Today in the Star Tribune (MN biggest newspaper) break some good news!! “Mortgage fraud scheme architect gets 13 years in prison” by James Walsh breaks the news of that the people behind the Parrish Marketing are going to jail.
What is Parrish Marketing? This company was a multi-million dollar company that built real estate and sold it. The only problem is, they were crooks. They used straw buyers; other peoples credit reports, to purchase the homes. They also worked with a fraudulent loan officer at US Bank who made up income documents and pleaded guilty to mortgage fraud.
It’s not only the mortgage fraud that really pisses me off, but rather all of the innocent people he screwed over. I have a friend who did all of the lawn work for this company. He never got paid for any of his work!! I also feel bad for the neighbors next to these homes, because they all lost money on equity. Instead of neighbors these people now get discounted foreclosed homes.
The main man of Parrish Marketing, Michael Parrish got 13 years. I wish that with jail time, they could find out a way to pay back all of those poor people who worked hard, but got screwed.
Thursday, July 31, 2008
Wednesday, July 30, 2008
Housing Bill 2008- UPDATE
Okay, so the President passed the new housing bill today. Aloha, new laws and regulations.
“Devils in the details” by Eva Rosenberg, posted on marketwatch.com 7/29/2008 examines the new laws.
In a previous post I thought that First-Time Home Buyers will be able to get some free money, but I was wrong. It looks like it’s a short-term, zero interest loan.
It’s an informative read and I suggest doing so. If you have any questions regarding the new tax laws, please call your CPA or tax preparer. As always, if you have any questions regarding real estate, you know where to go!!
“Devils in the details” by Eva Rosenberg, posted on marketwatch.com 7/29/2008 examines the new laws.
In a previous post I thought that First-Time Home Buyers will be able to get some free money, but I was wrong. It looks like it’s a short-term, zero interest loan.
First, we have a $7,500 credit for new homeowners that is not really a credit,
it's a loan. Those who qualify to receive this credit will receive 10% of the
purchase price of their home -- up to $7,500, in the first year. Then, they will
repay the loan over a 15-year period, starting in the second year after the
taxable year in which the house is purchased.
It’s an informative read and I suggest doing so. If you have any questions regarding the new tax laws, please call your CPA or tax preparer. As always, if you have any questions regarding real estate, you know where to go!!
A what-if story....
I first read this article “Life in a Bubble”, by Carol Lloyd on sfgate.com in the 2004. At that time you have to remember that we were just starting to see the real estate bubble come to fruition.
The summary of this article is that Lloyd looks at three different scenarios of people thinking about buying real estate. She does the math and forecasts three "what if’s" for these people. All are unique and it really points out that its different strokes for different folks.
The moral of this post is, don’t always listen to the national headlines, but rather find out what works for you. Personal preference is a strong factor when it comes to purchasing real estate. Make sure you have a true, solid professional helping you out, who is not just out to make a bigger paycheck!!
The summary of this article is that Lloyd looks at three different scenarios of people thinking about buying real estate. She does the math and forecasts three "what if’s" for these people. All are unique and it really points out that its different strokes for different folks.
The moral of this post is, don’t always listen to the national headlines, but rather find out what works for you. Personal preference is a strong factor when it comes to purchasing real estate. Make sure you have a true, solid professional helping you out, who is not just out to make a bigger paycheck!!
What is a FICO™ (credit score)?
A FICO score is a credit scoring system that is commonly used by financial lenders to evaluate the borrower. Here's a list of different factors that impact your credit score and their approximate percent of impact.
Types of Credit in Use: 10%--Considers the number of credit accounts and the mix of credit types: credit cards, installment loans, mortgages, and is most important if you don't have a very lengthy credit history.
Payment History: 35%--Takes into account (1) many different types of payments, including mortgages, major credit cards, department store credit cards, car loans, other installment loans such as for furniture, etc., (2) information from public records such as bankruptcies, liens, lawsuits, foreclosures, judgments, and wage garnishments, (3) details of any missed or late payments, such as the amount, how long ago it occurred, and how late it was.
