If you are in the real estate industry and involved in the buying and selling of residential properties,  please visit www.savesellerfinancing.org. Why?

The Dodd-Frank Act, effective January 2013, amended the Truth in Lending Act and established some new rules concerning seller financing. These rules became effective January 2014, and apply only to properties that the buyer is going to reside in.

The problem is that Dodd-Frank was intended to curb abuses that arose out of the mortgage meltdown and Great Recession. Big banks and major mortgage lenders were the guilty parties – not you or me selling a home and carrying the note. The government, in its wisdom, threw us in with the big boys, and essentially limited our right to sell as many homes as we cared to. It limits our actions and provides guidelines on our “behavior” in assessing our buyer and terms we agree to with him.

Knowing the rules, most of us – doing Mom and Pop transactions – can comfortably live with them. But we should not be compared to or become a part of the big lenders who caused the problems with faulty due diligence.

Save seller financing has been working with the Consumer Financial Protection Bureau to point out these disparities and get them to understand that we are just plain folks trying to help the housing market and economy. Slowly, progress is being made.They need our help.

Please go the website. Read about the issues. Join the coalition. Donate.

On June 22, 2015 I wrote that some big lenders experienced 40%+ increases in refi mortgages for the 1st quarter 2015 compared to the same period in 2014.

Today, the headline reads “refis plunge as rates rise above 4%.” Banks are now shifting to borrowers who want to buy homes – a lukewarm market. Ever since the 2008 Great Recession, small rate variations have sent the mortgage markets gyrating as borrowers jump in to take advantage of the cheaper financing. But when rates rise, lenders assume that the refi market has topped out, and those borrowers who were able to refi have done so. Consequently, few people will choose to refi moving forward as rates rise.

Bank of America, for example, had 2/3 of their 2nd quarter mortgage business as refis. As this business dries up, the bank plans to emphasize home-equity lines of credit, where B of A finds itself #1 in the industry. Other lenders will probably follow suit.

As always, one of the messages here is aimed directly at our industry. If it remains difficult for many would be borrowers to obtain a money purchase loan from a lender, you as a seller can step in and take the place of that lender. Have your realtor – or yourself – find a buyer who will want to make your property their home. Negotiate terms that are fair and firm for both of you.

Help the real estate market.

Sources: Mortgage Bankers Association and Moody’s Analytics.

The dog days of baseball are about to begin as the players try to stay focused and healthy as they prepare for the last 60 games of a marathon 162 game season. Trades are being made, players are being rested, and bullpens are being bolstered,  all with the goal of getting into the playoffs and having a chance to appear in the World Series.

In the note business, our dog days have arrived as well. Kids are out of school for another 3-4 weeks, working people are on vacation, and a lot of note holders will just wait for summer to end before getting serious about selling their note. Transactions are closing, but activity is down, as we prepare for the bull rush and final months of the year.

So, if you hold a note you may want to sell before the end of the year, you just might want to take a few minutes now and locate your file. Make sure you have your original note and recorded deed. Is your hazard insurance policy current and in force, with you listed as payee? Do you have proof of receipt of all your monthly payments? Is your Title policy and closing statement in your email or paper file?

Spending 5-10 minutes today will make it easier for you when the time comes to present your documents to a note buyer.

In the meantime, enjoy your summer!

If you are holding a seller carry back note and would like to cash out, the most likely person you should be talking to is your payor – the person who bought your property. Is he in a position to pay off the note? Does he want to pay off the note? Can he pay off the note? If the answer is “Yes”, then the two of you can have a conversation about the amount that is acceptable and proceed accordingly. If the answer is “No”, then you can go to the open market and see what kind of price your note will attract.

Unfortunately – for those of us in the note buying business – some sellers will reverse this process. They will talk to a few note buyers, and, with their pricing in hand, will now approach the payor about him paying off the note. If the payor is able to do so, the seller knows what the “market value” of his note is and will simply attempt to get a pay off from his payor that is a little higher than his best offer. The seller then feels good that he has gotten a “fair” price for his note and that he has been honorable in giving his payor an opportunity to pay off the note early.

When this happens, it is a 50/50 proposition if the seller will tell the note buyer(s) what has occurred. Sometimes the seller will just drift away and the note buyer(s) will have no idea what happened. Sometimes the seller will be courteous and acknowledge that he has spoken to his payor, who has agreed to pay off the note.

Since most of us conduct our business as professionally and ethically as possible, we will typically ask the seller up front if he has spoken to his payor about possibly paying off the note early. Regardless, some sellers will choose to use the leverage of open market offers to negotiate with their payor. Fair or foul? This happens in business negotiations – witness professional athletes who are free agents – all the time, and someone always loses.

