Rob Alley

What to expect this week with Mortgage Rates in Charlottesville and the rest of Virginia

There are several important reports scheduled for release this week that are likely to affect mortgage pricing. The first is tomorrow's release of June's New Home Sales that gives us a measurement of housing sector strength and mortgage credit demand. It is expected to show an increase in sales of newly constructed homes, indicating that the housing sector gained some strength. That would be considered negative news for bonds, but since this data tracks only 25% of all home sales it usually has little impact on the bond market and mortgage rates unless it varies greatly from forecasts.

The Conference Board will post their Consumer Confidence Index (CCI) for July late Tuesday morning. This index measures consumer sentiment, giving us an idea of consumer willingness to spend. This is important because consumer spending makes up two-thirds of the U.S. economy. If the CCI reading is weaker than expected, we may see bond prices rise and mortgage rates drop Tuesd ay. Current forecasts are calling for a reading of 48.7, which would be a lightly lower reading than June's reading.

Wednesday brings us two events that are relevant to mortgage rates. The first will come from the Commerce Department when they will post June's Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a decline in news orders of 0.5% from May to June. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates Wednesday morning. If it reveals a much larger than expected decline, mortgage rates should drop. It should be noted that this data is known to be extremely volatile from month to month, so a minor difference between forecasts and the actual reading may not move mortgage rates much.


The Federal Reserve will release its Beige Book report Wednesday afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke's testimony to Congress last week gave us a recent update, I don't think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates Wednesday afternoon as a result of this report.

There is no relevant monthly or quarterly data scheduled for release Thursday, but there are two releases scheduled to be posted Friday morning. The first is the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic activity. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. This reading is arguably the single most important we get regularly. Current forecasts are estimating that the economy shrank at a 1.5% annual rate during the second quarter. A smaller decline will probably hurt bond prices, leading to higher mortgage rates Friday. But a larger than expected decline would likely fuel a bond market rally and lead to lower mortgage pricing.


The second report of the day Friday is the 2nd Quarter Employment Cost Index (ECI) that measures employers' costs for wages and benefits. It is considered to be an important measurement of wage inflation and can have a pretty big impact on the bond market and mortgage rates if it varies much from forecasts. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise. It is expected to reveal an increase of 0.3%.

Also worth mentioning are a couple of Treasury auctions that may affect bond tradi ng and mortgage rates this week. The two most important are Wednesday's 5-year Note and Thursday's 7-year Note sales. The last auctions of these securities were met with very good demand from investors. That led to bond strength following the sales. Results of this week's auctions will be posted 1:00 PM ET each day. If investor interest is strong again, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates Wednesday and Thursday afternoons.

Overall, it likely will be a fairly active week in the mortgage market. With several important economic reports on tap, we will likely see noticeable movement in mortgage rates more than one day. The most important report of the week is Friday's preliminary GDP reading, making it one of the most important days of the week. But it is difficult to say which day we can expect to see the most movement in rates as several of releases and scheduled events have the potential to influence mortgage rates.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com

Charlottesville Homeowners with 2nd Mortgages and the options they have.

You probably know that Charlottesville bankruptcy judges do NOT have the
power to reduce the principal of a first mortgage in the event you file for bankruptcy personally.

There was a move to change this. But the powerful lobby for the big elite banks defeated it in congress.

But are there cases where filing a Charlottesville bankruptcy can wipe out a mortgage?

Regarding 2nd Charlottesville mortgages...I have read that the US bankruptcy code section 6 allows for wiping out a second mortgage in a situation where the 1st mortgage loan amount is greater than the current value of the home.

Such that the second mortgage becomes an unsecured debt and subject to the bankruptcy provisions.

Is this true or even possible in your experience?

In a personal Charlottesville bankruptcy, if the second mortgage has no
equity coverage, the judge can turn the second mortgage into a personal loan and you can discharge it in bankruptcy.

Let's look at an example.

Say you owe $200,000 on a first and $100,000 on a second.

And say your Charlottesville house is worth $150,000.

The second has no equity at all.

