Archive for March, 2008

Home Ownership Hardship

Thursday, March 27th, 2008

There is so much going on in the housing industry that it is time for me to catch up so that our readers will not feel as if we have forgotten about them. It appears that every day for the last few weeks that I have been slammed with various projects, more and more has happened in the housing industry on many levels. I want to almost dedicate this first blog to those who are homeowners that are facing hardships. You have to understand when things begin to get tough; you might not believe you have anyone that you can reach out to. It is not true.

First and foremost, do not let your pride keep you from seeking help or answers because you think no one will understand. What I am about to share is something that I am hearing too often and it sickens me to think that people are this callous when it comes to someone asking for help. Let me explain what I mean. I have heard more than once of a person who knows they are going to have a few difficult months contacting their mortgage company saying I am going to have a few difficult months and I want to be able to pay a partial payment because I know that I am not able to make the full payment. Is there anything you can do to work with me? Then the person at the mortgage company basically saying, we cannot help you out.

Is it me or is some money better than no money? Instead since the customer believes they are no better off, they end up not making any payment because the mortgage company will not work with them and they are on the verge of foreclosure. What happened to working with the customer instead of being part of the problem? If the person did not contact the mortgage company and things started happening, I would be of the mindset maybe something is happening. In the above situation, the customer (who has had a perfect on-time record) of paying their mortgage payment contacted to say I know there is a situation can you help. What good does it serve a mortgage company to be cold-hearted?

When this family is facing foreclosure, you better believe they will share the story of how they contacted their mortgage company and they turned their back on them. They became more of the problem instead of being a part of the solution. Imagine if the mortgage company had said, yes here is what we can do to work with you. Would this client be telling everyone they know about how their mortgage company became an ally versus an enemy? With a move like they made, they became an enemy. Only thinking of themselves and not looking at the overall picture.

This truly saddens me that this is happening to people all over the United States because no doubt it is. Hmmm maybe we should stop and look at the ones that are under investigation and maybe this is part of the reason. I encourage you if you are in a situation and have contacted your mortgage company and the person on the other end seems to be a roadblock, keep calling until you get someone that will listen and take action on your behalf.

Dr. Taffy Wagner

Tightening the Reins on Mortgage Lending

Monday, March 17th, 2008

Is this supposed to be a surprise to anyone seeking to get a loan in this housing market? Seriously because almost day after day we are reading increasing stories on the number of foreclosures, the mortgage rate and even lenders. Maybe the actual fact the guidelines are being tightened is not a surprise but what they are saying is. I must admit I was stunned to find out this was happening.
I read a story that came out of Ohio that shared how the guidelines are being tightened on mortgage lending. It shared that basically due to the sharp increase in foreclosures nationwide, Fannie and Freddie are implementing tighter underwriting guidelines on approving a family for a home loan. Some changes are significant and have begun to take lenders, real estate agents and prospective homeowners by surprise.
I want to share a few of these that I know will affect homeowners: one of the biggies I would believe would be the Appraisal Guidelines. Why, because with the market being soft there is not in my opinion any way that your home could appraise at the same value today in 2008 that it might have appraised for at the end of 2006 or beginning of 2007, especially with homes in your neighborhood or area that have been foreclosed on. Foreclosure affects home owners that are not facing foreclosure because the number of foreclosures in the neighborhood brings down property value.

I remember when we were selling our home, we had the standard walk through appraisal. Now it seems, in addition to the standard walk through appraisals by a licensed appraiser, lenders now are requiring an automated valuation model which is statistical data from all the real estate sales that have taken place in that specific area. The rule now says whichever value comes in less will be the true market value. It goes on even further to say if the assigned appraiser declares your home to be in a declining market or should the new automated underwriting track your property as an area deemed to be in a declining area, the buyer cannot get 100 percent financing. I know that will affect some people.
We know that one of my favorite subjects is credit. Apparently it is one of the topics of discussion here as well.

From what I can gather, Fannie Mae and Freddie Mac’s major changes take place in March 2008 affecting how conforming mortgages are priced with an interest rate. The new guideline will (not optional) require lenders to review credit scores and down payment information before a mortgage rate can be offered. New interest rate adjustments will apply to high loan to value, low scores, cash out refinances and investment properties. Once again, credit score is important. A point that I found interesting was at the end of this story it said these changes have not affected programs from The Federal Housing Administration. In an FHA mortgage loan, the mortgage insurance is provided by the borrower and included in the loan. As I have said in previous blogs, do your research. Talk to a lender and see what your options are. If you are strictly seeking an FHA Loan, know that all lenders are not FHA approved. I cannot stress doing your due diligence enough.

