OREGON REAL ESTATE ROUND TABLE

Tag: Mortgages

You will find links to mortgage coompanies I feel that are staffed with experienced proffessionals that can help you with your mortgage and real estate lending needs.

  • Post-Mortgage Meltdown, Where Do We Go Now?, National Public Radio (NPR)


    For more than 20 years, the mantra in Washington has been “more, not less” when it comes to Fannie Mae, Freddie Mac and the expansion of homeownership.

    But in light of the financial crisis and Fannie and Freddie’s near-collapse, policy leaders are also rethinking the government’s role — and many Americans are starting to question whether homeownership is the only path to the American Dream.

    Fannie and Freddie function by buying, bundling and then stamping a government guarantee on mortgages. Then they sell them to investors. It keeps the banks happy because it keeps capital flowing, and it keeps consumers happy because it makes low, fixed-rate mortgages possible.

    At least that how things were supposed to unfold. But the two mortgage finance giants “made astonishing mistakes,” Raj Date, executive director of a financial policy think-tank called the Cambridge Winter Center, told NPR’s Audie Cornish.

    ‘It Has All Come Back To Haunt Them’

    “As normal people everywhere in the country realized that housing prices seemed to be growing straight into the stratosphere, instead of becoming more conservative about lending against those ridiculously high values, Fannie and Freddie just continued to make the same kind of loans and indeed made more aggressive loans during that period of 2005, 2006, 2007,” Date said. “And it has all come back to haunt them.”

    So instead of rationally-priced credit, he said, the country wound up with a $6 or $7 trillion bubble in housing values. And all of Wall Street and most of the country’s banks made the same sort of mistakes, Date said.

    Policy makers are at a bit of a crossroads, said Date, who was among a number of industry leaders who huddled with Treasury Secretary Timothy Geithner this week to figure out a new way forward on housing.

    Fannie and Freddie have dramatically scaled back their level of aggressiveness in underwriting credit, Date said. But, he added, “the fact of the matter is that on average and over time, Fannie and Freddie represent an economic subsidy from the public at large to middle and upper middle-income homeowners.”

    Despite talk on Capitol Hill of dismantling the two organizations, it might be tough to get rid of them. That’s because Fannie and Freddie, along with the Federal Housing Administration, are responsible for some 95 percent of the mortgages in the country today, Date said.

    “If you think that the fall of 2008 was calamitous, believe me, you haven’t seen anything yet if you were just somehow to turn off the lights on Fannie and Freddie today,” he warned. “That said, I think the policy makers are trying to be thoughtful about the right long-term answer is for housing finance more broadly, and that involves revisiting some issues that have been treated as sort of untouchable for quite some time.”

    Ultimately, Date said it might be time to rethink homeownership as an American ideal.

    The White Picket Fence Reconsidered

    “The world we live in today is not quite the world that existed in 1950,” he noted. “The nature of households and the rate at which they dissolve and reform, the nature of work and its transient nature across geographies are all things that suggest that maybe, just possibly, a middle-class American shouldn’t stake themselves to an illiquid, very large, concentrated, leveraged asset —- that is to say, a house.”

    Alyssa Katz, author of Our Lot: How Real Estate Came To Own Us, also thinks America needs to reconsider the American Dream.

    “Homeowenership has gone from being pretty much an unmitigated good — something that would provide stability — and instead has thrown a huge cloud of doubt over the value of homeownership for a lot of people.”

    Even so, there also are downsides to renting, she said.

    “Some of the common beliefs about renting are absolutely true,” Katz said. “Being a renter has very little security. They don’t have any promise they’ll be able to live in the apartment or home for more than a year or two. Renting is also perceived as something that really divides Americans by class. So I think for a lot of potential renters, or people who own and are thinking of making that transition to renting, they have to overcome this sense that they are giving up a sense of status.”

    That’s a tough thing to shake for many Americans, she said.

    If more people rent, the benefits of homeownership will only increase for those who own homes because the pool will shrink, Katz said.

    “Those who have access to homeownership and the benefits that it brings, as a result of policy, will be even more privileged than they are now.”

    http://www.npr.org/templates/story/story.php?storyId=129348144

  • Foreclosure rate soars in suburbs, Steve Law, Portland Tribune


    While Portlanders continue to be plagued by home foreclosures, the number of distressed homeowners is spiking even faster in the suburbs these days.

    Foreclosure actions filed against homeowners in upscale Lake Oswego mushroomed 20 percent the first six months of this year, compared with the same period last year, and rose 10 percent in jobs-rich Hillsboro, according to RealtyTrac Inc., an Irvine, Calif., real estate data services company. RealtyTrac counted nearly 300 Lake Oswego properties socked with foreclosure actions from January through June and more than 500 Hillsboro properties.

    Foreclosures also shot up at a rate faster than Portland in suburban Oregon City, Milwaukie, Tigard, Tualatin, Sherwood and St. Helens.

    “The foreclosure activity that is occurring in suburban markets in Oregon is unprecedented,” says Tom Cusack, a retired federal housing manager in Portland who continues to track the issue via his Oregon Housing Blog. “It’s affecting not just rural areas, not just inner-city neighborhoods, but suburban neighborhoods, probably more substantially than any time in the past,” Cusack says.

    From January through June, foreclosure filings grew 6.5 percent in the city of Portland, compared with a year earlier, and 8.5 percent in Portland suburbs, not counting Clark County, according to RealtyTrac data.

    In 10 different local ZIP codes — three in Portland and seven in the suburbs — foreclosure actions were filed against more than 2 percent of all properties the first six months of 2010.

    Dominating local market

    Realtors say a record number of foreclosures dominates the area housing market, depressing home prices but also attracting bargain-hunters looking for distressed properties.

