Seattle Mortgage Rates

Even The Seemingly Good Ones Are a MESS...

money | 07 December, 2009 08:16

Top Ranked Wholesaler AmTrust Seized, Sold To N.Y. Community

December 7, 2009

AmTrust Bank of Cleveland, which until recently was the nation's third largest residential wholesaler, was seized by the government late Friday with a majority of its assets sold to New York Community Bank, Westbury, N.Y., a top ranked player in multifamily lending. A source familiar with the matter said the government actually took bids on AmTrust's operations two weeks ago, saying interested investors included BB&T, EverBank, Fifth Third Bancorp, Key Bank and others. Its failure is expected to cost the government roughly $2 billion. The lender's demise is yet another blow for loan brokers in search of wholesalers willing to table fund their customers. At press time, it was unclear whether NYCB would keep AmTrust's wholesale division intact. A thrift, AmTrust had $12 billion in assets and until a few years ago was called Ohio Savings and Loan. The thrift was a national correspondent originator, selling its conventional loans to Fannie Mae and Freddie Mac. NYCB paid no premium to assume all of AmTrust's $8 billion in deposits, and also agreed to take over $9 billion of the failed thrift's assets. New York Community and the FDIC will share losses on $6 billion of those assets. The nation's largest privately owned thrift, AmTrust had been stung by a string of losing quarters and mounting losses from construction and development loans. Last Monday its holding company, AmTrust Financial Corp., filed for Chapter 11 bankruptcy protection.

Key Economist Says Housing Market Has Hit Bottom

money | 05 October, 2009 15:34

Key Economist Says Housing Market Has Hit Bottom

Detecting a change in attitude among both buyers and sellers — not to mention what is now a three-month increase in the benchmark price indices that bear his name — economist Karl Case believes the housing market has hit bottom. Not that housing is ready to bounce back with a vengeance, but at least it is no longer in a free-fall, the co-founder of the S&P Case Shiller indices said at the New England Mortgage Bankers Conference in Providence, R.I. "We're not going to come roaring out of this," said Mr. Case, who has been teaching economics at Wellesley College for more than 30 years. "We'll come out of this slowly. There will be some bad days and good days, but the mood began changing in March." The economics professor cited several signs that a recovery has begun, including a 25% increase in housing starts since April and "the best number of all," a sharp drop in unsold inventory of new homes. The huge number of completed but unsold houses has "been a real drag" on the market, he said. "The building industry has been getting killed like it's never been killed before," he said. But Mr. Case also warned that if he is reading the tealeaves incorrectly, the mortgage market could take another hit. If housing continues to falter, the economist said, "then we are writing bad paper now." To illustrate just how far the housing sector has fallen, the economics professor pointed to housing starts, which nosedived from 2.273 million units at the peak of the cycle in January 2006 to 598,000 units in August. That decline cost the economy roughly $588 billion, or 4.2% of GDP, he said. Origination News.

Homebuyer Tax Credit Instrumental in California's Sales

money | 30 August, 2009 11:12

Reduced Documentation Loans With Safeguards Must Return

money | 27 July, 2009 18:55

It's a shame that lenders blew it with reduced documentation loans. Reduced documentation loans are a necessity for people that may require flexibility in their loan verfication process. The term reduced doc is a general concept that applies to financial strength verification items such as: Tax Returns, W-2's, Pay Stubs, Bank Statements, etc. It does not apply to items such as property insurance, credit reports or the loan application itself.

These loan types were created to streamline the process in order to not inconvenience certain borrowers. An example would be the corporate officer that has a complicated tax return based on tiered incentives and yearend bonuses. This busy executive can make a loan application without bank statements or income verification, obtain a loan and depending on the down payment, can get a fairly decent rate. He or she may have owned a home before and is relocating quickly and would like a place to land when they arrive in their new area. The market got abused when these loans were offered to people with less than 20% down and to borrowers with low credit scores. These loans would still work fine if the credit score requirement was above 740 and the down payment was a minimum of 20%. As usual, the government, the banks and the powers that be went overboard with the program eliminations.

Reduced documentation home mortgage loans are a bit higher risk level for the investors so there will obviously be an increase in the rate. Typically the adjustment can be anywhere from a .25% to .75% depending on credit score, down payment and the extent of the reduction on documents.