Amounts Owed: 30%--Looks at (1) the total of all the amounts you owe for all accounts, (2) the mix of amounts owed (credit cards versus installment loans, for example), (3) the number of accounts that have balances, (4) how much of your total credit available on credit cards and installment loans you're using (the closer you are to maxing out your available credit, the more negative the impact on your score), and (5) how much of the original balance borrowed you still owe on installment loans, like your car loan.
Length of Credit History: 15%--As long as you don't have negative information in your file, the longer your credit history, the higher your score.
New Credit: 10%--Considers (1) how many new credit accounts you've opened recently, (2) how long it's been since you opened a new credit account, (3) how many requests you've made for credit recently, (4) how long it has been since lenders have requested credit information on you, and (5) how good your recent credit history has been.
Types of Credit in Use: 10%--Considers the number of credit accounts and the mix of credit types: credit cards, installment loans, mortgages, and is most important if you don't have a very lengthy credit history.
Payment History: 35%--Takes into account (1) many different types of payments, including mortgages, major credit cards, department store credit cards, car loans, other installment loans such as for furniture, etc., (2) information from public records such as bankruptcies, liens, lawsuits, foreclosures, judgments, and wage garnishments, (3) details of any missed or late payments, such as the amount, how long ago it occurred, and how late it was.
Amounts Owed: 30%--Looks at (1) the total of all the amounts you owe for all accounts, (2) the mix of amounts owed (credit cards versus installment loans, for example), (3) the number of accounts that have balances, (4) how much of your total credit available on credit cards and installment loans you're using (the closer you are to maxing out your available credit, the more negative the impact on your score), and (5) how much of the original balance borrowed you still owe on installment loans, like your car loan.
Length of Credit History: 15%--As long as you don't have negative information in your file, the longer your credit history, the higher your score.
New Credit: 10%--Considers (1) how many new credit accounts you've opened recently, (2) how long it's been since you opened a new credit account, (3) how many requests you've made for credit recently, (4) how long it has been since lenders have requested credit information on you, and (5) how good your recent credit history has been.
Tuesday, July 29, 2008
How far will it dip…
The Standard & Poor's/Case-Shiller 20-city index dropped by 15.8 percent in
May compared with a year ago, a record decline since its inception in 2000. The
10-city index plunged 16.9 percent, its biggest decline in its 21-year history.
Source
Will this ever end? I’m not sure, but I do know that this is good for people looking to buy. Homes are getting cheaper and cheaper by the day.
At the same point, this is a national figure. Not all areas are in a decline. Since this stat is Real Estate, it's location specific. I have heard reports of people selling their homes in some areas of the country in less than two weeks, while others have been waiting a year or more! It is all about location, price and demand.
The new mortgage bill….
The headlines around the nation have been dominated by a new mortgage bill that has already passed the senate and on the way to W’s desk to get signed.
The bill provides government money to help the housing industry. I’m not so sure about all of the FHA stuff in the bill. It’s a little hard to understand because I’m not sure if it’s between the lenders and their current customers, or if customers can refinance into a new FHA mortgage loan with a different lender?
One part of the plan is called "FHA rescue" which is supposed to help people get out of toxic mortgages. Sounds more like a way to help people stop foreclosing and to help ease the housing market crash. I will post more information on this topic when I gather more knowledge.
The highlight of this bill is for First-Time Home Buyers (FTHB). The numerous articles I have read state that there will be a tax credit issued to First-Time Home Buyers. On a bankrate.com mortgage blog, they are saying that FTHB will receive as much as $7,500 in tax rebates if they buy a home.
With this new tax incentive, next year might be the best time ever in the history of the United States of America to be a FTHB. Not only are there tons of great deals on the market today, FTHB will get a $7,500 dollar incentive to purchase a new home!! Basically, you can buy a new construction for a discount or buy a fixer-upper for a discount...You can’t go wrong!!
