Ruth's Blog

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  Foreclosure stats according to MBA:    

	2nd qtr 2008	1st qtr 2008	2nd qtr 2007
Delinquency Rate	6.41	6.35	5.12
In Foreclosure Process	2.75	2.47	1.4
Foreclosure Action	1.08	1.01	0.59
Foreclosure Starts by Loan Type:
Fixed Rate Loans	0.34	0.29
ARM Loans	1.82	1.56
Subprime Fixed	2.07	1.8
Subprime ARMS	6.63	6.32
FHA	0.95	0.96
VA	0.57	0.51

  Foreclosures in California and Florida increased (accounting for 39% of the total foreclosures started in the second quarter), offsetting the improvements in Texas, Massachusetts and Maryland.  

There were 8 states that exceeded the national average: Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana, and Ohio.  

So, have we hit the bottom? Who knows? Just buy extra candy for the kiddies this year to make up for the vacant homes, if any, in your local market!

For the full story, click here: MBA

RECAP for the month of:

 

Month end again... seems like I JUST did a month end recap...where does the time go?

Here's a recap of the articles I posted this month:

FHA MIP effective 10/1/09

FNMA says 2 years after Short Sale

FNMA & FHLMC under conservatorship

Cities Likely to See Increase

Shopping Rates

Attn: COLORADO! CHFA continues!

Stopping "Buy and Bails"

Anyone Selling Hot Dogs?

Bail Out was a Bust

 

In light of all the recent turmoil regarding the failed bailout, I wish to share just a few points with you that were shared in a rather lengthy email sent to us this morning from Bill Starkey, the owner of WR Starkey Mortgage:

• The initial plan has failed but that just means that our politicians must go back to the drawing board and draft a plan that is acceptable to all parties.  
• Although we do not have a Bailout Plan in place, the US Government is still taking care of the issues on a case by case basis and they will continue to do just that.
• Until a Plan is reached, you are going to see ups and downs in the stock market as well as all financial sectors.   
• Our industry has caused the majority of this mess in that Sub-Prime Mortgages sit at the center of it all.  
• Hence, the Real Estate Industry and Mortgage Industry have seen a great amount of recent slowdown because a great amount of change is currently being initiated so that this does not ever happen again.   
• Unfortunately many Banks as well as other major firms and individual investors have been put in financial hardship because of the investment in Sub-Prime Mortgages.   
• Also remember that we have a Presidential Election in progress and this will definitely have an impact on the successful completion of a Bailout Plan.

Guess time will tell... stayed tuned!

For the rest of the story, click here: Bail Out Bust

Is anyone else out there sick and tired of hearing about the economic disaster we are in? How many meetings have you been in over the last couple of days where someone asks what YOU think about how much trouble the nation is in?

I think their is no better way of explaining what I think than by reminding them of the story (click here): The Man Who Sold Hotdogs.

If you haven't read it, or haven't read it in awhile, it might be worth the time to read it again.

Then decide if it's time to give up, or get serious.

 

Now, after all that, let me finish with a little something to make you chuckle:

Do you know what the differnce between a recession and a depression is?

A recession is when your neighbor loses their house. A depression is when you do.

 

Don't know about you, but I like my house. So, I'm going to go sell some more hotdogs!

 

 

One of the most recent scams that has evolved due a slow housing market is being referred to as the "Buy and Bail". This is where people buy one home with the intention all along of defaulting on their current residence!

Until now, homeowners were able to provide a lease agreement to offset their current mortgage payment and help them qualify for a new home without much scrutiny. Earlier this year, conventional guidelines addressed changes stipulating there must be 30% equity in the home to allow the new rental income to be used to offset the mortgage payment. But now a recent update from has also come from FHA! Going forward the circumstances in which an underwriter may include the income from the rental agreement for the current residence are as follows:

1. The borrower must be relocating to a new job location, and the new home is outside reasonable commuting distance from the current residence (UW's discretion).

• The borrower must provide a fully executed lease with at least a 1-year term from the closing date of their new mortgage.
• The borrower must also document receipt of the security deposit and/or first month's rent.

2. OR, if the current residence has an LTV of 75% or less.

    The value of current residence can be proved with the following:.

• Appraisal no more than 6 months old, or
• Original HUD-1 compared to current unpaid mortgage balance

This is effective immediately and may be a temporary change giving FHA time to further analyze this situation to determine whether permanent measures may need to be taken.

These changes apply solely to a principal residence being vacated in favor of another principal residence.  It is not applicable to existing rental properties disclosed on the loan application and confirmed by tax returns.

If any of you are working with first time homeowners in the state of Colorado, you need to know the CHFA (Colorado Housing and Finance Authority) program is still alive and well!

I don't want to bore the rest of the country with the details, but for those of you interested, click here for more: CHFA statement

Not all lenders participate in this program. Not because it's not an excellent program, but rather because it's not as profitable as other loans. ***shaking my head*** Shame on them. It should not be about the paycheck, it should simply be about what is in the best interest of the customer!