Some borrowers may want to avoid offering income papers, some borrowers will want to avoid bank statements and others would like to avoid both. The rates and terms will be based on the increased level of risk as it pertains to verification and the borrowers historical credit.

Reduced documentation loans can be called many names, some of which are; stated income, no doc, no ratio, stated income/stated asset, verified income/stated asset, etc. They are all variations on reduced documentation.

All of these forms will require the borrower to still be responsible and sign a 4506 tax verification form. These loans were created as a convenience tool not for borrowers to skirt regulations. See our previous article regarding the current problems arrising in the Subprime sector. As a borrower you will always be responsible for the information provided on your loan application.

Homeownership Rate Levels Off

money | 25 July, 2009 20:37

Homeownership Rate Levels Off

The homeownership rate seems to be leveling off at 67.4% after falling for close to a year, and the number of vacant homes for sale has dropped by 14% since the start of this year.

The Census Bureau reported that the number of vacant homes on the market fell to 1.92 million in the second quarter, down from 2.23 million at yearend 2008. The homebuilders have been waiting for this inventory to drop back to its historical norm of 1.25 million to 1.5 million, because the overhang puts downward pressure on new home prices. The Census Bureau also reported that the U.S. homeownership rate edged up to 67.4% in the second quarter from 67.3% in the first quarter. In the second quarter of 2008, the homeownership rate was 68.1%. Meanwhile, the homeownership rate for blacks was 46.5% in the second quarter, down from 47.8% a year ago, while the homeownership rate for Hispanics was 48.1%, down from 49.6% a year ago.

Bi-Weekly Mortgages Are Great If You Can Find Them

money | 20 July, 2009 21:06

A biweekly mortgage is an accelerated mortgage payoff system that allows you to make an extra monthly payment each year. It's simple.

What are the superb benefits (I'm biased), I just love bi-weekly's whenever you can find them..

- you can increase the amount of equity in your home at a quicker rate
- you can save money by paying less interest on your mortgage
- your mortgage payments are automated and made simple
- more frequent payments decrease the outstanding principal loan balance faster

Bi-weekly's aren't offered by many lenders only the few good ones. Part of the problem is Fannie Mae and Freddie Mac's promotion of the program. A lot of lenders, in my opinion, don't want to offer them because the loans get paid off sooner hence the bank earns less interest. Call me an old cynic.

Seattle Mortgages: Appraisals Hurting Housing Recovery

money | 24 June, 2009 07:29

Home values are being pushed lower in part due to previously foreclosed and distressed sales showing up on appraisals.

Home builders are the first to loudly complaign though everyone in the business is grumbling about the horrible turn times and lack of quality. The big complaint is that appraisals aren’t taking into account differences in condition between well maintained homes (non distressed) and those that are distressed. One reason is that appraisers are not able to view the inside of foreclosed homes to make accurate comparison. Often times appraisers simply drive by these comparables and most times only view them on the MLS for research purposes.

It only makes sense that an appraiser should be required to consider the overall condition of a property in relation to foreclosures and distressed property saled when selecting and adjusting the value of comparables.

Some have suggested home appraisers be given an expanded right to view greater radius areas and an extended time frame for recent sales to assess home values in areas wraught with foreclosures.

It also makes it more difficult to sell homes, or allow current homeowners to refinance, as appraisers aren’t coming up with an accurate value due to improper comparables.

Since appraiser are also having to share their revenue now with appraisal management firms, they tend not to spend as much time on the quality of the appraisal.

We can't blame appraisers, they are only doing what they are prescribed to do for the modest pay they recieve. Builders, real estate agents and mortgage professionals allowed the situation to get out of hand and now the government has to prescribe a solution. Anytime the government gets involved you have to be worried that the solution is going to be worse than the problem.

Seattle Mortgage: Understanding Appraisals

money | 29 May, 2009 17:14

An appraisal is a expanded report of the value of your property based on a number of factors. If you purchase a new home or refinancing a home, you will need to order an appraisal. A broker will handle this for you, but you will still have to pay before its done.

Appraisals cost anywhere from $350 to $550. The cost varies based on property type, location, etc. Multi unit properties and properties in far away areas usually cost more to be appraised than a property in the city.

