San Mateo Coastal Blog, LeeE at coastside dot net

Six Must-haves for Mortgage Approval

2012-01-24T11:52:00.000-08:00

I saw this article, by Dian Hymer, and liked so much I reproduce it here.

"Interest rates are hovering around historical lows, and low interest rates increase affordability, making it easier for buyers to qualify. Yet stories of buyers waiting months to gain loan approval and home purchase transactions not closing on time due to lender's strict underwriting are all too common.

Some buyers are turned down for illogical reasons. For instance, if you have investments -- even if they're performing well -- an underwriter might deny the mortgage because your portfolio doesn't fall into the underwriter's risk assessment model.

One couple was turned down because the husband had worked at his current job for less than a year -- even though he was making more money at the new job than he was before.

These buyers were well-qualified. The wife had worked several years for one employer and was able to qualify for the loan on her own. So, the transaction closed, although two months late.

Generally, it's more difficult to qualify now than it was a year ago. Most conventional lenders require a 20-25 percent down payment. For the lowest interest rates, your credit scores need to be in the 700 range. You need to have verifiable income and cash reserves in addition to your down payment and closing costs.

You could run into underwriting problems if you're self-employed, as W-2 income is much easier to verify. Other hurdles are lapses in employment and owning a lot of property. Some lenders won't lend to buyers who have more than three or four residential properties.

If you're buying a new home before selling your current home, you'll need to have 30 percent equity in your current home. This needs to be verified by the lender's appraiser. Also, the lender will want to see a copy of the cashed check from the tenant for the first month's rent to verify rental income if needed to qualify.

THE CLOSING: Because of the risk factor, the lender may want you to have a large cash reserve. Your retirement account counts toward this."

Dian Hymer is a real estate broker with more than 30 years' experience and is a nationally syndicated real estate columnist and author.

145 Troon Way, Condo adjacent to Ocean Colony in HMB.

2011-12-16T12:24:00.000-08:00

• 2 Bedrooms
• 2 Baths
• Built in 1990 by the Plumber’s Union
• Aproximately 1100 sq. ft. of living area, per county records
• Open kitchen, perfect for entertaining
• Ample dining room
• Convenient one car garage, and one car carport
• Beautiful Green common area
• Adjacent to Ocean Colony and golf course.
• Close to school, beach, downtown Main Street and Hwy 92
• Easy commute to Silicon Valley, SFO, or the City
• Roof just one year old.
• Fresh paint and new carpeting
• Split level, and cathedral ceilings

Home Affordable Refinance Program (HARP)

2011-11-02T11:24:00.000-07:00

The industry’s four largest mortgage servicers all say they will be taking part in the revamped Home Affordable Refinance Program (HARP).

Bank of America, Chase, Citigroup, and Wells Fargo have each expressed their support of the program and the changes that will allow more underwater homeowners to refinance at today’s lower interest rates.

Government officials expect the program’s revisions – particularly the GSEs’ waiver on representations and warranties – to increase competition for mortgage refinancing.
An executive with JPMorgan Chase told the company’s investors this week that HARP 2.0 will facilitate “cross-servicing refinancing” because with the rep and warranty waiver, the new lender is not required to assume responsibility for underwriting deficiencies that may have occurred with the original loan.

Chase explains that HARP may be used to replace an adjustable-rate or interest-only loan with a standard fixed interest rate loan, and typically reduces the borrower’s monthly payment.
Frank Bisignano, CEO of mortgage banking at Chase, estimates that with the new HARP guidelines, thousands of Chase customers could lower their mortgage payments by an average of $2,500 a year.
Citi said in an emailed statement that it “supports the program and expects to participate.”
Wells Fargo, likewise, said in a statement that it “welcomes the addition of the new HARP features.”

Veronica Clemons, a spokesperson for Wells Fargo Home Mortgage, says the company is waiting for specific guidelines and requirements from Fannie Mae and Freddie Mac in order to put the changes into practice.

