Maryland and Virginia Real Estate and Homes Blog

WARNING TO BUYERS AGENTS, DON’T RELY ON THE REMARKS IN FORECLOSURE AND SHORT SALE LISTINGS (edit/delete)

                                    * * * *  HARD CORE REAL ESTATE TALK * * * *

LESSON FOR BUYERS AGENTS:   Information contained in listing REMARKS and about $3 will get you a cup of coffee at Starbucks. 

I COULD HEAR THE ANGER IN HIS VOICE.  I received a telephone call today from a broker (former agent) who had just lost a bid for a short sale.  His big complaint was that he relied on the REMARKS in the listing and yet they lost the bid.  The agent was hot.  Sadly, he didn’t get any sympathy from Lenn.  He was really complaining about the 5 hours he felt was wasted in preparing the offer and the additional hours previewing homes and showing the buyers homes in their approved price range.  Fact is, if the agent learned anything, the time wasn’t wasted. 

Lenn’s Law #127.  Don’t believe a word you read in the short sale listing REMARKS.  Or, REMARKS in any listing for that matter.  The listing remarks said:  “Lender approved for $210,000.  The buyers were pre-approved for $210,000.  They wrote a contract offer for $215,000 with $5,000 closing. 

There’s more.  In the area of Montgomery County Maryland where the buyers need to buy, every single listing meeting the minimum needs are priced $210,000 or less is a foreclosure or short sale.  Since the buyers can’t qualify for more, they already have a 47 ratio, they either have to look farther out in the county, or they will have to wait for prices to come down more, which may or may not happen.  In fact, I have shared similar experiences with other agents in my network about short sales and especially foreclosures selling for far over list price.  The lesson is simple.  Don’t rely on the list price or REMARKS. 

There’s more.  The market value for similar town homes in that area is about $235,000 to $245,000.

The agent relied on the REMARKS in the listing.  Big mistake.  An experienced agent knows to do their own research and advise their buyer based on the results of the research, not based on what is written by the seller’s agent in the listing REMARKS.  The agent has no way of knowing when those REMARKS were entered in the listing.  Most agents enter a listing and then, no matter what transpires, with the exception of price changes, never revise the listing details or REMARKS.  As it turned out, once the offers started to come in, the bank raised the minimum acceptable bid and may raise it again.  None of that is reflected in the listing REMARKS.  Nor does it have to be. 

DON’T LET THE FOX GUARD THE HEN HOUSE.  Buyers Agents should not rely on listing agents or sellers for information.  Between the time the information is conveyed, the sellers could have a complete change of mind, which is the case in this scenario.  Do your own research and advise your buyer/clients accordingly.  If the buyers insist on making low offers, losing one should teach them a lesson.  If not, perhaps they need to work with another agent.  Agents and brokers are experienced in market research for non-foreclosure / short sale listings.  We know when a home is overpriced and advise our buyer / clients about offering ranges.  We can do the same for underpriced listings.  Just because it’s priced below market doesn’t mean that your buyer will be successful trying to buy below market.  Factors such as average market prices, days on the market, condition, market trends, pre-approvals, contingencies, inspections, price range, etc. affect successful offering prices and negotiations 

Knowing that short sale and foreclosure listings have recently been priced low to attract bids, it’s doubtful that this buyer had a chance with any listing in this area.  In fact, we’ve discussed this between agents and brokers to alert them about the pattern evolving.  Bait and switch listings are nothing new here, but they’re usually auction listings. 

WHAT DOES LOSS MITIGATION MEAN?  We know that the bank is going to take a loss on the short sale listing.  It just makes sense that if they list low and several higher bid come in, that they would revise their “minimum acceptable bid”.  REMARKS like “Bank approved for $XXXX” are totally unreliable and meaningless.  The departments in the banks that process short sales and foreclosures have a title.  Loss Mitigation means that the bank mitigates their loss on a transaction. 

DUE DILIGENCEmeans that an agent or broker does their own research, their own CMA and advises their buyer client accordingly.  If the listing is clearly below market for the area and condition, the agent must expect that there will be vigorous bidding for a property and walking a fine line with qualifying and offer price just doesn’t compete.  First time home buyers and buyers for lower priced homes are back in the market.  If the buyers are bidding at the limit of their qualifying range, they are not likely to be successful. 