If you are interested in learning more about what you qualify for, or want to start looking at homes, please Contact Us. We have the answers for you.
The bill provides government money to help the housing industry. I’m not so sure about all of the FHA stuff in the bill. It’s a little hard to understand because I’m not sure if it’s between the lenders and their current customers, or if customers can refinance into a new FHA mortgage loan with a different lender?
One part of the plan is called "FHA rescue" which is supposed to help people get out of toxic mortgages. Sounds more like a way to help people stop foreclosing and to help ease the housing market crash. I will post more information on this topic when I gather more knowledge.
The highlight of this bill is for First-Time Home Buyers (FTHB). The numerous articles I have read state that there will be a tax credit issued to First-Time Home Buyers. On a bankrate.com mortgage blog, they are saying that FTHB will receive as much as $7,500 in tax rebates if they buy a home.
With this new tax incentive, next year might be the best time ever in the history of the United States of America to be a FTHB. Not only are there tons of great deals on the market today, FTHB will get a $7,500 dollar incentive to purchase a new home!! Basically, you can buy a new construction for a discount or buy a fixer-upper for a discount...You can’t go wrong!!
If you are interested in learning more about what you qualify for, or want to start looking at homes, please Contact Us. We have the answers for you.
A new tool for the mortgage market
The people that lend all the money in America have decided that they are going to start to use covered bonds as a way to finance mortgages. The top four banks think that these bonds will help to revitalize the mortgage market, especially in the secondary market.
Here is a link to the covered bonds definition on Wikipedia. The gist of these bonds is that they remain on the bank's balance sheet and are backed by the bank's cash flow/assets. They have a good credit rating and are almost fail-proof.
What does this mean for the housing market?
I’m not exactly sure, but I do know that at this point in the housing cycle, anything can help. Any money put in the housing sector is a good thing in my book. These bonds are also very popular in Germany where they have had some great success.
To read the full article, click here
Here is a link to the covered bonds definition on Wikipedia. The gist of these bonds is that they remain on the bank's balance sheet and are backed by the bank's cash flow/assets. They have a good credit rating and are almost fail-proof.
What does this mean for the housing market?
I’m not exactly sure, but I do know that at this point in the housing cycle, anything can help. Any money put in the housing sector is a good thing in my book. These bonds are also very popular in Germany where they have had some great success.
To read the full article, click here
Thursday, July 24, 2008
Q and A on investment real estate from a smart realtor…
Well, there are so many homes on the market today that I start to get giddy. It’s a buyer's market and will be for the rest of the year and maybe even longer.
In today’s post, I interviewed one of my most trusted realtors in the Twin Cities area, Mr. Brian Amiot. He is my go-to realtor for investment real estate.
Satori: Where should I look at buying?
Brian Amiot: You should look for a neighborhood that is not over saturated with homes listed for sale and especially not over saturated with abandoned or foreclosed homes for sale. It should be within a decent proximity of where you live, regardless of whether you plan on renting or rehabbing. Other than that, it's all about trying to find a neighborhood that has relatively short listing times in general.
S: If I buy a foreclosure, what are some of the pitfalls I should be aware of?
Amiot: In buying a foreclosed home, you are buying the home "as-is" in most cases. A lot of foreclosed homes have been sitting vacant for quite some time, so there can be issues with cracking from the extreme temperatures and sometimes even pipes bursting. I always recommend getting an inspection, and to keep in mind that inspectors don't always catch everything. Plan on having more repairs than you initially see.
S: When do you see the market bouncing back?
Amiot: If I knew that answer for sure, I would be in a tropical paradise, being served on hand and foot...but I have seen signs of the market turning in the recent past. There have been more showings and offers on my listings, and I have seen more and more properties that I show clients sell before we even get a chance to see them. I don't think it's going to happen overnight, but I think we are at least starting to head the right direction.
S: If I have 100k to invest in another property what should I look at buying?
