Hemet, CA

Investor Number Krunching – A New Web Based Tool

There is a mew website, Krunching, that once it becomes known should become as common place in the world of real estate websites as Zillow, Trulia, PropertyShark, RealtyTrak, ForeclosureRadar and all the other innovative sites that are transforming the real estate landscape.

This site is rather unique in it’s approach as it “Krunches” numbers for potential real estate investments, allowing the investor to analyze any piece of property, combining real estate information with the multiple listing service and it’s own set of digital tools that allow the real estate investor to crunch the numbers.

The site, www.Krunching.com is the brainchild of Brian Fudge who aside from being an active real estate investor is a bit of a geek, having worked in the video compression technology field. He has felt that there was a lack of good investing tools available to the contemporary real estate investor.

Krunching has an easy to use interface, with map based displays of comp properties as well as a number of reports that can be generated including cash flow, rental market analysis and market trends. The site can generate some slick reports that can be used for presentations to clients.

The program currently has tow programs with the promise of a third, just for REALTORS®. The first version, the “Visitor” is free and just a teaser of what it can do. The paid version, “Power Investor” is $39.95 a month. The yet unreleased REALTOR® version promises to include everything the Power Investor offers plus it will allow us to brand the reports and be able to send them to our clients and prospects.. Unfortunately, there is not yet a price released for the REALTOR® version. (I emailed them last week when I first stumbled upon the site, but have not heard back yet.)

Both version active allow the user to play with the numbers on an interactive calculator which is pretty cool. If you don’t like the rent projections, lets say, you can get as conservative (or aggressive) as you care to. MLS active comparables are also available for both the free and paid versions.

To include the sold data and access to three years worth of property data you will have to step up and become a Power Investor at the Krunching site. Other advantages to the paid version is you can search by cash flow - how cool can that be? There are a number of other custom features and notices as well.

Now for the sad news…this site is currently only available for properties throughout California and I can not figure out what the plans are for the other 49 states other than the company has plans to expand.

The other issue I am not 100% comfortable with is the fact that the site is owned by a Real Estate Broker. So, I have to question myself if I generate a report for an investor client, will that same client be solicited in the next few days…or will Krunching be looking to me for a referral fee at some point?

Anyway, it is a pretty cool site that I thought I would share. I think I’m going to go ahead and Krunch some numbers on a couple of properties that are on my radar and perhaps report back here.

Blessings to all who read this,

John Occhi, REALTOR®
Century 21 Crest - CrestREO
CrestREO.Com
Hemet - San Jacinto Valley
951-927-9473

Author of "What You Need to Know...About Foreclosure and How You Can Stop It!" - If you are a Hemet or San Jacinto Homeowner.

This blog and the contents written here is the intellectual property of John Occhi, Hemet California REALTOR®. The views and opinions expressed are just that - views and opinions of John Occhi and those who comment. Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0. Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® with Century 21 Crest and the CrestREO Division who is proud to be a contributing member of the ActiveRain community.

Buying a Hemet – San Jacinto REO Home: The Loan Process

Many people want to take advantage of the current market conditions in the Hemet – San Jacinto Valley at the eastern end of the Inland Empire, in Southern California because we have such a high foreclosure rate and there are many bank owned (REO) homes for sale in the region at very affordable prices.

Finding a good home is typically not the problem – as we have many to choose from. Today there is even a wide selection from as low as $75,000…if you don’t mind taking care of some repairs. There are many near move in homes available for well under $150,000 – maybe just in need of some fresh paint and flooring.

The process should not start with looking at homes, but rather with qualifying for financing. Perhaps the biggest determent in the market today is not the inventory but the financing options, as more and more lenders tighten their belts and really narrow down the availability of consumer friendly loan products.

One of the big misconceptions about financing a Hemet – San Jacinto REO home for sale is that there is money available to borrow for repairs. While there are approved FHA programs (and others) this does not mean that there are lenders willing to take on that kind of risk. So, for the most part, rehab money is not available to borrow via traditional resources.

The other problem today is there is not a 100% loan. State Income and No Document loans are all but a distant memory. Today the borrower must have decent credit, a low debt-to-income ratio as well as verifiable employment and income.

The FHA has a First time Home buyer program that many homebuyers in Hemet – San Jacinto take advantage of. The FHA will allow the seller to contribute 3% towards the buyers closing costs. Today most lenders are willing to participate in this program in order to sell the REO home.