The judge can turn the second into an unsecured loan, upon a motion that you bring in Charlottesville bankruptcy court.

The loan is then handled like a credit card or medical bill.

It is unsecured and can be discharged.

But don't think you have to file for bankruptcy in order to handle a second mortgage this way.

You can do a short sale, and often pay the second a few thousand dollars and get a release of liability.

But what if the second won't give that release to you?

You may be able to negotiate a small note for the second.

Or just let it go and hope they don't come after you.

If they do come after you, you can always file for bankruptcy later.

Oftentimes, a second mortgage can be handled by paying them a small amount and doing the Charlottesville short sale, and then just putting things off.

What you can put off until later will often be much easier to handle.

You probably can settle these left-over second mortages for a fraction of what you originally owe, quite often.

Without a Charlottesville bankruptcy.

And while improving your FICO score.

Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com

Certified Short Sale Specialist

Certified REO Property Specialist

Charlottesville Foreclosure Projections

If the majority of Wall Street economists are right, the U.S. recession will end this quarter and the global recovery won't be far behind. And our window of opportunity for once in a lifetime deals is here, but not for long. (Read on below.)

On Wednesday, the International Monetary Fund is expected to nudge up its forecast for 2010 global growth from the current estimate of 1.9 percent, primarily because fears of a more serious economic setback have not materialized.

That makes for a brighter backdrop to this week's meeting of leaders from the Group of Eight major industrial nations in Italy, where the economic outlook is top of the agenda.

As you have noticed lately in the skittishness of the stock market, recovery will not be a smooth process. As Bank of America Securities economist, Drew Matus, put it, this quarter marks a "new beginning with some nagging reminders of the past."

First, the good news.

1. The U.S. housing slump appears to be near an end after 3-1/2 years of decline. That, combined with a strong stock market performance in the second quarter, should stop the bleeding in household wealth. (Read more about housing bottom news here.)

2. Government stimulus money is flowing in the United States and other major economies including Japan, China and Germany.

3. Global manufacturing surveys show output expanding after a year-long period of contraction. In the United States, the pace of new orders is improving while inventories keep shrinking, so production may need to pick up soon to meet demand.

4. Figures due on Thursday are expected to provide a good illustration of that. Economists polled by Reuters think U.S. wholesale inventories dropped 1.1 percent in May, while sales were flat.

Those are among the reasons why Matus recently raised his U.S. economic outlook to show an above-consensus 2.7 percent jump in 2009 gross domestic product.

Now for the bad news.

1. Wednesday's report on U.S. consumer credit bears close watching for more evidence that Americans are paring their credit card debt as banks clamp down on lending and consumers rethink attitudes toward borrowing and spending.

2. Job losses are likely to keep piling up at least through the end of the year. Last week's disappointingly weak June employment report served as a reminder of that. The data showed employers cut a net 467,000 positions last month, far more than expected and considerably more than in May.

The White House expects unemployment to climb to 10 percent in the next two to three months, far higher than it envisioned back in January when it was pushing for its $787 billion economic stimulus package.

"The heavy loss of jobs in June is a warning that the road to recovery will be bumpy, but doesn't yet indicate that we have gone off the track," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

If there is a bright side to stubbornly high unemployment, it would be that it helps keep inflation at bay even after the recovery gets going.

That takes some of the heat off the U.S. Federal Reserve and its central bank counterparts in Europe and Japan to raise interest rates once the recovery begins.

Those low rates and even lower home prices are making affordability at levels not seen since the 1970s.

It's absolutely time for you to buy below todays already low prices, from very motivated sellers, and then quickly sell and put profits in your bank today. This window of opportunity is here now, but it is hard to say for how long.

All the key indicators show how Charlottesville housing is not only stabilizing, but improving.

Just today the Pending Charlottesville home sales show a sustained upward trend, rising for the fourth month in a row, from our very favorable housing affordability and a first-time buyer tax credit boosting activity.

The Pending Charlottesville Home Sales Index based on contracts signed in May, increased 0.1 percent from an upwardly revised reading in April, and is 6.7 percent higher than May 2008.