Amiot: What to invest in is very different for every investor. It depends if your goals are to buy and hold, or buy and sell first of all. Again, I believe in keeping properties close enough where you can manage them if need be. Other than that, it's all about finding the house that has some opportunity for improvement. I try and look for functional obsolescence, or something that is functionally wrong with a home. But, also something that can be fixed without too much of an expense.
S: What are some of the upsides you look at in homes?
Amiot: I am a personal fan of 3 bedroom, 1 bath homes that have an opportunity of adding another bath. I also like homes that are in nice neighborhoods and down the street from much larger, more expensive neighborhoods. Layout in general is a huge factor, but probably the two most important things that I look for are curb appeal and that "Wow" factor right when you walk in the door.
If you are looking into purchasing investment real estate in the Minneaoplis/Twin Cities, MN area, please contact The Satori Group or Brian Amiot (web-site posted under the link section). We love questions!
In today’s post, I interviewed one of my most trusted realtors in the Twin Cities area, Mr. Brian Amiot. He is my go-to realtor for investment real estate.
Satori: Where should I look at buying?
Brian Amiot: You should look for a neighborhood that is not over saturated with homes listed for sale and especially not over saturated with abandoned or foreclosed homes for sale. It should be within a decent proximity of where you live, regardless of whether you plan on renting or rehabbing. Other than that, it's all about trying to find a neighborhood that has relatively short listing times in general.
S: If I buy a foreclosure, what are some of the pitfalls I should be aware of?
Amiot: In buying a foreclosed home, you are buying the home "as-is" in most cases. A lot of foreclosed homes have been sitting vacant for quite some time, so there can be issues with cracking from the extreme temperatures and sometimes even pipes bursting. I always recommend getting an inspection, and to keep in mind that inspectors don't always catch everything. Plan on having more repairs than you initially see.
S: When do you see the market bouncing back?
Amiot: If I knew that answer for sure, I would be in a tropical paradise, being served on hand and foot...but I have seen signs of the market turning in the recent past. There have been more showings and offers on my listings, and I have seen more and more properties that I show clients sell before we even get a chance to see them. I don't think it's going to happen overnight, but I think we are at least starting to head the right direction.
S: If I have 100k to invest in another property what should I look at buying?
Amiot: What to invest in is very different for every investor. It depends if your goals are to buy and hold, or buy and sell first of all. Again, I believe in keeping properties close enough where you can manage them if need be. Other than that, it's all about finding the house that has some opportunity for improvement. I try and look for functional obsolescence, or something that is functionally wrong with a home. But, also something that can be fixed without too much of an expense.
S: What are some of the upsides you look at in homes?
Amiot: I am a personal fan of 3 bedroom, 1 bath homes that have an opportunity of adding another bath. I also like homes that are in nice neighborhoods and down the street from much larger, more expensive neighborhoods. Layout in general is a huge factor, but probably the two most important things that I look for are curb appeal and that "Wow" factor right when you walk in the door.
If you are looking into purchasing investment real estate in the Minneaoplis/Twin Cities, MN area, please contact The Satori Group or Brian Amiot (web-site posted under the link section). We love questions!
Friday, July 11, 2008
Where the smart investors are buying....
Yesterday in the Star Tribune an article written by David Peterson appeared, examining the issue of how the core cities of the Twin Cities are growing, unlike a few years ago when the burbs were bursting with new homes.
I have been saying this for a long time to my clients looking to buy a new home, buy in the city, not far away from the core. People are going to start to move closer to the core of the city and not to the far away suburbs. The McMansions are in trouble.
One of the major reasons for this is GAS PRICES!!! People are not going to be able to keep up an 80 mile commute when gas is $4 bucks a gallon.
Not only that, but energy prices are playing a part in the move also. Homes in the burbs are usually bigger, which means they cost a lot more heat and take care of then a smaller house in the city.
At the end of the day people will always live near and around the core of the Twin Cities. There are so many nice places to live in the area, unlike Detroit, that people will continue to move in to the city.