    “Either you’re helping people get into them or helping get out of them,” says Fred Stewart, a Northeast Portland Realtor who operates a website listing foreclosed homes for sale in Multnomah County.

    Distressed properties account for “40 percent of the business right now,” says Dale Kuhn, principal broker for John L. Scott Real Estate in Lake Oswego.

    Every suburb is a unique real estate market, so it’s hard to generalize why some are experiencing more foreclosures now than before. In West Linn, for example, foreclosure filings were down the first six months of the year compared to a year earlier, while things are going in a different direction in its affluent neighbor to the north, Lake Oswego.

    Explanations vary

    One factor could be that many borrowers of modest means took out subprime loans, which were the first to go through foreclosure when those loans “exploded” and reset to much-higher interest rates. Working-class neighborhoods had the highest foreclosure rates in the early months of the Great Recession.

    “They got hit the hardest first,” says Rick Skaggs, a real estate broker at John L. Scott in Forest Grove.

    In the Portland area, an unusually high number of middle-class and affluent borrowers took out interest-only loans and Option ARM or negative-amortization loans. Option ARMs (adjustable rate mortgages) allowed the borrower to pay a minimum monthly mortgage payment — akin to a credit card minimum payment — while tacking more principal onto the loan. Option ARMs and other alternative loans took longer to unravel than subprime loans, and many are now winding up in foreclosure. And those mortgages were more common for more expensive properties.

    They were ticking time bombs, like subprime loans, but they had longer fuses, says Angela Martin, of the Portland public interest group Our Oregon.

    Stewart offers another reason for the surge in suburban foreclosures. He’s noticing a larger pool of buyers now for closer-in Portland neighborhoods, as people seek to avoid long commutes. People selling distressed properties in Northeast and Southeast Portland have more options to sell than someone saddled with an unaffordable mortgage in a suburb, Stewart says.

    Tables turned

    Recent state and national statistics also reveal a counterintuitive trend — affluent homeowners are going into foreclosure lately at a higher rate than others.

    Cusack recently analyzed data for Oregonians who took out traditional 30-year Federal Housing Administration loans since mid-2008. He found that the greater the loan amount, the greater the chances those became problem loans.

    “The default rate and the seriously delinquent rate were higher for higher-income loans,” Cusack says.

    Business owners and other affluent homebuyers who settled in suburban markets also had more resources available to hold onto their homes than lower-income homeowners, at least during the earlier stages of the Great Recession. That may explain why places such as Lake Oswego are seeing such an upsurge in foreclosures now.

    “If you paid a half-million for anything in Lake Oswego in 2007, you’re ‘under water,’ ” Stewart says. That’s the term for people who owe more on their mortgage than their home is worth.

    Portland bankruptcy attorney Ann Chapman, of the firm Vanden Bos & Chapman, is seeing an uptick in affluent clients coming to her office.

    They had been turning to pensions, savings and family money to hold onto their homes and businesses, Chapman says. But as the economic downturn grinds on, some clients see the best option as dumping their home and filing for bankruptcy reorganization.

    Affluent homeowners make a more sober assessment when they realize their homes aren’t going to be worth the mortgage amount for many years, she says. “They’re going to potentially be less emotionally involved when it comes to stopping the bleeding.”

    It’s often a different story for lower-income homeowners who hope to hold onto the only homes they’ve ever had, or hope to have. “They get blinded by their optimism or their paralysis,” Chapman says.

    Little relief in sight

    Many Realtors say it’s a great buyer’s market now for those who have steady jobs, because interest rates are low and prices have fallen so much. But don’t expect the onslaught of Portland-area foreclosures to end any time soon.

    “We are nowhere near the end if you look at the number of homeowners that will ultimately be at risk,” says Martin, citing a new study by the North Carolina-based Center for Responsible Lending. Based on that study, she figures Oregon is only halfway through the foreclosure crisis, in terms of the number of people affected by foreclosures.

    Skaggs says he wishes he could be more positive, but he doesn’t see the light at the end of the tunnel. He just spoke with an investor last week who is about to walk away from five rental homes and let the bank take them back. Three of the homes are in the Beaverton area, one is in Bend and one is on the Oregon Coast.

    “I probably know at least 15 people that in the next month or two are going to walk away from their homes.”

    stevelaw@portlandtribune.com

    http://www.portlandtribune.com/news/story.php?story_id=128216600543594000

  • Multnomahforeclosures.com: Bank Owned Property List Update for July 2010


    July REO list for bank owned property has been added to Multnomahforeclosures.com . REO lists for Clackamas, Multnomah and Washington County has been addd to the site. The homes listed in these files were deeded back or returned to the investor or lender due to the finalizing of the foreclosure process. Many of these homes may already be on the market or will soon will be. It would not be a bad idea to contact the new owner of these properties and find out what their plans are when it comes to their future ownership of the property.

    Multnomah County Foreclosures
    http://multnomahforeclosures.com/

  • The Future of Fannie Mae and Freddie Mac to be decided August 17th, by Jim Kim, FierceFinance


    The most glaring omission from the Dodd-Frank financial reform act is without a doubt the lack of a plan for Fannie Mae and Freddie Mac. The government-sponsored enterprises remain encumbered with billions in toxic loans, and unfortunately, the movement to fix these institutions has been stuck on the back burner–until now. The Treasury Department has announced it will hold a conference on the future of Fannie and Freddie on Aug. 17. A Congressional hearing will be held in September.

    The administration seems bent on offering a concrete proposal in January, which is welcome news, as the travails of these entities are costing taxpayers a lot of money. So far the tab stands at $145.9 billion; it will likely end up topping $380 billion–which would make it by far the most expensive bailout effort to date.

