Washington Mortgage Planner-straight up mortgage advice and commentary

Good morning! My wife and I watched Ben Bernanke on 60 minutes with interest last night. I kept wondering why he was on. Sure, he presented himself as a small-town boy who wasn't in bed with Wall Street. He seemed to be a down-to-earth gent who wanted to appear human. All that is well and good.

My question is this? Why now? Excuse me for being cynical but it appears Mr. Bernanke and the Fed. want to uphold whatever reputation they think they have. Thus, the public relations blitz. It will be interesting to see if it takes hold. Personally, I don't think so. It's interesting how so many smart people ( Bernanke, Greenspan, Paulson, Weill, Greenberg to name a few) got it so wrong. I think it just goes to show you that greed gets in the way of doing the right thing.

Meanwhile, here we are. Small-time players trying to make an honest living yet susceptible to whatever decisions the big shots make. It makes me wonder if we wouldn't have been better off letting the free market dictate the economy. I realize there's danger here as well and expect to hear from you about why that wouldn't work either. As it is, our new administration is already caving about earmarks, deficits and the like. So what do you think? I know this. If I was incompetent at my job, I would either quit or get fired. Wouldn't it be nice if the fat cats had to play by the same rules? Have a great day!

Hi all: I hope your weekend is off to a good start. There's an interesting phenomenon going on. The buyer is returning to the market! I don't know about you but I've received several referrals lately from my favorite realtors to buyers (mostly first-timers) who are out looking at homes. Last year, I did 3 (count them) transactions for purchases. Currently, I have one purchase scheduled to close in a week and have pre-qualified two other buyers so they can start looking.

I'm not sure we'll see the boom times again for a couple more years but am encouraged by the uptick in activity and the more positive outlook by the realtors I know. I expect this to be a much better year for purchases. I think the fact that home prices have dropped, interest rates are still very low and the new $8000 tax credit for first-time homebuyers definitely helps.

I wish you all success this year. I have heard bits and pieces of positive news from your neck of the woods. Let me know how you're doing so far. After all, we're all in this together! Take care.

Good morning: After digesting the latest proposed changes to help homeowners who are upside down but current on their mortgages, I came away feeling this will help very few people at all. And it makes me wonder why the lenders aren't willing to reset mortgages to accomodate their borrowers. All of these ideas to help people really haven't helped many at all. You would think that the lenders would want to help homeowners; especially if they're in danger of losing their home. After all, I guarantee you the lender doesn't want to own your property. At last estimate, Countrywide had over 21,000 properties they own!

Here's the thing. Although a good idea in theory, the newest act only allows people to refinance who have approved mortgages through Fannie Mae (for the most part; my company can only refinance people where the mortgages are held by Fannie Mae and we're a banker). Also, it's only first mortgages. If a second mortgage is on the property that has to be subordinated. And alot of lenders are unwilling to do that.  So what we're left with are a bunch of knock-out factors that probably mean this program won't help most homeowners either. My question is this. When will something be proposed that helps the people who need help right now? Or do we just need to wait and let the cycle run its course? Your thoughts are always welcome. Have a great day!

Hello all: There seems to be a fair amount of confusion about how the new $8000 tax credit passed by Congress recently will work. So here it is in a nutshell.

The $8000 tax credit is available to all first-time homebuyers or buyers who haven't owned a home in the last 3 years. It is a credit on your return and the maximum is $8000 or 10% of the purchase price. For example, a home bought for $50,000 would get a $5000 tax credit. Anything over $80000 would get the full $8000. The maximum allowed is $8000.

If you plan on purchasing this year, realize that you'll still need to come up with the down payment (in all likelihood). You will get a tax refund but only after you have bought your place. If you owe money, deduct what you owe from your credit. This will give you the amount of your refund. If you have a refund coming, you can add $8000 to that number.

The $8000 tax refund replaces the $7500 tax refund in place earlier. The good news is the $8000 doesn't need to be paid back. The $7500 was an interest free loan that needed to be paid back over 15 years. The new $8000 tax credit is good from January 1, 2009 through December 1, 2009. This stimulus has sparked quite a bit of demand among first-time homebuyers. This is a good thing. All in all, I like this measure and expect it to help all of us as the real estate market continues to recover. Have a great day!

Hello all: I'm not sure if this is happening in your neck of the woods but up here it's getting tougher to do loans if you're a mortgage broker. Frankly I'm glad I made the switch to a bank. It seems to me as if the days of the mortgage broker are gone for now. It's too bad. I used to be a mortgage broker and enjoyed looking for that perfect loan for my clients. I heard up until a year ago that mortgage brokers captured 70% of the market. Recently I heard that number was 50% and I wouldn't be surprised if it goes in half again.

It appears the lenders aren't really interested in being in the wholesale business any more. I know I had a file that I couldn't get done on the brokerage side and managed to get done on the banking side. It wasn't easy but we found an investor who would take it. My advice to all you mortgage brokers out there. Affiliate with a bank now. The guidelines are getting tougher every day and, if you wait, you won't be able to get any loans through. The playing field is diminishing and I don't see it correcting anytime soon. Perhaps when the economy picks up steam again we may see mortgage brokers enter into the fold again. But not before then.

As always, I'm curious what you're seeing in your area. Have an awesome day!

Hello all you Western Washingtonians! I'm excited to announce that I, in conjunction with Rebecca Haas (fellow Active Rainer), will be offering an 8 week series of real estate classes at Renton Technical College starting on April 7 and running through June 20. Rebecca and I believe in education and plan on presenting the most up-to-date information available. Our pedigrees are good. Rebecca has taught for years and I'm the son of a retired university professor.

