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Friday, April 3, 2009
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38 comments:
What does it mean when a bank appraiser says your house is worth EXACTLY what the amount paid is? Does that usually mean that the house probably isn't really worth what the loan?
Thats pretty normal Jeff.
They almost never say its worth more.
Save my mortgage broker from me:
Is it reasonable that over two weeks after we had a ratified contract, we stiil do not have a closing date?
I had emailed both the settlement company and the mortgage broker almost daily, submitting all our requested paperwork and reminding them both how anxious we were to close ASAP. We have been done with all our obligations since Monday, and were asked to be patient, because banks are totally swamped due to the low interest rates. Very well, I can see that.
But the broker has said he cannot even set a closing date yet. That strikes me as odd. If the bank does not have a date they are working towards, what is their motivation?
So I was planning to send a more strongly-worded email today, saying we want to close no later than April 15, and if that bank cannot do such a deadline, we want to find a better rate at a different bank.
Is that a good idea, or do I not know what I am doing?
And we did not go with Navy Fed or USAA, since they did not have the best rates by a lot. The mortgage broker we are using was highly recommended by many people in our church, so he is not likely to be anything other than honest. It is not that we do not trust him; we are just not sure who we need to be pressuring to close now.
Tabitha, are you buying a foreclosure or a short sale?
jeff--
that is exactly the topic of a future post of mine about how appraisals are a racket, a sham. but i don't want to tell the whole story until after we have closed, hopefully in a couple weeks.
for now, don't worry, the bank's appraisal came in exactly at our offer, too. that's what's expected.
jeff--
no, we are buying directly from the seller, traditional sale without realtors involved.
I'm not sure how it normally goes without a realtor but it seems to me that it shouldn't take too long for it to go through. If you are buying from a regular seller, then they SHOULD want to sell. Everyone involved should be motivated. It sounds like you should contact the seller and ask them what the problem is. If they want to keep trying to sell then that's for them to worry about. Honestly, there's no reason the buyer shouldn't be using a realtor. The seller traditionally pays the realtor fees, not the buyer.
tabitha,
all I can say is crossing fingers, because I don't have any experience in this arena. But hopefully someone else here will.
tabitha,
doesn't your sales contract specify a closing date agreed to by you and the seller?
if so, you shouldn't be asking the bank when they can close, you should be telling them when they have to close.
i can tell you from my recent experience that the paperwork went down to the wire, but ultimately got done. i was very proactive in supplying the bank with necessary paperwork and the bank still didn't get closing docs to the settlement attorney until 5:30pm the evening before our scheduled close. talk about stress!!
jf,
it was "within 30 days of a ratified contract," which would be april 18, the same day our rate lock expires.
we just haven't set up the actual closing date.
Tabitha, do you think you might get a better response if you slightly modified your inquiry to the bank, saying something like "if we do not close by April 18, we aren't meeting the terms of our legal contract with the seller. Further, legally we have to move out of our present place by X date. So we really need a commitment from you on the date."
Or maybe that's what you've said all along.
I'm sure they are overloaded with sales and refis and some have the same story you have, but some may have more flexibility (e.g., some refis).
Tabitha - my experience is this is common when things are pretty hot - which they are thanks to the huge refi boom. I wouldnt be too worked up about it just yet.
Chances are good, someone will contact you around the 13th and say hey how does the 18th sound for closing? So you may need to be prepared to drop everything and show up (bring your kids if you want to make a principled protest : )
Feel free to make threats all you want, continue to badger them all you want. Squeaky wheel gets the grease!
That said, understand that there are probably hundreds of others pressuring them too - except these guys are even days away from being in technical default due to failure to close on time.
