Mega Bank News

Posted on October 24, 2013 by Buyer Broker
This BLOG post will be updated on an ongoing basis to update you on news about large US banks and their behavior.  My guess is … some of it won’t be good behavior!

10-24-2013: In addition to my other blog posts regarding big bank multi-Billion-dollar mortgage settlements, Bank of America is also facing heat from something they never did. They acquired (through highly suggestive US Government suggestion) Countrywide Financial Corp after the real estate bubble crash. Before the acquisition, Countrywide had alot of stated loans (i.e., you state your income and if your credit score was high enough, they made a loan) and made other risky loans including expedited processing of approvals (i.e., High Speed Swim Lane or hussle loans) and subsequent sale of those loans to Fannie Mae and Freddie Mac, of which a good many failed..now Fannie and Freddie are ticked and suing Bank of America for something they never did. I’m not sympathetic, but I wonder if that is fair or not since Countrywide behaved this way, not Bank f America.

3-10-2012:  Bank of America agrees to cut down to market value and not just down to 120% LTV in Big Bank Settlement.  Source:  http://www.courant.com/business/hc-bank-of-america-mortgages-deal-20120309,0,5836235.story

10-20-2011: Possible plan to settle 50 US States Attorney General lawsuit over foreclosure action of many US banks would allow people underwater (owing more than home is valued) and current on monthly payments to refinance to a lower rate for only those mortgages owned by banks (about 20% of mortgages (which means about 80% are tied up in mortgage backed securities). Source: http://www.mortgagenewsdaily.com/10182011_ag_servicer_settlement.asp

9-3-2011:  Federal Housing Finance Agency (FHFA) “IS” (depending on Bill Clinton’s definition of IS) suing 17 major US banks over Mortgage Meltdown…Source:  http://online.wsj.com/article/SB10001424053111904583204576546940630966016.html?mod=djemalertNEWS

9-2-2011:  Big banks are getting sued by Federal Government; over 1 million distressed/forecloed homes coming to a market near you soon; and Bank of America is receiving more attention.
Source: http://ftalphaville.ft.com/blog/2011/09/02/667926/us-government-attempts-bank-raid/

9-2-2011:  Federal Reserve asks Bank of America for contingency plans – including bankruptcy? Source:  http://www.bizjournals.com/sanjose/news/2011/09/02/fed-asks-bofa-for-contingency-plans.html

7-6-2011:  It may not affect just Mega Banks, but the majority of mortgage are used/held by the Mega Banks.  About 20% of mortgage portfolios at Mega Banks are delinquent.  Source:  http://online.wsj.com/article/SB10001424052702303763404576416090501569426.html?mod=googlenews_wsj

6-18-2011: HUD claims Bank of America (BOA) hindered investigations and didn’t provide access to BOA personnel or data to investigators in a “timely manner”.  Source:  http://agentgenius.com/real-estate-news-events/bank-of-america-stonewalling-mortgage-probe-says-hud/

3-15-2011:  Bank of America plans to write down mortgages on applicable loans by US soldiers on active duty. WSJ, 3-11-2011, C1.

3-11-2011:  Bank of America is thinking about closing about 6,000 banking locations due from electronic banking growing in popularity. Source: Bank of America may close some locations

3-8-2011:  Just to summarize – J.P. Morgan Chase bought Washington Mutual Bank; Bank of America bought Countrywide Home Loans; and Wells Fargo bought Wachovia.

3-7-2011:  Wells Fargo is now controlling about 25% of the mortgage loan market and B of A share has fallen to about 20%. (WSJ, 3/5-6/2011) (My personal thoughts – the mortgage market will probably continue to fall due to higher down payment requirements, fewer qualified applicants due to credit issues, and previous bank foreclosures of their real estate.)

