St. Louis Mortgage News - The View From 30,000 Feet

Filed under: For Buyers, For Sellers, Mortgage News

St. Louis Real Estate Voice guest editor Chris Scheer takes a look back at the past 12 months of the mortgage industry and a hopeful look forward.

As a buyer, seller, or investor, how do you feel about the mortgage mess and how has it affected your home purchase plans? . . . what’s the view from street level?

What a difference a day makes! by Chris Scheer, Cornerstone Mortgage, O’Fallon MO

Over the past 11 months the mortgage industry has gone through one of the most tumultuous times in recent history.  As mortgage companies went out of business, others were rescued by the Federal Reserve and program guidelines changed like your mother told you to change your underwear; DAILY.  Many people, loan officers included were caught not being up to date on the ever changing landscape of guideline changes.  I can admit I had challenges with 2 condo loans in particular. 

In addition to the ever changing landscape of product and guideline changes we have also seen a rate climate that reminds me of a playground toy, the sliding teeter totter!  Rates go up one day, down the next, up again then up and up and then a drastic drop followed by more upward movement.  I continue to preach to my clients, that locking in is the best defense in the current market.  We can always look to renegotiate if rates go down drastically but, once they go up you are screwed.  As my old mentor told me, “pigs get fat, hogs get slaughtered.

Let’s hope that the reforms FHA has instituted effective July 14, 2008 and the merger of Countrywide and Bank of America signal a change to the whirlwind of changes and the rest of the year is filled with calm waters for borrowers to sail in.

For questions or comments on this post, please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Tags: St.+Louis+Mortgage, St.+Louis+Real+Estate, Buyers, Sellers, Investors, FHA, Countrywide+Mortgage, Bank+of+America

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   07.05.2008

St. Louis Real Estate - Mortgage News - FHA takes the gloves off

Filed under: First Time Home Buyer, For Buyers, For Sellers, Mortgage News

FHA Lifts 90 Waiting Period by Chris Scheer, Cornerstone Mortgage, O’Fallon, MO

In a move to help get foreclosures off the books of lenders quicker and help avoid deterioration of properties that have been foreclosed upon the Department of Housing and Urban Development has lifted their ban on writing a contract if the title has changed in the past 90 days. 

See the following article: FHA Lifts Waiting Period, Extends Insurance Coverage

For further clarification you can visit HUD’s website.

For questions or comments please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   06.18.2008

St. Louis Real Estate - Mortgage News - Foreclosure

Filed under: First Time Home Buyer, For Buyers, Mortgage News

Summer is almost here! by Chris Scheer, Cornerstone Mortgage, O’Fallon, MO

After spending 5 of the last 7 days on the golf course, I realized (not for the first time) that my future is not in professional golf.  Thus I am resigned to continuing to help people achieve the American Dream of home ownership.  So what is going on in the real estate world you ask? 

Well we finally have the long awaited change in FHA mortgage insurance premiums coming into play. Therefore after July 14, 2008 it will be more expensive for borrowers with less than stellar credit to purchase a home.  The effect in most cases will be less than $20 per month, but when you are living paycheck to paycheck, $20 a month can be a lot of money! 

Foreclosures continue to rise!  That is to be expected, but what it has done is that over the past 10 years an appraiser could ignore a comparable sale if it was a foreclosure.  Now with the amount of foreclosures, they have to be treated as part of the marketplace.  Thus property values are declining in areas of numerous foreclosures.  The positive aspect of this is that those property owners who have been complaining about their rising real estate taxes will see a freeze on the rise and in some cases may see there property taxes come down in 2009!

For questions or comments on this post, please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, Mortgage+News, First+Time+Home+Buyers, Home+Buyers, FHA, mortgage+insurance+premiums

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   06.16.2008

St. Louis Real Estate - Building Inspection - The Report

Filed under: Building Inspection News, First Time Home Buyer, For Buyers

UNDERSTANDING THE REPORT by Harry Morrell, Allied Building Inspection, ASHI Certified Inspector

Home inspection reports have made dramatic changes from its earliest beginnings of 25-30 years ago to now. Although there still are old time inspectors providing hand written check lists type reports, most of today’s inspectors provide comprehensive computer generated reports that include color digital pictures. Even though these newer upgraded reports look spectacular compared with the obsolete hand written check lists, a new set of problems and concerns has raised its ugly head.

There are a wide variety of home inspection computer software programs on the market that today’s home inspector’s use. Inspector’s usually purchase the shell of the program and are able to boiler plate whole paragraphs that describe certain mechanical and structural components. Additional paragraphs can be built to describe the defects or conditions for any mechanical or structural component as well. These boiler plate paragraphs can be entered into the report by a click of the mouse. This allows the inspector to provide a 25-30 page report with photos in about 30 minutes. There are also inspectors that are capable of providing on site computer generated reports similar in length, but usually formatted by a check list. The downside of this is that the boiler plate paragraph may not apply to your particular house.

