This blog will remain intact, but for more recent information please visit:
http://www.FinePortlandHomes.com
Thanks!
Michelle Berry
Thursday, July 31, 2008
Sunday, January 20, 2008
The Latest in Mortgage Requirements
I'm getting so many questions from folks about financing lately. Jerry Baker, Senior Loan Officer with Northwest Mortgage sent the below info in an email this week and has given his permission to share with you here:
This is obviously the most tumultuous time that the mortgage industry has ever faced. We’re seeing the very largest global financial companies taking billions of dollars of losses in each of the last two quarters (Citibank & Bank of America), and the largest independent mortgage company in our industry (Countrywide) has just accepted a bailout by one of the largest banks in the country. Chase Bank has just recently stopped all of their agency stated income, stated asset programs for both Conforming and 2nd mortgages.
This is obviously the most tumultuous time that the mortgage industry has ever faced. We’re seeing the very largest global financial companies taking billions of dollars of losses in each of the last two quarters (Citibank & Bank of America), and the largest independent mortgage company in our industry (Countrywide) has just accepted a bailout by one of the largest banks in the country. Chase Bank has just recently stopped all of their agency stated income, stated asset programs for both Conforming and 2nd mortgages.
Due to liquidity constraints and worse-than-expected performance, we have seen an unprecedented contraction of guidelines in all corners of the industry. What was originally limited to Subprime guideline cuts has now adversely impacted Agency flow (Fannie Mae & Freddie Mac), Alternative "A" paper and Super Jumbo guidelines.
Listed below are some of the changes we have seen in the last 6 months:
2nd Mortgages: (which have become passe')
- Elimination of 80/20's for 100% purchases.
- Elimination of the 'really good' pricing for 2nd mortgages.
- Elimination of any stated income, stated asset programs for 2nd mortgages.
- 80-10-10's available, but not priced well.
- Stated Income Stated Asset (Fannie-Freddie).
- Higher credit scores for the best rates.
- 680+ minimum acceptable score for a 'decent' rate.
- Minimum 3 months reserves after closing.
- More credence given to amount of income being stated & verification of 2 year employment history with no job gap longer than 2 years.
- True NO Doc loans (no job, no income, no assets indicated on loan app)
NO longer available in ANY form. - NON-owner occupied loans.
- Stated Income, cash-out refinances - NO LONGER EXIST.
- Purchases, Stated Income: 70% and lower LTV only.
Other Product changes:
- NO Ratio loans (2 yr job, no income shown on loan app) - only available with LTV's 75% or less, with 700 credit score.
- NO Pay-Option ARM's unless 10% down, good credit, fully-documented - qualififed at fully-index rate.
- NO Doc loans (see above) are eliminated.
- 100% purchase loans - only available at 620 credit score or higher & carry mortgage insurance - at higher rates than previously.
- Job gaps in last 2 years more carefully scrutinized.
- Depth of credit looked at more closely - not just score.
- Reserves after closing usually needed (2 months or more).
- Lower debt-to-income ratios for qualification.
Pricing for Agency Loans:
It's all risk-based pricing now. That means an add-on to the interest rate for lower credit scores. 620-639 = +.25% add to rate; 640-659 = +.375% add & 660-679 = +.500% add.
Rate "shoppers" are encouraged to get it writing and speak to reputable sources; otherwise they may be disappointed when they go to closing.....
With losses mounting for all lenders nationwide, there is a general 'tightening up' of underwriting standards affecting all mortgage lending in all markets. It is so important for you as realtors to get your buyers pre-approved properly BEFORE you show them any property - that means they have done their homework up-front with the lender (actually sent in the required documentation for loan approval - not just talked to them over the phone). Sometimes the slightly little variance in documentation received can mean the difference between a "surprise at closing" and actually getting loan approval for you. The 'easy-qualify days' of lending are over for many buyers, with the reality that it's back to good old-fashioned responsible lending - which will make a better economy and a better housing market in the long run for all of us.
What's the GOOD NEWS??
It's still 'business as usual' for people with good credit, good employment history, with down payments from acceptable sources and reserves after closing to weather a financial emergency.