You should be cautioned though, if the home is listed for a really good price and it is new on the market or has just taken a dramatic price reduction and is generating a lot of activity then you may want to stack the fees you are asking for.

As an example, there was a nice 2 bedroom 2 bath REO Hemet home that just came on the market, last Friday for $75,000. It was not very rough – but it did need a bit of work. I saw the property on Sunday with my buyer. We wrote our offer and submitted it to the listing agent for $85,000, asking for the 3% seller contribution towards the closing costs. About 10:00 a.m. Monday morning spoke with the listing agent and discovered that I was right in the middle of 8 offers, (with more anticipated coming in) and advised if my client wanted the property, they should submit their “highest and best” offer.

The flip side is homes that have been on the market for over 30 days are obviously not a hot commodity and there is room for negotiation. With another buyer, we found a home in the MLS that had been on the market for 43 days and had not yet reduced its list price of $92,000. Again, the home was in fair condition and only requiring the cosmetics of fresh paint and flooring. Yes, there were projects discussed to improve the property – but they were not necessary to make it move-in ready. In this case we offered $85,000 and requested the seller contribute the 3% ($2550) towards the buyers closing costs. Done Deal! Another Hemet REO comes off the market and opens escrow.

Back on Topic – The Loan Process

Regardless of whether you are buying an REO property of a For Sale By Owner (FSBO) or any other Hemet – San Jacinto real estate for sale, it all begins with money. So unless you are a cash buyer you will need to obtain financing.

The First Step: Apply

The application process is rater simple. As a Hemet REO REALTOR® I prefer to have you speak with one of the lenders that I do regular business with. It’s not that I have a financial incentive that you work with anyone; it’s that I have an established working relationship and an open avenue of communication that helps get the job done. Teamwork is critical to a smooth transaction and closing escrow on time.

Typically, when we meet, I will put you on the phone with the Loan Officer that I believe will best be able to work with you in your particular situation. The lender will answer general questions about available loan programs based on the verbal answers you provide to the questions the Loan Officer will ask.

Second Step: Pre-Qualification

After you application has been made and the Loan Officer has you gather additional documentation and your credit has been reviewed a decision can be made based on viewing your total picture.

Based on the complexity of qualifying and underwriting criteria the lender may suggest several different loan programs that may work best for you. The Loan Officer is a professional and his expertise comes from knowing the inventory of loan products and matching you to the one that works best for you…not the one the lender can earn the highest commission for.

Once you jointly agree with the Loan Officer, a Pre-Qualification Letter will be issued letting you know how much home you qualify to buy and what your own financial contributions will be. Additional information may include interest rate and monthly payments.

Step Three: Processing

This is where a file is built that assembles all of the documents necessary and verifies all of the information provided such as you income, your debt, your assets as well as all of the information on the property you are buying.

During this phase, the property will typically be appraised and any inspections completed so the lender will know the condition of the property. Remember, the lender is not only taking a calculated risk on you the Hemet REO home buyer, they are also taking a risk on the Hemet REO home – and who really knows what condition that is in?

Step Four: Doc’s

Document Preparation, of Doc’s as it is often referred to, is a complex process that must comply with the law that requires the lender to send you a full disclosure that confirms all of the loan details.

The actual loan documents are also prepared and arrangements for signing with a notary are made. Many times, Loan Doc’s are signed in the Escrow office. However since many REO’s contract with escrow companies outside of the area, arrangements may be made to have a mobile notary come and sign the docs with you, in your home or other place of mutual convenience.

Step Five: Approval

After the loan documents have been signed, notarized and returned to the lender, they are given a final review to make sure all of the “I’s” are dotted and the “T’s” are crossed. Although it is unusual, the lender may still require additional conditions are met. Once all of the conditions are met, the lender approves the loan, making their final commitment.

Step Six: Funding

After the lender makes the final commitment, the funds are wired to the Title Company which disperses them to Escrow. Escrow makes the disbursements to everyone who is entitled to any of the monies. Prior to funding, escrow would have issued a preliminary HUD-1, or net sheet. This form tells where every cent is going. If there are any challenges, that is the time – once money leaves escrow it is almost impossible to get back.