She adds that once the company’s mortgage servicing team has the guidelines in hand, “it will take us some time – depending on the complexity of the guidelines – to make the necessary systems changes to begin offering the new enhancements to our customers.”

The GSEs’ regulator, the Federal Housing Finance Agency (FHFA), says Fannie and Freddie plan to issue guidance with operational details about the HARP changes by November 15th.

“Since industry participation in HARP is not mandatory, implementation schedules will vary as individual lenders, mortgage insurers, and other market participants modify their processes,” FHFA said.

Bank of America says it will participate in the enhanced Home Affordable Refinance Program announced by the administration, and it expects the new guidelines and eligibility criteria to go into effect after December 1st.

“Despite ongoing economic challenges, nearly 90 percent of our customers remain current on their mortgage,” BofA spokesperson Rick Simon said. “HARP helps these homeowners who remain current on their mortgage with options to lower their monthly payment when, otherwise, conventional funding options are limited.”

The GSEs have removed the 125 percent loan-to-value (LTV) cap under the program. Now any borrower with an LTV ratio above 80 percent is eligible for a HARP refinance, as long as the loan was sold to Fannie or Freddie prior to May 31, 2009, and the borrower is not delinquent on their payments.

Since HARP was launched in 2009, nearly 900,000 loans have been refinanced through the program. Government officials estimate that an additional 1 million homeowners will receive assistance under the new guidelines.

In its announcement of the program changes, FHFA encouraged borrowers to “contact their existing lender or any other mortgage lender offering HARP refinances.”

Copied from DSNews.com

Proposed new mortgage finance rules

2011-10-03T11:28:00.000-07:00

You may have seen reports that the federal government is proposing new mortgage finance rules under which only home purchasers who can afford a minimum 20% down payment on a conventional loan would get a shot at the best interest rates and terms. It's true and here are the new guidelines:

Strict mandatory debt-to-income limits. Under the proposal, to get the best mortgage rates, you
would need to spend no more than 28% of your gross monthly income on housing-related expenses, and you couldn't have a total monthly household debt that exceeds 36% of your income. There would be no flexibility to go beyond these ceilings, unlike in today's marketplace in which Fannie Mae and Freddie Mac consider debt-to-income ratios along with other factors through their electronic underwriting systems. At the moment, Freddie Mac has an overall debt ratio limit of 45% of an applicant's stable monthly income.

To refinance your existing mortgage and replace it with one carrying the best interest rate, you'd need no less than a 25% equity stake in your house to qualify. If you sought to take any additional cash through a refinance, you would need 30% equity. Today's requirements are usually not as strict.

Pristine credit standards. For example, if you were 60 days late on any credit account during the previous 24 months, you would be ineligible for a mortgage at the best terms.
These proposals were released at the end of March by banking, securities, and housing regulators, along with the Department of Housing and Urban Development. The agencies were required by the 2010 financial reform legislation to come up with new standards for low-risk conventional mortgages. Under the law, loans that do not meet these strict tests will be pushed into a less-favored, higher-cost category. Banks would need to set aside 5% of loan balances in reserves to cover possible losses from defaults. This extra capital cost would inevitably be passed on to consumers.

2011-07-12T12:45:00.000-07:00

While markets like Palo Alto can bear price increases, multiple offers, and a healthy pace of sales, there are several other markets throughout the Bay Area that cannot. In real estate, it is all relative. Each sale needs just one seller and one buyer.

The value is determined by who is selling, the profile and capability of the buyer, the support of the lender, the type of real estate you are buying or selling, inventory, days on the market of the competition, list / sales price of past sales, and whether you are in a negotiating situation or a competitive world fighting against all cash multiple offers. The key to navigating all of this is education. You need to know what market you are selling or buying in and what will it take to get the house sold or to buy one. The rules are not only different in different areas, but they can also change daily based on what is selling and at what price point. Additionally, the media confuses us even more. ZIllow will tell us that home prices fell 3% in the first quarter, the steepest decline since 2008, and Fiserv Inc. is predicting home values still have 5-10% more to decline. Yet, this is not what homebuyers who are trying to buy a home in Palo Alto or the Sunset are experiencing.