    What sort of solutions will be discussed? I doubt anyone will argue that having some sort of body that guarantees mortgages and sells them for securitization is a bad thing. The key will be to somehow retain the salutary effects of this process, which can lower costs, expand the ability of lenders to make home loans, and protect lenders from rate shocks.

    Taking the long view, the rise of securitization has been a welcome development. The real estate crash has revealed that there’s a down side if you let securitization run amok. One theory, as noted by the New York Times, is that this process has led to lax lending. “If mortgage issuers passed along the default risk to Freddie Mac and Fannie Mae or to the buyers of mortgage-backed securities, those issuers would have little incentive to screen borrowers properly. While issuers often do have some skin in the game, the enormous amount of both securitization and sloppy lending during the boom made it natural to link the two phenomena.” Indeed, defenders of Fannie and Freddie have long argued that they were pressured to start guaranteeing non-prime loans, to expand the homeownership pie. On top of all of this, securitization has made it harder for loans to be worked out. These are certainly reasonable theories.

    The bottom line is that securitization of mortgage loans based on a sound lending standard is a good idea. But how best to do that? Perhaps the biggest issue is whether the government has a role in subsidizing this effort. And if so, what exactly is that role? What are your ideas?

    FierceFinance
    http://www.fiercefinance.com/story/future-fannie-mae-freddie-mac-be-decided-aug-17/2010-07-29?utm_source=twitterfeed&utm_medium=twitter

  • Demystifying Income Documentation, By Jason Hillard, Fireside Lending Group


    Having discussed the importance of the home loan pre-interview, I would like to dedicate a little time to income documentation. There is a lot of confusion about this subject, and thanks to an atrociously lazy mainstream media, and some irresponsible “new media”, disagreements on the issue are still coming up in day to day business operations.

    This is a list of the items your mortgage professional NEEDS from you, REGARDLESS of what type of home loan you want or what type of borrower you are.

    –most recent 30 days of paystubs
    –most recent statement for any depository account, ALL PAGES
    –most recent statement for any other liquid assets or retirement plan
    –most recent 2 years federal tax returns with ALL PAGES/SCHEDULES
    –any divorce/alimony/child support documentation
    –any bankruptcy discharge documentation from the last 10 years

    The reality is that most loans now are what is referred to as “full doc”, which is to say that you will be subject to a financial rectal exam. There are some stated income programs coming back, but bank on your next home loan funding as a result of a full fledged inquest into your personal finances. We’re talking mortgage court-marshal, so you need to be prepared.

    It may sound funny, but you really should frame your thinking around this analogy. Your mortgage professional is really taking up your case, not just packaging a home loan. The underwriter is the judge, jury, and executioner. That is why you need someone who vigorously represents you, like us. (We are not above plugging our outstanding services.)

    So I am now going to explain the thinking behind each of these items, from an underwriter’s perspective. You know you are a good person who will pay back what is owed, and so do we. Let’s delve into the mind of the cagey underwriter though, and see where it leads.

    30 days of paystubs
    This is pretty simple, obviously. But it does go a little beyond “does this person have a job that pays legal tender?”

    What the elusive underwriter is searching for is your year-to-date (YTD) numbers. Does this person work an average of 40 hours? Is there overtime pay that is consistent? What about commisions and bonuses? And is this borrower’s income consistent with the tax returns provided?

    Now, some check stub formats provide a lot of information, and others leave something to be desired. However, it is estimated that 30 days worth of paystubs will provide an accurate representation of monthly income calculated on a yearly basis. “In plain english”, you say? Your YTD pay divided by the number of months so far this year minus one month equals your monthly income.

    Most Recent Depository Statements
    This is usually your most recent bank statement, for all accounts you have. This helps to verify liquid assets. It is very important when running your situation through the automated underwriting software to have this information accurate. This verifies the number of months of cash reserves you have and/or whether you actually have your down-payment available.

    Why do we emphasize ALL PAGES? We know…your balance is on the first page. However, when an underwriter sees “page 1 of 7″ on your bank statement, they immediately want to know, and quite honestly NEED to know what the other 6 pages say. Are there car loans, lines of credit, etc. that aren’t shown on the 1st page? The underwriter needs to assume the worst at all times in order to protect their mortgage company from exposure to loan buybacks.

    Other Asset & Retirement Statements
    More “liquifiable” assets. Stocks, bonds, 401ks, IRAs, etc. What resources do you have that you can sell to make your payments in the event that your income disappears? That’s why we need proof of these items. Important note: for most loan programs, the value of 401ks and IRAs will be decreased by 3o per cent. The reason for this is that if you lose your job, and have to dip into these funds to make your payments, there will be about 30% in penalties and taxes you will have to pay for early withdrawal.

    Last Two Years Federal Tax Returns (All Pages)
    These aren’t always needed. However, we always ask for them. More and more, the automated underwriting systems are requiring them. And even if the underwriter doesn’t need them, it’s a good idea to show them to your mortgage professional. Why? Because, you will be signing a disclosure (4506T) stating that the lender has the right to request transcripts of your last 2 federal tax returns. This right will be exercised. Having a competent mortgage professional look over them upfront assures a smaller chance of “issues” coming up later. You may have what are called “2106” expenses, which reduce your income in the eyes of the underwriter. If you are riding the fence with your debt-to-income ratio, this can implode your home loan.

    As for the self-employed, we will always need 2 years of federal tax returns. There’s no way around it right now.

    Divorce Decrees & Child Support
    Divorce is a nasty thing, and it can rear its ugly head AGAIN the next time you apply for a mortgage. Is there an alimony agreement? Alimony reduces your income. How long will it continue? Is there child support involved? Again, how long will you be obligated to pay it? Is either amount scheduled to increase? The bank has to look at the big picture when it comes to your overall liabilities, and these can play a huge role in determining your debt-to-income ratio.

