Keepingthekeys.com is providing hope (for a fee) for homeowners who wish to use legal options to stay in their home as long as possible, or to prevent foreclosure altogether.

We’ve all read, and some RCG commenters have complained loudly, about loan servicing companies being slow to approve short sales, modify loans, or engage in any kind of foreclosure workout with homeowners. Well, perhaps the threat of predatory lending and violations of state and federal law at loan origination will bring loan servicers to their knees.

The legal team at Keepingthekeys.com seems to be focused mainly in California, where the current count of 1000 foreclosures per day seems to ensure a model for business growth for the next decade.

So what can homeowners do who are located in Washington State and want legal help? Sometimes homeowners in financial distress just want an attorney to take a look at their documents.  Taking this simple step is better than full blown homeowner denial, and legal help can often be more affordable than the homeowner might think.  I’ve been on the look out for Seattle area law firms offering affordable legal counsel for homeowners facing foreclosure.  Now I’ve found one and I bet you’ll never guess which firm decided to extend a hand to this market.  Thanks, Craig and Marc.

Now, what to do about all those homeowners who committed stated income fraud at application in 2007.  Hmmm.  Perhaps there’s a reason why foreclosure rates continue to climb.  Maybe it’s not just “denial” or “loan servicing” backlogs.  

• Short Sales
• Question from today’s short sale class
• Homeowners in Foreclosure Should Hire an Attorney
• With her typical common-sense approach, Rhonda lands…
• “Hope Now” program to curb delinquency/foreclosures fraught with problems

Issaquah Undressed asks: 50 to 80 in a day?   More changes happening on Beach Drive Blog.

Get your “Spring Cleaning” in gear for CHS Capitol Hill Seattle and The Garage Sale, and Miller Park Neighborhood Association announces neighborhood clean up this Saturday.

Capitol Hill Triangle and a favorite breakfast treat in a tiny cafe, and on Capitol Hill, the poster for this years’ Block Party! 

Captain Columbia City launches it’s new neighborhood personalities interviews, for more cinematic news…vote for your favorite “Movies on the Wall” at West Seattle Blog.   

Blogging Georgetown and the annual Georgetown Art and Garden Walk and Mid Beacon Hill is covering Georgetown and uncovering a new mural. 

It’s Farmers Market time again at Kirkland Weblog, and at the Outer limits: The Lake City Blog the Farmers Market is relocating. 

Broadway Seattle  bikes Broadway… The Wedgewood Blog … and the Rock Walk.   

Atop the Top: Queen Anne Highlights points out that a person can always learn something new about their neighborhood. Cosmo Seattle and new info on Denny Park. 

Pondering Fame and Infamy at One A Day -Mostly Seattle and lastly…Breaking News on Ballard Avenue!

• Round-up of Seattle Neighborhood Blogs
• Seattle Neighborhood Roundup…. It’s beginning to look a bit like….
• Farmers’ Markets in Seattle
• Neighborhood Round-up
• Neighborhood Round-up: Things are Heating Up

Rejecting the arguments of Countrywide executives and directors that they were unaware of lax loan operations that led to ballooning defaults, Judge Mariana R. Pfaelzer of Federal District Court in Los Angeles ruled Tuesday that she found confidential witness accounts in the shareholder complaint to be credible and that they suggested “a widespread company culture that encouraged employees to push mortgages through without regard to underwriting standards.”

Will this lawsuit set a precedence for further legal action?

Hundreds of mortgage companies have failed in the last year or so, but few executives or directors have taken responsibility. That makes the ruling significant

Looks like the lead plantiff is the Arkansas Teacher Retirement System. I wonder how many other plantiffs are out there if we look at the hundreds of bankrupt companies. Probably thousands if we count all the individual employees who held stock in their companies.

For the next decade, we should all expect underwriting guidelines to further tighten until defaults start to subside. With 1000 foreclosures happening each day in California, a slowdown doesn’t seem to be in sight any time soon.

Frivolous lawsuit or corporate officer accountability 101, or ?

If you were a stockholder of BOA, would you vote to continue to move forward and purchase Countrywide?

Some of us will argue that lawsuits will lead to increased costs. With or without this lawsuit, borrowing costs will rise, and they should. Countrywide and all lenders severly underpriced risk. I believe this lawsuit has the potential to impact mortgage lending business practices for years to come.

