Buying A Home Should be Fun and Easy

Listening to the radio on a long drive yesterday the button stopped for awhile on a mortgage-company-infomercial. The host and CEO of this company was fairly long winded about an ad he read a few years back that boasted that ‘ Buying A Home Should be a Fun and Easy thing.’ Apparently he read this ad in some kind of financial magazine for the mortgage business and he thought this was the pre cursor for what became the financial meltdown on 2008. He went on and on about how easy it was to get a loan back in the day and this was fundamentally wrong and as he said “look where it brought us?’ type of thing.  He went on and on about how buying a home should be hard to do as a kind of poetic struggle so that the results are hard earned by the buyer.  If you ever did business with his company (and I have) he is clearly setting up an expectation that this is going to be “hard to do” because, quite frankly, doing business with his company is a flat out nightmare.

Read more: Buying A Home Should be Fun and Easy

It's the Rates, Stupid

As complex as our issues are the answers are always very simple.  During the 1992 Presidential Campaign the Clinton Headquarters had a banner that became the pivot point of the campaign that read “it’s the Economy, Stupid.”  We aren’t there yet but chances are the 2012 Presidential election will feature one of the candidates with a banner that reads “its JOBS, stupid.” In the meantime, we have enjoyed a long period of low rates and if this stops anytime soon there'll be a big old banner parked right up side the plummeting real estate market that reads "It's the Rates, Stupid."

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Super Tuesday: What Really Happens

Super Tuesday: the first Tuesday in every month when Trustees across the State of Texas converge at their respective County Courthouses and conduct foreclosures.  It’s a one day deal and it doesn’t matter what else happens to fall on this day – New Years, Fourth of July, Thanksgiving, Easter – the show must go on and it does. There is a lot that goes into the execution of a foreclosure and lenders are simply not going to miss the window to take back their security pursuant with the terms of the DOT. Every State treat foreclosures differently – some foreclosure every Tuesday, others every business day, some require judicial proceedings, other Trustees sales. Texas is a one day ordeal and we call it Super Tuesday, (Its probably Super if you can buy one at the price you want; its not all that Super if you are losing your home that day; and since they all go at once, it has a SUPER-CALA-FRAGILE-LISTIC-EXPE-ALA-DOCIOUS quality to it.)

Read more: Super Tuesday: What Really Happens

On Answering The Phone

Call it old school but last time I checked we are in the communication business. Phones are a big part of that and I make it a practice to do answer when I can and return it immediately when I have a call going. (Most times I will ask whoever I am speaking with to pardon me for a moment and when I take the new call ask that person if I can call them back when I am finished.) I don't avoid anyone even people that I would just as soon not answer. If I am in a meeting or a course of some kind and simply cannot answer the phone the first thing I do when that is over is return calls.

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New Rule: Never, Ever Ask To Close Early.

Just as quick as an agent calls to see about closing early is the exact moment when the deal starts to go bad. Its like the old rule ‘man plans, Gods laughs’ kicks in and the next thing you know the agent is sending over an Amendment to extend the contract because the (and I quote) “yip-a-dee-do-daa- did a rap-a-dee-ya da.” It’s the same reason every time and it all started with the agent calling to see if there was anyway my side of the transaction “might be able to close early.”

Read more: New Rule: Never, Ever Ask To Close Early.

Designations: Not the End game, They Jump Start Everything

Designations abound. Everywhere we turn in the real estate biz there is another course, another designation, another 2 days and four or five hundred bucks to be “certified.” (I have to admit, I love that word) To be honest, I never took much of this certification very seriously – it seemed that you could either do deals or you couldn’t and there was no two or three day course going to light up the trail over getting boots to the ground and getting after it. In my view agency wasn’t rocket science and this quest for initials after your name was all a smoke screen and in some cases a hoax. The agent could either get in and out of a deal or they couldn’t and what really mattered was their grit, their focus, their resolve, not some string of initials after their name.

Read more: Designations: Not the End game, They Jump Start Everything

What Agents Do: The Source of the Source

The best description of what real estate agents do is that we are the “source of the source.” We advocate our buyer or our seller, you bet – and we do that with information, guidance, counsel, being there, meeting them, meeting the whole family – meeting the Uncle in from Albuquerque who’s coming in on Labor day and wants to be sure their niece or nephew is making a good decision. We are there, on game and walk through the entire process like we have so many times before and know when we first start talking to you we are about to do it again. We use everything we know and what we don’t know we find out and report back and it is all pointed toward a single goal – make sure that our buyer or seller has every resource we can conger up to complete their transaction. And we refer our sources. That’s what we have – sources – and, frankly that is who we are – we’re the source and as it turns out “the source of the source.”