I suggest that people look at foreclosed homes in the range of 180-250k range and gobble up cheap foreclosed condos!! The thing about condos is that when people leave them, only so much can happen to them, unlike a single family home, where there is no association to protect against some of the damage.
http://www.startribune.com/local/24283434.html?page=3&c=y
I have been saying this for a long time to my clients looking to buy a new home, buy in the city, not far away from the core. People are going to start to move closer to the core of the city and not to the far away suburbs. The McMansions are in trouble.
One of the major reasons for this is GAS PRICES!!! People are not going to be able to keep up an 80 mile commute when gas is $4 bucks a gallon.
Not only that, but energy prices are playing a part in the move also. Homes in the burbs are usually bigger, which means they cost a lot more heat and take care of then a smaller house in the city.
At the end of the day people will always live near and around the core of the Twin Cities. There are so many nice places to live in the area, unlike Detroit, that people will continue to move in to the city.
I suggest that people look at foreclosed homes in the range of 180-250k range and gobble up cheap foreclosed condos!! The thing about condos is that when people leave them, only so much can happen to them, unlike a single family home, where there is no association to protect against some of the damage.
As always if would like to get property listings or wondering what your financing options are, contact The Satori Group and we will do our best to make it happen.
Thursday, July 10, 2008
Fire Sale!!!
Foreclosures are up 53% since last June!! Houses are getting cheaper!!! There are some good things about these stats and some really bad news regarding the stats.
I’ll provide the negative aspect first. America is not close to seeing an uptick in home values yet, especially on a national level. If you live in a home today, you are going to keep losing money on your equity (of course this is neighborhood specific). The market bottom will not take place until the majority of these foreclosures are passed thru the market to consumers.
In fact in this article they project that the number of 2.5 million homes nation wide, up from 1.5 million in 2007. These numbers point out that this mess is far from over!
Of course to some people this is great news!! Houses are getting cheaper and will continue to get cheaper. If you are looking at buying a home to live in or for a long term investment, this could be a wonderful time in the market. I have heard of homes dipping more then 30% in some markets and with this news, it looks like we might see a bigger decline.
The point is that not all people should be worried about these horrifying stats. In the short-term they hurt the current homeowners, but if you are looking in to buying home or investment properties, then it’s a great time to start shopping.
I my humble opinion I think that in the MN area, the end of this year and the start of 2009 will start to show the bottom of the housing market. We have not seen the huge declines in home values, like FL or CA; therefore it should not take as long for the local housing market to rebound compared to the national level.
http://biz.yahoo.com/ap/080710/foreclosure_rates.html
The FOUR C's
This article was posted on bankrate.com and provides a great mnemonic called the “Four C’s”
The four C's
The four C's
Capacity, which refers to the adequacy of the borrower's income to pay
the interest and principal due on the loan, plus property taxes and homeowners insurance.Character, which refers to the borrower's track record of paying debts
as evidenced by his or her credit history and credit score.Capital, which refers to the borrower's down payment (or equity) as a
percentage of the current value of the home.Collateral, which refers to the safety and soundness of the home and
the value of the home as determined by an appraisal relative to the agreed-upon
purchase price.
- Greg Gwizdz, national sales manager for Wells Fargo Home Mortgage in Des Moines,
Iowa. 7/10/2008
If you are okay according to the four C’s you should be able to get a mortgage. You might also be able to obtain a mortgage if one of these C's is a little weaker then the other one.
For example, you have a ton of equity (>35%) and have a lower credit score. You will be able to get a loan or vice versa, you have little equity, but a terrific credit score.
The truth is that there are tons of products on the market for consumers. Don’t be too concerned about not getting a loan if you live within your means and have a good credit score.
If you have any questions regarding your current mortgage, please contact us @ www.thesatorigroup.org.
