Lending Regulations, Too Strict

Mortgage rates are still at record lows. But, what does this mean for all of us? Yes you can get a home or refinance your current mortgage at a phenomenal interest rate, but there is more to it. Why are interest rates so low right now?

Interest rates continue to fall because there are not enough people buying homes. With a lot of the “Bank Owned” inventory hitting the market, there just are not enough qualified buyers. There are not enough buyers because lending practices have become increasingly strict. I agree that the practices during the sub-prime mortgage boom were a major cause of the housing bust, but that doesn’t mean that all of the requirements were too lenient.

Yes, there needs to be good regulation in lending, but there are too many people, wanting to purchase homes, and in the past, would have been qualified to, that cannot. If our government really wants to get rid of all the inventory on the market and pull us out of this recession, homes have to be sold. For homes to get sold, there has to be qualified buyers, and with the lending standards the way they are right now, not many people, who do not already own one or two houses, can qualify.

Leave a comment and let me know what you think.

Will They Forgive Underwater Mortgages

This is a re-post of an article from Barron's.com by Randall W. Forsyth, which I thought was very interesting. I would love to hear your comments about it. http://online.barrons.com/article/SB50001424052970203667404575412951885388376.html?mod=googlenews_barrons

Buying Junior Liens

This article by by Colin Said of the San Francisco Chronicle tell the story of a couple who purchased a trustee's deed to a home in Santa Cruz at auction. Little did they know, they bought a second mortgage on a foreclosed house, that has no actual value.

The article states that Roberta and Randall Stand paid $97,606 for a house at a courthouse auction. They gave the home to their daughter and her fiancé, who in tern, spent over $13,000 fixing it up. Months later, a notice was posted on the door stating the home would sold at auction. After much litigation, Wells Fargo and the couple settled for an undisclosed amount.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/08/01/MNRU1EL529.DTL

This just goes to show that you really need to do all the research when you are buying anything from an auction as there are no guarantees to title or condition.

What do you think about this? Leave a comment and let us know.

Credit and Loans

In today’s economy and real estate market, the most important asset in securing a loan is good credit. But should it be? Does having good credit mean that you will make your payments on time and does having bad credit mean you won’t? Although one’s credit is definitely a good way of showing a person’s past actions, it may not be the best way of showing their future. I believe there needs to be less emphasis on credit ratings when it comes to loans. There are many items which can affect credit, and sometimes, they cannot be controlled. For instance, say you went to a medical institution for physical therapy. You paid your bill on time, every time. But, they say you owe them for a visit. They can attack your credit and you have no choice but to enter a dispute. This has a great negative effect on your credit rating. Furthermore, proving that you do not owe them any money can be extremely difficult. Now it might only be $200, but that can be the difference between a 10% and 7% loan rate.

Also, say you defaulted on a credit card 5 years and entered a rate reduction plan and have been paying your bill every month on time for the past 5 years. This still has an extremely detrimental effect on your rating. Personally, I think loan qualification should be based on more recent than past history and also, more on your income debt ratio. If you have $50,000 in the bank and you want a $20,000 loan, it shouldn’t matter what you did 5 years ago, as long as within the last 2 to 3 years you have been doing all the right things. I just think, as a society, we put too much emphasis on arbitrary numbers that are based on actions, which so nothing about how you carry yourself and your finances now.

Problems for Defaulters

I believe most of you know about the new Fannie Mae regulations for borrowers who purposely default on their mortgages. If you do not, one is quite simple. If you “strategically default” on your mortgage, you will have a seven year ban on new Fannie Mae loans. They are using this as a means of detouring borrowers who can afford to make their payments, but choose not to. This is becoming popular amongst borrowers who owe more on their home than it is worth. On top of the seven year ban, according to an article on seerpress.com, Fannie Mae might start attempting to recover some of their losses through the court system.

I don’t know how most of you feel about this topic, but I agree with Fannie Mae. I know these are hard times and it must be very difficult to be “upside-down” in your mortgage, but I don’t think that give one the right to walk away. We are all facing the same difficult times and why should we, as taxpayers, homeowners, and citizens, have to pay for one’s strategic default. When someone defaults, it is a cost to all of us. The value of the nearby houses goes down, which is a strain on the community and can cause further defaults. The huge numbers of defaults also make it harder for everybody to receive credit, as banks need to become more conservative. Personally, I think Fannie Mae is well within their rights to try and recoup their losses, however, there must be a thorough investigation to see if these cases are actually strategic defaults. Otherwise, they will be punishing those who are already in over their heads.

