Mark Flanders :: SoundBiteBlog.com

January 2007 …  A blog is born.

Way back then (seems like ages ago), Rich and I started this venture. We had plenty of ideas, tons of energy and just enough arrogance to believe that people would want to read our questionably erudite prattlings! In the intervening time many things have changed. I pulled away from the blogging crowd and social media, Rich immersed himself in it. Yet, through all the changes, our friendship and mutual respect has survived and grown. SoundBite has become a closet full of articles and memories.

I sit here on the morning of 01-01-10 thinking about what the new year will bring. I am sure I am not alone. The beginning of a new year always has a subtle flirtation to it. Thoughts of what might be in store beckon.

Between us, Rich and I have acquired over 100 years of living. We have yet to aquire 100 years of wisdom. Then again, 2060 is not that far off. When exactly do we become wise? And how do we know when we get there?

Thursday morning coffee this week included a conversation about our homes. We both find ourselves in a similar, somewhat bewildering  situation. The houses seem suddenly quiet. Both of us bought large homes years ago in which to raise families. Now our children are off to explore their lives, rendering the family home quiet. As we were talking, we noticed that each of us has only three people living at home; husband, wife and one child.

I can remember looking forward to some quiet in my life. I often felt that the schedules, appointments, meetings, sports practices and parent-teacher conferences consumed every available hour. Now that all those hectic responsibilities are in the past, I find myself with hours to fill and little idea how to fill them. Maybe it is finally time to discover Golf!

The new year beckons. I have decided that I will commit to only one New Years Resolution … I will enjoy my journey for the journey’s sake alone.

There will be 52 Coffee Thursdays before the next New Year. I look forward to each one. They are a part of my journey too.

Posted in Miscellaneous | 3 Comments »

Another sign of the times appeared yesterday when Washington State’s Department of Revenue reversed it’s position on how and when it collects the Real Estate Excise Tax (REET) in real estate transactions involving a Short Sale.

A Short Sale is the name for a Real Estate transaction where a seller, heading into Foreclosure, agrees to sell his/her home for less than the amount of money  owed on the property. Short Sales are complicated transactions which must involve not only the Seller and the new Buyer, but the mortgage holder as well. In a Short Sale, the mortgage holder must also agree to accept a sale price that may be significantly below the amount owed on the property.

The difference between the amount owed and the amount generated by the sale, known as a deficiency balance, is sometimes “forgiven” (the seller is not required to pay the lender), and most times not forgiven (the seller still owes money after the sale to the original lender).

To add injustice to injury, before yesterday, the WA DOR imposed the Real Estate Excise Tax on the deficiency balance as well as the sale price. In other words, not only did someone lose their home while continuing to pay a mortgage lender, but the State of Washington taxed the homeowner on the amount of money still owed to the lender. (The IRS does something similar to this, but that is another story)

This practice changed yesterday when the Department of Revenue issued it’s reversal of previous policy in the Short Sales – Letter to Stakeholders. This letter explains that the DOR will no longer require Escrow Agents to collect the Real Estate Excise Tax on deficiency balances. It goes further to provide contact information for sellers who were charged the tax in the past.

Posted in Foreclosure, Real Estate Bites, Sellers | 1 Comment »

Some tenants are better than others. Yet no matter how ethical a tenant might be, or how diligent in paying the monthly rent, even terrific tenants can get badly hurt by a foreclosure.

Landlords don’t usually discuss their financial problems with their renters. Why would they? If the property owner is falling behind on his/her mortgage payment, they fear that if the tenant finds out, the tenant might just follow suit and quit making the rent payment. And the landlord, headed for foreclosure,  needs money badly. Tenants of rental properties are often among the last to know about a pending foreclosure.

A landlord’s  foreclosure leaves a tenant in a precarious position and can potentially have a lasting effect on the tenant’s future ability to rent as well as throwing the tenant’s life into disarray while they scramble for housing unexpectedly. The scramble for a new home is a short-term problem. There are other pitfalls for renters, that can last for years beyond the foreclosure, and have a much more significant impact on the renter’s future.

When a lender “takes back” a home through foreclosure, the lender’s primary goal is to sell the property as quickly as possible. Empty properties are easier to sell than occupied properties. The lender, determined to sell quickly, must take steps to make the house as sell-able as possible. These steps often include emptying the house of it’s occupants. In other words, and eviction takes place. And here is where tenants can get hurt.

An eviction is a formal, legal action. Many legal actions are part of the Public Records. And Public Records are part of a Credit Report. So a tenant can end up with an Eviction on their Credit report! This can happen even if the tenant does not fight the eviction. Many lenders will “follow protocol” just to be sure future litigation cannot happen. Protocol in this case is a legal eviction. The lender, wishing to have a perfect “paper trail” of documents, can insist on following the letter of the law with regards to an eviction. They insist on following the process to it’s bitter end.

The ripple effects of the current mortgage market continue to surface in unexpected ways.  If you are a renter and find yourself in this unpleasant situation, document everything (make copies of any communications, and make written notes of any verbal conversations). You might want to consider speaking with legal counsel just to be safe. And make copies of all your rent checks (front and back) in case you ever need to prove that you made all your rent payments on time.