Step Seven: Recording

This is it! Recording will typically take place the day after the loan funds. Title submits all of the documents necessary to the County Recorder early in the morning and usually starting around 2:00 p.m. the Recorder will start releasing them, with the goal to have everything done by 5:00 p.m. Once the Deed has been recorded, title to the REO property officially changes hands and you are now the new owner.

There you have it – the loan process – over simplified maybe, but at least if give you an idea that there is a process that no one person has control over. Your Loan Officer can monitor what is going on and is often the messenger when there are issues that need to be dealt with.

On the other hand, your REALTOR® coordinates not only with the Loan Office, but every other aspect of what is taking place to close the escrow…and believe me, there is a lot more than can go wrong when you buy a Hemet – San Jacinto Valley REO home.

Blessings to all who read this,

John Occhi, REALTOR®
Century 21 Crest - CrestREO
CrestREO.Com
Hemet - San Jacinto Valley
951-927-9473

Author of "What You Need to Know...About Foreclosure and How You Can Stop It!" - If you are a Hemet or San Jacinto Homeowner.

This blog and the contents written here is the intellectual property of John Occhi, Hemet California REALTOR®. The views and opinions expressed are just that - views and opinions of John Occhi and those who comment. Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0. Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® with Century 21 Crest and the CrestREO Division who is proud to be a contributing member of the ActiveRain community.

About the Author: John Occhi REO REALTOR®, successfully started an REO Team in Hemet, CA that quickly expanded to 3 agents and 2 admin members with over 50 REO properties under his direct control. He was able to keep approximately 20% of his assigned inventory in escrow at any given time and another 20% entering the pipeline with properties in the pre-marketing phase of the business. Today John has been sought out to assist one of the largest franchises in America to expand their REO operations into the Inland Empire.

CrestREO has REO sales closings (listings only) that total over $1 billion in asset value. Imagine how much volume 300+ Century 21 Crest REALTORS® have represented buyers to successfully close REO listings.

In order to provide the public with a no-pressure hassle free system for shopping and buying Hemet - San Jacinto REO properties, CrestREO is please to announce the release of the proprietary REO Home Buyer Protection Program.

This FREE Service is reserved exclusively for our VIP Buyer Clients, initially in the Hemet-San Jacinto CA market area.

When you enroll in the CrestREO REO Home Buyer Protection Program a Crest REO Home Buying Specialist will be assigned to help you...

• Find The Very Best Home Loan that You will Qualify For
• Find The Lowest Down Payment Available!
• Find The Lowest Interest Rate Available!
• Find The Lowest Monthly Payment Available!

Again, the services outlined here are all FREE and will never cost you a single dime!

The Banks Want You to Use CrestREO
To Help You Buy Your REO Home!
(The Most Important part of this entire Website)

Banks, Asset Managers and Lenders receive many offers on their REO homes for sale...even the ones that appear to sit on the market forever.

There are many offers that come in that are from low-ball bottom feeders that believe if they throw enough garbage offers against the wall, that some of it will stick...and occasionally, some of it does stick.

Banks, Asset Managers and Investors also receive offers to buy their REO assets from buyers that may otherwise be good offers from good buyers. Unfortunately for the buyers, in many cases agents today do not know how to best structure an offer to purchase an REO home. Most offers written by non-REO agents are prepared as if the offer as it is for buying a home from the original homeowner, just as if times were still good in the current Real Estate market - and we know that is not the case.

Truth be told, the best offers that the Banks, Asset Managers and Investors receive and approve will typically come from a REO agent. It does not matter whose listing it is, REO agents know what the Banks, Asset Managers and Investors are looking for to get offers accepted and get deals done.

Every REO contract will have a set of lender generated addendum's that will have their own particular terms - often negating important terms protecting the consumer in the standard forms that all California REALTORS® typically write their offers on.

As an example -

• Do you know how many days you will have to complete your due diligence? What rights do you have to inspect the REO?

• Do you know what will happen if your escrow date is delayed? What if it's not your fault?

• Do you know how much the Bank, Asset Manager or Investor will require for a good faith deposit? Under what terms and at what point does your good faith security deposit become a risk?

• Do you know what notices the bank, asset manager or investor has to provide? What disclosures will they provide regarding the property?
  
  And, maybe most importantly...
  

• Do you know what will happen if there is a dispute???

These and many other issues that are not commonly considered in a traditional real estate transaction often blow up into problems that could have been avoided.