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The Age of Short Sales: Loss Mit Trumps REO for 2009, More to Come

2009 was an erratic year in the REO business. Brokers that were used to large inventories were suddenly picking up their signs and not moving them to new listings. Most of them were geared up for a regular flow of new assignments and found themselves unable to load their pipeline. Most watched their active listings shrink and had to respond with lay offs and overhauls of their expenses and all were faced with not being able to get their arms around their quarterly projections. We were in what appears to be the Golden Age of REO and, yet, their inventories were shrinking and they simply were not feeding well-established appetites.

The reasons were innumerable – the moratoriums that lasted through April, bulk sales and auctions were no longer reserved for aged or tough to sell inventory, new agents into REO because it was the only real hold out in a crating market and major changes in how and who had the assets. The old guard were saying that the relationships they had with major customers didn’t really mean a whole lot anymore – asset managers were no more in control than their bosses.

Read more: The Age of Short Sales: Loss Mit Trumps REO for 2009, More to Come

Altos Research Sees Controlled Inventory in 2010: 20% Fewer Homes than in 2008

DS News reports that Altos research sees an overall decline in available inventory. The company says there are 20 percent fewer homes for sale now than there were in 2008.

“Some fear this decline is because banks have been holding back their repossessed properties, but Altos doesn’t expect this so-called shadow inventory to result in a real estate day of reckoning in 2010 as some market observers have warned” according to the article.

Read more: Altos Research Sees Controlled Inventory in 2010: 20% Fewer Homes than in 2008

The New HUD: The Biggest Part of the Log-Jam came from Title Companies

If I am a closer or support to a closer it is probably a good idea to step on up and take a quick overview of the new GFE-HUD before it is mandatory. Instead of working off rumors or little bits and pieces of information it might just be a good idea to get a feel for how this new system works. Word has it there are (and were) a ton of seminars on the subject – some for agents, some for LO’s and even a few for title companies.

There has to be a memo out there from the mother ship and there have been classes offered by the boards and all kinds of title servicers since its original unveiling. The whole world of real estate has been talking about it for the past six months and it was officially unveiled in the 4th quarter of 2009 and mandatory after January 1st 2010.

Read more: The New HUD: The Biggest Part of the Log-Jam came from Title Companies

GFE-HUD seeks genuine “Integrity” in a world of “Bait & Switch”

Of all the changes that have found their way to the new GFE HUD the single most important is to take the word “estimate” off the table as a shield for  a systemic “bait & switch.”  The old way of cajoling the buyer to agree to move forward because of a low ball “estimate” are over. And it was “cajoling” and that is being nice about it. There have been seemingly countless incidents of calling the LO as we are at or about to be at closing to get clarification about what a fee is and why it wasn’t on the GFE only to have him say “that’s why they call it an “estimate.” That game is over.  The GFE needs to match the HUD or the LO has to eat the difference.

Read more: GFE-HUD seeks genuine “Integrity” in a world of “Bait & Switch”

The New GFE-HUD: Snags, Delays, Disagreements…Did I mention Delays?

Bottom line on the GFE-HUD is that there were simply too many holes in the old system of disclosure. Those holes got filled with all kinds of interpretations and gray area shananaghans. LO’s and their bosses were riding the deal all the way to the end and if they saw an opportunity to yank a little more money from their pigeon then you can bet your sweet bippy, they did. The new GFE-HUD is an effort to stop the madness and  in part level the playing field so we are all talking oranges to oranges and to stabilize the process so that promises made by the lender are kept all the way through closing.

Read more: The New GFE-HUD: Snags, Delays, Disagreements…Did I mention Delays?

Stephan Swanapoel On 2010: Real Estate As A Business & Pruning the Herd

One of the most influential voices about the organization of real estate as a business is Stephan Swanapoel. His Trends Report is considered to be cutting edge material and is highly acclaimed and not just by the leadership of the NAR - he appeals to a cross section of anyone interested in real estate as a business - the good, the bad and the ugly.

Read more: Stephan Swanapoel On 2010: Real Estate As A Business & Pruning the Herd

2010: The Year of "Free to Move Around the Cabin."

This time of the year we all start reflecting where we have been and start to peek around the corner to see if we can see what might be coming in the coming months. The way I see 2009 was the year of "fasten your seatbelt, there is turbulence ahead." 2010 has the promise of being the year of "The Captain has turned off the fasten seatbelt light and you are free to move around the cabin."

