How to finance and refinance Everett real estate.

 Everett real estate, FHA Mortgage  2 Responses »
Feb 192010
 

Why Yield Spread Premiums can be a good thing for the consumer

YSP (yield spread premium) or also called rebate is very useful tool in financing or refinancing Everett real estate. For example I just did a refinance using an FHA mortgage. I used the YSP to pay for my clients closing costs. I saved him a ton of money, and didn’t take a bunch of his equity to make the loan.

I used the YSP to save my client money, lower his payment and save his equity. Some politicians want to eliminate the YSP because they don’t understand its uses. I am writing this blog to try and explain how this is extremely useful to the consumer. When you limit the consumer’s choices you always increase his costs.

I will try to keep the technical stuff and the numbers down but in a discussion like this it is hard to do. But here is how an FHA mortgage with a rebate can be used to refinance Everett real estate.

My client has a $425,000 payoff. His current payment is $3331.00 and that is principle, interest, taxes and insurance. He has an adjustable loan and his payments are going up. So he asked me to see if I could come up with a way to lower his payments and keep the cost down.

An FHA mortgage is the only one he qualifies for because of current market conditions. You see just like everyone else he has lost equity in his home due to market conditions. FHA mortgages allow a refinancing of your Everett real estate up to 96.5% of it’s current value.

We came to the conclusion that the value of his property is around $440,000.  At that value if I am using an FHA mortgage we are limited to a maximum of $430,100 as a new loan amount. If I could not use a YSP to pay for the loan costs I could only do an FHA mortgage if we could get an appraisal for $445,525. We might get that value and then again we might not.

I was able to get him a new loan for $422,000 by using the rebate (the YSP) and paying my clients closing costs with it. His new payment is $3017.95 and saves him $313.05 per month. With all fees he has a payback of 14 months. His loan is a fixed 30 year FHA mortgage at 5.375%.

If we had to get his loan without any rebate (YSP) his new interest rate would be lower at 4.875%. And his new loan would have had a monthly payment of $2964.63 per month but with a monster catch. You see his new loan amount would have been $435,500 and the payback period would have been over 49 months.

So you see here with the YSP we have a new loan at a lower loan amount and a slightly higher interest rate. But we didn’t take anywhere near as much of his equity to pay for the loan costs.

We saved him $13,500 in equity by using the rebate or YSP to pay for the loan costs.

YSP or rebate is a great tool for refinancing Everett real estate and in combination with a FHA mortgage can save you lots equity.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line

Twitt
 Posted by JAJohnson at 11:36 pm

Everett Mortgage-Why are loan Mods so hard to get

 Everett real estate, Homes for Sale Everett  7 Responses »
Feb 162010
 

Everett Real Estate May Never Recover

Ever wonder why loan Mods are so hard to get?

Wow, with sweetheart deals like this Everett real estate may never recover its value. If the value of homes for sale in Everett doesn’t recover then the entire economy will not recover any time soon.

Have you heard about the sweetheart deal the FDIC gave 1 West Bank? That is the bank George Soros owns. You know he’s the guy who bankrolls the Democratic Party. I well remember the old adage it’s who you know.

Well back in July of 2007 IndyMac Bank failed. 1 West Bank bought it in March of 2009. The FDIC gave 1 West a deal like you can’t believe.

1 West paid 70% of the value on all mortgages and 58% of the value of all HELOCs.  The FDIC guaranteed 1 West 80-95% of all losses for 1 West.

Everett real estate is having a hard time recovering because of foreclosures and short sales. The value of home for sale in Everett is suffering because of the same reasons. Ever wonder why it is so hard to get a loan Mod? Well here is why.

This is an actual example of why the FDIC bureaucrats should be fired, every damn one of them.

A homeowner owes $478,000 and with lates fees and missed payments the total due 1 West is $485,200. 1 West paid (70% of the $478,000) $334,600 for this mortgage. The homeowner can’t get a loan mod because IndyMac and 1 West wouldn’t allow it. The homeowner gets an offer of $241,000 and 1 West approves the sale.

