Thursday Thriller


This country is great.

It’s the only place where you can borrow

money for a downpayment,

get a 1st and 2nd

mortgage and call yourself a homeowner.

Friday Funny!


 

Q: How long is a temporary mortgage?


A: Until the bank forecloses.

 

Although this may make you laugh today…be sure you are dealing with an agent that cares about you.

Check out www.VickieGylling.com for more information on the real estate happenings.

Word of the Week


Title Theory:

The theory holding that a mortgage gives the lender

legal title to the security property while the

debt is being repaid. 

Most states follow lien theory instead. 

Are the banks finally owning their responcibility in the housing crash?


 Here is a great article I saw on Reuters written by Joe Rauch about Bank of America agreeing to pay Fannie Mae & Freddie Mac BILLIONS to settle claims that they sold bad home loans.  Will other banks finally own up to their responcibility in this crisis we are in also and will this acknowledgement & payback help any of the people about to loose their homes find any help in this move?  I guess time will tell…

(Reuters) – Bank of America Corp agreed to pay Fannie Mae and Freddie Mac $2.8 billion to settle claims that it sold the mortgage finance companies bad home loans, signaling that the bank may be closer to containing its outsized housing losses.

The news sent Bank of America shares up 5.5 percent to $14.08 in midday trading on the New York Stock Exchange. The deal triggered hopes that other banks may soon make similar settlements, and shares of Citigroup Inc and JPMorgan Chase & Co also rose.

Investors have feared for months that Bank of America would have to buy back billions of dollars of home loans it sold to investors at the height of the housing boom.

“I think 2011 will see the issue hopefully behind us,” said Alan Villalon, a senior bank analyst at Chicago-based Nuveen Investments, which owns Bank of America shares.

The agreement with Fannie Mae and Freddie Mac resolves the bulk of Bank of America’s exposure to those government-sponsored enterprises (GSEs), but likely means the bank will post its second straight quarterly loss when it announces fourth-quarter earnings on January 21.

Before the settlement was announced, analysts projected the bank would post a profit of 25 cents per share for the quarter, according to Thomson Reuters I/B/E/S. The settlement had some analysts revising their estimates.

For example, Sandler O’Neill analyst Jeff Harte reduced his fourth-quarter earnings estimate from a profit of 20 cents per share to a loss of 20 cents.

Bank of America said it would set aside $3 billion in the fourth quarter to help cover the Fannie and Freddie claims. It also said it expects to take a $2 billion charge in the quarter to write down goodwill linked to its home loans and insurance business unit, amounting to an admission that the unit is not as profitable as the bank had expected.

Despite the settlement, the bank still faces potential liabilities from mortgages it sold to private investors, as well as big losses from home loans it has made and kept on its books.

“This doesn’t get the bank completely out of trouble. They’re still going to face litigation on repurchases from private-label investors,” said Chris Whalen, senior vice president and managing director of Institutional Risk Analytics.

Mortgage investors say the home loans should never have been sold to them in the first place because they did not meet investors’ underwriting requirements.

Bank of America said it made a $1.28 billion cash payment to Freddie Mac as part of an agreement to end all claims, including future claims, related to mortgages sold through 2008 by Countrywide, a mortgage company bought by the bank that same year.

The bank paid Fannie Mae $1.34 billion in cash and applied certain credits to reach an agreed $1.52 billion settlement on 12,045 Countrywide loans from 2004-2008. Fannie Mae has reserved the right to bring future claims against the bank.

BofA Chief Financial Officer Charles Noski said on a conference call with analysts that the bank does not expect to add significantly to the reserve for additional repurchase requests from Fannie or Freddie in the future, though the agreement only covers loans originated by Countrywide.

The bank estimates it will have $2.7 billion in outstanding repurchase requests from Fannie and Freddie not covered by the settlement. Noski said this includes $832 million of requests due to incomplete documentation that can be resolved without large losses to the bank.

 In October, Bank of America said it was two-thirds of the way through its GSE-owned mortgage repurchases and had bought back $11.4 billion in mortgages from Fannie Mae and Freddie Mac.

