Does Your Mortgage Guy (or Lady) Know What He’s Doing?

I was reading the NY Times recently and came across an interesting article. It has to do with the professionalism and knowledge of mortgage loan originators. As you might imagine, this affects my business so it piqued my attention. The ability of a loan originator to get transactions closed cuts down on headaches and frustration for buyers--and their realtors.

It seems that something called the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) was passed by Congress in July 2008 and required states to pass legislation requiring the licensure of mortgage loan originators. The SAFE Act mandated that state agencies participate in the Nationwide Mortgage Licensing System and Registry (NMLS) and that mortgage brokers meet national standards in order to obtain a license.

Testing began in summer 2009. Now that results are starting to trickle in it appears a substantial of mortgage brokers have a lot more work to do to meet standards. Some 10,000 people have taken the tests and more than 30% failed the federal portion. The number of failures on the applicable state portions was slightly less – 27%. All in all, that’s a pretty sad state of affairs.

I would like to think Arkansas’ brokers are a cut above those dismal test results. At least our area did not suffer the horrendous housing collapse that occurred in many states where many unqualified borrowers were given loans they had little ability to repay.

Nineteen states have offered the tests to date, including Arkansas where tests began November 1, 2009. So far I haven’t been able to find results specific to Arkansas.

When a buyer asks me for recommendations about the best place to obtain a mortgage, I usually refer them to few trusted people at local companies who have done a good job in the past for my clients. I don’t necessarily trust some of the on-line lenders that advertise frequently on TV. Sometimes you get a good loan originator, sometimes not.

The other thing to look for is whether you are dealing with a mortgage broker or a bank. A bank will process the loan according to its guidelines. Sometimes they keep the loan and sometimes they will sell it to another lending institution. A mortgage broker has a lot of “investors” (usually banks) to whom they will sell the loan. Some have better relationships with their investors than others and are better able to exert pressure to get problems solved and the transaction closed. Banks who regularly sell their loans also need to have such relationships, but even the experience (or lack thereof) of loan originators within their own institutions can sometimes make or break a transaction.

A proven track record speaks volumes. A good, experienced, and knowledgeable loan originator is important, and the same is true for the realtor you select.

For more information:

http://mortgage.nationwidelicensingsystem.org/safe/Pages/default.aspx

http://www.nrmlaonline.org/App_Assets/public/ef8c2414-00da-4cff-8c69-e45d2ca45a82/SAFE%20Act%20Update.pdf

http://www.nytimes.com/2009/12/27/realestate/27mort.html?

http://www.securities.arkansas.gov/page/338/mortgage-loan

The Mortgage Melt-down explained

I just discovered a wonderful video on You Tube which explains the mortgage melt-down in terms that everyone can understand. It's very clear, and there's also part 2 to continue the explanation.

Click below to see part 1.

http://www.youtube.com/watch?v=Q0zEXdDO5JU

It applies to the current situation in NW Arkansas Real Estate in that in this area we are victim to what happened in the mortgage meltdown. In addition, there were some contributing factors.

For example, back a number of years ago, the stock market tanked. Local people (who maybe lost money in the stock market) started looking at real estate investment rather than the stock market. A piece of land or a house is a tangible entity after all. They invested in single-family rentals and other multi-family real estate.

Then in 2004 the Fayetteville-Springdale-Rogers MSA (Metropolitan Statistical Area--i.e. basically NW Arkansas) ranked #1 for the Millkin report on the economy for all of the US, ahead of Las Vegas. All of a sudden the vultures started circling. Investors from all over the country were trying to purchase the same homes that first time home buyers were trying to purchase. Prices skyrocketed on the low end as demand far exceeded supply. Builders were not constructing new homes on the low end, because land prices were too high.

The result was that it became almost impossible to purchase an affordable home in NW Arkansas.

Then the mortgage melt-down happened and the investors from elsewhere disappeared. Inventory in NW Arkansas was high (i.e. lots of homes on the market in all aprice ranges).

Now we have a lot of homes on the market including affordable homes. Prices have declined precipitously. Of course, it all depends on price range.

The bottom line is that now is a terrific time to purchase a home. There are a lot of homes on the market in all price ranges. The low end is showing homes for less than $100K, a phenomenon not seen in many years. Lots of foreclosures, but also lots of good deals.

If you want to purchase a home, give me a call. I can help. I mostly help buyers, but my knowledge of the market also helps sellers.

See my home search website: http://www.NWArkansasHomeSearch.com or my regular informational website at http://www.Judyluna.com

NW Arkansas Weathering the Mortgage-Crisis Storm

According to an article published in the last few weeks in the Arkansas News Bureau, the mortgage crisis in Arkansas is not as severe as national media would have us believe.

Governor Mike Beebe is quoted as saying, "I've talked to the state bank commissioner about the housing market and have been assured that Arkansas bankers, lenders and consumers have been more responsible than those in some other parts of the country."

Arkansas was ranked 17th nationally in foreclosures in October 2007, which was about the same as a few years ago during the boom according to RealtyTrac, an on-line marketplace for foreclosure properties.

There is some debate as to whether sub-prime lending caused the foreclosures or adjustable rate mortgages resetting at considerably higher rates. But another thing to consider is the number of builders being foreclosed due to overbuilding in our area as opposed to individual homebuyers.

Whatever the answer, the effect of foreclosure sales is downward pricing. For the most part, although prices have decreased due to supply and demand issues (i.e. oversupply of homes) as well as some foreclosures and sales of bank-owned properties, I don’t think we’ve encountered the level of price decreases in NW Arkansas that other parts of the country are experiencing.

The result is that this is probably the optimum time to invest in real estate in NW Arkansas—despite the negative stories in the national media. With prices lower, a huge selection of homes on the market in all price ranges, and low interest rates, I would suggest that buyers get off the fence and start buying before interest rates creep up again and the supply of homes diminishes, resulting in higher prices.

But buyers do need to be careful. There are a lot of overpriced properties out there, as some sellers haven’t gotten used to the current buyer’s market yet. A reputable buyer’s agent will do a market analysis for his buyer to determine a fair market price.

For sellers, it’s important to work intelligently with their agents when an offer does come in. If the seller doesn’t want to accept a particular offer he may lose the sale. In this market a counter offer from the seller may make the buyer select a different property and an opportunity to sell the home quickly may be lost. Buyers hold the winning cards now and there are a lot of homes to choose from.

For more information:

Read my blog posting October 6, 2007 “What’s the Mortgage Crisis All About?”

http://www.arkansasnews.com/archive/2007/12/05/News/344272.html