What I am seeing in the Real Estate Market

The term 'be careful what you wish for' is so overrated.....but true. Stocks and bonds were mixed this week. With good news of the earnings reports for some companies, and increased home sales, mixed with the bad news of unemployment, a jobless recovery and health care reform battles, NO WONDER bonds did not know how to price mortgage rates!

I did see a glimmer, and I mean glimmer, of 4.875% on Wednesday, for about 90 minutes. Then it was gone, as quickly as my winnings in Vegas last summer.

What am I seeing in the market? Lots of contracts, lots of backup offers, increased close times, so-so quality on appraisals, increased documentation from our investors, lots of review appraisals, longer underwriting times, lock extension fees, and volatility in rates. What else is new? This is the world we live in folks. And it may get worse before it gets better.

Ongoing advice to you is COMMUNICATE, and do it early - with everyone in the transaction. If you are not a list maker, BE ONE. If your client refuses to get pre approved early, THINK TWICE, and if you sense something does not seem right with a lender, title co, etc, ACT EARLY. And last but not least, BE FLEXIBLE. Your closings will be delayed when you least expect it. Advise your sellers not to move out until docs are at title, and don't let your buyers schedule movers that cannot be changed either. THIS WILL HAPPEN TO ALL OF US, even with the best intentions. Even when we are all on top of it. Something will come up, I promise you.

Tips to survive the recent TILA changes effective July 30

Let me preface the next paragraph by saying that Patriot Bank Mortgage is committed to the success of your business! We have been embracing changes as they happen, so that we can ease the transitions and complexities of the real estate industry as we know it today.

Now, for the news. On the heels of the HVCC (appraisal) changes we saw May 1, we now have disclosure changes that affect how mortgage companies will have to disclose to consumers. HERA (The Housing and Economic Recovery Act) was passed by Congress and the Federal Reserve to provide a more transparent, level and fair regulation of the real estate industry. These additional steps (effective July 30, 2009) are to help avoid deceptive lending practices:

The earliest a home purchase transaction (with a loan) can close is 7 BUSINESS days after the homebuyer is issued his initial truth in lending disclosure from the lender. M- Sat are considered business days. ·

Application fees cannot be collected until the initial disclosures are received (this could delay appraisals being ordered) ·

ANY change to the loan amount (ex. Sale price), days of interest, or fees (that all affect the Truth in Lending disclosure) , will trigger a new 3 day disclosure and waiting period until the transaction can close. Hence, last minute changes to the contract, or change in closing date from initial application, ‘could’ (not always) impact the closing date.

Tips to ensure timely closings: ·

• Set realistic expectations with listing agents, seller and buyer for potential closing dates)- 30 days min . is a ‘wise’ choice·
• Be sure the lender and title company are in contact as early as possible in the transaction. Title and mortgage need to work together on fees/disclosure , etc more than ever.·
• Be sure homebuyers understand that if their loan is not locked until later toward closing (if they choose to float), this could impact the APR, and therefore trigger new disclosure 3 day period, therefore delaying closing. Borrowers should NOT expect to be able to float down their rate or switch lenders last minute. This would trigger close date changes for sure.·
• Be in constant contact with the lender, and ensure title/lender have a ‘preliminary’ HUD 4 days prior to closing, in case a new TIL disclosure required.·
• Make changes to the contract (lowering price, seller credits, etc) is done as EARLY as possible, and that lenders have those amendments asap, so they can redisclose early.

In the Chronicle, July 15, business section, Scott Burns had a wonderful article titled ‘Buying a Home Takes a Miracle’. He sums it up nicely in the last paragraph : “There is no way you can accumulate enough paper to substitute for human judgement. The No Paper System did not work, It created the housing crisis. The Infinite Paper system that replaced it doesn’t work either. It will extend the crisis. Scott, those are wise words. Only time will tell. We have no choice, Jennifer, but to embrace this change, and hit it head on with changing the way we do business. We must be more tenacious than ever, and encourage team work more than ever as well.

No Democracies with Fannie/Freddie - Happy 4th!

May you enjoy and cherish this precious day, and remember what a gift FREEDOM is! We are so blessed to live in a country with the ideals of independence and democracy. The thought of managing 302 million people is overwhelming! No wonder our legislators cannot agree. But that is the beauty of it all! We need balances, so that we can continue to function as a democracy.

As for the mortgage industry, no democracies here! It is Fannie /Freddie way or the highway. We continue to see increased regulation, silently trickling into our everyday lives. More disclosures. More verifications, and ultimately, more cost to the consumer. That is what ultimately will happen. In many cases, it already has.

Why do we think the rates are not lower than they are? If they followed the 10 year bond as in historic past, the yields would be below 5 for sure. But investors are tired (not to mention poor), and they are not going to 'give it away' this time around like they did in 03/04 during the last rate craze. They want profits, and they want them big. What we have seen is a 'no mercy 'attitude from our lenders. No exeptions, no forgiveness, no anything. It is brutal, but we are managing and shielding this from our clients as much as we can, to continue to ensure a stress free transaction!

This weeks letter is short, and as promised last week, more information on the July 30 changes is coming in my next letter. This week was crazy with month end and I dont have all the facts yet. I hope you are off somewhere fun , and relaxing.Until next week.........