This is a good agent.  I don’t believe he’ll make the same mistake again. 

MILITARY RELOCATION IN MARYLAND, Base Realignment and Closure (BRAC), challenges Maryland citizens and government to form an ACTION PLAN to help our active duty military and civilian individuals and families make reassignment as smooth as possible.  One BRAC study estimates that approximately 25,000 housing units, rentals and sales will be needed in Maryland over the next couple of years.

HOUSING IS THE FIRST NEED.  Locations for personnel relocation include the need for information about not only housing, but also schools, shopping, transportation alternatives, local municipal services and recreation.  The first need for military relocation is housing.  On base housing is often limited so relocating usually means that the family must locate a home that suits their family size and local needs, schools, transportation and more.

NEW HIGHER VA LOAN LIMIT.  The Veterans Administration has raised the loan limit for eligible home buyers, military and civilian, to $729,000 through December 31, 2008.  The new higher limit is set to expire end 2008.  Further announcement will be published by Homefinders.com when received.

BRAC Bases Impacted in Maryland
National Naval Medical Center, Bethesda
Fort Detrick
Fort Meade
Aberdeen Proving Ground
Andrews Air Force Base
Pax River Naval Air Station
Edgewood Arsenal

LOCAL COUNTY GOVERNMENTS’ ACTION PLANS FOR BRAC

• Anne Arundel County
• Baltimore County
• Harford County
• Howard County
• Prince George’s County
• Montgomery County
• Frederick County
• Cecil County
• Baltimore City
• LOCAL BRAC INFORMATION

POPULAR LOCATIONS

• Waldorf, MD in Charles County - Andrews AFB, Bolling AFB

FOR INFORMATION ABOUT HOMES IN A PARTICULAR AREA, contact Homefinders.com.  We are experienced with home sales and the real estate market in all areas of the Military Relocation needs of military and civilian military employed families. 

VA LOAN ELIGIBLE HOME BUYERS  
URGENT ANNOUNCEMENT - August 21, 2008 to December 31, 2008.

The increased limits in the general home loan program for all veterans’ home purchases or construction will be based on local housing costs, tied to the similar locality adjustments of the Federal Home Loan Mortgage Corp., Freddie Mac.

VA home loans are available for veterans to purchase or construct single-family homes, and to purchase condominiums or cooperative apartments.  There are about 2.3 million existing VA home loans, more than 90 percent made with no down payment.

The limit for Fannie Mae Loans in the Maryland and Northern Virginia real estate market is $729,000 in

For more information, contact Lenn Harley, Broker, Homefinders.com, 800-711-7988

SHORT SALES ARE NOT FOR EVERY HOME OWNER
WHO CAN’T MAKE THEIR MORTGAGE PAYMENTS.

Many home owners, because of national publicity, believe that any home owner is a candidate for a
short sale solution.  It’s not that easy. THE OWNER MUST QUALIFY.

Some things must happen before your home should be listed as a short sale. 
        1.  You should have contacted your mortgage company and let them know that
        you are in financial difficulty and need a solution. The mortgage company
        may question you about
                a.  assets
                b.  earnings
                c.  have you tried to sell?

Once the mortgage company understands that you are serious, they may send you a “short sale package”
for you to complete with necessary information to return to the bank.  Based on your information, the
bank will advise that you may want to list as a short sale. 

There are several events that must occur for a potentially successful short sale.
        1.  You need to understand the market value of your home. 
        2.  You must list the house for sale with “third party approval required”.
        The “third party” that must approve the contract of sale is your mortgage company.
        3.  When you select a listing agent, make sure to use the services of an agent with
        short sale experience. 
        4.  Understand the market in your area before pricing the home.  Your mortgage company
        will require detailed market information before approving a Contract of Sale.
        5.  Your agent may recommend that you obtain the services of an attorney to communicate
        with your mortgage company because real estate agents cannot give legal advice.
        6.  Make sure you disclose to your agent all mortgages, liens and encumbrances that
        you may have.  HELOC loans, second mortgages, consumer purchases that are a lien
        against the property can make short sales difficult. 
        7.  Make the house as accessible as possible.  You can’t sell it if you don’t show it.
        8.  Cooperate with the bank with timely letters and forms as requested.  The banks are
        not always quick to review and approve short sale contracts.  Everyone involved in the
        process must have patience.
        9.  You must disclose all of your assets to the mortgage company.  Your mortgage
        company will not approve a short sale on your residential real estate if you have assets
        that can be liquidated to pay your deficiency. 