3-7-2011:  Bank of America is leaving the reverse mortgage market (probably to focus on more profitable loans since we are in a declining value market).(WSJ, 3/5-6, 2011, B15)

1-10-2011:  Bank of America is expected to buy back only about $3 Billion of home loans (from Fannie Mae/Freddie Mac) due from their acquisition of Countrywide Mortgage, but some analysts expect private investor lawsuit settlements to range from $8-35 Billion ($6 Billion repurchase requests from private investors and insurers) …Also, Ally Financial (part of GMAC that the Federal Government owns) agreed to pay Fannie Mae $462 million to cover purchase requests related to mortgages…The relative good news is that some estimates see total losses across the mortgage industry could be limited to $33 Billion. (WSJ, 1-4-2011, C10)

12-31-2010:  Bank of America (B OF A) settled with (paying $108 million to) the SEC from charges that Countrywide (who B of A acquired) improperly charged mortgage customers; settled with (paying $150 million to) the SEC due from failing to properly disclose information regarding their acquisition of Merrill Lynch; and settled with (paying $137 million to) the SEC related to steering government municipal bond sales to specific bidding agents.  (WSJ 12-8-2010, C8)

12-21-2010:  Wells Fargo agreed to provide $2.4 billion in loan modifications to settle claims of a California lawsuit – $33 million to reduce or prevent foreclosures and $32 million in restitution of “pick a Pay” (adjustable rate) loans.  Agreements between Wells Fargo and other states are in progress. (WSJ, 12-21-2010, C9)

12-16-2010: (WSJ 12-16-2010, C1) – Bank of America (BOA) is fighting allegations from 17 investors that 167 bond deals were improperly serviced and their subsequent requests to “buy back” those mortgages.  Total claims of $12.8 Billion in repurchase of mortgages.
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11-16-2010: Bank of America has already paid $9 billion

11-6:  J.P. Morgan Chase plans to proceed with foreclosure filings.  It’s been reported that Chase has been asked to repurchase $2.92 billion of loans in 2010 and $3 billion in 2009 out of a total requested $8-9 billion in each of these two years. (WSJ)…JPM has also said they converted 29% of the temporary loan modifications into permanent modifications (WSJ 11-6/7-2010).

10-27-2010:  Bank of America will focus more on retail mortgages directly to customers (22% of market last year) is exiting wholesaling of mortgage loans – might result in loss of 1,000 jobs.  May mean Wells Fargo becomes biggest wholesaler and can pick up the slack..maybe.  JP Morgan Chase doesn’t plan to purchase loans from mortgage brokers.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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Reviving Poor Neighborhoods – Atlanta Style?

Posted on October 12, 2013 by Buyer Broker

Investment in small, locally defined areas and neighborhoods may prove more successful than the billion$ spent in this same effort by federal, state, local governments and nonprofits.

East Lake Foundation

More specifically East Lake Meadows (a.k.a. Villages of East Lake) for example that was started in the mid 1990s. It is a mixed income development, cradle-to-college preparation; a new charter K-8 school; and job and health opportunities. Crime is down well over 50% and employment up well over 50%.

The question: Are other local communities facing the same challenges willing to look at this Model for Revitalization and make a commitment to implement it?

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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Superbugs

Posted on October 11, 2013 by Buyer Broker

Well, I know this subject isn’t related directly to home ownership, but it is of importance…

Apparently the CDC is concerned about our overuse or inappropriate use of antibiotics and that as a society, we may be making ourselves immune to their benefits.

After reading “A Big Step in the Fight Against Superbugs” (WSJ – 9-26-2013, page A15), I understand the importance of good hygiene practices in hospitals by hospital staff, or lack thereof.
(10-7-2014 note: I recently read an article that said almost 40% of hospital employees don’t wash their hands adequately to avoid spreading bacteria.)

Apparently, about 25% OF 80,000 deaths in hospitals are caused by infections (MRSA and Staphylococcus) contracted in the hospital.

Any solutions of preventing infections besides washing hands?

Well, maybe some nasal ointment and antimicrobial soap helps cut deaths in testing close to 50%????

Note: Viral infections can’t be helped by antibiotics, but bacterial infections might.

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They’re bbbaaaccckkk – Interest Only Loans

Posted on October 9, 2013 by Buyer Broker

This is not a recommendation, but a responsible warning…interest only loans serve a purpose, but they have some “gotch-yas”.