    Bankruptcy
    Chapter 7 or Chapter 13? When was it discharged? What was included? What was excluded? The details and date of your bankruptcy discharge is a crucial piece of information. The lender must document what liabilities remain, which are cleared, and that the requisite amount of time, as prescribed by the mortgage product you are applying for, has transpired since the discharge.

    Other Circumstances
    You may have a pension that you are looking forward to in the future. Unfortunately, it doesn’t have any cash value now, so it cannot be considered as an asset right now. And you’re not receiving any income from it right now, so it doesn’t offset your debt-to-income ratio.

    Maybe you just started your own business last year, and things are going great. Unfortunately, current underwriting guidelines do not allow us to consider self-employed income unless you have been in business for two years, as evidenced by 2 years of federal tax returns.

    There are all kinds of unique situations, and we are always happy to help you determine where you stand.

    Please understand that in order to truly apply for a home loan, you need to have these items prepared. We don’t ask for them just to make your life miserable. Your mortgage professional is your advocate, not your enemy. You have to present them with ALL of the information so that they can properly represent you in front of the judge. I mean underwriter.

    If you have any questions about income documentation or mortgages in general, please feel free to shoot us an email! Jason Hillard, Fireside Lending Group jasonh@firesidelendinggroup.com

  • Important New Regulations Affecting Closing Dates!


    From the Desk of Phil Querin, Partner, Davis Wright Tremaine, LLC, PMAR/OREF Legal Counsel

    Although the initial annual percentage rate (APR) on a residential loan is disclosed in the Good Faith Estimate early in the purchase transaction, it can change before closing. Under the new rules enacted in the Truth in Lending Act, effective on July 30, 2009 (last Thursday), if the actual (i.e. the final) APR varies from that initially disclosed on the Good Faith Estimate by at least .125%, then there is a mandatory additional three (3) business day waiting period before the transaction can close. So if the final APR isn’t disclosed until late in the transaction, it could potentially force the three (3) business day period to extend beyond the closing date set forth in the Sale Agreement.

    As you know, the Oregon Real Estate Forms (OREF) closing date is written in stone – there are no automatic extensions – so if it appears that the APR could be held up or there is any indication that the APR will change at closing, brokers would be well-advised to get seller and buyer to agree in advance to a written extension as a contingency if the final APR causes the three (3) business day period to extend beyond the scheduled closing date. OREF will be meeting shortly to consider some additional language for the new sale agreement form, although it won’t actually get printed and distributed until early next year. In the meantime, I have recommended to my clients that they may wish to consider adding an addendum to their sale agreements with language such as the following: ” In the event that Buyer’s final Annual Percentage Rate (“APR”) differs from the APR initially disclosed to the Buyer in the Good Faith Estimate by .125% or more, the Closing Deadline defined in the Real Estate Sale Agreement shall automatically be extended for three (3) additional business days in accordance with Regulation Z of the Truth in Lending Act ,as amended on July 30, 2008.”

    This, of course, is subject to the review of the companies’ principal broker and legal counsel.

  • Multnomahforeclosures.com Updated with New Notice of Default Listings


    The new update of the Multnomah Foreclosures web site (http://multnomahforeclosures.com/) includes NOD listings dating back to February of 2008. This data was added because we had it and there has been a lot of interest in this data by the visitors of the site.

    Multnomah Foreclosures
    http://multnomahforeclosures.com/

  • Multnomah Foreclosures Web Site Updated


    The new update of the Multnomah Foreclosures web site (http://multnomahforeclosures.com/) includes NOD listings dating back to February of 2008. This data was added because we had it and there has been a lot of interest in this data by the visitors of the site.

    Multnomah Foreclosures
    http://multnomahforeclosures.com/

  • Short Sale vs Foreclosure – EFFECT ON CREDIT, By Paul Dean, Evergreen Ohana Group


    I thought this information would be beneficial to know, when you are dealing with sellers on a Short Sale basis. Many consumer don’t realize the impact of a short sale on their credit. Read the attached article and commentary from our credit agency below. There are a couple KEY pieces:

    1. Foreclosure – lenders won’t do another loan for 4 yrs. (Bankruptcy is now 4yrs also)

    2. Short sale – if they keep payments current and their credit is relatively intact, and they do due diligence with the lender to determine how they will report the Short sale on their credit report (ie. “settled” is the best, Deed in Lieu is the same effect as a “foreclosure”) this will result is the least amount of damage to their credit rating. That also goes for a Notice of Default (NOD), even though a foreclosure process was started and the seller is able to sell the home prior to it actually going to foreclosure sale, this will be reported as “foreclosure in process” on their credit, which is treated as a “foreclosure” for credit scoring purposes.

    3. Oregon is not a deficiency State. Meaning that Oregon does not pursue the seller for any deficiency. The banks just take the loss, the seller’s credit is damaged, and that’s the end of it.

    4. The biggest advantage to sellers in a Short Sale is keeping payments as current as possible and getting the lender to reflect the account as “settled”. That will allow this borrower to secure another home loan sooner (maybe 2yrs), rather than if a foreclosure or NOD (4yrs) is reported on their credit.

    I think this is valuable information to share with your sellers.

    To Your Success,

    Paul Dean
    Principal
    Evergreen Ohana Group
    5331 SW Macadam Ave, Suite 287
    Portland, OR 97239

    Office: (503) 892-2800 Ext.11
    Fax: (503) 892-2803
    Email: pauld@evergreenohana.com
    Website: http://www.evergreenohana.com
    OR ML-21,WA 510-LO-33391, WA:520-CL-50385

  • Multnomah County Foreclosure site updated


    New foreclosure reports listed on the multnomah county foreclosure web site. This week a new addition is the bank owned property lists (REO List) for the month of February 2009. This list consists of properties that were forcloused or deeded back to the lender in lew of foreclosure. Some of these homes are on the market but most are not. These lists will have the name and contact information (address) of the owners (lenders) of the property. Contacting the owners for status might allow an opportunity for you to purchase any of these properties in post foreclosure.