Posted in Credit Bites, Foreclosure, Miscellaneous, Real Estate Bites | 1 Comment »

Tags: bremerton real estate, kitsap real estate, port orchard real estate, poulsbo real estate, silverdale real estate, washington state foreclosure

John and Mary are frightened and more than a little upset. They need to ask for an extension on the closing of their new home purchase because the financing is not ready. They made an offer on their new home 26 days ago and had no idea their Loan Approval Letter was not worth the paper it was written on! Now their Earnest Money is at risk and the money they already spent on a moving company is in question. In addition, they have already paid for the appraisal.

When is a loan approval not a loan approval?

This is not a frequent occurance. It does happen often enough that savvy Realtors® and experienced sellers are somewhat wary of Mortgage Pre-Approval Letters from loan officers they don’t know through previous transactions. The reason they are wary is simple. Experienced Realtors® know that Pre-Approval Letters are written by loan officers, and loan officers can’t approve loans!

The who’s who of a mortgage transaction.

A Loan Originator is the real name for a person like me who is more commonly called a Loan Officer. A loan originator does exactly what the title implies. He or she creates (or originates) mortgage business. A loan originator’s primary job is to supply a never-ending flow of new loan clients. The title of Loan Officer is rather misleading. A good loan originator does not have to work very hard to maintain a flow of business. Previous happy clients and satisfied Realtors® will keep him or her pretty busy without the need to spend much time marketing.

After they find a client to work with, loan originators are responsible for making certain everything that must be done to close the loan, is indeed accomplished. This includes coordinating a Title Company, an Appraisal Company, a mortgage processor, two Realtors® (one for the buyer and one for the seller) and of course, the borrower. But, a loan officer does not approve loans.

The Loan Underwriter is an employee of the bank. The underwriter’s job is to make sure the borrower (represented by the Loan Originator) fits the Lenders Guidelines for Approval. The underwriter is the person who actually approves the mortgage loan. Very few borrowers ever speak with a Loan Underwriter. Many underwriters prefer it that way. They are busy people who want to be able to move quickly from one loan to the next. There jobs are dependent on speed and accuracy. Getting bogged down with client phone calls does not help with either speed or accuracy.

Whether you, as a borrower, are working with a Bank or a Mortgage Broker, your primary contact is probably a Loan Originator, not an underwriter.

How do you make sure your Pre-Approval Letter is worth something?

A Loan Commitment Letter is the document an underwriter sends to the loan officer once a loan is approved. This is the real thing! A commitment letter will detail every aspect of the mortgage. It will include the terms and interest rate. It will itemize the “Conditions” (the items that must be provided or explained for final approval). The commitment letter will be dated and it will have an expiration date. It may be signed by the underwriter. The Loan Commitment Letter is a formal, legally binding document.

So, if you want to be sure your pre-approval is really an approval, request to see the Commitment Letter! If you are unfamiliar with anything in the letter, have your loan officer explain the unfamiliar portions. It is after all, your loan commitment letter and there is no reason you shouldn’t see it!

In Washington State and many others, the seller has the right to request this proof from the Buyer’s Agent. If the seller has a savvy Agent, the Agent will verify the validity of the Pre-Approval Letter by requesting a Loan Commitment Letter.

In John and Mary’s case, had they simply known to ask for a copy of their Loan Commitment Letter, they would have found out that the loan was not yet approved when the Pre-Approval Letter was written. It shouldn’t have happened the way it did, but this happens often enough that as an educated borrower, you must verify that your pre-approval is a genuine approval.

Posted in Miscellaneous, Mortgage Bites | 5 Comments »

Tags: bremerton real estate, first time homebuyers, port orchard real estate, poulsbo real estate, silverdale real estate

Everybody loves a sale! It’s easy to get so caught up in the illusion of saving money that we either spend more than we should or we squander hours (and money) trying to find an even better deal.

About two weeks ago the Wall Street Journal announced, in a very short article, that the U.S. Government is considering a fixed 4.5% interest rate for mortgages in an effort to stimulate the economy. The article was very short; about 6 sentences. It quoted no sources and gave little information. But, boy did it cause a flurry in the newspapers and on the Internet. And ironically, almost immediately, activity in Mortgage Offices slowed down. The telephones got busier, but mortgage application activity slowed down noticeably. Why? Because everybody loves a sale!

Shortly after the WSJ article was published, the telephone started ringing. Clients wanted to know when they could sign up for the new 4.5% interest rate. All of the callers I spoke with were disappointed to find out that this program is not available. It may become available at some point in the future, nobody knows. It’s just an idea at this time, not a fact. Our Government might institute the idea, they might not. Almost every phone call ended the same way. “Well, I think I’ll wait to see when that new program starts and I’ll get my mortgage then”, or a variation of this comment.

It didn’t seem to matter that 5.125% was available that day. Nor did it matter that over the next week rates dipped slightly (they can’t dip much right now because they are already so low). Almost everybody had their sights set on 4.5% and nothing else would do. Many people, it seems, want to wait for the “maybe”. In the meanwhile, incredibly low, very attractive interest rates are being overlooked while an entire segment of the population waits for something better!

I can’t help but wonder how many hundreds of thousands of dollars will be lost to homeowners who are so focused on the 4.5% interest rate that they will ignore terrific interest rates already available. Will you be one of the people looking backwards thinking “What was I thinking? 5.25% was a great rate!”.

Posted in Miscellaneous, Mortgage Bites | 3 Comments »