So, what does all of this mean? What we can say is that what should be is sometimes, what seems logical is sometimes, and what can be often is just because it can be. We call this latter the emotional approach to value. There are no set rules and the journey is often not the one we expected. In the end, buy in a good location, take out a conservative loan, and wait 5
years. From Palo Alto to Novato, real estate will reward you.

The Market is Healthy in 2011

2011-05-02T13:10:00.000-07:00

If you are among the buyers who have been waiting for the bottom of the real estate market, that point has passed you by. Looking at the sales data, posted above, notice that pricing has jumped up quite a bit; due in large to multiple offers becoming common again in San Mateo County, and looking from a personal standpoint, the fact that pricing is the best I have seen in my 20 plus years of selling homes. Buyers are again eager to get into the market. The sampling data is large enough to give us good data, including all sales of single family homes and condominiums in the entire county.

Fannie Mae and Freddie Mac have once again made it even harder to borrow.

2011-02-24T10:49:00.000-08:00

I know a young woman who owns a condo. She purchased it back in 2006 when of course it looked like a great deal. No one would have criticized her for the purchase at the time. She is now deeply under water. But she still has her job, and can still make the payments. She wants to buy a house. Houses are now going for less money then she paid for her condo. She wants to walk, but of course if she does that, she won’t qualify for a loan. Who would want to lend to a person who just walked from her obligation?

She can afford to rent the unit out, and her negative would only be 400 a month, seems like a perfect solution, doesn’t it? Rent it out, buy the house, and in time rent will make it a great investment. Trouble is though she has over 100,000 invested in the unit, she has no equity. The new Fannie Mae requirements are that you have a 30% equity in your rental, plus a years lease. So she is in the perfect catch 22, where she cannot hold it (and buy), nor can she walk away and move.

For Sale:Vacant Land in El Granada, CA, Harbor Views, (2 adjacent) 7500 sqft lots

2010-11-12T14:57:00.000-08:00

For Sale: (2 adjacent) 7500 sqft Vacant Land in El Granada, CA, Dirt Cheap! $30,000, Harbor Views.

The Current Home Loan Market

2010-10-21T13:39:00.000-07:00

We were talking in the car, the other day and my wife admitted to me that she was glad she listened to me a few years ago. We had refinanced our mortgage, and I wanted a variable loan, and she wanted a fixed rate loan.

The fixed rate seemed conservative, as the rates seemed likely to go back up. Our first loan was at 17%, so 7% seemed rather desirable. Currently our variable loan rate is in the low 4’s.

Speaking to my loan broker, Brian McNamara, -hmbloans @ aol.com- rates may be at an historic low in January. This coupled with the low cost of housing, the best I have seen in 20 years, makes the next few months look like an historic opportunity for buyers.

Brian tells me, “Rates for loans above $417,000k to 729,750k are very close in rate to the conforming loans below 417k”, but he says that qualifying is much tighter then the “bad” old days. “lenders want to see income and taxes, and minimum credit scores are higher”.

Still I wouldn’t own a house today, if I hadn’t taken the plunge, so long ago, i.e. 17%. And variable rate loans and “negative amortization” still hold a fond place in my heart.

San Mateo County Housing Values Stabilizing

2010-10-12T14:29:00.000-07:00

Zillow sent me the link below about average housing prices in Moss Beach since 2006. I thought it was interesting, because I had just made a similar chart from MLS statistics for my open house last weekend. http://www.zillow.com/local-info/CA-Moss-Beach-home-value/r_53424/?scid=emm-101110_OctLocalPROClaim-bab

My chart is for the San Mateo Coastside so the data may be a little better; since the sampling is a larger slice of the pie, and I notice both curves show a leveling of values over the last few quarters.

Now I don’t really believe the average value (median) of housing in Moss Beach was ever 900k, which leads to the old notion of Lying with statistics. My data includes condos and places like Pacifica, which don’t always command the highest values. I have noticed over the course of time that often Moss Beach‘s average value is relatively higher then the rest of the Coastside.

