Rediscovering the American Dream

By Marcie Geffner - Inman News

Home ownership has enjoyed a well-deserved reputation as a crucial component of the so-called "American Dream." But for many people, home ownership is now perceived more as a nightmare than an essential element of the (admittedly somewhat mythical) "good life" that could be attained in the United States. Whether that negative perception is based on valid fears or little more than irrational overreactions to today's market correction, it's nonetheless a paradigm shift that should be of concern to anyone whose livelihood depends on real estate.

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When will YOUR housing market recover?

By Marcie Geffner -

Pundits love to make predictions as to when home prices will stabilize in U.S. housing markets. But even well-respected forecasters and analysts may disagree, and even if a forecast proves true nationally, your local market may behave in a wildly different way. This disconnect between broad-stroke forecasts and small-scale local markets presents quite a puzzle for homebuyers and home sellers, who need to make major financial decisions on the basis of facts, not fiction.

Two examples nicely illustrate the divergent opinions of respected economists, some of whom suggest a housing rebound is just around the corner and others of whom say a recovery could take years just to get started.

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REALTOR® Rescue Squad

By Marcie Geffner - California Real Estate

REALTORS® who want to learn more about short sales might take a few tips from Doug Fowler, a manager at Coldwell Banker Brokers of the Valley in Napa.

A dozen sales agents in three of the firm’s four offices attended Fowler’s internal training sessions on short sales, and seven or eight of the participants later banded together in an informal group that aims to help homeowners explore alternatives to foreclosure.

“We trained pretty much everybody [in our offices],” Fowler recalls. “Some people yearned for more and wanted to have a support network and exchange of ideas, so that was the genesis of putting together what we called the ‘rescue squad.’”

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Is Your Business REO-Ready?

By Marcie Geffner - California Real Estate

While no one is happy to hear sad stories about homeowners who’ve lost their home in foreclosure, the hard truth is that foreclosures can be an excellent business for real estate salespeople who have the expertise, cash flow, and professional demeanor to sell bank-owned properties.

The incidence of foreclosure has soared so quickly that many lenders are overwhelmed by the number of “real estate-owned” or “REO” properties they have on their books, according to Vicki Carpenter, director of training at Coldwell Banker ABR in Menifee.

“Banks have a very high inventory” of REOs and “the floodgates have just started to open,” Carpenter says.

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Fence-sitters waiting for the bottom may miss it

By Marcie Geffner - California Real Estate

It’s a common condition in today’s housing markets: Buyers appear to be glued to the proverbial procrastinator’s fence and their hesitancy creates plenty of work, but generates no income for REALTORS®, month after commission-less month.

“What we are finding is fence-sitters,” says Pat “Ziggy” Zicarelli, owner of Style Realty in Tarzana. “Young people, single people, divorced people who need to buy properties are saying, ‘I like that property; however, I’ll wait until the prices come down more.’

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Survey finds tougher loan requirements

By Marcie Geffner -

It's no secret that banks have raised the bar for borrowers who want to get a new home loan. The fact is that today's requirements may be significantly more challenging, regardless of whether you want to buy a home, refinance your current mortgage or take out a home equity loan or line of credit.

Yet these tougher requirements definitely don't mean that you won't be able to get a loan. Plenty of borrowers have obtained new loans this year on good terms and often at historically low interest rates.

Banks tighten across the board Lenders use the phrase "tighter credit standards" to describe their own tougher requirements. And indeed, most banks have tightened their credit standards this year.

A recent Federal Reserve survey of senior loan officers found that 62 percent of the banks surveyed had tightened their standards for prime residential mortgages, and even higher percentages had tightened their standards for non-traditional and subprime home loans, and home equity lines of credit. None of the banks that were surveyed had loosened credit standards for these types of home loans.

Documents may help you qualify To obtain a loan today, you'll probably have to jump just a little higher than you would have had to a year ago. You'll probably have to fill out more paperwork, and you'll probably be asked to hand over more documents, such as W-2 forms, paycheck stubs and income tax returns, to demonstrate your creditworthiness.

To qualify for a loan at a favorable interest rate and on favorable terms, you'll also need an acceptable credit score, and the lender likely will require an acceptable appraisal of the home. You may have more loan choices if your employment has been steady for several years, your credit is unblemished, and you are able to make a larger down payment to buy a home or you have some equity in your current home if you want to refinance.

