Real Estate Investing

Although short sales have become fairly commonplace in the last year, lenders have parameters that must be met to qualify to sell a home “short” of the payoff amount.  Parameters that *most* banks require, that is.  Some still don’t pay attention.  In a very illuminating post by Pacita Dimacali, an East Bay, North CA real estate agent in Alameda, one specific lender gets a pretty powerful dressing down.  She also writes on ActiveRain what conditions are defined as “hardship”:

HARDSHIP conditions include, but are not limited to:

Unemployment
Reduced income
Divorce
Separation
Medical bills
Too much debt
Death of spouse
Mortgage payment increases
Business failure
Job relocation
Illness
Damage to property
Military service
Incarceration

A friend of mine qualifies at least four of the 14 items listed here, but also deals with this bank that’s mentioned as being one of the worst for short-sales.  I think she’s bound for foreclosure before they ever get the paperwork done for a short-sale.  I hate that she’ll go through this, but she is not alone - there are a lot of people who sympathize with her position. In fact one commenter wrote (regarding the bank),

I know many say had our all-wise government just let the banks go ahead and fail it would have caused world-wide disaster. Well, I wish they had stayed out of it and let the chips fall where they may. No one comes to my aid or yours if we make bad decisions. As for the world-wide disaster, I think the banks are causing it themselves right now.

They do not care. That’s all. The top brass got their bonuses and that’s all that really mattered.

Read the entire article along with the comments.  Very very enlightening and I’m all about informing the consumer!

“Mortgage Mentor” Bill Ladewig posted something over at Active Rain about those ridiculous little postcards we all get trumpeting the 4.5 percent loans that are still available. He reviewed in detail all the fine print, made phone calls, and learned that maybe things weren’t as they appeared.

1. It is questionable to me the advertised rate was ever available.
2. The California Department of Real Estate requires the advertised company name and license number match exactly.
   
3. hey also require the company to be a legal entity. Two DRE strikes? This guy is either gutsy or really stupid.

I believe RESPA requires the advertised rate and APR be shown in the same print size. I also believe the loan amount basis for the APR calculation must also be disclosed.

His findings and declaration that we need to do something about it remind me of this scene from Network.  Also interesting is that actor Peter Finch playing Howard Beale was ranting about the economy, the jobless rate, and more!  How timely!

CAUTION:  Very strong language.  Very strong.  Careful if you’re watching from work.

Any contract written after July 30, 2009 will have a whole new set of rules to follow - primarily the Mortgage Disclosure Improvement Act which included amendments to the Truth-in-Lending Act.  The new rule amends disclosure requirements, sets waiting periods, and institutes fee disclosure requirements.  All are important measures to protect the consumer.

Here’s a link to the detailed information about Regulation Z.

First, lenders must now disclose if there is a rate change - or extension of credit.  If the annual percentage rate (APR) changes by more than 1/8 of a percent, a new good faith estimate must be SENT no later than three business days prior to the closing.   These same disclosures must now say, “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

The waiting period is the funkiest part of the new regs, though.  A creditor may not close a home loan until SEVEN business days following the MAILING or delivery of the initial disclosures.  Saturdays count as business days, but Sundays and holidays do not.  If there are any changes, yet another seven-day waiting period is required.

What does this mean for buyers, sellers, and their agents?  Count on a longer period of time to close a house.  Where we might’ve before been able to close in 30 days, it MIGHT now take 45 days.  In any case, for a home loan there is a minimum 7-day wait until closing.  Of course, a CASH deal is always an option.