Lowering Washington Home’s Mortgage Rates May Have Risks:
The Federal Reserve has so far spent about $250 billion on low-interest mortgages acquired from lenders by Fannie Mae and Freddie Mac.
The purchases, which could eventually top $1 trillion, are one part of the financial buyout many people understand and support. This spending has driven mortgage rates to record lows, encouraged people to buy houses, and helped many people refinance out of lousy mortgages.
It all looks good on paper, but some economists are warning others about some risks. Here are a few of their concerns:
● The Fed is creating new money to pay for this, which will eventually encourage inflation.
● When the Fed stops buying, rates will increase quickly and substantially.
● Not too many investors are interested in the low-yielding mortgages, so it is likely taxpayers will have to foot the bill.
Source: The Wall Street Journal, Peter Eavis (04/02/2009)
via REALTOR® Magazine-Daily News-Lowering Mortgage Rates May Have Risks.
Crystal Boldt Mortgage and Financing
Banks Get New Leeway in Valuing Assets for Vancouver Wa properties
The Financial Accounting Standards Board (FASB) has approved a rule change that allows banks to report on their income statements certain assets at their value in a normal market. They’ll only be required to write them down to market value if the drop is “other than temporary.”
The fall in asset values would be indicated on their balance sheets, but critics contend that the change will permit banks to put off recognizing losses from bad loans. Another change approved by the FASB will force banks to disclose the impact of the new reporting rules, though the extent of the disclosures remains to be seen.
Source: New York Times, Floyd Norris (04/03/2009)
via REALTOR® Magazine-Daily News-Banks Get New Leeway in Valuing Assets.
Crystal Boldt General
Lenders Cut Credit for Reliable Clark County Proeprty Borrowers
Lenders are cutting credit lines and pushing down credit limits on their best-paying customers, which ultimately can reduce these frugal customers’ abilities to get mortgages.
A new study by Fair Isaac says 11 percent of U.S. consumers had their access to credit trimmed during the six months ending last October, even though they pay their bills on time and have good credit scores. That’s more than double the 5 percent of consumers with poor credit whose access to credit was reduced in the same time frame.
People who pay on time aren’t very profitable for lenders, says John Ulzheimer, president of consumer education for Credit.com, because they don’t carry balances or pay late fees.
The affect of these cutbacks is cumulative, credit experts say. When lenders close accounts or cut limits, it can hurt consumers’ credit scores and make it harder for these good payers to get other loans, including mortgages.
Source: USA Today, Kathy Chu (04/03/2009)
via REALTOR® Magazine-Daily News-Lenders Cut Credit for Reliable Borrowers.
Crystal Boldt Mortgage and Financing
Vancouver Foreclosure Prevention Plan
When people lose homes to foreclosure, our communities, the housing market, and our economy all suffer.
Separate from the stimulus package, President Obama has made up to $200 billion available to shore up investor confidence in the mortgage secondary market and up to $75 billion in incentives to encourage lenders and borrowers to refinance troubled loans. The effort is critical because of the destabilizing impact of high foreclosures and distressed sales, says NAR.
The plan details include:
- Help for home owners making their payments but at risk of default. Home owners with a conforming loan could be eligible to refinance as long as their mortgage doesn’t exceed 105 percent of the home’s current market value.
- Help for home owners already in default and in need of loan modification. For lenders that voluntarily agree to lower a borrower’s payment so that it makes up no more than 38 percent of the borrower’s income, the government would share the cost of lowering the mortgage burden further.
- Doubled resources to Fannie Mae and Freddie Mac. To encourage investors to buy the secondary market companies’ mortgage-backed securities, the government promises to back them to up to $400 billion, twice the current amount.
Guidelines for the program could be out before April 1. If you’re working with borrowers who are having trouble keeping up on their mortgage, tell them to call their mortgage servicer or a HUD-approved nonprofit housing counseling agency.
The stimulus package and foreclosure plan are a good start to solving the nation’s economic woes, says NAR 2009 President-elect Vicki Cox Golder. “By helping good people caught in bad mortgages, we’re keeping inventory from being added to a market already under stress.”
