Trends In Mortgage Rates : What The Fall Season Brings To Rate Shoppers

Mortgage Market Update
From the desk of Joe Bailey

Keeping You Informed…

 Trends In Mortgage Rates : What The Fall Season Brings To Rate Shoppers  

 Like in 2006, 2007 and 2008, autumn 2009 is marked by falling leaves and falling mortgage rates.

The trend looks more like a pattern. 

Based on Freddie Mac data of the last 4 years, 30-year fixed mortgage rates rise from January through August, and fall through fall. There’s 6 weeks left until January.  The clock may be ticking for today’s home buyers and rate shoppers.

Conforming and FHA mortgage rates are sub-5 percent right now and, by most measures, there’s no good reason for it.

• The U.S. dollar is extremely weak — usually a negative force on mortgage rates
• The price of gold reflects a healthy fear of inflation — usually a negative force on mortgage rates
• The stock market is on a tear — usually a negative force on mortgage rates

Furthermore, the economy is no longer in free-fall which is the scenario that dropped rates below 5 percent in the first place.  Mortgage rates are poised to rise and, when they do, they’ll rise in a hurry.

See, that’s the other trend in mortgage rates.  Rates rise much faster than they fall.  Just ask anyone on the wrong side of the Memorial Day Massacre about how that turned out.   As low as rates are now, we could be looking at 7 percent mortgage rates in a flash.

Timing mortgage markets is impossible.

As a homeowner, it’s easy to keep up with rate trends on a weekly basis with the newspaper or the aforementioned Freddie Mac data, but markets move faster than that.  They’re minute-by-minute and ever-changing.  Unfortunately, laypersons don’t get access to mortgage bond data for free.  Even the U.S. Treasury market fails as a proxy anymore.

“Play like a champion today!”
 

Joe Bailey - Loan Officer
O.  (831) 689-8500
C.  (831) 251-5167

JBailey@JoeBailey.biz

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Judicial vs. Non-Judicial States: Foreclosure Investing

Have you ever wondered what foreclosure law your state abides by?  Have you ever wondered what foreclosure law other states use?  Well, I put together a list of all 50 states that I’m sure you would love to take a look at. 

What does it all mean?

Judicial Foreclosure – This is when the courts have to get involved and the foreclosure has to go through the legal system.  This is typically a longer and more difficult process to deal with. 

Non-Judicial Foreclosure – This is when the courts don’t get involved and the foreclosure stays out of the legal system.  This is typically a shorter and easier process to deal with.

For more information about the difference between Judicial and Non-Judicial Foreclosure check out this website www.embracevision.com/JudvsNonJud.

Mortgage – This is the document used to purchase a house in a judicial state.  It acts as the security instrument for the property.

Deed of Trust – This is the document used to purchase a house in a non-judicial state.  It acts as the security instrument for the property.

For more information about the difference between Mortgage and Deed of Trust documents, check out this website www.embracevision.com/MortvsDeed.

Some states are both Judicial and Non-Judicial and you will need to check into the jurisdiction in your area to find out which method will be used.

Thank you,

Aaron Clendenning

aaron@embracevision.com

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Short Sales: A Step by Step Process

Short Sale Help - The Easy Button

Short Sales: A Step by Step Process

With the foreclosure rates as high as they are today a lot of home owners and investors are looking for a way to save their credit and get out of their homes or investments without completely breaking the bank.  When in reality, breaking the bank is what they should be doing! 

Let’s first go over the foreclosure process or timeline.  The first step of foreclosure is referred to as pre-foreclosure.  This is the time period when the homeowner starts to miss payments on their mortgage.  After a certain amount of payments have been missed, typically 3 months or 90 days, a notice of default or lis pendens is issued to the home owner.  This marks the transition from pre-foreclosure to full on foreclosure.  During foreclosure, the bank will set a date to sell the house at a public auction.  This time period varies drastically between different states and different banks.  Once the house goes to auction, if no one bids on the house the bank takes over the property and it becomes a REO (Real Estate Owned) Property.  Short sales are most common during the foreclosure stage but can occur during pre-foreclosure as well. 

You might be asking yourself: Why would the banks accept a discount on their loan?  Banks are not in business to own real estate, they are in the business of arbitrage and because of this they will accept considerable discounts on properties so they don’t have to take them back on their books.  Also, for every non-performing asset on a bank’s books, they have to keep cash reserves of seven times the value of the non-performing asset.  In order to get a short sale offer approved, you need to follow a step by step process.  Below I will outline what I feel are the necessary steps required to secure successful short sale deal which is then wholesaled to an end buyer.

Step 1:  Locate Sellers

You need to acquire leads of homes that are currently in distress.  This means they are in either pre-foreclosure or foreclosure.  You can pay companies to generate these leads for your or you can do the grunt work and find the leads yourself.

Step 2:  Evaluate the Deal

Just because you will be picking up this property for a discount on the current mortgage, doesn’t always mean it will be a good deal.  Short selling is an acquisition strategy.  Just keep in mind that everything else still needs to be in place once you have the property.

Step 3:  Seller Sign Documents – Get the Deed

You should meet with the home owner at a title company and go through the necessary paperwork required in order to get started.  It is very important to get the deed so you have legal standing in the deal.

Step 5:  Submit an Offer to the Bank

This is by far the most important step in the short sale process.  If your offer isn’t perfect, the loss mitigation specialist assigned to your file will simply place it at the bottom of their stack.  That is the last thing you want to happen!  Their stacks are VERY large and it could take weeks or months before they get back to your file.

Step 6:  Schedule a BPO with the Bank

The bank will require a BPO (Brokers Price Opinion) to be performed on the property in order to establish a current fair market value for the property.  This BPO agent works for the bank but will do their best to establish a fair price for the house.

Step 7:  Follow Up with the Bank

It is important to consistently follow up with the bank and make sure they have everything they need.  The saying goes; the squeaky wheel always gets fixed.  Keep in mind, the loss mitigation specialist’s time is valuable.  So, in your follow up make sure not to waste their time.

Step 8:  Market the Property

In order to insure a quick turn around on the property it is important to begin marketing for the property during the negotiations with the bank.  At the same time, make sure the future buyer is fully aware that the sale of the house is dependent on the acceptance of your offer to the bank.

Step 9:  Get a Payoff Letter from the Bank

This is the letter from the bank accepting your offer to purchase the property and payoff the loan.

Step 10:Accept an Offer on the Property

Now that you have the banks approval you can accept an offer from a new buyer.  This is where your due diligence will come into play along with your exit strategy.  There will be more steps in the process if you are planning to fix the house yourself instead of wholesaling the property.

Step 11:Shedule the Closing with the New Buyer

You need to close with both the original home owner as well as the new end buyer.  In some states this can be done with a double close, but in other state the double close is no longer allowed. 

Step 12:Cash the Check

Now that your deal is complete, hopefully everything went according to plan and you can deposit a sizeable check into your bank account!  It’s very important to know that there is considerable risk with Real Estate Investing and not all deals go according to plan.

This is a very broad stroke of what goes into a Short Sale deal.  If you would like to learn more about short sales and see examples and strategies put in place on actual deals, feel free to contact me at aaron@embracevision.com.

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