Bay Area Home Loans

New Mortgage Regulations add More Time and Money to Consumers Costs

Russ Boyd — Sun, 29 Aug 2010 00:10:47 +0000

Mortgage Rates are Way Down While Loan costs have Risen Dramatically

As I’ve reported over the past year there have been untold changes to the way mortgage loans are being regulated and underwritten. While all the new regulations are in place to provide more transparency and consumer protections, unfortunately, the result is increased time and costs to the consumer. While I’m sure this is not the result the regulators were seeking, the proof is now available with the release of Bankrate.com’s annual mortgage fee survey.

First, the good news…California is not the most expensive when it comes to mortgage fees and costs. That dubious honor goes to New York. In fact, California is the fifth most expensive state in the survey results. All in all, according to Bankrate.com’s survey, which used a $200,000 loan model, costs increased by an incredible 36% year over year.

And I can understand why. In my business, I can see that appraisal costs have increased by some 25% and the increase is not going to the appraiser that is doing the work, as a matter of fact, appraisers are making less while the increase is going to the “appraisal management companies” or AMC’s that are mandated by the appraisal regulations implemented known as HVCC. Loan processing has increased by about 20%, simply because of the increased underwriting appetite for every piece of documentation available and the more time consuming preparation of disclosures. Add what is known as Fannie Mae’s “Loan Quality Initiative” which dictates that every single loan go through a detailed pre and post funding quality assurance process that begins when a file is received in underwriting.

As a loan originator, I am not only required to be licensed by the State of California, I am now subject to the rules under the National Mortgage Loan Registry. This year, I have had to pass both a state and a national exam, be fingerprinted, have a background check done by the FBI and complete affidavits that required in depth personal and business information. All of this cost me about $1500 out of pocket.

As a real estate and mortgage professional, I take my responsibility to my clients very seriously. I am always available to answer your questions or discuss your concerns.

With the complexity in today’s mortgage and real estate market you will benefit from the advice and guidance of an experienced and knowledgeable mortgage and real estate professional. I’m always available to answer your questions or discuss your concerns. Just text, call (650 325 7877) or email me for a prompt response.

If you are in the San Francisco Bay Area, I invite you to take a look at our Resource Center, www.AboutBayAreaHomes.com. There you will find links for active home listings, including bank owned and short sales, home loan information, market activity reports, home seller strategies, staging and decorating, a suite of 19 calculators, plus my book, “Let’s Make a Deal, The Insiders Guide to Buying and Selling Real Estate” and more.

Russ Boyd and his team professionally assist buyers, sellers and homeowners in the Peninsula Communities of the San Francisco Bay Area. They serve clients in San Mateo, San Francisco, Santa Clara, Alameda and Contra Costa counties. Licensed as a Real Estate Broker by the California Department of Real Estate, 01264240. National Mortgage License Registry 230411.

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Kids in Need Benefit as eWaste Recycling Event Huge Success at Intero San Mateo

Russ Boyd — Wed, 18 Aug 2010 20:47:41 +0000

The eWaste recycle event at Intero Real Estate office in San Mateo was a huge success. All week long the people came to the office with old televisions, unused cell phones, computer monitors, keyboards and all types electronic stuff that no longer worked or was being used. The Intero Foundation partnered with EarthCare Recycling by offering an eWaste Collection Center at Intero Real Estate San Mateo the week of August 9, 2010.

After a week of collecting and accepting eWaste, EarthCare Recycling showed up with two trucks to collect the recyclables. EarthCare Recycling will donate 50% of the proceeds from all the recycled EWaste to the Intero Foundation. The Intero Foundation provides grants to local non profits that are dedicated to helping children in need and children in crisis. The Foundation has funded grants totaling more than $50,000 so far this year and over $1.5 million since its inception.

Thanks to the Intero agents, office staff and all those that took the time to bring unused electronic equipment to the office. While we don’t have the final figures this was truly a win – win for all.

Do Low Rates Matter When Consumers Fewer Consumers Qualify?