Crystal Boldt Foreclosures and Shortsales
An increasing number of appraisers and consumer experts say unrealistically low price estimates caused by short sales and bank-owned foreclosures are artificially depressing Clark County property values.
They are particularly critical of broker price opinions (BPOs), which they say are used because they cost less than property valuations by licensed appraisers.
David Berenbaum, executive vice president of the National Community Reinvestment Coalition, has asked Congress to outlaw using BPOs as a substitute for appraisals in distressed property transactions.
Defenders of BPOs say that real estate professionals know the local area and can do a realistic appraisal accurately.
The National Association REALTORS® said it intends to issue a policy statement in May, but it currently takes no position.
Source: Washington Post Writers Group, Kenneth R. Harney (03/28/2009)
via REALTOR® Magazine-Daily News-Appraisers Say BPOs Hurt Property Value.
Crystal Boldt General
What You Need to Know When Making an Offer on a Vancouver Short Sale
Are you looking to buy a new home? Are you thinking that now’s a great time to find bargains? Before you make an offer, it pays to know a little about the seller’s situation.
If a home is being sold for below what the current seller owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.
A short sale is different from a foreclosure, which is when the seller’s lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.
You’re a good candidate for a short-sale purchase if: Read more…
Crystal Boldt Foreclosures and Shortsales
Sales associates are increasingly leveraging their expertise in preparing broker price opinions into a lucrative sideline by selling the service to third parties like lenders and attorneys.
More sales associates are preparing broker price opinions, but when third parties are involved, you open yourself up to new liabilities. Here are the top risks you need to know about.
4 Dangers of Broker Price Opinions for Washington Real Estate:
1. Not having a policy. Your broker should have a policy that spells out when it’s appropriate to prepare a BPO, what you can charge, who handles the fees, and who keeps records. Not having a policy is risky for you and your broker because state law could impose a penalty if BPOs are prepared improperly or mischaracterized. A BPO fact-finding group in Nevada found that in most cases, real estate professionals were preparing and getting paid for BPOs without their brokers even knowing about it. “There was no record-keeping,” says Pamela Kinkade, a member of the Nevada BPO task force. “And that’s a big part of our law.”
2. Using the wrong terminology. Appraisers determine property market value; sales associates preparing a BPO determine a recommended property price. Make sure that third parties aren’t calling your BPO a “market valuation,” which is the work of appraisers.
3. Breaking state laws. State regulations governing BPOs vary greatly. Nevada, for example, permits real estate licensees to prepare BPOs for clients only in a sales transaction. Many states don’t allow fee-based BPOs. Some states require that BPOs include a disclaimer that they are not appraisals and are not to be used for lending purposes. Certain laws also require that only appraisers provide an opinion of market value, and that BPOs must be limited to determining a purchase or sales price. Be sure to investigate what’s legal in your state.
4. Being uninsured. If your E&O policy doesn’t specify that it’ll cover liability for BPOs, get a policy that does. “Most brokers have no coverage for liability arising out of the purpose for which the BPOs are being done,” says Kinkade.
Source: “Broker Price Opinions,” NAR Legal Affairs podcast, episode 18
Crystal Boldt General
The $8,000 credit and the higher loan limits could result in hundreds of thousands of new buyers and move-up buyers coming into the Clark County Real Estate market this year, says NAR Chief Economist Lawrence Yun.
But these two aspects of the stimulus are just the tip of the iceberg for real estate. The new law includes tens of billions of dollars in other assistance through a variety of programs that impact real estate, such as commercial real estate tax credits and grants for low-income rental housing.
Crystal Boldt General
A Record Low for Mortgage Rates, Again
Just one week after 30-year mortgage rates fell to a record low of 4.85 percent, the average dropped even further to 4.78 percent this week, Freddie Mac reported.
Refinancing activity has picked up because of the low rates, and the Mortgage Bankers Association says approximately 80 percent of mortgage applications came from borrowers seeking to refinance.
Crystal Boldt Mortgage and Financing
Recent Comments: