Wednesday, October 23, 2013

Foreclosure listings.

I have 7 new foreclosures not yet listed. Please call Justin @ 541-543-7287 for a list.

Important FHA Changes


FHA has made changes to how Collections, Charge Offs, Judgments and Disputed Accounts are handled. These changes are effective as of October 15th, 2013. Please see below a summary of the FHA Mortgagee letters 2013-24 and 2013-25 and if you have any questions please contact us. Thank you.
EFFECTIVE DATE
• These new rules are applicable for FHA case numbers issued on and after October 15, 2013
COLLECTIONS AND/OR CHARGE OFF ACCOUNTS
• Medical collections and/or charge offs are excluded from this guidance.
• A letter of explanation from the borrower(s) is: 
- Not required for loans receiving an approved/eligible from FHA Total Scorecard (DU).
- Is required for all manually underwritten loans. In addition to the letter of explanation, the borrower(s) must provide supporting documentation that provides the DE underwriter with evidence that the collection account was not the result of the borrower’s disregard for financial obligation and/or inability to manage debt.
• Payment plan
- Must be considered if the aggregate balance of all outstanding collections
is equal to or greater than $2000.
- Considered for both manual underwrites and loans receiving a FHA Total Scorecard (DU) A/E decision.
o Medical collections are EXCLUDED from this aggregate.
o Unless excluded by State law, the collection accounts of a non-purchasing spouse in a community property State are INCLUDED in this aggregate.
- One of the following actions MUST be taken if the aggregate from all borrowers is $2000 or higher. (Note: If borrower A total is $1500 and borrower B total is $600 the sum is over $2000 and therefore the guidance applies.)
o   Payment in full at or prior to closing (with the source of funds properly verified)
o   If a payment plan has been made with creditor, include the agreed upon amount in the DTI. 
o   If a payment plan has not been made, 5% of the balance must be included in DTI.
JUDGMENTS
• Applies to all loans, whether approved by Total Scorecard (DU) or manually underwritten.
• All judgments (including medical) must be paid in full at or prior to closing.
- An exception may be given if the borrower has entered into an agreement with the creditor.   Full documentation of the payment agreement required AND a minimum of 3 months of scheduled payments have been made.   Borrowers may NOT prepay the scheduled payments in order to satisfy the 3 month requirement.
• Payments must be included in the DTI.
• Unless exempt by State law, the judgments of a non-purchasing spouse, in a community property State, included in this guidance.
DISPUTED ACCOUNTS - DEROGATORY INFORMATION ON THE REPORT
• This category is used to determine if a manual downgrade to a loan is required, if the loan is approved by Total Scorecard (DU) and there are derogatory disputed items on the borrower’s credit report.
• Derogatory disputed information is defined as:
- Disputed collection accounts - OR
- Disputed charge off accounts - OR
- Disputed accounts with late payments in the last 24 months
• Excluded from the calculation are:
- Disputed medical accounts.
- Accounts that are the result of identity theft;   credit card theft and/or unauthorized use.   However, there must be appropriate documentation, such as a police report, to substantiate the theft and/or unauthorized use claim.   If proper documentation cannot be obtained, then the accounts are included in the calculation.
• Cumulative outstanding balances from all borrowers are $1,000 or higher the file must be downgraded to a “Refer”.   (Note:   If borrower A total is $500 and borrower B total is $600 the sum is over $1000 and therefore the guidance applies.)
- The DE underwriter will then consider this derogatory disputed information in the credit analysis as a manual underwrite.
- If the disputed information is isolated and the overall credit profile of the borrower is acceptable, the DE underwriter may leave the file with an open dispute.
- If the disputed information is not isolated and/or the overall credit profile of the borrower is not acceptable, the DE underwrite may require that the dispute be satisfactorily resolved before the loan can be closed. 
• Cumulative outstanding balances from all borrowers are $999 or less, a downgrade is NOT required.
DISPUTED ACCOUNTS - NON DEROGATORY INFORMATION ON THE REPORT
• Non-Derogatory disputed information is defined as:
- Disputed accounts with zero balance
- Disputed accounts that are current and paid as agreed
- Disputed accounts with late payments aged 24 months or longer
• Non-derogatory disputed accounts do NOT require a manual downgrade.
• The DE underwriter IS required to consider the disputed accounts and the potential impact to the borrower’s ability to repay the loan, including the impact to the DTI.

Sunday, October 20, 2013

Thank you! Thank You! Thank You! Team Thayer / Justin Thayer fillowers

I want to thank my followers & support for the amazing success of all my media outlets but especially this blog!

Real Estate Scientist Justin Thayer 

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Thursday, October 10, 2013

The 6 Worst Mistakes You Can Make as a Buy and Hold Investor!

1.) Paying Too Much

There is a lot of emphasis around the real estate investing world on getting incredible deals for wholesalers and flippers – and rightly so. These kind of investors need to get amazing deals in order to make a quick profit. However, just because you plan to hold on to property for the long haul – doesn't mean you can afford to pay too much. Yes – over time, that mortgage will be paid down to zero but that doesn't give you an excuse to pay more than you should.
2.) Adjustable Rate Mortgages
An Adjustable Rate Mortgage (ARM) is a loan, but unlike a “fixed rate mortgage” – the interest rate can change with the economy, causing your payment to skyrocket. I understand the allure of an adjustable rate mortgage: low payments at the start. However, although you might lock in that rate for 3 or 5 years… there is no guarantee what the economy will be like in 3-5 years. For me – I want to have the most control over my destiny, and ARMs take a huge chunk of my control and put it into the hands of the US economy.

3.) Not Learning the Landlord Business

 Land-lording is a business, and like any business – the success of that business depends almost entirely on the owner’s ability to lead. Many treat land-lording like a hobby, insisting on handshake agreements, loose rules, and emotional decisions.

4.) Not Doing the Math

 Take all expenses into account then ad 5%!

5.) Not Buying with Property Management In Mind

 Make sure to calculate PM with this in mind!

 

6.) Quitting Your Job

Investing is Investing! Never rely on it for your total support. Investing is used to build net worth! You job is what allows you to live & invest! 

The likelihood that a mortgage application will be approved varies widely by bank.

Home-buyer rejection rates ranged from 11% to 34% in 2012 at the 10 largest mortgage lenders, according to data released this month by the Federal Financial Institutions Examination Council. Those who applied for a mortgage at SunTrust STI -0.07%   faced the lowest rejection rate—3,831 out of 34,749 applications were denied—while those at Chase encountered the highest rejection rate, with 26,894 out of 80,036 (a third) not passing muster. Despite the fact that large lenders sell most of their mortgages to government agencies, many require applicants to clear hurdles that surpass federal guidelines, and they do so in degrees that vary by institution, resulting in confusion for applicants. Home buyers who get rejected for a mortgage at one large bank could get approved at its competitor—assuming they know not to give up the search. “It absolutely makes a difference where you go,” says Stu Feldstein, president at SMR Research, a mortgage-research firm. 


Since the housing downturn, most banks have been selling the mortgages that they originate to government-backed agencies. These groups, including Fannie and Freddie, set the minimum guidelines—including credit score, down payment, and debt-to-income ratio requirements—which lenders must follow when determining whether to approve a mortgage applicant. Housing experts say if large lenders stuck to that rubric, they would all have similar rejection rates. They vary widely, however, in part because most lenders add an extra layer of requirements on top of the federal guidelines, says Feldstein.


