Archive for the 'Finance' Category
Custom Made For Vets
April 22nd, 2009 categories: Finance, Real Estate News, Relocating
Locating pertinent information on loans, and specifically, home loans, is an exercise every home buyer attempts in preparing to buy a home. For military personnel and veterans, a Veterans Administration (VA) loan is often the vehicle of choice. But, is it the best choice for Vets?
The folks at VAMortgageCenter.com do an excellent job of providing veterans with the information they need to make an informed decision about VA loans and their value. As a matter of fact, they’ve provided me with a brief article outlining the benefits of the loans. Using accurate, factual data is vital to making an informed decision. And, that’s what the article below provides:
Whether you’re getting back from deployment and you’re ready to make that move from the barracks to homeownership, a little one has arrived and your family needs more space, or you’re a seasoned homeowner and you’re looking for the best loan product to fit your needs, the VA Mortgage Center. Com will help you secure affordable financing with a VA loan.
The VA loan is the best product available for active duty members and veterans purchasing a home because of its No-Money down requirement, one of the last mortgage products available to offer such financing. In addition to No-Money down, the VA Loan offers:
è Relaxed Credit Requirements
è Minimal out-of-pocket expenses
è No Private Mortgage Insurance
è No Pre-Payment Penalties
è VA Loans are Assumable
You can also use the VA Loan to refinance your current home, regardless if you’ve used the VA Loan before. Examples of using the VA Loan to refinance:
è Streamline a current VA loan to lower interest rate
è Consolidate a conventional mortgage or second mortgage into a VA Loan
è Take out cash from home equity to eliminate other debt
è Take out cash from home equity to make home improvements
è Transition from an Adjustable-Rate Mortgage into a Fixed-Rate VA Mortgage
While the VA Loan is designed for Active Duty Service Members and Veterans, there are eligibility requirements:
è 24 Months Active Duty
è 90 days of service (wartime) 181 days of service (peacetime) for veterans who served after Sept. 15 1940
è National Guard members completed six years of service
è All members must have been discharged under conditions other than dishonorable
VAMC, one of the nation’s leading VA Lenders and an A-Rated company by the Better Business Bureau for its overall dedication to customer service and ethical lending practices, has a skilled team of VA Specialists who will take you through the VA loan process.
“I could not have asked for a better experience then the one you and VA Mortgage center has given me. I do believe your service is the reason I got into my home and without it I could not have bought a house… Thank you for serving the American Veteran.”
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HOME Relief for the TROOPS
March 30th, 2009 categories: Finance, Real Estate News, Relocating
Have you heard of the Housing Assistance Program (HAP)? Most of us haven’t. Why would we?
HAP is a Department of Defense (DoD) program to assist federal personnel who are stationed near an installation scheduled for closure or realignment, who, no fault of their own, are unable to sell their homes under reasonable terms and conditions. The good news is, the program has expanded.
The newly signed American Recovery and Reinvestment Act of 2009 expands the HAP program. Not only does it cover personnel impacted by the Base Closure and Realignment Commission (BRAC), but now has expended to include:
1) Service members and Defense Department and Coast Guard civilians injured, wounded or ill in the line of duty during a deployment, with at least a 30 percent disability rating determined by defense or Veterans Affairs officials, who have relocated or will relocate for medical treatment or due to medical retirement.
2) Surviving spouses of service members and Defense Department and Coast Guard civilians killed in the line of duty during a deployment, or who died from an injury or illness incurred in the line of duty during a deployment. Survivors must relocate within two years of the death to qualify.
3) Service members under PCS orders to a duty station outside a 50-mile radius of their current station. The primary residence must have been purchased by the owner before July 1, 2006, and sold between July 1, 2006, and Sept. 30, 2012. The reassignment must have been ordered between Feb. 1, 2006, and Sept. 30, 2012. Defense officials can designate earlier end dates.
4) Service members and civilians who must sell their homes to relocate because of 2005 Base Closure and Realignment Commission actions during the current housing market crisis, without tying the decline in home values to BRAC. Under current law, the Homeowners Assistance Program assists BRAC homeowners only when it can be shown that declining market value in an area is a direct result of a BRAC-related action.
