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Darryl Brasseur

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Want a mortgage? Do Not change your job status before the house closes!

09-26-09
Darryl Brasseur

I have recently had clients that have run into problems while trying to buy a home so hopefully this article will save the potential home buyer a lot of headaches along the way. Below are things to consider before making a change in employment if you are thinking about buying a home....Changing employers will not really affect your ability to qualify for a mortgage loan for most people. For some home buyers, however, the effects of changing jobs can be disastrous to your loan application. Below are tips on avoiding problems in the loan process...


Salaried Employees

If you are a salaried employee who does not earn additional income from commissions, bonuses, or over-time, switching employers should not create a problem. Just make sure to remain in the same line of work. Hopefully, you will be earning a higher salary, which will help you better qualify for a mortgage.
Hourly Employees

If your income is based on hourly wages and you work a straight forty hours a week without over-time, changing jobs should not create any problems.
Commissioned Employees

If a substantial portion of your income is derived from commissions, you should not change jobs before buying a home. This has to do with how mortgage lenders calculate your income. They average your commissions over the last two years.

Changing employers creates an uncertainty about your future earnings from commissions. There is no track record from which to produce an average. Even if you are selling the same type of product with essentially the same commission structure, the underwriter cannot be certain that past earnings will accurately reflect future earnings.

Changing jobs would negatively impact your ability to buy a home.
Bonuses

If a substantial portion of your income on the new job will come from bonuses, you may want to consider delaying an employment change. Mortgage lenders will rarely consider future bonuses as income unless you have been on the same job for two years and have a track record of receiving those bonuses. Then they will average your bonuses over the last two years in calculating your income.

Changing employers means that you do not have the two-year track record necessary to count bonuses as income.

Part-Time Employees

If you earn an hourly income but rarely work forty hours a week, you should not change jobs. There would be no way to tell how many hours you will work each week on the new job, so no way to accurately calculate your income. If you remain on the old job, the lender can just average your earnings.
Over-Time

Since all employers award overtime hours differently, your overtime income cannot be determined if you change jobs. If you stay on your present job, your lender will give you credit for overtime income. They will determine your overtime earnings over the last two years, then calculate a monthly average.

Self-Employment

If you are considering a change to self-employment before buying a new home, don’t do it. Buy the home first.

Lenders like to see a two-year track record of self-employment income when approving a loan. Plus, self-employed individuals tend to include a lot of expenses on the Schedule C of their tax returns, especially in the early years of self-employment. While this minimizes your tax obligation to the IRS, it also minimizes your income to qualify for a home loan.

If you are considering changing your business from a sole proprietorship to a partnership or corporation, you should also delay that until you purchase your new home.

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What happens when a lender can’t produce the original note? BATON ROUGE, LOUISIANA

09-14-09
Darryl Brasseur
by Darryl Brasseur Realtor, Tiger Town Realty BATON ROUGE, LOUISIANA

A growing number of homeowners around BATON ROUGE LOUISIANA and the rest of the country are using a foreclosure defense that may help them retain their homes. It’s called “Produce the Note” and we want you to know this is not a mere technicality that should be treated lightly by the lender or by the Court.

Everyone needs to understand the importance of this issue. When a lender can’t produce the original note, allowing a foreclosure to proceed puts the homeowner at risk of owing that debt again to another party in the future. Therefore, great caution must be taken before a judge can allow someone who can’t produce the original note to cash in on your home.

What if Your Lender CAN’T Produce the Note?

So, what happens when the lender tells the Court it can’t produce the original note, because it is lost? Let’s start with the basics. If a lender wants to foreclose on a property, it has to be able to show that it is, in fact, the appropriate person to whom the money is owed. That right to foreclose belongs ONLY to the person who has legitimate POSSESSION OF THE ORIGINAL NOTE - not a copy, not an electronic entry, but the original note itself with the original signature of the person(s) who allegedly owes the money along with appropriate raised notary seal and signature. So, if you are faced with a foreclosure, you have every right to demand that the person or entity trying to take your property, first prove to the Court that they have the legal right do to so in the first place by proving they have legal possession of the original promissory note.

In my opinion, an original mortgage note is much like legal tender and should be guarded and protected as such by the person holding such an asset. Loosing an original mortgage note is like loosing a $100 bill or a gift card or a lottery ticket. What if I scratched that million dollar ticket and just stuck it somewhere and misplaced it? Do you think I could just show up at lottery headquarters and claim my prize without having the winning ticket? The same principle applies to the person or entity claiming to be the legal holder of an original mortgage note. He who holds the note holds the key.