If you meet all of the four C's you might be a perfect fit for our SWBStm.
http://www.bankrate.com/brm/news/mtg/20080710-mortgage-requirements-a1.asp
Wednesday, July 2, 2008
Time to ditch that ARM
Today on the watch, an article was posted about how rates will be going up over the next few years. People on ARMs will find that there rates are going to go up and so are 30yr mortgage rates.
Even thou it points that it will take a few years, before we face higher rates from the Fed, the point of the article is that its time to start planning.
I for one think mortgage rates will fall sometime in the fall and then begin to climb up and up. If you are on a ARM I would look at getting in to a fix mortgage rate ASAP. Not only will it protect you against rising rates, your home is going down in value daily. The only way to position your self in the market safely is to lock into a long term rate. That way you can hold on to your house for the long term or you can sell it when the market turns.
I know many people with very good FICOS and wonderful jobs that still remain on ARMs. It’s not that bad if everything works out, but it could be devastating for these people if the market does not turn around in the next few years.
"It's a pretty safe bet that if you are able to refinance out of your
ARM into a longer-term fixed rate, now is a great time to look and probably a
pretty good time to get it done," says Gerri Detweiler, author of "The Ultimate
Credit
Handbook."
http://www.marketwatch.com/news/story/feds-overlooked-message-dump-your/story.aspx?guid=%7BEFCC57B4%2D1C56%2D4A35%2DAB41%2D01AD7A60D6A6%7D
Even thou it points that it will take a few years, before we face higher rates from the Fed, the point of the article is that its time to start planning.
I for one think mortgage rates will fall sometime in the fall and then begin to climb up and up. If you are on a ARM I would look at getting in to a fix mortgage rate ASAP. Not only will it protect you against rising rates, your home is going down in value daily. The only way to position your self in the market safely is to lock into a long term rate. That way you can hold on to your house for the long term or you can sell it when the market turns.
I know many people with very good FICOS and wonderful jobs that still remain on ARMs. It’s not that bad if everything works out, but it could be devastating for these people if the market does not turn around in the next few years.
Tuesday, July 1, 2008
The end of the 1% interest rate??
Wachovia announces today that they are pulling there Neg-am loans off of the market.
What is a neg-am loan? These loans were made to people who desire more payment flexibility.
The payment options are:
1.) Pay half the of the monthly interest payment on the loan. The other half of the interest is deferred back to the principle.
2.) Interest only payment. Only the interest that is due on the loan. Uses a 30 year amortization schedule.
3.) Principle and interest payment, like a traditional 30 year mortgage payment
4.) 15 year payment. This is based off a 15 year amortization schedule.
The real tricky thing about these loans is that they are based on a floating index, meaning that interest rates are always adjustable. YIKES!!
I think the problem is not that these are bad loans, they have been used for 25 years, but they were made to the wrong type of people the past few years. If you are deferring your interest that is due on your home and its deprecating then it’s a lose-lose scenario. It looks like Wachovia finally woke up and decided that enough was enough.
What is a neg-am loan? These loans were made to people who desire more payment flexibility.
The payment options are:
1.) Pay half the of the monthly interest payment on the loan. The other half of the interest is deferred back to the principle.
2.) Interest only payment. Only the interest that is due on the loan. Uses a 30 year amortization schedule.
3.) Principle and interest payment, like a traditional 30 year mortgage payment
4.) 15 year payment. This is based off a 15 year amortization schedule.
The real tricky thing about these loans is that they are based on a floating index, meaning that interest rates are always adjustable. YIKES!!
I think the problem is not that these are bad loans, they have been used for 25 years, but they were made to the wrong type of people the past few years. If you are deferring your interest that is due on your home and its deprecating then it’s a lose-lose scenario. It looks like Wachovia finally woke up and decided that enough was enough.
Article:
http://www.marketwatch.com/news/story/wachovia-halts-mortgages-negative-amortization/story.aspx?guid=%7B4FB9EE95%2D6B1E%2D4F8D%2DA785%2DB989525C9641%7D&dist=msr_2
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