Bottom line, expect very poor customer service, but in the end as JF said, expect it to be done.
thanks, all. it's not just me, then. i'll take it easy on mr. mortgage broker, but i will still email both broker/settlement co. and remind them that we are being booted out our house at the end of the month, and we need to seal the deal ASAP.
if the 18th is "within 30 days of ratification" that means the contract must have been ratified on the 19th of March (and the 30 days started counting on the 20th of March).
since the 18th of April is a Saturday, you need to schedule the closing for the 17th.
if it's gotta be done by the 17th, i'd call the settlement attorney and tell him you want to schedule for that day period. then tell the bank the settlement attorney has the closing scheduled for X time on the 17th and that is your required closing date in the contract as well.
then just sit back and let them do their thing (but make sure to follow up on, say, the 13th).
one final note to hopefully sooth your concerns, if by chance the closing had to be pushed back by a day or so and this was due to back ups at the bank, it is highly unlikely the sellers would have a problem with it so long as they know they reason. if it comes to that, just let them know the day before the closing. remember, the sellers are probably just as vested in this transaction now as you are.
That sounds like a huge stress inducer Tabitha. I mean, if things get pushed back, you'll be living in a hotel and have all your stuff in storage!
You keep mentioning your broker. Do you have an actual mortgage broker or are you going through a loan officer at a bank. If you are going through a broker, then they're probably getting 1%. If that's the case, then they should be pushing HARD for the sale to go through. If it doesn't go through, then they don't get paid.
If the loan falls through, I probably wouldn't deal with the broker later because it's his/her job to actually make this loan work. That IS what you're paying him for, right? It's not your job to contact the bank, it's HIS job to make the loan work. If you're using a loan officer that's one thing, but it sounds like you're using a broker!
Here's a very good deal in "immunozone" Arlington - gorgeous, recently updated, big interior; big lot; in a great neighborhood. Short sale for about $300K less than assessed value:
http://www.sawbuckrealty.com/find/listing/?s=1&k=5gGQIeiwhfh5KmE2rCDd5A%3d%3d
I think delusions are starting to set in again in this range (above $900K) ("oh, the market's turning around and people will soon get million dollar loans again and rush to buy our property, so let's keep our prices high"!!). Haven't seen many price drop notices recently. But sellers should note: not many sales either!
More seriously delinquent Prime than Sub-prime loans
I know you all read calculated risk, but just in case you don't you have to take a look at this one. Prime delinquencies are now beating out sub-prime delinquencies by their sheer numbers. To heck with the coming wave of Alt-A's what about the primes?
Washington Post Article:
Home Loan Defaults High Despite Modifications
. . .
The report by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, which regulate mortgage lenders, focuses on the effectiveness of industry efforts to help troubled borrowers. It finds that a growing number of homeowners are falling behind on their payments and that borrowers with prime mortgages, which traditionally are considered less risky, are a growing part of the problem.
"It's higher than we have ever seen it, historically, and the fact that it is still climbing is something we are keeping an eye on," said John C. Dugan, comptroller of the currency. The report covers two-thirds of the mortgage market.
http://tinyurl.com/cemqz5
re: prime defaults
It's the economy, stupid.
Cara, this is the prime reason that I don't take the reset chart too seriously. Those people will likely either get to refi out of their ARM or they'll simply walk away from their overpriced depreciating houses.
Fannie, Freddie Quietly Lift Moratorium on Foreclosures
A ban on foreclosure sales and evictions from houses owned by mortgage giants Fannie Mae and Freddie Mac, which began as a high-profile effort just before the holidays to keep people in their homes as the government tried to come up with homeowner rescue plans, is over.
Spokesmen for Fannie Mae and Freddie Mac confirmed the ban ended March 31, in a response to an inquiry from TWI. The agencies made a major announcement in November to roll out the ban, garnering headlines and extensive news coverage. Freddie Mac CEO David Moffett issued a statement at the time, saying the ban “provides a new measure of certainty” to families facing foreclosures during the holidays.
