by Jammer
posted May 17, 2008
 Jammer |
Brian asks: “word of mouth out here in Apison is local banks are refusing
to fund new construction..are u aware of any lending freeze?”..A: there's no “freeze out” going on, however each institution has alloted “purchase money” and have portfolios of lenders who will buy that loan from them..most banks cherrypick the loans they want and they will lean toward those with very little risk factor...
Matt asks: “What exactly is an origination fee? Is it usually 1%? Can
Mark asks: “Has anyone filed a class action suit against Countrywide?
One cannot get any information or calls returned. They even set up an
escrow on my account saying my insurance lapsed and didn't even contact me. State Farm proved them wrong on that but it still took weeks to get that escrow removed..”..A: no class action suit, though Countrywide's solvency has been well documented. They closed some 3,500 retail offices nationwide, have sold off parts of their divisions to Bank Of America, but they are still a major player in the investment markets today. Mark brings up a great point though about the insurance lapse...if you do not set up escrows from the beginning of the loan it is imperative that a homeowner stay on top of renewing the policy timely.
All lenders put a clause in the closing papers regarding any lapse in insurance allowing them to escrow and collect insurance if you don't. That house is “their baby” first, until you pay off the mortgage so they're going to protect their interest if you fail to. Your story is far too common however with regards to lack of customer relations and all lenders seem to “scream” when the occasion arises, but dirt napping when you can prove them wrong and try to clear up the misunderstanding!
Tommy asks: “I would like info and opinion on selling my 2nd house. I tried selling it once 4 years ago but the bottom has fallen out lately, so should I sell or just keep renting it out?”..A: You have options here. If that home is in a depressed area, a zip code with high foreclosure rates, your appraisal value may be less today or any value given could be reduced in underwriting at the lender. Tommy be glad you have a renter in the home now to recover your mortgage costs! One option might be to sell to the renter. If they've got 12 months consecutive rent checks and an option to buy the home, they can buy the home based on current appraisal value and hopefully the price agreed upon by all parties will make the deal work. The renter must qualify within any program guidelines on paper as in any transaction. Another option is to re-finance the mortgage if you are a solid borrower and just rent it out till the housing market recovers; yet another option would be to list the home for sale but keep in mind, IF you list a home to sell, and you don't get a reasonable offer and you take that home off the market and decide to re-finance, lenders require a waiting period for a home to be off the market before they will re-finance you! It would be noted in the appraisal the last time the home was on the market for sale so depending on what type of mortgage program you qualify in will determine how long you must wait to re-finance.
Cathy writes: “I'm a local realtor and curious what your thoughts are on when the soft housing market here will turn around?”..A: Many national pundits seem to agree it will be 2009 before it's all “said and done”..but keep in mind our area (till you get near Atlanta) is not nearly as bad off as most of the country. I'd suggest you visit the business archives of Chattanoogan.com and read some of my other articles as we discussed this previously. I think there are always buyers out here, and Chattanooga is #3 ranked as “most livable city” based on what the area offers in total, plus you still have people expanding their family, or job re-location, etc. If someone has the credentials to qualify, and some money to invest, NOW is the time to buy because the market will get better! I don't think your realtors association will be bragging about a great 08 though.
Amy asks: "Are the interest rates affected by all these foreclosures and bankruptcies? How would it all affect me, a first time homebuyer?" ..A: Amy you qualify based on your credit, income, debt ratio and what you can afford. The interest rates are still historically low as we discussed in last week's column. The foreclosures (mainly) can affect the value of a home you are interested in, but actually, it could benefit a buyer because of the softer market! You might be able to “steal a deal” moreso now than before. Lastly, you don't get special privileges for being a first time home buyer..that's a myth and borders on false advertising and yellow journalism!
Terri writes: “I am disappointed in your article of April 14 titled 'What Caused the Mortgage Meltdown'...don't you think it's a little irresponsible to make absolutely NO MENTION of Bill Clinton repealing the Glass-Steagall Act of 1933, and signing into law the Gramm-Leach-Bliley Act? I think that Americans have the right to know the real history of how all this began and the fact that you are choosing to omit this, or perhaps, overlook it, in my opinion, takes away your credibility as a journalist.”..
A: First, let me provide you with the link that Terri included in her email so anyone interested in reading what she speaks of can:
http://www.progressivehistorians.com/2007/11/bill-clintons-role-in-mortgage-crisis.html
Our “checks & balances” system, over-rides of majority votes, and plenty of legislators along the way who were in power positions such as finance, ways & means, and judicial committees could also be exploited as to conflicts of interest, lining one's own pockets, and the fall-out just after the new bill took effect with various “power” people falling into cushy, high ranking positions and onto the boards of new companies! It wasn't just the “left side of the aisle” either..I understand your point but to say that one President (alone) caused all this, is certainly painting with a very broad brush!
TIP OF THE WEEK: I am not a journalist, I just play one on Chattanoogan.com! Let's hear your feedback, questions and scenarios!
(Jammer is a managing senior loan officer for American First Mortgage, LLC, and can be reached at 423 894-8388 x239, or via email:
chattjammer@yahoo.com )
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