By Margaret Jackson
The Denver Post
Colorado experienced a sizable drop in the rate of homeownership as the recession deepened, with an almost 2 percentage-point decline from 2007 to 2009, according to U.S. census data released Tuesday.
Of the 1.9 million occupied homes last year, 67 percent were lived in by the owners, down from 68.8 percent in 2007.
“That’s actually a fairly significant drop,” said Ryan McMaken of the Colorado Division of Housing. “It’s not easy to add a percentage of homeownership rate, so if you’re going to drop 2 percent in two years, it’s significant.”
He said foreclosures, job losses and difficulty financing a purchase are contributing to the drop.
“We continue to add people to the population, but more are going into renting now than into owning,” Mc-Maken said. “Buying a home is just relatively less attractive. You’re not able to sustain the number of people who are getting into homeownership as quickly as they were in ’06 and ’07.”
As the vacancy rate for owner-occupied housing increased, the vacancy for rental property dropped from 8.4 percent in 2006 to 8 percent last year.
Median rents have increased from $825 a month in 2006 to $851 last year, with 27.5 percent ranging from $500 to $749 a month.
The average household size was 2.64, up from 2.62 in 2006.
Thursday, September 30, 2010
Denver Getting Younger...
• Denver and most other Front Range counties are getting younger. Denver’s median age dropped from 35.5 years old to 33 years old, largely because many young adults — ages 25-34 — moved into the city. On a percentage basis, the city’s black population grew slightly and Latino population declined slightly. Adams, Arapahoe, Boulder and Jefferson counties also grew younger over the year.
Denver Metro area sees dip in jobless rate to 8.1%
By The Associated Press
WASHINGTON» Unemployment fell in 230 metro areas last month, the broadest improvement since May.
Nationwide, unemployment ticked up in August to 9.6 percent from 9.5 percent the previous month. Businesses added a net total of 67,000 jobs, but about twice as many temporary census jobs ended.
The Denver-Aurora-Broom-field rate fell to 8.1 percent in August from 8.2 percent in July but was up from 8 percent in August 2009.
The metro report does not adjust its figures to take into account seasonal trends such as high unemployment among agricultural workers before fall harvests begin. As a result, the figures can differ from the national trend and can be volatile from month to month.
WASHINGTON» Unemployment fell in 230 metro areas last month, the broadest improvement since May.
Nationwide, unemployment ticked up in August to 9.6 percent from 9.5 percent the previous month. Businesses added a net total of 67,000 jobs, but about twice as many temporary census jobs ended.
The Denver-Aurora-Broom-field rate fell to 8.1 percent in August from 8.2 percent in July but was up from 8 percent in August 2009.
The metro report does not adjust its figures to take into account seasonal trends such as high unemployment among agricultural workers before fall harvests begin. As a result, the figures can differ from the national trend and can be volatile from month to month.
Mortgage Rates Continue to Drop; Who is it Helping?
Rates on 30-year fixed-rate mortgages have dropped more than a percentage point since the end of the recession in June 2009 (did it really end?), averaging 4.37% last week, according to Freddie Mac's weekly survey. Since 1975, fixed-rate mortgage rates have fallen over the 12 months following every recession, with the exception of the 1980 downturn, Freddie Mac chief economist Frank Nothaft said. How far will rates drop? According to MarketWatch they could drop lower than 4% to help get more buyers in the market, however not too many people are able to take advantage of these historically low rates, if they can qualify for a mortgage at all, because they lack the necessary income and sufficent credit scores.
Chase puts hold on 56,000 foreclosures
Chase puts hold on 56,000 foreclosures
'Robo-signing' scandal grows, could slow foreclosures
By Matt Carter, Thursday, September 30, 2010.
Inman News
In what's been dubbed the "robo-signing" scandal, JP Morgan Chase and Co. has joined GMAC Mortgage in temporarily halting foreclosure proceedings in judicial foreclosure states, following allegations that workers the companies employed failed to follow the proper legal procedures in filing paperwork demonstrating that the lenders had the right to foreclose.
In the past, such allegations -- often brought by attorneys representing homeowners in disputed foreclosure proceedings -- have mostly delayed, not stopped foreclosure proceedings.
But the robo-signing allegations could affect other lenders who rely on a paperless loan registration system developed for the industry by Mortgage Electronic Registration Systems Inc. (MERS), slowing foreclosure proceedings in courts nationwide.
On Sept. 17, GMAC Mortgage temporarily halted foreclosure proceedings on homeowners in 23 states including Florida, New York, Illinois and Ohio. The company has said employees preparing foreclosure filings submitted signed court affidavits that contained information they had not personally verified.
GMAC Mortgage has withdrawn some of the affidavits, and the Treasury Department, which owns a majority of parent company Ally Financial Inc. thanks to a $17 billion bailout, has ordered the company to correct its procedures, the New York Times reported.
Now, JP Morgan Chase has put the brakes on 56,000 foreclosure proceedings, following similar allegations against a team of Chase workers in Ohio that was allegedly signing off on 18,000 documents a month.
According to Ohio Secretary of State Jennifer Brunner, a team of eight employees at Chase Home Finance may have improperly notarized thousands of affidavits in foreclosure proceedings, stating that they had reviewed loan files and documents demonstrating a loan's chain-of-ownership, when they were in fact relying on the work of subordinates.
Brunner detailed those allegations in a letter last month asking the U.S. Attorney for the Northern District of Ohio to look into the matter.
"For too long, thousands of homes have been taken from consumers without proof that the foreclosing party actually has that right," Brunner said in a press release. She said lenders are abusing the notary process "to concoct a chain of title they never had."
Chase spokesman Tom Kelly said the company believes the information in the affidavits was accurate, and not affected by whether or not the signer had personal knowledge of the precise details.
"The affidavits were prepared by appropriate personnel with knowledge of the relevant facts based on their review of the company's books and records," Kelly told Inman News.
"We are working with independent outside counsel to review our affidavit preparation and signature process to confirm that it satisfies all documentary and evidentiary standards."
Chase has requested that the courts not enter judgments in pending matters until the company finishes its review, which Kelly said should be completed "in a few weeks."
GMAC Mortgage parent company Ally Financial has made similar statements, characterizing the issue as technical.
But Brunner, citing a deposition of a Chase Home Finance employee taken by lawyers who are suing Chase on behalf of homeowners in foreclosure, thinks the problem is more than technical and may be widespread.
In the deposition, Brunner said that in order to process documents needed to file foreclosure actions, the employee admitted to signing documents "in multiple capacities" -- such as the assistant secretary or vice-president of various companies -- in order to assign interests between companies including Deutsch Bank, JP Morgan, Chase Home Finance, and MERS.
The way the system works today is "not fair to consumers or to the employees who, by virtue of their jobs, are signing these documents," Brunner said, urging the Department of Justice to take up an investigation "to protect consumers and hold financial institutions to the standards of scrutiny and exactitude required by law, even if it means prosecuting some of our largest corporations."
MERS was created by the lending industry in 1997 to make it easier for lenders and companies that securitize mortgages to buy and sell loans. Brunner said over half of all new U.S. mortgages are registered with MERS and recorded in the MERS name, rather than in the name of the actual noteholder.
That can make it difficult for homeowners -- or their attorneys -- to determine who actually owns their loan, critics say.
MERS has won a number of court decisions upholding its right to be the mortgagee of record -- a right borrowers give the company when they sign their closing documents. The company launched a new service this summer that allows borrowers to look up which company services and which company owns their loan, although investors who buy mortgage loans can opt out of the system.
The "robo-signing" scandal has also attracted the attention of attorneys general in California, Florida, Colorado, Illinois, Iowa, and North Carolina.
Last month, the Florida attorney general's office said it was investigating whether documents produced in court by attorneys representing lenders have been "fabricated" by affiliated companies outside of the U.S.
'Robo-signing' scandal grows, could slow foreclosures
By Matt Carter, Thursday, September 30, 2010.
Inman News
In what's been dubbed the "robo-signing" scandal, JP Morgan Chase and Co. has joined GMAC Mortgage in temporarily halting foreclosure proceedings in judicial foreclosure states, following allegations that workers the companies employed failed to follow the proper legal procedures in filing paperwork demonstrating that the lenders had the right to foreclose.
In the past, such allegations -- often brought by attorneys representing homeowners in disputed foreclosure proceedings -- have mostly delayed, not stopped foreclosure proceedings.
But the robo-signing allegations could affect other lenders who rely on a paperless loan registration system developed for the industry by Mortgage Electronic Registration Systems Inc. (MERS), slowing foreclosure proceedings in courts nationwide.
On Sept. 17, GMAC Mortgage temporarily halted foreclosure proceedings on homeowners in 23 states including Florida, New York, Illinois and Ohio. The company has said employees preparing foreclosure filings submitted signed court affidavits that contained information they had not personally verified.
GMAC Mortgage has withdrawn some of the affidavits, and the Treasury Department, which owns a majority of parent company Ally Financial Inc. thanks to a $17 billion bailout, has ordered the company to correct its procedures, the New York Times reported.
Now, JP Morgan Chase has put the brakes on 56,000 foreclosure proceedings, following similar allegations against a team of Chase workers in Ohio that was allegedly signing off on 18,000 documents a month.
According to Ohio Secretary of State Jennifer Brunner, a team of eight employees at Chase Home Finance may have improperly notarized thousands of affidavits in foreclosure proceedings, stating that they had reviewed loan files and documents demonstrating a loan's chain-of-ownership, when they were in fact relying on the work of subordinates.