What do you think? Leave a comment and let us know.

Source: http://seerpress.com/fannie-mae-tightens-belt-on-borrowers-defaults/2697/

New Lead Paint Regulations

With unemployment rates still very high and the economy struggling, is now the best time to be adding to the cost of renovating one’s home?

According to an article by Inman News, the Environmental Protection Agency is removing a provision in their 2008 Lead Renovation, Repair and Painting rule. This stipulation allowed home owners and their contractors to disregard the rules of the act as a means of saving money, as long as they could prove there were no children under six years old or pregnant women living in the home. Now, whenever there is work done to a home built before 1978, the contractors must follow all aspects of the rule, regardless of the owners’ requests.

I know most of you are probably thinking this is a great thing. There will be less toxic substances in our homes and we will all be safe because of it. But I ask, is now the right time? With all the problems in the housing marking, is it a good idea to make the cost of renovation higher? These costs could deter many home owners from making key “efficiency improvements”, which can raise the value of the home and decrease energy use.

What do you all think? Would you prefer the added cost, or be able to your own decisions about what needs to be done with your house?

Real Estate Agents - 7 Reasons Why You Need Them

When you are looking to sell or buy a home, do you need the services of agents or can you manage without them? While not using an agent can save the commission payable to them, here are the several reasons why their services are invaluable to people who are looking to make real estate transactions.

• Expertise: Realtors and the agents who work for brokerage firms usually have formal education and training in the field. In addition, with their years of experience, they will have better knowledge of the market and prices than you will.
• Making your work lighter: When you publish a sale advertisement about your home, you could be flooded with responses. Imagine having to show the house to ten different people at ten different times of the day! This is where a professional can help by sieving out the not-so-interested buyers and contacting you only when a good offer is made.
• Market information: Realtors have their finger on the pulse of the market. They can help you fix a good price based on their knowledge about the prices in a particular neighborhood, as well as prices of competing properties. They are aware of market trends and can advise you on the best time to buy or sell.
• Confident negotiation: Their years of experience make them excellent negotiators and they can get you the best price possible by acting as an intermediary without giving out details on how high or low a price you are willing to settle on.
• Taking care of paperwork: Paperwork for the agreements for sale or purchase could run into multiple pages. Every clause has to be checked thoroughly, so that you will not be later held legally responsible for mistakes in the wordings. Agents have the professional expertise in drafting and checking the words in these documents to prevent any future damages.
• Benefit of networking: While you may have a limited number of contacts among prospective buyers and sellers, agents are constantly in touch with buyers, sellers, as well as competitors, and can find a suitable match for you.

If you are hesitant thinking that they are interested in a quick sale to earn their commission, think again. Most professional agents keep their clients’ best interests at heart, as they are more interested in gaining your trust and maintaining long-term relationships, so that you will contact them whenever you are looking to buy or sell property.

For additional resources and information please visit the following sites.

Resource Links:

http://www.gmacrealestate.com

Bill Fields All Star Coaching Program: http://www.AllStarCoaching.net
GreatWest GMAC Search all MLS Listings: http://www.LocalHomeLink.com
GreatWest GMAC Consumer Buyer/Seller Blog: http://www.GreatWestBlog.com

T. Sami Siddiqui (Broker/ Owner) Buzz About Sacramento Blog: http://www.samisiddiquiblog.com
GreatWest Podcasts- Weekly Updates on new REO, Short Sale, Bank Owned Foreclosure Listings: http://www.HouseTalkOnline.com
GreatWest Videos: http://www.youtube.com/brodiestephens
Facebook GreatWest Profile Page: http://www.facebook.com/searchmlshomesforsale
MySpace GreatWest Blog: http://www.myspace.com/greatwest
GreatWest Real Estate Careers- GMAC is looking for Professional Realtors to Join Us: http://www.CareersWithUs.com
Global Employee Relocation: http://www.employeerelocation.blogspot.com
Apply for a Loan: http://www.choice1funding.com

ActiveRain Blog Company:http://activerain.com/blogs/greatwestgmac

Sacbee:http://www.sacbee.com

Company WordPress Site:http://www.thehomeholders.com

Real Living:http://www.realliving.com