Consider the above and if you believe that you may be a candidate for a short sale, contact
Homefinders and we’ll help.  800-711-7988.

KING GEORGE COUNTY VIRGINIA HOMES FOR SALE, ACREAGE, WATERFRONT and GOOD PRICES

KING GEORGE COUNTY VA HOMES AND REAL ESTATE.

FIRST TIME HOME BUYERS will benefit from the wonderful low prices for real estate in King George County, Virginia.  Home buyers in King George County Va will find wonderful homes on nice home sites, many wooded and many with acreage.  The value in King George County is attractive to employees at Dahlgren, Charles County in Maryland and military and civilian personnel at Quantico Marine Base. 

Ask us about VA financing for $0 money down loans.  Military buyers often by with no money down and all closing costs paid by the seller.  All Homefinders home buyers receive a FREE One Year Home Warranty at closing.  

About BRAC Reasignment in Virginia.   

King George County is located on the shores of the Mighty Potomac River and offers well priced waterfront property. 

Property Details for listing # KG6710167

Price:  $749,900 City:  KING GEORGE Bedrooms:  3 Bathrooms:  2 full Type of Home:  Detached Style:  Rambler Year Built:  1950 Lot Acreage:  1.87601 Subdivision:  ALLEN ESTATE  County:  KING GEORGE, VA  State, Zip:  VA, 22485  Status:  ACTIVE  Listing Office: RE/MAX Supercenter

King George real estate is popular with military personnel and civilian employees working at Dahlgren Naval Base.   King George is also popular for military personnel, FBI, and other government employees stationed at Quantico Marine Base.   Quantico is a designated military reassignment BRAC location. 

King George to Woodbridge - 50 miles King George to Stafford - 30 miles King Geroge to Manassas - 60 miles King George to Fairfax - 70 miles King George to Warrenton - 57 miles King George to Fredericksburg - 18 miles (Catch the VRE here.) King George to LaPlata MD - 30 miles

TRANSPORTATION BY TRAIN, the VIRGINIA RAILWAY EXPRESS (VRE) TO ARLINGTON, ALEXANDRIA OR WASHINGTON, D.C. IS JUST A STOP AWAY.

Virginia Rail Express (VRE)

Fredericksburg to Stafford - 6 minutes Fredericksburg to Quantico - 23 minutes Fredericksburg to Woodbridge - 37 minutes Fredericksburg to Springfield - 49 minutes - Connect to Metro Rail here Fredericksburg to Alexandria - 62 minutes Fredericksburg to Union Station - 88 minutes

The Map of King George Below reflects the rural nature of this lovely County in Virginia.                      

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

See Water Features Below.

Property Details for listing # KG6691682

Price:  $299,000 City:  KING GEORGE Bedrooms:  3 Bathrooms:  2 full  1 half Type of Home:  Detached Style:  Colonial Year Built:  2003 Lot Acreage:  0.4 Subdivision:  PRESIDENTIAL LAKES  County:  KING GEORGE, VA  State, Zip:  VA, 22485  Status:  ACTIVE Listing Office: Coldwell Banker Elite

Status: ACTIVE (16)

HOMES IN AVENEL FOR SALE AUGUST.

See Multiple Photos Here. . .

Property Details for listing # MC6627256

Price:  $1,495,000 City:  POTOMAC Bedrooms:  4 Bathrooms:  4 full  1 half Type of Home:  Detached Style:  Colonial Year Built:  1989 Lot Acreage:  0.163912 Subdivision:  AVENEL  County:  MONTGOMERY, MD  State, Zip:  MD, 20854  Status:  ACTIVE

Descriptions

Comments:  HIGHLY DESIRED CENTER HALL “A” MODEL HOME IN PRESCOTT. HIGH CEILINGS, 4 FIREPLACES, 2 WET BARS, 4TH BDRM BEING USED AS SITTING ROOM OFF MASTER BATH, FULLY FINISHED LWR LVL WITH LARGE WINE CELLAR. WELL PRICED FOR TODAY’S MARKET.

