Susan Templeton

We have quite a lot of green action up here the the 4th corner. Something about all this clean air and rain maybe. I meet people who lived polluted urban lives who have come here in search of something you can feel when you look at Mount Baker's snow covered peak on a sunny day. It's fresh and spacious and a little heady. People associate what they hear from local non profit groups about sustainability and living more in balance with building or renovating green. They've heard all about Green Mortgages, Green Building and various green products....everything from green heat to green energy to green flooring, and even green cars! We are very fortunate in that our area many bright people working are on these technologies and putting them into practice in all kinds of ways. I am here to tell you there is more than just a bit of puffery going on in my world abouts so called Green Loans.

FACT: The Energy Efficient Mortgage(EEM of 1979) has been dusted off and represented in a nice green ribbon to capitalize on the sustainability trend. Unfortunately for many banks, the process of vetting a project for energy efficiency is just not something they know how to do.

For renovation projects featuring energy efficiency upgrades the EEM has its limits. Firstly, not everyone will qualify for a Government (FHA, VA or Home-Style) loan. Expect the usual hoops and then some. EEM's require good credit, full documentation of income and more strict debt to income ratios. There are also EEM funding limits: topping out between $5 -$8,000 above your mortgage limit. Besides which the FHA limit in our tri county area is well below the conventional limit. $(304,750 for Whatcom County.) so if you need more you will definitely need to find a construction lender who is a specialist in renovation or custom building loans.

When Is More Better? If you are just making energy improvements, some of themost effective changes you can make are weather proofing. I mean sealing gaps and insulating and fortunately thos are not the most expensive things you can do for quite a big return. It's not surprising for a new furnace to cost $5 -8,000 -so if you happen to need more green you may need a Renovation Loan. Any Renovation Loan works for smaller projects you can accomplish in 6 months or more. It factors how your improvements will enhance the value of your home. Most renovation loans don't take energy improvements into the equation...so we build the financial case to prove their worth over time. For any construction project, the ‘as built value' must equal or exceed the costs you incur to make the improvements pencil out to a lender.

Get the Real Deal! Your green project needs to realize more than good intentions. Invest in a designer or architect and builder who are certified under a green program. The two most recognized programs are: Built Green, rated by stars and LEED rated as silver, gold or platinum.

Built Green is run by our local BIA chapter: www.biawc.com There are other programs in other regions.

LEED for Homes is managed by the US Green Building Council. www.usgbc.org this program was originally developed by commercial architects and has the most rigorous testing

Get a leg up on the spring building boom! www.buildnet.blogspot.com Factoid: Most so called 'green loans' are a public relations ploy to get you in the door and the lender doesn't even know about EEM's and may not have a specialist constrcution department--borrower beware!

So remember the new mantra of our times: Green is Good!

Click this Credit Link to order your tri-merge lender report on our secure site. Credit really matters a great deal to construction lenders. You need to have at least 20% in the project and money in the bank to carry you during the project to get a construction loan.

susan templeton www.loannetter.com

washington loan officer license 510-LO-31434 branch license: 510-MB-24707-50145

So you think you want to work in Commercial Real Estate? Heard the glory stories about whopping commissions and up front fees? That commercial is thriving while residential falters? I'm here to tell you it's no place for the faint of heart or lazy of behind.

WORK IN PROGRESS: I happen to have a few projects on my mind that in some cases have been two years or more in the planning. Meanwhile, I am also running a residential client service that runs the gamut. In a way, the commercial world is a welcome break because it takes me back into the corporate hard knocks school I trained in and I feel comfortable slinging the lingo ..hey it's also fun to be talking about millions not thousands. Before you hand in your residential badge, ask yourself if you are the kind of person who can work their backside off for a year only to be beaten out by some boys in Jersey who did a little more wining and dining than you did.

