Fannie & Freddie Refi's

Calculated Risk: WSJ: Details on New FHFA Refinance Program, No LTV Limit, Eliminate appraisals

Home prices drop?

10/10/2011A Fannie Mae survey shows that respondents now expect home prices to decline 1.1 percent over the next year, a steeper drop than the 0.5% decrease predicted in the August survey and the biggest decline expected to date.

Profile of Repeat Buyers

June 1, 2011 by Sophia Stuart, Marketing Associate · Leave a Comment
Filed under: Home Buyers 

• The median age of repeat home buyers was 49. The median household income was $87,000.
• Seventy-nine percent of repeat buyers buyers purchased a single-family home with a median home size of 2,000 square feet.
• There are several reasons why repeat buyers purchased a home.  Fifteen percent desired a larger home, 12% had to move for a job relocation, and 10% of repeat buyers wanted to move closer to family & friends.
• Learn about the various demographics of home buyers with our 12 page Profile of Home Buyers Booklet. It contains information on first-time home buyers, repeat buyers, single females, and married couples among many others. Download it here: http://www.realtor.org/prodser.nsf/products/186-45-202?OpenDocument

What's a Rookie Agent to do?

What's a Rookie agent to do?!

If you're a Rookie agent (or even new to an area) you're probably feeling a bit overwhelmed.  They didn't tell you in real estate school it was going to be this hard to find a buyer or seller! You thought you'd be able to send out a letter to all your friends and family, sit phone duty, or even magically be handed hot leads from your broker/manager and BANG, you'd be rollin'!
That's not what happened is it?  You mailed out to your sphere of influence.  Your cousin decided to buy directly from the new home sales associate anyway.  You sat phone duty and besides answering 15 times that, "No, that property isn't for lease," you didn't get squat except a little better at Angry Birds.  Your broker hasn't given you a lead.  In fact, they're asking YOU what YOU'RE doing to get leads!
How can you possibly compete with these agents?  These agents are making fat bankroll.  They've been here forever and all they have to do is wake up in the morning and they're getting mad referrals from every person in their path. You hear the lead agent in your office in the bathroom stall next to you talking on his bluetooth.  He just landed another million dollar listing.  You think "Ahhhh sh%$!" You don't know anyone, you can barely log into a website, much less understand how to update the template website the company gave you.  Between your board association fees, that little black supra key that costs a fortune (but looks like a bad 1980's Knight Rider pager), the fees you paid to join your office and what you spent buying supplies and electronics to get started, you're tapped out.  You can't buy an eraser for your mechanical pencil, much less pay to have leads supplied to you!
It's tough, isn't it? 
So, here's my secret to how the Rookie agent can compete with the seasoned veteran agent who knows a third of the town:  GET IN FRONT OF THE CUSTOMER.  GET FACE TIME AND PHONE TIME.
How do you do it?  Here's a few ideas:
1. Start farming an area. Leave business cards on doors with a personal, handwritten message on the back. Start a newsletter or quarterly market report.  Better yet, walk the neighborhood on a regular basis and pass out viable information.
2. Send out expired listing letters on a daily basis.  Or, call them. There's also nothing wrong with showing up at their door with an informational package.  If you feel there's too much competition, go back a few months in the MLS and contact the past expired listings.
3. Go talk to an unrepresented seller. Here's a post that gives advice on how to get your foot in the door with FSBOs.
4. Talk to builder representatives and ask if you can market one of their homes or help hold open some of the homes. Follow up, offer to help, bring them lunch, ask for their referral if a buyer is desiring representation, ask for the opportunity to list one of their properties. Ask, Ask, Ask!
5. Ask an agent if you can advertise one of their listings or hold an open house.  This gives you an excuse to invite neighbors by going door to door. You can also call owners who live in the same neighborhood as that listing to tell them all about that listing and ask if they are thinking of selling in the next 3 months. (Follow Do Not Call procedures.)
6. Preview properties.  Preview listed properties, builder properties.  Get out there and learn the area.  You never know who you'll bump into that might want your help.
7. Blog, set up a Facebook business page, get a Twitter account and be consistent with updating these things.  I'm kinda preaching to the choir here.  I should be more consistent!  These things are free (well, not ActiveRain, but many other blogging platforms are).
8. Get involved in your community, volunteer, talk to your neighbors.  I'm not saying you should stick a business card in their face every time you see them, but reminding someone you work in real estate is ok.  for example, 'Gotta run, I'm previewing properties...have a property tour...have a real estate meeting...taking a continuing education course...got a closing..."
9. Take a successful agent to lunch.  Here's something you might have figured out by now: they probably like to talk about themselves.  Ask them to tell you what they wish they would've known when they started.  Ask them to tell you the top 3 activities you should do.  Get inspiration and hear their stories of how they started.  The good thing about this is they'll start getting all nostalgic and remember when they were poor and BOOM...your lunch is paid for!
10. Follow up often and immediately start a database.  It doesn't matter if it's on note cards, as long as you're contacting your database on a regular basis. You have got to constantly be on the front of that potential clients mind when they go to buy, sell or refer.
If you will commit to doing these activities, consistently, you will see success.  Once you start having closings you can start investing more money into marketing that leverages your time. But, for right now, you may have to pound the pavement a little bit and ACTIVELY pursue that client.  Pretty soon you'll be just like the bluetooth guy in the next bathroom stall.