I wrote about interest only loans and their pros and cons years ago.

Gentle words of warning about interest only loans.

How interest only loans work, including reaching end of loan and still owe principal.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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New Home Developments in Metro Atlanta

Posted on October 8, 2013 by Buyer Broker

10-7-2014: Venture Homes will build 49 townhomes near South Cobb and Church Roads in Smyrna that will list for $190,000-240,000 – no details on square footage or floor plans…but watch www.venturehomes.com for updates.

8-27-2014: Minerva developers is planning to build at least 58 townhomes and 18 craftsman style single family homes on property off Powder Springs Road between Marietta Square and Marietta Conference Center.

Traton Homes will build Harrison Oaks (24 homes starting in the $400Ks) in the Harrison High School District…visit www.tratonhomes.com for more inforrmation.

8-25-2014: Bellmont Hills shopping center site to be a 160 single family homes-274 unit apartment-47,000 square foot retail center that breaks ground this year and should be ready sometime late 2015.

8-21-2014: 194 single family homes (about 5 per acre) with at least 2,000 square feet starting at $350,000 will be constructed at the corner of Windy Hill and Old Concord Roads in Smyrna, GA.

8-7-2014: Two new Cobb County new home developments are postponed now but are coming – Acworth (195 homes on 137 acres off Paul Samuel & Due West Roads) and East Cobb (10 homes on 6.5 are lot) off Shallowford & Westfield Walk.

7-22-2014: Patrick Malloy Communities building 22 single family homes between $450-650K at Atlanta Road and Cooper Lake Drive. Another 36 single family homes between $400-500K in a subdivision near I-285 and Vinings Estates.

6-4-2014: Senior Living (55+) development called Benton House in Woodstock GA

5-19-2014: Construction is to begin by Brock Built on the former Boston Homes site between Fairground and Highway 41 north of Roswell Street. Craftsman style bungalows (2,000-2,500 square feet is planned betweeen $275-325K) and tonhome (1,900-2,100 square feet about $250K).

Meeting Park near the Marietta Square by John Wieland

Mill Creek Preserve off Holly Springs Road in East Cobb by John Wieland

Search for new home communities at this link http://www.atlantacommunities.com/

Also, you may look on one of the Atlanta area builders below to see what properties are under construction or available:

Metro Atlanta Home Builder & Home Design Websites

Here are J.D. Power Ratings of Homebuilders in Atlanta, Georgia Metro Area.

Here is the Atlanta Homebuilders Association website to learn more about home builders

Other real estate property websites including FHA and VA foreclosures

This post will be updated as I discover more developments:

COBB County:

11-19-2013: Riverview Landing in Smyrna (near Riverview Road west of I-285 next to Chattahoochee River) – 82 acres, 155 SFHs; 330+ THs; 200 senior units; 160+ Condos; 850 apartments; and 200,000 sq ft of retail space. Note: Local area manufacturers/industrial trucking 4,000 trucks/month on the road and can cause disruption of one or the other and not live harmoniously?

9-5-2013: Apparently John Wieland is taking a shine to the property at Meeting Town off the Marietta Park are (once government housing) that was beginning to be developed but stopped during the 2006-2008 real estate market crash.

9-4-2013: Older news, Brooks Chadwick Capital (developers) is planning to develop 85 single family homes (4,000-5,000 square feet from $600-1,000,000+) and 40 townhomes (2,500-3,000 square feet @ $300,000-500,000 range) on Johnson Ferry Road between Lower Roswell and Paper Mill near the Riverhill Subdivision….

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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Mortgage Loan Delinquencies by Loan Type

Posted on October 7, 2013 by Buyer Broker

I am researching any updated information, but..

According to calculatedriskblog, about 4 million loans were seriously delinquent in 2011: about 75% were Prime or Subprime loans, but FHA delinquencies more than doubled in 4 years. Even though the number of Prime and Subprime loan delinquencies have fallen, the number of serious delinquencies of Prime and Subprime loans are huge!

