Maryland Real Estate Consultant

On Monday it was rumored that a struggling Washington Mutual (WaMu) would be getting a cash infusion of $5 billion from a private equity firm to help it weather the subprime mortgage storm. On Tuesday that amount had morphed to $7 billion in additional capital from the sale of company stock.

The nation's largest savings and loan announced that TPG, Inc and a consortium of other investors were investing that amount in the company. WaMu, however, is far from out of the woods.

The company also announced that it will have a 1.1 billion quarterly loss and will undergo substantial job cuts.

Washington Mutual will close all of its 186 home loan offices and will no longer acquire home mortgages from brokers. The company will continue in the home lending business but all mortgages will be originated through its retail locations. Closing the offices and other cost cutting moves will eliminate 3,000 jobs although some of the mortgage workers will be offered positions in the retail locations.

The company will set aside $3.5 billion this quarter for anticipated loan losses, nearly twice what analysts had projected, and said charge-offs will amount to $1.4 billion. Losses in the fourth quarter of 2007 had totaled $1.87 billion.

 Former U.S. Federal Reserve Chairman Alan Greenspan told Spain's El Pais newspaper on Sunday that chances of the U.S. economy slipping into a recession were now above 50% but the world's leading economy had not yet entered one.

Greenspan said, "In my opinion recession is a period of a sharp correction and a rapid decline in activity across many sectors of an economy coupled with the domino effect of a strong rise in unemployment. We haven't seen that in the U.S. yet, but it could happen."

 I was recently asked what the heck is a HUD 1- Here is a quick definition

HUD-1 Settlement Statement
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include loan fees, points, and initial escrow amounts, and other fees. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet."

It took awhile to complete but I recently put together a home buyers book. If you ever need info on purchasing a home, do not hesitate to call me @ 240-472-9008. I can forward you a copy upon request.

Until next time take care.

The Federal Reserve significantly cut rates today for the sixth straight time since September. This follows a busy weekend where the Fed also extended its hand to Wall Street, bailing out Bear Stearns with JP Morgan Chase. While rate cuts look good at face value, you need to prepare for what's to come.

Why did they do this?
The Fed wants you to start spending money and wants to boost consumer and Wall Street confidence. Consumers are under stress with increasing consumer prices and a slowing housing market. Wall Street banks have been under stress from mortgage defaults and their impact on corporate balance sheets.

How does this impact you?
Fed rate cuts are inflationary. Since the Fed started cutting rates in September of last year, oil prices are up nearly 40%, gold prices are up over 25%. This is the direct result of a falling dollar which occurs from Fed rate cuts.

As a result, mortgage rates will ultimately rise from here. It is inevitable. Inflation is the arch enemy of fixed-income investments, long-term bonds and mortgage-backed securities, upon which mortgage rates are based.

Here's a look at the inflation picture: Gas prices last September, prior to the Fed's current cutting trend, were roughly $2.75 a gallon. Today, gasoline averages $3.25 a gallon nationally, up 18% before the first rate cut. This is a sign of inflation.

A Way to Avoid Foreclosure

Why would a lending institution accept less than what it is owed from a homeowner. Don't they lose money that way? Well, yes and no.

The short sale is most often used as a way to avoid foreclosure on a home. As the name "short sale" implies, it's a way to sell the home quickly when the homeowner is in financial trouble and facing foreclosure. Thus, the short sale is one of several ways a homeowner can avoid foreclosure on the home.

Mortgage lenders will also want to avoid foreclosure, as much as possible. Lenders are in the business of loaning people money -- they are not in the business of managing properties, marketing them, selling them at auction, etc. These cost the mortgage lender money they don't want to spend. And that's why they often agree to accept a bit less than what is owed to them, as long as the homeowner can sell the home quickly by way of a short sale.

By listing the home below its market value, it's a safe bet that the home will sell quickly. Many homewoners have a choice, never hesitate to ask questions.

Home Selling Security Tips for the For Sale By Owner

• For your own safety never set an appointment with anyone to see your home unless they have given you their name and number and you have called back to verify that number. An easy way to do this is to say, "Let me check with my husband/wife for the best time and I will call you back." Even if you are not married.
• Never let potential buyers know your schedule. Don't ever tell them when you won't be at home, when your spouse won't be home, when you pick up the kids, when you work, when you will be on vacation, etc.
• Never give a caller information about your home's security such as deadlock bolts, security systems, and so forth.
• Always have a back-up plan when you allow strangers into your home, especially if you have children. Have a neighbor look out for you until the lookers have gone.
• Never let a stranger into your house without seeing some identification. If the person says he/she is a real estate agent, ask for a card then call his/her office to verify the information if you don't recognize the person.
• Keep a log of everyone who's looked at your house. Get their name, telephone number, address, car description, tag number, and any additional information that could be helpful in the event of a future burglary. All of these people would be suspects.
• If you make a flyer to advertise your home, don't include any information that might breech security.
• Remove from sight all valuables including guns, jewelry, silverware, and collections. Recently there was an incident in South Florida where a couple was going around with a real estate agent and stealing things from the houses they visited. The couple actually stole over $150,000 worth of valuables. We screen all potential buyers through a thorough pre-qualification process before we let anyone into a listed home.
• Never leave strangers alone and watch their every move while they're in your home.

One of the latest scams, according to Real Estate Today magazine involves prescription drugs. A nice looking, clean-cut couple will make an appointment to view your house. When they get inside, one of them will ask to use the bathroom and will search for prescription drugs while in there. There is a huge market for such drugs especially since the new drug Viagra hit the market. So make sure your prescription drugs are well hidden before anyone looks at your home.

 Sellers please be careful who you let in your home for more tips and info feel free to contact me.

Until next time.

Be Safe.

Frank Harris

Attention home buyers please be advise to not go on an "applying spree" after you qualify for a home loan. It can adversely affect their credit scores, causing the scores to drop before the loan closes. Damage can come from: 1. applying for department-store credit cards; 2. getting an auto-insurance quote; 3. opening new bank accounts; 4. co-signing on someone else's loan; and 5. returning the application for preapproved credit cards.

These steps may not seem like a very big deal, but believe me it can make a difference between obtaining or not obtaining a loan.

 I received and interesting and funny email today. I guess banks have to protect themselves.

Very Important- Guideline Changes

· LTVs > 65% SISA Loans now require a minimum credit score of 849.

· For all LTVs > 65%, 360 months of payment reserves now required.

· Borrowers must have no previous bankruptcies in their family history going back three generations (including, but not limited to 2^nd cousins twice removed).

· A minimum of 25 years self-employment history now required for all Stated Programs (at same location).

· Minimum Credit Score for Subprime Loans raised to 720.

· All non-arms length transaction borrowers (mortgage, real estate professionals, family members) will be required to provide full-documentation, subject to criminal background checks, wire tapping, strip-searches, blood tests, and a minimum of 12 hours of interrogation by the Department of Homeland Security.

Please note that these changes will go into effect within the next five minutes. So please lock your existing loans immediately. All existing loans in your pipeline must fund by noon today.  The vast majority of fulfillment staff is off today, so no Rush Requests will be accepted. 

We apologize for the inconvenience. We realize these are tough times in the mortgage industry for all of us. Be assured that we have a commitment to remaining strong and weathering out the storm. We ask for your understanding and cooperation.

Sincerely,

Your Committed Wholesale Lender

Ronda

Very funny Rhonda,.

You had me there, for a moment.