WHAT NO PERKS?I don't think it good business to grease palms. Call me naive but I think people respect business as business. We are so schooled in the residential world that we cannot legally offer kickbacks to Realtors or clients that I have taken on the 'no gifts of value' mission as my personal challenge! (I grow flowers in summer so most of my housewarming gift is fresh and free!) I am succumbing to the fact I might have to take up golf again...stay tuned on that. The only problem is some guys get a little miffed when the girl sinks a 30 foot putt and I'll be darned if I'll fake my putt!

COWBOYS GALORE: 'W' made a living on his swagger and pedigree. In commercial you definitely need a professional attitude, firm attack and thick skin. An MBA from Yale (a real one) wouldn't hurt either since it will be your job to write a snappy executive brief complete with statistical data. You quickly learn to trust your gut and cut your losses. One client called me predicably every time he was in deep doo doo. I would counsel with ideas and he would drift off...then come back another day for solace. I fully realized he was using me to negotiate terms with his bank but in the end his bank actually dumped him and by then he was so far gone he didn't have the fight left needed to carry on. A true killer instinct broker would probably have propped up the carcass! I learned to draw the line on some things.

DEVELOPER STIGMA? Actually, we have lots of great undeveloped places that would actually benefit from economic stimulus and environmentally conscious planning. Like creating real working wage jobs for folks in dying towns that happen to have deep water ports. Some greenophites would cringe if they knew certain areas were slated to go under the dozers. But hey --they will go under anyway! If I can have a positive effect on helping steer more conscious land use I'm at least contributing to the vision of better is better. You see a closet greenie like me does struggle from time to time with the meaning of life.

ARE YOU GAME? Does the hustle and bustle of the pitch or the closing the deal really thrill you? if so leap into commercial with both feet and give it a try. You might just enjoy it!

Earlier I Raised: What (or more accurately) WHO Determines Fair Market Value? (appraisers vs. auto valuations vs. bank reviews. We have a lot of theories on accurately matching up the person who will pay a given price. Kinda like describing the love of your life...words just don't get it. Ask any Realtor or Loan officer about the deal that fell apart on a bank review of their beloved property's appraisal...many a tear shed on those stories. I would just like to suggest that the physical aspects of valuation are much less tangible than we suppose. But you knew that.

Perhaps the More Important Question Is: What Drives Value? Median Sales Price and Median Property Value and Median Income are terms that hint at the obvious: Value is based on what the particular market will bear. And we all know that depends. On how desperate the seller is, how cool the buyer is, how hot the view and how easy it is to finance to name a few. Those are the physical facts. Perceived value is hard to pin down. Sure, we can cough up lots of statistics to support this price or that price. But, like the word 'quality' which is my pet peeve most ill-used word in the entire English language (what quality: poor, bad, indifferent, excellent?) 'value' is a word we often use to indicate high when in fact it could be any level. Emotions folks. Emotions drive us. Our emotive responses to the feel of something determine how we decide what to put our money on. Whether it's a horse or a house or a pair of high heels you can bet emotion footed the bill on which one to buy. You might say the value is in the eyes of the beholder.

What Are The Key Value Drivers in Your Area?I'll bet we all have different drivers' based on our particular local quirky buying public. Here in the Pacific NW you can bet that many buyers nowadays are looking for greener, cleaner, scaled back lifestyles which is why they have come here in the first place. Not necessarily your 'been here three generations' crowd but they are also catching onto the value of cleaner, greener, smaller footprint homes that are easier to keep and have a more modest charm than the huge empty boxes stacked side by side in some rather faceless fenced off community with a vacuumed golf course. Sure we have lots of golf courses...in fact more courses per capita than most areas but the 'driver' pardon the pun to our local golfers is more likely to be those with a decent ability to sidestep puddles and brave early morning fog and ice on the golf cart paths. In other words hardy sorts who like our wider open spaces and happy about the space between human beings! Our buyers are folks who thrive on the smell of Douglas Firs and wood fires and rain and Rosemary. Maybe we should all be advertising our area in garden and adventure magazines, not traditional homes of the rich and famous outlets?

It Stands to Reason That If You Know Your Value Drivers, you know what (benefits) to advertise, to whom, where and how much (far) to go (spend)! And remember: Smile and BREATHE!!!!! Air's good for you!