I don’t believe that this means that a ‘70‘s build 2000 sq ft house in Moss Beach commands any more money then a similar one in HMB, but rather that since the sample is smaller, Moss Beach’s average values are more readily effected by a couple large ticket sales then other areas of the Coastside. Moss Beach has more cliff side, and acreage properties relative to more normal housing then other places on the Coastside.

I hope you find this interesting, and I want to express again that it appears the value of homes, not just on the Coastside, but throughout San Mateo County have leveled out, and appear to be stable, since early 2009.

Half Moon Bay's Pumpkin Festival

2010-09-09T14:47:00.000-07:00

This year’s 40th festival will be held on October 16-17 from 9 a.m. to 5 p.m. Admission is free. For you that don’t know, this is a huge street fair, the largest of the year in Half Moon Bay. This would not be the day you wanted to look at property on the Coastside. The highlight of the fair is a pumpkin weigh off. Individual pumpkins are brought in one at a time on flat bed trucks. These monster pumpkins, weighing in excess of 1,000 lbs, often brought in from Oregon or further, will be carved after they are weighed. They are surreal items, and quite interesting to see. There is also a pie eating contest, and Half Moon Bay winery serves it’s “pumpkin" wine at the event.

The Tunnel at Devil's Slide

2010-07-10T14:53:00.000-07:00

I read in the Chronicle June 2010 that the tunnel at Devil’s Slide is on schedule to be complete and open in the fall of 2010. Caltrans is quietly fighting a lot more water then they expected, which may still hold them up. It is not clear to me if the tunnel has been dug completely through at the time of this writing.

People always ask me if the tunnel will bring home pricing up in Montara and the Mid-coast. I believe it will, partly due to timing, and partly due to the increasing cost of the Golden Gate and that commute.

When the Bridge tolls went up to five dollars we saw an increased number of sales and interest in Pacifica, which arguably is the most affordable area on the Peninsula. Since the toll went up, inventory in Pacifica has dropped to about half of it’s historic amount.

Many have always been reluctant to look further south, not wishing to commute on Devil’s Slide. This is partly because the traffic on the Slide is so heavy during the weekends, particularly, the good weather weekends. Also many don’t like driving on the windy road next to the water’s edge. Truth is most days’ commuters travel at the limit off the Coastside, with their cruise control on, as they are so used to the road.

I don’t see the tunnel helping ease the minds of those who don’t like to drive twisty roads, but since San Mateo County is generally in recovery, and Montara tends to lag but follow the County’s trend, I think the opening of the tunnel may serendipitously help Mid-coast look like a real value. The toll again has risen again on the Golden Gate, six dollars. This may make the Mid-coast the new bright value of the Peninsula.

Cypress Point Road

2010-05-10T12:00:00.001-07:00

This tastefully updated Ocean Colony home overlooking the golf course is highlighted by elegant style and superior attention to detail. Welcoming entry opens to bright formal living room with French doors leading to professionally landscaped backyard. Spacious separate dining room adjacent to beautifully remodeled kitchen with breakfast nook. Ground floor master bedroom has; a fireplace, and marble bath with spa tub.

Frustration About Short Sales

2010-05-10T11:44:00.000-07:00

The trend lines for this week continue to suggest that the Active inventory is declining while demand is increasing. Prices may have bottomed out and some factors are in place to see a potential reversal of the downward pricing spiral. As stated in this blog frequently, it is important to note that the pricing and subsequent market value of homes varies dramatically from neighborhood to neighborhood and the condition and amenities of each home.

This week the number of homes in Active status is lower by 1.7% than last week and is 10.62% lower than last year at this same time period. The number of homes in the Pending status is 58.64% higher than last year at this time. Closed sales for April 2010 are 10.53% higher than last April. The number of Closed sales skew the number for Pending sales because longer escrows are required for, including but not limited to; the short sales, tighter lending requirements for buyers and tougher lender requirements for the home.