Russ Boyd — Tue, 10 Aug 2010 21:16:00 +0000

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According to figures provided by FICO Inc., as of April 1010, 25% of consumers (about 43 million people) now have a credit score of 599 or below, making them big risks for lenders. This number is up from the historical level of 15%. Interestingly, the number of consumers who have a top score of 800 or above has increased in recent years. Experts say this is mostly attributed to them cutting spending and paying down debt. Obviously, consumers on the lowest end of the scale are less likely to try to borrow to buy a house or qualify to refinance

You’ve probably never seen anything like the table below. It is Fannie Mae’s Risk Based Loan Level Price Adjustments. These “price adjustments” are subtracted from a borrower’s loan pricing, which pushes their mortgage rate higher. A borrower with a FICO score of between 680-699 takes a 1.50 point hit on their pricing at an 80% loan to value.

If this fee was paid at closing, on a $200,000 loan, it would cost the borrower an additional $3,000 to close! I don’t think we can blame Fannie and Freddie for adjusting their model to risk, but these loan level pricing adjustors will prevent many current homeowners from qualifying for a refinance and make first time buyers hesitate at the additional cost of buying. Of course, some will look to FHA, which has less restrictive underwriting requirements and far fewer pricing adjustments, for financing.

Now you can see that there is a direct cost factor between the cost of a mortgage loan and your credit score. The good news is that time is on your side if you are trying to rebuild your score. Your score rises the longer you go through time maintaining prompt payment on your outstanding credit. You are entitled to one free credit report a year, just visit www.annualcreditreport.com and get your free copy. There are plenty of websites out there that claim to give you a free report but unless it’s www.annualcreditreport.com you may be required to buy a product or subscribe to a service.

With the complexity in today’s real estate market you will benefit from the advice and guidance of an experienced and knowledgeable real estate professional. I’m always available to answer your questions or discuss your concerns. Just text, call (650 325 7877) or email me for a prompt response.

Free EWaste Recycling at Intero San Mateo Benefits Children

Russ Boyd — Sat, 31 Jul 2010 22:25:01 +0000

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To tell the truth, electronic waste isn’t something that I usually think about. Of course, I know such things as old cell phones, used lap top batteries, computer monitors and such don’t get thrown away in the trash or recycle bin. I’ve seen signs around town that let me know I can recycle electronic waste at some location or another at some time in the future. The problem is that eWaste accumulates very slowly and so it just gets put in some obscure drawer or placed out of the way in the garage.

For instance here in my office I have an old phone and charger, a broken video camera and a laptop battery that gave up long ago. Without even thinking about it, I know we have two computer monitors, one printer, a broker dvd player and several what I call “spare” cell phones at home.

We all know recycling is the right thing to do. Now what if you had an opportunity to recycle electronic waste and help children? Now that would be a really good deal. This is your opportunity to recycle and help children. The Intero Foundation has partnered with Earth Care Recycling and is accepting Electronic Waste for recycling at the Intero Real Estate Services office in San Mateo during the week of August 9, 2010. That’s right, just bring those old cell phones, computer monitors, keyboards and all the other electronic stuff you’ve been meaning to recycle to the Intero Real Estate Services office at 1100 Park Place, Suite 100, San Mateo between August 9, 2010 and August 13, 2010 and we’ll take care of the rest.

Now here’s the really good part….EarthCare Recycling will donate 50% of the proceeds from all the recycled eWaste to the Intero Foundation. The Intero Foundation provides grants to local non-profits that are dedicated to helping children in need and children in crisis. The Foundation has funded grants totaling more that $50,000 so far this year. So remember, the more electronic waste you can bring by the Intero San Mateo office between August 9, 2010 and August 13, 2010 the more the Intero Foundation can grant to non-profits that assist children in need and in crisis.

If you need assistance or have questions, I can be reached at 650 325 7877 or Russ@BrokerRuss.com.

Applications to Finance Homes Continue to Fall Despite Low Rates

Russ Boyd — Thu, 22 Jul 2010 19:31:57 +0000

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Mortgage applications to buy homes have plunged in recent weeks to the lowest level in more than 13 years. I’m Russ Boyd and this decline comes as the housing recovery continues to struggle following the expiration of the homebuyer tax credit.

The Mortgage Bankers Association said application for mortgages to purchase a home sank last week driving the volume to its lowest level since December 1996. Year over year, applications for the week were down 43%.

Much of the slowdown has come since the April 30 expiration of homebuyer tax credit. Homebuyers had until that deadline to sign contracts. Congress extended the deadline to close deals to Sept. 30.

The government’s latest reading on new home sales plummeted to a record low in May, thanks largely to the expiration of the tax credit.