Brunner detailed those allegations in a letter last month asking the U.S. Attorney for the Northern District of Ohio to look into the matter.
"For too long, thousands of homes have been taken from consumers without proof that the foreclosing party actually has that right," Brunner said in a press release. She said lenders are abusing the notary process "to concoct a chain of title they never had."
Chase spokesman Tom Kelly said the company believes the information in the affidavits was accurate, and not affected by whether or not the signer had personal knowledge of the precise details.
"The affidavits were prepared by appropriate personnel with knowledge of the relevant facts based on their review of the company's books and records," Kelly told Inman News.
"We are working with independent outside counsel to review our affidavit preparation and signature process to confirm that it satisfies all documentary and evidentiary standards."
Chase has requested that the courts not enter judgments in pending matters until the company finishes its review, which Kelly said should be completed "in a few weeks."
GMAC Mortgage parent company Ally Financial has made similar statements, characterizing the issue as technical.
But Brunner, citing a deposition of a Chase Home Finance employee taken by lawyers who are suing Chase on behalf of homeowners in foreclosure, thinks the problem is more than technical and may be widespread.
In the deposition, Brunner said that in order to process documents needed to file foreclosure actions, the employee admitted to signing documents "in multiple capacities" -- such as the assistant secretary or vice-president of various companies -- in order to assign interests between companies including Deutsch Bank, JP Morgan, Chase Home Finance, and MERS.
The way the system works today is "not fair to consumers or to the employees who, by virtue of their jobs, are signing these documents," Brunner said, urging the Department of Justice to take up an investigation "to protect consumers and hold financial institutions to the standards of scrutiny and exactitude required by law, even if it means prosecuting some of our largest corporations."
MERS was created by the lending industry in 1997 to make it easier for lenders and companies that securitize mortgages to buy and sell loans. Brunner said over half of all new U.S. mortgages are registered with MERS and recorded in the MERS name, rather than in the name of the actual noteholder.
That can make it difficult for homeowners -- or their attorneys -- to determine who actually owns their loan, critics say.
MERS has won a number of court decisions upholding its right to be the mortgagee of record -- a right borrowers give the company when they sign their closing documents. The company launched a new service this summer that allows borrowers to look up which company services and which company owns their loan, although investors who buy mortgage loans can opt out of the system.
The "robo-signing" scandal has also attracted the attention of attorneys general in California, Florida, Colorado, Illinois, Iowa, and North Carolina.
Last month, the Florida attorney general's office said it was investigating whether documents produced in court by attorneys representing lenders have been "fabricated" by affiliated companies outside of the U.S.
Tuesday, September 21, 2010
Why your house needs a mother-in-law suite
BY SCOTTMCGILLIVRAY
OVER THE YEARS,I’ve transformed several properties into multi-generational homes, and here’s why: The National Association of the Remodeling Industry reports that the number of households nationwide with more than two generations expanded from 5million in 2000 to 6.2 million in 2008, an increase of 24%.
Here are some things to look for in your home or to consider when purchasing a property you intend to use for in-laws or other family members:
Additional bedrooms. Adding rooms inside ahome is affordable and fairly simple. You may need an electrician, but the rest of the work is pretty basic. Ahome addition is complicated and expensive and requires permits and contractors.
Separateentrance. Having dedicated entrances creates a sense of independence and makes it easy for everyone to come and go at will. If your home already has aseparate entrance, you may have to add only afew walls or doors just inside the entrance to give the interior some separation. Adding an entrance usually requires a permit.Abasemententranceis themostcommon, butit’salso more expensive.
Separateliving rooms. An extra bedroom or office can be converted into an additional living room for some breathing room between families. If you don’t have aroom to spare, a comfortable couch in the master bedroom or adaybed in the office will do the trick.
Separatebathroom. You’ll need permits and aplumber to build anew one. Adding bathrooms can get complicated and expensive, but it’s usually worth it for the added value.
Separatekitchen. If it’s a must, find alocation close to existing plumbing and with adirect path to the electrical panel, which will keep costs down. Be sure to use alicensed plumber and electrician.
Soundproofing. If you’re building walls to separate bedrooms and living space, use good-quality insulation.
SCOTT MCGILLIVRAY is guest judge on HGTV’s new series All American Handyman,which airsSundaysat 9p.m. ET/PT. He also is host of HGTV’s Income Property.
KARL GELLES FOR USA WEEKEND
OVER THE YEARS,I’ve transformed several properties into multi-generational homes, and here’s why: The National Association of the Remodeling Industry reports that the number of households nationwide with more than two generations expanded from 5million in 2000 to 6.2 million in 2008, an increase of 24%.
Here are some things to look for in your home or to consider when purchasing a property you intend to use for in-laws or other family members:
Additional bedrooms. Adding rooms inside ahome is affordable and fairly simple. You may need an electrician, but the rest of the work is pretty basic. Ahome addition is complicated and expensive and requires permits and contractors.
Separateentrance. Having dedicated entrances creates a sense of independence and makes it easy for everyone to come and go at will. If your home already has aseparate entrance, you may have to add only afew walls or doors just inside the entrance to give the interior some separation. Adding an entrance usually requires a permit.Abasemententranceis themostcommon, butit’salso more expensive.
Separateliving rooms. An extra bedroom or office can be converted into an additional living room for some breathing room between families. If you don’t have aroom to spare, a comfortable couch in the master bedroom or adaybed in the office will do the trick.
Separatebathroom. You’ll need permits and aplumber to build anew one. Adding bathrooms can get complicated and expensive, but it’s usually worth it for the added value.
Separatekitchen. If it’s a must, find alocation close to existing plumbing and with adirect path to the electrical panel, which will keep costs down. Be sure to use alicensed plumber and electrician.
Soundproofing. If you’re building walls to separate bedrooms and living space, use good-quality insulation.
SCOTT MCGILLIVRAY is guest judge on HGTV’s new series All American Handyman,which airsSundaysat 9p.m. ET/PT. He also is host of HGTV’s Income Property.
KARL GELLES FOR USA WEEKEND
Homeowners’ refinancing grows elusive
Homeowners’ refinancing grows elusive
By Mary Ellen Podmolik
Chicago Tribune
CHICAGO» The lowest mortgage interest rates in decades have sent thousands of homeowners eager to refinance their home loans scurrying into lenders’ offices. Many leave empty-handed and upset.
A multipronged whammy of lower home values, new appraisal guidelines and tighter lending requirements frequently derail consumers from snaring loans at lower interest rates. Lenders say they are closing 60 percent to 70 percent of refinancings.
“It’s a blow to (a borrower’s) ego,” said Todd Gosden, a loan originator at Avenue Mortgage in Naperville, Ill. “The guy who makes $250,000 a year, managing 150 people, who says, ‘I want to take advantage of this,’ and I have to say, ‘You can’t.’ The reaction is, ‘Are you kidding me?’ ”
A decade ago, all types of consumers were able to qualify for a particular interest rate. In the current era of risk-based pricing, numerous variables determine the rate offered to an individual, including whether the property is a single-family home or condominium, and loan-level pricing adjustments are applied to eight tiers of credit scores.
“There are more people that can’t get a refinance today than two to three years ago,” said Brad Blackwell, an executive vice president at Wells Fargo.
A case in point is a couple who six months ago easily refinanced the $365,000 interest-only loan on their $900,000 home, said David Hochberg, president of Townstone Financial Inc. in Chicago. Hochberg said the man’s credit score was 790; hers was 715.
But since the last refinancing, credit guidelines have tightened, and the minimum score now required for a new loan at the rate they sought was 720. The only option, which the couple rejected, would have been for the wife to remove her name, and thus her score, from the mortgage application.
Self-employed borrowers face extra challenges because they have to produce two years of tax returns. If the owner of a sole proprietorship has a lot of tax write-offs that alter adjusted gross income, or the most recent year shows a substantial income decline, it can hurt his or her application.
By Mary Ellen Podmolik
Chicago Tribune
CHICAGO» The lowest mortgage interest rates in decades have sent thousands of homeowners eager to refinance their home loans scurrying into lenders’ offices. Many leave empty-handed and upset.
A multipronged whammy of lower home values, new appraisal guidelines and tighter lending requirements frequently derail consumers from snaring loans at lower interest rates. Lenders say they are closing 60 percent to 70 percent of refinancings.
“It’s a blow to (a borrower’s) ego,” said Todd Gosden, a loan originator at Avenue Mortgage in Naperville, Ill. “The guy who makes $250,000 a year, managing 150 people, who says, ‘I want to take advantage of this,’ and I have to say, ‘You can’t.’ The reaction is, ‘Are you kidding me?’ ”
A decade ago, all types of consumers were able to qualify for a particular interest rate. In the current era of risk-based pricing, numerous variables determine the rate offered to an individual, including whether the property is a single-family home or condominium, and loan-level pricing adjustments are applied to eight tiers of credit scores.
“There are more people that can’t get a refinance today than two to three years ago,” said Brad Blackwell, an executive vice president at Wells Fargo.
A case in point is a couple who six months ago easily refinanced the $365,000 interest-only loan on their $900,000 home, said David Hochberg, president of Townstone Financial Inc. in Chicago. Hochberg said the man’s credit score was 790; hers was 715.