Below are the numbers by cities and the count of short sales and bank owned properties:

City Active Status Pending Status Closed Escrows

Short Sale/REO Short Sale/REO Short Sale/REO

Belmont 1/2 1/1 7/3

Burlingame 6/0 8/0 2/0

Foster City 2/1 3/0 4/0

Hillsborough 2/1 4/10 0/0

Redwood Shores 1/1 1/2 0/1

San Mateo 26/5 57/10 4/0

Pay particular attention the statistics for the City of San Mateo. 57 Pending sales are short sales, yet there were only 4 of the 44 Closed sales that were reported as Short sales. 10 in San Mateo’s Pending sales were REO and no REO’s were reported as Closed in San Mateo in April. tThese figures would clearly indicate to me that I would pay a nominal premium in price to purchase a home that is not a short sale because once I remove my contingencies, I know the home is mine. But it is unlikely that most buyers will take this advice as everyone is out of the “deal”. And many times they will be missing out of other opportunities while waiting for the bank short pay approval. It will be interesting to see which markets, if any, will be negatively impacted by unemployment, short sales, bank-owned properties, and most likely, interest rates.

Lawrence Yun, Chief Economist of the National Association of Realtors stated in their May 2010 issue; “Mortgage interest rates have been historically low for a long time, but expect them to start climbing soon. Thirty-year fixed rates may rise to 6 percent by December and to about 6.5 percent at the end of 2011; rates were about 5 percent in early April.

It’s tempting to think the Federal Reserve’s recent pullback from mortgage-backed securities purchases will drive interest rates higher.

But since it ended those purchases at the end of March, as it had planned to do, the impact on rates has been negligible. By all appearances, private investors have filled the void and are absorbing the MBS supply, keeping rates down. Predictable macro-economic factors – the continuing high U.S. budget deficit and the recovering economy – are the main reasons rates are likely to climb.”

I have been told that historically, but I haven’t verified, that the market activity increases just as rates start to go up because people want to lock in the low rates before they go higher. The tax credits have been attributed to the surge in first time home buyers along with the affordability factor. Will an increase in rates fuel the market as our economy improves?

Pinehurst Lane, Ocean Colony

2010-05-07T11:46:00.001-07:00

Great value in this approximately 2300 square foot home on the 2nd fairway of Ocean Colony gated community. Spacious 3 bedroom, 2 and a half bath home. Remodeled, ground floor master suite; includes master bath with spa tub, and separate stall shower. Sunken living room; with gas starting fireplace, and vaulted ceilings. Large eat-in kitchen. Bathroom includes tub with jets.

Remodel Tips

2010-03-12T10:47:00.001-08:00

Here are five tips for planning a successful home remodel that you can enjoy for many years to come.

1. Compile a list of home remodeling ideas and draft a budget for the work.
Look through magazines and tear out pictures that attract your attention. Make up a poster board and glue the pictures on it to empower your vision.

2. Look for a professional remodeler to help plan the project.
Get referrals from friends who have had work done in the area, consider friends, also, if you have a contractor’s leaning, but your artistic side admittedly is a little stilted, chat with or hire an interior designer. Designers should have some kind of portfolio. Treat them as you would a builder.

3. Check the references and background of the remodeler.
Don’t work with any contractors who can’t give you proof of errors and omissions insurance. (Known as E&O)

4. Agree on a contract.
Many contractors will try to get an open ended contract for time and material. You need a lot of trust or experience with these contractors for this to make sense. Still if you’re opening up the walls of an older house, be prepared for surprises, and don’t expect your contractor to take the brunt of the surprise.

5. Take advantage of the energy efficiency tax credits.
There are many interesting new ideas and opportunities out there today. Some will pay off handsomely when you go to sell the home. If you appreciate the extra quality or energy savings it’s reasonable that a buyer will as well.

Credit Offer Opt-out

2010-02-25T14:23:00.000-08:00

My loan broker just sent me this.
"Hi Everyone
As you may know I am in the mortgage brokerage business.
This week, a client complained to me that she received calls from businesses offering her different credit services the very night I ran her credit report. They knew her personal information and her credit score.
I told her I would find out what happened. What I learned was that the credit repository companies Transunion, Equifax etc) regularly sell that information. I discovered that if a person does not "opt-out" they can sell this sensitive information.
I imagine most of you would not like this to occur to you.