For many military personnel, this additional coverage is a sight for sore eyes. Those who purchased during the home price run up that went amok from 2003 to its zenith in the summer of 2005, and, are now due to rotate again, are between a rock and a hard place. In most locations, home values have fallen precipitously since 2005. Additionally, many home prices have decreased 35% or more. Financially, selling is not an option. Instead, many home owners have decided to rent out their homes. Sometimes to the tune of a loss of $500 - $800 dollars a month. But, how long can any member of our military afford to lose that kind of money?
For uniformed personnel, if you haven’t already, take the time to learn about what the Housing Assistance Program has to offer. According to the U.S Army Corps of Engineers contact I talked to last week, the program should be off the ground during the next month or so. If you’re not in the market to sell your home, you probably know someone else in uniform who is. Pass the word. Let them know where to find out about the program. This is a good place to start:
For more information about benefits, eligibility, programs and application procedures, contact:
Homeowners Assistance Program
Attn: RE-AH
P.O. Box 889
Savannah, GA 31402-0889
800-861-8144
The program is being administered through the regional U.S. Corps of Engineers regional offices. Already, they are being flooded with applications for the program. Packages are being accepted and processed in the order received. They will begin processing the packages as soon as the Office of the Secretary of Defense (OSD) gives the go ahead, which is expected in late April or early May. So, in other words, RUN, and don’t walk to the nearest regional office if you’re interested in participating in HAP!
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Do You Like To Play Dominos?
July 14th, 2008 categories: Finance, Market Trends
“IF you can keep your head when all about you
Are losing theirs…”
While the weekend past didn’t witness the height of the current mortgage crisis, the announcement of the financial troubles of Fannie Mae and Freddie Mac resulted in both to lose half their stock value, and more than a bit hand wringing by the Treasury Secretary, Henry M. Paulson. Fortunately, despite the government’s longstanding claim of not backing the debt of both these agencies, in the midst of a near financial stroke, Mr. Paulson seemingly did a “one eighty” by announcing on Sunday that the government would not let either of these agencies fail. One could hear the loud and long sigh of relief from Main Street to Wall Street upon hearing Paulson’s words of assurance. Unfortunately, the weekend’s news came on the heels of IndyMac Bank’s collapse and subsequent takeover by the Federal Deposit Insurance Corp (FDIC) on Friday. Predictably, the mortgage crisis dominos continue to fall with little relief in sight.
With many analysts indicating that failed banks are “lagging” and not “leading” indicators, how much more ”road kill” will the mortgage mess deliver? Will the next casualty be another national bank like Wachovia or Wells Fargo, or, is it the local banks who are due to walk the sub-prime gangplank? And, just who caused this mess in the first place? A sample line-up of likely suspects would probably look something like AJ Nisen’s list:
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Sub-prime Mortgage Brokers
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Banks
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Rating Services (Standard & Poors, Moody’s, etc.)
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Wall Street Investment Banks
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Bond Insurers
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Government Agencies (The Federal Reserve, Congress, Federal Trade Commission, The Accounting Regulatory Agency, just to name a few)
While his list is fairly comprehensive, what about the borrower? Was the borrower asleep when the lender was explaining the loan options to him? Does the borrower have a responsibility to do a risk assessment/analysis at some point prior to committing to the loan? Or, are they blameless?
What about the borrower’s real estate agent? What are their fudiciary duties? Since many of us don’t “pre-qualify” our buyers any longer, can we look after their best interest in what loan vehicle they choose? Or, do we simply take the word of the lender, even one we aren’t familiar…you know, the internet kind.
Well, enough of the finger pointing. Where we sit is the reult of a journey chock full of bad choices by many of those involved. It didn’t happen overnight. As Robert Louis Stevenson said, “Sooner or later in life, we all sit down to a banquet of consequences.” Little did we know that in this case, the meal just happens to be gruel!
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What’s “short” About A Short Sale – Part II?
June 29th, 2008 categories: Finance, Market Trends, Real Estate News, Repairs
So, despite the promise and benefits of a “short sale“, why do they seldom work? Why does there seem to be such a huge disconnect between the seller and their real estate agent, and the lender?
Unfortunately, there are a number of reasons for the general failure of the short sale process.
1) One of the biggest obstacles to a successful short sale is the lack of communication between the listing agent and the lender. Coordination between the real estate agent, who has listed the property, and the lender, or the asset manager handling the property is crucial for a successful transaction. Communication between the asset manager and real estate agent is problematic at best. In almost all short sale cases, attempts to contact the lender’s loss mitigation department or asset manager are rarely successful.