School Information Elementary Middle School High School POTOMAC HERBERT HOOVER WINSTON CHURCHILL

Home Interior Features

Amenities:  Attic-Strs Pull Dwn, Auto Gar Dr Opn, Bidet, Corian Counters, Crown Molding, Drapery Rods, Drapes/Curtains, FP Glass Doors, FP Mantels, MBA/Sep Shwr, MBA/Sep Tub, MBR-BA Full, Master Walk-in Closet, W/W Carpeting, Walk-in Closet(s), Wet Bar/Bar, Wood Flo  Basement:  Fully Finished  Kitchen / Dining Info:  Breakfast Room, Fam Rm Off Kit, Kit-Breakfast Bar, Kit-Island, Sep Dining Rm  Other Rooms:  Den/Stdy/Lib, 2nd Family Room, Game/Exer Rm, Lndry-Sep Rm, Mud Room, Recreation Room, Storage Room  Heating System:  Forced Air, Heat Pump(s), Zoned  Heating Fuel:  Electric, Natural Gas  Cooling System:  Central A/C, Zoned  Cooling Fuel:  Electric  Water System:  Public  Hot Water:  60+ Gallon Tank, Electric, Multi-tank  Parking:  Garage

Home Exterior Features

Construction:  Brick  Community Amenities:  Bike Trail, Common Grounds, Horse Trails, Jog/walk Path, Security, Tot Lots/Plygrd

	Agent’s Information to contact to tour this home in Avenel.
	Your Agent: LENN HARLEY  Phone: 800-711-7988   Office: HOMEFINDERS.COM

	Listing Courtesy Of
	Listing Office: Long & Foster Real Estate, Inc.

HUD IS INCAPABLE OF PROTECTING THE CONSUMER WITH RESPA REFORM

                                    * * * * HARD CORE REAL ESTATE TALK * * * *

HUD PROPOSES CHANGES TO RESPA that they claim would save consumers over $8 Billion a year by requiring disclosures that would help consumers shop for title insurance and settlement services. 

WHICH COMES FIRST, FINDING A HOME TO BUY OR SELECTING THE MORTGAGE COMPANY?  This is the same HUD that recommends a consumer begin their home shopping adventure by selecting a mortgage company first and a real estate agent next.  I suppose they will soon be recommending that a home buyer select:

• First:  a mortgage company
• Second:  a title company
• Third:  a real estate agent

Many of the consumers who have defaulted on their mortgages and now contributed to the statistics generated by the mortgage mess did, indeed, begin their home buying process by responding to mortgage company print, TV, Internet or radio advertising.  How’s that working out?

THE HUD SOLUTION:  ONE FORM IS BETTER THAN TWO.   Most of the settlement services abuses of the consumer that I’ve witnessed over the past 25 years have been the result of affiliated business relationships.  Substituting two disclosure forms that the consumer doesn’t understand with a single form that the consumer doesn’t understand won’t stop the abuse. 

Trying to stop kickbacks within affiliated businesses is impossible.  The very existence of affiliated service providers owned in part or in whole by one company is simply one magnificent kickback scheme.  It’s the scheme that is the abuse, not the individual referrals.  So far, any regulation proposed or enacted has sought to prevent $30 kickbacks to single agents while the affiliated companies might enjoy an additional $30,000 or $300,000 or $3,000,000 in profits. 

Marketing settlement services directly to the consumer will, IMO, lead to the same abuse and profiteering in settlement services that resulted from lenders marketing mortgages directly to the consumer. 

“WHAT IS YOUR INTEREST RATE??”  HUD was and still is one of the entities that recommends that consumers begin their search for real estate services with the mortgage company rather than the real estate agent.  That has led to a proliferation of consumers tied to mortgage companies based on one feature, the mortgage ratewith no comprehension of the actual cost of that mortgage rate.  HUD assumes that the consumer understands a mortgage loan sufficiently to shop intelligently.  The average consumer understands only one component of a mortgage, the interest rate.  The consumer does not understand how origination fees, discount fees, lock in fees, etc. affect the quoted interest rate.   