We saw rates drop back into 5% and below range on Monday: Alert your buyers to lock!

Practice credit wellness: www.netcredit.blogspot.com and correct any issues. Factoid: Over 70% of the credit reports in America have errors on them.

Click this Credit Link to order your tri-merge lender report on our secure site. Our agency report is about $30 compared to $50 on MyFico.com for a retail version. This is our cost direct to you. I'll be happy to discuss your report over the phone at your convenience, no strings attached

susan templeton www.loannetter.com

washington loan officer license 510-LO-31434 branch license: 510-MB-24707-50145

Very Little! You may love a property and be willing to pay more than it is worth but your lender will now have more of a say. We have a new game in town called the Lender Authorized Appraisal, arriving on May 1, 2009 compliments of Fannie Mae. This means conventional lenders (who resell their loans) will be calling the 'fair market value' on your properties. Well you had your chance to comment and now the law is going to be laid down. Nobody believed we could lose this 'right' to order appraisals. Even appraisers I know said they doubted this would happen. Welcome to the Monkey House!

What Does This Mean to Your Borrower? Firstly, even though you have a Sale Price affixed firmly on your contract it is just possible that your lender may downgrade the value and your borrower would be forced to come up with the difference or negotiate the price again. The only problem with this new kink is not knowing going into the application process how any particular bank authorized appraiser will see your unique property. AND they may not even send out a person but rely on their Auto Valuation Models. Naturally we have relationships with lenders who may have relationships with respected local appraisers and that would be a good thing to know (which we do). Considering the vast difference in value I've seen from a 'bank appraiser' and a VA appraiser on the same property suffice it to say the bank's report is usually lower. A lot lower.

Who Determines Fair Market Value? If you have in the past relied on your bank to tell you what your house is worth please ask yourself: what is their motive? I realize that mortgage brokers and the 'sellers of scumprime' as we are called have been tarred and feathered by the media to such a degree that some of us stopped going to cocktail parties last year. However, the thinning of our ranks has left a stalwart band most likely to give a darn. We aren't motivated to lower your value. In fact, we are charged with the duty to hire an independent third party to provide unbiased valuations. If the value is found to be below the sale price we are legally charged in our fiduciary role to advise the client of their consumer rights to negotiate like hell. Great--eh? We imagine our Realtor partners will be less enthused about this news.

What Is A Residential Appraiser? They are NOT to be confused with Certified Realtors who assess market value. Buyers often confuse CRS Realtor valuations as 'appraisals'. Each have their place. Residential Appraisers spend several years to become licensed and many become certified, having apprenticed under senior appraisers to get their stripes. They then have to submit their work to lenders to get on their good books and pass another rigorous set of tests to get HUD approved.

Third Party Independent Opinion. You lender is not supposed to 'steer' the value in any way. We can state what the owner or buyer or sales document says and that is all. An appraiser goes out in person and looks at your property, taking measurements, pictures and copious notes, looking at the county data, finds recent sales and goes out and take pictures of the homes they consider comparable then pull all that into a format that compares many factors of size, age, value number of rooms, style, neighborhood --oh and ONLY recent sales (not listings) to arrive at your market value. Consider this a snapshot in time. To think your bank can get an accurate AVM result from the comfort of their desktop in Iowa is a little far fetched don't you think? The AVM knows nothing of the neighborhood, the people or the local market trends.

AVM Factors: According to a Senior Lender I know (name withheld) Core Logic AVM's (Auto Valuation Models) are used to asses values using very generalized statistics for a region. According to a Senior Appraiser (name withheld) when you use AVM's to value or review a property you get a vanilla result. Since the duty of an appraisal is to represent LOCAL in fact quite CLOSE comparables for a subject, those can best be found by a human being researching actual statistics of SALES in the immediate vicinity to compare the variables of a subject property based on other very similar factors. No two properties are exactly alike in every way!

FYI: This does not affect FHA, VA, US-RDA and Reverse Mortgages (or portfolio loans for that matter) since they have different certifications for appraisers.