As any agent whose handled a short sale transaction will tell you, in a transaction whose success depends on coordination, frequent and easy communication with the asset manager handling the transaction is rarer than rare. Despite agent’s best efforts, it’s normally a struggle (and that’s putting it midly!) to contact the lender’s point of contact. Building this bridge between the listing agent and the lender is crucial to the success of any short sale. Without this relationship, the short sale is destined to be Dead on Arrival (DOA).
2) The asset managers are overwhelmed by their case loads. Like most of America, lenders were blind sided by the subprime mortgage mess, and are in the crisis management mode attempting to stop the financial bleeding. In other words, the lender’s employees, especially those in loss mitigation, are peddling as fast as they can.
3) The real estate community, much like the lenders on the other side of this short sale joy ride, are, in most cases, lacking the preparation needed to properly market the property in coordination with the lender. To begin the process of coordiation with the lender, the listing agent must compile a full package with supporting documentation from the seller. Rarely, if ever, will the lender even begin to listen to an agent without a complete short sale package in front of them. This short sale submission package should include, among other things:
1. A synopsis of items enclosed.
2. Completed financial disclosure.
3. A hardship letter, preferrably hand written. Remember, this the opportunity to relay the seller’s “story” to let the lender know why they’ve missed payments and won’t be able to make them in the future.
4. Purchase contract.
5. Net sheet or HUD1.
6. Proof of income for the last two pay periods.
7. Copies of last two bank statements.
8. Copies of last two years tax returns with W-2s and 1099s.
9. Third party authorization form.
Some additional items that may be helpful include, a Broker Price Opinion (BPO) or Comparative Market Analysis (CMA), neighborhood foreclosure stats & proof of active listings in the area that are priced low but aren’t selling. All of these will assist you in presenting the seller’s case to the lender.
Pricing the property correctly is another must. A simple method is to take the low end of the comparables, and price the property $10,000-$20,000 lower. It’s important to price the property to peek interest, but the pricing needs to be realistic as well.
An opportunity for a short sale is beneficial to both the seller and lender. For both parties, it’s an escape from a difficult financial predicament. The seller unloads a property they can no longer afford, as does the bank, with minimal damage to the credit rating they need for future investments. The bank, unlike a foreclosure, can avoid managing a property, and unload one on much better terms than if foreclosed.
With the attractions of the short sale option, we can only hope the practice gets much better before the window of opportunity for this “bargain” creeps closed. There’s work to be done on both sides of the transaction. For lenders, establishing a routine and regular avenue of communication with the real estate agent listing the property is a necessary first step. For agents, taking the time to learn the steps necessary to comply with lender requirements might make the coordination process on the other end a bit easier to navigate. In either case, progress is measured in dollars, not finger pointing. So, what are we waiting for?
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Finally – The Housing Crisis is Over!
May 6th, 2008 categories: Finance, Market Trends, Real Estate News
Yes, folks, that’s right. According to today’s Wall Street Journal (WSJ) the housing crisis that’s been upon us since 2005, is at an end. Kind of, anyway. The article’s author, Cyril Moulle-Berteaux, is a managing partner of Traxis Partners LP, a hedge fund or investment advisory firm based in New York city. He cites a number of indications that the worst of the housing “crunch” is behind us, and that current trends indicate we’ve bottomed out, or, as he puts it, “is bottoming out.”
Moulle-Berteaux mentions the market indicators include:
- Homes sales peaked in 2005. New home sales are down 63% from peak levels of 1.4 million.
- Housing starts have fallen more than 50%, and adjusted for population growth, are back to 1982 levels
- Many that were priced out of the market during the downturn can now afford to get back in. Three primary factors have contributed to this:
- Home values have fallen
- Mortgage rates have decreased
- Personal income has increased
Home construction deline is another indicator cited by the author. New home inventories peaked in July of 2006 at 598,000 homes. That figure had declined to 482,000 by the end of March. This decline is due to a drop-off in home completions which have resulted in an increase in the rate of undershooting new home sales. This “under supply” will reduce the inventory. He expects a seven month inventory supply by the end of this calendar year. Once we reach the five month supply mark, which Moulle-Berteaux predicts will occur in ‘09, home prices should hit bottom.
And, while the WSJ’s news is welcome, these views aren’t shared by all, as evidenced here.
Forecasting the long term direction of any market is risky at best. I don’t know about you, but, at this point, I’ll take Mr. Moulle-Berteaux at his word.
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