You take the original loan amount plus late fees and missed payments of $485,200 less the $241,000 and you get a loss on sale of $244,200. FDIC guaranteed 80% of the loss so they pay 1 West ($244,000 X .8) $195,360.

1 West got $241,000 (short sale) plus $195,360 (FDIC loss guarantee) = $436,360 for the house that they paid $334,600 for. So 1 West gets a profit of $101,760.00. To add insult to injury 1 West got the homeowner to sign a note of an additional $75,000. Multiply this over 1000’s of homes and you see why there is no incentive to do a loan modification for anyone. There is much more profit in a foreclosure or a short sale. Now you see why Everett real estate is having a hard time recovering. Now you see why the market for homes for sale in Everett is so soft.

Do you see why 1 West can sell any home for any price because they are guaranteed a profit on every home mortgage they bought? They have no risk what so ever on any mortgage. Now do you see why lenders make loan mods so hard to get. There is no incentive to make a loan mod and every incentive not to.

To top even that 1 West will only get these payments if the show a $2.5 Billion loss. So guess what, they don’t do loan mods because they will not get paid by the FDIC if they do.

I will leave you to figure out who is actually paying George Soros and 1 West to screw up the entire American economy.

Now you can see why Everett real estate may never recover. Now you know why the market for homes for sale in Everett is so soft.

Want to watch a video on this? http://www.thinkbigworksmall.com/mypage/player/tbws/23622/1017333

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Twitt
 Posted by JAJohnson at 7:46 am

Everett mortgage-Obama Tax Credit just hot air

 Everett real estate, FHA Mortgage, Homes for Sale Everett  7 Responses »
Feb 072010
 

Another Useless Idea

Will the new jobs tax credit affect Everett real estate? Will it help with homes for sale in Everett?  Will it change an FHA mortgage rate?

I am sorry Mr. President but the new credit will not help. I think this is nothing more than a publicity stunt. Unless this is truly the hand of someone so ignorant of how jobs are created that Mr. Obama doesn’t realize this will not make a single new hire happen.

Unfortunately here is what will happen. If you are in business a tax credit of $5000 plays no part in the decision you make on whether you hire or not. You have to have the business sales to justify the cost of the hire. If I have the sales then I will hire if I don’t $5000 will not make me hire. All the other terms and strictures are nonsense.

Let’s review the “benefits” of the credit and see if it will affect Everett real estate. Let’s see if FHA mortgage rates will go down. Let’s see if this will produce jobs and help homes for sale in Everett. The 2 main ideas are as follows:

1)      Businesses will receive a $5,000 tax credit for every net new employee that they employ in 2010. The total amount of credit will be capped at $500,000 per firm, to ensure that the majority of the benefit goes to small businesses.

2)      Small businesses will be reimbursed for the Social Security payroll taxes they pay on real increases in their payrolls. Specifically, firms that increase wages, expand hours or hire new workers would get a credit against the added payroll taxes that result. This bonus would be based on Social Security payrolls, so it would not apply to wage increases above the current taxable maximum of $106,800.

Look carefully at item number 1. As I stated above there is no reason or justification to hire unless the sales are already there. So any hire will have happened regardless of any credit. This is another drain on tax receipts with no benefit to the taxpayer.

Item number 2 is just another federal giveaway that doesn’t improve or enhance hiring. Again this is another drain on tax receipts with no benefit to the taxpayer.

This tax credit is just another useless giveaway that accomplishes nothing. It will not help improve the market for homes for sale in Everett. It will not improve FHA mortgage rates and it will not help Everett real estate.

Jim Johnson and comments are always welcome

Everett Mortgage on Line.

Twitt
 Posted by JAJohnson at 10:43 am

Seattle Lagging Economy and Everett Real Estate

 Everett real estate, Homes for Sale Everett, Real Estate Everett, Seattle Mortgage Companies  No Responses »
Jan 182010
 

Will Everett Real Estate Experience the Same Lagging Economic Effect?

In Snohomish county and real estate in Everett only one home in 53 has received a notice of default. Seattle is doing much better at 1 in 80. The national average is 1 in 45. The usual rate for real estate in Everett is 1 to 1.5 in every 100 homes.

