Archives

January 2007

Another Amazing Project in the Works

Posted at 8:02 PM, Jan. 28, 2007

Another Amazing Project in the works!

As usual with Steve Wynn, details are sparse about his concept to bulldoze his lovely, brand new golf course in order to clear room for an urban village development. A Wall Street source claims the project, tentatively called Wynn Golf Course Redevelopment, is said to include at least 4 boutique-hotels with a total of 5,000 hotel rooms and several condo high and low rise buildings. These will be scattered around a large lake. The projects expected cost will be around $4 billion and has a planned opening date in 2010 right after MGM's Project city center opens.

 Mark Adams, VegasTodayAndTomorrow.com

Some of the more common loan types and the needed paperwork

Posted at 9:23 PM, Jan. 27, 2007

Full document:  Taxes, 1099s, W2s, pay stubs, bank statements, investor statements, lease agreements.

Stated income/ verified assets:  Verify employment, ensure it is realistic to profession listed and provide bank statements and any other financials to prove assets

Stated income/ stated assets:  Just verify employment and ensure it is realistic for profession listed on the application.  No need to prove, but assets must be reasonable.

Verified income/ stated assets:  Prove income history with taxes, 1099s, W2s but do not prove assets at all.

Lite document:  Similar to Full Doc loan but instead of showing income history over 24 months, we prove just 12 months. 

No Ratio:  Verify employment but we do not lend as much weight to the income needed to support our client’s ability to pay this loan each month.  We do have to provide assets on this loan.  There is no debt to income ratio on this loan at all.

No Document:  Do not prove employment, salary, or income.  Nothing! Credit is king!

The above are the most common loans I write across the United States.  I always try to write the most aggressive loans (meaning best rates) for our clients.  However, every company and every investor has a great memory so I have to project the appropriate amount of foresight so I do not limit our client’s ability to secure future loans. 

For example, if I wrote a loan as a full document today and then 6 months later we wanted to write a stated income loan, the underwriter would most likely not permit this.  Even if the underwriter somehow let it through, the investor always reserves the right to come back after the loan officer and/or client for anything they feel is a misrepresentation or that could put the loan and the investor’s financial health at risk.

Here’s the rule: The less information we provide to the investor, the higher the rates will be for the client.

 Andrew Hoelzel, Meridas Capital - 702-938-7734

What is a Foreclosure?

Posted at 8:05 PM, Jan. 26, 2007

Foreclosure numbers are growing daily. Of the one hundred twenty or so million homes in America, more than 4% or roughly 4.8 million of them are facing foreclosure. Some of these homeowners are able to work their way out of foreclosure, however, according to MBA there were about 500,000 homes that went through foreclosure last year. Foreclosure threatens these homeowners because they are late or seriously behind on their mortgage payments.

The Foreclosure process begins when the homeowner fails to make payments of the money due on the mortgage at the appointed time. This may be due to several reasons. Unemployment, divorce, medical challenges, terms of the loan, sick of property management, and even death.

Foreclosure is applied to any method of enforcing payment of the debt secured by a mortgage, by taking and selling the estate. Borrowers and lenders now face a challenging situation. Both seek a compromise that permits a win-win outcome. The borrower to keep his home or business, the lender to keep receiving mortgage payments.

Foreclosure proceedings typically start with a formal demand for payment which is usually a letter issued from the lender. This letter of notice is referred to as a Notice of Default (NOD). Depending on your state, the lender will issue this notice when the homeowner has been 3 months delinquent on the mortgage payments. Keep in mind that the notice is a threat to sell your property, terminate all your rights in that property and evict you from the premises.

www.ForeclosureUniversity.com

****LAS VEGAS REAL ESTATE****

Posted at 5:37 PM, Jan. 23, 2007

No matter how you look at it, 2006 was a year in which you just could not compare apples to apples.  It wasn't a question of whether the glass was half full or half empty.  Ultimately, analysts were left trying to guess where the glass actually was.

In our opinion, the Las Vegas real estate market began a major transition in 2006, the beginning of a new era.  That means that some traditional numbers fail to identify what is really happening inside the market.

In fact, our analysis of final housing numbers for 2006 suggest the year was much better than some analysts have indicated.

----->And, like every other analyst in the market, we are reviewing  definitions and even the methods by which median prices are computed.

In a moment, we'll give you an example.  But, first, let's look at some housing data that nearly everyone expected.

The number of new home sales ended the year 2006 at 35,484, an 8.5% decline from 2005.  December's drop was more powerful: 2,970 or 29.4% from last year's all-time record high.

The number of existing homes sold dropped to 41,771, a 24.1% decrease from last year.  December saw a drop of 31% to 2,907.

On January 1, Existing home inventory was at 19,482 -- the lowest level since June of last year.  (We don't expect that downward trend to hold in February). The number of active new subdivisions climbed to 530 in December, the second highest in history and a 13.5% gain over last December.  The number of new home permits finished at  905 for December, 64.7% less than last December and down 30.3% for the year.

----->That's all traditional.  But, here's one area of analystical change that is not: Housing prices.

If you look at housing prices traditionally, they continue to defy the laws of gravity and economics.  December 2006 median new and resale home prices were up.  Median prices of a new home ended the year at $336,641 up 7.9% from last December and 14.8% for the year.  The median price of an existing home in December was $284,000, a scant .2% up from last December, but 3.6% up for the year.

But, let's take a look at new home prices more closely.  The figures we cited include apartment-conversions, traditional single family residential and attached and both Mid-Rise and High-Rise.  Last year, we came to believe that the lower prices of conversion product offset the higher prices of Hi-Rise and Mid-Rise.

But, this year, conversion sales were considerably less than last year -- while Hi-Rise and Mid-Rise continue to grow in importance.  If we look at ONLY at Single Family Residential and Traditional attached product, the last two months of the year would have been negative, but the overall year was still up 6.6%.

Larry Murphy, Sales Traq       

What is a Short Sale?

Posted at 9:51 PM, Jan. 22, 2007

A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan. This is a short sale. Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.

At the time of this writing, foreclosures are at an all time high, which basically translates into more opportunities for you. Since foreclosures are increasing, this is the perfect time to jump into this because there will be more and more lenders discounting properties. It is safe to say that most lenders will accept a short sale, however, you may come across one or two lenders who will not discount. If the numbers work out for the lender they will do it.

It is best to do a short sale when the property is in the pre-foreclosure state. Yes, you can perform a short sale when the bank owns the property, however your profits will more than likely be smaller. There are two stages within pre-foreclosure. The first stage being those individuals who are behind on payments and the second stage are those who are behind on payments with a notice of default. In order for this to work properly and for you to successfully get a short sale, you must find the homeowners who are in the second stage of pre-foreclosure or more than 3 payments behind on their mortgage. Once the notice of default has been recorded, banks become motivated as well, so you are more likely to get a discount. Until that time, very rarely will a bank ever discount a mortgage that soon. Why would they? The homeowners still have time to cure the loan and make up the back payments.

It does not matter what type of house or condition it's in, all mortgages can be discounted. The best properties to perform a short sale on are the houses that need lots of work and repairs because lenders will give you a bigger discount if they see they are "don't wanters". Properties that are over leveraged are also prime candidates. Most rookie investors who see a house over leveraged with an upside-down mortgage may think there is no hope for this property. On the other hand, this is a sweet deal to the savvy investor. Properties with large 2nd mortgages are also treated as gold because the 2nd mortgage is wiped out at the foreclosure auction. Lenders with a 2nd and 3rd mortgage position would rather have something than nothing.

www.foreclosureuniversity.com