Great Views = Landslide Waiting to Happen? Looking for a Geologist to Evaluate Slope Stability January 31, 2008
Wow, what a view! It takes your breath away…now let’s not let it take away good judgement too.
Sometimes a great house, with a fabulous view needs a little extra inspection and evaluation to help our clients make informed decisions when buying a house. I have been working with a wonderful couple for awhile now and it looks like we have finally found their next home. This home is hitting all the important criteria, and has a bonus of a beautiful view.
There is a BIG territorial and mountain view because the home sits on a high, steep bluff. So while to my untrained eye there does not look to be anything that indicates a problem, I have suggested to my clients that we have the slope’s stability looked at and evaluated by a professional to be reasonably sure that this is good home for them.
Since I have not needed a geologist technician before, I asked around and found one one who was referred to me by a commercial Geo-tech company and will probably have him evaluate the slope.
My question is, have any of you needed to have a slope evaluated either for clients or yourself? If you did, who did you use? What did the evaluation determine?
Sphere: Related ContentFed Funds Rate now at 3% January 30, 2008
Today the FOMC reduced the Fed Funds rate by a half point to 3%. A half point rate cut was expected by Traders and so far we do not have significant changes (yet) to mortgage interest rates. However, if you have a HELOC, your interest rate has just gone down again. The Fed also reduced the Discount Rate to 3.5%. The Fed is leaving the door open for future cuts as needed. You can read the press release here.
We still have Thursday’s PCE report and Friday’s Jobs Report which both highly impact mortgage interest rates. If either indicate strong inflation, we will see mortgage rates increase.
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If You Walk Away, I’ll Walk Away January 29, 2008
A couple of Seattle Bubble readers sent news stories to me last week on a new company called You Walk Away (hat tip to Alan and synthetik.) This company, which is headquartered in California, is selling a how-to kit for $1,195 to help homeowners make the process of walking away from their home and the mortgage, as painless as possible. Even the promotional pictures on the site display happy people who look like regular, ordinary homeowners….except they’re moving OUT of their homes and they look like they’re really, really having some good quality HAPPY family time.
A long time ago, in a galaxy far, far away, most all mortgage lenders use to require a downpayment. The reasons now seem obvious but even in a relatively stable housing market, when a person is putting some of their own money into the home purchase, that personal investment was seen as a good reason that could compensate for other reasons on why the lender said “yes” to the American dream for this particular borrower. People use to think two, three and four times before walking away from a home when they would be walking away from their own hard-earned, after-tax dollar investment into the real property. Those days went away with zero down, seller-paid closing cost loans. One of the cards left that the lender is holding is a person’s credit history. You Walk Away claims to connect you with their affiliated credit repair service so the borrowers can start repairing their credit immediately.
Then we had the 60 Minutes episode, “House of Cards“ this past week interviewing a couple who had been advised to just walk away, which comes very close to legitimizing the practice: just stop making the payments, save the money, and live in your home until you absolutely have to move out. Lender use to rely on the social stigma of foreclosure and the shame of walking away from one’s obligations. Now the logic of putting one foot in front of the other and walking away is starting to trump shame.
So, what should homeowners do who are trying to make this decision? I recommend finding a lawyer in your city that specializes in consumer protection or real estate law and paying for a face-to-face meeting to discuss all your options. I will bet that in most cases, the cost of an attorney will be less expensive than the kit. Google your state’s bar association to get started.
Mortgage loan originators routinely give advice on how to repair your credit, and loan originators in most all states are only able to earn a fee when a loan is made, therefore this advice is given free of charge, as part of their ongoing relationship with you. State laws on the foreclosure process such as your state’s Deed of Trust Act will also be available for you to read free of charge. To get started, just google it: “_Your State_ Deed of Trust Act.” Also, non-profit housing associations provide FREE counseling to homeowners in default. We all pay for this service by way of our tax dollars. As a tax-paying person, I personally invite you to use these services if you need them and not to feel like this is only an option for someone unlike yourself. To get started, visit Hud.gov and click on the phrase talk to a housing counselor located in the section ”at your service.” You’ll need to scroll through the list, and select an agency that offers “default counseling.” What I would like you to avoid, because I care about you, reader-who-is-thinking-about-walking-away, is avoid the signs by the side of the road or any other person who appears to present themselves as an angel here on earth to rescue you, and promises something that sounds too good to be true. It is. You are better off hiring an attorney. Don’t have money for an attorney? See if you qualify for your state bar association’s free legal aid program.