Tighter credit standards mean it's important to shop around and compare loan offers. You may even be pleasantly surprised to find out you're better qualified for a loan than you thought you were.

The bottom line is that tighter credit standards should be a welcome trend in home loans. That may seem counterintuitive, but the fact is that tougher requirements protect borrowers as well as lenders and help to ensure that you're financially able to make the monthly payments on your new loan. Always be sure to read your loans documents before you sign them and ask questions about any aspect of your loan that you don't understand.

© 2008 LendingTree, LLC. This story, "Survey finds tougher loan requirements," is reprinted by the author with the written permission of LendingTree, LLC.

Rates dip on big mortgages

By Marcie Geffner -

Interest rates on so-called "jumbo-conforming mortgages" have dipped significantly in recent weeks. The new lower rates should make these larger loans more affordable for people who live in high-cost housing markets and can meet the qualifications to get this type of loan.

Jumbo-conforming loans were created in February, when the federal government raised the loan limits on mortgages that can be purchased by Fannie Mae and Freddie Mac, two government-sponsored corporations that buy packages of securitized mortgages from lenders. The loan limit used to be $417,000 even in most of the nation’s high-cost housing markets, but was raised to as much as $729,750 in some counties. To find maximum loan limits in your county, you can download Fannie Mae’s Jumbo-Conforming Loan Limit Look-Up table.

Initially, interest rates on jumbo-conforming loans remained stubbornly higher than rates on smaller conforming loans. But the interest-rate gap has narrowed considerably now that Fannie Mae has decided to price the larger loans in line with the smaller ones.

As a result, you may be able to get a significantly lower interest rate on a larger loan today, even if you live in an expensive housing market. And a lower interest rate means you may be able to borrow more money than you otherwise could have to buy a home or refinance your current mortgage.

Lenders still have tougher requirements to qualify for jumbo-conforming loans. These requirements include:

• A sizable down payment, which may be advantageous since it creates equity in your home and eliminates the need for mortgage insurance.
• Plenty of equity, which is especially important if you want to refinance an existing jumbo mortgage with a conforming jumbo.
• A strong credit score.
• The ability and willingness to document your income and assets.

You may be among the chief beneficiaries of the lower interest rates on jumbo-conforming loans if you want to buy a home in an expensive housing market and can make a substantial down payment or if you want to refinance an existing jumbo mortgage and have plenty of equity.

If a jumbo-conforming loan might meet your needs, you probably should act quickly because these loans still face an uncertain future. Jumbo-conforming loans haven’t been seasoned in the marketplace, and the higher loan limits are set to expire at the end of this year, unless the federal government extends the sunset date or makes the new higher limits permanent.

© 2008 LendingTree, LLC. This story, Rates dip on big mortgages, is reprinted by the author with written permission of LendingTree, LLC.

After VOWs, what next?

Marcie Geffner - Inman News

The U.S. Justice Department and National Association of Realtors have at last settled their long-running dispute over the competitiveness of virtual office Web sites. The settlement is good news for real estate, but VOW innovations may yet play out in surprising ways that neither the DOJ or NAR could have anticipated, and the settlement itself still leaves plenty of intriguing questions to ponder.

In case anyone's still confused, a VOW is a Web site that functions like a "virtual" real estate brokerage office in the narrow sense that registered users can use the Web site to access just about the entire MLS database of for-sale homes. Only selected information that's protected for business or privacy reasons is excluded. These Web sites enjoyed some popularity as new innovations some years ago. But the extended controversy over their use and allegations of anti-competitive practices stalled the VOW revolution in its early days.

The settlement involves wins, losses and compromises on both sides:

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What To Know About FHA Loans

By Marcie Geffner -

It's a common misconception, but in fact, the FHA is not a lender. Nor does the FHA give people money to buy a home or set interest rates on home loans. Rather, the FHA, or Federal Housing Administration, is a federal government agency that offers mortgage insurance on loans originated by lenders that are approved by the agency. This insurance protects the lender in case the borrower defaults on the loan.

The FHA was set up in 1934 after the Great Depression and is a division of the U.S. Department of Housing and Urban Development, or HUD. FHA-insured loans enjoyed decades of popularity, but then fell out of favor during the recent housing boom in part because lenders began to offer subprime loans that had artificially low initial interest rates and monthly payments. These subprime loans have since proved disastrous. As a result, lenders have tightened their credit standards and borrowers have flocked to the comparative safety and familiarity of FHA-insured loans.

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