Martin Wareing's Discussions

I don't think anyone in the RE or investment/Wall Street world really has an idea as to what we might be facing.  The rhetoric on thinking the bottom is here sounds like the New Orleans Mayor on Saturday before Katrina at the Superdome. Here in Central Florida, we have inventory issues that could take years to unwind.  The longer it takes to stabilize, the more victims it will claim.  It was not the strom that destroyed New Orleans, it was the flood afterwards.  We will continue to have pricing pressure at least here in FL.

I am afraid that is the next problem.... "dirty inventory", meaning bank-owned and we all know they will "sell it" to someone at some price.  Our Central Florida issues have 2 main issues... 1) rents vs. mortgage costs are still out of line and 2) we are currently selling at about 1,000/month pace and have been for 6 months with a backlog of 26,000 homes.  3 years ago, we were selling about 1700 homes/month with 3500 homes in inventory. OUr months ofo inventory don't look as bad as they might going forward because we average sale/inventory going backwards 12 months.  The inventory number has been pretty much the same for about 1 year, but our resales have slipped 35% in SEP when the ALT A line was removed from lenders. I had heard and seen Phoenix was another are in the country with pressure on it. The sun will rise tomorrow, but we just have much cleanup work ahead of us that's all.

Chase, The "reduce the mortgage balance ans still let you stay in the house plan" is/was 1 of those "Hank Paulson/CNBC" ideas that will never happen. None of the options are easy if you are needing to sell it or can't make your payments. Short sales are a possible remedy and is the latest "buzz" going around the RE world, but they are not easy.  You are asking the bank to "eat your loss".  It is a lot longer and more complicated than people think.  You must prove you are broke...  you must fall behind on your mortgage payments (usually) for them to consider. Your credit is still destroyed.  Sometimes, the Lender will forgive and eat it and sometimes they want the woner to sign a promissory note for some of the remainder. I am sorry for your troubles, but if you are in this type of peril,  get good legal advice to make sure you are doing the best thing in the long run for you and your family. It may be a better strategy if you are losing the home to attempt to save as much money and maneuver legally the longest without payments as you are already underwater.  The answer is legal, not financial. I wish you well.

Just know your options.  If you "decide" to refinance your first mortgage and you HELOC with any balance...  it iwll be considered a CASHOUT REFI according to FNMA and FreddieMac...  Furthermore, many areas have CASHOUT LTV maximums that could be exceeded by a larger HELOC balance in a sense, trapping you in the loans if you were to keep the.  Finally, the last bit of good news is that depending on your credit score as of loans closed in early April 2008, there can be some pretty significant pricing hits for CASHOUT REFIS with scores below 720 and it gets much more painful if your middle score is in the 679 and below.. The LENDER that offered you the HELOC should be able to explain the pros and cons of a HELOC as well and if they can't .... shame on them....  They should know better... This is not about a $350 exit fee.... Just get the facts and if you can... try to stay BELOW 90% with both loans as that seems to the the top of the heap with the best of credit..  We are trudging through deleveraging and you don't want to be trapped that's all. Good luck!

CG, The simplest answer to your question is:  It will greatly speed up the payoff time on your first mortgage if you make a large principal payment in order to remove the MI from your payment.  Your payment will "drop" the MI portion, but will put you on a much faster track to Free-n-Clearville.  The mathe question is:  "At what cost and future risk/cost" is this prepayment amount going to be?  Using a "cheap" HELOC today jsut to skip $110/month may prove to be an achiles down the road.  Several years ago, we had HELOC rates at 4% and we were all dancing in  the streets....  3 years later....  Prime wnet to 8.25%  (over double) and we will see many "living in the streets" from the waves of resets, greed, speculation, whatever.  If you can swing the HELOC payment with some type of ending in sight from the draw...go for it and get to Free-n-Clearville as fast as you can because no bank can take that away.

KennyD, Your "mortgage guy" mad e a "switch to Countrywide".  I am not saying he is bad. I am saying he knowingly went to work for Countrywide amidst the unbelievable fall from grace.  I was set up with them in the 90's and they were the "Cat's Meow" and it was a privilege to work with them.  Grred and the market has changed it so much that I was approached by them to rekindle our relationship and I have put out a survey to my clients asking them if they would be opposed to me "selling their "A" paper loan to Countrywide.  The answer is/was yes.  The main reason was about fears about servicing issues, etc.  Your loan will be fine, but I would attmept to get a "fair" and unbiased quote from a rival and ask the question to him:  "Dude, .... Why?"  If his answer is:  "Well, I might think about leaving here and applying with WAMU instead...... he's got problems...  Not slamming him, but we in the know, know that WAMU AND CFC are just getting taken behind the shed and will not survive by themselves.. They have been receiving CASH injections like morphine to a dying patient.  Time will tell. Sorry about the rambling, but you shoud be able to receive the same, if not better loan from a company that will be able to place the loan with a safer servicing agent. Good luck to you

HLM, Wells is the most agressive servicer to do what you were in hopes for, BUT you do not live there and it changes everything.  Maybe they'll come around, but this is a question you can answer yourself..  "If you had to take a loss, when would you do it"?  If you can not sleep at night...sell it now.  Liek most of us in RE and stock for that matter... we seem to buy high and sell low.  Sad but true.  Your Down payment has already left your account and you are in hopes that it will return.  But because you are simply "floating the property/interest only", you along with tens of thousands of others hope the market will return.  I do as well, but have a suspicion this "storm" is worse than others and has more lingering issues.  Just make sure you are not going to be "milked to death", run out of money floating it, then selling it a loss after it all.  It's not pleasant to speak of "losses" but the problem is not really the loan, it is the value of the asset today versus what was paid for it several years ago.  The loan is just what you/we are trained to focus on.  The main reason for my "bear market" fear about housing is that last AUG, we effectively removed 40% of the "mortgage qualifying" public when the ALT A line was removed and "subprime" was officially killed.  Most areas see this as inventory is stacking up and we simply don't have enough qualified buyers to puch demand/pricing up versus the standing demand.  If you want to ride it... then "prime the well" and start attacking the debt... Piggyback 2nd first to get the carry cost lowered if you can get it paid off.  Then hold as a rental.  Not the end of your world. Good luck

The most recent "sweeping" waive is for Netbranching because of the FHA savior to replace Subprime. Does anyone like working for a Netbranch and what are the pros and cons if you do work for one?

R U still with an operation of that sort?  When I worked Wholesale, I found that NetBranching "looked good", but in many cases it was simply a "skimming" operation and that there was not a single protocol or QC operation to be found. THey took a few crumbs per file from the LO, but it was the LO who had the relationship and the "mother ship" was a giant bulletin board of A/E's and programs... You know the what sticks to the wall will close syndrome.

Tom, I don't sell it, but it's basically a financial trainer pushing you to pay off your debt, but as Brent said, it is a commitment and desire to do the work to acocmplish it.  It takes about 4 years to recoup the interest savings from teh $3500 outlay.  The rub is who is selling it and why and the tactics and testimonials.  Paying off debt is not magic, it is just work.  I like your candid persective and posts.