But since the last refinancing, credit guidelines have tightened, and the minimum score now required for a new loan at the rate they sought was 720. The only option, which the couple rejected, would have been for the wife to remove her name, and thus her score, from the mortgage application.
Self-employed borrowers face extra challenges because they have to produce two years of tax returns. If the owner of a sole proprietorship has a lot of tax write-offs that alter adjusted gross income, or the most recent year shows a substantial income decline, it can hurt his or her application.
Appliance Dilemna Repair it or Retire It?
When an appliance breaks, should you repair it or replace it?
If the repair costs half the price of a new appliance, seriously consider buying
new, said Mark Kotkin, director of survey research at Consumer Reports.
According to the magazine’s research, any major household appliance more
than 8 years old should be considered for replacement rather than repair. Another
generalization from Consumer Reports: Skip the repair
and buy new if your appliance costs less than $150.
For example, it’s not going to pay to repair an
out-of-warranty toaster.
“It’s always a question people have, especially older
people who are used to repairing things,” Kotkin
said.
Gregory Karp, Chicago Tribune
If the repair costs half the price of a new appliance, seriously consider buying
new, said Mark Kotkin, director of survey research at Consumer Reports.
According to the magazine’s research, any major household appliance more
than 8 years old should be considered for replacement rather than repair. Another
generalization from Consumer Reports: Skip the repair
and buy new if your appliance costs less than $150.
For example, it’s not going to pay to repair an
out-of-warranty toaster.
“It’s always a question people have, especially older
people who are used to repairing things,” Kotkin
said.
Gregory Karp, Chicago Tribune
Will Capital Gains on Homeowners Be Eased?
ASK DOW JONES |
By Tom Herman
Q: What are the chances that Congress will ease the rules on how long you have to own your home and live in it in order to qualify for the most favorable capital-gains tax treatment when you sell it?
K.M., Prior Lake, Minn.
A: Slim to none. Naturally, anything is possible if Congress ever decides to overhaul the entire tax system. But don’t count on that happening any time soon.
Even if lawmakers do consider major tax-law changes after the November elections or next year, don’t expect them to ease the home-sale rules. I haven’t heard any significant discussion of this issue among congressional leaders in many years.
Here is how the basic rules work: In the late 1990s, then-President Bill Clinton signed legislation that officials said at the time would eliminate capital-gains taxes for most people who sell their primary home for a profit. That legislation generally allowed most sellers to exclude a gain of as much as $500,000 (if married and filing jointly) or as much as $250,000 (if single).
To qualify for the full exclusion, you typically must have owned the home—and used it as your primary residence—for at least two of the five years prior to the sale. For more details, see IRS Publication 523 (“Selling Your Home”) on the Internal Revenue Service website ( www.irs.gov ).
But don’t assume you’re out of luck if you can’t meet the ownership and use tests I mention above. You still might be eligible for a partial exclusion that could greatly reduce—or even eliminate—capital-gains taxes on the sale of your primary home.
For example, you may qualify for a partial exclusion if you had to sell your home because of “a change in place of employment” or if you moved for “health” reasons. IRS Publication 523 has other examples.
Here is what the IRS says it means on the health issue: “The sale of your main home is because of health if your primary reason for the sale is: To obtain, provide or facilitate the diagnosis, cure, mitigation or treatment of disease, illness or injury of a qualified individual,” or to “obtain or provide medical or personal care for a qualified individual suffering from a disease, illness or injury.”
Conversely, the IRS says the sale of your home isn't because of health if the sale “merely benefits a qualified individual’s general health or well being.”
You also might qualify for a partial exclusion if you had to sell for certain “unforeseen circumstances,” such as “natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible.”
Send your questions to us at askdowjones.sunday03@wsj.com and include your name, address and telephone number. Questions may be edited; we regret that we cannot answer every letter.
By Tom Herman
Q: What are the chances that Congress will ease the rules on how long you have to own your home and live in it in order to qualify for the most favorable capital-gains tax treatment when you sell it?
K.M., Prior Lake, Minn.
A: Slim to none. Naturally, anything is possible if Congress ever decides to overhaul the entire tax system. But don’t count on that happening any time soon.
Even if lawmakers do consider major tax-law changes after the November elections or next year, don’t expect them to ease the home-sale rules. I haven’t heard any significant discussion of this issue among congressional leaders in many years.
Here is how the basic rules work: In the late 1990s, then-President Bill Clinton signed legislation that officials said at the time would eliminate capital-gains taxes for most people who sell their primary home for a profit. That legislation generally allowed most sellers to exclude a gain of as much as $500,000 (if married and filing jointly) or as much as $250,000 (if single).
To qualify for the full exclusion, you typically must have owned the home—and used it as your primary residence—for at least two of the five years prior to the sale. For more details, see IRS Publication 523 (“Selling Your Home”) on the Internal Revenue Service website ( www.irs.gov ).
But don’t assume you’re out of luck if you can’t meet the ownership and use tests I mention above. You still might be eligible for a partial exclusion that could greatly reduce—or even eliminate—capital-gains taxes on the sale of your primary home.
For example, you may qualify for a partial exclusion if you had to sell your home because of “a change in place of employment” or if you moved for “health” reasons. IRS Publication 523 has other examples.
Here is what the IRS says it means on the health issue: “The sale of your main home is because of health if your primary reason for the sale is: To obtain, provide or facilitate the diagnosis, cure, mitigation or treatment of disease, illness or injury of a qualified individual,” or to “obtain or provide medical or personal care for a qualified individual suffering from a disease, illness or injury.”
Conversely, the IRS says the sale of your home isn't because of health if the sale “merely benefits a qualified individual’s general health or well being.”
You also might qualify for a partial exclusion if you had to sell for certain “unforeseen circumstances,” such as “natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible.”
Send your questions to us at askdowjones.sunday03@wsj.com and include your name, address and telephone number. Questions may be edited; we regret that we cannot answer every letter.
Why It Pays to Pay Off Your Mortgage Early
THE AGGREGATOR
Why It Pays to Pay Off Your Mortgage Early
Edited by Nikki Waller
Paying down your home mortgage faster than the loan contract requires is hardly a new idea, but it could offer homeowners some particularly valuable advantages right now. But accelerating your mortgage pay-down works only if you have positive cash flow and available cash, and you’re looking for a risk-free way to invest surplus funds.
Say you’re 45 years old and still in good financial shape. You have cash on hand and positive monthly cash flow, and you expect to be in the same position for the foreseeable future.
You have a remaining balance of $400,000 on your 30-year 6% fixed-rate mortgage. Your monthly principal-and-interest payment is $2,460. If you keep making your scheduled monthly payments, you’ll be 73 years old when the mortgage is finally paid off. At age 65, you’ll still have eight years to go.
But say you start paying $4,500 a month. You’d pay off the $400,000 mortgage balance in about nine years and 10 months, finishing off at age 55. You’d also earn a guaranteed 6% return, because that’s the interest rate you avoid by making accelerated payments. If after the mortgage is paid off, you continue the program for another 10 years by putting $4,500 a month into a retirement savings account that earns 5% after taxes, you’ll accumulate about $699,000 by age 65.
Even a less ambitious plan could pay off. Assume you pay $3,500 a month under the accelerated pay-down program, requiring an extra $1,040 a month. You’d pay off your $400,000 mortgage balance in about 14 years and two months (at age 59), and you’d earn a guaranteed 6% on the deal. If you continue the program for another six years by putting $3,500 a month into a retirement savings account that earns 5% after taxes, you’d accumulate about $293,000 by age 65. Not bad.
If you have great credit and can refinance your mortgage, the accelerated pay-down strategy is still a good idea as long as you’re satisfied with earning a guaranteed, risk-free return equal to the interest rate on the refinanced loan.
One downside to paying off on the fast track: You’ll lose income-tax deductions because your interest charges will go down rapidly.
While the accelerated mortgage pay-down strategy will yield guaranteed results, it’s not foolproof. If we have a period of high inflation, paying down a mortgage with a relatively low interest rate earlier than required may no longer make sense.
On the other hand, the accelerated pay-down strategy will work great during a period of deflation, because you would be paying down the mortgage when dollars are cheap.
—Bill Bischoff
SmartMoney.com
Why It Pays to Pay Off Your Mortgage Early
Edited by Nikki Waller
Paying down your home mortgage faster than the loan contract requires is hardly a new idea, but it could offer homeowners some particularly valuable advantages right now. But accelerating your mortgage pay-down works only if you have positive cash flow and available cash, and you’re looking for a risk-free way to invest surplus funds.
Say you’re 45 years old and still in good financial shape. You have cash on hand and positive monthly cash flow, and you expect to be in the same position for the foreseeable future.
You have a remaining balance of $400,000 on your 30-year 6% fixed-rate mortgage. Your monthly principal-and-interest payment is $2,460. If you keep making your scheduled monthly payments, you’ll be 73 years old when the mortgage is finally paid off. At age 65, you’ll still have eight years to go.
But say you start paying $4,500 a month. You’d pay off the $400,000 mortgage balance in about nine years and 10 months, finishing off at age 55. You’d also earn a guaranteed 6% return, because that’s the interest rate you avoid by making accelerated payments. If after the mortgage is paid off, you continue the program for another 10 years by putting $4,500 a month into a retirement savings account that earns 5% after taxes, you’ll accumulate about $699,000 by age 65.
