Juicy Estates: Mortgage Blog

Archive for March, 2009

Here Come The Buyers!

Leading real estate information provider Trulia has compiled some statistics which illustrate something that those of us in the profession are living everyday.  The Miami and Florida real estate markets have experienced a dramatic increase activity in the past 90 days as buyers from around the world recognize the tremendous values that many South Florida properties represent.

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20% Down Jumbo Financing Is Available!

My objective in in this post is to dispel any rumors that 20% down jumbo financing is not available or the rumors that jumbo loans are almost impossible to qualify for.  While mortgage brokers and many smaller lenders for the most part no longer have access to jumbo loans many major lenders still offer a full jumbo product set with very favorable terms. 

The fact is that there currently exists very little appetite on the secondary market for non-conforming mortgage backed securities therefore almost all jumbo mortgages are “portfolio loans”.  As a result of this reality the larger lenders with larger balance sheets have a greater ability to deliver these loans are favorable rates and terms. 

Since the inception of the liquidity crisis in the summer of 2007 I have been actively engaged in establishing a network of mortgage bankers at various major lenders in an effort to ensure that my clients have access to the best possible financing terms.  Over the past 6 months I have referred potential clients whose needs I could not meet to other lenders to the tune of more than $10 million in closed loan volume.   That translates to approximately $12.5M in closed residential transactions in the Miami market that might not have otherwise happened.

While I do not get compensated when I refer a client to another lender I feel it benefits all of us in several ways.

1. The buyer is able to secure the financing needed to purchase the new home.
2. The seller is able to sell their current home and in most cases move on to purchase another.
3. The professionals in the transaction such as the Realtors, closing agents, appraisers etc.  earn a commission or a fee putting more money back into the economy.
4. Another sale is completed reducing inventories and helping to expedite the stabilization of the housing market.

In the end we all benefit by ensuring that a potential buyer has access to those financial services which enable him or her to purchase the home. 

If you are a real estate professional or potential buyer I welcome the opportunity to discuss you or your clients home purchase.   In the current mortgage environment no lender can be all things to all people, therefore you can rest assured that if I can not meet your financing needs but another lender can, I will make sure you are put in touch with the appropriate party.

Soccer Rooftop Opens In Brickell

Great news for Futsal Soccer (5-a-side soccer) players and aficionados in the area! Soccer Rooftop has just opened its doors in Brickell, with two state of the art fields featuring the latest technology on synthetic grass. The fields, located on the rooftop of Rivergate Plaza on Brickell Avenue, measure 56 x 110 feet and are caged by a 21 foot tall net. The facilities provide all of the necessary infrastructure to assure a safe and comfortable environment for people of all ages to enjoy the sport of soccer year-round.

Brickell Soccer Rooftop is located at 444 Brickell Avenue, Miami FL 33131. For information on hours of operation, rates and reservations visit www.soccerrooftop.com or call 786-220-4589.

For more of my posts on Brickell Key real estate, news and events click here.

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Toxic Asset Plan For Dummies.

Without getting technical and boring you to death here is a synopsis of how the U.S. Treasury’s plan to get “toxic assets” off the banks books will work. 

·         The Treasury will provide $75- to $100-billion to seed capital for public-private investment funds.  These investment funds will combine taxpayer money with private capital.  The investment funds are to be formed specifically to buy distressed loans from banks.  The seed money the government will inject into these investment vehicles will come from the $700 billion financial rescue fund Congress approved last October.

·         These investments funds will be able to use FDIC guaranteed debt to achieve a 6-1 debt-to-equity leverage ratio.  That’s a sweet deal.  If private investors and the Treasury each contribute $1 billion to the investment fund, that entity can raise up to $12 billion in FDIC financing to purchase $14 billion in loans. 

·         Under this part of the program, banks would approach the FDIC with a pool of loans they want to sell.  The FDIC would offer financing and the Treasury would partner with private investors to bid in organized auctions for the loans.

·         Since the sale of these “toxic” assets will be made through a competitive auction progress (one investment fund bidding against the other) a market for loans and securities that otherwise could not be traded will be established.  The competitive bidding process virtually assures the government will not pay to much as they help banks shed debt instruments that are severely limiting the banks available capital.  The leverage offered by government financing to private investors ratchets up potential returns into double-digit ranges with minimal risk. On its face, this is not a bad deal all the way around.   

Sounds simple enough…right?  For those of us in Miami and the South Florida markets the question is will this plan set the banks on the road to recovery.   Perhaps this plan along with all the other actions being taken by the Obama administration in conjuction with improved housing market numbers will encourage mortgage lenders to start easying their distressed market policies.  Only time will tell if this is the medicine that the Miami mortgage market needs but I for one am of the opinion that we will look back and see the “Toxic Asset Plan” one of the mile stones on our way to a more stable real estate market.

Feel free to share your thoughts and opinions on the topic.

Boutique Real Estate, The New Breed

 

In an era of industry consolidation on both the sales and finance side of real estate Janie Coffey and her business partner Shelly Montalvo are redefining the term “boutique real estate brokerage” at Papillon Real Estate LLC.  This excerpt from the Papillon Real Estate website defines their business model succinctly.