Winning and losing in business is part of the game, just as it is in sports. It’s just a lot more fun when the folks involved take an honorable, honest and up front approach.

The National Association of Realtors reported that pending home sales in May 2015 climbed to their highest level in more than nine years.

This increase puts the housing sales level just below where it was in April 2006 – a year before the housing bust triggered the Great Recession.

See the 3 minute video with Lawrence Yun at www.realtor.org/videos/may-pending-home-sales-highest-since-2006.

Scott Reckard of the Los Angeles Times wrote an article this month saying that Wells Fargo, JPMorgan Chase & Co. and 4 other banks still aren’t complying with customer-service standards imposed by a federal regulator.

Morris Morgan, deputy controller for large banks at the Office of the Comptroller of the Currency, was quoted as saying “we’re not satisfied with where they are at this point in time.” Orders were issued in April 2011 and amended in February 2013. So, four years down the road, the non-complying banks are expected to take “months, not years” to meet servicing standards.

The banks must seek permission from the comptroller to name senior servicing managers, set up offshore call centers or acquire mortgage servicing business, which collects payments and handles foreclosures.

The harshest penalties were against San Francisco based Wells Fargo, California’s largest bank and one of the top four nationwide. Wells was banned from acquiring mortgage servicing rights or setting up servicing in other countries until they can show that they are complying with the terms of consent orders.

A Wells Fargo spokesman said it had made “significant changes” in servicing and expected “to complete that work in the coming months.”

Stay tuned!

Watch out – refis are back!

Bank of America – everyone’s favorite bank – reported a 47% jump in the 1st quarter for cash out refinancings  funded compared to 1st quarter 2014.

Loan Depot, a non-bank mortgage originator, saw a 78% jump!

Lending Tree had a 40% increase.

Conversely, lenders like Wells Fargo and Quicken Loans are not experiencing anything like this. What’s the deal? Looks like there is demand and certain lenders are rising up to meet that demand. Standards are tougher, and it appears most people are paying down higher interest debt or remodeling their homes – not buying cars and going on vacation like folks were in the pre bubble days.

If you have substantial home equity, may be worth a call to your lender and investigate.

Source: Ken Harney, Washington Post Writers Group.

Here are some recent housing updates:

1. Foreclosures are down 67% in February from the peak in 2010. 1.4% of all homes with a mortgage are in the foreclosure inventory as of February 2015. …..CoreLogic.  

2. Home builders are positive. The National Association of Home Builders Housing Market Index rose 4 points to 56 in March. The index measures builder confidence and readings over 50 are seen as positive. Housing starts in March were higher than February (heavy snow caused the big decline). There were 926,000 starts – the average was 1.5 million for the 20 years leading up to the housing crisis…… MMG Weekly.

3. Existing home sales in March surged by 6.1% from February to an annual rate of 5.19 million units. This was the largest monthly increase since December 2010. Sales are also up 10.4% from one year ago……National Association of Realtors.

1. So far this year, I have seen several of “you” who are selling properties and carrying back a note agree to a “0%” interest rate! Why?  The answer is ” I am helping a friend”, or, “I like the buyer”, or, “I want the terms to be good for the buyer.” Fine, but “you” are potentially hurting yourself. We have bought some of these notes, and the pricing to “you” suffered as a consequence. If you want to offer 0% and feel you do not want to sell the note eventually, then require the biggest down payment possible and the shortest amortization period.

2. Who is a good candidate to offer a seller carry back to?

a. First time buyers wanting to get into the housing market but need financing options.

b. Buyers with “credit ding” but are otherwise in good financial shape.

c. Buyers who usually pay cash, resulting in little or no credit history.

d. Buyers who just want “in” on a real estate transaction but can’t get a bank loan.

Good buyers are out there. If you are a seller, you can help them.

The U.S. housing market is heating up. So says the National Association of Realtors.

Lawrence Yun, chief economist for N.A.R., says “an improved job market and low mortgage rates are boosting buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years.”

Existing home sales rose 6.1% in March, and climbed 6.3% in the West. The national median price for an existing home was $212,100, up 7.8% from last year.

At the same time, the National Association of Home Builders  “sentiment index” rose four points to 56, highest level since January. Anything over 50 indicates more builders view sales conditions are good, rather than poor.

I know in my county, as I drive around, I see a fair amount of  new residential construction going on, along with a tremendous amount of freeway upgrades/construction.

This should instill confidence in all of us. The note industry is having a fantastic year and helping lots of sellers get very competitive prices for their notes. Most of these sellers are buying another property with the cash proceeds, helping our housing market even further.