These variables are often unique to the REO theater causing situations with buyers who want to buy REO property. Unfortunately, the problem is usually only a problem because of agent inexperience. Buyers select an agent to represent them buy a REO home based on anything but REO experience. Most agents today do not have the same level of experience as a REO listing agent, such as John Occhi and other team members found at CrestREO.

When you let a CrestREO Home Buying Specialist help position you, you will achieve the most home for your money in the smoothest transaction possible, using proven consumer innovations and the latest technology that will go far beyond the resources or knowledge of the traditional agent in the field who is still looking to sell homes using traditional methods.

The REO Home Buyer Protection Program
Focuses on YOUR NEEDS!

Your CrestREO Home Buying Specialist will coordinate as the lead person of a selected team of professionals experienced in meeting the needs of the REO home buyer of today.

FIRST - The first step is to take you through the loan process - and not out looking at homes. So many agents and buyers just want to get out and look at a home - often leading to disappointment because they can't qualify for a loan in today's market that will allow them to buy the home they think they can afford.

A big factor to the problem we are having today revolves around lenders who were able to make loan programs work around buyers, just a short time ago. Today, however, the buyer either fits the mold of an available program or they don't and there just isn't getting around it.

Yes, it is tougher to get a loan today - but the loan you get as a qualified buyer will enable you to afford the monthly payments and not worry about losing the home yourself in a couple of years.

Your CrestREO Home Buying Specialist works closely with several direct lenders that fully understand the REO home buying process.

Once your Crest Home Buying Specialist understands the variables of your personal situation, they will be able to guide you to the lender who will most likely be able to help you achieve your goal.

Today, there are Federally Insured programs where the lender will allow the seller to contribute up to 3% for closing costs and another program that will piggy-back on the first allowing the seller to contribute another 3% for down-payment assistance. As a first time home buyer, there is currently a program that will finance 97% of the purchase price.

This means you can buy a home today for next to zero out of pocket.

By qualifying for a loan before you start writing offers, you will have the ability to write the offer as if you are a cash buyer - and there is nothing more that the lenders like when considering the numerous offers they receive.

The added benefit of pre-approval is that you will be able to close escrow much quicker, once an offer has been accepted by the bank, lender or investor that foreclosed on the property. Now, the pressure is on the seller delivering the title and not you delivering the money.

The pre-approval procedure is very simple. A pre-qualification can be initiated as soon as you complete a loan application and a credit report is pulled so the loan officer knows your credit score (FICO) and can identify any preliminary red flags. This is the extent most REALTORS® and lenders will take prior to an offer being written and escrow opened.

The next step the underwriter will take is to verify your personal information, such as your employment, bank accounts and other information you provided on your loan application. Once this is done, the underwriter, who has final approval authority on your loan, will calculate your borrowing power and issue an Approval Letter that is as powerful as a blank check, to buy the REO home of your dreams.

Based on the strong relationships and expertise of CrestREO, this process can generally be accomplished in about a week - giving you the power to shop as if you were a cash buyer.

The edge CrestREO provides our REO Buyers is unparalleled in today's market!

SECOND - Once armed with your Letter of Approval from a major Direct Lender you are now ready to sit down with your CrestREO Home Buying Specialist . In this initial meeting you will have the opportunity to have all of your questions and concerns addressed, discuss current market conditions as they relate to you and your unique goals and most importantly review all of the important details in finding your special REO home - at the best possible price.

One way of doing this is by playing the game of "Nines". This is where you make two separate lists - select 9 absolutely must have features...maybe the number of bedrooms, a pool, a cul-de-sac location or whatever is important to you needs.

The other list of 9 is what you do not want in a home - under any circumstances...could be an all electric kitchen, an exterior lot, or maybe you don't want a pool. You can also call this "Nine of This and None of That".

Once we know what you are looking for and we have built a custom CrestREO Home-Finding Checklist we will take this data and enter into both the Tempo MLS (SoCalMLS and SandiCor) and MRMLS which provide virtually 99+% MLS coverage of all of Southern California.

Each MLS will search it's database based on the complex algorithms we have developed to find the right home for you in the right neighborhood at the right price and provide you with a report to your email box every morning with every new listing that meets your needs as well as homes that have reduced their price and now fall into your price range.

Because this is computer generated, there will be homes that do not meet all of your requested criteria. You will have the opportunity to review all of the properties sent from each MLS. Depending on you and your priorities - we can set the results to be published once a day, once a week or even once a month - the choice is yours.