“WHAT IS YOUR SETTLEMENT FEE??”  Similarly, if title services companies begin to market directly to the consumer, those same title companies will begin to advertise the “lowest cost real estate closing” just as the mortgage companies advertise “lowest interest rate for your mortgage”, neither of which is likely to be true. 

The problem is, the consumer doesn’t know what they are buying and have neither the knowledge nor experience to make intelligent choices.  There is no relief for the consumer coming out of any RESPA reforms published to date.  There is merely a shuffling of the deck of cards that are already stacked against the consumer.

IF IT’S FREE, IT MUST BE GOOD!  The affiliated companies will always be able to advertise a lower “settlement costs”.  the Devil is in the details.  How about this:  FREE settlements!!  The consumer is always attracted to FREE.  Does the average consumer have sufficient knowledge to shop title examination services?? I have not yet met a consumer that understood the nexus between the Settlement Fee and the Title Examination Fee.   Is there a benefit to the consumer to receive a FREE settlement meeting and then pay $500 for a title examination? 

Does the average consumer have sufficient knowledge to shop title insurance rates?  Hardly.  Most consumers don’t even realize that the title company is receiving a commission on the sale of title insurance.  Profits from settlement services are not from conducting the closing meeting or managing the settlement transaction, most of those fees, survey, abstract, etc. are simply passed through.  The profit for the title company is from the commission paid on the title insurance premium.  While it’s necessary and fair for title companies to be profitable, the public would be better served if the disclosure were honest and not diversionary.  Why focus on a $30 kick back to an agent who recommends an affiliated title company when that same title company is generating an undisclosed $3,000 commission on the title insurance premium?  Filing the title insurance rate with state regulators is not disclosure to the consumer.   Want to see a consumer’s eyes glaze over?  Hand them a HUD-1. 

THE DEVIL MADE ME DO IT.   If you are a real estate agent reading this article, the next time you accompany a buyer to settlement and the settlement officer or settlement attorney fails to disclose that they are receiving a commission from the title insurance premium, mention it and watch the expression on the settlement attorney’s face. 

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

Maryland Buyers Agents helping home buyers find homes to buy; new homes in Maryland, resale homes in Maryland, condominium, town house, single family homes in Maryland.  We cover the areas throughout Maryland from the DC to Baltimore to Annapolis areas and the Eastern Shore.  Home buyers also offers experienced real estate brokers to sell your home in Maryland and Northern Virginia.  New home buyers benefit from the Homefinders.com new home buyers REBATE, our way of saying THANKS!  We REBATE one-third of our real estate commission (up to 1% of the purchase price) to our new home buyers at settlement.

Buyers Agents in Northern Virginia helping home buyers find the best resale or new home in your price range and location of choice.  Areas include all areas from DC west to Frederick County, south to Spotsylvania, Culpeper counties and east to Westmorland.

MARYLAND and Virginia HOME BUYERS will benefit from the experience and dedication of our experienced brokers and agents.  Homefinders.com’s agent and broker partners have been representing home buyers in Maryland and Northern Virginia since the mid 1980s and have a depth of understanding of the Maryland and Virginia real estate market that gives our home buyer clients the benefit of real market experience.  We know the counties.  We know the neighborhoods.  As a home buyer, you’ll be represented by a buyer’s agent who is well trained and has experience in the area of your home search. 

Homefinders.com partners participate in on-going training to make sure we have the latest information of real estate law, contract forms, market trends, local settlement procedures, developers and builders activities in our areas, government actions that affect real estate sales throughout the Maryland and Northern Virginia market.

NEW GUIDELINES FOR MLS LISTINGS 

The giant MLS system, the Metropolitan Regional Information System (”MRIS”) covering Maryland, Northern Virginia and DC has promulgated new guidelines, definitions and rules for Short Sale listings.  MRIS is the largest MLS in the country and covers about 22,000 square miles.  This is welcomed news. 