Even a less ambitious plan could pay off. Assume you pay $3,500 a month under the accelerated pay-down program, requiring an extra $1,040 a month. You’d pay off your $400,000 mortgage balance in about 14 years and two months (at age 59), and you’d earn a guaranteed 6% on the deal. If you continue the program for another six years by putting $3,500 a month into a retirement savings account that earns 5% after taxes, you’d accumulate about $293,000 by age 65. Not bad.
If you have great credit and can refinance your mortgage, the accelerated pay-down strategy is still a good idea as long as you’re satisfied with earning a guaranteed, risk-free return equal to the interest rate on the refinanced loan.
One downside to paying off on the fast track: You’ll lose income-tax deductions because your interest charges will go down rapidly.
While the accelerated mortgage pay-down strategy will yield guaranteed results, it’s not foolproof. If we have a period of high inflation, paying down a mortgage with a relatively low interest rate earlier than required may no longer make sense.
On the other hand, the accelerated pay-down strategy will work great during a period of deflation, because you would be paying down the mortgage when dollars are cheap.
—Bill Bischoff
SmartMoney.com
Friday, September 17, 2010
September 2010 Top 10 Reasons to Buy
10 Reasons to Buy a Home
Time magazine is being overly pessimistic in its recent cover piece that called into question the benefits of homeownership. In fact, now is a great time to buy. And, what's more, tomorrow will be a great time to own, because the fundamental strength of homeownership hasn't changed.
Why is now a great time to buy? Here are 10 reasons:
1. You can get a good deal. Prices are down 30 percent on average. They're at a level that makes sense for people's income.
2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.
3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.
4. It'll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?
5. You can get a better home. In some markets, it's simply the case that the nicest places are for-sale homes and condos.
6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.
7. It's risk capital. If the economy picks up, you stand to benefit from that, even if you're goal is just to have a nice place to live.
8. It's forced savings. A part of your payment each month goes to equity.
9. There is a lot to choose from. There are some 4 million homes available today, about a year's supply. Now's the time to find something you like and get it.
10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.
Source: Wall Street Journal, Brett Arends (9/16/10)
Time magazine is being overly pessimistic in its recent cover piece that called into question the benefits of homeownership. In fact, now is a great time to buy. And, what's more, tomorrow will be a great time to own, because the fundamental strength of homeownership hasn't changed.
Why is now a great time to buy? Here are 10 reasons:
1. You can get a good deal. Prices are down 30 percent on average. They're at a level that makes sense for people's income.
2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.
3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.
4. It'll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?
5. You can get a better home. In some markets, it's simply the case that the nicest places are for-sale homes and condos.
6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.
7. It's risk capital. If the economy picks up, you stand to benefit from that, even if you're goal is just to have a nice place to live.
8. It's forced savings. A part of your payment each month goes to equity.
9. There is a lot to choose from. There are some 4 million homes available today, about a year's supply. Now's the time to find something you like and get it.
10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.
Source: Wall Street Journal, Brett Arends (9/16/10)
Denver Area 1 of top 10 to Appreciate According to Forbes
Daily Real Estate News | September 14, 2010 | Share
10 Markets Most Likely to Appreciate
Forbes magazine turned to real estate research firm Local Market Monitor to figure out which markets have the greatest likelihood of price appreciation because they offer a mix of jobs weighted toward growth industries.
These are the top markets, the research company concludes:
1. Raleigh-Cary, N.C.
2. McAllen-Edinburg-Mission, Texas
3. Austin-Round Rock, Texas
4. Nashville-Davidson-Murfreesboro-Franklin, Tenn.
5. San Antonio, Texas
6. Colorado Springs, Colo.
7. Albuquerque, N.M.
8. Denver-Aurora-Broomfield, Colo.
9. Springfield, Mo.
10. Indianapolis-Carmel, Ind.
Source: Forbes, Francesca Levy (09/13/2010)
10 Markets Most Likely to Appreciate
Forbes magazine turned to real estate research firm Local Market Monitor to figure out which markets have the greatest likelihood of price appreciation because they offer a mix of jobs weighted toward growth industries.
These are the top markets, the research company concludes:
1. Raleigh-Cary, N.C.
2. McAllen-Edinburg-Mission, Texas
3. Austin-Round Rock, Texas
4. Nashville-Davidson-Murfreesboro-Franklin, Tenn.
5. San Antonio, Texas
6. Colorado Springs, Colo.
7. Albuquerque, N.M.
8. Denver-Aurora-Broomfield, Colo.
9. Springfield, Mo.
10. Indianapolis-Carmel, Ind.
Source: Forbes, Francesca Levy (09/13/2010)
Another Perspective On The National Economic News As of Late
Before we start with the news of the day, let’s take a quick look at a letter from a college student to her parents.
Dear Mom & Dad,
Since I left for college I have been remiss in writing and I am sorry for my thoughtlessness in not having written before. I will bring you up to date now, but before you read on, please sit down. You are not to read any further unless you are sitting down, okay?
Well, then, I am getting along pretty well now. The skull fracture and the concussion I got when I jumped out the window of my dormitory when it caught fire shortly after my arrival here is pretty well healed now. I only spent two weeks in the hospital and now I can see almost normally and only get those sick headaches once a day. Fortunately, the fire in the dormitory, and my jump, was witnessed by an attendant at the gas station near the dorm, and he was the one who called the Fire Department and the Ambulance. He also visited me in the hospital and since I had nowhere to live because of the burnt out dormitory, he was kind enough to invite me to share his apartment with him. It’s really a basement room, but it’s kind of cute. He is a very kind boy and we have fallen deeply in love and are planning to get married. We haven’t got the exact date yet, but it will be before my pregnancy begins to show.
Yes Mom & Dad, I am pregnant. I know how much you are looking forward to being grandparents and I know you will welcome the baby and give it the same love and devotion and tender care you gave me when I was a child. The reason for the delay in our marriage is that my boyfriend has a minor infection which prevents us from passing our pre-marital blood tests and I carelessly caught it from him.
Now that I have brought you up to date, I want to tell you that there was no dormitory fire, I did not have concussion or skull fracture, I was not in hospital, I am not pregnant, I am not engaged, I am not infected and there is no boyfriend. However, I am getting a “D” in American History, and an “F” in Chemistry and I want you to see those marks in their proper perspective.
Your loving daughter
Sharon
This story reminds me of the economic data of late…it certainly hasn’t been great news, but taken in perspective of the negative news we had been getting – or comparing it to the news we have feared getting – the data coming out has been given a very warm welcome by the Stock market, and causing problems for the Bond market. And today’s Initial Jobless Claims number is no exception.
Dear Mom & Dad,
Since I left for college I have been remiss in writing and I am sorry for my thoughtlessness in not having written before. I will bring you up to date now, but before you read on, please sit down. You are not to read any further unless you are sitting down, okay?
Well, then, I am getting along pretty well now. The skull fracture and the concussion I got when I jumped out the window of my dormitory when it caught fire shortly after my arrival here is pretty well healed now. I only spent two weeks in the hospital and now I can see almost normally and only get those sick headaches once a day. Fortunately, the fire in the dormitory, and my jump, was witnessed by an attendant at the gas station near the dorm, and he was the one who called the Fire Department and the Ambulance. He also visited me in the hospital and since I had nowhere to live because of the burnt out dormitory, he was kind enough to invite me to share his apartment with him. It’s really a basement room, but it’s kind of cute. He is a very kind boy and we have fallen deeply in love and are planning to get married. We haven’t got the exact date yet, but it will be before my pregnancy begins to show.
Yes Mom & Dad, I am pregnant. I know how much you are looking forward to being grandparents and I know you will welcome the baby and give it the same love and devotion and tender care you gave me when I was a child. The reason for the delay in our marriage is that my boyfriend has a minor infection which prevents us from passing our pre-marital blood tests and I carelessly caught it from him.
Now that I have brought you up to date, I want to tell you that there was no dormitory fire, I did not have concussion or skull fracture, I was not in hospital, I am not pregnant, I am not engaged, I am not infected and there is no boyfriend. However, I am getting a “D” in American History, and an “F” in Chemistry and I want you to see those marks in their proper perspective.
Your loving daughter
Sharon
This story reminds me of the economic data of late…it certainly hasn’t been great news, but taken in perspective of the negative news we had been getting – or comparing it to the news we have feared getting – the data coming out has been given a very warm welcome by the Stock market, and causing problems for the Bond market. And today’s Initial Jobless Claims number is no exception.
Colorado Foreclosure Filings Down 9.6 Percent in August from 2009
HUD has allocated a little over $17 million of the $1 billion in funding to local communities struggling to reverse the effects of the foreclosure crisis. According to RealtyTrac Colorado foreclosure filings are down 9.6 percent in August from 2009.
Thursday, September 16, 2010
13 Unique Ways to Sell a Home
For Your Clients: 13 Unique Ways to Sell a Home
By Paige Tepping
RISMEDIA, September 16, 2010--In today’s market, it takes more than painting and trimming the bushes to get noticed, to stand out, to make your home memorable. While home sellers across the country are resorting to dropping the price in order to make their home more attractive, it leads to one crucial question: what can I do differently to make my home stand out?
Larry Nusbaum, Resolution Assistance Contractor for the FDIC, offers the following tips for home sellers looking to differentiate their homes from the numerous homes that are on the market today.
1. Get lighted signage that’s illuminated even after dark. This will give prospective buyers extra time to see your home as they don’t have to depend on sunlight.