    Mulnomah County Foreclosures
    http://multnomahforeclosures.com/

    Fred Stewart
    President
    Stewart Group Realty Inc.
    fred@sgrealtyinc.com
    http://www.sgrealty.us/
    503-289-4970 (Phone)
    503-296-2336 (Fax)

  • Minimum Credit Score


    It seems my industry (mortgage) continues to see changes weekly, if not daily. I received this message from one the lenders we do business with (Suntrust Mortgage).

    IMPORTANT UPDATE REGARDING REVISED MINIMUM CREDIT SCORE REQUIREMENT FOR ALL LOAN PRODUCTS – Effective for Locks and/or Credit Packages Received on or After Monday, March 23, 2009

    Effective for locks and/or credit packages received on or after Monday, March 23, 2009, a minimum credit score of 660 will be required for ALL borrowers on ALL loan products (traditionally underwritten and AUS processed), regardless of the AUS approval.

    This is concerning conventional loans (less than $417K) fannie & freddie. FHA still allows a min. credit score of 620.

    Now, while this is only one lender, it is likely other lenders will follow suit. Just another sign of the times, that the credit markets continue to “tighten” and credit scores are becoming more important when buying a home.

    Have a good weekend.
    Thank you for the opportunity to serve you,

    Paul Dean
    Principal
    Evergreen Ohana Group
    5331 SW Macadam Ave, Suite 287
    Portland, OR 97239

    Toll Free: (800) 387-7355
    Office: (503) 892-2800 Ext.11
    Fax: (503) 892-2803

    Website: http://www.evergreenohana.com
    Email: pauld@evergreenohana.com

    OR ML-21, WA510-LO-33391, WA WA:520-CL-50385

    PS. Your business and loyalty are truly valued. I strive to provide all my clients with the very best professional service possible. If a friend or family member would appreciate this level of service, please don’t keep me a secret!

  • Banking Crisis for Dummies


    The financial crisis explained in simple terms ………………………..

    Heidi is the proprietor of a bar in Berlin. In order to increase sales, she decides to allow her loyal customers – most of whom are unemployed alcoholics – to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

    Word gets around and as a result increasing numbers of customers flood into Heidi’s bar.

    Taking advantage of her customers’ freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively.

    A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi’s borrowing limit.

    He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

    At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items.

    One day, although the prices are still climbing, a risk manager of the bank (subsequently of course fired due to his negativity), decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Heidi’s bar.

    However they cannot pay back the debts.

    Heidi cannot fulfill her loan obligations and claims bankruptcy.

    DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %.

    The suppliers of Heidi’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy; her beer supplier is taken over by a competitor.

    The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.

    The funds required for this purpose are obtained by a tax levied on the non-drinkers.

    Finally, an explanation I understand.

    This should clear up any / all questions… Enjoy! J

    Melissa Stashin

    Sr. Loan Officer / Branch Manager

    Pacific Residential Mortgage, LLC

    2 CenterPointe Dr. STE 500

    Lake Oswego, OR 97035

    (503) 670-0525 x113

    (971) 221-5656 Cell

    (503) 670-0674 Fax

    (800) 318-4571 Toll Free

    http://www.TeamStashin.com

  • Five Ways to Avoid Mortgage Foreclosure, Tips from Expertforeclosurehelper.com


    If you fail to make your mortgage payments on time or if you default on your payments, you are in danger of foreclosure. This happens more and more frequently in today’s economic climate. But it is possible to avoid mortgage foreclosure if you know what to do.

    Here are a few of the options that are available to you. These are only going to be open to you if you can get the cooperation of your lender.

    – See if your lender would be willing to re-arrange your payments based on your current financial situation. This may be referred to as a special forbearance and you may qualify for it if your financial situation has changed. To qualify for this you will probably have to provide information to your mortgage holder to prove that you will be able to meet the payments of the new plan.

    – Another option may be a modification of your actual mortgage. This would involve refinancing the amount owed and/or extending the term of the mortgage. The goal is to reduce monthly mortgage payments so they are more affordable for you.

    – You may qualify for an interest free loan from HUD to bring your mortgage up to date if you meet certain conditions. This is referred to as a partial claim and your lender can help you with the application process and explain the conditions of this type of loan. You can also contact your local HUD office for more details.

    – Another way to avoid mortgage foreclosure is to consider a pre foreclosure sale. The purpose is to sell your home and clear up your debts to avoid foreclosure and damage to your credit. If you know that you will be unable to make mortgage payments even if they are lowered, this may be something to consider. You will have to see if your lender will agree to give you some extra time to sell before foreclosing.

    – A final option which should be considered only as a last resort is a deed-in-lieu of foreclosure. In this case you are basically turning your house over to your mortgage institution instead of paying off the mortgage.

    Even though you will lose your home this may be a better option than losing it to foreclosure. That’s because your chances of obtaining another mortgage loan at some point in the future are better than if your home is lost due to foreclosure.

    These are the main alternatives that you have as you try to avoid mortgage foreclosure. Be sure to contact your lender at the first sign of financial difficulty so they can help you find the option that will be best for you.

    Learn about 6 practical steps you can take to avoid foreclosure.