Everyone who pays any attention knows that the Seattle Metropolitan Area has a lagging economy. Our economy lags by 4-8 months versus the rest of the nation. What does that portend for the next year or so?

God I hate to have nothing but bad news to talk about

Foreclosures or “Notice of Defaults” have increased, as Seattle mortgage companies well know, by about 60% in 2009 over 2008. But the Seattle and Everett real estate markets still haven’t seen the worst of it yet. So while we haven’t completely caught up we seem to be working at it. My guess is that the value of homes for sale in Everett will face downward pressure for the next 12 to 18 months.

Because foreclosed homes are almost always sold at a discount, sometimes a huge discount, they will continue to exert a downward pressure on prices. I have addressed how we could mitigate that pressure by changing the way appraisals are done, see my blog post, that isn’t going to help until enacted.

The foreclosure pressure is not letting up soon. We can expect from 3,000,000 to 3,500,000 homes enter foreclosure in 2010. Do you want to ask my why? I can say in with 3 words, JOBS, JOBS, and more JOBS”. And it not just the loss of jobs but the loss of high paying jobs. When you go from $75,000 per year to $55,000 it hurts your ability to pay mortgage loans. What tells us that is the fastest growing sector of foreclosures is the 30 year fixed rate mortgage. The very one that used to be the bed rock of real estate in Everett and the rest of the nation.

I may be getting strident here. But I want you to know if you don’t do something about this our nation may be damaged for an entire generation.

Now so you realize that I am not calling the sky is falling. Here is a bit of good news 3 States have foreclosure rates of more than 10% and they are Nevada, Arizona and Florida. In Washington, Clark and Pierce were the only counties in which more than 2 percent of homes were sent a notice of default last year.

We desperately need quality leadership at the state and federal level. I believe that we need leaders who have experience in business. I want to see Everett real estate recover its value.

Jim Johnson and comments are always welcome.

Twitt
 Posted by JAJohnson at 8:38 am

Boondoggle Involves Everett Real Estate

 Everett real estate  No Responses »
Jan 182010
 

By the Time HAMP is Up to Speed the Crisis Will be Over

Enacted on March 9, 2009 this $75,000,000,000 boondoggle is screwing up the value of Everett real estate. Mortgage lenders are cashing in on monster money for doing virtually nothing.

At least this guy is honest enough about t. But maybe the reality is we (you the taxpayer) can’t do a thing about it anyway.  Richard Neiman was quoted directly, “HAMP has made only limited progress for nine months now, and the residential foreclosure crisis continues to mount,” the superintendent of banks in New York state and a member of the Congressional Oversight Panel. This is the guy appointed by the Obama administration to oversee the HAMP program.

HAMP by the way is Home Affordable Modification Program. With a budget of $75,000,000,000 of your tax dollars it is designed to modify mortgages to avoid foreclosure. I will not go into just how unfair this whole concept is in this post. Or why the Federal Government is paying my neighbors mortgage with my tax dollars but I have posted about it before.

A Republican congressman from Texas, Jeb Hensarling, has call HAMP a massive failure.

Right now after 9 months they have finished only 31,382 loan mods. That is out of 759,058. But that 759,058 number is not really correct. Because I get different numbers every time I look at a different report. According to another report we have 10,000,000 loan mods to do. Well if it took 9 months to do 31,382 then it will take: Lets see take 31,382 divided by 9 months = 3486 per month.

Give them credit and say 4,000 per month. 10,000,000 divided by 4,000 = 2500 months or 208.33 years.

By the end of December they did manage to get it moving along a bit better. An additional 35,083 loan mods were finished and that means they might get done in 23.75 years. Still they will not make a dent in the 10,000,000 until long after the crisis is over.

Oh by the way our Federal government allows the very same people who lied to get these loans can now lie to modify them.

Why am I not surprised.

And you would let these clowns run health care.

How will the value of real estate in Everett ever recover with these idiots running the government?

Jim Johnson and comments are always welcome.

Twitt
 Posted by JAJohnson at 8:30 am
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