The offerings can be taken individually or as a series. Most classes will cost $10 and we expect to cover the following topics.

1) How to get a loan today and the different loan programs available

2) Short sales and foreclosures-demystify the process

3) Investing in real estate-is it for you

4) Women and real estate-a fun filled night out in Renton for all you women out there!

5) Real estate financial analysis-an in-depth look at investing in real estate

6) Ask the experts-a round table with an attorney, CPA, financial advisor and insurance agent

7) Should I buy or sell now

8) How to sell your home in this market

Again, Rebecca and I are excited about being able to offer these classes. For more information and sign up, go to www.rtc.edu and look under classes. You can also contact either one of us here. Enjoy your weekend!

Good afternoon all: I hope you're enjoying your weekend! I was thinking this morning about how we've all been humbled by what's going on in our world. Personally, I think it's a good thing. We all know better days are ahead and we'll once again return to the proeperity we once knew. In the meantime, I think it's o.k. to have a wake up call once in awhile.

In fact, I truly appreciate the humble, modest, thankful people I know. Those are my favorites because they have put things in perspecitive. I had the opportunity to ride with a friend of mine in his Porsche last week. It was really fun to say the least. And it's obviously an expensive car. What struck me though was his comment about it was just a car. This is his approach to life. He has such a giving presence that drives him; I think it's awesome! I know another realtor who is one of my favorites. Why? Because she is so thankful for every opportunity and makes sure everyone knows it.

So I say that we should all be grateful and humbled by what is happening. An attorney friend of mine would often say "no one died" when discussing events and things that happen to us. Would I have liked to have a better year last year? Absolutely! Did it turn out to be a stellar one production-wise? No. It really wasn't that good. But I still love what I do and this year is starting out great. So hang in there, remember what you're really thankful for, and give! That's the key. Thanks for reading. Enjoy your weekend!

Hello everyone! I hope you day is fruitful. I was just thinking (always a scary thought!) about the fact that it's taking us loan officers of the world longer to get loans done. It's due to a combination of factors. Yes, refinance volume is high and I expect it to stay that way for the first half of the year as rates seesaw up and down. Also, there are less of all of us to handle the increased volume. There are fewer appraisers, underwriters, title people, etc. etc. The backlog at my office means most of the time we're locking loans for 40 days. Of course this doesn't even take into account the purchase side of the equation. This seems to be improving as well. Last year I could count on one hand how many purchase transactions I did. This year I think it might average 1/month. In other  words, a big improvement.

So whatever side of the fence you're on, have patience. These are extraordinary times and we need to recognize that loans take longer to do for a variety of reasons. If you're a borrower, please understand and be sure to get your loan officer all the necessary documentation requested in a timely manner. If you're a real estate professional, please communicate everything and exercise patience with all the providers. I don't think we have much longer to go before turn times, etc improve. It's just now that we need to get through. Have a great day!

Good morning: I read a very interesting article this morning that talked about how the difference between the 10 year treasury note yield and mortgage rates is currently at 2.5%. In a normal market, the difference would be 1.75%. With mortgage rates currently right around 5%, is it possible they may dip as much as .75% lower if lending conditions improve? I think so.

Right now the big lending institutions are trying to see if there is a normal market for paper money as opposed to the government having to guarantee everything. For all practical purposes the free market seized up in August 2007 (for more information there is an excellent Bloomberg article on this). Now, on a limited basis, the large financial institutions (think G.E. Capital, for example) are auctioning off commercial paper to see if there's a market.

I was on the phone with a long time business contact of mine the other day and he said he thought we might see mortgage interest rates close to 4%. He's been in business a long time and has often been right. Again, it appears the government along with financial institutions are doing everything possible to jump start our real estate market and the economy.

If there is a swing toward lower rates, I expect it in 60 days or so. I don't know about you but I still have quite a few fence-sitters looking to refinance if rates touch 4.5% or better. Of course we're all hopeful we'll come out of the downturn we're in. This just might be the catalyst we've been looking for. Of course we're also all eternal optimists! Have a great day.

Hello all: Part of my continuing education the end of last year was to take a class on loan modifications. This is becoming a big business these days. The one thing I always felt was that the consumer needed to be careful about who they signed up with to do a loan modification. In fact, most of the time this can be done directly through the lender. I know this may offend some of you who offer this as a service. I'm sorry and hope that you're working on behalf of your client and not lining your own back pocket!

So here are a few simple tips about loan modifications. Although I have heard of loan modifications being done where the interest rate drops yet the borrower has always made their payments on time, this is the exception to the rule. Generally, loan modifications are being done for people who are behind on their payments. In fact, most lenders will state that they will talk to you when you are delinquent. Now I'm not suggesting that you ruin your credit to do this. Any decision should be made after weighing all sides of the equation.

Here in Washington State, they have mandated that your payment should be no more than 38% of your gross income. This means if you have a loan at a much higher interest rate, you may be able to get it cut almost in half. The terms are usually an adjustable rate (let me know if you hear about modifications for a fixed rate) that goes up every year with a lifetime cap. Suffice it to say it's allowing alot of homeowners in trouble to hang onto their houses.

Yes, the process can take up to 60 days but also can stave off foreclosure and allow you to keep your home. All in all, I think it's a good plan. Remember the lender really doesn't want to have to take your house. They have thousands already! Again, you can often contact the lender directly about your situation; you may be pleasantly surprised what they work out for you. I hope this helps. As always, you're welcome to weigh in with your thoughts. Have a great day!