Review the listings we send and pick the ones you would like to see - then do a drive by so see if they still meet your expectations. When you find one you like, let us know and we will dig into information available to us as your REALTOR® for the property, providing you with our Proprietary CrestREO Market Report with up-to-date comps and other valuable information that will help assess the value and asking price. Only then, if you are still interested, we will arrange for a private showing.

Never Worry - You will never have to worry about pressure from us to buy any home - regardless of whose listing it is. We know that this may be the most important decision of your life and we don't want to make if for you - we want to help facilitate the decision making process.

Bottom line, the CrestREO
REO Home Buyer Protection Program
Puts YOU IN CONTROL!!!

As a VIP Buyer in the CrestREO REO Home Buyer Protection Program you will never again have to...

• Search the Papers and Internet for homes because they are now coming straight to you, before other buyers have a chance to even consider them.
• Waste your time going from house to house because some real estate agent picked them out for you - you will only be looking at homes you want to see that match your specific criteria on your own timeline.
• Feel Pressure to buy a home, since most real estate agents will pick out a group of homes and try and pressure you into making a decision to buy one. With CrestREO, there is never any pressure to buy a home that's not right for you.
• Worry about paying too much for a home. By being first to see a home we may have an offer written and accepted before the rest of the buyers even know the home is on the market. You should be able to avoid many multiple-offer situations... generating a lower price for you!

THIRD - The REO home shopping process may be fun or it may be grueling (or both) - but finding a good home is the easy part of real estate. Once you have determined which home is best for you and the one that you want, your CrestREO Home Buying Specialist will craft an offer and negotiate for you, taking advantage of our intimate knowledge of the market and insight what each bank, asset manager or investor will and will not accept.

We will review all of the criteria necessary for a good offer and how best to position you so that your offer is accepted.. It is important that you think through every aspect of what you are offering - so we will take our time and do it right.

We will communicate with the lenders REO Agent to present the offer in the best possible light. It's amazing how many offers are submitted by just faxing the documents to the listing agents without any communication or coordination. Needless to say, very few of those offers ever get accepted.

Negotiation is the process of give and take - although many times we are able to successfully present an offer that meets the criteria of the lender, there are other times when we have to go round after round of offer and counter-offer. We know what we are doing at CrestREO and will negotiate the best possible purchase price for you, or advise you to let a home go if it is going to be too expensive and then we will start all over again - without every charging you a single penny for all of these services!!!

Then, once the offer has been negotiated and accepted the toughest part is still ahead - closing escrow. However, with the surprises that lenders often throw into the process eliminated with your Underwriter Approval, the process will be much smoother than many other escrows where the buyer is still scrambling for documents to prove their credit worthiness. Our skilled transaction coordinators will manage all of the paperwork necessary to ensure a smooth on-time closing of your escrow so you can take possession and move into your REO home, as planned.

Your Secret Advantage - Our Specialized Knowledge

Perhaps one of the biggest advantages that an REO agent has in the current market place is our very specialized knowledge. Not only are we experts in the process of buying and selling bank owned REO homes but we are experts in the actual market, as well - making sure you never pay too much for a REO home..

You see, being an REO Agent has a unique responsibility to the Banks, Asset Managers and Investors who actually own these properties. REO Agents are the eyes and ears of our selling clients and we have a huge responsibility for providing up-to-date market analysis information for every property we are trusted to dispose of. There are a series of special reports known as BPO's and MSR's that are completed on every assigned REO listing.

A BPO, or Broker Price Opinion, is a comprehensive in-depth analysis of the market and how it relates to a particular property. These are typically completed when the property is in the pre-marketing stage of the listing process and then repeated every 90 days. A MSR, or Monthly Status Report is a snapshot of market activity for the past 30 days hat allows the Banks, Asset Managers and Investors to watch the variations of the market, as it relates to each individual REO property. These reports not only provide our clients with the data so they can keep their finger on the pulse; arming them with valuable insight to use to consider accepting or rejecting offers and even to justify price reductions in the MLS - they equip the agents with an in-depth study of the current market conditions as well.

The advantage in working with the CrestREO Team is unparalleled market knowledge of local conditions which will help you get the very best price for your REO home purchase.