Read more: 2010: The Year of "Free to Move Around the Cabin."

Ripped From The Headlines: REO isn't going anywhere anytime soon

There are two market forces and we spend our lives going back and forth: on the one side there is "greed" and "fear" is on the other. After the "greed" phase burns out or gets real we have the fall out phase and then "fear." After a long period of being puckered up someone comes up with a new idea or a new way to play the system and it catches on and then everyone is doing it and we are on a uphill climb to "greed" central. 

Read more: Ripped From The Headlines: REO isn't going anywhere anytime soon

Low Rates Are Likely to Go Away Very Soon

Excerpt from today’s Mortgage Market Guide

The recent low in rates is not likely to be seen again - due to less Fed buying, along with additional supply. We have also expressed concern over the cavalier attitude that clients, referral sources and some so-called experts seem to have had towards rates.Customers will be getting a cold slap in the face when they receive legitimate rate quotes based on today's pricing. This will be additionally challenging after Freddie Mac hits us with their weekly rate survey on Thursday. Let's remember to remind our clients that these are last week's rates, which were much better - and long gone - as well as the typical average charge being .75% in points for rates in the survey, which could tack on an additional .25% to the rate.

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Results Are In: Giving Buyers Cash Money to Buy Actually Worked

What a surprise! If you have the Feds buying $5 Billion Dollars worth of mortgage backed securities a day to drive the mortgage rates down and the US Treasury gives Buyers up to $8,000 just to purchase their first home and the rest of the economy is in the toilet turns out that you can expect somewhere in the neighborhood of 2 Million extra sales to come through the door.

Read more: Results Are In: Giving Buyers Cash Money to Buy Actually Worked

Loan Mods: Here we Go Again

Since February 2009 there has been this concerted effort on the part of the government to stop foreclosures through loan modifications. The idea is that if the Borrower has a subprime or even non subprime loan for that matter and the Borrower is having a hard time making the payments that the loan can be modified at a lower rate and everyone wins. The Borrower wins because he gets to keep his house. The Lender wins because they don't have to foreclose (the assumption is that this is a huge cost to the lender) The world wins because our foreclosure rates start to decrease; the markets start to stabilize, our Bonds start to be worth something more than the paper they are written on and the US economy is back on the prowl.

Read more: Loan Mods: Here we Go Again

OK - Now Put this One in Your Pipe: Foreclosures Are Actually Down in Dallas

Go figure! Just when you thought things were starting to make sense you pick up the DMN and the headline reads:

New study shows Dallas County foreclosures fell in 2009
Clipped in its Entirety by  STEVE BROWN

If you exclude repeat filings on the same properties, home foreclosure postings in Dallas County actually declined by 12 percent in 2009, a new study shows.

Read more: OK - Now Put this One in Your Pipe: Foreclosures Are Actually Down in Dallas

Ripped From the Headlines: DFW Foreclosures up 30% for December.

North Texas home foreclosure filings for December soared 30 percent from a year ago

The jump in postings for December pushes the total for the year past 61,000 – a record for the Dallas-Fort Worth area.

More than 5,200 homes are facing forced sale by lenders next month in Dallas, Tarrant, Collin and Denton counties, Addison-based Foreclosure Listing Service said Thursday. It's also the eighth time this year that monthly foreclosure postings were above 5,000.

Read more: Ripped From the Headlines: DFW Foreclosures up 30% for December.

One More Shot at How to Lose Your Earnest Money

Let me put this in as simple terms as possible - I might actually make the point. I am going to be a little light on the details and just hit the highlights. You do the math.

    * Buyer finds a Loan Officer
    * Loan Officer Pre Quals the Buyer
    * Buyer hires the Loan Officer
    * Loan Officer writes a Pre Qual Letter
    * Buyer uses the Pre Qual letter to write a contract to buy a house
    * Buyer puts up earnest money deposit - call it $2,500 bucks
    * Contract says Financial Contingency is 15 days after execution.
    * LO gets appraisal, orders survey and get the loan app done.
    * Loan Officer sends loan application to an Underwriter
    * Underwriter rejects the loan - loan is denied - (after 15th day)

Read more: One More Shot at How to Lose Your Earnest Money

"Yes Virginia - Its a Good Time To Buy"

Coming into the summer there was talk among some of the real estate Gurus that the next few months were hands down one of the best times to buy a house in - well - probably the history of mankind. Then again when you talk to these guys it is always the best time to buy a house is - well - the history of mankind.  Its like crying wolf in reverse - who even listens anymore?