Rates have dropped back into the 5% and below range this week: Don't miss out!

Practice credit wellness: www.netcredit.blogspot.com and correct any issues. Factoid: Over 70% of the credit reports in America have errors on them.

Click this Credit Link to order your tri-merge lender report on our secure site. Our agency report is about $30 compared to $50 on MyFico.com for a retail version. This is our cost direct to you. I'll be happy to discuss your report over the phone at your convenience, no strings attached

susan templeton www.loannetter.com

washington loan officer license 510-LO-31434 branch license: 510-MB-24707-50145

It was my turn: My lender downgraded a perfect appraisal based on their computerized valuation system that declared the property to be in a 'declining market'. I hit the ceiling. What does that mean, exactly? Are underwriters just looking for excuses to say no? Maybe.

Co-inki-dink!? The very same day I got this news a certain humongous national bank emailed me their National Declining Market Data List -- posting for all the world to see-- each state by state, county by county list of declining market data. All Washington state counties showed "NO" under the Declining Value column. Now the interesting part was that on that very morning I was sitting in a meeting wherein a lender pronounced the entire state of Washington as a 'basically a declining market'. HUH? My national bank's model (much bigger than this lender) posted not ONE of our counties in decline. So what gives? The busy body I am called my most senior statesman lender who shed some light on their perspective and then I called my most senior statesman appraiser for theirs.

The facts are clear as mud: Lenders want to control the appraisal process so they can limit loan sizes (lend less) control the Loan to Value of a loan (allowing them to charge higher rates for the higher LTVs) and --oh yes, make borrowers pay more and higher Mortgage Insurance Rates for longer. Is this fair? Of course not. Business is not fair. Banks are in business to make money from you. They are not in the fairness business.

STABLE, MATE: Many Washington State communities are deemed to be just fine. That bit of news came from the very chart I received from my national bank. And with exceptions for certain price points and neighborhoods with low sales-- the Pacific NW is doing above average. It only takes one corporate to fire a few hundred folks to see values in certain neighborhoods screech to a halt as too many houses go on the market at the same time. And while some urban regions may not be selling their condos (with so few lenders funding them) we do have sales.

Motive to Downgrade? To suggest that an entire state is a "Declining Market" could be a way for lenders to protect their investors by keeping their money safe inside the vault. If that is the goal perhaps they should stop advertising their mortgage services?

FYI: The appraisal valuation model is being challenged by new guidelines proposed by Freddie/Fannie to cut out the human appraiser from interacting with mortgage professionals. OK so some crooks helped value a passel of overpriced houses to retirees who didn't exist. Enough already. Such incidents happened in areas where the crooks clearly outnumbered the honest folks! If your brokers are no longer able to interact with appraisers then the value of your property will be in the hands of lenders themselves. Is this a good thing? We think not. If you lender is the only one allowed to brief you appraiser or use AVM's and you disagree with the result, you will possibly have to pay for a new appraisal with lender two and so on. In many cases today if the value is 'not there' we must decline the application based on the tighter Fannie/Freddie guidelines. How long do you think borrowers would put up with double or triple appraisal costs if they have to go from bank to bank paying for a new appraisal each time? Right now one appraisal with your broker can get your application in front of several lenders simultaneously. Think about it: $450 x 3 banks = $1,350 and you could still get a NO? The new code takes effect May 1, 2009 ready or not!

PSSSST!! Support your local Residential Real Estate Appraiser. Pass it on!

We are still locking rates at 5.125 - to 5.25% range today! Don't dally if you are in the market.

Practice credit wellness: www.netcredit.blogspot.com and be ready to pounce.

Click this Credit Link to order your tri-merge lender report on our secure site. Our agency report is about $30 compared to $50 on MyFico.com for a retail version. This is our cost direct to you. I'll be happy to discuss your report over the phone at your convenience, no strings attached

susan templeton www.loannetter.com

washington loan officer license 510-LO-31434 branch license: 510-MB-24707-50145