Dr. Taffy Wagner

House Abandonment

Monday, March 10th, 2008

I want the readers to know from the outset that my heart goes out to people that feel this is their only option. I can imagine they feel this way because they do not believe someone has reached out to them in a manner they can understand. Let me paint this picture and you tell me how you would feel.

You are working and everything is going along well at the job. Your wife has a good job, the children are in school and it appears that everything is peachy keen. Bills are being paid on time and you have never been late. You have no idea what is about to happen. One day you go into work and they tell you, they are having company wide layoffs and you have fallen into that category. Unfortunately the layoff is effective immediately. There is no discussing it and everyone has to leave within your department. As you are leaving, you contact your wife at work to share what happened because you are absolutely stunned at this news. She says you will discuss it more tonight. You are semi-reassured thinking she will have a plan.

Later on that evening as you begin discussing the household finances to include the mortgage payment, you discover within two months you be in a financial hole without that regular income. You will not be able to pay your mortgage nor other bills. So your first thought it to begin searching for employment. However when that two month period rolls around you have not gotten a job. Now you and your wife have some choices to make. Bills are piling up and you didn’t pay all your bills from the month before. You are receiving creditor phone calls and you do not even want to answer the phone. You begin using a one credit card to pay another and juggling your bills. The next month rolls around and you are receiving calls from your mortgage lender. Instead of answering the phone or even looking at your mail, you have chosen to take no action.

Right about three months and two days, you have decided to move out in the middle of the night. You have felt like you have no choice. You were upside down on your mortgage and have felt there was not an easy option. You returned the house keys to the lender and literally walked away. I have to tell you as I was reading an article on the internet about this, there was a company that started titled Youwalkaway.com to assist people. I have to tell you I will go and read about this as well.

Before you walk out of your home make sure that you talk to a competent and reliable person within the home ownership industry. You might be surprised especially if you find out that you lender has been attempting to contact you and has viable options that assist you in keeping your home. However, you have been too afraid to answer the phone because you do not want any more bad news. You might be surprised at what you hear on the other end of the phone.

Dr. Taffy Wagner

House-Swapping – Home Ownership from A Creative Perspective

Monday, March 3rd, 2008

I must admit, I am one of those people that love creativity. What is happening with the housing market is literally forcing people to get creative. Think outside the box. If there has ever been a time, this is a good time. Why because when you think inside the box it is limiting to the way things are always done. Now, there is a world of opportunity. I was contacted by a friend and colleague who knew I was writing a mortgage blog. She briefly told me about this house-swapping story.

 

I was all too excited to go and find out about house-swapping. From what I understand, people that live in different places that have a house for sale and have not been able to sell, look for houses in the area they want to move that are for sale. You have to love modern technology. This is where the internet comes into play. You can search an online database (Domuswap.com) where people can go state by state. That is absolutely phenomenal. It also tells you how many properties available by state and then it shows you in the different cities or counties.

 

Even in this transaction, a realtor has to be used. What each party should agree is to utilize the same realtor which in return reduces fees. The realtor should be willing to work with lowering their fees or commission based on the transaction taking place. If the properties are of equal value it is a swap, if they are not there is some cash exchanged. I have to say, I would have to and see the property to make sure it would be conducive to my needs. Why do I say that? You do not get to choose your own furnishings and all those things. However, at the end of the day you also do not have that expense. Not necessarily a huge moving cost either. The more I write about this, it keeps getting better and better to me.

 

This could definitely solve those moves that need to happen quick due to job relocation, or even health concerns. If you are someone that has a house that has been on the market for a while and have not had any luck, I think this would be an option worth considering. Let your fingers do the walking and see if someone is looking for a home like yours.

 

We have looked at the advantages, are there disadvantages to this equation? The only questions which might not be disadvantages are the following: I would want to know about the neighborhood and school system. Something that came to mind is how do the utilities and other bills get handled that belong to the property. When you do a house swap, do you do it for a set period of time? Find out all the particulars before you do a house-swap.

 

Think about it, house-swapping is bartering coming back to life. Not that it has been non-existent in some fashion. However, I think it is being revived on a much larger scale.

 

Dr. Taffy Wagner