Rates are GREAT (right now) - 5.625% today with NO points, 30 year fixed, full doc, 20% down.
You can contact Jerry Baker at Northwest Mortgage by calling 503.452.0001 or visit http://www.nwmortgagegroup.com/ .
Thursday, December 27, 2007
FICO 08: New Scoring Formula to Help & Hurt
Fair Isaac is attempting to roll out a new scoring method that will hurt some folks, and help others. Under the new method, secondary account holders will no longer benefit from being on joint accounts. The more unscrupulous credit repair services would add a low scoring credit seeker to an account of an established high scoring credit user, with the two parties not having any relation to each other what so ever. This sounds like a necessary change, doesn't it?
But what about the many married couples who are joint account holders on most everything? Now that secondary account holder may find herself floundering in credit quick sand. This may not be that big of a deal if employers, insurance companies and cell phone companies didn't use your credit score as part of their various processes of determining your worthiness to their goods and services. Various blogs about the 'net say this will have a huge impact on women, as they are typically the secondary account holders in most marriages.
The new formula rewards having a variety of accounts, like a mortgage, car loan, and credit cards. It also won't ding you as deeply if all your accounts are in good standing except one; missing a payment on a small limit credit card won't hurt you as much as it used to, as long as your other accounts are on time. Some folks scores will go up, some will go down. The new model will continue to reward healthy, responsible credit users, while still penalizing chronic late payers, with over-limit balances.
Fair Isaac expects to see their new scoring model implemented during 2008. Two of the big three are in testing phases currently, and the other is digging in saying they won't use it until litigation between Fair Isaac and the big three is resolved. But whether you agree with it or not, no matter what the degree of impact will be on your credit, it is expected to be in full force by end of 2008, and it is important to understand the changes.
I always suggest to anyone trying to build credit that they sign up for a score reporting service that will track it monthly. You can learn very quickly what impacts your score and to what degree. You can go to http://www.myfico.com/ , http://www.freecreditreport.com/, and many others to obtain your report. By law, each credit reporting company has to provide one free report each year. Obtain your report and take the time to make the corrections. Many people have low score only because of faulty or outdated information on their report (i.e. - someone else's account or collection, an old gym payment plan from college). Making these small changes is relatively easy and can have a significant impact on your score.
For more serious issues, you can use a credit repair service, but please check them out thoroughly.
But what about the many married couples who are joint account holders on most everything? Now that secondary account holder may find herself floundering in credit quick sand. This may not be that big of a deal if employers, insurance companies and cell phone companies didn't use your credit score as part of their various processes of determining your worthiness to their goods and services. Various blogs about the 'net say this will have a huge impact on women, as they are typically the secondary account holders in most marriages.
The new formula rewards having a variety of accounts, like a mortgage, car loan, and credit cards. It also won't ding you as deeply if all your accounts are in good standing except one; missing a payment on a small limit credit card won't hurt you as much as it used to, as long as your other accounts are on time. Some folks scores will go up, some will go down. The new model will continue to reward healthy, responsible credit users, while still penalizing chronic late payers, with over-limit balances.
Fair Isaac expects to see their new scoring model implemented during 2008. Two of the big three are in testing phases currently, and the other is digging in saying they won't use it until litigation between Fair Isaac and the big three is resolved. But whether you agree with it or not, no matter what the degree of impact will be on your credit, it is expected to be in full force by end of 2008, and it is important to understand the changes.
I always suggest to anyone trying to build credit that they sign up for a score reporting service that will track it monthly. You can learn very quickly what impacts your score and to what degree. You can go to http://www.myfico.com/ , http://www.freecreditreport.com/, and many others to obtain your report. By law, each credit reporting company has to provide one free report each year. Obtain your report and take the time to make the corrections. Many people have low score only because of faulty or outdated information on their report (i.e. - someone else's account or collection, an old gym payment plan from college). Making these small changes is relatively easy and can have a significant impact on your score.
For more serious issues, you can use a credit repair service, but please check them out thoroughly.
Monday, December 17, 2007
Preliminary Auction Results are In
The Oregonian reports on the Auction:
"Roger Pollock said he wanted to sell a lot of homes at his two-day auction this weekend -- and he did just that.
