Entries Tagged 'Finance' ↓

The mid-year NAR -National Association of REALTORS

 meetings in Washington DC were as informative as ever.  The best meeting I attended was the committee on Risk Reduction.  Their panel discussion on Short Sales was terrific. Short Sales happen when the sales price of a property does not cover the amount of money the seller owes the lenders.

Real estate practitioners continue to struggle between representing sellers who want and deserve confidentiality about their finances vs. the needs of the buyers to know the offer they make will be reviewed and approved, or not, by the lenders.  Buyers are caught in delayed closings -or worse- are waiting to hear back from an offer that is finally rejected.  Real estate agents are in the crossfire trying to represent the clients and get paid.  One thing made loads of sense to me; Virginia should use Short Sale addendas to disclose and inform.  The form in use in Arizona looked pretty good. More later.

The negotiating is over and an agreement to buy/sell a piece of property seems set?  What are the last minute issues around your real estate settlement?

Has the loan commitment been received? 

Even if the buyer has a loan commitment, the current loan climate makes us as agents for buyers and sellers cautious until the final underwriting has taken place.  It is possible that a transaction with a loan commitment could still fall apart.  What is a loan commitment? 

The lender has received an application from the borrower and has done a credit check, evaluated income and debt ratios, and has received an appraisal report showing the value of the property will secure the amount of money for the borrower ’s transaction.

There are often last minute questions and requests from lenders-even after the appraisal and commitment.  It is in the final underwriting or reviewing of all of the loan application documents that sometimes causes delay. The lenders look long and hard before making loans today. What is your defense?  Work with good people; agents and lenders, and ask lots of questions. 

Senate panel agrees to housing relief billA compromise between ranking members in the Senate Banking Committee helped advance a housing rescue bill to the floor of the U.S. Senate yesterday. President Bush has backed off of earlier veto threats, citing progress made on this bill, intended to help the ailing housing market and impose tougher standards on Government Sponsored Enterprises Fannie Mae and Freddie Mac. The bill is expected to pass the full Senate. To read the full report:

In an earlier Post we decribed this bill as it came out of the House Committee.

 The current loan situation became up close and personal for me when I read a response from Karol. She wrote about about her current sub-prime loan: ”had no idea what my broker, title company did, nor appraiser, I’m no cheat and knew less than I thought about what I was doing, and sometimes you trust people. who would think that these people would do this to you?”  While Karol knows that this program may not help her who would be helped?

What could the FHA relief bill mean for struggling homeowners?  This bill provides FHA guarantees to lenders.  The lender’s in turn make up to 90% loans to the present value. 

“For a homeowner to get a new FHA-backed loan, the holder of the current mortgage would have to accept a loss and take a payment totaling no more than 85 percent of the home’s value.

The government would also get a share of profits if the homeowner sold the house in the future and would have to pay the lenders only if homeowners defaulted on FHA-backed mortgages. The Financial Services committee estimates that 1 to 2 percent of the new loans would default, costing the government between $3 billion and $6 billion.” 

 Karol says her family will be OK and they will repay their debt-what should borrowers do to make sure they are getting the best loan for their situation? 

Though still a long way from becoming the law of the land, the House of Representatives moved an FHA relief bill out of committee.  The bill in its current form would guarantee $300 Billion with a B in new mortgages by Government Sponsored Enterprise approved private lenders.   The house Financial Services Committee passed the bill with the full House voting this week.  This may be a relief and alternative to homeowners who are about to lose their homes to foreclosure. As committee chairman Rep. Barney Frank said, “There are people who made loans that should not have been made; there are some people that were wrong to take the loans out, some wrong to make the loans.  If nothing happens the economy suffers.”

What could this mean for struggling homeowners?  This bill provides FHA guarantees to lenders.  The lender’s in turn make up to 90% loans to the present value. Perhaps this will become an option for troubled loans.

Our central Virginia market is not overwhelmed with foreclosure but as Percy Montague,IV said in his POST, A Tale of Two Markets, if you are the homeowner suffering-then one bad loan is one too many.

According to a posting on the Inman News Blog-a Blog which calls itslef the “First word in Real Estate,” an April 10th Reuters Zogby poll  53.8% of those surveyed felt it is a good time to buy. What about the 41.6% who say now is not a good time and those who are “undecided”?  When will the time be right?  When do stock investors buy stock?  Do people prefer to buy when prices are over heated or when there is a Buyers’ Market? Is it possible to find the bottom of any market?  From where I sit, now is a great time to buy because of the number of properties available and because the loan rates are very attractive.