Thanks to Laurie Jarrett!!!

Will I Still Owe the Bank Money If I Do A Short Sale?

Will I Still Owe the Bank Money If I Do A Short Sale?

If you have one mortgage loan on your California home the answer is no.  Senate Bill 931 allows that after January 1, 2011, if a lender on a first mortgage accepts a short sale, they are agreeing to waive the deficiency amount.  So, if they approve the short sale and it closes, you will not owe your lender any additional money, even though you have not paid back the entire loan balance.  In fact, in my opinion, that is the entire goal of a short sale.  You definitely should discuss the impact of Senate Bill 931 with your attorney when considering a short sale.

If you have two mortgage loans, the issue of whether you will continue to owe the second mortgage lender money is negotiable.  The goal of the short sale negotiation is to obtain a full release of the second lender’s right to pursue a deficiency after the short sale.  Accordingly, short sale sellers should review any and all short sale approval letters with their attorney to insure that the deficiency release language is sufficient to protect them.  Also, it is not unusual to receive two demands from a second mortgage holder.  The lower demand will often be what they will require to participate in the short sale -- a simple “lien release”  -- the second higher demand will often be what they will require for a full release of their right to pursue a deficiency.  

A short sale with two mortgage lenders may present itself like the following:  Lien release demand amount $3000, and deficiency release demand amount $5000.  Typically, the first mortgage holder will allow some amount of the short sale proceeds to the second mortgage holder.  So, let’s say the the first mortgage holder will allow $4000 to go to the second lender, but no more.  It would take an additional $1000 seller contribution to insure that the seller would not be pursued by the second lender after the short sale.  The first lender would have to approve that additional payment and it would have to be reflected on the closing documents.  In this example, after the $5000 deficiency release amount is met, the short sale seller would not owe any additional money after the short sale.  

If you are considering a short sale of your Orcutt, Vandenberg Village, Nipomo, or Arroyo Grande home, you should seek out an experienced short sale agent to guide you through this process.  If you would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.

Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

*Nothing in this article is intended to solicit listings currently under contract with another broker.  This article offers no legal or tax advice.  Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.  Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

Copyright© 2011 Tni LeBlanc *Will I Still Owe the Bank Money If I Do A Short Sale?*

A Simple Explanation Of The Federal Reserve Statement (April 27, 2011 Edition)

Earlier today, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.
The vote was 10-0 — the third straight meeting after which the FOMC vote was unanimous.
In its press release, the FOMC noted that since its March 2011 meeting, the economic recovery is proceeding “at a moderate pace” and that labor markets conditions are “improving gradually”. Household spending and business investment “continue[s] to expand” but the housing sector remains “depressed”.
Furthermore, the FOMC’s statement discussed the Federal Reserve’s dual mandate of (1) Managing inflation levels, and (2) Fostering maximum employment. The statement acknowledged recent inflation pressures on the economy, but it expects those pressures — because they’re related to oil and food prices — to be “transitory”. Unemployment remains “elevated”.
The FOMC statement also re-affirms the group’s plan to keep the Fed Funds Rate near zero percent “for an extended period” of time, and to keep its $600 billion bond market support package — more commonly called “QE2″ — intact.
The statement’s verbiage suggests that a third support package may be created after QE2 ends in June 2011, depending on the needs of the economy.
Mortgage market reaction to the FOMC statement has been positive thus far. Mortgage rates in Newport Beach are unchanged, but leaning lower. And, as always, market sentiment could shift quickly. If you like today’s mortgage rates, consider locking in.
The FOMC’s next scheduled meeting is a 2-day event, June 20-21 2011.

Possible Very Strict New Guidelines

Reporting from Washington—

You may have seen reports that the federal government is proposing new mortgage finance rules under which only home purchasers who can afford a minimum 20% down payment on a conventional loan would get a shot at the best interest rates and terms.

That is correct, and it's deeply sobering news for large numbers of first-time and moderate-income buyers who can't come up with that much cash or afford to pay higher rates.

But some of the other requirements that federal agencies and the Obama administration are proposing in the same plan have gotten much less attention yet could prove just as troublesome for consumers:

•Strict mandatory debt-to-income limits. Under the proposal, to get the best mortgage rates, you would need to spend no more than 28% of your gross monthly income on housing-related expenses, and you couldn't have total monthly household debt that exceeds 36% of your income.

There would be no flexibility to go beyond these ceilings, unlike in today's marketplace, in which Fannie Mae and Freddie Mac consider debt-to-income ratios along with other factors through their electronic underwriting systems. Freddie Mac, for example, has an overall debt-ratio limit of 45% of an applicant's stable monthly income.

•To refinance your existing mortgage and replace it with one carrying the best interest rate, you'd need no less than a 25% equity stake in your house to qualify. If you sought to take any additional cash out through a refi, you would need 30% equity. Today's typical requirements for a conventional refi are nowhere near as strict.

•Pristine credit standards. For example, if you were 60 days late on any credit account during the previous 24 months, you would be ineligible for a mortgage at the best terms.

These are all core features of what may be the most sweeping and controversial set of changes in decades for the housing and mortgage markets. The so-called "qualified residential mortgage," or QRM, proposals were released at the end of March by banking, securities and housing regulators, along with the Department of Housing and Urban Development. The agencies were required by the 2010 financial reform legislation to come up with new standards for low-risk conventional mortgages.

Congress did not specify what a "safe" mortgage should look like but directed the agencies to consider such factors as full documentation of borrower income and assets plus avoidance of toxic features such as negative amortization and balloon payments. Congress was silent on the subject of minimum down payments.

Under the law, loans that do not meet the strict QRM tests will be pushed into a less-favored, higher-cost category: Banks and Wall Street securitizers would need to set aside 5% of loan balances in reserves to cover possible losses from defaults. This extra capital cost inevitably would be passed on to consumers.

Mortgage industry estimates of the interest rate differential between ultra-safe, QRM-qualifying loans and all others range from three-quarters of a percentage point to 3 percentage points. In today's market, this would mean that mortgages that meet the federal agencies' stringent new standards might go for 5%. But all others — the vast majority of today's conventional loans — could cost from just under 6% to 7% and higher.

You can muster only a 10% down payment? Tough. You can't quite fit into the tight confines of the QRM's debt-to-income ratio rule? Pay up.

Where and when will this all start hitting the marketplace? The proposals are out for public comment through June 10 and probably won't be put into effect until mid-2012. The agencies' proposal, though not the legislation, exempts mortgages sold to Fannie Mae and Freddie Mac from the rule as long as both remain under federal conservatorship — a date uncertain. FHA and VA mortgages would not be subject to QRM either.

Meanwhile, builders, consumer groups, banks, real estate agents and others are readying campaigns to persuade the regulators and the Obama administration to back off some of the provisions. Michael Calhoun, president of the Center for Responsible Lending, argues that if adopted in its current form, the proposal would make it much tougher for modest-income and minority consumers to afford a first home.

Jerry Howard, chief executive of the National Assn. of Home Builders, says the agencies and the administration have strayed far beyond Congress' intent, and their proposals threaten to wreck any recovery in housing and force millions of Americans to rent rather than to own.

"I think we're in for a hell of a fight," he says.