“SHORT SALE” IS MATERIAL INFORMATION.  In the past, agents working with buyers have no assurance that a listing is not a potential Short Sale listing.  It is presumptuous and thoughtless when a potential Short Sale property is not disclosed in the MLS.  We have a number of relocating buyers, buyers with expiring leases, etc. that may not have an undetermined amount of time to wait for a Short Sale transaction to close.  It’s bad enough that lenders have a thoughtless contempt for the needs of home buyers.  It’s worse when listing agents do not disclose what this real estate broker always considered “material information”, i.e. that the property listed for sale, if sold, will be a Short Sale.  The knowledge that a listing is a potential Short Sale means that we can contact the listing agent and ask if there are already offers, inquire as to the status of the lender’s approval of the owner/seller position as a potential Short Sale seller. 

“CONTINGENCY” IS MATERIAL INFORMATION.  One thing is for sure, “it isn’t a short sale until the lender says it’s a short sale”.  That fact is often not understood by listing agents.  In their zeal to list properties, many inexperienced agents fail in their due diligence and, by not disclosing that a property is a potential Short Sale, may cause unnecessary financial harm to prospective home buyers and their agents.  Many listing agents have their own policy of not disclosing the potential Short Sale status of a listing.  They often fear that disclosure of this material infrormation would encourage low offers.  By not disclosing that a seller may only accept a contract with a contingency (lender approval), the seller is misleading potential buyers and their agents. 

WHY DISCLOSE THAT A PROPERTY IS A POTENTIAL SHORT SALE?  Our market is slow.  Home buyers’ time is valuable.  Buyers Agents’ time is valuable.  Our reputation is not helped by misleading the public and each other.  It’s an unfair practice to list a SECRET SHORT SALE.

SECRET SHORT SALES
MRIS has received many complaints from agent and broker members about listings that do not disclose “Short Sale” status.  The status of “Short Sale” has been available as a single keystroke for listing input for about 6 months.  Yet, many potential Short Sale listings do not show that listing status.  Without a strict policy for Short Sale listings, there was little the MRIS could do.  That all changes this week with the publication of guidelines for Short Sale listings.

Highlights of the MRIS Short Sale policy:

STATUS OF THE LISTING
This policy is one of the most important.  Often we read listing that are totally silent as to (1) the listing is a potential Short Sale and, (2) there are 1, 2 or multiple offers on the property.  Worse yet, often a fully “ACTIVE” listing does not disclose that there is an accepted contract on the property.  It’s isn’t unreasonable that the actual status of a Short Sale listing should be disclosed in the MLS just as the actual status of any listing should be disclosed by use of the CNTG/KO or CNTG/NO KO keystroke option.

With disclosure that a property listing is a potential Short Sale, it may make a difference in the lender’s letter, price offered, terms and conditions.  We would, for instance, know to avoid “drop dead” contingencies.  There is little need for a seller to receive an offer that requires acceptance or a counter offer within 24, 48, hours if the offer must be approved by the seller’s lender.  With the information that there is a contract accepted, home buyers and their agents can pursue contracts with properties that are fully available.  What a concept. 

The new guideline requirements are clear.  When a potential Short Sale listing is under contract, with or without a KickOut, that too is material information and should be disclosed.

Appropriate Status.   The status for any listing where a ratified contract is subject to a lender approval must be changed to CNTG/KO or CNTG/NO KO, indicating a third-party approval contingency.  MRIS’s perspective is that a listing broker, in such an instance, may continue to market the property and continue to accept back-up offers.  The MRIS Rules and Regulations require that the listing’s status be changed within 48 hours excluding weekends and holidays.

This policy for Short Sale listings is welcomed and will help listing agents and buyers agents conduct our business in a more orderly fashion and better serve our buyer and seller clients.

Chalk one up for “transparency in real estate transactions”. 

IT’S A MORTGAGE MESS, NOT A REAL ESTATE MESS. A DEFENSE OF REAL ESTATE AGENTS

                                * * * *   HARD CORE REAL ESTATE TALK * * * *

Thanks to the Mortgage Pro Week in Revew: 6/30/2008 throught 07/06/2008  by Alan ‘AJ’ Nisen, I found some very good reading material by ActiveRain members from the mortgage loan industry.   