But Guess what? Santa Claus has come to town! (Pay attention, Virginia)

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Its Offical: Loan Brokers Are Out.

No question about it - since January any deals done with brokers have been a flat out friggin' nightmare. Inside the lending community they have always been step children; they fast became the step children from the third ex wife once the finacial crisis of the 4th Qtr of 08 were unfolding. Now - the leadership of the Mortgage community is saying the run is over.

Read more: Its Offical: Loan Brokers Are Out.

DFW Values: Rebounding & Stabilizing For Now

Fact is Texas is one of the best residential markets in the country right now. (10/09) There are a lot of reasons but the most important of which is that our unemployment is well under the national average. We just jumped to 8% unemployment last week - the national unemployment is 9.7% and expected to be over 10% in the coming weeks. As we summarize it in our office "if they're working, we're working." They are in Texas and our real estate market has legs as a result.

Read more: DFW Values: Rebounding & Stabilizing For Now

One Last Thought on Extending the Tax Credit (free money giveaway)

Since I wrote my prescription for a world fix by modifying and extending the tax credit to everyone it has occurred to me that the plan might have a few negative consequences. It is not like there are some things happening on the Federal level that are causing quite a stir among people that advocate fiscal restraint already and here I come with a whole new way to add to what is considered an out of control spending spree.

Plus it is a little scary when our Politicians start throwing around the word "Trillion" like it is a normal number. As quick as they mention it the next thing you know they are talking tens of trillions of dollars. Life was simplier when a Billion was considered a whole bunch of money. Fact is "billions" is Old School now - we live in a world where the "T" word is an ordinary part of our vocabularly and if you are with it you need to cast off the Old and jump into the New.

Read more: One Last Thought on Extending the Tax Credit (free money giveaway)

Let's Ramp Up This Tax Credit Business

There are a lot of rumors floating around about the First Time Buyer's Tax Credit. Some people are saying that the plan is to run through the (up to) $8,000 credit and come out with a more generous program of (up to) $15,000. Other people are suggesting that the plan is just about out of money and we are going to wake up one day and the Feds are going to declare game over. Others have suggested that the plan is working but no where near what was expected in sales and that the plan may get extended for some period out in the future as a result.

Read more: Let's Ramp Up This Tax Credit Business

Those Pesky Dates On Contracts

Recently I was talking to a loan processor about a contract we are trying to get done and he said the most astonishing thing - he said "it looks like we are going to miss the estimated date of closing."

I asked. "estimated?" I went on and said "I am pretty sure that that is the actual of closing - as in if we miss it the buyer is out of contract." He then asked "don't we have 14 days or so after that date to get the administrative parts of the loan done?" I knew I was in trouble about this point and told him that the Texas real Estate Commission had changed that 'grace period' for loan administration a couple of years ago. He said "oh - I didn't realize." I told him that I would do what I could to get an extension and would let him know.

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Part II: Loan Letters and the Paper They Are Written On

Before we go on, let’s talk about these LOAN LETTERS for a minute. They are a big deal and are never an Amendment or Addendum to the Contract itself. There are all kinds of loan letters and they have one thing in common: none of them are a guarantee that you are going to get the loan.

Loan letters range in quality from "pre-quals" to "loan commitments" to "underwriter-approved-just-go-find-an-address" and everything in between. The bad news is that the way they are written it is not always clear which variety of letter we have; the worse news is that the information on the letter – like the information you provide – is subject to change without notice.

Read more: Part II: Loan Letters and the Paper They Are Written On

Part I: Your Loan Officer Works For You

This is the first of several entries about Buyers, Loan Officers and residential contracts in Texas. These entries are not legal opinions of any kind – you will need a lawyer to render a legal interpretation of the contracts and if you have any legal questions hire one right away. (There is even a place for lawyers on the contract.) These entries are attempts to cut through all the legalese and try to bring clarity to the mechanics of how this works from the trenches. Think of these entries as an attempt to sort through the trappings and get to the bottom line in what I hope is common sense, practical, this-is-how-it-works terms.

Read more: Part I: Your Loan Officer Works For You

Introduction - Fire Your Loan Officer.

In every residential transaction that involves the Buyer getting a loan the lending process becomes (and really is) the sharp end of the pencil. You want the house, the Seller wants to sell it, the agents, the title company, your insurance agent not to mention your wife or husband, your kids, their friends, your relatives, friends and co workers are all excited to for you to get your new home – but, whether the deal is going to happen depends (almost) exclusively on what your loan officer is doing or, as the case may be, not doing.

Read more: Introduction - Fire Your Loan Officer.