Lonnie Glessner

The end is very near for LandAmerica and its stable of title insurance companies. Late last week Fidelity National scrapped their plans to buy LandAmerica as part of their due diligence before completion of the deal.

In the last 2 days I received notice from several banks and from our warehouse banks that all closings with LandAmerica must be stopped and moved immediately!!! These closings will NOT happen with any of these title companies that LandAmerica owns.

Here in Colorado, LandAmerica owns Transnation, Commonwealth, and Lawyers Title. I expect that LandAmerica will either be closing and/or filing for bankruptcy protection any day. For readers in states outside of Colorado, please research and find out if your title insurance company is listed and if they are you will need to move the title insurance to a different title insurance company.

For many years I have said thousands of times "Cash is King!" Let me be the first to tell you: The King Is Dead!!!

Two clients tell the story the best. One gentleman could put $100,000 down on a $200,000 house; but I could not get him approved for even a FHA loan! Why? His credit report consisted only of 4 unpaid collection accounts. And I was not allowed to verify non-traditional credit like rent, utilities, insurance payments because his traditional credit report was filled only with collections. A 50% LTV did not matter!

A second client is a young lady fresh out of college with her first professional job. Her problem: she has no traditional credit or credit score. Thus, I added her Dad to the loan as a non-occupying co-borrower which FHA allows. Her Dad is giving her $40k for a down payment. His credit is perfect and he has a 7 figure income. I have their FHA loan approved through FHA's Total Scorecard underwriting software. Easy loan? Wrong!

Knowing that she has no credit score, I thought this could be a problem. It was! 11 of my 15 FHA banks said "NO!" Three of them said maybe if I can verify at least 3 or 4 non-traditional credit tradelines for her. Only one bank has said YES to this loan as approved by FHA!

So, who is the new King? The new King is definitely credit and credit scores. In fact, most banks and the PMI companies require that a borrower have at least 3 traditional credit tradelines open for at least 12 months regardless of any on-line approval that I receive from Fannie, Freddie, FHA, or VA.

Say hello to the new KING.

It was reported this week that new home sales in October dropped 5.3% from September's levels. There was 433,000 sales (annual pace) in October or roughly 36,000 new homes sold last month.

I did not think too much of this number until I reviewed last week's numbers on new home starts and building permits. In October, builders started 791k homes (annual pace) and pulled permits for another 708k homes (annual pace). In monthly numbers, builders started nearly 66k homes and pulled permits for another 59k homes.

Do you see a problem here?

They are still building and planning to build more homes than they are selling right now. Thus, their inventories will continue to grow. They should be starting fewer homes than they are currently selling. Right? Their folly knows no bounds.

I expect that we will see several Top 20 national home builders go out of business next year unless the government intervenes to help.

This week I had the opportunity to learn about USDA Rural Housing Loans and this is an awesome program for people and properties that qualify. Here are some of the details-

•· No down payment

•· Seller concessions of 6% allowed

•· No monthly mortgage insurance

•· Great fixed rate loan with no prepayment penalty

•· Only need a 620 fico score; but exceptions can be made with a 580 score

•· No declining market limitations or worries

•· Loan has income limits-for a family of 4 the limit is currently $82,600 for the Denver metro area; but higher limits apply in Elbert County.

Here in the Denver metro area the following areas are eligible for this great loan--

•· Adams County east of Watkins

•· Arapahoe County east of Watkins south into Elbert County

•· All of Elbert County is eligible

•· Perry Park and Larkspur are eligible in Douglas County

•· Very little of Jeffco is eligible

•· All of Park County is eligible

•· All of Clear Creek County is eligible

If you list homes for sale in these areas we need to talk about how to sell your listings faster. If you have buyers who want away from it all; let's talk.

I just read the summary of NAR's latest research on home buyers and home sellers and I thought in today's post I would highlight the data pertinent to first time home buyers.

•· 41% of home buyers are first time home buyers this year.

•· The typical FTHB is 30 years old and their median income is $60,600.

•· Twice as many single females buy a home as do single males.

•· 94% of buyers aged 25-44 used the internet to search for homes.

•· 25% of FTHB reported that the mortgage application and approval process was somewhat more difficult than expected and 10% reported that it was much more difficult than expected.

Personally, I am surprised that the last statistic was not even higher as difficult as getting a mortgage can be today. Here is what we need to do lower this number in my opinion and make their experience better--

•· Set our clients' expectations about this process upfront. It's not easy and a lot of paperwork and explanations may be needed. This is where you can help.

•· Be thorough and obtain all the needed paperwork upfront. Every client hates being asked for additional paperwork every day or week.

•· I have to do my homework in advance and be on the lookout for any potential problems and deal with them early on.

•· I must help clients with any letters of explanation which I always do.

•· Communicate often.

•· Be honest at all times.