2. If you or your agent are hosting an open house, be sure to serve light snacks and hand out something that attendees will remember. You want something that will be a positive reminder of your home—seasonal gifts are the perfect way to stay top of mind. Be sure to at least have pens and key chains with your agent's name and contact information on them.
3. Create an informational flyer with all the local conveniences you can find: shopping, schools, universities, hospitals, malls, restaurants, gas stations and attractions in the area, in addition to local police and fire stations, even school bus pick up locations. Assume your open house attendees don’t know the neighborhood.
4. Hand out information pertaining to your home as well as information on the other listed properties in the area showing that your house is the best value.
5. Do some staging to make sure your home looks its best.
6. Be sure to offer incentives. Some examples include a Lowe's gift card, paying for a year’s worth of yard care or a free session with a landscape architect, offering a $1,000 landscape allowance, paying for a years worth of homeowners fees, offering $1,000 for new appliances or any home improvement, offering a new carpet allowance or paying for lawn service for a year—the possibilities are endless.
7. Paint the garage floor (concrete paint). Making the garage look fresh and clean will make the whole house feel newer.
8. Send letters to all the neighbors inviting them to “pick their neighbor,” and be sure to include information about your home and the open house. Give them an incentive to talk about your home with other individuals in their sphere of influence. (i.e. a $200 gift card if they find your buyer).
9. Put up signs in your front yard and be sure to hang up as many directional signs as the neighborhood allows.
10. Put out flyers in surrounding shopping areas.
11. Have your agent create a video of your home and put the virtual tour on the Web.
12. Have your agent post ads on Craigslist and on any other free online listing sites you can find.
13. E-mail HR departments at local companies as many employees prefer to live close to their jobs but don’t make time for the house hunting process. This will make it easy for employees to find your home.
By Paige Tepping
RISMEDIA, September 16, 2010--In today’s market, it takes more than painting and trimming the bushes to get noticed, to stand out, to make your home memorable. While home sellers across the country are resorting to dropping the price in order to make their home more attractive, it leads to one crucial question: what can I do differently to make my home stand out?
Larry Nusbaum, Resolution Assistance Contractor for the FDIC, offers the following tips for home sellers looking to differentiate their homes from the numerous homes that are on the market today.
1. Get lighted signage that’s illuminated even after dark. This will give prospective buyers extra time to see your home as they don’t have to depend on sunlight.
2. If you or your agent are hosting an open house, be sure to serve light snacks and hand out something that attendees will remember. You want something that will be a positive reminder of your home—seasonal gifts are the perfect way to stay top of mind. Be sure to at least have pens and key chains with your agent's name and contact information on them.
3. Create an informational flyer with all the local conveniences you can find: shopping, schools, universities, hospitals, malls, restaurants, gas stations and attractions in the area, in addition to local police and fire stations, even school bus pick up locations. Assume your open house attendees don’t know the neighborhood.
4. Hand out information pertaining to your home as well as information on the other listed properties in the area showing that your house is the best value.
5. Do some staging to make sure your home looks its best.
6. Be sure to offer incentives. Some examples include a Lowe's gift card, paying for a year’s worth of yard care or a free session with a landscape architect, offering a $1,000 landscape allowance, paying for a years worth of homeowners fees, offering $1,000 for new appliances or any home improvement, offering a new carpet allowance or paying for lawn service for a year—the possibilities are endless.
7. Paint the garage floor (concrete paint). Making the garage look fresh and clean will make the whole house feel newer.
8. Send letters to all the neighbors inviting them to “pick their neighbor,” and be sure to include information about your home and the open house. Give them an incentive to talk about your home with other individuals in their sphere of influence. (i.e. a $200 gift card if they find your buyer).
9. Put up signs in your front yard and be sure to hang up as many directional signs as the neighborhood allows.
10. Put out flyers in surrounding shopping areas.
11. Have your agent create a video of your home and put the virtual tour on the Web.
12. Have your agent post ads on Craigslist and on any other free online listing sites you can find.
13. E-mail HR departments at local companies as many employees prefer to live close to their jobs but don’t make time for the house hunting process. This will make it easy for employees to find your home.
Wednesday, September 15, 2010
26% Of Homeowners Cut Their Asking Price This Month
Some poor news for the Housing market…26% of homeowners cut their asking price this month, representing the third consecutive month of price cuts, and matching the highest number of "slashers" since October 2009.
Tuesday, September 14, 2010
Forbes Article Says Colorado is One of Top Markets for Investors
But investors aren't just looking at the jobs picture, and neither should families seeking promising cities in which to live. One of the characteristics of a city poised for a comeback is a population that was booming before tough economic times made relocating difficult for most Americans. Raleigh saw its population expand by 18% in the first half of the last decade, and McAllen and Austin each had 16% population growth during those five years.
That's the story for other cities on the list, like Nashville, Tenn. It had a 10% population surge. San Antonio, Texas; Colorado Springs, Co.; and Albuquerque, N.M., all on the list, grew by 9% each before the downturn hit.
"These are markets that in the past year have had sharp turndowns but we think they have longer-term potential," says Wizner. "Markets with longer-term prospects in general have had above-average population growth between 2000 and 2005."
That's the story for other cities on the list, like Nashville, Tenn. It had a 10% population surge. San Antonio, Texas; Colorado Springs, Co.; and Albuquerque, N.M., all on the list, grew by 9% each before the downturn hit.
"These are markets that in the past year have had sharp turndowns but we think they have longer-term potential," says Wizner. "Markets with longer-term prospects in general have had above-average population growth between 2000 and 2005."
The Way Warren Buffett Sees It
September 2010.
BUTTE, MONT.» Warren Buffett ruled out a second recession in the U.S. and said businesses owned by his Berkshire Hathaway are growing. “I am a huge bull on this country,” Buffett said Monday in remarks to the Montana Economic Development Summit. “We will not have a double-dip recession at all. I see our businesses coming back almost across the board.”
BUTTE, MONT.» Warren Buffett ruled out a second recession in the U.S. and said businesses owned by his Berkshire Hathaway are growing. “I am a huge bull on this country,” Buffett said Monday in remarks to the Montana Economic Development Summit. “We will not have a double-dip recession at all. I see our businesses coming back almost across the board.”
Shanahan pal takes hit on coach’s digs
Former Broncos coach Mike Shanahan’s former Cherry Hills mansion sold last week for $7 million — a $10 million discount off the original asking price.
The Shanahans sold the six-bedroom, nine-bath 17,850-square-foot home at 20 Cherry Hills Park Drive in January 2007 for $16 million. The buyer was Cherry Hills LLC, headed by Steve Mooney, a Shanahan pal and a partner in the coach’s namesake restaurant in the Tech Center. Mooney’s group took the $9 million hit.
Mike and Peggy Shanahan originally sold the home to concentrate on building a 30,000-square-foot mega mansion not far from the old abode.
The Shanahans leased back the 20 Cherry Hills Park place and lived there while the new pad was being built.
The listing and selling agent was Sandy Weigand of the Kent-wood Co., who declined to talk about the sellers or the new buyers because of confidentiality agreements. She did say, however, that the Shanahans, who have a second home in Wash- ington, D.C., where Mike Shanahan now coaches the Redskins, have no intention of selling their new Cherry Hills digs.
The Shanahans sold the six-bedroom, nine-bath 17,850-square-foot home at 20 Cherry Hills Park Drive in January 2007 for $16 million. The buyer was Cherry Hills LLC, headed by Steve Mooney, a Shanahan pal and a partner in the coach’s namesake restaurant in the Tech Center. Mooney’s group took the $9 million hit.
Mike and Peggy Shanahan originally sold the home to concentrate on building a 30,000-square-foot mega mansion not far from the old abode.
The Shanahans leased back the 20 Cherry Hills Park place and lived there while the new pad was being built.
The listing and selling agent was Sandy Weigand of the Kent-wood Co., who declined to talk about the sellers or the new buyers because of confidentiality agreements. She did say, however, that the Shanahans, who have a second home in Wash- ington, D.C., where Mike Shanahan now coaches the Redskins, have no intention of selling their new Cherry Hills digs.
Five Points plan seeks unified vision-The historic neighborhood is being redeveloped, but plans have sparked some debate
By Colleen O’Connor
The Denver Post
Community groups focused on the development of a master plan to give Five Points an economic jump-start are hoping a series of community meetings will help create a vision for the historic Denver neighborhood’s future.
Impetus for the action on the Welton Street Marketplace — a 10-block corridor between 20th and Downing streets — gained traction in April when Gov. Bill Ritter signed an executive order that named Five Points as a pilot community for the new Sustainable Main Streets Initiative.
The process is not without disagreement and debate. Some black elders fear that newcomers to the neighborhood will disrespect the historic character of the legendary African-American neighborhood, once called the Harlem of the West.
Even the phrase Welton Street Corridor can raise hackles because Five Points — and the cultural associations that go with that name — appears to have been overlooked.
One of the hottest issues, however, is dog parks, said Lisa Calderon at a recent community meeting.
“Some of the black elders don’t want to have your dog come up and sniff them, because (once) dogs were sicced on them,” she said. “There is cultural consideration involved.”
At the Sept. 1 meeting, which was peaceful and productive, people broke into small groups to discuss what should — and shouldn’t — be changed.
Keeping the “historical jazz nature” of the corridor was a necessity named by all groups.
The biggest problem was that only a few African-Americans attended, said Wil Alston, executive director of the Five Points Business District.