Sphere: Related ContentFree Speech? Miami Realtor/Blogger sued by developer for $25Million
It was reported by the Miami Herald that a local Realtor blogger is being sued by a developer who is not pleased that the blogger, Lucas Lachuga, remarked that the development was “doomed” on a January 10th post.
”Like any other blog out there, it’s a collection of my unbiased opinions and thoughts,” he said. “I have buyers all over the world who go to my blog. They know I’m not going to sugarcoat the market.”
Realtor Lucas Lachuga’s Blog is called Miami Condo Investments.
This is the kind of case attorneys probably would watch very closely.
Sphere: Related ContentSunday Night Stats - King County January 27, 2008
King County - Residential
For sale - 8,680 - UP 172
In Escrow - 2,064 - UP 158
Closed month to date - 608 - UP 169
King County - Condo Market
For sale - 3,009 - UP 80
In escrow - 823 - UP 25 - 2.6% of those are contingent contracts
Closed month to date - 204 - UP 60
Next week I’ll have to post both end of month and Sunday night stats plus YOY closings for the month of January.
Single family home market keeping pretty good pace with those closing and going into escrow vs. coming on market. Condos not so good. Hard to believe that with over 3,000 on market, only 18 went into escrow two weeks ago and 25 this past week. If the condos don’t move, the single family market will see the consequences of that come Spring and Summer.
“Statistics not compiled or published by NWMLS.”
Sphere: Related ContentWashington State Legislative Alert: SB 6381 and SB 6452 January 25, 2008
Two Senate bills have been introduced into the state legislature this session.
The first bill, SB 6381 (link opens a 2 page PDF) will change the state’s Mortgage Broker Practices Act to require that mortgage brokers owe fiduciary duties to consumers. In order to make fiduciary duties meaningful, they must be extended to include the loan originators that work under a mortgage broker. The legislature should make that crystal clear. Many LOs work out of branch offices and are unsupervised on a day to day basis by their broker, who may be located in a different office or in a different state.
I recommend that the state legislature also include not only mortgage brokers but businesses licensed under the state’s consumer loan act. We must not forget that the two largest predatory lending lawsuits in the United States were settled with companies that were NOT mortgage brokers but consumer loan lenders: Household Finance and Ameriquest. If we do not make this change, unscrupulous mortgage brokers may just change the way they’re licensed. This loophole should be closed now.
The second bill, SB 6452 (link opens an 11 page document) also changes the state’s MBPA in an interesting way. At the bottom of page 3, this bill would remove a mortgage broker’s ability to quote a Yield Spread Premium range. Recall that brokers can see the wholesale cost of mortgage money, and elect to quote a higher interest rate to the consumer and earn the difference as profit. Sometimes, when a borrower wants a “no cost loan” (which, by the way doesn’t exist. Why don’t we ban the use of that phrase?) the borrower’s closing costs are paid from the Yield Spread Premium. So the borrower IS paying for their closing costs, they are just paying their costs in the form of a higher interest rate. After the closing costs are all paid, the mortgage broker may elect to keep the difference as profit.
At application time, a loan originator may or may not know how much money he or she will be able to earn (as profit) so the LO quotes a YSP “range.” It is very common to see a range of, say, 1% to 3%. Ask any average random consumer what a 1-3% YSP means on the GFE and I will bet you five dollars that he or she will not know. However, the LO must also quote this in a dollar figure range according to existing federal law (RESPA). It is very common that loan originators who are making big YSPs are not also quoting the dollar amount range because to show a dollar amount means to have to justify that figure when asked.