If you need help with a CHFA loan, or would like more info, please contact me!

Do you compare rates trying to shop for your buyer's "best deal"? Determining what their "best deal" is will be getting more and more difficult because so much now relies on the borrowers FICO scores! Here's a chart that is worth taking a peek at to see just what a few points in a FICO score can do to their payment:

FICO Scores	APR	Monthly Payment
760-850	5.751%	$1,751
700-759	5.973%	$1,793
660-699	6.257%	$1,849
620-659	7.067%	$2,009
580-619	9.165%	$2,449
500-579	10.194%	$2,676

Source: Myfico.com (30 year fixed-rate mortgage on $300,000) 

Finding a good lender, that communicates, that gets figures AND funds to the closing table on time suddenly just isn't enough. Lenders need to be scratching their heads and figuring out how to get the best rate by educating borrowers on HOW TO bump their score, even just a little, to get to that next best FICO score tier. OH! And by the way, IF the lender does understand this concept, and will work with the buyer to increase the score, will they give the benefit back to the consumer OR just pocket it?

Something to think about!!

A recent article in Forbes listed the following as the top ten cities to most likely see an increase in housing prices:

(drum roll, please...)

10. Oklahoma City, OK

9. Atlanta, GA

8. Minneapolis, MN

7. Colorado Springs, CO

6. Salt Lake City, UT

5. Austin, TX

4. Portland, OR

3. San Antonio, TX

2. Charlotte, NC

1. Albuquerque, NM 

Click here to see the full article: Forbes

For specific details on Colorado Springs, click here: Springs

The following email was received by the Owner and Chairman of WR Starkey Mortgage, Bill Starkey, Jr., this morning regarding the recent announcement regarding FNMA & FHLMC:

The Federal Government has placed both FNMA and FHLMC under conservatorship as of this past weekend.  While many will have an immediate reaction that appears to be negative, this is the best possible solution that we could have hoped for as it relates to the mortgage industry.  To understand this process in detail, you must first understand how the mortgage industry operates on a day-to-day basis...........

Fannie and Freddie both purchase home loans from financial institutions and then repackage those loans as mortgage-backed securities that they either hold on their own books or sell to investors around the globe. This process provides financial institutions with more money to make more home loans, greatly expanding home ownership.  In other words, WR Starkey Mortgage makes home loans and eventually many of these same mortgage loans are purchased by FNMA or FHLMC and then placed into mortgage backed securities which investors can invest in just as an investor would invest in stocks.

The issue that has come up over the past few months is that investors have been hesitant to invest in these securities due to the falling housing markets and failing mortgage loans.  The other major concern with investors has been the financial liquidity of FNMA and FHLMC themselves.  The companies, which together own or guarantee about $5 trillion in home loans, about half the nation's total, have lost $14 billion in the last year and are likely to pile up billions more in losses until the housing market begins to recover.  So the US Government is simply protecting FNMA and FHLMC from failure and thus giving investors around the globe the confidence to once again invest in mortgage backed securities. 

What most people do not realize is that the failure of the two agencies named above would have caused a global tragedy that would have affected investors throughout the world.  This move has eliminated this threat and should lower rates over time as well as provide assistance in correcting the current housing slump.  However, please note that the current housing slump will not be cured over night and we will continue to see mortgage firms close their doors as they cannot continue to make money when their loan production is falling.  These changes are a positive for WR Starkey Mortgage in that we are still focused on growth while others lick their wounds.  The difference is that we now have the US Government standing behind the two largest mortgage investors which will provide stability in the US Housing markets.

There is obviously much more detail that is involved in the above stated changes but this should at least give you some basic knowledge to help you understand what happened and the effect on our industry.

This information was posted with Mr. Starkey's authorization.

A few weeks ago I posted a blog re: Short Sale and Foreclosure. There has been some discussion regarding the true guidelines of a short sale as it relates to credit - first lien mortgage credit specifically.

It wasn't until a few months ago that short sales were even recognized as anything other than a foreclosure by FNMA. On June 25, 2008 FNMA issued a bulletin - Number 08-16 - calling them "Preforeclosure Sales". In that bulletin, it was stated that a new residential mortgage could be considered as soon as two years after completion vs four years.

BUT...here's the catch...

FNMA sets the "guidelines".

Investors make the "rules" that we must live by... or they don't buy the loans. These are the very same investors that are currently taking all those losses resulting from short sales, by the way!

Look at it this way. FNMA draws a line in the sand and says "Don't cross it". THEN it's up to the investors to determine how close they want to get to that line without going over it.

Now that FNMA has drawn the line at two years, over time investors might start edging closer to that line. But that is most likely not going to happen until after they have stopped licking their wounds from all the losses they have been forced to take.

BTW- government underwriting guidelines (FHA and VA) clearly state that Short Sales are to be viewed the same as foreclosures.