The MBA’s reading on refinancing applications and its overall mortgage application index also declined, each sliding a seasonally-adjusted 2.9%. Mortgage rates are holding near lifetime lows, however, the housing markets remain fragile. In the Bay Area inventory continues to be low with bidding common on well priced homes.

With Rates at 50 Year Low, how are Homebuyers Reacting?

Russ Boyd — Sat, 03 Jul 2010 15:08:25 +0000

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According to Freddie Mac, 30 year fixed mortgage rates hit a 50 year low last week, averaging 4.69%. Already low rates have been made lower since the debt crisis in Europe became the top news.

Take a look at this graph , which shows fixed rates back to 1963, and you can see that rates have generally trended down since the mid 1980’s. So with low rates and prices at about 2003 levels the question is “how are homebuyers reacting”?

As shown here from the Campbell Inside Mortgage Finance Monthl Survey , first time homebuyer traffic dropped in May after peaking in April. Of course, the end of the tax credit on April 30th played into this drop as well. However, thanks to its own tax break, California fared better than the country overall in terms of first-time homebuyer activity, the survey found. The California index for first-time homebuyer traffic managed to stay relatively flat in May at 49.4, California enacted its own $10,000 credit for first-time homebuyers on May 1, the day after expiration of the federal tax credit.

As a percentage, investor buyers seem to be holding steady, while current homeowner buyers have increased their activity at the same time the percentage of first time home buyers is dropping.

The California Association of Realtors (C.A.R.) Affordability Index reveals that the opportunity of homeownership is available to 66% of Californians.

Five Things San Francisco Bay Area Home-Buyers Should Know

Russ Boyd — Sat, 26 Jun 2010 23:23:21 +0000

“Five things to know when house hunting in the Silicon Valley” was a recent headline in the San Jose Mercury. In my opinion, the five points would apply to house hunting in most parts of the Bay Area. While the article pointed out the pitfalls, it was short on advice.

No doubt the last three years have left both buyers and sellers uncertain about the best strategy. Interest rates are low, but likely to head up, and while housing prices are also low, they’re already inching up in some areas. So how about some advice to go along with the challenges.

1. Expect stiff competition for some homes.
That is the steepest learning curve for buyers. Buyers still seem to think that homes are available for the picking and quite frankly they are not. Inventory is low and there are plenty of qualified buyers. Did you know that nearly 50 percent of houses sold in Santa Clara County in May, and 41 percent in San Mateo County, sold for more than their asking prices in May. Remember, prices are lower than they were a few years ago, rates are low and inventory is lower yet. Seek the advice of a real estate agent that knows the market and when you find the home for you, act decisively!

2. Getting a loan may be more complicated and time-consuming than you expect.
Now that’s an understatement. Complete income documentation is required and good credit is a must. Since it is likely that you will not be the only one interested in a nice, well priced home, consider that having your loan pre-approved a requirement if you expect to be a successful buyer. You need a capable loan officer working on your behalf.

3. Buyers, be prepared to try, try again.
If you’re trying to buy one of the least-expensive homes in a particular neighborhood, be prepared to make offers on a few homes before yours is finally the winning offer. This is where the right combination of agent and loan officer will pay off.

4. The appraisal process can throw a monkey wrench into a sale.
No question an abundance of caution is being exhibited by appraisers and lenders. Add the rules change that took place with the implementation of HVCC and you end up with appraisals taking more time and uncertain outcome. No one wants to overpay for a home and that’s why your agent should have given you a good indicator of value when you made your offer.

5. Completing a “short sale” can be a hassle.
It is typical for banks to take up to a few months for sellers to get approval from their lenders to accept an offer that’s less than what is owed on their mortgage. Sellers who have a second mortgage and need a second approval should expect even more delays. If there are liens against the property, such as for unpaid property taxes or judgemnets, you guessed it — delay. Best advice is to only make an offer on a short sale after the price has been approved by the lender.

First there was Shadow Inventory, now there is Sidelined Sellers Inventory

Russ Boyd — Thu, 17 Jun 2010 14:45:22 +0000

By now you’ve heard the term “shadow inventory,” which refers to foreclosed or soon-to-be foreclosed houses that lenders have yet to put on the market for resale. I don’t know who coins these phrases but get ready for yet another form of inventory. This one is labeled “sidelined sellers” inventory by the folks at Zillow. The term is being used to describe homeowners who would like to sell for one reason or another but haven’t even bothered to place their houses on the market.

