Hello, everyone!
SURE WE ARE #1! – I was reading an article recently about how the U.S. is losing its edge in manufacturing, much like we lost out in exporting of goods. Not so, I say! I think we are #1 in both manufacturing and exporting. Absolutely! No country manufactures more paper money than we do (out of thin air, you might say); and with the economic crises that originated here and became pandemic (much used word today!), we were also #1 as we exported …..debt …. in the form of mortgage backed securities to other nations. Yes sir, we are still #1!
THE SWINE(S)! – Seems like swine news is the news du jour. Besides the swine flu here is another little known “swine” news making the rounds: Citigroup CEO is asking Treasury for permission to pay bonuses to keep their demoralized employees. Here is the article. I guess these would not be the same 600 odd demoralized regional and area managers, administrators and loan consultants that got their pink notices the same day this story broke? The swine!
NO HAPPY LENDERS - Some of my Buyers have run into new and outrageous underwriting conditions when trying to obtain a new loan, especially when purchasing flip properties held by an Investor/Seller. For instance: Seller had to have owned the property for over 90 days; Seller has to provide invoices for all the renovation work done; Seller has to be an individual; Seller has to be a corporate entity… so on and so on. Every day something new comes up, sometimes out of the Buyer’s control. If you haven’t gotten the general picture, it is that taking TARP (Troubled Asset Relief Program) money does not make the Banks happy lenders.
STATE OF THE MARKET – LA STYLE: As everyone in my area knows, housing prices in this pocket of Los Angeles County has not gone down much at all. In fact, there is a decided lack of inventory in some places. Buyers who equate what is happening in Palmdale, Lancaster, Riverside and San Bernardino to what is happening here in Pasadena, San Marino, San Gabriel, Arcadia would be in for a shocker. For those of you who did not have a chance to read an article in the Los Angeles Times last Sunday, here is one for the books: Bidding wars in desirable areas that are pricing the properties right out of some Buyer’s pocketbook range; smart REO Lenders timing the release of repossessed homes for added value; 80 bids on one property. Incredible. Welcome to LA. Now, the problem I see is this: will the Buyer who won the bidding war be able to get a loan to cover the sales price (see “No Happy Lenders” above)?
CHEAPER TO START FRESH: Then, a world away in Victorville (San Bernardino County), there is the one tract of unfinished new homes that has been totally torn down by order of the REO Bank. Apparently, it would have been too expensive to complete and the value of the finished product was just not there. Ouch. That is just painful.
LOAN MODS – Forget Short Sales. Loan Mods are the new “IT” word. Short Sales may have been the wave for the last 8 months but it is sadly passé. Loan modifications are what we will be seeing through the spring and summer months. Example: I have a file that is presently a Short Sale. The existing Lender, of its own accord, notified the Borrower that he would qualify for a loan modification whereby the unpaid interest and costs of $9,000 would be added to his existing unpaid balance and the modified loan given a 2% interest rate fixed for 27 years. The question for this Borrower is whether he can (1) afford the reduced payments and take the loan mod so that he can continue to live in his home or (2) cheaper to rent so continue with his short sale and give up his home altogether. This is the incentive to the Lender: under the short sale this Lender would only get $177,000 (out of $317,000) today. But under the loan mod the Lender stands to get $326,000 plus 2% interest through the years. So the incentive for Lenders to modify the loan is definitely there. The incentive for the Borrower then is whether the payments are low enough that it makes sense.
APPRAISERS ARE OUT IN THE COLD: The nationwide new law that came into effect on May 1st calls for the ordering of appraisals through a third party vendor contracted by the Lenders. This means that Loan Brokers and Loan Officers cannot order from their appraiser of choice; they have to go on-line with the third party and let this third party order the appraisal. This, of course, is a response to what Congress perceives as one of the causes of the economic meltdown – loose and lenient appraisal standards. Unfortunately, each Lender has their own third party vendor, and if the appraisers want to continue in business, they have to present their qualifications to all these individual vendors.
BANKRUPTCIES: Chrysler filed for bankruptcy. GM is close behind. Others may be forced to follow suit. Some of them may be household names. How many do you know? Read the article here.
As the month draws to a close (Another month! Almost halfway through the year!) I am taking advantage of one of the best shopping values out there now – a vacation! My husband and I are part of a group who will be taking a leisurely 7 day cruise to Alaska the last week of May. We are getting a SUPER discount! Check out what other values you can get in a down economy and do your homework! So, Alaska and Sarah Palin, here I come! :)
The test of thankfulness is not what you have to be thankful for, but whether anyone else has reason to be thankful that you are here.
– Anonymous –