The most common type of appraisal is the Uniform Residential Appraisal Report also known as a URAR. It does an interior and exterior inspection and compariable sales to name two important factors. The compariable sales are broken down in the appraisal report as well, and compared to the subject property. Each compariable is given or minused in value in a number of categories based on how it compares to the subject property. The net value of the comparison sales are then averaged to come up with a median appraised value for the subject property.

The value of the subject property is really the most important factor when it comes to securing a loan. Banks and mortgage lenders must insure your property is in good condition and worth what you or your real estate agent says it’s worth. Any inconsistencies will likely cause readjustments or a loan decline or a larger downpayment to make up for the shortfall.

There was a new 'rule' inacted by the large underwriting agencies, Fannie Mae and Freddie Mac wherein no loan officer would be allowed to discuss value or place the order directly with the appraisal. This HVCC rule was implemented to reduce LO coersion of appraisals.

Appraisal management companies hire and use a qualified appraiser who assigns a realistic value to your home. It’s better to know the true value of your home upfront before you sign any contingencies or purchase contracts. This can be done by looking at what very similar homes near yours sold for within the last three months. Some value may be damaged due to the current state of the market and excessive foreclosures.

Be armed with information of what other 'like' properties in your area sold for because your appraiser may be coming from a distance city and may not understand the traits of subdivisions in your town.

Home Valuations Slow and Consumer Confidence Jumps

money | 29 April, 2009 17:25

Pace of Decline in U.S. Home Prices Slows in February...

The S&P Case-Shiller home price index fell less than expected in February, although 10 of 20 metro areas still showed record rates of decline. The S&P Case-Shiller Home Price Index fell to a reading of 143.17 in February. Industry insider claim that the bleeding has slowed tremendously and we're quickly getting close to reversing the price declines.

Tuesday's Events: Consumer Confidence and House Prices...
 
Some U.S. house price data and consumer confidence figures top the day's main economic events on Tuesday. You've heard it over and over in the last few days that consumer confidence experienced one of the largest spikes in history. Much of this downturn is psychological so look for what direction this indicator heads. Consumer confidence should mirror the strength of the economy.

Finally, California Sees a Leveling off of Home Prices

money | 16 April, 2009 20:00

The median price paid for a Southern California house is down 35.1 percent compared to March 2008 and over 50 percent from its peak of $505,000 in 2007. Median home prices are now $250,000. Wow, talk about a new world. California finally affordable? Hard to believe that lala land is coming down to earth.

Per Dataquick, an information service provider that concentrates on California real estate, “Because of the lopsided sales mix profile, the decline in the median overstates the decline in home values. It appears that homes in older, more costly, neighborhoods have come down in value by about half as much as homes in newer, more affordable, neighborhoods.”

Southland home sales were up 27.9 percent from February and up 52.1 percent from March 2008 which is the slowest March in Dataquick’s history

Seattle Mortgage: FHFA Says Home Prices Rise Nationally in January

money | 29 March, 2009 07:19

Home prices rise in January. Home prices rise in January. Home prices rise in January. Feels so good I had to say it a few times.

U.S. home prices climbed 1.7% on a seasonally adjusted basis from December to January per Federal Housing Finance Agency’s monthly Housing Price Index. Great news that you have to take with a grain of salt. This is after 12 months of a 6.3% national price decline and we'll have to wait and see if the numbers get adjusted for certain hot markets that may skew the stats.

“While it is difficult to perfectly control for changing geographic mix in estimating house price indexes, the data suggest that if one were to remove those effects, the change in home prices in January, while still positive, would have been far less dramatic,” FHFA release.

East North Central Michigan, Wisconsin, Illinois, Indiana, Ohio region did the best, experiencing a 3.9 percent rise in home prices, while the Pacific Census Division: Hawaii, Alaska, Washington, Oregon, California region dropped 0.9 percent, making it the worst performer. FHFA’s monthly home price index is calculated using Fannie Mae and Freddie Mac purchase loan funding statistics.

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Seattle Mortgage: Calculating Income to Qualify for a Mortgage

money | 17 March, 2009 17:29

A borrower submitted an email to us a few days ago regarding usable income. Her mortgage lender was giving her some parameters which didn't make sense to her. This borrower had a roommate which was paying her $800 a month to rent a room. The borrower wanted to purchase a larger house and thought she should be able to use the roommates rent payments as income to qualify for the new loan. Her loan officer gave her accurate information.