Home buyers should be aware of and question any technical type verbiage that appears too vague or confusing in nature. Reports should be simple and easy to read as well as being comprehensive. For example if an inspector merely states that the roof needs further review by a qualified roofing contractor, he may be cutting the client short. This leaves an opening for the roofer to recommend a new roof when the roof may still have several years of service left. It leaves the question of what exactly is the general condition of the roof unanswered. If the inspector states that 45% of the roofing has significant deterioration, and missing and damaged shingles, then goes on to recommend a new roof, there is no need have a roofer further evaluate the roof, just replace it.

This type of reporting can apply to any structural or mechanical component as well. If you are reading a report describing the electric service panel as appears to be OK, but better have a qualified electrician further evaluate it just in case. The buyer may be getting short changed. If the inspector noted rust and corrosion within the interior of the panel, burn marks on the conductors and connections, and conductors running across the bus bar, the inspector probably did a pretty good job inspecting the service.

A good inspection report should include a summary of defects and conditions on each and every structural and mechanical component, as well as a comprehensive narrative with photos expounding on the summary. All this should not include repetitive and ambiguous statements. A verbal summary, with a photo slide show by the inspector after the inspector should give the buyer a pretty good idea of the level of competence of the inspection and of the finished report. All buyers should thoroughly read their report and then read it again. If there is anything that the buyer does not understand or feels the inspector missed, there is always only one thing to do, CALL BEFORE CLOSING!

Harry O. Morrell
ASHI Certified Inspector  

Harry can be reached at harrymorrell@stlouisrealestatevoice.com

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   06.06.2008

St. Louis Real Estate - Mortgage News - Live Talk

Filed under: For Buyers, For Sellers, Mortgage News

Someone Finally Heard the Message! by Chris Scheer, Branch Manager, Cornerstone Mortgage, O’Fallon, MO

Stop the presses!  After attempting to brand myself as “Your Residential Lending Expert” for over the past 2 years, one of my past clients has finally heard the message.  Dave Simons who hosts the “Dollars and Sense” money show on KMOX 1120 AM radio has asked me to join him on Wednesday, May 21, 2008 to discuss what is going on in the mortgage industry.  At this time I am scheduled to go on air at approximately 10:10 a.m.  The length of the visit should be around 10 minutes.

You can tune in or check out their live stream at www.kmox.com.

For questions or comments, please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, Mortgage+News, Home+Buyers, Home+Sellers, KMOX+1120, Dave+Simons

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   05.19.2008

St. Louis Real Estate - Mortgage News - Declining Market 2

Filed under: Appraisal News, For Buyers, Mortgage News

Declining Markets Part 2 by Chris Scheer, Branch Manager, Cornerstone Mortgage, O’Fallon, MO

So what defines a “Declining Market?”  Some investors have taken their large paintbrush out and if an area; county, city or zip code has seen their average sales price drop in the last quarter; they are calling it a “Declining Market.”  Others have chosen a smaller brush and have stretched the time out by reviewing the last six months.  Then the rest of the investors have left the defining to the appraisers, which is whose shoulders it should fall on.  They are the ones whose job is to provide support that the investor is making the right decision to purchase a loan on a certain piece of property.

So when I checked with a few appraisers to learn their definition of “Declining Market” I was not surprised to find that each appraiser had their own definition of “Declining Market.”  The thing to remember about appraisers is that what they do is not a science; it is more of an art.  So again we use the paintbrush analogy and there are some appraisers that are running scared and using their large paintbrush and putting the term “Declining Market” in all of their appraisals.  Others are taking the time to do a statistical review of the cost of the homes in the various areas and are applying the term when there is a continued decrease of value that exceeds 5% over three six month periods and then there are others who are only applying the term if the valuations have changed by greater than 10%.

In addition, most investors are only concerned with reducing the loan to value on Conventional loans.  On FHA and VA loans, the appraiser has factored the market into the value and it does not have an impact on the amount the borrower can borrow.

For questions or comments on this, please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, Mortgage+News, Appraisal, Home+Buyers, Declining+Market

Posted by Doug Aegerter   |   Read More   |   4 Comments »   |   05.13.2008

St. Louis Real Estate - Building Inspection - New Construction

Filed under: Building Inspection News, First Time Home Buyer, For Buyers

NEW CONSTRUCTION INSPECTIONS by Harry Morrell ASHI Certified Inspector, Allied Building Inspection

For those buyers that are considering a new home purchase and believe the home inspection should be waived just because it is a new home, BEWARE. There are many circumstances to consider when buying a new home relating to the inspection process in general that buyers should know.