NOTE:  ADD this link to the content in this post.  It’s very interesting. 

One of the featured articles includes real estate agents in the group responsible for the mortgage mess.  Including real estate agents in the blame game for the mortgage mess appears to be a knee jerk reaction.  However, the writer doesn’t say how the real estate agents were responsible for the mortgage mess.  We know how mortgage loan officers can be responsible for approving loans for unqualified buyers.  I have yet to hear how a real estate agent can be responsible for a loan officer approving an unqualified prospective borrower. 

“Get pre-approved before selecting a real estate agent” is the advice from mortgage loan officers and HUD.  If mortgage loan officers can pre-qualify a prospective home buyer before the consumer has selected a real estate agent, how does the real estate agent become responsible for the actions of the loan officers approving loans for consumers once the consumer has an agent???  

The mortgage loan officer is not responsible for the institutional creation of the Alt-A, the Neg. Am, etc. loan instruments.  Those loans were created at a much higher level than the mortgage loan officer.  In fact, Fannie Mae and Freddie Mac guidelines approved many loans that were doomed to failure.  Surely, the mortgage companies that employ loan officers have Policies and Procedures for their employees.

• On Tuesday, Fannie Mae (nyse: FNM - news - people ) executives told analysts that 43.0%, or $946 million, of the $2.2 billion in losses incurred during the first quarter involved Alt-A loans. They also said that the company’s “Alt-A book will continue to drive an outsize portion of our overall credit losses.” Fannie also reported $344.6 billion current Alt-A exposure and a limited strategy for stemming future losses.  Forbes, May 6, 2008.
   

REAL ESTATE AGENTS ARE AT THE BOTTOM OF THE FOOD CHAIN.   I’ve read the license law in both states in which I practice real estate brokerage.  Neither have any duty on the part of the broker or agent to advise or have any knowledge of mortgage lending, rates, terms or conditions.  How can real estate agents be held responsible to police the actions of mortgage loan officers??  Not only are they not trained in the intricacies of mortgage loans, they have no authority to police the application and approval process or criteria for mortgage loan approval. 

Why does everyone try to suck the agents into this mortgage mess?  Agents have their job and loan officers have their job. 

• Does the agent blame the mortgage loan officer when the agent fails to provide required disclosures? 
• Does the agent blame the loan officer when a buyer closes on a home without the HOA docs?
• Does the agent blame the loan officer when the agent practices undisclosed dual agency? 
• Does the agent blame the loan officer when the agent provides an inaccurate CMA?

Real estate agents and brokers do have many duties for which they bear responsibility.  Mortgage loan approval is not a duty of the real estate agent.  There are many levels of knowledge and exprience of real estate agents.  However, mortgage lending is not a required competency for real estate agents.  I have always been of the opinion that it takes about 100 transactions before a real estate agent really has an understanding of real estate brokerage.  If agents are responsible for mortgage loan failures, you’ll have to add a few years experience for competency.  Few agents even attend or participate in mortgage loan applications.  If we are responsible, we would have to have been involved in the approval process.  Real estate brokerages have published Policies and Procedures for their real estate agents.  Those guidelines do not include mortgage loan approval authority. 

Loan officers often say that they wouldn’t approve bad loans for buyers if the agent didn’t “pressure” them to do so.  This statement astounds me.  Pressure from an agent is hardly an excuse for failing to follow the law or guidelines for a mortgage loan. 

All the mortgage loan officer has to do is “SAY NO”!The blame game has to stop when one sector of the real estate industry tries to suck everyone into the mess and refuses to police themselves and accept responsibility for the causes.  

If the mortgage loan industry is not going to accept the responsibility for making mortgage loans to consumers who didn’t meet the guidelines, the persons making those loans will continue to perpetuate this problem and the consumer will continue to be badly served. 

Consumers do not understand mortgage loans even when they shake their heads up and down and say that they understand. 

Many real estate agents do not understand mortgage loans, even when they shake their heads and say that they understand. 

Mortgage loan officers DO understand mortgage loans and if they approve a loan for an known unqualified home buyer, they may bear responsibility for their actions.  FHA and VA have “charge back” features that go a long way to prevent unqualified buyers being approved.  Loan officers know when a buyers is qualified and when they are not. 