At the bottom of page 5 is the big news:
“Any yield spread premium or equivalent compensation or gain paid between a mortgage broker and a lender prior to or after closing of a residential mortgage loan must be refunded directly to the borrower, if the amount of compensation is greater than the original good faith estimate provided under RCW 19.146.030.”
This means that the consumer will know the compensation of the mortgage broker/LO at application and if the compensation increases between application and closing, the difference will be refunded to the consumer. I meet many mortgage brokers and LOs who are already doing this and won’t have any problems at all with this change. We will hear criticism from the broker community about the unfair nature of these two bills. Yes, the bill unfairly targets only mortgage brokers. Yes, it is true that banks do not have to disclose the yield they make when they package and sell their loans on the secondary market. Federally chartered banks are regulated by the federal government. States don’t have power over federally chartered banks. However, federally chartered banks are also seeing proposed federal legislation that would have an impact their relationship with the consumer as well. We are only just beginning to see new legislation directed at the mortgage lending industry.
Mortgage brokers should not waste another ounce of energy in believing that a level playing field should exist between banks and brokers in regards to having to disclose their yield. Banks and brokers are two completely different entities. To treat the two in the same way would be UNfair. Yes, it is unfair that the broker community is paying the price for the bad apples that took advantage of the consumer and mis-used YSP for their own personal economic gain, without fully disclosing and explaining their compensation to the consumer.
Even though I predict the broker community will try to fight these bills, it is hard to get behind that movement. Let’s try it on for size:
Brokers: “We, mortgage brokers do NOT want to act in the best interest of the consumer. It is just not possible because we owe fiduciary duties to the banks and lenders.”
Response: Actually, looking out for the best interest of the consumer could also be thought of as acting in the best interest of the bank/lender.
Brokers: “Banks don’t have to disclose their Yield Spread Premium, why should we be singled out?”
Response: Yes, you’re right, banks are treated differently than brokers. If you don’t want to disclose your YSP, you could become a correspondent lender and then, when you close on your correspondent line, you wouldn’t have to disclose your YSP either. Do you want us to take that away from you, too? No? I didn’t think so.
I predict both of these bills will pass.
Mortgage brokers should support these two bills. Brokers will then be able to go to the consumer and say: “We are different from banks. We will fully disclose our YSP and we will also put your interests ahead of our own. We have a fiduciary relationship with you and loan officers who work at a bank do not.” When these two bills pass, brokers will be able to claim market differentiation. Brokers: your expertise and higher duties will be worth more in the eyes of the consumer.
Sphere: Related ContentFriday’s Rates: 30 Year returns to the Mid to Low 5’s
T.G.I.F! Mortgage interest rates have improved slightly since this morning by 0.125% across the board. Jumbo rates jumped up significantly on Wednesday. And as if this week didn’t provide enough drama, next week is packed with events that assures another volatile ride with mortgage interest rates. As always, I strongly recommend locking. In this market, rates may change as soon as I’ve posted them (one lender I work with provided 6 rate sheets on Wednesday alone).
Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties). The conforming rate quote below is based on owner occupied, “full doc” purchase with a minimum credit scores of 680 with an 80% loan to value or lower, a loan amount of $400,000, and with reserves (taxes & insurance) not being waived. Rates quoted are priced based on a 45 day lock with 1 point and there are no prepayment penalties on any of the rates quoted below.
30 Year Fixed: 5.375% (APR 5.533%). Payment per $1000 = $5.60.
30 Year Fixed with 10 Year Interest Only: 5.750% (APR 6.866%). Payment per $1000 = $4.79.
40 Year Fixed: 5.875% (APR 6.005%). Payment per $1000 = $5.42.
7/1 ARM (5/2/5 caps - 2.25 margin): 5.000% (APR 6.481%). Payment per $1000 = $5.37.