If you are buying a home close in to the metropolitan area from a well known and reputable general contractor chances are that the home will be well built and up to code. However, consider that this well known builder uses many sub contractors who can always have that one bad day or are in a rush to get to that next job. Short cuts occur all the time even in those multi-million dollar homes. In the world of construction speed is everything and sometimes digs right into the heart of the quality and craftsmanship that all home buyers want. Your home inspector will go back over all the important and significant structural and mechanical components to make sure you are getting the quality that you are paying for. Remember code inspectors do not do a top to bottom inspection. If you are buying a home out in rural areas from a weekend/amateur home builder, I have four words for you, GET A HOME INSPECTION!

New construction inspections can be grouped into three major categories:

1. Phase Inspections
2. End of Construction Inspections
3. Warranty Inspections

Phase inspections are recommended for the buyer that is purchasing a new home in a rural area with no or little code enforcement to ensure good building quality and safety and usually includes the initial foundation pour, framing, mechanicals, and roofing.

End of construction inspections are the most common and usually are more than adequate for any purchase close in the metro area.

Warranty inspections are a great idea for builders who offer a one year top to bottom warranty.

Home owners can get their inspector to perform a top to bottom inspection before that one year warranty expires. Most common defects discovered during these type inspections are foundation wall cracks, leakage or water/moisture intrusion, concrete pad settlement, and drainage and grading issues.

Most home inspectors have a solid general background in residential home building and have looked at thousands of homes during their career. Do not get side tracked by that new home being perfect. Spend a little now for an inspection to avoid paying more for a major repair or replacement later.

Harry O. Morrell can be reached at harrymorrell@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, New+Construction, Home+Buyers, ASHI+Building+Inspectors

Posted by Doug Aegerter   |   Read More   |   Your Comments Are Welcome!   |   05.09.2008

St. Louis Real Estate - Mortgage News - Going Down

Filed under: For Buyers, Mortgage News

Lock and Load! by Chris Scheer, Branch Manager, Cornerstone Mortgage, O’Fallon MO

Well the Federal Reserve has lowered short term interest rates once again and if you believe the written statement coming out of the meeting, they are finished lowering interest rates.  The “inflation” boogeyman is haunting them as well it should be.  Mortgage rates have not gone as low as they should have, for a majority of reasons:

1. RISING OIL PRICES
2. Falling value of the dollar.
3. Mortgage Backed securities are not an attractive investment.

Rising oil prices are the single biggest concern with our economy.  This nation is so dependent upon oil that most everything that we do involves some use of oil or oil byproducts. Why the U.S.’ Oil Dependence is Bad for the U.S. Economy. Prices for all consumer goods are being affected by the rising price of oil, making it less likely that the consumer will have extra money to spend on non essential items. 

The falling value of the dollar does have a positive; it makes it more attractive to foreign nations to purchase American goods.  Unfortunately, we have become less of a manufacturing nation than we were 40 years ago. The Dollar’s Decline and Its Implications.
Along with purchasing goods, we may see foreign investment in US Real Estate since we also have declining value in real estate.

The Sub-Prime Mortgage Crisis has put a stain on all mortgage backed securities.  Most investors have been trying to rid themselves of mortgage backed securities.  Even though short term rates have fallen, interest rates on mortgages have not followed.  This trend is brought about by the simple law of supply and demand.  As the demand for mortgage backed securities has lessened, their price has gone down.  When the price on a bond goes down, the yield (interest rate) goes up.  Until we see demand for the mortgage backed securities increase, which would drive the yield down, we will continue to have interest rates well above where they should be.

So why do I say lock and load?  The Federal Reserve is almost out of bullets to stimulate the economy.  Some are predicting that the economy will soon recover.  Once the Fed sees signs of a recovering economy, they are going to want to start raising rates to slow the economy. And even more importantly, reload their own gun.  We have now seen the Fed lower short term rates from 5% to 2%.  They would like to have some room to work again with interest rates. If they need to get some room to work, raising rates is the easiest thing for them to do.  For buyers looking to purchase a home or owners wanting to refinance, it means that rates are no longer going down and now will only go up.  So find your house, lock your rate and start saving your pennies.  We are going to be fighting inflation for a few years! Chris Scheer can be contacted at chrisscheer@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, Mortgage+News, Buyers, Federal+Reserve, inflation

Posted by Doug Aegerter   |   Read More   |   1 Comment »   |   05.05.2008