Only about five of an estimated 50 people were African-American, and Alston is working with community leaders on getting more African-Americans involved.
Meanwhile, about 11,000 community surveys have been distributed to gain more community input. That survey will close on Sept. 30.
The Denver Post
Community groups focused on the development of a master plan to give Five Points an economic jump-start are hoping a series of community meetings will help create a vision for the historic Denver neighborhood’s future.
Impetus for the action on the Welton Street Marketplace — a 10-block corridor between 20th and Downing streets — gained traction in April when Gov. Bill Ritter signed an executive order that named Five Points as a pilot community for the new Sustainable Main Streets Initiative.
The process is not without disagreement and debate. Some black elders fear that newcomers to the neighborhood will disrespect the historic character of the legendary African-American neighborhood, once called the Harlem of the West.
Even the phrase Welton Street Corridor can raise hackles because Five Points — and the cultural associations that go with that name — appears to have been overlooked.
One of the hottest issues, however, is dog parks, said Lisa Calderon at a recent community meeting.
“Some of the black elders don’t want to have your dog come up and sniff them, because (once) dogs were sicced on them,” she said. “There is cultural consideration involved.”
At the Sept. 1 meeting, which was peaceful and productive, people broke into small groups to discuss what should — and shouldn’t — be changed.
Keeping the “historical jazz nature” of the corridor was a necessity named by all groups.
The biggest problem was that only a few African-Americans attended, said Wil Alston, executive director of the Five Points Business District.
Only about five of an estimated 50 people were African-American, and Alston is working with community leaders on getting more African-Americans involved.
Meanwhile, about 11,000 community surveys have been distributed to gain more community input. That survey will close on Sept. 30.
Thirty-Year Mortgage Rises for First Time Since June
Mortgage news:
Thirty-Year Mortgage Rises for First Time Since June
The Wall Street Journal, By Amy Hoak
September 10, 2010
After weeks of falling, the average interest rate on a 30-year fixed-rate home mortgage rose slightly this week, according to Freddie Mac's weekly survey. And the rate on a 15-year fixed-rate mortgage was unchanged.
"While overall employment was down in August, private nonfarm payrolls rose more than the market consensus forecast, and the prior two months' employment figures were revised up," said Frank Nothaft, vice president and chief economist at Freddie Mac, in a statement. "This somewhat sanguine report had a mixed effect on mortgage rates this week, with the 30-year fixed rate nudged up but the 15-year fixed rate unchanged."
The rate on a 30-year fixed-rate mortgage averaged 4.35% for the week ended Sept. 9, up from 4.32% last week. It averaged 5.07% a year ago. It is the first time the rate has risen since the week ended June 17.
Meanwhile, the rate on a 15-year fixed-rate mortgage was 3.83%, remaining at its record low, set last week. It was 4.5% a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages were 3.56%, down from 3.54% last week and 4.51% a year ago. One-year Treasury-indexed ARMs were 3.46%, down from 3.5% last week and 4.64% a year ago
Thirty-Year Mortgage Rises for First Time Since June
The Wall Street Journal, By Amy Hoak
September 10, 2010
After weeks of falling, the average interest rate on a 30-year fixed-rate home mortgage rose slightly this week, according to Freddie Mac's weekly survey. And the rate on a 15-year fixed-rate mortgage was unchanged.
"While overall employment was down in August, private nonfarm payrolls rose more than the market consensus forecast, and the prior two months' employment figures were revised up," said Frank Nothaft, vice president and chief economist at Freddie Mac, in a statement. "This somewhat sanguine report had a mixed effect on mortgage rates this week, with the 30-year fixed rate nudged up but the 15-year fixed rate unchanged."
The rate on a 30-year fixed-rate mortgage averaged 4.35% for the week ended Sept. 9, up from 4.32% last week. It averaged 5.07% a year ago. It is the first time the rate has risen since the week ended June 17.
Meanwhile, the rate on a 15-year fixed-rate mortgage was 3.83%, remaining at its record low, set last week. It was 4.5% a year ago. Five-year Treasury-indexed hybrid adjustable-rate mortgages were 3.56%, down from 3.54% last week and 4.51% a year ago. One-year Treasury-indexed ARMs were 3.46%, down from 3.5% last week and 4.64% a year ago
Thursday, September 9, 2010
Changes to FHA
FHA Changes - AGAIN!
Author: Diego Quintero
Published: August 27, 2010 at 6:04 pm
On September 7th, the Federal Housing Administration will make yet another change to Mortgage Insurance Premiums. It can be considered a change for the worse, but I consider it a positive change for a couple of reasons.
A few months ago, the FHA increased mortgage insurance premiums during the time period where the tax benefit was in full force. These changes may have slowed the momentum of home-buying that the tax benefit was producing and may have thwarted buyers. The sales were great during the tax benefit, but this may have been counterproductive.
So while the tax benefit has ended, a new plan must be implemented to allow the market more incentive to buy real estate. This new plan enables home buyers to pay a 1% Mortgage Insurance Premium Funding Fee (MIP/FF) and pay a monthly premium of .90%, as opposed to the 2.25% (MIP/FF) and .55% (Monthly Premium). It’s less expensive up-front, more expensive on a monthly basis, but beneficial overall.
What does this look like in real numbers? Well, a $100,000 loan amount would yield a MIP/FF of $1000 versus $2500. Additionally, the monthly mortgage premium would be $45.83 with the current premium but increased to $75 when the new premium is implemented. So, how do I view the benefits of these changes?
The stabilization of the FHA is paramount to enable new home buyers to purchase homes with a low down payment. Providing the FHA with a few months of receiving the 2.25% up-front MIP, allowed the cash flow for the agency to increase substantially while the tax incentive was in full force. The new decrease of the MIP/FF to 1% will decrease the cash flow, but prove to make the agency more money in the long run, as the monthly premium is almost double. The FHA is banking on home owners to stay put and own a home for a long while.
How do you get out of paying the monthly premium? Homeowners can remove mortgage insurance when the home loan is 78% or less than the home value. Since it will be tougher to remove the mortgage insurance due to a slower economic upturn, the FHA will be banking on the money for quite some time, further increasing their cash position, and enabling their programs to be offered to many more home buyers.
The equity position of a new home buyer is better than in the past, for obvious reasons. A new home buyer utilizing FHA finance must provide 3.5% of a down payment as a minimum investment. When you wrap in the old 2.25% (MIP/FF) the new home buyer was sitting on a mere 1.25% equity position. As far as closing costs are concerned, this is the only fee that can be wrapped in, and actually increase the loan amount. So, we can all see that a 1% (MIP/FF) will enable home buyers to have a better equity position from day one of home ownership (2.5% equity position). Although not much, it’s better!
Find out more info on FHA and their recent changes at www.hud.gov. If you have questions and do not wish to wait on recorded lines, remember that your local mortgage consultant will have the answers as well.
Read more: http://technorati.com/business/finance/article/fha-changes-again/page-2/#ixzz0z4tgDlIZ
Read more: http://technorati.com/business/finance/article/fha-changes-again/#ixzz0z4tO7XYd
Author: Diego Quintero
Published: August 27, 2010 at 6:04 pm
On September 7th, the Federal Housing Administration will make yet another change to Mortgage Insurance Premiums. It can be considered a change for the worse, but I consider it a positive change for a couple of reasons.
A few months ago, the FHA increased mortgage insurance premiums during the time period where the tax benefit was in full force. These changes may have slowed the momentum of home-buying that the tax benefit was producing and may have thwarted buyers. The sales were great during the tax benefit, but this may have been counterproductive.
So while the tax benefit has ended, a new plan must be implemented to allow the market more incentive to buy real estate. This new plan enables home buyers to pay a 1% Mortgage Insurance Premium Funding Fee (MIP/FF) and pay a monthly premium of .90%, as opposed to the 2.25% (MIP/FF) and .55% (Monthly Premium). It’s less expensive up-front, more expensive on a monthly basis, but beneficial overall.
What does this look like in real numbers? Well, a $100,000 loan amount would yield a MIP/FF of $1000 versus $2500. Additionally, the monthly mortgage premium would be $45.83 with the current premium but increased to $75 when the new premium is implemented. So, how do I view the benefits of these changes?
The stabilization of the FHA is paramount to enable new home buyers to purchase homes with a low down payment. Providing the FHA with a few months of receiving the 2.25% up-front MIP, allowed the cash flow for the agency to increase substantially while the tax incentive was in full force. The new decrease of the MIP/FF to 1% will decrease the cash flow, but prove to make the agency more money in the long run, as the monthly premium is almost double. The FHA is banking on home owners to stay put and own a home for a long while.
How do you get out of paying the monthly premium? Homeowners can remove mortgage insurance when the home loan is 78% or less than the home value. Since it will be tougher to remove the mortgage insurance due to a slower economic upturn, the FHA will be banking on the money for quite some time, further increasing their cash position, and enabling their programs to be offered to many more home buyers.
The equity position of a new home buyer is better than in the past, for obvious reasons. A new home buyer utilizing FHA finance must provide 3.5% of a down payment as a minimum investment. When you wrap in the old 2.25% (MIP/FF) the new home buyer was sitting on a mere 1.25% equity position. As far as closing costs are concerned, this is the only fee that can be wrapped in, and actually increase the loan amount. So, we can all see that a 1% (MIP/FF) will enable home buyers to have a better equity position from day one of home ownership (2.5% equity position). Although not much, it’s better!