Thanks to calculatedriskblog for disclosing and analyzing this…

Source: http://www.calculatedriskblog.com/2011/05/mortgage-delinquencies-by-loan-type.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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Are you following the real estate hype?

Posted on October 4, 2013 by Buyer Broker

Are you getting pretty tired of getting jerked around?

Housing prices are going up – better buy before they’re too high!

Mortgage rates rising – buy NOW!

Prices are rising – buy NOW!

11-26-2013: WSJ, 11-23-24-2013, A1 reported housing advances were slowing down from lowered prices and more inventory coming into market. This further proves the real estate market is an ever changing market with interest rates, inventory and demand levels, and other market changes and so very heard to predict or track.

10-25-2013: Good News in Housing With No Declines in 300 Markets
Home prices in about 300 major cities are going up!

Housing starts up – whoopeee!

Housing Experts say – buy-buy-buy!

In August 2012, this report state there were still 11 million homeowners underwater on their mortgages and consumers were still in debt.

Hey, calm down – if it ain’t the right time to move in and sit on a property for a few years or you can just take the time to look, just wait until it is the right time for you. There’s always a better house and always a right time to do things – just don’t get caught up in the hype!

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Brokerage Relationships in Real Estate Transactions Act (BRRETA)

Posted on October 3, 2013 by Buyer Broker

Do you know who the real estate you are working with is “working for” – Seller, Buyer, or neither? BRRETA was established to make this relationship more transparent – How’s it working out for you, so far?

After establishing the Georgia law (O.C.G.A. § Title 10 (Commerce & Trade) Chapter 6A) in 1994 to outline the Real Estate Agent’s responsibility to disclose to their client/customer in whom they are protecting their interests, it was revised and amended in 2000 to give clarity in the duties of a real estate broker and in relationships between clients and customers; gave real estate brokers greater legal protections; and updated changes in real estate industry.

The 2000 Act gave the ability to form a “client” relationship without first engaging in a Brokerage Agreement which outlines and specifies the duties and responsibilities of both parties:  broker (or their agent) and client.

You may view the official Georgia Code thru: use BRRETA or 10-6A-7 for search terms on buyer agency duties and responsibilities

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Termites – Will they eat you out of house and home?

Posted on October 2, 2013 by Buyer Broker

Bottom line message: If you do seek termite damage protection, make sure there is a valid, enforceable termite damage repair coverage in addition to the termite treatment last performed at your residence.

Ok, volumes of information have been published on the subject and most people have an image when they hear the word Termites, but you can learn a little more about them to put potential immediate damage in perspective and how you can control their potential damage to your home.

Termite v. flying ant: Termites have straight antenna (ants have elbowed-bent ones); two similar sized sets of wings (ants have two different sizes); and ants have a distinctive division between body sections.

Some different types of termites:

(1) Eastern Subterranean: Underground or can be above ground from roof or plumbing leaks.
(2) Formosan Subterranean: An aggressive and destructive insect that builds its colonies within the walls and don’t need the moisture in soil to survive.

If you need a non-partial, independent source of information, then Dr. Forschler (Principal Investigator for the Household and Structural Entomology research program) at University of Georgia is the definitive source of termites and termite behavior

Some excellent information from the University of Georgia about termites in Georgia

I’d like to see some form of termite insurance protection and I prefer a liquid treatment application around your home’s foundation, but you can always compliment it with a bait system protection system. Also, look at the foundation around your home every quarter. If you see any suspicious activity (i.e., dirt tunnels along the wall), call your pest control company. Also, check under your kitchen and bathroom sinks – I’ve seen them coming up the side of pipes from ground (especially on slab homes). I also have seen them in basements through tiny cracks in floors or walls and any cardboard boxes stacked against the walls will attract termites.

Here are some other websites and information about them that may help you understand how to protect your home from their infestation.

http://www.heimer.com/information/termites.html – Some facts here about termites like a colony can devour 1ft run of 2×4 in 4 months and several colonies can attack your house at one time…also, this website provides descriptions of swarming termite and ants, termite damage, and other information about termites

Realty Times article on caring for your home and protecting it from termites.