To find out more about the The CrestREO REO Home Buyer Protection Program please visit our website, www.BuyaCAReo.Com

Blessings to all who read this,

John Occhi, REALTOR®
Century 21 Crest - CrestREO
CrestREO.Com
Hemet - San Jacinto Valley
951-927-9473

Author of "What You Need to Know...About Foreclosure and How You Can Stop It!" - If you are a Hemet or San Jacinto Homeowner.

This blog and the contents written here is the intellectual property of John Occhi, Hemet California REALTOR®. The views and opinions expressed are just that - views and opinions of John Occhi and those who comment. Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0. Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® with Century 21 Crest and the CrestREO Division who is proud to be a contributing member of the ActiveRain community.

One of my favorite real estate bloggers had a post featured today on the Active Rain Social Network. This real estate professional is smarter, more experienced and more widely-read than most of us on the network. The post was well-written, incisive and thought-provoking.

So I think it's only natural that I disagree.

Lenn Harley calls the "Declining Market" policies so much blather.

I'm having a hard time understanding some of the logic in the post and in the "Amen" chorus of comments. After leaving three long-ish comments, I decided to avoid hijacking her post and to post one myself. That will give Lenn and other smart people the opportunity to publicly humiliate me...or at least just educate me. So, let me try my hand at what Lenn calls Hard Core Real Estate Talk.

..........................................................................................................................................

First, let's go the post that started it...

The always excellent Janet Guilbalt posted about a deal that went sideways because the investor changed the guidelines to require another 10% down from the buyer of a $1,300,000 home. Then Janet says this:

"Fewer people who can get loans = fewer buyers = more unsold houses = declining values. And there you have it...what is really causing our industry to remain at a standstill."

Huh? Our industry isn't "at a standstill". Prices are dropping, foreclosures are increasing...that's not standing still.

That's a contraction.

Nobody was complaining when record numbers of buyers were qualified to buy. Nobody was complaining when houses would have multiple offers within one hour. Nobody was complaining when home prices were skyrocketing.

........................................................................................................................

Wait a second! Lenn might have offered something in the way of complaint as recently as last June:

"We need for prices to go DOWN. We need the housing prices to depreciate, deflate, lessen, lower, recede, slash, truncate, GO DOWN."

That's what's happening. The real estate market is like everything in life...it has seasons. There are times where the flowers bloom and there are times when the leaves fall. This isn't armageddon...this is just the other side of the hill.

Lenn reminisces in her post of the late 90's, when a Realtor could rely on any buyer that had good FICO scores. She then builds an arguments that people with great credit histories shouldn't be affected by the 'declining market' policies and lower loan-to-value ratios.

She's right...kind of. The FICO system has been a great predictor of a borrower's ability to pay since it was created...

BUT NOT ANYMORE.

There's evidence that LTV is the new FICO. Check out these quotes from Calculated Risk's recent interview of Wachovia bigwigs:

• "...when equity in the home approaches zero, behavior changes..."
• "their propensity to just default and stop paying their mortgage rises dramatically and I mean really accelerates up and it's almost regardless of how they scored, say, on FICO or other kinds of character, credit characteristics." (emphasis mine)

..............................................................................................................................

I'm experiencing it first hand as the Hemet Home Loan Guy. I've seen ordinarily good people, even law enforcement officers, use their excellent credit as a free pass. Great credit is being used like medieval indulgences, and it goes like this:

• Make an offer to buy the home across the street that is WAY less expensive than the model match you bought three years ago.
• Get a friend or relative to sign a lease agreement saying that they'll be renting out the home you live in now.
• Move.
• Stop paying on your old house.

Turns out a high FICO pales in comparison to a good, old-fashioned downpayment in predicting a person's future behavior. Let's not be too wistful about a FICO score being the major criteria in getting a loan. That credit score system hasn't been tested by the sort of real estate downturn we're facing now.

That's why I am shocked when Lenn and her readers start turning on "The Institutions" for causing this mess. Like I said in my comments there, we're Americans...we like to let our institutions do our sinning for us. That doesn't mean we're not complicit.

Most of these same people would have cried bloody murder while the bubble was inflating if our institutions intervened, and if the government took action to stave off the rapid appreciation. (Most real estate professionals made enough money during the build-up to last an eight year recession...if they didn't blow it.)

..............................................................................................................................

"I believe that the 'Declining Market Syndrome' is an obfuscation invented to give cover to lenders who suffered massive losses through loose lending standards."