What the Lender Must Do

What often happens, however, is that the lender claims it doesn’t have the original note, because that note has been lost or destroyed. If the lender is making such a claim, the law requires the lender to prove all of the following under the “Uniform Commercial Code”, which is a set of laws governing commercial transactions that many states have adopted. It contains a specific provision on this subject (Section 3-309) which states that a person can enforce a promissory note without having the original, BUT only under certain limited circumstances.

1. The person or entity has to swear and attest that it no longer has the original note;
2. The person or entity has to prove that it was properly in possession of the note and was entitled to enforce it WHEN it lost possession of the note;
3. The person or entity has to prove it didn’t “lose” possession simply because it transferred the note to someone else (i.e., it’s not really lost); and
4. The person or entity has to prove that it cannot produce the original note because the instrument was destroyed or its whereabouts cannot be determined or it was stolen by someone who had no right to it.

All of these matters have to be definitively proven by the person or entity trying to foreclose on the property. It is not the obligation of the borrower to prove or disprove any of this. The borrower can challenge the right of the person or entity trying to foreclose and demand proof.

The Court’s Important Role

It is up to the Court to determine whether the lender has satisfactorily proven why it no longer can produce the original note. The Court also has to be satisfied that when the original note was lost, the person trying to foreclose on the property had possession of the note at the time it was lost. Until the Court has been satisfied of all of this, the foreclosure cannot proceed.

It is also important for the Court itself to understand that this issue is not merely a “technicality” and the judge should not be satisfied with anything less than full proof of this issue. The Court itself needs to appreciate the fact that if it should agree that an original note has been legitimately lost (and allows the foreclosure to proceed) it is the borrower who is still at risk.

Why? Because incredibly, even if a Court has found that the original note is lost and the foreclosure sale is finalized, if someone later turns up with the original note and proves that it is the proper holder of the note, and not the person who foreclosed on the property, the original borrower is STILL LIABLE.
That’s right. Someone took your home and the Court allowed it because it believed that the lender proved that the note was lost and it was the proper party. Then someone legitimate shows up in the future with the actual note and you still owe that person the money even though your property was taken with the blessing of the Court. Trust me, this is a very serious issue regarding post foreclosures and post pre-foreclosure short-sales. It has happened to three of our own clients! These homeowners had the need to sell their property by means of a negotiated short-sale (so they could avoid a foreclosure) only to find out that the entity claiming to have the legal right and authority to enter into such negotiations and accept such settlements sold their note to another entity and weren’t even aware of it. Several months later, the newly assigned lenders (now claiming to be the rightful owners of our client’s original notes) have since come forward and have also filed suite seeking to recover their entire outstanding principle balances owed to them (prior to the homeowners closing their short-sale transactions with the wrong note holders).
How fair is that?!?! It’s not! And that’s why homeowners need to start fighting back when someone is trying to take their home by foreclosure, especially since an overwhelming percentage of mortgages granted over the last 3 to 5 years have been packaged into securities and re-sold and re-assigned numerous times since the inception of the borrower's original note and mortgage. In some states, homeowners have better than a 50/50 chance of being successful in defending themselves against a completed foreclosure. Why wouldn’t anyone who owns a home do everything in their power to protect and defend it?

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Who is setting the market? Buyers or Appraisers? Baton Rouge Louisiana Real Estate Blog

09-12-09
Darryl Brasseur

by Darryl Brasseur REALTOR, Tiger Town Realty BATON ROUGE LOUISIANA

There has always been a saying in Real Estate "Buyers set the market". After all a home is only worth what someone will pay for it, right?

In a recent article put out by Bloomberg "Home-price Recovery May be Undermined by Appraisal (Update 1)" buyers are not the ones setting the market.

Especially when they purchase using Fannie Mae or Freddie Mac loan packages. According to Bloomberg there have been multiple deals that have crashed and burned due to appraisals coming in lower than the agreed upon sales price. With the new laws set into place as of May 1, 2009 there are even tougher standers to be upheld. A watch dog of sorts for the mortgage company and appraiser relationships.

"So what did the appraisal come in at?" is a question that I have heard many times in the BATON ROUGE LOUISIANA REAL ESTATE market from a prospective buyer. The fact of the matter is that most appraisers (unless there is a latent defect with the home) bring the appraisal in at or slightly above the contract price. Why do appraisers need to know the contract price before they complete the appraisal?

I am guessing that if they want more business from that mortgage company they will bring it in at a value so that the deal won't fall apart. But who are they serving ultimately? The mortgage company that will be stuck with a property that can't be sold for what they bought it for, the owners who now can't sell because the home value was inflated?