He told her that unless she was showing the income on her tax returns, it was not usable. She didn't want to hear that. The truth is, how can a lender really determine if she was getting the money or not, since it was not being recorded as income? Some people want it both ways, count it as income to make me look stronger financially but don't count it when it comes to paying taxes. Often, in these roommate situations, the rent is paid sporadically; some months in cash, not paid other months and split payments at other times. Banks like to see income that is steady and reliable. Roommates are not always the most steady source of income.

When lenders and mortgage consultants calculate income for home loan purposes, they look to steady sources such as; regular hourly and salaried income, taxable rental income, commissions, overtime, alimony, child support, pensions, annuities, dividends, interest and more. If you were looking for a good rule of thumb for calculating income, this would be it: Income should be present on tax forms, consistent or growing for the past two years and ongoing for the foreseable future.

Child support for a child that is turning 18 in a few months would be a good example of income that is not usable. the support will not be ongoing for the foreseable future. In lender speak the foreseable future is typically considered a minimum of three years out. There are many nuances to watch when calculating income.

Income streams such as overtime, commissions and bonuses are usually points of contention when calculating income. These three sources of income for many people are important for loan qualifications but often cannot be used due to inconsistent earnings. Mortgage underwriters will usually count overtime, commissions and bonuses if they have been proven to be consistently received for the last two years. Underwriters will also do a two year averaging to level out big spikes in income.

Has the income been received for the last two years? Is it consistent with current income? Will it be ongoing for the next three years? Three important questions to ask when determining if certain catagories of income are usable.

Some programs allow for flexibility in calculating income.

A Good Time to Buy a Home in Seattle, Scratch That, It's a GREAT Time to Buy a Home of Your Own

money | 06 March, 2009 14:46

With today's outstanding rates and many real estate loan choices, it is easier than ever to afford a home of your own. Not only are home mortgage rates great and loan programs in abundance, there are so many different types of properties and price points being offered right now. Truthfully, if California, Arizona, Nevada and Florida weren't bogging us down right now, we'd probably have very little issues with a "down market".

Today we have single family residences by the score waiting for good buyers. Whether the home is a detached residence, condominium, townhouse, duplex or other, yours is out there and waiting for you at the right price.

Most home builders are very good at what they do these days but they've over built substantially. It's a buyers market and the quality of home is exceptional. New home construction has a much higher level of production quality due to advancements in raw materials, and builders have been able to do a good job at keeping building expenses down even in the face of rising healthcare and workmans comp costs.

The only downside is that the homes builders are building are cookiecutter and lack character sometimes. It almost feels like there is one person designing all the homes from New York to Seattle. Each area is impacted by one major type of construction design and that one design permeates the area.

You should also think about an older home. Often you'll get much more bang for your buck with pre-existing construction and there is so much to choose from right now.

Washington Mutual's Mortgage Portfolio More Like Chernobl For Chase

money | 27 February, 2009 15:56

Do you think we should throw Ex-Washington Mutual Executives in Jail?  

 

 

 

Chase Bank stated that 66% of the $174 billion in mortgages assumed through the almost forced purchase of Washington Mutual are of poor quality. Thats $117 billion in defaulting or pre-default home loans.

82% of pay option arms, the ones that allow a borrower to pay negative amortization or interest only, are considered impaired and 80 percent of Washington Mutuals subprime loans and 66% of home equity loans are also in or close to default.

Chase expects $33 billion in total losses on the WM mortgage loan portfolio. That number is almost certain to rise to as much as $40 billion if home prices continue to fall as expected.

In addition Chase bank anticipates $1 billion to $2 billion in quarterly losses this year on its prime home equity loans. Economists estimate that up to 50% of these borrowers will be underwater by the end of 2010 up from 30% at the end of 2008.

Cities Near Seattle

money | 25 February, 2009 11:51

• Seattle
• Medina
• Clyde Hill
• Shoreline
• Mercer Island
• Burien
• Lake Forest Park
• Seahurst
• Mountlake Terrace
• Edmonds
• Kirkland
• Normandy Park
• Bellevue
• Tukwila
• Kenmore
• Bainbridge Island
• Brier
• SeaTac
• Lynnwood