The Pacific Trust Report

April 29, 2011

To Our Clients, Colleagues and Friends:

• The law says you must give full disclosure of any problems with a house when you sell it.  Here’s someone who followed that law to the letter:

• FHA guidelines require that a borrower be 3 years away from a foreclosure to qualify for a new home loan.  In my mind, the beginning of the subprime mortgage collapse was August 2007 with the collapse of New Century Mortgage and the domino effect of collapsing lenders that ensued.  The foreclosure crisis then commenced in 2008 and people then began losing homes at a record pace.

                Let’s fast forward to 2011.  Those borrowers who were the early victims of the foreclosure crisis are now 3 years out from their foreclosure date and can now qualify for another new home loan.  Does this open the door for a flood of               new home buyers to enter the market? 

• It’s almost ironic that those same homeowners that walked away from a home not long after the peak of the housing market can now qualify to buy that same home at a price that is somewhere around 25-40% lower than what they paid for it at a rate that is 2% lower making the payments roughly half of what they walked away from just 3 short years ago!

                Have any of you real estate agents considered marketing to these experienced home buyers and educating them about their ability to now qualify to buy the same home they walked away from 3 years ago for half the payments?  Talk to       me if you want to develop a joint marketing campaign to help get these potential buyers out of their rentals and back into home ownership.

• With all HomePath eligible properties automatically getting a 3.5% seller credit from Fannie Mae on all offers accepted by the end of June, home buyers made need to be educated what this money means to them in terms of getting a lower rate and payment and how this credit essentially equates to a significant drop in price. 

                For example, by using the seller’s 3.5% credit to buy down the buyer’s interest rate from a rate of 4.875% to 4.25% on their new loan, the buyer of a $300,000 home is seeing their p&i payment drop from $1,587 to $1,475.  The seller          would need to reduce the purchase price by over $21,000 to $278,875 to give the buyer the same monthly payment that they are achieving using Fannie Mae’s 3.5 % seller credit of $10,500 to buy down the rate. 

                This is just another example of why it is so important for real estate professionals to understand the power of the Seller Buy Down Strategy.  Let us know if you or your office needs an introduction or a refresher to this concept.  We   would be happy to provide some training or marketing materials to help you sell more homes.  

• The National Association of Realtors reports that home resale’s rose 3.7 percent in March to 5.1 million units, marking the sixth monthly gain over the last eight months. However, median prices fell 5.9 percent from March 2010 to $159,600; and distressed homes accounted for 40 percent of sales, up from 35 percent a year ago. Still, economists expect a steady rise in sales; and Patrick Newport of IHS Global Insight believes that Mortgage Bankers Association data, showing that applications to buy homes are up 10 percent over seven weeks, is a sign that non-investor buyers are stepping up.

• Friday Funnies:

1)      I have a temporary mortgage. What do you mean temporary?  Until they foreclose. 

2)      Realtor: first you folks tell me what you can afford, then we’ll have a good laugh and go on from there.

3)      The dream of the older generation was to pay off a mortgage.  The dream of today’s young families is to get one.

4)      If you think no one cares you’re alive, miss a couple of house payments.

5)      My buyers went through debt consolidation.  Now they only have one bill they won’t pay

6)      If you want to know exactly where the property line is, just watch the neighbor cut the grass.

7)      This country is great.  It’s the only place where you can borrow money for a down payment, get a 1^st and 2^nd mortgage and call yourself a homeowner. 

8)      Sign next to FSBO-We shoot every third agent and the 2^nd one just left.

9)      The trouble with owning a home is that no matter where you sit, you’re looking at something you should be doing.  

·         About 4 months ago Congress passed a bill that would provide financial assistance for September 11^th firefighters and first responders facing cancer and other respiratory illnesses caused by their tireless efforts working at ground zero.  Amazingly enough, not only did it take over 9 years to put together a package to take care of those that took care of us in our most serious time of need, but these heroes will now also receive a letter once they request these benefits stating the following:

                 “The Act also requires the World Trade Center Program Administrator to determine whether a WTC responder or survivor is on the terrorist watch list prior to his or her enrollment or certification…”

                So, in other words, we are saying to the men and women who are now battling cancer as a result of the dust and debris that they inhaled during their response to 9/11 that before they can get any financial aid to help with their medical   bills from conditions that arose because of their heroic efforts we just have to prove that they are not a terrorist.  You know who else has to go through that kind of scrutiny to get their money?  Nobody!  Not Medicare.  Not social          security. Not Medicaid. Not FEMA disaster money.  We are actually considering arming the Libyan rebels, and I am not sure we are even cross checking them against the terrorist watch list. 

                This is simply rubbing salt in the wounds of America’s heroes.

• Have you looked at the Home Affordability Index lately?  Here's the index over the last 40 years:

                There hasn't been a better time to buy a new home since the Vietnam War.  Cash buyers made up a  record 35% of purchases closed in the 1st quarter.  Investors realize the opportunity there is in housing.  What will it take for the average consumer to step up and buy a home before the affordability index returns to more normal levels when rates go back up?

• Don't forget Mother's Day is Sunday May 8!

Helping turn your home shoppers into home owners! 

Dan Mason | dmason@closeyourownloan.com

| www.closeyourownloan.com

1-800-276-CYOL(2965) x707

Fax 949-271-2718