No Country for Mortgage Brokers

Over the weekend I finally caught the movie, No Country for Old Men. It’s critically acclaimed and several friends recommended that I go see it. At times the movie was boring and slow. At times it was quick witted and interesting. However, most of the time nothing about the movie made sense.

In the current landscape nothing makes sense.

I still get several refinance requests from the internet where people are and getting quoted rates that haven’t existed in years. Moreover, to get a loan closed today is much more difficult than ever before. So for anyone to do a loan at the lowest possible rates doesn’t make any business sense.

Some requests are for home purchases by investors. Every day lenders are limiting their risk by limiting what a mortgage broker can and cannot submit. Every day programs are disappearing. There are very few high risk loans available. It’s only a matter of time before buying a home with no money down will become extinct.

Most of the inquiries I get are questions. Simple questions such as “Is now a good time to ?” or “Will not paying my bills hurt my credit?” The people who ask these don’t give me any information about themselves just a name and an email. That’s like asking your optometrist (eye doc) “Do I have ocular degeneration?” without having him/her/it look at your eyes.

Just like the movie, No Country for Old Men, there is no end in sight to all the madness.

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Spanning the web

Interesting stuff from around the web:

Rocky Mountain News: File under nice hotel but will it give me Marriott Reward points? Ritz puts on finishing touches: It’s the home stretch for the $75 million Ritz-Carlton , which opens its doors a week from today.

Paul Kedrosky: File under the misery gets worse or how California Dreaming is turning into a real nightmare Option ARM Misery

Calculated Risk: File under what happens when corporations don’t pay their Analysts: Corporate Defaults to Rise “Drastically”

Zillow: File under 2007 ends 2007 - It’s a wrap

Trulia: File under 2008 begins New Year’s Resolutions for Online Real Estate and Trulia

Alex King: File under now this is what I call a year end review 2007 in Review

4Realz: File this under A trip down the memory super-highway

AMG: File under Chop Suey Subprime Woes Gives the Chinese Politburo 10% Stake in Major US Bank

PhotoMatt: File under Misery is the key to happiness.

If you have an interesting link that you’d like to share, just post in the comments. I’m always on the lookout for interesting readz!

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Buying a Denver Home online

If you know what Redfin is all about, this article, Buying or selling a home? Forget the traditional realtor may intrigue you:

The Internet is increasingly taking on the duties once performed by agents. And while no one - yet - is suggesting that it’s a good idea to buy a house over the Internet sight unseen, a new business model is emerging that takes advantage of the convenience of Internet .

80% of all home searches start on the internet. So it’s no surprise that companies are using the internet to transform the way they buy and sell .

More on online home buying:

Buyers and sellers can save thousands on sales commissions and through rebates using online agencies, such as Real-a-Save:

FOR A BUYER

  • Home sales price: $300,000
  • Traditional 2.8% buyer’s agent commission: $8,400
  • 66% Rebate Real-a-Save clients would receive: $5,400

FOR A SELLER

  • Home sales price: $300,000
  • Typical 3.2% sales commission: $9,600
  • Real-a-Save’s standard sales commission: $2,500
  • Savings: $7,100.

It’s really too soon to tell whether or not online brokerages will be around or just another passing fad. If you talk to most people they love the idea but would prefer to stick to using a real estate agent no matter how much they despise agents. Why do people despise agents? Same reason people despise the government - a lot of upfront promises, not much after that. The internet won’t solve that problem.

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Double Dealing

Last night during the Sunday Night Football between Indy and Baltimore I managed to steal a glance or two at the Sunday Paper. This article entitled The art of the double deal. The first two paragraphs seemed rather interesting:

To investors, a good day is when they can buy a piece of or sell it. A better day is when they can do both.

Buying and selling the same home before sunset yields a quick profit to the fortunate investor who can work both transactions. It is the stuff of “get rich in ” schemes advertised in infomercials.

While the rest of the story is rather mundane.

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These rates are freezing

Five-Year Freeze Looms
Wednesday December 5, 8:42 pm ET
By Martin Crutsinger and Alan Zibel, Associated Press Writers

Bush Plan Will Freeze Certain Subprime Interest Rates for 5 Years WASHINGTON (AP) — The Bush administration has hammered out an agreement to freeze interest rates for certain mortgages for five years to combat a soaring tide of foreclosures, congressional aides said Wednesday.

The aides, who spoke on condition of anonymity because the details have not yet been released, said the five-year moratorium represented a compromise between desires by banking regulators for a longer time frame of up to seven years and industry arguments that the freeze should last only one or two years.

Another person familiar with the matter said the -freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.

The administration said President Bush will speak on the agreement at the White House on Thursday and the Treasury Department announced that Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson would hold a joint news conference Thursday afternoon with industry officials.

Treasury also announced there would be a technical briefing to explain more of the proposal’s details.

Paulson, who has been leading the effort to craft a plan, said on Monday that the program would only be available for owner-occupied homes — to ensure the break is not given to speculators.

The plan emerged from talks between Paulson and other banking regulators and banks, investors and consumer groups trying to address an avalanche of foreclosures feared as an estimated 2 million mortgages reset from lower introductory rates to higher rates.

In many cases, the higher rates will boost monthly payments by as much as 30 percent, making it very difficult for many people to keep current with their loans.

The plan is aimed at homeowners who are making payments on time at lower introductory rates but cannot afford a higher adjusted .