But its expiration didn’t seem to merit the same level of fanfare, with some housing advocates caught by surprise, scrambling for information today and Wednesday on listservs and in phone calls.
http://tinyurl.com/ctvh35
Ah yes, the much forgotten moratorium. I guess all the retarded Realtors claiming the market has finally hit bottom (for the 100th time) don't see the cause and effect of plugging up a dam. I wish the dam would break and we'd get flooded with these things soon.
yeah, there are plenty of SDQs in the market. still waiting for them in arlington. i believe that places like clarendon 1021 will have some more foreclosures, but for townhouses/sfh --- just not so sure, still plenty of people with high income who can afford it (and idiots who think it makes sense to pay a very high %s of the income for a home).
i also believe that a lot of people currently think that real estate is not a bad place to park their money in given the way fed is printing money. they think inflation is imminent. i'm not so sure about that, main reason i'm still on the fence. if inflation will come big time, people who bought now will be extremely happy looking at me sitting on the fence with emptying pockets.
but i will not bet on short-term inflation. will take a year and more likely two to start. especially with the unemployment going up. so for now i will bet on knife-catchers bleeding, not laughing at me.
Jeff,
It's my experience that appraisals rarely come in over contract price - even if you are getting a terrific bargain. Maybe there are some appraiser's here that can explain(?). I bought a house in 1993 that required 3 appraisals (the lender was being ultra conservative).
Appraisal #1 234K
#2 290K
#3 340K
It was unbelievable.
Tabitha,
Many lender's are very last minute. As someone mentioned, talk to the processer at your title company and make sure they are in contact with the loan processor. Get a firm commitment from your broker.
Cara,
re: prime defaults
Do you think that it just may be that the vast majority of sub-prime have already been foreclosed upon?
If you can buy and pay out in monthly cash flow, significantly less than you would in rent, then (a) everyone else will know this too and it will be the bottom (b) if you don't have to sell you can't lose any money (c) you might as well buy in now.
Where I'm looking buying can be cheaper than renting. And activity is way up. So what if more REOs come on the market so long as people are buying them? It is a very local thing though, and very tier specific.
Interesting commentary from BusinessWeek's Economics editor:
Housing's Long-Haul Recovery
Despite recent good news, government help will fade, prices will keep falling, and the real estate bear market could go on for years
http://tinyurl.com/dggk5b
va_investor,
That's part of it (running out of sub-prime loans to default on), but really this is the effect of the economy and job losses on the housing sector, combined with an inability to refi your way out of trouble if you're underwater, and the general over-extended debt of most everyone in the bubble run-up.
Prime loans are most of the market, so it's not surprising that eventually they would surpase sub-prime loans in total number of defaults. Also Tanta from Calculated Risk documented how the "prime" standard itself shifted downward towards the end of the bubble.
DOh! Another mansion being foreclosed on.
Wapo notice:
http://mypublicnotices.com/washingtonpost/PublicNotice.asp?Page=PublicNotice&AdId=1346320
the mansion itself:
http://www.realtor.com/realestateandhomes-detail/10610-Vale-Road_Oakton_VA_22124_1102986571
I guess building castles on spec wasn't a good idea afterall...
not a bad castle at all. still, if i was into castles, i would either buy one in scotland with some history attached, or made sure that the newly built one has all the styles/finishes/layouts chosen by me, not some bland corporate style grand designer.
this heavy style looks perfect if it is authentic, when everything is made in china last week it loses the appeal.
"Cara said...
It is a very local thing though, and very tier specific."
Yep, as always, if you want to know if any of these things brought up in national publications affect your market - watch your market.
Nearly every one of these things, if relevant will cause your inventory to rise. Either people try to sell before they lose the house to foreclosure, or they lose it, and it comes back on the market in the form of REO.
And none of this is really new either. Prime defaults have been rising for over a year now. Has your local inventory gone up or down? (i.e. is it relevant to you)?
Also, dont just rely on personal observations (i.e. "I see alot more listings than last year"), watch your stats - are those listings sticking around, or are there more buyers now around to buy them to keep them from lingering?
Note, I would take heed of everything that is published, but just keep in mind with so many things (inventory build up, sales slow down, declining prices, sales picking up, inventory declining) we have been way ahead of the national market.
It could be, this is something that is going to hit locally, and you will see it coming, or it could be something that has already hit, in which case its already done what its likely to do.