I have also heard the saying "you have to sell this home 3 times" meaning that you need to catch the attention of the buyer, their mortgage company and appraiser before you can purchase the home.

Of course, if you have a bunch of money to put down you can alleviate this problem, the fact of the matter is most people don't.

So tell me what you think!

Are you telling your clients that buyers or appraisers are setting the market today?

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Signs Of The Times In Home Sales

09-11-09
Darryl Brasseur

by Darryl Brasseur, REALTOR Tiger Town Realty Baton Rouge Louisiana

The American dream of home ownership in BATON ROUGE LOUISIANA is still attainable, only the rules have changed and buyers need to be made aware of them. Exactly one year after the collapse of the housing market triggered the financial meltdown, most lenders are requiring more money up front along with higher credit scores and proof of income. I just recently had a buyer in BATON ROUGE LOUISIANA that was turned down for a $215,000 mortgage. This young, hardworking couple was applying for a VA loan and had $47,000 in cash for the downpayment & closing costs along with a FICA score of 750. Problem was, he is a 4th generation store owner in BATON ROUGE LOUISIANA and their income was hard to prove. The lender said they could not consider his wife's income because she was working in a field that she did not major in. Isn't that CRAZY! My suggestion to any buyer is to make sure all paperwork is in order. Patience and persistence is required. And NEVER ask about a sub-prime mortgage.

We are having to work by a totally new set of rules from a decade ago when home prices soared and mortgages were easy to come by. For people that are trying to sell their homes, the rules have also changed. Be patient and maybe even lower your asking price because the balance of power has swung towards buyers. Housing bubbles have happened before and experts warn that it could happen again. Already, home sales and prices in the BATON ROUGE LOUISIANA area are rising slowly, being helped by tax incentives for first time home buyers. Hopefully it will continue to rise

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WHY DO BATON ROUGE LOUISIANA REALTORS NET SELLERS MORE MONEY THAN FSBO'S

09-10-09
Darryl Brasseur

By Darryl Brasseur, REALTOR® with TIGER TOWN REALTY, BATON ROUGE LOUISIANA

I have been selling homes in the BATON ROUGE LOUISIANA and surrounding parishes for a while now. I have noticed a trend when driving around or when I speak with potential sellers regarding the sale of their homes. A large percentage of sellers decide to test the FSBO market and most of them get frustrated after around 6 weeks of the "roller coaster" ride, (Now worse than ever), that us REALTORS have come to expect as part of the business in the BATON ROUGE LOUISIANA Some sellers mistakenly think they can save money by excluding a REALTOR. Invariably, they usually learn the hard way that selling a home is an extremely complex and time consuming undertaking and that, in the end, the savings might not even exist. These sellers go online to these dot com FSBO websites, pay a flat minimal fee and think "that's it"...I will stab a sign in my yard and wham! My home will get sold! I only wish these FSBO websites would accurately report to the consumer how many of the "SOLD" listings they boast of, were actually sold by Realtors. Here is the reason that most FSBO's don't sell. Sellers usually don’t reduce their sales price by the amount of the commission they would have paid in hopes of pocketing the perceived profit. Likewise, buyers take into account that there are no ccommissions to be paid and reduce their offers accordingly. So, many sellers end up right where they would have been price-wise if they had used a Realtor’s service, but without any of the benefits of the expertise of this professional. My experience here in the BATON ROUGE LOUISIANA market is that if I have a relocation of an executive from another state, they don't have time to go through newspapers or dot com sites in search of there new home. They will call their REALTOR and then get referred to a local Realtor. Another issue that would scare me as a potential buyer is that a FSBO is not governed by any real state laws whereas a licensed REALTOR is governed by the state real estate commission. We have to carry errors and omissions insurance to protect the consumer. Not utilizing a Realtor’s services also means your property will not be marketed through MLS or shown to the largest pool of potential home buyers. Studies show that 8.5 out of every 10 homes that are sold, are sold by Realtors.

The National Association of REALTORS® conducted a survey of 100 FSBO's that were successful in selling their homes and 62% said that they would not attempt it again. Many contributed it to lack of knowledge or experience along with the "roller coaster" ride of the ups & downs of dealing with buyers.
Most important, when it comes to knowing the intricacies associated with this transaction, working without a Realtor is like bungee jumping without measuring the height of the bridge first. For instance, there are mandatory disclosure rules a seller must follow and the seller is liable for damages if he or she fails to do so. The entire escrow is extremely tedious and complex – miss one crucial step and there can be delays, cancellation, even lawsuits. So my advise is if you really need you home marketed and sold, contact a REALTOR and save yourself a lot of grief!
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