    If it’s too late for that, find out how to stop a foreclosure by going to getforeclosurefacts.com

    Expert Foreclosure Helper
    expertforeclosurehelper.com

  • MACPLAN – Foreclosure Crisis Analysis, By Dave McDonald


    There are several updates and issues to bring to your attention. As things transpire I may not have time to e-mail pertinent updates to you so I have set up a blog at macplan.blogspot.com where you can go for the information. I will try to e-mail you when there is a new update on the blog. Here is what is happening now and what I am working on:

    1) Late last week the largest mortgage insurance company, The PMI Group, instituted a policy that they would no longer insure mortgages that were originated by brokers. By implementing this policy the Mortgage Insurance companies will speed up the consolidation and nationalization of the banks, hasten the downfall of most if not all non-bank lenders that utilize brokers as their main source of business, and force the small mortgage broker to consolidate under a larger bank environment. This policy will also put most appraisers out of business.
    The public, once again, is getting the shaft. By not allowing brokers to originate loans with less than 20% down on a purchase or less than 20% equity in the property for a refinance borrowers will have to go to the few remaining banks the exist who will be able to charge what the want because they won’t have competition from the brokers. A client that is over 80% Loan –To- Value that goes to a broker will be limited to an FHA product….which is insured by the government ad has not one but 2 types of mortgage insurance which in many cases makes it more expensive for the borrower than it would under a conventional loans with mortgage insurance. Again, customers wanting high LTV loans will need to go to banks, put up with higher rates, longer lines and bad service.
    Yesterday I spoke to the upper management at the PMI Group to get their side of the story as to why they are implementing this policy. They told me, unlike published reports, that it was not due to quality of the loan originations submitted by brokers. Their take was that they do not have the capital necessary to reserve for future losses. They say that their low stock prices make it harder to attract new capital. They say that this a strictly a company survival mode tactic to make sure they don’t take on any more risk until the delinquency issues on the current loans in the market place have run their course. They say if they were able to raise more capital then the policy could change back.
    I made clear to them what the ramifications of their policy implementation will do to the average borrower. I made clear that it will cause a domino effect with closing of the remaining non-bank lenders, brokers, appraisers and everybody else in the industry leading to a lot more unemployment while giving borrowers less loan options and higher rates.
    The bottom line, there are ways to fight this which I will go into later.

    2) Obama’s Foreclosure Rescue Plan – I am currently reviewing this. It seems like a lot of the same old stuff and need a lot of questions to be answered:
    a) How are they going to implement the refinancing through FNMA and Freddie Mac for upside down borrowers? Where does mortgage insurance come in….are they going to do it without mortgage insurance. If mortgage insurance is required then San Diego is screwed again…because all mortgage insurance companies have designated us as a Declining Market. How is FNMA and Freddie going to get around that. Also, I understand that they will only allow up to 105% LTV….how is that going to help people that are upside down by 20-50%?
    B) The incentives given to servicers…are they going to be enough. The modification plan is still voluntary for the servicers.
    C) Throwing $400 billion more into FNMA and Freddie Mac to continue to buy mortgage backed securities that nobody else is buying and nobody can put a value on…is the govt over paying….and what are they paying for those securities. It is almost as if the government thinks that the securitization crisis has been solved. The buying up of the securities may have the effect of temporarily lowering rates but will those rates still be offset by the price and cost adjustments currently being added on by FNMA and Freddie.
    And when will the money that is printed to fund the buying of the securities get circulated….the printing of the money will no doubt cause inflation which will increase rates significantly.
    D) Currently in this plan there is absolutely no relief for people that have Jumbo Loan for more than the GSE Loan limit of $546250. Are we just going to let that deck of cards fall. One Jumbo default equals 3 or 4 condos…nobody has the guts to take this problem on.
    E) There is still no relief for people that own rentals. The Popular thing to say is that we don’t want to bailout speculators an investors. But what about they guy who has owned a rental for 20 years and did some refinancing to better his cash flow…but now his value is down, his payment is up, and it doesn’t cash-flow. He is not a speculator. He is one guy that owns a property that is rented out. He did not buy it recently and try to flip it. Most likely, he isn’t rich either. People like that need relief, as much as it is politically incorrect to say such things.

    3) The effect of the Stimulus Plan on mortgages – I am still digesting the 1100 or so pages. However, we do know that the loan limit for San Diego will go back up to $697,500. Once again, the key for this is how the loan limit is implemented and we are getting conflicting messages from the bond traders and the GSE’s. We do no that now there will a $8000 tax credit that does not need to be paid back for homebuyers that buy by the end of November. We do know that 2 Billion Dollars is going to be spent on local foreclosure prevention methods

    4) The Mortgage Crisis is an Urgent event that could eventually and pretty quickly cost Americans our Sovereignty. The fact that very little is being done correctly to break up the bank oligarchy, correct our financial problems, and produce solutions that will stabilize our economy is absurd.

    THE MACPLAN – An Action Plan For the Financial Crisis

    1) Currently, I am assembling plans and ideas from many various sourcesfrom bond traders to securitizers to asset managers to Realtors to come up with an overall, well thought out comprehensive mortgage crisis and foreclosure prevention plan. Most plans are there come from one view or the other….they are not comprehensive and don’t attack all areas. If you have any ideas please e-mail them to me. Once these ideas are collected, I will setup meetings where everybody can show up, voice their opinions, and add ideas to for speak against the plan. Unlike Congress, you will have ample time to read the initial plan before you go to the meeting.
    DEADLINE TO SUBMIT IDEAS AND PLANS: Sunday February 22nd
    SELF IMPOSED DEADLINE FOR PUBLISHING INITIAL PLAN: March 1st
    1st MEETING :tentatively March 1st at a place TBD

    2) The final plan will be put together based on the response of the meetings

    3) Once this plan is completed, then we will get it to our elected officials via e-mail, fax and regular. We will also post not only on my blog but several others.