• Any guesses as to if the BOA buyout of Countrywide will still happen?
• Countrywide: SuperBad
• MGIC Tightens Underwriting Guidelines…Again
• The Future of Countrywide
• No, Chicken Little, the sky isn’t falling…

…so “they”: say.  I’m delayng this listing one day from Wednesday to Thursday, hoping for a bit of blue sky and sunshine.  My iPhone tells me it will be sunny from Thursday until past Sunday!  Do I dare believe it!?!?  Oh well, I’ll have some backup gray sky photos just in case.

Planning to run around taking as many sunny photos of other listings on Thursday and Friday too.  Anyone with snow photos ought to do the same.  Thursday is Picture Day..with Friday as a backup.

This morning I was singing Sesame Street’s “Sunny day, everything’s A-OK” but it was driving Kim nuts…so I switched to the Beatles.

• Snowing in Seattle
• Snow is Seattle’s Kryptonite
• Let me get this straight, you will pay me if it rains???
• Snowing in Seattle
• HELP! Techie Problem! I’m going NUTS!

Plan on using at least 20% for your down payment plus closing costs.   With a 25 or 30% down payment, you will receive a slightly better interest rate.   Just to give you an idea, here is a sample of some current rates based on a single family dwelling with a sales price of $450,000 for a 30 year fixed mortgage and a minimum 720 credit score:

Owner Occupied with minimum 20% down:  5.75% priced with 1% origination/discount point (APR 5.904%)

Non-Owner Occupied (NOO) with 20% down: 6.375% with 1% point (APR 6.537%)

NOO with 25% down: 6.250% with 1% point (APR 6.413%)

NOO with 30% down: 6.125% with 1% point (APR 6.289%)

Of course, you can always pay more in points to have a lower rate.   This is just to provide you with an apples to apples comparison.

There are two camps for qualifying for an investment property:  those who are proven at managing rentals and those who are buying a rental for the first time or who have less than 2 years history.  If you have less than a 2 year history, then it’s likely that you will not be able to use rent credit from the proposed purchase.  Lenders allow 75%  of the rent to be used for qualifying purposes.   Proving you’re a financially successful landlord to the underwriter will take your last two year’s complete tax returns including the Schedule E’s.   If you can qualify for the full PITI payment on the investment property along with your current PITI payment on your residence, then the underwriter may only require a regular appraisal.  Otherwise, count on the appraisal costing almost twice as much as a typical appraisal for conventional financing.   Fannie and Freddie also require a minimum of 6 months reserves (cash assets after closing) for NOO borrowers.  

Odds and Ends

• FHA can be a great way for first time buyers to get into the investor market when they’re buying a 2-4 unit home.  The buyer must occupy in one of the units and the mortgage will be treated as an “owner occupied” transaction.   You will have upfront and monthly mortgage insurance and can buy with as little as 3% down payment.
• Second homes are sometimes treated as investment properties.  This is really up to the underwriter.  Typically if the home is located within 50 miles of the borrowers residence or if it does not make sense as a second or vacation home, the underwriter may determine that it’s an investment which means tougher underwriting and the NOO rate.
• Fannie Mae programs exist that help family members buy properties that don’t meet the second home requirements without treating it as an investment purchase (Family Opportunity Mortgage).

As always, I highly recommend that you meet with your local Mortgage Professional as soon as possible if you’re even just considering obtain a mortgage for any reason (investment property, residencial purchase or refi, vacation home, etc.).

• Friday’s Mortgage Rates
• It’s Friday and mortgage interest rates are…
• Too Close to Home
• New Mortgage Program for Helping Out Family Members
• Friday’s Rates…conforming is up 0.25% from last Friday

In January of 2008 only 261 people were able to sell their homes in 30 days or less and they sold at 98.93% of asking price.

42% fewer people sold their homes within 30 days of listing the home for sale in January 2008 vs. January 2007

In January of 2007, 13.25% of all homes sold had been on market for over 120 days and sold for 97.52% of asking price at time of sale.

In January of 2008, 21.67% of all homes sold had been on market for over 120 days and sold for 95.60% of asking price.

And yet…they sold for a little more.  Volume down by 30%, days on market longer, but median sold prices up from $430,000 to $431,375.  Median asking prices up from $430,014 to $439,000.

That was January…let’s jump to April (I don’t know the answers before I type this BTW.  I figure I can’t introduce my agent bias if I post in real time.)

In April of 2007, 1,184 people were able to sell their homes in 30 days or less for 100.62% of the asking price.

In April of 2008, only 561 people were able to sell their homes in 30 days or less and they sold at 99.25% of asking price.

53% fewer people sold their homes within 30 days of listing the home for sale in April 2008 vs. April 2007

In April of 2007, 13% of all homes sold had been on market for over 120 days and sold for 97.8% of asking price at time of sale.

