Jun
4
There are several definitions of the word BILL:
- an itemized statement of money owed for goods shipped or services rendered; as in “pay your bill“
- a piece of paper money; as in “dollar bill“
- the entertainment offered at a public presentation; as in “what’s on the bill“
- player for the National Football League team based in Buffalo, NY; as in “Jim Kelly will always be a Buffalo Bill“
- Nickname for William; as in “Bill Clinton“
- a brim that projects to the front to shade the eyes; as in “bill of a baseball cap“
- beak: horny projecting mouth of a bird; as in “pelicans have big bills“
- a statute in draft before it becomes law; as in “I‘m just a bill. Yes, I’m only a bill. And I’m sitting here on Capitol Hill.”
Bill Ritter recently signed five mortgage and foreclosure bills into law. Here’s a rundown of these BILLS from the Rocky Mountain News:
- HB 1322, MEASURE TO PREVENT MORTGAGE FRAUD
- SB 85, PROTECTS CONSUMER REAL ESTATE TRANSACTIONS
- SB 203, MORTGAGE BROKER LICENSING
- SB 216, MORTGAGE LOAN ACTS PRACTICES
- SB 249, REAL ESTATE TITLE ESCROW SETTLEMENT
Summary: Mortgage brokers and others involved in real estate transactions must act for the benefit of the borrower, including making reasonable inquiries into the borrower’s financial situation and using best efforts to obtain a loan that takes into consideration the borrower’s situation.
Summary: Prohibits brokers from trying to influence the judgment of a real estate appraiser through coercion, intimidation or compensation.
Summary: Brokers must be licensed by the Division of Real Estate and must get adequate training, testing and continuing education and are prohibited from engaging in 24 specific activities, including fraud and conflicts of interest. A broker who has a license revoked for violating this legislation would not be eligible to be reinstated unless he or she provides full restitution to individuals he or she has harmed.
Summary: Requires brokers to act in good faith and deal fairly, including: not to recommend the borrower enter into a transaction that “does not have a reasonable tangible net benefit to the borrower, considering his circumstances; to make reasonable inquiry into the borrower’s financial circumstances; not to make loans where there is no reasonable probability of repayment.”
Summary: The Division of Insurance is required to provide annual reports on the number of enforcement actions taken, the market trends with title insurance and real estate transactions, and consumer complaints generated by market analysis, investigation and enforcement efforts regarding title insurance.
While this is a start but there are several areas that still need to be addressed:
What about the borrowers? Aren’t they culpable? If Joe and Jane Borrower buy a house and refuse to pay their mortgage simply because they racked up a lot of debt what’s their penalty?
What about banks? In Colorado, state and nationally chartered banks are exempt from registration: bank, saving bank, savings and loan association, industrial bank, industrial loan company, credit union, or bank or savings association holding company organized under federal law, and subsidiary or employee of the above. This is a large population of the mortgage community.
What about the Account Reps? They represent the mortgage lenders who end up buying your loan. Some will say just about anything to get mortgage brokers to send them business. In other words they’re part of the problem. Somehow there’s no law where mortgage lenders have to police their own employees.
Jan
17
FAQ: How do I get the best rate?
Filed Under faq, mortgage | Leave a Comment
From time to time I’ll be addressing client questions that are frequently asked and some questions that are quite obscure. Some questions are mortgage related, some are real estate related, and some are Denver related. My answers won’t be the canned answers you see on most mortgage sites.
Q: “How do I get the best rate?”
A: Let’s assume the following:
- you’re asking about a mortgage on a single family house that’s considered your primary residence
- you’re asking about a first mortgage without a second mortgage
- you have either 20% equity (refinance) or you’re putting a 20% down payment (purchase)
- you have credit scores over 720
- you don’t have any late payments of any kind
- you have assets i.e. money in a checking account, savings account, 401k, mutual funds and/or stocks at established financial institution(s)
- you have statements from the aforementioned financial institution(s)
- you’ve been in the same line of work for quite some time for the same company
- you have a limited amount of debt
- your debt to income ratio is far below the 40% threshold
If you fit this profile you’ll get the best rates because mortgage institutions view this profile as little to no risk. These loans are typically run through an automated underwriting program i.e. computer software that runs an algorerithm (software geek joke) and gives you a loan approval in seconds. Even if you don’t fit this profile 100%, the automated underwriting program may still grant you an approval in seconds. Your history of paying debt (credit score), capacity to pay the loan (income/assets), and the collateral backing the debt (property) all plays a role in getting the best rate.