Find out more info on FHA and their recent changes at www.hud.gov. If you have questions and do not wish to wait on recorded lines, remember that your local mortgage consultant will have the answers as well.
Read more: http://technorati.com/business/finance/article/fha-changes-again/page-2/#ixzz0z4tgDlIZ
Read more: http://technorati.com/business/finance/article/fha-changes-again/#ixzz0z4tO7XYd
Tuesday, September 7, 2010
Mile High City is One of Least Stressed Out Nationwide
Take it easy; we’re in Denver
Survey finds the Mile High City is one of America’s least-stressed-out
By William Porter
The Denver Post
The news might stun our forebears, who braved blizzards, stampedes, gunfights and tobacco spittoons to found Denver, but our city has just been rated one of America’s most stress-free burgs.
We rank seventh on the list, sandwiched between Oklahoma City and San Antonio. The survey was sponsored by Portfolio.com , a business-news website.
Indicators used include unemployment rates, personal financial data, environmental factors, health risks, crime rates and living standards.
“This study shows that a healthy and relatively low-stress life can be achieved in at least a few urban areas,” said J. Jennings Moss, Portfolio.com ’s editor. “Looking at the Denver numbers, I see that you’ve got great sunshine and you don’t kill each other, which is nice.”
Although maybe not Detroit, billed as the most stressful city, followed by Los Angeles. Cleveland comes in third, although it’s unknown whether the survey was compiled before or after hoopster LeBron James decamped to Miami.
Salt Lake City ranks as the least stressful city, even without extra points for its nice yards and full pantries.
Some of the survey rankings are eyebrow-raisers.
Phoenix is 10th on the list of least-stressful cities. This despite scorching heat, jammed freeways, crazy politics and a kidnapping rate that makes the town look like a northern suburb of Bogotá, Colombia.
So the next time you walk out into a high-plains hailstorm or find a bear breaking into your car, which has been immobilized with a Denver boot, remember: We live in a low-stress city.
William Porter: 303-954-1877 or wporter@denverpost.com
Survey finds the Mile High City is one of America’s least-stressed-out
By William Porter
The Denver Post
The news might stun our forebears, who braved blizzards, stampedes, gunfights and tobacco spittoons to found Denver, but our city has just been rated one of America’s most stress-free burgs.
We rank seventh on the list, sandwiched between Oklahoma City and San Antonio. The survey was sponsored by Portfolio.com , a business-news website.
Indicators used include unemployment rates, personal financial data, environmental factors, health risks, crime rates and living standards.
“This study shows that a healthy and relatively low-stress life can be achieved in at least a few urban areas,” said J. Jennings Moss, Portfolio.com ’s editor. “Looking at the Denver numbers, I see that you’ve got great sunshine and you don’t kill each other, which is nice.”
Although maybe not Detroit, billed as the most stressful city, followed by Los Angeles. Cleveland comes in third, although it’s unknown whether the survey was compiled before or after hoopster LeBron James decamped to Miami.
Salt Lake City ranks as the least stressful city, even without extra points for its nice yards and full pantries.
Some of the survey rankings are eyebrow-raisers.
Phoenix is 10th on the list of least-stressful cities. This despite scorching heat, jammed freeways, crazy politics and a kidnapping rate that makes the town look like a northern suburb of Bogotá, Colombia.
So the next time you walk out into a high-plains hailstorm or find a bear breaking into your car, which has been immobilized with a Denver boot, remember: We live in a low-stress city.
William Porter: 303-954-1877 or wporter@denverpost.com
Computer Software Programs Helping Buyers Find Foreclosures
Startups help buyers find foreclosures
Software firms mine the data stream from counties and listings.
By Tom LaRocque Special to The Denver Post
Every week, real estate investors dart all over Denver seeking distressed properties to buy at bargain prices. Their efforts culminate with the weekly foreclosure auction at the Webb municipal building.
Similar scenes play out in counties across Colorado, where collectively, hundreds of foreclosed properties are identified on Monday or Tuesday, then sold to investors or seized by lenders on Wednesday or Thursday.
For serious property investors, the need for speed is never greater than in the two or three days preceding a foreclosure auction.
Two Denver startups offer subscription software to help investors streamline the search for properties. The firms are direct competitors, focused on metro Denver, but with designs on expanding beyond Colorado.
Renav.com was created by Matt Buettner and Neil Bodo, both former IT professionals who teamed up initially to buy real estate. Most of their prospects came from county foreclosure lists and Multiple Listing Services.
Renav was joined last year by Aaron Lebovic, an investor from Chicago. A fourth partner, Brent Hicken, came aboard when his company, Fast Property Data, merged with Renav.
“We started with a spreadsheet and some basic tools for retrieving data from the counties,” said Buettner. The team grew Renav into a “visualization-rich” interactive site that now pulls in and processes public information from 16 Colorado counties.
Renav’s first client was a Golden-based team of investors. Dean Myerson, Jerrod Johnson and Kevin Smith use it to scour investment opportunities, mainly in Jefferson County.
Renav “saves us a ton of time,” said Myerson, formerly a corporate property development manager. “The key to success at the auctions is doing your homework.”
The rival to Renav is Ironscope .com , launched this year by investor Ryan Lantz and attorney Alex Volpe. In its earliest incarnation, the service was accessible only to a handful of investors. Some paid $5,000 a month for the privilege, Lantz said. Both firms now offer subscriptions at multiple levels starting around $50 monthly.
“We changed our model so we could serve and interact with a very large number of investors,” he said. The populist push was propelled in part by competition from Renav, he admits.
Ironscope hired a contract software developer while concentrating on its real estate business. Lantz and Volpe have closed more than 200 property purchases around Denver, they say.
An Ironscope user chooses a range of upcoming auction dates, and then narrows the search. By specifying the minimum equity, for example, the investor can find properties where the required bid is low relative to the county assessed value. Renav has similar abilities.
Lone Tree real estate broker Yan Kaminski of Metro Brokers Elite Realty Group in Lone Tree has become a fan of Ironscope’s technology.
“I use it to find listings of short-sale properties. I look for properties where the deficiency isn’t too excessive, and for certain lenders that are better to deal with. It’s gotten me at least 12 to 15 listings in the past six months,” he said.
Software firms mine the data stream from counties and listings.
By Tom LaRocque Special to The Denver Post
Every week, real estate investors dart all over Denver seeking distressed properties to buy at bargain prices. Their efforts culminate with the weekly foreclosure auction at the Webb municipal building.
Similar scenes play out in counties across Colorado, where collectively, hundreds of foreclosed properties are identified on Monday or Tuesday, then sold to investors or seized by lenders on Wednesday or Thursday.
For serious property investors, the need for speed is never greater than in the two or three days preceding a foreclosure auction.
Two Denver startups offer subscription software to help investors streamline the search for properties. The firms are direct competitors, focused on metro Denver, but with designs on expanding beyond Colorado.
Renav.com was created by Matt Buettner and Neil Bodo, both former IT professionals who teamed up initially to buy real estate. Most of their prospects came from county foreclosure lists and Multiple Listing Services.
Renav was joined last year by Aaron Lebovic, an investor from Chicago. A fourth partner, Brent Hicken, came aboard when his company, Fast Property Data, merged with Renav.
“We started with a spreadsheet and some basic tools for retrieving data from the counties,” said Buettner. The team grew Renav into a “visualization-rich” interactive site that now pulls in and processes public information from 16 Colorado counties.
Renav’s first client was a Golden-based team of investors. Dean Myerson, Jerrod Johnson and Kevin Smith use it to scour investment opportunities, mainly in Jefferson County.
Renav “saves us a ton of time,” said Myerson, formerly a corporate property development manager. “The key to success at the auctions is doing your homework.”
The rival to Renav is Ironscope .com , launched this year by investor Ryan Lantz and attorney Alex Volpe. In its earliest incarnation, the service was accessible only to a handful of investors. Some paid $5,000 a month for the privilege, Lantz said. Both firms now offer subscriptions at multiple levels starting around $50 monthly.
“We changed our model so we could serve and interact with a very large number of investors,” he said. The populist push was propelled in part by competition from Renav, he admits.
Ironscope hired a contract software developer while concentrating on its real estate business. Lantz and Volpe have closed more than 200 property purchases around Denver, they say.
An Ironscope user chooses a range of upcoming auction dates, and then narrows the search. By specifying the minimum equity, for example, the investor can find properties where the required bid is low relative to the county assessed value. Renav has similar abilities.
Lone Tree real estate broker Yan Kaminski of Metro Brokers Elite Realty Group in Lone Tree has become a fan of Ironscope’s technology.
“I use it to find listings of short-sale properties. I look for properties where the deficiency isn’t too excessive, and for certain lenders that are better to deal with. It’s gotten me at least 12 to 15 listings in the past six months,” he said.
Monday, September 6, 2010
Foreclosures Dip 5 Percent in First Half of Year
MIAMI, Fla., Aug. 10 (SEND2PRESS NEWSWIRE) -- Foreclosure Listings Nationwide, a leading provider of foreclosure listings and foreclosure investment information, announced a nationwide 5% decrease in foreclosure properties over the past six months. Much of the decrease occurred during the second quarter of 2010, when foreclosures fell 4% from the previous quarter and were up only 1% from the second quarter of 2009.
With a total of 1,654,630 properties entering some stage of the foreclosure process from January 1 to June 31, the mid-year statistics show a slowing trend over the first part of the year, and a year over year decrease of almost 7% from June of 2009. But experts warn buyers not to read into the statistics as the end of the foreclosure trend.
