Archive for September, 2016

Lenders are Messing Up Real Estate Sales!

Monday, September 19th, 2016

I don’t know if it’s just bad luck, but I have been having MAJOR issues with lenders lately – messing up (and almost killing) escrows at the 11th hour. (I should say that these mistakes are not from MY preferred lenders, but from lenders whose clients are purchasing my listings). Here is what I know: lenders are held to high standards, most importantly they must check all paperwork and needed documentation during the buyer’s loan contingency process. Here are some of the dumb things that I have seen lately from buyers’ lenders: th

1. Not checking buyer documentation. I had a lender this past week that on the day of the loan contingency removal deadline realized that there were two parties to a trust for which they based funds going into the loan. Now I have to assume that they had a copy of this trust for 21 days, and that they vetted it to make sure their borrower qualified. However, on day 21 I find out that they “just realized” that there were 2 trustees, not one, and therefore the borrower actually had half of the money to his name instead of the whole trust amount, on which they based approval.

This is unacceptable folks! These are basic inquiries a lender needs to make when processing a loan! How could the lender not have known the borrower’s stake in the trust when it should have had that trust documentation, which clearly identifies trustees and is a vital document when funds are coming from it?! Unbelievable.

2. Sending over loan docs with a change in borrower names. Believe it or not, a lender this past week sent over loan docs to escrow to be signed by the buyers, with closing slated for the following day (which happened to be a Friday so there was no room for screw-ups). The problem was that the docs had DIFFERENT buyer names than the contract/escrow documents – they basically eliminated a buyer! Now, I don’t know about you but it isn’t rocket science –  it is pretty basic common sense that if you have a contract between parties, you cannot just change or eliminate the name(s) of a party without proper documentation (it also happens to be the law). Lenders KNOW this!

Suffice it to say that in this particular case escrow and I had to jump through hoops and the lender had to re-draw docs at the 11th hour. It was very stressful. This is absolutely unbelievable. The lender has copies of the contracts and all documentation relating to the purchase agreement. For them to do something like this is just crazy.

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The moral of my crazy lender scenario week is that there are often problems in a real estate transaction, so prepare for them. But those who are charged with qualifying borrowers need to be much more careful. Things like this should not be happening. This past week was officially named by me “lender screw-up week.” I sure am glad those lenders that I work with are so on top of things, and hope to never work with either of these particular lenders again.

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4 Reasons Why a Housing Bubble is Not Looming

Thursday, September 8th, 2016

Many blogs and articles have alluded to the idea of a pending housing bubble, and some people even seem to be nervous. This kind of talk is always prevalent after a strong sales season, but how do we know how much credibility to give these claims, and could we be facing a housing bubble any time in the near future? house-bubbles

The answer in my opinion is a loud NO. In the July pending home sales index the National Association of Realtors (NAR) revealed that pending home sales are now at the highest level since 2006 (the highest month was April 2016). But wait, you may say, it was not long last time between the strong sales season to when the market actually crashed. However, there are some differences between the last housing bubble and our current economic situation.

Here are some reasons why the housing market won’t likely crash,  nor any bubbles form in the near future:

1. Mortgage applications are up. While purchase activity dipped in August, there has been an increase in the last few weeks and the MBA reports a 1% rise in the last week alone. With rates still low many homebuyers are jumping off the fence.

2. Consumer credit is strong. Credit servicing continues to strengthen and Fannie Mae reports that the single family home delinquency rate continues to decline. Those home borrowers who are either 3 months or more behind in payments, or who are actively in foreclosure, has  dropped, with a total fall of close to 25% in the last year – resulting in the lowest level since 2008.

3. Mortgage availability has increased, according to the MBA. But credit is not as loose as before the last crash, when many people were given loans without being able to afford them.

4. Inventory is down/little or no new building – many active homes are now in escrow and with scarce inventory the chance of a bubble forming is slim to none. Unlike in 2007/2008, there is very little or no new home construction in most areas. As prices have risen many buyers have been priced out of markets. Eventually buyers will give up in many areas and prices will then be driven down. Population is growing in many areas, like here in San Diego County, faster than housing supply – this means that there is not likely a chance of a bubble.

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