In April of 2008, 20% of all homes sold had been on market for over 120 days and sold for 95.97% of asking price.

But in April, no more volume down; prices up.

Median sold price in April of 2007 was $474,950 ($50 less than median asking price)

Median sold price in April of 2008 was $451,250 and median asking price at time of sale was $459,925

By Request: Stats for “Curious” in Redmond 98052 pretty strong relative to King County as a whole.  Also for Curious - Woodinville 98072; not a pretty picture.  For Aiboh here’s 98074 Sammamish - not bad.  A lot better than Woodinville.  I have to put the special request stats on my blog for space purposes.  But keep the requests coming and if I can’t do them on Sunday night, I’ll squeeze them in during the week somewhere. 

Regular weekly stats:

King County Residential

Actively For Sale: 11,231 - UP 268

In Escrow: 2,813 - UP 63 - MPPSF $210 (dropped $2.00 again - and that’s asking price

Closed YTD 5,414 - UP 305 - MPPSF $220 YTD (April MPPSF $224)

Not sure why closed sales keep running high while the properties in escrow are running low as to median price per square foot.  You would expect the closings to be affected eventually as these close, but so far not.

MAYBE a lot of the ones staying in escrow are short sales, and they are not closing at all.  That would be the only explanation I can come up with for “in escrow” MPPSF running lower and lower and closings not being lower. 

King County Condos

Actively For Sale: 3,890 - UP 106 MPPSF $320 Down $3.00

In Escrow: 940 -UP 40 - MPPSF $303.50, Down $1.50 but close to where they were the week before last.

Closed YTD: 1,776 - UP 101 - MPPSF $288 - asking prices still running high relative to closed prices.  Especially considering April closed sales are running at $270 MPPSF compared to April 2007 at $300 MPPSF.

Volume down 52% April YOY in condos and prices are starting to see more signs of weakening.   But again, given the sold properties in both residential and condo were on market for a long time, we could be seeing some old inventory selling off at drastically reduced prices.  Some old stale inventory is runing scared from “new on market” and dropping prices accordingly.  

• Sunday Night Stats - King County
• Sunday Night Stats + 1st Quarter YOY
• Sunday Night Stats - King County
• Sunday Night Stats - King County
• Sunday Night Stats - King County

For all markets — so-called restricted markets or otherwise — MGIC said it will essentially no longer provide MI for any Alt-A loan. The company also said that it will no longer allow cash-out refinances in any market, investment properties, multiple units, and option ARMs to be eligible for its mortgage insurance. The insurer also will require a minimum of 3 percent down on any eligible purchase transaction

and this:

Loans in the conforming jumbo range — in a non-restricted market — must have a minimum of 90 percent CLTV and a minimum FICO of 700 to qualify for MGIC underwriting; in restricted markets, the CLTV requirement is tightened to 85 percent. MGIC said it will not insure any loan above $650,000 in any market.

As I have been saying for many months now, underwriting guidelines will, and should, continue to tighten until defaults begin to slow down.

• The Difference between a 679 and a 680 Credit Score
• Fannie Mae’s Jumbo-Conforming Loan Guidelines
• Any guesses as to if the BOA buyout of Countrywide will still happen?
• Credit Scores, Government Loans and 100% Financing
• We’re not in a declining market…we’re just soft

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties).  The conforming rate quote below is based on owner occupied with a minimum credit score of 720, “full doc” purchase with a sales price of $500,000 and a loan amount of $400,000.  This scenario includes reserves (taxes & insurance) not being waived.   Rates quoted are priced based on a 45 day lock with 1 origination/discount point and there are no prepayment penalties on any of the rates quoted below. 

30 Year Fixed:  5.750% (APR 5.902%)

30 Year Fixed with 10 Year Interest Only:  6.000%  (APR 6.140%)

15 Year Fixed: 5.250% (APR 5.500%)

7/1 ARM - LIBOR:  5.250% (APR 6.502%)

5/1 ARM - LIBOR:  4.875% (APR 6.756%)

Conforming-Jumbo Rates.   Pricing is based on the same criteria above except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties.  (For other conforming-jumbo loan limits in Washington state, click here); specifically priced for a sales price of $650,000 and a $520,000 loan amount.

30 Year Fixed:  5.875% (APR 6.021%) 

30 Year Fixed with 10 Year Interest Only:  6.375% (APR 6.513%)

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).   The specific scenario used to price the rates below is a sales price of $850,000 with a loan amount of $680,000.

30 Year Fixed:  7.500% (APR 7.758%)

FHA.  Pricing based on credit score of 620 or better and loan amounts up to $362,790 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed:  5.750% (APR 6.527%). 