Pollock said he sold 141 homes for a total of $65 million at the Oregon Convention Center in what was one of the largest real estate sell-offs in Oregon history.
Pollock's Buena Vista Custom Homes had advertised more than 240 homes to sell at auction. By comparison, Real Estate Disposition Corp., the Irvine, Calif. auctioneer, had never done a home builder's auction larger than 60 homes.
Pollock turned to the auction when the housing market slowed this fall and his sales turned to a trickle. Rather than pay interest on his construction loans for a year or more until the homes sold, Pollock opted for the auction.
Westside homes in Beaverton and Hillsboro sold best, Pollock said. None of the 29 Bend homes sold, and homes that are now rented didn't sell well, either. Pollock said the sales also will generate about $250,000 for charity.
Although the homes looked especially attractive with super-low starting bids, some brokers were concerned that the homes had a higher, undisclosed "reserve price" that was the lowest Pollock was obligated to accept. But Pollock said about 96 percent of the homes he sold went for below the reserve price. The reserve price, he said, was equal to his costs.
"We didn't make any money on these homes," Pollock said. "We lost money."
"There's been this perception that this wasn't aboveboard," said Pollock, noting that each home has a one-year warranty, standard for Buena Vista's homes. "But I think the results speak for themselves. I did what I said I would do."
About 1,900 people turned out for the auction. "
-- Ryan Frank for The Oregonian
Average Price: $461,000
Not much of a deal in my book. Roger Pollack is not in the business of giving houses away, I suspect he's pretty happy with the results. He could still reject bids this week. His comments to the Oregonian are nothing but PR work. And we will see some fall-out due to buyers not understanding the REDC sales process, and getting cold feet. But don't worry about Rog, nearly $900,000 in earnest money isn't a bad grab either.
December 17th is a long ways off from January 18th.
Folks are starting to share their experiences at the Portland Housing Blog .
"Roger Pollock said he wanted to sell a lot of homes at his two-day auction this weekend -- and he did just that.
Pollock said he sold 141 homes for a total of $65 million at the Oregon Convention Center in what was one of the largest real estate sell-offs in Oregon history.
Pollock's Buena Vista Custom Homes had advertised more than 240 homes to sell at auction. By comparison, Real Estate Disposition Corp., the Irvine, Calif. auctioneer, had never done a home builder's auction larger than 60 homes.
Pollock turned to the auction when the housing market slowed this fall and his sales turned to a trickle. Rather than pay interest on his construction loans for a year or more until the homes sold, Pollock opted for the auction.
Westside homes in Beaverton and Hillsboro sold best, Pollock said. None of the 29 Bend homes sold, and homes that are now rented didn't sell well, either. Pollock said the sales also will generate about $250,000 for charity.
Although the homes looked especially attractive with super-low starting bids, some brokers were concerned that the homes had a higher, undisclosed "reserve price" that was the lowest Pollock was obligated to accept. But Pollock said about 96 percent of the homes he sold went for below the reserve price. The reserve price, he said, was equal to his costs.
"We didn't make any money on these homes," Pollock said. "We lost money."
"There's been this perception that this wasn't aboveboard," said Pollock, noting that each home has a one-year warranty, standard for Buena Vista's homes. "But I think the results speak for themselves. I did what I said I would do."
About 1,900 people turned out for the auction. "
-- Ryan Frank for The Oregonian
Average Price: $461,000
Not much of a deal in my book. Roger Pollack is not in the business of giving houses away, I suspect he's pretty happy with the results. He could still reject bids this week. His comments to the Oregonian are nothing but PR work. And we will see some fall-out due to buyers not understanding the REDC sales process, and getting cold feet. But don't worry about Rog, nearly $900,000 in earnest money isn't a bad grab either.
December 17th is a long ways off from January 18th.
Folks are starting to share their experiences at the Portland Housing Blog .
Monday, December 10, 2007
Actual Vs. Factual
I had an interesting discussion with a loan broker tonight regarding the statistical home sales data out there. RMLS does an adequate job of collecting data, but a poor job of reporting that data accurately. This is where factual vs. actual comes in. Anyone who has played with data for more than 15 minutes knows that it can often be manipulated to appear to support certain theories and conclusions.