Through October, there were about 1.8 million filings nationwide, compared with about 1.3 million in all of 2006, according to Irvine, Calif.-based RealtyTrac Inc. With defaults still rising, the trend is expected to worsen next year.

The plan represents an about-face for Paulson, who until recently had insisted the mortgage crisis could be handled on a case-by-case basis. However, he and other administration officials became convinced the tide of foreclosures threatened by the resets represented such a severe threat that a more sweeping approach was needed. They opted for a proposal that was along the lines of a plan put forward in October by Sheila Bair, head of the Federal Deposit Insurance Corp.

Paulson and other federal regulators began holding talks with some of the country’s biggest mortgage lenders, mortgage service companies, investors who hold -backed securities and nonprofit groups that provide counseling for at-risk homeowners.

Under the typical loan — those offered to borrowers with spotty credit histories — the rates for the first two years were at levels around 7 percent to 8 percent. But after two years, those rates were scheduled to reset to levels around 9 percent to 11 percent.

For a typical $1,200 monthly payment, the reset could add another $350 to the monthly payment, greatly raising the risks of loan defaults by homeowners struggling with the current payment.

The wave of foreclosures threatened to make the most severe slump in housing even worse by dumping more foreclosed properties onto an already glutted market, further depressing home prices and shaking consumer confidence.

The deepening housing slump has already roiled financial markets, starting in August, as investors grew increasingly concerned about billions of dollars of losses being suffered by banks, hedge funds and other investors.

The administration plan is designed to deal with the crisis by letting borrowers who are living in their homes and are current on their payments to avoid a costly reset for five years. The hope is that by that time the housing downturn will have stabilized, clearing out the glut of unsold homes and halting the steep slide in prices that is hitting many parts of the country.

With sales and prices once again rising, the expectation is that homeowners will be able to renegotiate their current adjustable rate mortgages into a more affordable fixed- plan.

The housing crisis has become an issue in the presidential race with Democrats Hillary Rodham Clinton and John Edwards putting forward their own proposals this week that would go further than the administration.

Clinton said her own proposal that would impose a 90-day moratorium on foreclosures and freeze the rates for five years or until they had been converted to fixed- loans was a better approach that would help more people.

“Although the administration is finally giving the crisis the attention it deserves, it seems that President Bush is going to give struggling homeowners far less than they need,” she said in a statement.

Mark Zandi, chief economist for Moody’s Economy.com, called the administration plan a good first step, but said the government eventually will have to go further given the problem’s size and the threat to the economy.

“This is the most serious housing downturn we have seen in the post World War II period,” Zandi said. “It is a threat to the broader economy. The risks of a recession are very high.”

Associated Press reporters Deb Reichmann and Nedra Pickler contributed to this report.

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What’s with Web 2.0 and wacky real estate domain names?

Social networking dominates Web 2.0 with sites such as MySpace, Youtube, Facebook. Web 2.0 stalwarts include Zillow and Trulia and now comes Zolve:

Zolve is an online real estate referral network, a business exchange that connects practitioners and service providers across the country and around the globe.

Zolve has a Colorado connection ( Springs) with an interesting twist:

Iraq is known for many things, but being an incubator for a new high-tech, American-based real estate businesses is not one of them. But from 2006 to 2007, a Baghdad garage converted to U.S. military barracks was the launching pad for Zolve, a networking and referral website for professionals that launched this October.

Read the full article: A site for real estate pros

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Realtor woe

From the Post: Realtors seek support amid housing woes

With so many homes and condos sitting on the market month after month, their fresh-paint smell fading and owners’ costs rising, Realtors must find a way to sell.

There will be many real estate agents leaving the business. It’s hard to say who’ll be here in a year and who won’t. I’ve seen good ones leave. I’ve seen bad ones stay. Finding a good is VERY DIFFICULT. As a lender, I only work with a handful (less than five) who I’d recommend.

If you’re wondering how to find a really good real estate agent, read this article first: How to Find a Great Real Estate Agent - 12 Interview Questions!

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Appraising Denver

The Denver Post is a terrible read Monday through Friday but Sundays they tend to “bring it” and “keep it real” when it comes to . This past Sunday they had a great article on appraising .

Read the full article: The measure of a home

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Littleton couple sells home in only five days

How?

They followed guidelines set in the book “How to Sell Your Home in 5 Days,” by Bill Effros.

I didn’t make this up, read the full story: DU real estate class, book help couple auction home

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When real estate is involved, scams will surely follow

First, the part:

A 1031 Exchange, also known as a Like Kind Exchange, is a way of structuring a sale of certain kinds of property so that the seller’s profit or gain is not currently taxed. Instead, the property that is sold is replaced with another “like kind” . If the transaction is properly structured, the seller’s profit or gain is deferred to a future date.

Section 1031 of the Internal Revenue Code:

No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for of like kind which is to be held either for productive use in a trade or business or for investment.

Next, the scam part:

The Internal Revenue Service doesn’t want investors touching their money during a 1031 exchange. Anyone who wants to do this transaction must entrust their money to someone they don’t really know. It can’t be their lawyer, their broker, their lender, or their friend. It has to be a qualified intermediary, according to IRS rules.

There are no actual qualifications to become a qualified intermediary. Sometimes, these qualified intermediaries will take your money and run.

You hand them all the equity in your house, and they blow it on whatever they want. Your 1031 fails, and you then end up owing capital- gains taxes on money that was basically stolen from you. Your only recourse is to sue.

If you love reading about scams then read the full article: Legal tax deal could cost you

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