Loan Modifications – They Can Be Done! Lots of Patience Required!

July 14, 2010 · Kathy Wall · 3 Comments

I haven’t blogged in a long time, partially because I’ve been super busy with work, but also because I’ve been so wrapped up and worried about a loan modification that I had been trying to get on my house since 2008. Yes… I said 2008!

This has been one of the most frustrating and stressful experiences of my life. As mentioned, I started talking with the bank in late 2008. Around July of 2009, they told me that I had qualified for a certain type of loan modification. They gave me my new payment amount and I started paying that amount. I paid them faithfully every month thereafter. I was concerned, however, because I never received any formal paperwork and, because real estate is my job, I knew something had to be wrong. I called them constantly and they kept telling me there was no problem, everything was “in process.”

I believe it was in January this year that I returned home to find a letter from the bank in my mailbox. The letter indicated that I was in default and that if I didn’t pay them $35,000 by a certain (very near) date, they would start foreclosure proceedings. Needless to say, I freaked out. Read more

The Post-Credit Era

May 19, 2010 · Dean Rizzi · 3 Comments

We’ve been saying for the past month or so that we’re not particularly worried about the end of the federal homebuyers tax credits. We also weren’t particularly concerned when the Federal Reserve said it would cease purchasing mortgage-backed securities. After all, the only way to discover if a market is truly healthy and viable is to stop subsidizing it.

It’s still early to render a verdict, but so far so good. People recognize that the combination of low rates and lower home prices represent a great opportunity, while many shoppers who failed to find a home to qualify for the tax credit remain undeterred and, just as important, rational – understanding the go-go days of the early 2000s are over. And that’s a good thing. The market of that era was driven more by speculation and less by fundamentals. And though it was highly remunerative for many of us, we see how it turned out.

In housing, slow and steady wins the race, which is why we continue to advise our clients that today’s market offers good fundamentally sound deals that can be financed at good economically advantageous interest rates. Sounds like a win-win deal to us.

www.deanrizzi.com

A Look at the Past and a Look at the Future

December 30, 2009 · Dean Rizzi · 1 Comment

This time last year we predicted that 2009 would end a lot better than it began. We were right, though it wasn’t a great accomplishment to be right considering how low the housing market, stock market, and overall economy had sunk during the latter half of 2008. As we’ve stated repeatedly over the past year, a low base and a dour outlook provide an excellent buying opportunity, so we weren’t surprised when buyers stepped forward to exploit the opportunities.

Looking ahead to 2010, we see continued improvement in home sales and home prices. In fact, we wouldn’t be surprised if the market turns to a sellers’ market from a buyers’ market by year’s end. We are almost certain that will be the case if we see a two to three percentage point drop in the unemployment rate. Low mortgage rates and income tax credits are contributing factors in stabilizing the market, to be sure, but no factor is more important than employment in not only maintaining stability but stimulating activity. Read more

Still the Time to Borrow and Buy

November 20, 2009 · Dean Rizzi · 1 Comment

For the past four months, we have been forwarding the argument that housing prices have stabilized. Wells Fargo has provided another arrow for our quiver. To avoid defaults and foreclosures, the banking giant is offering homeowners with Alt-A ARMs the option to offset monthly payment increases with interest-only loans to defer amortization for six to 10 years.

It sounds like a risky move. After all, interest-only loans were a contributing factor to the housing meltdown. But many of those loans were originated in a much riskier era – near a market top. That is certainly not the case today, which is why Wells Fargo is betting that home prices have stabilized and that the economy will improve. We think it is a smart move.

We also think it is a smart move to refinance or buy today. Rates are very, very good (but they will not be forever, for sundry reasons we have previously stated). What’s more, the purse strings aren’t nearly as tight as borrowers might think. According to the Federal Reserve, the rate of banks that reported tightening lending standards for prime residential real estate loans was 25% in October, which is well off the peak of 75% reported in July 2008.

In other words, 30-year fixed-rate mortgages are readily available at 5% (which for borrowers in the 28% federal income tax bracket works out to 3.6% after tax). Meanwhile, the 5/1 hybrid ARM presents an intriguing option for borrowers planning to move within the next few years. A 3.75% 5/1 works out to a mere 2.7% after tax for someone in the 28% tax bracket. Yes, rates could go lower, but not much lower.

www.deanrizzi.com

Bank or Mortgage Broker? Who to Use?

October 5, 2009 · Kathy Wall · 4 Comments

Where is the best place to get your home loan….a bank or a mortgage broker? Over the course of my many years in real estate, I have waffled back and forth over this question. Many times my decision on whom to refer would be based on the credit of my buyers. If they were self employed, had a small down payment or not-so-good credit, I would usually suggest that they talk to a mortgage broker. If they had excellent credit scores and a good down payment, I would usually suggest that they might be better off going directly to one of the major banks.

Now, after an incredibly negative experience with one of the largest banks operating here in California, I am leaning much more towards referring all clients to mortgage brokers, because I know that they will do the job and, most importantly, will actually care about my clients. Read more

Lower Rates Aren’t In The Bag

June 24, 2009 · Dean Rizzi · 4 Comments

Last week’s drop in mortgage rates was a welcome relief, and you would think that more relief should be forthcoming. After all, inflation appears to be a dead issue, given recent data on producer and consumer prices. Inflation and interest rates are highly correlated: When one falls, the other usually falls in tandem.

But there is more to the story than inflation. All interest rates are determined relative to risk-free market interest rates, with short-term Treasury bills serving as a proxy. But most interest rates are not risk-free. Mortgages rates are certainly not risk-free, which is why they are higher than Treasury bill rates. What’s more, mortgage rates are heavily influenced by rates on mortgage-backed securities (MBS). MBS rates, in turn, are heavily influenced by yields on Treasury bills, notes, and bonds.

And there is the rub. Treasury securities prices tumbled last week after Read more

It’s Getting Better All the Time

May 18, 2009 · Dean Rizzi · 7 Comments

It’s Getting Better All the Time

Federal Reserve Chairman Ben Bernanke has forecast an end to the US recession, which he believes will be kaput before 2010. Bernanke also told the Congressional Joint Economic Committee that the collapse in the housing market, which began three years ago, may have bottomed out, something we’ve been saying for the past month. Read more

Mortgage Protection Program for First-Time Homebuyers!!

April 3, 2009 · Jean Joh · 4 Comments

news Great news for California home buyers! As if the $8000 tax credit, historically low interest rates, and affordable home prices were not enough, the California Association of Realtors Housing Affordability Fund (C.A.R.H.A.F.) is making the pot even sweeter by offering a mortgage protection program for first-time home buyers. Wow!

Back in January, I posted a blog on my personal blogsite (http://budurl.com/5vpd) about the Hyundai Assurance Program (if you lose your job or have another hardship within 12 months, you can give your new car back) and commented that it would be an interesting idea if we could have the same sort of thing for buying homes. The basic idea – buy a new home, and if you lose your job, you can give the home back without penalty. Well, it seems that someone out there was reading my blog…okay, maybe not, but this new program is not too far from the same line of thinking. So what does it entail exactly?