Mortgage Market Rebound

National Mortgage Application Up in Weekly Measure

October 29, 2008 11:39am

Adam Pasquale


The Market Composite Index, a measure of mortgage loan application volume compilied by the Mortgage Bankers Association, rose nearly 17 percent last week on seasonally adjusted basis.

The Index rose to 476.7 from 408.1 in the week prior. On an anadjusted basis, the Index increased 29.6 percent compared with the previous week, but was down 30 percent with the same week one year earlier.

Howeowner Bailouts are happening!

FHA “Hope for Homeowners” Refinancing Program Launched

HUD’s new HOPE for Homeowners Program, under which the Federal Housing Administration (FHA) will insure refinance mortgages for borrowers who are having difficulty making their payments, began on October 1, 2008 and will end September 30, 2011. HUD has created a HOPE for Homeowners website with information for both borrowers and lenders.

The program is available only to owner-occupants of one-unit properties who can afford a new loan and will offer 30-year fixed rate mortgages. If borrowers are unable to refinance the entire amount due, banks will have to write down the existing mortgage to 90 percent of the new appraised value of the home. To be eligible, the property must be the borrowers primary residence (they can’t have an ownership interest in any other residential property, such as second homes and their existing mortgage has to have been originated on or before January 1, 2008, and they must have made at least six payments. In addition, they must be unable to pay their existing mortgage without help (as of March 2008, their total monthly mortgage payments due must be more than 31 percent of their gross monthly income).

Again, where is the press on the one? If you know someone who needs this program, send this blog to him/her.

Adam Pasquale, Achieva Realty

Great News for Worcester!!!

This is great news for Worcester. Yet another Company pledges to invest in this community.
High paying jobs relocating here is awesome.

Adam Pasquale

Achieva Factor is featured on TV

The True Picture of National Real Estate

These graphs were just published by The National Association of Realtors !

2008 is actually a good year in comparison to the last 18 years! Don't believe the hype from the media. House's are still selling.

Worcester County Value Update

What is a Short Sale?

Buyers pursue short sales to get a good deal. So when you see a price listed for a home that you think is too low for the neighborhood, before you jump on that price like hot fudge on a sundae, ask your agent to call the listing agent to find out if the home is a short sale. Because you might want to think twice about making an offer on a pre-foreclosure, short sale home. It's not as simple as you may believe, and very few can close in 60 days or less. In my experience, it takes about 4-6 months at least.

What is a Short Sale?

A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.

Be aware that the seller need not be in default -- to have stopped making mortgage payments -- before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it.

Check Public Records

Do your research before making an offer to purchase. Your agent can find out who is in title, whether a foreclosure notice has been filed and how much is owed to the lender(s). This is important because it will help you to determine how much to offer.

If there are two loans, you could have a problem. The first mortgage lender's position is protected by the second lender, unless the second lender does not want to foreclose. If a seller owes $160,000 on the first and $40,000 on the second, offering $160,000 leaves nothing for the second. The first will need to give something to the second to gain its cooperation.

Hire an Agent with Short Sale Experience

It's one strike against you if the listing agent has never handled a short sale, but it's even worse if your own agent has no experience in that arena. You need an experienced short sale agent.

An agent with experience in short sales will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner.

Prepare the Seller for Lender Demands

A lender is not going to agree to a short sale unless the seller has no equity and is unable to repay the difference between your sales price and the existing loans. Sellers need to provide a hardship letter to the lender. Sellers may also owe taxes on the amount of debt that is forgiven.

A seller I know once demanded that the buyer slip the seller $1,000 to be given the right to purchase the seller's property. We said no. This is fraud. The lender legally pursued that seller. Do not be lured by sellers who suggest this practice. In a short sale, the seller receives no money because the lender is losing money.

If you have further questions about Short Sales, call Adam Pasquale. AchievaRealty.com

Multi Family market crash! 50% loss!

Some of you may disturbed by the the following fact: In 2006, between the peak selling season of April-October, the average selling price for a 3 family home in Worcester was $304,540. 95 units were sold.

In 2008, during the peak selling period of April-October, the average selling price for a 3 family home in Worcester was $142,402. 121 units were sold.

It is interesting to note that the volume of sales were up 20%. This research was compiled by using MLS data. The question is ....why are the values so low? The answer is simple. Most, if not all of the 3 family homes that were sold were under financial duress. The sales were either short sales or REO's (Real Estate Owned by the bank).

Savvy investors are buying a lot of Real Estate in Worcester! Let's do the math. Let's pretend each unit is paying $650 a month in rent. $1,950 comes in every month and the mortgage payment is about $1,200 a month! This scenario provides positive cash flow of $750 a month. That's plenty of money to address any repairs!

If you or someone you know is interested in learning more about how to create a Real Estate Pension! Call Adam Pasquale for a Real Estate review!

Real Estate Market Defying Odds

Provided to you by Adam Pasquale

Real Estate Outlook: Real Estate Market Defying Odds

by Kenneth R. Harney

The panic and fear that have been shaking Wall Street aren't translating into negative numbers for real estate -- in fact, it's been the reverse.

While the Dow Jones index peeled off a record fourteen hundred points in a matter of days, the latest pending home sales index was moving in the opposite direction -- up strongly to its highest level in more than a year.

Pending sales jumped by 7.4 percent in the latest month, according to the National Association of Realtors.