Often the same data set can be spun in opposite directions, depending on what the user needs out of it. In the case of RMLS, I think they take too broad a stroke by only breaking down by large areas, and not by price segments in smaller areas. They then tout continued appreciation, which then filters into the media. Instead, if they were looking more closely, they would see more detailed trends that may or may not raise the red flags sooner; soon enough for more folks to make better decisions regarding their housing situations.
So often I talk with other realtors about sales data, market analysis, and general market conditions. There are the hopelessly optimistic who take the sales data as reported by RMLS at face value and wave the appreciation flag valiantly. In the other corner are the direly pessimistic ones whose world is crashing down around them, and use the data to scare instead of educate their clients. Then there are the angry ones, who hate to see good times go, who pour over and over data looking for that glimmer of hope that the market is returning to a boom phase again. The optimist and the angered one are using sales data to overprice homes; while the pessimist is crying Apocalypse and discouraging rather than stimulating their clients.
The short of it is that most real estate transactions are instigated by some other life event. People are not going to stop having babies, getting married, getting divorced, transferring jobs, or getting older and even dying. Every homeowner will have to buy and/or sell at some point, for some reason most probably out of their control. Folks going through trying, emotional times need honesty, education, and sincerity from their realtor. This is where using the sales data to determine actual sales price becomes so crucial. We are in a correction phase, which will include some depreciation. This is not news; it's happened in cycles since the beginning of homeownership.
So instead of taking the RMLS monthly report at face value, or using outdated comps to seemingly placate their clients, realtors have an obligation to study the data, study their local niche markets, and do it often. You can't just slap a price on a house and sit on it. The market is a living being, that changes each and every day. You must give homeowners the most accurate, not just factual, information to base their decisions on. The actual selling price of a home may be very different from the factual averages. Determine what will set that home apart, and account for it one way or the other in pricing.
Incorrect pricing only brings frustration to an already bleak situation, undermines the client relationship, and complicates what is already an emotionally charge life event. Study the facts to determine realistic pricing, to report an a more accurate scenario.
Often the same data set can be spun in opposite directions, depending on what the user needs out of it. In the case of RMLS, I think they take too broad a stroke by only breaking down by large areas, and not by price segments in smaller areas. They then tout continued appreciation, which then filters into the media. Instead, if they were looking more closely, they would see more detailed trends that may or may not raise the red flags sooner; soon enough for more folks to make better decisions regarding their housing situations.
So often I talk with other realtors about sales data, market analysis, and general market conditions. There are the hopelessly optimistic who take the sales data as reported by RMLS at face value and wave the appreciation flag valiantly. In the other corner are the direly pessimistic ones whose world is crashing down around them, and use the data to scare instead of educate their clients. Then there are the angry ones, who hate to see good times go, who pour over and over data looking for that glimmer of hope that the market is returning to a boom phase again. The optimist and the angered one are using sales data to overprice homes; while the pessimist is crying Apocalypse and discouraging rather than stimulating their clients.
The short of it is that most real estate transactions are instigated by some other life event. People are not going to stop having babies, getting married, getting divorced, transferring jobs, or getting older and even dying. Every homeowner will have to buy and/or sell at some point, for some reason most probably out of their control. Folks going through trying, emotional times need honesty, education, and sincerity from their realtor. This is where using the sales data to determine actual sales price becomes so crucial. We are in a correction phase, which will include some depreciation. This is not news; it's happened in cycles since the beginning of homeownership.
So instead of taking the RMLS monthly report at face value, or using outdated comps to seemingly placate their clients, realtors have an obligation to study the data, study their local niche markets, and do it often. You can't just slap a price on a house and sit on it. The market is a living being, that changes each and every day. You must give homeowners the most accurate, not just factual, information to base their decisions on. The actual selling price of a home may be very different from the factual averages. Determine what will set that home apart, and account for it one way or the other in pricing.
Incorrect pricing only brings frustration to an already bleak situation, undermines the client relationship, and complicates what is already an emotionally charge life event. Study the facts to determine realistic pricing, to report an a more accurate scenario.
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