In all the years I’ve been selling real estate, I’ve never known a loan officer who couldn’t say “NO”.

                            “Good news!  I can qualify you for a loan with a 1.5% start rate.”

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THIS MAIL HAS GENERATED SOMETHING I HAVEN’T GOTTEN IN QUITE A WHILE

I’M GETTING FLAMED!!! 

Note, that the whiners don’t have the guts to publish their views.  They primarily flame me with e-mail exhibiting a considerable level of commission envy. 

I never quite understand why loan officers complain about the “6 or 7%” that real estate agents collect at the end of a sale.  Fact is, they all have the freedom to do the same thing we do.

Take the real estate course
Pass the real estate exam
Get hired by a broker
Invest in promotion and farming for customers
Work your butt off to meet qualified buyers and/or sellers
Work your butt off to get some buyers and/or sellers to settlement
Collect the commission

It’s a free country and I suspect that anyone who can get a job as a loan officer
could get a real estate license and strive for those easy commissions.

It’s a free country.

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Wednesday 7/26, 2008

Well folks.  This has been an exciting read.  I’m not quite caught up yet and may not ever be. 

I just returned from a meeting with a loan officer and his underwriter getting caught up on their processes for approval, etc.  I like to meet with new mortgage company folks to look them in the eye. 

For one thing, it gets my calls answered or returned quickly and my folks get good care.  That’s important because I refer 2-3 buyers to mortgage companies every day. 

I’ve already sent this loan officer about 25 buyers (about 6 have been rejected) and thought it was time we met.  It was a very productive meeting.  But, I won’t be doing his job and he won’t be trying to qualify folks who don’t meet their the guidelines.  I’m not taking those buyers anywhere else. 

My agent and broker partners to whom I refer buyers will benefit from the meeting and communication will be better than if we had not had the meeting. 

The point of this comment is that real estate agents and mortgage loan officers can have a good mutually beneficial relationship working together.  Agents can’t hide their heads in the sand and try to make square pegs fit into round holes.  A buyer is either qualified or they are not. 

However, our competencies are quite different.  I do my job and the mortgage company does theirs. 

It’works very well. 

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Thursday, July 17, 2008

As the pusillanimous “google” points out above, below, thinking he found something incriminating in one of my past posts, I did say “I don’t have a problem with 100% loans.”.  In didn’t when I wrote that post and I don’t now.

And for the record, I don’t have a problem with Alt-A, negative am, pay option, etc. loans.  Exotic?  Sure.  However, used responsibility by loan officers, they open the doors to home financing that would otherwise be closed to many responsible home buyer such as self employed persons, persons who are on an upward mobility track in a professional field like medicine.

However, I do know that the consumer should be provided with an amoritization table so they have actually seen how their payments and mortgage balances will move.  Disclosure and information would have saved a lot of consumer the anguish of foreclosure if they had simply known.  In the past 10 years or so, I have had one, just one, loan officer provide a 10 year amortization table to my buyers.  So I do it.  Am I stepping on the toes of the loan officer?  No.  I’m just letting my buyer who wants to buy a home at the limit of their qualifying range know what to expect. 

We also through the house (along with a wonderful home inspector who agrees to perform this extra service for my buyers) and let them know what to expect in the way of home maintenance and upgrade costs for the next 5-10 years.  If a buyer spends his last dime to buy a home and the air conditioner, while working new, is at the end of it’s useful life, that buyer is at risk if he has to pay $5,000 for a air conditioner and only has sufficient income to meet his mortgage payment. 

So, there is nothing wrong with 100% financing if it gets a family into a home they want and need as long as it can be established at the outset that they are prepared financially to make the mortgage payments. 

It’s very difficult for families (even a family of one) to save cash these days.  However, everyone has to have shelter and if buying a home with 100% financing is an alternative to renting, I’ll help them all I can.  However, I don’t expect loan officers to put my buyers in loans that put that buyer at risk of foreclosure. 

If, on paper, the buyer works two jobs and earns $25,000 W-2 earnings and they are approved for a $500,000 house with a 100% mortgage, that’s not one of my buyers.