SETTING PRECEDENTS

The agreement is similar to but much larger than a recent $462 million settlement between Ally Financial Inc and Fannie Mae.

The regulator for Fannie Mae and Freddie Mac, the Federal Housing Finance Agency, suggested other banks may be forced to follow suit.

“While these agreements are an important step, the Enterprises (Fannie Mae and Freddie Mac) have other outstanding claims across a range of counterparties and they are being pursued,” said Edward DeMarco, acting director of the FHFA.

As the largest mortgage servicer in the United States, Bank of America has been at the center of the multi-year foreclosure crisis. The agreement with Fannie and Freddie is not the end of the problem.

Bank of America said during its third-quarter earnings presentation that it had received $8.7 billion in repurchase requests from outside investors and monoline insurers, on $910 billion in mortgage-backed securities sold to those two groups during the housing boom.

Nuveen’s Villalon said the agreement with Fannie Mae and Freddie Mac could set a precedent in the bank’s negotiations with private investors, since the GSEs had stricter underwriting standards.

The bank started negotiating with a group of mortgage investors — including the Federal Reserve Bank of New York and PIMCO — last month in an apparent shift in its stance toward such claims.

In October, Bank of America Chief Executive Brian Moynihan said the bank would fight back against investors whose attitude was: “I bought a Chevy Vega but I want it to be a Mercedes.”

(Reporting by Elinor Comlay in New York and Joe Rauch in Charlotte; additional reporting by Maria Aspan in New York; Editing by John Wallace) 

By Joe Rauch

When does the Spring Housing Market begin?


Before I got into real estate as a consultant, I to believed the Spring Market for home sales began in May.  Do you know that the Spring Market really begins in late February? Well, it does.  With the holiday season being over & the decorations have been put away, people realized over the past month or so things have changed in their lives or THE SPIRITS TO MOVE just settle in.  Our home maybe too big, too small or we need to be closer (or sometimes even further) away from the rest of the family.  

This thought process & conversation will usually happen over the month of January and then I will get a call that they would like to know what their home is worth.  The situation may also play out something like this, if you are in the Northern part of the country, say like Minnesota, you know that you can be locked up in your home if you’re not a winter lover for what seems like a lifetime, but actually ends up to be about 5 months.  Come February when the Spring Parade of Homes starts, people will go looking at homes just to get out of the house.  Once they start to see some of the new innovations, locations or lay outs they decide they must have a new home.  This means a great opportunity for the person looking to move up and not deal with the stresses of building a home.

So with this said, what to do now?

First, take the time to look around and see if your current home is meeting all your needs.  If you are renting talk to someone or you can even play around on the mortgage calculators found on most mortgage web sites, you will be amazed that in some situations what you are paying in rent you could be paying towards your own home creating a tax break each year & gaining equity on your investment.  NOW THERE’S SOMETHING POSITIVE TO START THE NEW YEAR OFF WITH! 

Second, be sure to talk with a mortgage person to make sure that your credit is in check & that you qualify for a home loan.  Most agents these days will not begin to show you homes until they have the pre-qualification letter from your lender with a maximum dollar amount you can afford.  This is for your own good and well as to manage the agents time as well.

Third, find an agent you like, trust and want to work with.  It seems to me that everyone I know seems to know at least 50 other agents as well.  Whether it be family members, friends, someone at work or a referral from a friend.  Just remember, during this process things can get heated and you need to be able to separate relation ties & be able to get down to business even when the boxing gloves come out.  So be sure that your connection to your agent if it is family or friend is strong enough to withstand a few arguments or disagreements that may happen.  You will also need to feel absolutely comfortable with this person as you will be spending LOTS of time with them whether it is via email, phone or personal contact.  Many agents these days have web sites that can allow you to get a feel for how they work, their background and their mission & goals when working with you.

Have THE SPIRITS TO MOVE touched you yet? If so, now is the time to start getting ready to make the move.  Here’s to happy house hunting in the NEW YEAR.