Financial industry analysts had forecast a one and a half point DECLINE in the index for the month, but pent-up demand for housing, plus rock bottom bargain prices in many markets, convinced buyers that this is a good time to get off the sidelines and get into the game.

The pending home sales index measures new contracts for home purchases that haven't yet gone to closing, but should do so in the near future. It's a widely accepted predictor of sales activity two to three months down the road.

Mortgage rates and new loan applications also defied the negative spiral in the stock market: Applications for home purchases to be financed with conventional mortgages jumped by three percent last week, and new FHA applications were up by nearly 10 percent, according to the Mortgage Bankers Association's national survey.

Interest rates on 30 year fixed rate loans dropped to 5.9 percent and 15 year rates hit 5.7 percent.

Why the sharp divergence in performance between home real estate and Wall Street?

One key reason is that real estate -- which helped trigger the financial crisis through lending abuses and fraud -- has been undergoing its own correction on pricing and underwriting practices for the past two and a half years.

It's already taken its lumps, and has now reached a point where prices in former boom markets are so affordable that smart buyers are swooping in.

Also - although we keep hearing about the global credit squeeze and banks' unwillingness to lend money, that's definitely NOT the case in the mortgage market. There's plenty of money available - as long as you have a solid credit history and some downpayment cash.

Fannie Mae, Freddie Mac and the FHA now account for well over 90 percent of home financing volume, and all three are backed by the federal government.

They've got a direct and virtually unlimited pipeline into the capital markets.

And with mortgage rates under 6 percent, no wonder consumers are shopping for -- and buying -- houses at great prices.

Published: October 14, 2008

Comments from Adam Pasquale on this article: Here in Worcester County the market is gaining significant momentum! In fact, many Bank Owned properties that are coming on to the market are going on deposit within days! The reason is simple... the properties are priced to sell fast!
The days of competing offers driving the selling price up are returning! In Worcester during the month of September, 15 houses sold over asking price within 5 days of coming on the market. My staff is very busy showing and selling houses this week despite what the news is reporting!
TheBuyWorcesterNow.com program is an excellent vehicle for many 1st time home buyers! Adam Cammosse from Homeinex is a home inspector and he is reporting that his activity is through the roof! Perhaps Global Warming is effecting the Real Estate market also. It feels like Spring Market is upon us in November. Thank you for supporting local business!

Adam Pasquale

Skipping a mortgage payment without hurting your credit??

Fannie Mae's New Loan Program Breaks The Oldest Rule of Lending

by Kenneth R. Harney

A new mortgage plan now available from a handful of lenders around the country allows home buyers and refinancers to break the oldest rule of lending: Borrowers can skip monthly payments periodically without hurting their credit standing, angering the bank, or getting hit with a late fee.

Known as "Payment Power", the plan is being field-tested by at least six lenders under arrangements with Fannie Mae, the giant Washington, D.C.-based home loan investor. Under the new mortgage's terms, borrowers can opt to miss up to two monthly payments per year, or as many as 10 payments over the full 30-year term of the loan. The missed payments--including principal, interest, taxes and other escrowed items--are rolled into the remaining principal balance of the mortgage. The principal balance is then amortized without increasing the term of the loan--in effect, financing the unpaid amounts via slightly higher monthly payments over the regular term of the mortgage. There are no balloon payments involved, nor can the number of months remainng on the loan be increased.

On a $100,000 30-year loan at 7 percent, for instance, the first skipped payment would add less than $9 to the monthly mortgage bill for the remaining term of the loan. Further skips would raise payments by additional amounts. Lenders are required to report missed payments as on-time payments to credit bureaus, provided the borrowers requested the skip in advance, and were authorized by the lender to do so.

To qualify for the loan, buyers or refinancers will need strong credit histories at application, (does that make sense???..... The people who need help are struggling)and will need to make on-time payments in all months except those where they opt to skip a payment. The idea, according to lenders in the field test, is to provide flexibility for borrowers in several categories:

First-time home purchasers who are stretching their budgets to afford the house, and who would welcome the opportunity to miss a payment or two in the early years of the loan.

People whose incomes vary from season to season, or unpredictably. Examples include teachers whose incomes decline during the summer months, construction workers whose hours drop sharply in the cold winter months in some locations, and factory workers whose production lines are shut down sporadically because of lagging sales in the retail marketplace.

Home buyers or refinancers who simply have some doubts about the sagging economy, and who'd like a little cushion built into their mortgage, just in case.

The new "payment power" loans--which may be marketed under different brand names--carry interest rates and other terms identical to regular conventional mortgages purchased by Fannie Mae. The main differences are the contractual right to skip that is spelled out in the loan documents, and a small upfront participation fee (about $600 on a $100,000 mortgage) that can be paid by the borrower or split with someone else, such as a builder, a Realtor or private seller. The program will be available on 1-2 unit homes and on condominiums.

Toledo's Northern Ohio Investment Co. already has begun marketing the new program under the name "Rainy Day" mortgage. Giant Countrywide Home Loans, based in Calabasas, California, says it plans to roll out its version of the mortgage in December. Other participating lenders, according to Fannie Mae, will be kicking off marketing campaigns in the coming weeks.

Could a "payment power" loan be in your future? If Fannie Mae's field tests demonstrate that the skip feature is a sound investment, look for it to become available everywhere, as a standard mortgage option.

Published: October 14, 2002

RealtyTimes.com

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When comes to Real Estate.... access to information is how informed decisions are made!

About the Red Sox.... "Boston is a baseball town with a drinking problem"

Adam Pasquale