7/1 ARM 10 Year Interest Only Payments (5/2/5 caps - 2.25 margin): 5.125% (APR 6.603%). Payment per $1000 = $4.27.
FHA/VA 30 Year Fixed: 5.750% (APR 6.279%). Payment per $1000 = $5.84. (not factoring upfront or monthly MI for FHA).
JUMBO (Non-Conforming) Rates. Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down).
30 Year Fixed: 6.625% (APR 6.782%). Payment per $1000 = $6.40.
30 Year Fixed with 10 Year Interest Only Payments: 6.750% (APR 6.894%). Payment per $1000 = $5.63.
7/1 ARM - 5/2/5 caps - 2.25 margin: 5.250% (APR 6.606%). Payment per $1000 = $4.38.
7/1 ARM Interest Only - 5/2/5 caps - 2.25 margin: 5.375% (APR 6.721%). Payment per $1000 = $4.48.
Please do not select your Mortgage Professional by interest rates alone and do not shop rates by APR. This is just a small sample available of rates and products. Rates are as of Friday, January 25, 2008 at 12:00 p.m. and may change at any time. Available programs may change at anytime as well. This is not a guarantee nor is it a commitment of interest rate. For your personal rate quote or for loan amounts over $650,000, please contact me.
Sphere: Related ContentRound-up of Seattle Neighborhood Blogs January 24, 2008
What neighborhood bloggers are saying is happening in their Seattle area neighborhoods….
“Car-free” and happy on Broadway Seattle , and ”parroting” similar sentiments on Capitol Hill ….
Capitol Hill Triangle “toasts” with an Elysian Immortal IPA to celebrate a Grand Re-opening.
“Home (less)” thoughts in Cosmo Seattle and more social issues when ”trash” raises its’ ugly head in Red Brick Blog
Happy 2nd Birthday to Kirkland Weblog! blog games when Mid Beacon Hill starts a game of where am I?
Miller Park Neighborhood Association gets a “bright idea” for improving safety in Capitol Hill, and the Outer Limits: The Lake City Blog finally wakes up after a long blog snooze and tells us about breakfast at LC’s
Bug alert for mom’s in SammaMishmash , and Super 8 Film Fest in Blogging Georgetown
Exotic Cat capture in West Seattle Blog and finally…Moon over Seattle in Beach Drive Blog
Sphere: Related ContentLock It or Lose It
Mortgage rates have been very volatile these past few days. Yesterday morning, I posted that the 30 year conforming fixed was under 5% and by the end of yesterday, mortgage rates had increased by 0.375% to rate or around 1% in fee.
Rate shoppers lost out big time if they did not lock.
Rates are continuing to rise at this time. Please don’t dilly dally with your mortgage interest rates. There are fewer Mortgage Professionals to assist you in our current market and many of us experienced (and I’m still seeing it today) banks being “clogged” with people trying to lock…websites “down for maintainance”…etc. By the time a Mortgage Professional can get through to lock in a loan, the rate is gone. Bam.
Next week has offers a full menu of events that promise to impact mortgage interest rates:
- FOMC Meeting on Wednesday, January 30th. (If the Fed drops the Funds Rate…mortgage rates may rise).
- Thursday, January 31 will bring us several economic reports which will indicate inflationary levels such as the PCE and the Chicago PMI.
- And as next Friday is the first Friday of the month, we will wrap up the week with the Jobs Report.
Again, I highly recommend that you lock in your interest rates for conforming loans and make sure it’s for enough time for your transaction to close. A possible bright spot: the conforming loan limit may be increased…no promises but this will be great help for the JUMBO market from $418,000 - $620,000.
Bye for now!
Update January 24, 2008 at 2:55 p.m.: I just priced the 30 year fixed conforming at 1% origination/discount…I can barely lock in 5.5% (APR 5.642%) based on my usual criteria for “Friday’s Rates” (which I will be posting tomorrow). Is it 5 yet? 
Cold…but Awesomely Gorgeous in Seattle January 23, 2008
Photos taken . by Harley Lever
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