long. Lenders are tightening lending standards due to a soft economy and record foreclosures. The risks are rising. When risk increases, the price of money reflects the risks. A recent survey of senior loan officers found that about 70% of banks raised their lending standards for prime mortgages. About 90% of banks that offer nontraditional mortgages raised theirs too. Find a rate you like and lock!!
NEW GUIDELINE ANNOUNCEMENTS THIS WEEK:
Construction loans are back in soft markets like Las Vegas. If you have a client who bought a lot but could not secure financing, he can now get a construction loan to finish his dream home. This is great news. Since this is a specialized product, it may not help your business directly. However, it’s one of the more risky loans there is. Bringing it back is a great sign. It shows a measure of lending confidence coming back to our market.
TIP OF THE WEEK:
Escrow Holdbacks Allowed for Repairs and Improvements on Bank-Owned Properties You can now do escrow holdbacks on existing Countrywide REO properties when using conforming loans programs (not including FHA) and a Countrywide loan officer. These holdbacks are allowed in financing of Countrywide-owned properties purchased at either an REO auction or non-auction sale where there is a certain amount of rehabilitation work needed. An escrow holdback is a portion of a loan held in escrow until an additional requirement, usually repairs or unfinished work, is completed. The loan may close and the borrower may occupy the home while incidental work is in progress. Common examples of improvements that may involve holdbacks include exterior painting or flooring, where the property is livable. The cost to make repairs or rehabilitation is placed in an escrow holdback account, along with reserve funds (20% of the repair budget) to ensure completion of work. In all cases, the property must be habitable or livable, and the 20% reserves are required to be escrowed along with the cost to complete.
- Detached SFRs only (no PUDs)
- Owner-occupied only
- Conforming conventional programs only
- Purchase transactions only for Countrywide REO properties
- New and existing construction allowed
- Maximum 95% LTV Allowed
- Mortgage Insurance is required on loans over 80 LTV
- Full appraisal required
- Property does not need to be purchased at an auction
- The property must be livable and must have evidence of working utilities, bathrooms, etc.
- Items such as paint, floor coverings or minor wall damage does not affect livability
- Health or Safety Hazards Escrow Holdbacks are NOT allowed for properties with Health or Safety Hazards
- Minimum Escrow Withhold Amount 120% of the total estimated cost to complete the required work must be held in escrow
- Completion of Work Must be accomplished within 120 days from the loan closing