To op-out for the next 5 years you should call 888-567-8688."

I tried, it, it is talking to a computer, and as a tad frustrating, but really didn't take too long,
Goodluck Lee

Corporate Controlled Congress

2010-02-20T12:32:00.000-08:00

You know in the past, I have preferred to work with loan brokers. The benefit with them was that they could shop the lenders who were hungry and get the best deal currently available to the borrower.

Well welcome to the new corporate America. These independent brokers are finding their hands tied behind their backs by large corporate lenders.

Today a broker told me he could get a loan for a guy with a 680 credit score, with a job and a 400k mortgage, on a 500k home easier then he could get a loan for a millionaire, with no job, who has the money in the bank, and a 770+ credit score, with only 200k owing on his million dollar home.

You know, I hear a lot about the Republican controlled congress, and the Democratic controlled congress, but all I see is the corporate controlled congress. Stand aside little guy, I have all the money.

Quality Schools in Half Moon Bay

2010-01-25T14:44:00.000-08:00

Education on the Coastside has always been a mixed bag. The Coastside has tried some innovative programs such as the Spanish immersion program, at Hatch Elementary, which may have been a good concept, but had problems and resistors. The local elementary schools have won awards, including Hatch, El Granada and Farallone View in Montara over the years. The high school has consistently done well in math and science, but has had fallen behind at times in the humanities.

When Apples for students was available, Half Moon Bay was second to none in parent and student participation in acquiring these computers for the schools. Parent participation in the local schools has long been very good. The high school has not been without its controversy’s, like any high school, but overall I would think it would feel good to have attended it.

Half Moon Bay High School is a relatively small school, thus they not always able to offer all the AP courses or students may have a schedule conflict and need other opportunities to take AP courses. Over the past five years, they have established a relationship with the University of California and their teachers to allow students the opportunity to take selected AP courses online; i.e. AP Physics, AP Chemistry, AP Calculus BC, and AP Economics. For a pdf of the HMBHS Advanced Placement Program visit

http://www.cabrillo.k12.ca.us/hmbhs/print_file/HMBHS_AP.pdf

Rehab Day in Half Moon Bay

2010-01-25T14:43:00.000-08:00

The Senior Center in Half Moon Bay annually sponsors a home repair day.
Men and women from the coastside and Elsewhere come together and do much needed repairs for seniors who cannot any more. These repairs include gardening, light plumbing, deck repair, stairway or ramp replacement, painting, and a host of other small tasks. Much of the work is done in the Half Moon Bay Senior Park, Canada Cove. Some of the work is done to homes in La Honda, Pescadero, EL Granada, Montara and Moss Beach. Here is what the senior center posts"

"What repairs will be done?
Projects dealing with safety, health and accessibility issues are given priority. In the past we have installed wheelchair ramps, replaced unsafe stairs and porches, fixed plumbing problems, repaired furnaces, painted houses inside and out and cleaned yards.
Who is eligible?
Homeowners must be at least 60 years of age or disabled and unable to do the repairs themselves. Recipients must meet income eligibility requirements.
How do I apply for help?
Call Senior Coastsiders at 726-9056 for an application. Return the application by March 31 with a $10 processing fee.
How do I volunteer?
Anyone fourteen and older can be a volunteer! Volunteers do not need to be skilled at home repairs, but any skills will be utilized. If you would like to volunteer, please call us at 726-9056 or print the Application at the top of this page and send it to us.
Who sponsors the program?
The Home Rehabilitation Program is sponsored by private donations, corporations, local businesses, San Mateo County Aging and Adult Services, and San Mateo County Department of Housing."
This work not only helps those who need a hand, but also brings the coastal citizens a bit closer together.

Wouldn't you like to join in. It is a fun day, and you are welcome to join in.

blogspot

2010-01-25T14:40:00.000-08:00