According to Zillow economist Stan Humphries “sidelined sellers” is one reason he believes housing prices will remain relatively flat over the next couple of years. Indeed, he recently told the National Association of Real Estate Editors’ that appreciation will be “very anemic” in the near term.

Based on the Seattle firm’s surveys, estimates are that some 5.3 million “highly motivated” owners are just itching to sell once they have confidence of a rebound.

This information is all very interesting, but of course there’s no way a “survey” can quantify exactly how many homeowners fit the definition of a “sidelined” seller. For me and the clients I serve I want the facts and this is what I can tell you about real estate inventory in the San Francisco Bay Area.

In May 2010 San Mateo County for sale housing inventory was 2.6 months, in Santa Clara County unsold inventory was less than two months, Alameda and Contra Costa counties stood at slightly over two months and in San Francisco there is three months inventory. Experts seem to agree that six months inventory is “normal”. As for the “prices remaining flat” being predicted by Zillow, they should review the facts, as can be seen at www.bayarreamarketmetrics.com, the median price is higher year over year in every bay area county

What does this “low inventory” convert to for today’s buyers in the Bay Area. Nice, well priced homes sell and multiple offers are common. Affordability is at a high point and rates are hovering at historic lows. Buyers need to be serious about the process. First by getting pre qualified and then be willing to move quickly when they find a house they want to call home.

First-Time Homebuyers Share of Purchases Drops in April

Russ Boyd — Tue, 08 Jun 2010 23:25:46 +0000

First-time homebuyers have been very active in the real estate market for the past two years. First-time buyers started to exit the housing market in April, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions.

The closely-watched survey found that 43.4% of April’s home purchase transactions were attributable to first-time homebuyers, a significant drop from March’s figure of a huge 48.2%.

For the past several months of, first-time homebuyer participation had been growing at a rapid clip; this month’s data reversal in the trend. Homebuyers have until June 30 to close transactions and qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for current homeowners.

Current homeowners made up the slack from first-time homebuyers, expanding their participation from 33.5% in March to 38.7% in April. Since most homeowners must sell their home when they buy another, this shift could mean that current homeowners are becoming more confident in the real estate market. This willingness to become more active will lead to a more balanced inventory as current homeowners begin to list their homes. If this trend continues I expect that the median price will increase as we move into the summer months.

As can be seen in this graph from a recent Case-Shiller report, after a near-disastrous 2009, the luxury market appears to be making a comeback, driven by growing buyer confidence, improved financing conditions and more-realistic seller pricing. According to a report from CoreLogic, attractively priced homes in some of the nation’s most coveted neighborhoods are selling, sometimes fast and sometimes with multiple offers. Nationwide, sales of homes selling for $2 million to $5 million in the first quarter were up 32% from a year before.

What’s This? Foreclosure Cancellations Continue to Climb.

Russ Boyd — Mon, 31 May 2010 14:36:09 +0000

ForeclosureRadar (www.foreclosureradar.com) issued its monthly California Foreclosure Report for April 2010. According to the report, foreclosure filings were down in April for the first time since the beginning of the year. The inventory of properties in pre-foreclosure or scheduled for sale dipped slightly as well. Interestingly, foreclosure cancellations continue to climb, up more than 32 percent from the beginning of the year. Also, the number of properties sold to 3rd parties at trustee sales continues to climb, helped by higher discounts offered by lenders at the trustee sale..

The report concluded that the steady rise in foreclosure cancellations is being fueled by loan modifications and short sales are gaining traction.

This graph depicts Notice of Default filings which are the first step in the foreclosure process. Notice of Trustee Sale filings set the date and time of auction and serve as the homeowner’s final notice before sale. As you can see, foreclosure filings have held steady since October 2009.

Here we see the Pre-foreclosure inventory (green) and the Scheduled for Sale inventory (blue) dropping slightly after months of holding steady. The Bank Owned (REO) inventory has dropped steadily since October 2008.

After the filing of a Notice of Trustee Sale, there are only three possible outcomes.

First, the sale can be cancelled for reasons that include a successful loan modification or short sale. Second, if the property is taken to sale, the Bank will place the opening bid. If a 3rd party, typically an investor, bids more than the bank’s opening bid, the property will be Sold to 3rd Party; or third, it will go back to bank and become part of that bank’s REO inventory. Foreclosures sold to 3rd parties and foreclosure cancellations have increased while those reverting to bank ownership are dropping.

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