2008 has come and gone but two remaining words that prompted a lot of conversation last year were Loan and Modification. They will certainly be even more well known this year. I've learned there are a lot of misinformed people out there and most of the people who could benefit from a loan modification are not raising their hand to ask for help. It's been estimated that 7 in 10 home owners who are classified as distressed in one way or another are not getting the help they need or even know it's out there. That will most likely change in 2009 as there are so many loan modification companies claiming they can help distressed home owners when in reality they will most likely only add to the home owner's over-all debt by taking money for services that will not improve their mortgage terms. Many loan modification companies charge exorbitant fees and much of that is requested up front with no guarantee of a refund if the loan modification cannot be completed.
One misconception is that the home owner needs to be behind in their payments before qualifying for assistance. This is not true. It is much better to anticipate a future potential financial hardship and act before it takes place.
I've been able to partner with two reputable and approved loan modification companies to offer my clients a safe, money back guarantee for seeing if they can qualify for what could be a reduction in payment and no doubt an increase in peace of mind.
Tuesday, January 13, 2009
Wednesday, November 12, 2008
Bottoms Up! Attention Fence Riders
One of the most common questions I hear from my clients, friends, family, and people I meet is "So when is this market going to turn around?" I'm always hesitant to answer those questions because I'm not an economist - but the cool thing is that I work closely with some people who are. By that I mean that every bank has a team of economists that help them predict the near future to set lending policies. This is why rates fluctuate, programs come and go, and Lenders that don't do this well go out of business.
If we pay attention, these changes allow us a bit of insight into what some of the smart guys are thinking. Think about it like playing cards. Watching what your opponent does helps you to determine the strength of his or her hand.
Over the last year, all lenders eventually moved to introduce a Declining Market Policy. What does that mean? In areas of depreciating home values, they decreased the allowable amount you could borrow through each program by 5%. That meant that if a specific program allowed you to go to 100% (0 down) they would require an extra 5% (total 5% down). San Diego was just one of these areas.
That was their way of saying that they predicted that home values were going to continue to fall. In order to protect their investment, they required buyers to maintain an increased equity position in the property. We saw this policy become common amongst all levels of lending. Some banks even took this to the extreme by restricting lending to 70% or lower.
In the past week, I've received several notices form various banks that are now lifting their Declining Market Restrictions. Interpretation? This is most likely an indication that the economists working for these lenders are no longer predicting significant declines in home values. They no longer feel the need to forcefully or artificially pad their investments and are again relying on the standard program parameters to set the tone.
I'm not going to claim to be smart enough to predict something as complicated as the national housing market. I am smart enough though to keep an eye on the people who are. And when they start showing me their cards, you can be sure I'm going to pay attention. So has the housing market fully corrected? We can't be certain. However if you combine this latest indication with the increase in purchase interest, reduction in builder supply, and a slow rate increase, it tells a pretty interesting story.
If we pay attention, these changes allow us a bit of insight into what some of the smart guys are thinking. Think about it like playing cards. Watching what your opponent does helps you to determine the strength of his or her hand.
Over the last year, all lenders eventually moved to introduce a Declining Market Policy. What does that mean? In areas of depreciating home values, they decreased the allowable amount you could borrow through each program by 5%. That meant that if a specific program allowed you to go to 100% (0 down) they would require an extra 5% (total 5% down). San Diego was just one of these areas.
That was their way of saying that they predicted that home values were going to continue to fall. In order to protect their investment, they required buyers to maintain an increased equity position in the property. We saw this policy become common amongst all levels of lending. Some banks even took this to the extreme by restricting lending to 70% or lower.
In the past week, I've received several notices form various banks that are now lifting their Declining Market Restrictions. Interpretation? This is most likely an indication that the economists working for these lenders are no longer predicting significant declines in home values. They no longer feel the need to forcefully or artificially pad their investments and are again relying on the standard program parameters to set the tone.
I'm not going to claim to be smart enough to predict something as complicated as the national housing market. I am smart enough though to keep an eye on the people who are. And when they start showing me their cards, you can be sure I'm going to pay attention. So has the housing market fully corrected? We can't be certain. However if you combine this latest indication with the increase in purchase interest, reduction in builder supply, and a slow rate increase, it tells a pretty interesting story.
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