FHA-Jumbo. Pricing based on loan amounts from $362,791 - $567,500 for King, Snohomish and Pierce Counties.  For other loan limits in Washington State, click here.

30 Year Fixed: 6.000% (APR 6.776%)

VA.  Pricing based on credit scores of 620 or better based on loan amounts up to $417,000.

30 Year Fixed:  5.875% (APR 6.188%)

Prime Rate (what HELOCs are based on):  5.000%  

This is just a small sample available of rates and products.  Rates are as of Friday, May 9, 2008 at 12:30 p.m. and may change at any time.  I’ve all ready seen many lenders issue two rate sheets so far today.   Follow me on Twitter to see rates I’m quoting.  Available programs may change at anytime as well.   This is not a guarantee nor is it a commitment of interest rate.  

• Rates for Friday
• Friday’s Rates
• Mortgage Rates on a Good Friday
• Friday’s Rates
• Friday’s Rates

Brokers, by definition do not loan their own money. Instead, they’re middlemen who go out and find the mortgage money. The entity funding the loan is the “lender.”  This definition comes to us via RESPA. Nothing has changed here, and I predict state law will mirror federal law.

In terms of state law, and in particular, SB 6471, it should now be made crystal clear to the consumer that a MORTGAGE BROKER IS NOT A LENDER.

Okay, fine. We got it.  However, there’s one small problem.  As I addressed in my four part series on the differences between a banker, broker, consumer finance company, and a credit union within the realm of licensed mortgage brokers we have a hybrid.  A “correspondent lender” is an entity currently licensed as a broker, but they have their own warehouse line of credit with a bank.  They can fund their own loans, and they can also broker out to other lenders, if they so choose.

Most correspondent shops are very well run, with onsite underwriting, training, auditing, and compliance departments.  Currently, many hold a mortgage broker license.  Some of these entities are exempt from holding a mortgage broker license because DFI has granted them an exemption certificate because they have direct Fannie Mae/Freddie Mac approval.  Unfortunately, these companies with the exemption certificate, (DFI estimates that we have about 300 brokers with exemption certificates,) have been largely unsupervised at the state level.  Senate Bill 6471 was supposed to close this loophole and bring all exempt brokers under the Consumer Loan Act. 

Many correspondent lenders also broker loans in addition to closing them with their own warehouse line of credit.  This leaves the correspondent lenders with a dilemma.  Correspondent lenders have the option now of holding two state licenses, or just one.  They can keep their license under the Mortgage Broker Practices Act and they also now must operate with a Consumer Loan license, or they can decide to just hold the consumer loan license.

This change affects only correspondent lenders.

Pure mortgage brokers, entities that ONLY broker ALL their loans, are not affected by SB 6471.

Correspondent lenders are mad as hell and many showed up at today’s meeting to express their shock and awe at having to pay an assessment to the state at .000180271% of their annual volume.  Depending on the breakdown of correspondent-funded loans v. brokered loans, estimates provided by the correspondents at today’s meeting range from an additional $20,000 to $60,000 per year in fees that the correspondent lender will have to pay to the state of Washington each year.

Existing consumer loan lenders already pay this assessment.  Realize though, that many consumer loan lenders loan money at much higher interest rates and charge much higher fees than traditional mortgage companies.  Correspondent lenders argue that these higher fees will be passed on to the consumer. One lender present testified that he plans on adding this fee on to the consumer’s fee schedule on the Good Faith Estimate, calling it a “State Tax.”  Guys: I’m pretty sure that you cannot honestly present a fee imposed on you, as a “tax.” 

Correspondent lenders are also mad as hell for another reason: They must now swim in the same pool with Consumer Loan Companies…..those who we do not speak of.  Those bastards that mortgage brokers look down upon.  If there’s a hierarchy, it looks like this:

Banks look down on

Mortgage Banks

Who are seen as “less than” because most don’t carry bank deposits.  Mortgage Banks look down on:

Correspondent lenders

Who are seen as baby mortgage banks, not fully grown up and ready to play hardball.

Correspondents are always looking down on:

Mortgage Brokers,

Who sneer in disgust as throw up a little in their mouths when they think of:

Consumer loan lenders

Who are seen as nothing more than pawn shops, payday lenders, and one step above the mafia.

Consumer loan lenders have been originating mortgage loans for quite some time.  Ameriquest, Household Finance, Paramount Equity, American Equity, are all names of lenders licensed under the Consumer Loan Act who originate mortgage loans. 

Now correspondent lenders and consumer loan lenders are swimming in the same pool. Correspondents must take care not to drink the water the CL lenders have peed in and avoid their floating turds.