Dec
11
An analysis of the Denver Real Estate Market
Filed Under denver, real estate | 1 Comment
Mark Twain’s quote “Lies, damn lies, and statistics.” is apropos when discussing the real estate market. Real estate statistics for sales are skewed due to the growth in real estate the past five years. Fueled mostly by low interest rates and overly aggressive loan programs, people of all shapes and sizes bought homes. As rates have gone up and the those loan programs have been deemed “too risky” the growth has slowed. However, the statistics will show that the Denver Real Estate market tanked.
To put things in perspective the real estate market is very similar to the career of Denver Bronco Jake Plummer. Jake has been a steady player who never put up gaudy statistics. The last several years his statistics were better than ever as Jake played at an elite level. This year his play dropped. But did it? On average he throws 15 touchdowns and 15 interceptions every season and this season, if he wasn’t pulled for Jay Cutler, he was set to meet those mediocre statistics.
A thorough statistical analysis should take into account the overall average over time. Recently I came across a blog called the Bubble Buster which presents a complete Real Estate analysis of major cities. The analysis takes history into account. Today they released their Denver real estate analysis:
The Denver economy is continuing its steady recovery following the bursting of the tech bubble. The past thirty years have seen three real price cycles and the beginning of a fourth in Denver. Including one cycle of TWELVE years in which nominal growth was 32.6%, yet real growth was negative 29.4%. Market cycle time periods have varied from the downturn cycle of twelve years to the prior growth cycle of fourteen years.
What I truly appreciate about this analysis is that it takes into account the real estate growth in Denver during the past quarter, four quarters, year, five years and historical average. According to this analysis, Denver has seen an appreciation of .1% in the last quarter, 2.3% past four quarters , 4.7% last year 2005, 17.6% last five years and 6.3% historically.
The analysis is further broken down:
- Summary
- Recent History
- Price Charts
- Peaks and Troughs
- Forecasts
Recent declines in sales activity have increased the number of homes on the market. Further sales declines should be expected due to current local market psychology. However, significant price declines are unlikely as the mortgage debt servicing cost has remained steady.
The past five years have seen fair nominal and real price growth. The Denver mortgage-debt-to-income ratio has remained steady throughout the past five years despite a national increase, indicating there should be little to no concern about an Denver market bubble. Consequently, nominal and real prices should be expected to continue to grow at near historic levels if mortgage rates remain at current levels.
In order to most accurately determine prior market price cycles one must remove the effects of inflation and look at real historical prices. The past thirty years have seen three real price cycles and the beginning of a fourth in Denver. Including one cycle of twelve years in which nominal growth was 32.6%, yet real growth was negative 29.4%. Market cycle time periods have varied from the downturn cycle of twelve years to the prior growth cycle of fourteen years.
Accurately projecting local prices is a challenging task because so many factors play a part in home prices. Mortgage rates, inflation, job growth, median income, legislation, migration patterns and market psychology are just a few. Additionally, real estate markets rarely have periods in which they achieve average historical growth. Rather, real estate markets have periods of tremendous growth followed by market decline. Consequently, the tables and charts below present three likely scenarios, rather than one definite path.
Good stuff!
Sep
7
Mortgage rates are dropping
Filed Under mortgage | Leave a Comment
Denver Post is reporting that rates are dropping.
Their graphic is somewhat puzzling because the online article never references subprime lending.
Subprime loans are for borrowers who have:
- LESS THAN PERFECT CREDIT
- BANKRUPTCIES, FORECLOSURES, LIENS, COLLECTIONS
- HIGH DEBT LOADS
- MINIMAL TO NO ASSETS i.e. SAVINGS, 401K, STOCKS, FUNDS, etc.
- HARD TO DOCUMENT INCOME
Subprime loans have:
- HIGHER RATES
- STRICT PENALTIES TO PREVENT YOU FROM SELLING OR REFINANCING
- INTEREST ONLY AND 40, 45, OR 50 YEAR AMORTIZATIONS AVAILABLE
- LENIENT UNDERWRITING