    4) We will start not only an online petition but a handwritten petition to implement this that will be delivered to our officials

    5) SAN DIEGO ECONOMIC AND MORTGAGE REVOLT DAY – APRIL 1st

    This is where all of the mortgage and real estate professionals, our families, and our customers take to the streets to promote the plan that we come up with….yes picket the banks, picket intersections, rally at the park, etc.

    We will need a committee to put this on and I will be looking from leaders and non-leaders in all parts of the county to step up.

    Be looking for the MACPLAN to take form….we will eventually change the name but it’s good for now.

    Dave McDonalds Blog
    http://www.macplan.blogspot.com/

  • Home Purchase Tax Credit, By Paul Dean of Evergreen Ohana Group


    As you may know, I have been advertising and promoting the $7500 First Time Home buyer Tax Credit (which is really an interest free loan for 15yrs) expires on July 1, 2009. And there has been very little interest by the general public & buyers.

    THIS IS A NEWS FLASH: The new stimulus package may increase that credit to $15K for ANY purchase of a primary home, and IT DOESN’T NEED TO BE RE-PAID!!! This hasn’t been passed yet. But as soon as it is signed into law, I’ll let you know. This is the news from RIS Media today:

    “The enhanced $15,000 tax credit offers a powerful incentive for home buyers to get off the sidelines and represents the best opportunity for economic recovery,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “Congress must make sure that the full $15,000 tax credit remains in the final stimulus plan.”

    The bipartisan amendment to the stimulus package, offered by Sens. Johnny Isakson (R-Ga.) and Joe Lieberman (D-Conn.) and approved by unanimous voice vote, would create a $15,000 home buyer tax credit available to all purchasers of a principle residence for one year after its date of enactment. The tax credit would not have to be repaid and buyers could claim it against their 2008 and/or 2009 tax returns.

    This could be HUGE for our industry. Stay Tuned.
    Thank you for the opportunity to serve you,

    Paul Dean
    Principal
    Evergreen Ohana Group
    5331 SW Macadam Ave, Suite 287
    Portland, OR 97239

    Toll Free: (800) 387-7355
    Office: (503) 892-2800 Ext.11
    Fax: (503) 892-2803

    Website: http://www.evergreenohana.com
    Email: pauld@evergreenohana.com

    OR ML-21, WA510-LO-33391, WA WA:520-CL-50385

    PS. Your business and loyalty are truly valued. I strive to provide all my clients with the very best professional service possible. If a friend or family member would appreciate this level of service, please don’t keep me a secret!

  • Point of Order by Matt Stashin, Pacific Residential Mortgage Company


    We’ve all heard the news: the dark storm clouds of the financial meltdown will cost the taxpayer hundreds of billions of dollars, if not several trillion by the time it is all said and done. Unemployment numbers are set to skyrocket. The U.S. automakers need a bailout, following suit after so many others. Retail sales were down substantially during the holiday shopping season. People are keenly aware of the possibility of layoffs. Are we done yet? Probably not.

    But amidst the ominous storm clouds lingering on the horizon, if one looks very closely, a platinum lining is visible amongst those clouds. One first reaction might be, “are you kidding?”. However, after a bit of reflection, one can begin to see the sun reflecting off that platinum lining.

    Regardless of an individual’s opinion of the bailout, the soon-to-be former administration and the role of the government in residential housing, the opportunities available in the market place today are unprecedented. We all recognize home values have dropped substantially in almost every neighborhood. And if this is coupled with extremely low interest rates (did someone say rivaling the lowest in 40 years?), the buying power of the consumer has not been more keen.

    One doesn’t have to look far to find a bargain. And with these interest rates, all factors have aligned in favor of the buyer. Sounds pretty good, huh? Well, it is for those who have put themselves in a good position to purchase a home. History will show them to have been very savvy. It pays to buy low, at the incredible interest rates, and watch one’s equity build substantial wealth over time.

    In today’s marketplace, 20% down isn’t the only option. There still exist a limited number of financing options with little to no down payment. In order to better prepare one’s self, a quick check of your credit scores are in order. Freecreditreport.com is a way to find out how your credit history will be analyzed by lenders; credit scores in excess of 740 give access to the best programs and pricing on interest rates. At least 2 years on the job, showing steady income will help on the employment front. Assets are nice to have, but not necessary to have in abundance for all programs. One will want to make sure that checking account statements (2 month’s worth) show no overdrafts. In today’s marketplace, lenders are more cautious than ever when it comes to loaning money to buy a home, but obtaining mortgage financing is still relatively painless when one chooses to work with a seasoned professional mortgage broker.

    With a mini refinance boom going on due to these record low interest rates, one issue the mortgage industry will have to face is the potential for a scarcity of funds. Today, due to the federal government’s conservatorship of Fannie and Freddie along with the strategy to have the Federal Reserve purchase mortgages, many fears have been eased regarding the availability of mortgage money. But a new problem may be just ahead. Wall Street, which capitalized about 60% of the mortgage market, has all but disappeared. Banks are publicly being told to lend money, while their regulators are telling them to maintain adequate reserves, which translates into holding onto their cash. Couple this with the mass exodus of foreign investment into the U.S. mortgage market, and one can imagine a market in which there is more demand to borrow than there is money to loan.

    Consider this: the Treasury department is issuing T-bills with very low yields that may not be attractive to buyers and the Federal Reserve will, at some point, rely on the funding created by the sale of T-bills to have enough capital to continue to purchase mortgages through Fannie and Freddie. If the appetite for low-yield T-bills drops off substantially, which may be a very real possibility, a liquidity crisis in the mortgage market could manifest itself.