And now they BOTH have a new punching bag: Brokers have now been classified as the pond scum, right? Wrong.

Because there’s a problem with this new hierchy.

Instead…….BROKERS actually take a step UP above correspondents, because brokers have stricter licensing requirements under the Mortgage Broker Practices Act.

So the hierarchy now looks like this
Banks
Mortgage Banks (what’s left of them)
BROKERS
Correspondents and consumer loan lenders

This is all about ego and money.

Correspondents: It’s now time to get busy figuring out how to separate yourself from your competition.  In today’s meeting, over and over again, correspondents told the mortgage broker commission that they bring a great deal of service enhancements OVER pure brokers to the consumer.  If that is so, then correspondents should not have a problem in the free market.  If this is not the case, if correspondents do not bring added value, then the state legislature has called your bluff.  Personally, I believe correspondents DO bring value to consumers. 

I can think of at least five different ways to market this change to consumers in a positive way to gain market share. This is nothing but business at it’s finest. Government intervenes, and businesses must find a way to survive and grow. Correspondents will survive this change.

Most memorable moment:

After testimony from a correspondent who reamed consumer loan companies and called them “loan sharks,” Consumer Services Director Deb Bortner stood up, waved her hands in the air and reminded the audience that there are many, many fine consumer loan lenders licensed in WA state and one of them happens to be sitting right there in the room….on the Mortgage Broker Commission.  Don Burton from Evergreen Home Loans smiled.  John Porter from Mortgage Masters asked, “So Don, tell us the down sides of being regulated under the Consumer Loan Act.”  Don said, ‘Well, I can’t think of any.”

DFI’s goal is to have definitions and a preliminary set of rules out for us to review by May 16^th.

• Banker, Broker, Consumer Lender or Credit Union? Part 3
• Mortgage Broker Commission Meeting Tomorrow
• Banker, Broker, Consumer Lender or Credit Union? Part 2
• Licensed to Loan
• Washington State Legislative Alert: SB 6381 and SB 6452

While driving from Renton to Bellevue’s Bridle Trails neighborhood, to show this listing, I get a phone call from another agent who has shown up to view it with a client.  He’s having trouble with the door and wants to know if I am aware of any problems or special way of handling the lock to make it turn.  “No, I haven’t had any problem with the lock before and neither have the other agents that have viewed the house already”, I tell him.

Come to find out, after calling one of the sellers, there is a way from the inside of the house to turn a little switch that would lock the home from the interior and it would make it so the master lock wouldn’t work.  Not good.  *Note to sellers - always let your agent know about quirky things like this so we can stop it from happening in the first place.*  Not only was I losing this viewing but the pending showing I was about to do would possibly be lost too.  On top of it, I lost one other possible buyer showing when yet another agent came by while we were working on getting the problem fixed.  My inner MacGyver kicked in.  I wasn’t about to do some fancy trick with a paper clip but I could quickly sort out a possible way to solve the problem.

And here is where my wiseguy comes in.  Chris is actually a former client of mine.  He and his girlfriend, Maridee, sold a condo and purchased a home through me about 18 months ago. I learned at that time that he was a locksmith and I’ve referred him to several clients since that time, with very good results I will say.  So, Chris gets a call from my partner, Michael, to see if he can help and he’s on top of it immediately coming over from the Seattle area during rush hour and actually making it within about a 20-30 minute time frame. I was thrilled.  One of the great things about working with various people and different types of contractors day in and day out is that when you need something fast - most of these wonderful folks will drop everything to come help you.

His first instinct was to try various methods and tricks he’s learned throughout the years to find special ways of opening locks. Unfortunately that didn’t work.  The second attempt through the garage didn’t work but mostly because it is on an electric opener, so then he had to tear off the existing door handle and replace it with a new lock.  I’ll say that it’s a little disturbing to see how easily some of this stuff can be taken off a property - although Chris did say that since he does this all the time he makes it look easy.  He just hates having to destroy stuff.  He didn’t damage the door though and that’s all good.

It ended up that the buyers that wanted to see the house at my scheduled showing ended up coming back (I rang their cell) and we had a successful viewing.  One of the other agents is planning to come back too but I likely won’t know if that 3rd agent comes back.  Either way, the house is accessible again and all is well that ends well.  Since the clients aren’t looking at offers till next Wednesday we should be set but I’ve got Chris on speed dial now, just in case….

• Sunday Fun: Self-Importance Test…
• Whose client is it, anyway
• Three Steps to Staging a Listed Property
• Your opinion appreciated
• Cats alive!