Ruh roh for that owner, NoVAwatcher. According to FFX Co, that property is worth less than $3m, and from looking at the map, that lot can't be subdivided to at least carve out another lot to sell. Looks as if she'll be sitting on her $10m asking price for a longgggg time.
Ooops, NoVAwatcher, sorry, you said the house is being foreclosed on, so now I should have said now it's the bank's problem.
Or maybe they'll go to a local Washington DC firm like Friedman, Billings Ramsey. err... Except that FBR is still laying people off:
http://voices.washingtonpost.com/washbizblog/2008/12/more_layoffs_at_fbr_capital_ma.html
Konstantin - per your inflation comment, what do you expect in the next 1-2 years with respect to price and wage inflation?
Tabitha: Major question (and this was asked before but not expanded upon): are you using a mortgage broker (i.e., someone who is shopping around for the best deal for you from a variety of lenders) or are you using a direct lender (i.e., Wells Fargo, Chase, Bank of America)? If you are using a mortgage broker who is "shopping," they go to the bottom of the heap with direct lenders and they are probably also charging you fees you would not have to pay if you went to a direct lender. You are right that the credits unions and USAA are not rate competitive now. It is not too late to switch your loan to a direct lender and get to your settlement date. Also, if you at least had your sales contract prepared by a lawyer, it is standard that you would have a financing contingency which had to be removed within a set number of days. If that is in the contract, you have probably already missed the deadline and you could use that as leverage to get your "broker" moving. If it is not in the contract, well use another lawyer next time. Also, your title company or hopefully a lawyer needs to schedule the settlement with the lender. If that settlement is not scheduled, you do not get into the lenders processing pipeline, and there will be delays. Please contact your title company to make sure they have scheduled the settlement with the lender. Also, since you are not represented by a real estate agent, I strongly suggest you have a lawyer represent you at settlement. Since you are an inexperienced buyer, and the sellers were not represented by a real estate agent, many, many issues are likely to arise before or at settlement which will have to be negotiated and resolved. Please also take this in the right way, but I have seen some of the worst problems arise from professional people who have been recommended by someone at their place of worship. You put unfailing trust in that person because you expect them to share your values, but you may not question the important thing: their competence. In selecting a lawyer, please look beyond your church for recommendations from people who have actually been to a settlement. One final bit of advice: instead of sending e-mails to the "broker," talk to him on the telephone. Instead of waiting for his response, you may be able to resolve items quickly in a direct conversation. You will also be able to get his candid responses from than through the filter of e-mail. You can then send him an e-mail documenting what he said in the telephone conversation and re-iterating your intent to settle. This will create a paper trail for you which, unfortunately, I think you are going to need. Best of luck.
I agree with the above post. you should definitely consider using a direct lender instead of a broker. If the broker is charging you 1% then you could have used that 1% to pay a point to the direct lender and probably gotten the same exact rate. IMHO, mortgage brokers are nothing more than a scam. They are a major factor into why the current crises has occurred. They made more money off of the "bad" loans so convinced people to take those loans instead of standard 30 year fixed ones. Also, there has been a lot of "bait and switch" with brokers. They offer you an ultra low rate that you can "only get from me" and when you get to closing, your 30 year fixed rate is actually an ARM. If you are indeed using a broker, read your paperwork carefully. I freely admit that I'm a paranoid crazy person but even "normals" shouldn't trust broker's. They want what makes THEM the most money, not what saves you the most.
Jaime,
We all know that these inflation forecasts are usually pretty bad, so please take it with a grain of salt.
I do not expect consumer confidence rebound much in the next 2 years, i do not think that economy will be either contracting or growing much as well. Government help will be providing system with enough fuel to support wages at the current levels but nothing more exciting. In the current economy we have plenty of people employed that do not help bottom line much but receive very competitive wages, they will be in trouble, so not much optimism on employment front.
Also it is a global recession so there is not much chance that other countries will rush to buy american goods and assets and inflate prices using potentially weak dollar.
Anyway, i will be proven wrong, either in details or in big picture, all the economists fail in long-term forecasts.
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