"We're seeing a decline in foreclosure rates not because the market is repairing itself, but because banks are providing homeowners more time to pay off their debts before a foreclosure occurs in order to slow the trend," remarks Jason Gallagher, a business analyst with Foreclosure Listings Nationwide. "This basically means we're not seeing as many new foreclosure properties. But we are seeing many existing foreclosure properties moving out of the foreclosure limbo stage into repossession by banks."
According to statistics, bank repossessions did increase roughly 5% during the second quarter, and have increased by an astounding 38% since the second quarter of 2009.
"There are a huge backlog of REO and bank owned homes right now, and banks are going to be eager to get them off their hands fast," says Mr. Gallagher. "That means low prices for buyers and investors, especially in places like Nevada, California and Florida."
Nevada still tops the nation with 1 in every 17 homes entering some stage of the foreclosure process during the first 6 months of 2010. Remarkably, this number is still down 6% from the same period of 2009. Arizona had the second highest rate, with 1 in 30 homes. Florida came in third with 1 in 32 homes. Other states with some of the highest foreclosure rates during this period were Utah, Michigan, Idaho and Colorado.
Among states with the highest foreclosure volume totals, California was the clear leader with over 344,750 foreclosure properties. Florida had 277,000, and Arizona was in third with roughly 91,500. Close behind were Illinois, Michigan, Georgia, Texas, Nevada and Ohio.
For more information on foreclosure investing and to browse listings for REO and other foreclosure properties, visit www.ForeclosureListingsNationwide.com.
NEWS SOURCE: Foreclosure Listings Nationwide
With a total of 1,654,630 properties entering some stage of the foreclosure process from January 1 to June 31, the mid-year statistics show a slowing trend over the first part of the year, and a year over year decrease of almost 7% from June of 2009. But experts warn buyers not to read into the statistics as the end of the foreclosure trend.
"We're seeing a decline in foreclosure rates not because the market is repairing itself, but because banks are providing homeowners more time to pay off their debts before a foreclosure occurs in order to slow the trend," remarks Jason Gallagher, a business analyst with Foreclosure Listings Nationwide. "This basically means we're not seeing as many new foreclosure properties. But we are seeing many existing foreclosure properties moving out of the foreclosure limbo stage into repossession by banks."
According to statistics, bank repossessions did increase roughly 5% during the second quarter, and have increased by an astounding 38% since the second quarter of 2009.
"There are a huge backlog of REO and bank owned homes right now, and banks are going to be eager to get them off their hands fast," says Mr. Gallagher. "That means low prices for buyers and investors, especially in places like Nevada, California and Florida."
Nevada still tops the nation with 1 in every 17 homes entering some stage of the foreclosure process during the first 6 months of 2010. Remarkably, this number is still down 6% from the same period of 2009. Arizona had the second highest rate, with 1 in 30 homes. Florida came in third with 1 in 32 homes. Other states with some of the highest foreclosure rates during this period were Utah, Michigan, Idaho and Colorado.
Among states with the highest foreclosure volume totals, California was the clear leader with over 344,750 foreclosure properties. Florida had 277,000, and Arizona was in third with roughly 91,500. Close behind were Illinois, Michigan, Georgia, Texas, Nevada and Ohio.
For more information on foreclosure investing and to browse listings for REO and other foreclosure properties, visit www.ForeclosureListingsNationwide.com.
NEWS SOURCE: Foreclosure Listings Nationwide
Wednesday, September 1, 2010
Who's Your Lender?
By Holly Alred | 20 August 2010 @ 08:11 am EDT
Understanding little-known differences among mortgage origination companies will help you serve your clients better.
A lot of my friends in the real estate business come to me with this question: "Where can my buyers go to find the lowest interest rate?"
Considering that I spent more than a decade working as a loan originator, and years before that in real estate sales, you'd think I could give them a clear-cut answer. Maybe I would have, a few years ago.
But today, I tell these friends they're asking the wrong question. Their prime concern should not be getting the lowest interest rate but rather finding a lender who'll approve their customer's loan.
A short time ago, a borrower with almost any credit profile could go into almost any mortgage broker and find a loan. All he or she needed was the motivation to buy. Clearly, this is not the case now. The current mortgage market and its guidelines are quite fluid.
That's why you need to know the differences between the three basic types of mortgage origination companies: banks, brokers, and correspondents. Even with the creation of an overarching consumer financial protection bureau, each type of lender follows different laws about what must be disclosed and each is overseen by a different regulatory agency.
To help your customers get approved for a loan, you have to know the best place for them to go.
Banks. Though there are exceptions, these institutions typically have underwriters on staff and close loans with their own money and in their own name. Their employees receive a base salary, which can make for less pressure and aggressiveness.
But since they work banker's hours, they might not be available if clients need something at 3 p.m. on Sunday. Banks don't have to disclose yield (the additional profit created by hiking the interest on a loan above market rate). Banks often have niche products for borrowers with a unique purchase-for example, manufactured homes or home construction. Every bank will have its own minimum credit score requirement.
Brokers. These guys get a bad rap, but their business is very transparent in this market and they're highly regulated. Under the recent Wall Street reform, the law pertaining to brokers is even more consumer-friendly. With respect to compensation, they can collect yield or an origination fee, but not both. They work on commission and make a little more than the bankers.
Brokers will compile your file and present it to a bank or other investor, and this can take more time since they're shipping the file to a third party. They charge more fees and often have higher credit score requirements than banks due to a concept called "layering"-typically, a bank's minimum credit score will be 20 or 40 points lower than that of the brokers who wholesale to them.
So if your customer's credit score is below 620, he or she shouldn't start shopping at a broker.
Correspondents. The company structure of correspondent lenders is almost a secret; even the brightest of people have a hard time knowing if they're dealing with a correspondent. Rather than using their own money to extend mortgages, as banks do, correspondent lenders draw from their credit lines (often called warehouse lines).
Within days of closing, sometimes hours, they sell the mortgage. Their ability to lend is subject to their credit line limits. If they have more loans to close than they have funds, loans can be delayed or declined for no apparent reason to the borrower. Correspondents don't have to disclose yield, but because layering is in effect, credit score requirements may be higher than at banks.
I'll be the first to admit that it's not easy to understand these differences. But that knowledge is crucial. If you or your clients don't know if a lender is a bank, broker, or correspondent, just ask. And if the loan is declined, find out why. Know your customer's financial profile and transaction needs, and learn about the lenders that are in your market.
Understanding little-known differences among mortgage origination companies will help you serve your clients better.
A lot of my friends in the real estate business come to me with this question: "Where can my buyers go to find the lowest interest rate?"
Considering that I spent more than a decade working as a loan originator, and years before that in real estate sales, you'd think I could give them a clear-cut answer. Maybe I would have, a few years ago.
But today, I tell these friends they're asking the wrong question. Their prime concern should not be getting the lowest interest rate but rather finding a lender who'll approve their customer's loan.
A short time ago, a borrower with almost any credit profile could go into almost any mortgage broker and find a loan. All he or she needed was the motivation to buy. Clearly, this is not the case now. The current mortgage market and its guidelines are quite fluid.
That's why you need to know the differences between the three basic types of mortgage origination companies: banks, brokers, and correspondents. Even with the creation of an overarching consumer financial protection bureau, each type of lender follows different laws about what must be disclosed and each is overseen by a different regulatory agency.
To help your customers get approved for a loan, you have to know the best place for them to go.
Banks. Though there are exceptions, these institutions typically have underwriters on staff and close loans with their own money and in their own name. Their employees receive a base salary, which can make for less pressure and aggressiveness.
But since they work banker's hours, they might not be available if clients need something at 3 p.m. on Sunday. Banks don't have to disclose yield (the additional profit created by hiking the interest on a loan above market rate). Banks often have niche products for borrowers with a unique purchase-for example, manufactured homes or home construction. Every bank will have its own minimum credit score requirement.
Brokers. These guys get a bad rap, but their business is very transparent in this market and they're highly regulated. Under the recent Wall Street reform, the law pertaining to brokers is even more consumer-friendly. With respect to compensation, they can collect yield or an origination fee, but not both. They work on commission and make a little more than the bankers.
Brokers will compile your file and present it to a bank or other investor, and this can take more time since they're shipping the file to a third party. They charge more fees and often have higher credit score requirements than banks due to a concept called "layering"-typically, a bank's minimum credit score will be 20 or 40 points lower than that of the brokers who wholesale to them.
So if your customer's credit score is below 620, he or she shouldn't start shopping at a broker.
Correspondents. The company structure of correspondent lenders is almost a secret; even the brightest of people have a hard time knowing if they're dealing with a correspondent. Rather than using their own money to extend mortgages, as banks do, correspondent lenders draw from their credit lines (often called warehouse lines).
Within days of closing, sometimes hours, they sell the mortgage. Their ability to lend is subject to their credit line limits. If they have more loans to close than they have funds, loans can be delayed or declined for no apparent reason to the borrower. Correspondents don't have to disclose yield, but because layering is in effect, credit score requirements may be higher than at banks.
I'll be the first to admit that it's not easy to understand these differences. But that knowledge is crucial. If you or your clients don't know if a lender is a bank, broker, or correspondent, just ask. And if the loan is declined, find out why. Know your customer's financial profile and transaction needs, and learn about the lenders that are in your market.
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