The last time there were four consecutive monthly gains was in October 2004.

Wow, the Charlottesville real estate market is really heating up.

And if you haven't already jumped in to get your Charlottesville foreclosure deals, you need to do that NOW.

Regional Breakdown:

Northeast rose 3.1 percent May over April and is 6.8 percent above May 2008.

Midwest slipped 1.3 percent May over April, but is 11.4 percent above May 2008.

South declined 1.7 percent May over April, but is 7.9 percent higher than May 2008.

West rose 2.2 percent May over Apri, and is 0.7 percent above May 2008.

NAR's Housing Affordability Index remains at historic highs.

The affordability index fell to 171.6 in May from an upwardly revised 178.8 in April, which was the highest on record dating back to 1970.

"Under these conditions the typical family would devote only 14.6 percent of gross income to mortgage principal and interest, which is one of the lowest percentages on record," NAAR's chief economist, Yun said.

A median-income family, earning $60,800, could afford a home costing $296,700 in May with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest.

Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of what a median-income family can afford.

The affordable price was significantly higher than the median existing Charlottesville single-family home price in May, which was $172,900.

The first-time buyer tax credit also is benefiting the market.

"Strong activity by entry level Charlottesville home buyers is helping to absorb inventory and allow some existing owners to make a trade," Yun said.

Pending home sales is a forward looking report.
Therefore you should see existing-home sales continue to trend up through the rest of the year. Even with all the new Charlottesville foreclosures hitting the market, with builders not building, supply is shrinking.

In some parts of the country, like California, housing supply is less than a 4 month supply.

That is great news for us, as you will see multiple offers when you price your houses right on the resale.

And at the same time, there is a ton of inventory from the banks that has NOT hit the market, but they own it and need to sell it.

That is what we call "phantom inventory" and you absolutely want to work those leads for bottom picking deals.

Rob Alley, Realtor at Keller Williams Charlottesville, Certified Short Sale Specialist, Certified REO Property Specialist
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com

The most common concerns and questions regarding a short sale is commission. Who pays the commission?
In a short sale, the bank pays everything at closing from the cost of the termite inspection all they way to the recordation fee. This includes the commission. The listing agent should be in contact with the bank on behalf of the seller and the contract. The listing agent is resposible to negotiate the overall commission with the bank. THE SELLER (HOMEOWNER) DOES NOT HAVE TO PAY THE COMMISSION. Most banks will pay anywhere between 4% and 6%. Depending on the listings agent and their ability to negotiate, I have seen commissions as high as 8%. Of course, the larger banks have their SOP, or Standard Operating Procedure. Can't really negotiate that, but the smaller, more local banks can generally be pursuaded a little bit more.

In conclusion, if you or anyone you know is in trouble of losing their home, tell them to short sale before they get foreclosed on. A short sale is way better for the individual than a foreclosure is. There are certified people in the Charlottesville and Central Virginia area that can help. Visit www.charlottesvilleshortsale.com for more information or to save your home!

Rob Alley, Realtor at Keller Williams Charlottesville, Certified Short Sale Specialist, Certified REO Property Specialist
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com

Charlottesville Short Sales - General How to Guide for Realtors and Consumers

Short Sale How To Phone Call Rules:
1) Listen to the Homeowner: Some Realtors/Investors are so excited to offer services that they just talk and talk. Make the homeowner feel that they're understood by you before you start talking. However, don't let this progress too far because some people start crying. When they expose themselves, it hurts your ability to deal with the homeowner's situation. On the phone; listen 70% and speak 30% of the time.
2) Project Confidence: Homeowners will want to deal with professionals who know what they're doing. Project confidence on the phone when discussing preforeclosure marketing and short sales.
3) Be honest: Don't make unrealistic promises. Ask the homeowner to take a look at their other options before signing on with you. If the person wants to keep their house, look at the avenues through which that might be possible, either in renting or leasing to own with you.
Always use a "two-call approach." Never solidify an entire preforeclosure deal on the first call. It shows the customer that you need to check to see if this will be a fit and gives you control over the situation. They immediately know that you are a business and that they may not qualify for your services, when you say that you'll look at the deal and call them back.