If Lenn really believed that then she would lend out her own money to high FICO, high LTV buyers. Yes lenders suffered massive losses through loose lending standards. Cutting back is what ALL of us would do if careless spending got us in a heap of trouble. Anybody have a better idea?

To twist one of Lenn's passages:

THE INSTITUTIONS HAVEN'T FAILED ME.

• Congress didn't fail me.
• Fannie Mae didn't fail me.
• Freddie Mac didn't fail me.
• The mortgage companies didn't fail me.
• Wall Street didn't fail me.

Nobody has a responsibility to throw good money at risky investments. Janet's example is sad, but an exception. Most of the declining market value guidelines have been publicized well in advance and most people aren't buying $1,300,000 homes. And if they are, I can't feel all that bad that they have to have another $130,000 in their savings account to afford it...otherwise, why are they buying a $1.3 million dollar home?

In most California cities, the declining policies are very simple and make sense:

• 5% reduction in total Loan-to-Value. If it was 100%, now it's 95%.
• The appraisal must include 2 recent comparable sales in the last 90 days.
• The appraisal must include 2 active pending sales.

Do those changes seem like Draconian laws bent on destroying our economy, or does that sound like 'makes-sense' investing aimed at protecting consumers?

To top it all off, FHA doesn't even have a declining market policy...and has even increased their loan limits!

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The slowdown is not just a season, it's a healthy and good season.

Here are the benefits of the current real estate market contraction:

• Houses are affordable again for first-time buyers
• Investors can rent a home at a profit
• The fly-by-night real estate 'professionals' are quitting in droves
• The real pros, who care for their clients for the long haul, are gaining market share

I'm not saying it's easy. I'm not saying there aren't some awful stories out there of fraud, mortgage deception, and people losing their homes.

Heck, I'm upside down on my house, too!

But I'm NOT complaining. Real estate has been good to me. And to the smart money investors that held off for the last several years. And to the simple folk that just couldn't afford until now. They are out there and they need my help.

It's a great time for real estate.

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Related Articles:

• What's the Interest Rate Today? It's on your Cell Phone.
• California and the Terrible, Horrible, No Good, Very Bad Real Estate Market
• Investing in Hemet Real Estate...Good News and Bad News
• 7 Steps to Fix Your Credit

Looking to buy a home?

Joey Aszterbaum is the Hemet Home Loan Guy and a member of the Active Rain social network of real estate professionals. To buy or refinance your home in Hemet, Riverside County, or California visit www.HemetHomeLoans.com or call 951.571.5751

There was a time when, to buy a home, you had to have 20% down. Then came along mortgage insurance.

Mortgage insurance allows mortgage lenders to recover their losses if there is a foreclosure. So it allows them to give you a home loan with less than 20% down.

.......................UNTIL NOW...................

Everyone knows that the rules have been changing fast. Since the 'subprime mortgage crises' those changes have been when the largest mortgage investors, Freddie Mac and Fannie Mae, tighten up their guidelines.

On April 14th, that changed. That's when the major mortgage insurance carriers tightened up how they work. And they've decided two major things:

1. They will not insure mortgages for non-owner occupied homes. This means that if you want to buy a second home, a vacation home, a rental or an investment property, you have to put 20% down before you can get financing.
2. They will not insure cash-out refinances. That means that if you refinance your first trust deed (your home loan), you can only borrow 80% of the appraised value of your home.

FHA loans, which are government-insured by HUD (Department of Housing and Urban Development) will still cover refinances with cash out up to 95%, but I expect they'll change the rules eventually based on the number of foreclosures.

Now is a great time to buy. The bad news is that most people will have to have down payment. The good news is that home prices have become much more affordable in Hemet, Riverside County, and any area hit hard by foreclosures. 20% of $150,000 is a lot less than 20% of $350,000...so start using that savings account!

...................................................................................................................................................

Related Articles:

• What's the Interest Rate Today? It's on your Cell Phone.
• California and the Terrible, Horrible, No Good, Very Bad Real Estate Market
• Investing in Hemet Real Estate...Good News and Bad News
• 7 Steps to Fix Your Credit

Looking to buy a home?

Joey Aszterbaum is the Hemet Home Loan Guy and a member of the Active Rain social network of real estate professionals. To buy or refinance your home in Hemet, Riverside County, or California visit www.HemetHomeLoans.com or call 951.571.5751