    How does this apply to someone today who is considering purchasing a primary residence, a second home or an investment property? My point is this: don’t wait. A scarcity of funds will cause interest rates to skyrocket, overnight. Jumbo funds seem to be disappearing already, although conventional financing to loan amount limits of $417,000 is readily available. Banks don’t seem to be interested in tying up their liquidity in large loan amounts. To me, this is a sign. Not a “doom & gloom” sign, but a warning sign nevertheless. My interpretation here is now is the time to act. The banking system is sound, but mortgage financing is not the banking system. And when capital is being used at the current rate due to the refinance boom, it sets me to wondering how this will impact the availability of funds for mortgage lending throughout the course of this year.

    The federal government has a very tenuous road ahead of it this year. The conservatorship of Fannie and Freddie was meant to be a temporary situation and, as it is currently in place, will terminate at the end of 2009. Between now and then, the best and brightest minds in our country will have to reinvent the mortgage market. With many banks still teetering on the edge, one must think these low interest rates will take a toll on the availability of funds. Who will be interested, long term, in 4.5% paper? As the stock market starts to rebound, investors will be looking for higher returns on their money and interest in current mortgage paper yields will wane thereby creating a scarcity of funding for new lending.

    Thought the storm clouds continue to linger, and they may even get a bit darker in the near future, It is my opinion that today is perhaps the best opportunity to invest in real estate that has existed in decades. For the money, this seasoned mortgage professional thinks now is the time to get mortgage financing before it becomes a scarce resource. Those that buy houses now will likely look like a genius down the road.

    Am I saying this is a sure thing? NO; any investment carries risk and should be carefully evaluated. But I am saying when one peers into the storm clouds above and sees the shiny reflection of the sun off the platinum lining, one should strongly consider that the combination of low home prices and low interest rates is a sign to buy before the clouds all break up and disappear. And everyone knows the opportunity has slipped away once the storm has passed. And so I say, keep wear a raincoat and keep an umbrella handy while shopping for a home out under the storm clouds.

    Matt Stashin
    President/CEO

    Pacific Residential Mortgage, LLC
    2 CenterPointe Dr. STE 500
    Lake Oswego, OR 97035
    (503) 619-0482 Direct
    (503) 670-0674 Fax
    (800) 318-4571 Toll Free
    http://www.pacresmortgage.com


  • Can Home Buyers Get Help When Still Making Their Payments?


    Must a Borrower Stop Paying in Order to Get Help?

    by Jack M. Guttentag

    Inman News

     

    “Is it true that mortgage servicers will not help borrowers who are in trouble until they stop making their payments? I am a home retention counselor, and I keep hearing from people referred to me that they have received no response from their servicer because they have not yet missed a payment. I would hate to advise people that they have to stop paying if they expect to get any help if it is not true.”

    There is certainly much truth to this because I have heard the same story from numerous people I have counseled, whose stories I have no reason to doubt. The most common thing I hear is that they were told by the servicer to come back when they were two payments behind.

    There are understandable reasons why borrowers who are delinquent on their payments receive more prompt consideration than those who are current. To the degree that servicers are faced with more requests for help than they can handle at one time, they have to set priorities. The number of borrowers in trouble has ballooned over the past year, outstripping the efforts of servicers to expand their capacity to deal with them.

    Setting Priorities

    A plausible way to set priorities is in terms of the degree of urgency of the problem. A borrower 60 days behind in his payment is closer to foreclosure, and if he is going to be saved, he needs faster action than a borrower who is current. So borrowers who are current get placed at the bottom of the list of borrowers requiring special treatment, if they are even placed on the list at all.

    This tendency is reinforced by the fear of free-riders. All borrowers would like to get a better deal on their mortgages, whether they have trouble making their current payments or not. If loans are being modified to help borrowers, some borrowers who are not in financial distress will try to take advantage of the situation by pretending that they are. But potential free-riders may not be willing to become delinquent because that would hurt their credit. By only considering modifications for borrowers who are already delinquent, the servicer reduces the number of potential free-riders.

    In addition, the practice of dealing only with borrowers who are delinquent keeps loans in good standing for longer periods. Consider the borrower who loses her job but has savings sufficient to cover the payments for some months. Investors would prefer that the borrower make the payment out of savings for as long as possible, since she might find another job during this period, avoiding the need for any modification of the mortgage.

    Moving Up on the List

    If I were a borrower with reduced income but with good prospects of recovery, I would make the payment out of savings, avoiding the hit to my credit. If I considered the prospects of recovery to be poor, however, I would stop paying and husband my savings. This would move me up on the servicer’s priority list for special treatment. While it also moves up the hit to my credit, that is something that would happen anyway as soon as my savings were exhausted.

    If I did not have a problem making the current payment but would have a problem dealing with an anticipated payment increase, I would handle it differently.

    First, I would determine exactly how large the payment increase would be. If the increase stemmed from an interest-only loan reaching the end of the interest-only period, the new payment could be found using any monthly payment calculator (including calculator 7a on my Web site) inputting a term equal to the remaining life of the loan. If the increase stemmed from an ARM (adjustable-rate mortgage) adjustment, the new payment wouldn’t be known exactly until a month or two before the adjustment, but an estimate based on the current value of the rate index would provide a good estimate.

    A Detailed Budget

    Step two is to develop a detailed budget which documents the point that the expected payment is not affordable. Use the form provided by Genworth to show your income, expenses, and assets.

    Submit your document to the servicer well in advance of the anticipated payment increase. There is no guarantee that it will lead to a contract modification before the payment increase materializes. However, it gives you a good shot to move up in the servicer’s queue by providing the concrete detailed information that servicers require. It also keeps you out of the hands of the modification hustlers who want to be paid upfront for doing what you can do yourself.