Banks’ additional requirements stem from the housing downturn when government agencies returned mortgages that banks had sold to them after borrowers defaulted. This was done on the grounds that the loans were poorly underwritten or because of other violations. Referred to as mortgage buybacks, they fell to their lowest level in four years during the second quarter of this year, according to Inside Mortgage Finance, a trade publication. But experts say many banks are sticking to their additional requirements to avoid new losses. “[They've made] decisions about whether they want to skate right on the edge of those guidelines or be in a comfort zone,” says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California.
Of  course, mortgage-rejection rates have come down significantly since the recession, when lenders pulled back on mortgage originations in the face of rising foreclosures. In 2009, rejection rates among most of the lenders on this list ranged from 13% to 70%. Two lenders—SunTrust and PHH Mortgage—had lower denial rates than in 2012. That disparity was not surprising then since lenders sold most of their mortgages to private investors who collectively accepted a wide range of underwriting standards.
To be sure, housing experts say recent rejection rates could vary greatly among the banks because of the types of mortgage applicants they’re receiving. For instance, lenders who receive a greater share of borrowers with lower credit scores or income, or higher debt, are more likely to have high rejection rates. In some cases, the banks’ existing customers could be contributing to higher rejection rates. Chase and Bank of America, which had the highest rejection rates in 2012, have subprime borrowers that they acquired when they bought Washington Mutual and Countrywide, respectively. If those borrowers tried to buy another home, it’s likely that they turned to these banks since they already had a relationship with them and were denied because of their poor credit, says Feldstein. A spokesman for Bank of America says the bank’s denial rates have been consistent over several years, ranging from 20% to 25%, including prior to the Countrywide merger. Chase did not respond by press time.
In many cases, however, borrowers face rejection rates that are even higher than the numbers on this table show. Home buyers typically have to answer a laundry list of questions about their finances before they even make it to the actual mortgage application. Many would-be applicants are denied before they even sign an application, says Guy Cecala, publisher of Inside Mortgage Finance. Some lenders will deny a large chunk of home buyers in the preapproval process. For instance, excluding pre-approvalsWells Fargo denied roughly 12% of applications; with pre-approvals  the rejection rate jumps to about 21%.
Separately, a large number of applicants never get approved or denied. More than 71,000 applications or 8.6% of all applications among the top 10 lenders in 2012 were either withdrawn or closed because they were incomplete, according to the FFIEC data. These cases include borrowers who couldn't produce income documentation or meet some other requirement that awaited them and walked away from the mortgage request.
For home buyers, the findings underscore the importance of casting a wide net when shopping for a mortgage. In addition to contacting individual lenders, consider speaking with mortgage brokers who work with a variety of lenders and can give would-be borrowers an idea upfront of whether they can get approved. And just because buyers are denied, that doesn’t mean they should stop the search.
Going forward, it remains to be seen whether the range of rejection rates will widen even more. As banks slowly increase their number of portfolio mortgages—which they keep on their books rather than sell to government agencies—the terms that borrowers have to meet could differ even more from one lender to another. (With portfolio mortgages, lenders set their own terms for the entire approval process.) Separately, now that mortgage rates are rising and refinancing activity is falling, lenders are becoming more eager to generate new mortgages, experts say, and some may approve more applicants than they are currently. 

Thursday, October 3, 2013

Can you put a price on experience? In real estate, you can. It is about $25,000 for the average house.

Can you put a price on experience? In real estate, you can. It is about $25,000 for the average house.

Veteran agents sell homes for an average of 12% more than their less experienced counterparts, says Bennie Waller, professor of finance and real estate at Longwood University in Farmville, Va. Veteran agents also tend to list more new properties, more townhouses and condominiums and larger properties.
"The more experience you have, the more likely you are to sell the properties that you list, the more likely you are to sell it at a higher price and the less time it stays on the market," 

Prof. Waller says. Prof. Waller, along with Ali Jubran, a student at Longwood University at the time, examined 10,065 real-estate listings in a mid-Atlantic multiple-listing service from March 1999 to July 2009. They divided the listings into three groups—ones listed by agents who have been licensed for two years or less (called rookies), agents who have been licensed for two to 10 years and agents who have been licensed for 10 years or more (called veterans). They controlled for property characteristics such as size and location to isolate the "experience variable," and then compared the results for rookies and veterans. The study was published in the Journal of Housing Research in May 2012.Prof. Waller became interested in quantifying experience when he noticed an increasing number of agents who chose not to renew their licenses after two years. Real estate has "very, very, very low barriers to entry," he says. But brokers then face a steep learning curve and many struggle to reach a level of Two-thirds of properties listed by veteran agents sold, while only half of properties listed by rookies did. That may be because rookie agents have to be more flexible in picking up listings, even if the chances of selling are low.