“Papillon prides itself on being a boutique real estate brokerage that is both High Tech and High Touch. Our focus is on education, knowledge, support and growth for our clients and our agents. We provide all of our buyer clients their own web page where they can sign-in and check the properties they have saved as well as appointments and other key info. We offer a large and varied host of marketing tools for our seller clients, ensuring that their properties are best positioned to sell in the market. We believe in building relationships for life. “

Janie’s blog Miami By Land and By Sea has a wealth of information and is a “must subscribe” for those who intend keep up to date on South Florida real estate.  My personal favorite of her more recent posts is her take on Miami’s Most Elite Neighborhoods.

You can contact Janie Coffey at 305.569.6380 or 786.252.4970 and Shelly Mantalvo at 305.569.6380 or 786. 525.1721.

Give them a call I am sure they would love to hear from you.

Mortgage Interest Rate Update

Last week stocks reacted favorably to talk on Capital Hill about addressing the flawed “Mark-to-Market” accounting rule.  Typically big up days in the stock market would push MBS prices lower and mortgage interest rates higher however rates remained essentially the same. 

Currently 30 year fixed rates for conforming loan amounts are 5% with no points and for Jumbo mortgages the 5/1 ARM is at 5.375% and the 30 year fixed rate is at 6.625% through the Private Mortgage Bank.

Housing starts in the U.S. unexpectedly surged in February however this is widely believed to be a temporary “up tick”. 

The Fed is meeting on Wednesday and as usual the minutes from this meeting will be parsed by traders of both equities and bonds for any indication that a second stimulus package may be needed.

UPDATE – BREAKING NEWS! 

3-18-09 ~ 2:38 pm

The Fed has just stated that it intends to spend as much as $750 Billion on the purchase of mortgage backed securities.  Lower mortgage rates just ahead.

The Condo Paradox, Distruction Of A Market Place

Would you be outraged if you found out that the Federal Government was taking actions that are slowing the pace of the recovery in the housing market?  Well it appears that is exactly what is going on.

While the Federal Government is pouring billions of tax payer dollars into the economy in an all effort to stabilize the housing and financial markets the recently nationalized Fannie Mae is tightening condominium lending standards.  These new standards make it more difficult to obtain financing for those who want to buy a new condo. 

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Wells Fargo Lowers Down Payment Requirement…More To Come?

In the first relief that we have witnessed since the inception of the mortgage crisis more than 18 months ago Wells Fargo has reduced it’s down payment requirement in one instance.  While I don’t expect this to be the first in a steady stream of relaxed underwriting guidelines it is the first significant sign of a thawing credit market and foretells of more stable housing numbers ahead.

Many of you are familiar with the term “combined loan to value”  which is more commonly referred to as CLTV.  This term refers to the combined amount of a first and second mortgage relative to the value or contract price or appraised value of a home.  During the period of 2000 through 2007 second mortgages in the form of equity lines of credit were used in a variety of ways.  When used responsibly this first and second mortgage structure could provide for lower down payment,  lower monthly payments and greater tax deductions for home buyers.

For Example:

With a contract price and/or appraised value of $695,000 a buyer may choose to use a first mortgage of 60% of the value of the property and second mortgage for 10% of the price/value of the property and a 30% down payment.  In this instance the combined loan to value or CLTV would be 70% (1st mortgage of 60% + 2nd mortgage of 10%).

We may use this structure as in the example above so that the buyer can have a first mortgage at the conforming loan limit of $417,000 which will offer the lowest interest rates.  Currently a 30 year fixed rate in this example for a well qualified buyer would be about 5% with no points and 15 year fixed rates are about 4.75%.

Since the mortgage crisis started most lenders have stopped offering second mortgages in the form of equity lines of credit and those that do offer them, like Wells Fargo have capped the CLTV at 70%.  Several major national banks currently offer these second mortgages but only to 60% combined loan to value.

In the first move to relax down payment requirements Wells Fargo will now offer up to a 80% combined loan to value for well qualified clients when the first mortgage product is a 15 year fixed rate mortgage.  This relaxed down payment requirement is applicable across the country and even here in South Florida.    There are a lot of smart people at Wells Fargo and the thinking here is that we are close to the end of the downward pressure on real estate values and that a 15 year fixed rate mortgage will amortize more quickly than property values will drop.

Of course if you are using just a single loan you can still put as little as 3.5% down through FHA, no money down through VA and just 10% down through conforming loan programs.  For a comprehensive outline of down payment requirements see my post of November 21 2008 by clicking here.

As a Private Mortgage Banker I am asked several times a week to make a projection about when will we see that steady stream of relaxed underwriting guidelines.  The fact is that no one knows but I imagine that we will have to see 3 or more consecutive quarters of stable or improving property values before we see significant across the board relief.  That being said the underwriting guidelines of today are similar to those of the mid 1990’s and are by no means unreasonable.