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Tag: Foreclosures (page 1 of 1)

June 25, 2010

FNMA Lends a Helping Hand (to Our Moral Backside)

by

Real Estate Renaissance Man

Author website

Two days ago, FNMA announced their new policy regarding strategic defaults; it’s a mortgage death penalty: seven years before the offender is eligible for another FNMA loan.  Finally, they got one right.  Yes, you read that correctly; if you make your profession in the business of real estate, Wednesday’s announcement is cause for celebration on more than one level.  I’ll explain why in a moment, but first let’s dispense with the two primary arguments in favor of strategic foreclosure we see over and over again from the bubble-heads on the left:

Already we’ve got Shahien Nasiripour on The Huffington Post (I know, that’s an easy target – but it’s usually wise to start slow and thoroughly warm-up one’s disdain muscles) trotting out the tired argument about how the average homeowner should be allowed to default because the corporations that hold mortgages do it themselves.  Mr. Nasiripour would apparently like to see individuals and large corporations share the same default outlook.  I wonder if he would also prefer that homeowners negotiate their own individual, custom loan contracts; pay much higher commercial insurance premiums; price home loans on the specific risk of the homeowner rather than a pooled risk; and so on.  Either he hasn’t thought this all the way through, or he’d actually like to see the cost of home ownership much higher than it is now.

The other misleading argument is neatly presented by Ezra Klein at The Washington Post.  Actually, kudos to Mr. Klein because he not only presents the other misleading argument, but he also manages to mislead us on the very definition of a strategic default.   The essence of the second argument, in his own words: “…a mortgage is a specific contract. It says that if the borrower stops paying, the bank forecloses on his or her house.”  Not quite.  The contract specifies foreclosure as one (and there may be more) remedy available to the bank if the borrower breaks the contract.  The point of the contract itself is a promise by the lender to loan money at a rate and term that will not vary from what’s specified in return for a promise by the borrower to repay the loan as specified.  That’s not such a Read more

December 3, 2009

A Disaster for Democrats? Yeah, but what about the rest?

by

Mortgage Officer

Author website

This is just ugly…..

Let me attempt to explain.   Goldman Sachs came out with their economic forecast.   Here’s a brief summary of it:

  • Mediocre growth until late 2011.
  • Unemployment peaking at 10 3/4 in the middle of 2011.
  • Extremely low inflation through 2011
  • Low interest rates through 2011 (at least the ones the Fed controls.)

So, what does this mean for the housing and mortgage markets?   The following list of predictions are made under the assumption that Goldman is right.    If they are, I think the housing market is going to see:

  • Continued growth in the number of foreclosed homes.
  • Continued downward pressure on house prices.
  • Continued delinquency problems at Fannie Mae, Freddie Mac and FHA.
  • Continued tightening of underwriting guidelines for mortgages.
  • Continued situations where the interest rate isn’t the problem, it’s property values and qualifying for the loan that’s the problem.

In addition to that, a couple of other things we could see:

  • Growing political unrest and dissatisfaction with the current state of the government and those who run it.
  • An opportunity for a massive restructuring of the political landscape, starting in 2010 and continuing to the 2012 election.
  • Growing resentment against the financial institutions on Wall St. and elsewhere that have had a big part in this mess.
  • Substantial regulatory changes that will either lower the regulatory and tax burden on consumers and businesses and create the type of growth that we need or will stifle all initiative and all opportunities for us to pull out of this any time soon.   We’ll either go Reagan or we’ll go Atlas Shrugged.   I vote for Reagan.

It’s going to be bumpy and it’s going to be wild, but it’s definitely going to be a ride to remember……

Tom Vanderwell

James Pethokoukis » Blog Archive » Goldman Sachs 2011 forecast would be an absolute disaster for Dems | Blogs |

The key features of our 2011 outlook: (1) a strengthening in growth from 2.1% on average in 2010 to 2.4% in 2011, with real GDP rising at an above-potential 3½% pace in late 2011; (2) a peaking in unemployment in mid-2011 at about 10¾%; (3) extremely low inflation – close to zero on a core basis during Read more

December 1, 2009

HAFA, HAMP and other assorted worthless acronyms….

by

Mortgage Officer

Author website

Okay, I’ve got to admit, it’s been one of those days, but I can’t stand by and not say what I’m thinking about this new “short sale” program.    I’m already hearing a lot of Realtors and others saying, “This is great news!”    Well, hold on a minute…..

I’m going to go through some of the main points of the HAMP Update that was issued yesterday and that our President spoke about today.    You can find the entire thing at Hamp Update if you want to read it for yourself.  If you want to read the entire directive, you can find that at Directive.   The bold and italicized portions are quotes from the official documents.   The regular print is my thoughts…….

Supplemental Directive 09-09 provides guidance to servicers
There’s the first clue that something’s not going to go well.   It provides guidance. 

The definition of guidance according to Wikipedia is: Advice (opinion), an opinion or recommendation offered as a guide to action, conduct. 

See where the problem is?   It’s guidance, it’s not mandatory.   So, Uncle Sam can say, “Now, Mr. Banker, you really should do this……”    And the Banker can say, “(Well, we really shouldn’t print that.)”

provides servicers with the option to determine the extent to which short sales or deeds-in-lieu will be offered under this program.  (This is actually from the Directive).    

It provides options.   It allows the servicer to determine the extent to which they offer them under this program.

So, once again, what do we have?   We have Uncle Sam saying, “Now, Mr. Banker, it would be really nice if you did this……”   And the Banker can say, “____________________.”

The effective date of this Supplemental Directive is April 5, 2010.
Excuse me, but what the heck is the rush for?   I mean, they rolled out the HASP refi program to lenders the day that they made it public to consumers so we were getting calls on it before we even knew what was what.    Now they are giving the banks four months to decide whether they want to participate?    Why not next Monday?

With either the HAFA short sale or DIL, the servicer may not Read more

October 26, 2009

7 Things Every Home Buyer Should Know – Part 2 – Don’t Worry

by

Mortgage Officer

Author website

Time to take a look at the second installment in the 7 things series.   If you recall, last time, we looked at the fact that, in a rapidly changing market like we are, 6 months ago is ancient history.    What someone paid 6 months ago…… Well, just read about that at 7 Things – Part 1.

So what’s Part 2 about?   Here’s what I wrote last time:

2. Don’t worry so much about what you paid for your house. Instead, look at the difference between what you can expect to sell your house for and what it’s going to cost you to buy the new one that you want. I expect you’ll find that those are much more important numbers (unless you end up without any equity, in which case you don’t sell).

There are a couple of things that I think still hold true and one big thing that I think doesn’t hold true any more.    First the things that hold true:

  • If you are selling one home to buy another, the most important number is not what you paid for the existing home, the most important number is the difference between the two homes.   If the value of your home has fallen by $40,000 but you’re in a situation where you can buy a newer home with less maintenance and 1000 square foot bigger for a “net” difference of $20,000, then it might very well be a good deal.   
  • If your family situation has changed (i.e. – We got married and are expecting our second set of twins in the last 2 years! – Yikes!) then what you paid for your house doesn’t matter.   I’ve got a client who is negotiating on a house where the seller has to sell within the next three weeks but they are “hung up” on what they paid for the house.   If you need to do something, don’t worry about what you paid for your house, just focus on what the financial and logistical aspects and make the move.    I’m working with Read more

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