"If a house is priced ridiculously, they might say, 'Fine, I'll take the listing,' " Prof. Waller says.
Generally, experienced agents have greater knowledge of the neighborhoods and a larger network of buyers and sellers, as well as relationships with home inspectors, appraisers and mortgage brokers.
For some, confidence comes with time. James Stroupe, a real-estate agent at Realogics Sotheby's International Realty in Seattle, says he used to take listings priced above-market, but now, with nearly 20 years of experience under his belt, he isn't afraid to suggest an alternative price. And then there are the lessons learned. Michael Rankin, principal and managing partner of TTR Sotheby's International Realty in Washington, D.C., began selling real estate right out of college, so he faced the twin pitfalls of inexperience and youth.
"I would meet people and say I'm a real-estate agent. They would joke and say, 'I've got children older than you. Are you sure you're a real-estate agent?' " 
Mr. Rankin says he didn't get referrals until his third year in the business. Referrals now make up about 70% of his sales. His listings stock also has changed dramatically. In his 20s, his average sale price was about $300,000 to $400,000. Now, it is more than $2 million.
Experience taught him how to deal with consumer behavior. "Residential real estate is really an emotional transaction. I don't think I was prepared for any of it. It's about understanding and knowing people. That, to me, is what an experienced broker brings to the table," he says.
When Pamela J. Hagan first began practicing real estate about 30 years ago, she had a listing that just wouldn't sell. After zero offers in eight months, she asked a more experienced agent to help. "We tweaked the price and staged it properly, removed clutter and everything. I just didn't think of that when I was new," says Ms. Hagan, of Century 21 Beggins Enterprises in Longboat Key, Fla. "After we got it all set up and dropped the price, we sold it within 30 days."

Tuesday, October 1, 2013

 Pending Home Sales, down 1.6% for August but still up 5.8% for the year.


   Mortgage rate national average have dropped the last two weeks with the Fed's announcement it would continue buying mortgage bonds. This will help stabilize the the winter market as the average big tickets will drop due to parents needing to buy the GI Joe with the kung fu grip  as well as feed aunt Margaret with her 12 kids at the holiday celebration! As the worship of the of small ticket retail! climaxes on Jan 01. The final day of returning gifts resulting in an upgrade for ones self at an average of +$10 per item! 

 New Home Sales up 12.6% year-over-year. There will be desperate builders who hold too much inventory during a low season 10/15-01/15 who will dump prices to stay afloat or out of panic! Either way look for great deals on new homes during this time! Remember this simple rule! Buy when the masses are busy with distractions. I even use large news events to gain advantage when buying property holdings! The same rules apply for the seasoned investor & single family home owner alike! It's so easy but if everybody did what I said I would not have been able to be as successful an investor! Nobody would!

The S&P/Case-Shiller 20-city home price index was up 0.62% in July, its 18th consecutive monthly gain, with all 20 metros ahead. Its 12.39% annual gain was its biggest since early 2006. This upward trend is calculated to last to 2024 barring normal cycles in the market. This means buy! Buy and hold for long term flippers (fix rent & sell) & less risk for short term flippers (fix & sell)

The Dow and the S&P 500 indexes down for the first time in four weeks, although the tech-heavy Nasdaq showed a minuscule gain. The Senate did pass a bill to avoid government shut down  but as of Friday, it still needed House approval. The U.S. will also hit its borrowing limit on October 17 unless the debt ceiling is raised. With all this going on, economic data held little sway. The economy as a whole is just note stable for obvious reasons. We have to weigh risk individually. My ability to accept risk &   mediate my losses will not be healthy for everyone. On the flip side my portfolio is a drop in the bucket to a top hedge fund manager. It's all relevant at the end of the day. Always work with in your personal risk tolerance. I have an excellent track record but manage your risk on your terms! If you need help calculating you net risk factor....call me on my cell @ 541-543-4287 if you have any questions.
Real Estate Scientist Justin  Lee Thayer  :) 


 DateTime (ET)ReleaseForConsensusPriorImpact
M
Sep 30
09:45Chicago PMISep53.753.0HIGH
Tu
Oct 1
10:00ISM IndexSep55.155.7HIGH
W
Oct 2
10:30Crude Inventories9/28NA2.635MModerate
Th
Oct 3
08:30Initial Unemployment Claims9/28315K305KModerate
Th
Oct 3
08:30Continuing Unemployment Claims9/212.825M2.823MModerate
Th
Oct 3
10:00ISM ServicesSep57.458.6Moderate
F
Oct 4
08:30Average WorkweekSep34.534.5HIGH
F
Oct 4
08:30Hourly EarningsSep0.2%0.2%HIGH
F
Oct 4
08:30Nonfarm PayrollsSep183K169KHIGH
F
Oct 4
08:30Unemployment RateSep7.3%7.5%HIGH