8 Short Sale How To Steps:
You'll have to work to keep the homeowner's interest in a preforeclosure deal. There are eight short sale how to steps to make the first phone call work for you:
1) Make Introductions: Often on the phone Realtors and Investors are so anxious to offer their services that they don't take the time to introduce themselves. Tell the homeowner that you are a preforeclosure specialist giving people help in tough situations.
2) Ask for More: Ask the customer to tell you more about their story. Don't ask direct questions. Also, take the responsibility off of them and put it onto the house. Tell the homeowner you may not be able to help them out, but you will give them their best option.
3) Qualify the deal: You can't accept every deal and neither should you. It's best that you don't take any deals less than $100,000 or from people with bad attitudes. Avoid people who are angry, upset, have a "poor me" mentality. Also look at the amount owed on the mortgage. Banks work on percentages, so take this into account.
4) Asking for More Short Sale How To Information: There's more to the preforeclosure marketing deal than equity and location. Ask the homeowner if they have FHA loans or VA loans. You can get huge discounts on FHA loans and have more time to close, sometimes up to 90 days to close rather than 30 days. Make sure there are enough repairs to get a great discount but not so many that no one will look at the property. Ask about their mortgage holders. Different banks have special docs that are often required. Divorce often comes up in these foreclosure situations so ask about their family situation. Ask when they are moving? The system is becoming so fast that you can often have short sale negotiations completed in 30-60 days.
5) Explain Yourself: Use the previous step to move into talking about your preforeclosure services. You specialize in working with folks who are behind in payments. You don't charge anything for your services no matter the cost of the house or the preforeclosure deal. On the downside there are a lot of people who need your services, so you can't accept everyone.
6) Let's pretend: This is a very powerful system because it doesn't hold you accountable for everything. Say, "Let's pretend we're able to help you out. Does this sound like it would be a fit for you?" This is a very loose question that doesn't put them on the spot or make you sound like a shyster. If they say yes, go over all the documents.
7) Explain the Documentation: Go over exactly what the homeowner will need for your first meeting and later for the short sale package. Let the homeowner know that the bank needs copies of these too. There are six documents:

· 2 months of bank statements • 2 recent pay stubs • 2 years of tax returns

· Financial hardship letter describing what's going on with their house and why they are unable to pay, such as bankruptcy.

· Mortgage statements from the lender of the past due loan. You'll need copies of these to know where to start the short sale.

· Financial statement listing the homeowner's income at its lowest and all monthly expenses at their highest. Show the bank that the homeowner's expenses are higher than their income.

8) A Second Call: You can have a second person follow up with the homeowner. Make sure you edify this second person by raising the influence of something or someone. The homeowner will have a respect for him or her when they call. If it's just you, get another person who can call back the homeowners ASAP. For now, set yourself up and say you have other folks you need to check with to make sure this is a deal you can do.

Short Sale How To: The Second Phone Call
The first call is very important to a preforeclosure marketing deal. Your second call will be a breeze if you handle the first call well. There are four steps in the second call:
1) Offer Congratulations: Tell the homeowner that you'll be able to take the deal and congratulate them. Your services are much better than the others out there. The homeowners should feel good that they have chosen you rather than bad competition.
2) Go Over Documents: Go through all the documents that you will need again. Make sure the clients understand it and everything is clear.
3) Set up a Meeting: Pick a time to meet with the homeowners either at their house or at your office. Ask them if they have a pen to write it down when you state the time and place of the meeting. The last thing you want is to have them forget the appointment.
4) Confirm the Meeting: Your time is valuable so emphasize that strongly to the homeowner. Many clients are in this situation because they have trouble meeting obligations. They may not have the best scheduling or organization skills.
Follow these short sale how to steps-the first call, second call, and meeting-flow as seamlessly as possible and your preforeclosure marketing plans will go smoothly. Each completed call ensuring that you have a successful short sale package and a homeowner willing to sign on with you.

Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com

Certified Short Sale Specialist

Certified REO Property Specialist