Some more information about termites from the termite institute.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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Lease Purchase of Real Estate in Atlanta Metro Area

Posted on September 30, 2013 by Buyer Broker

A quick summary on Lease Purchase Agreements

As an Exclusive Buyer Agent, I frown upon lease/purchase agreements for two reasons:

  1. Very few wind up closing, giving the Seller a large lump sum option payment. 
  2. The home buyer is not going to be in a strong negotiating/bargaining position for any lease/purchase.

But if a home Buyer really, really wants the house (which impatience never helped a homeowner) and is otherwise unable to proceed with mortgage financing to purchase a house but just needs a little time to be in a better financial position to purchase a house (for credit repair; short on down payment; owns a primary residence; plans to move without selling, etc), then the Buyer and Seller may agree to a rental period with subsequent property purchase.  In other words, a lease/purchase of a home.

Typically this involves:

  • Rental to tenant (future Buyer) over a 12 month period, agreeing to a sales price of the house 12 months from now;
  • Large non-refundable down payment by the Buyer (Seller keeps it if house sale doesn’t close, or used as down payment if it closes);
  • Portion of the “inflated” rent to be applied toward the purchase price of the home (refundable?);
  • Basic responsibilities of the Buyer and Seller including responsibilities for insurance, utilities, repair to and maintenance of the house, compliance with subdivision HOA CCRs, etc,;
  • Length of lease term is long enough to obtain financing
  • Provisions where Seller receives monthly payments and Non refundable fee, yet fails to make mortgage payments and home forecloses before Lease-Purchase expires and home is to go to closing;
  • Consult with Real Estate Attorney to draft and review contract regarding any other local, state, national Lease/Purchase laws in effect.

Lease Purchase Contracts – Factors Buyers & Sellers Consider

Buyer qualification

Not only do you need qualify as a renter with a credit and reference check (n from a vendor who investigates credit), but also you must qualify (income, credit score, amount for DP,etc,) for a mortgage loan (prequalification from a lender who will be working with Buyer throughout the process) down the road at the time of purchase.

Lease Agreement

A term long enough for Tenant/Buyer obtain financing; what level & type of insurance will you need (Seller has homeowners/renters coverage); if responsible for utilities, put in your name so you control payments & establish credit; provide proof of payment to Seller; and if you pay for repairs/improvements, outline how will they are treated by Seller (credit toward purchase price or off lease payment).  Protect or reduce responsibilities before purchase.

Responsibility for utilities, repairs, and maintenance and ask for proof of payment; Frequency; access of visits during lease; Levels of insurance required by tenant and Seller.

Monthly Lease Payments

Competitive, low and apply as much as possible toward Purchase Price.

Enough to cover current mortgage payment and any projected repair if possible (difference can be applied to purchase price if closed), otherwise, it’s there for repairs.

Security Deposit

Normal on rentals; should be refundable regardless whether you plan to use it toward down payment or not unless it covers legitimate repairs; and document move in and move out condition with Landlord.

Make it refundable after lease expiration net of repairs but after review property condition if property doesn’t close.

Option money

Tied to down payment; have money held in an escrow account and not Seller’s hands; and don’t make it “non-refundable” unless you can close.

Make non-refundable right away; you can apply toward price, but only if purchase closes.

Purchase Agreement

Protect your up front option dollars if possible; make it non-refundable if only Buyer default and can’t fulfill closing; and be sure to incorporate regular Purchase and Lease Purchase contract contingencies.

Obtain the non-refundable option money as quick as possible; make fewest purchase contingencies; shortest due diligence possible; and limit any contract extensions.

Purchase Price

Make it close to current prices or future trends if prices are falling and a better price may be down the road.

Make it as high as possible to cover loan amount and desired return not related to current market prices.

NOTE: Since the ultimate success or failure relies on the relative bargaining strength of all the parties and the Buyer’s ability to qualify as both a tenant and purchaser, this is not the complete list of factors to consider for all Lease/Purchase Agreements that would fit each individual situation.  Use it as a guideline.  Add or change concerns to fit your specific situation.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.  I welcome any or all comments that would help others.

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