Saturday, June 6, 2009

Is Anybody Out There?

Oh, how I wish I had access to the true policy makers in Washington DC!
Recalling the idea of "six degrees of separation" if anyone reading my blog knows someone who knows someone who knows someone (you get the idea) feel free to pass the following along.

The Real Estate segment of our economy has generally been credited (or blamed) with sparking the current financial crisis. Therefore, the very same Real Estate industry is expected to trigger our return to financial prosperity.

While our overworked President Obama is calling for increased lending, let's examine the current state of the mortgage industry. While it is true that interest rates are at historically low level, many other factors are making the mortgage process daunting, at best. All of the real estate professionals with whom I speak acknowledge that, as a result of major price reductions in each and every geographical area, whether coop, condo or house markets, there is a genuine return of the buyers to the market. Especially so, with a perception that the rate of unemployment may begin to shrink, buyers need only feel somewhat secure about their employment status so they may take advantage of the combination of low mortgage rates and lower prices. So, what's the problem?

The banks are making the process of obtaining those mortgages more and more difficult instead of easier as President Obama would hope. Before the financial crisis, there were many products and programs tailored to particular types of purchasers that are simply not available anymore (or so hard to find as to be virtually nonexistent). For example, previously, there were "low doc or no doc" loans available. These loans made mortgages available to those who had more cash that usual to put down, but lacked the level of documentation typically required for mortgage approval. These loans are now almost impossible to obtain.

Then there was the 80-10-10 mortgage. For the purchaser who could only put 10% down on a purchase, the 80-10-10 loan provided a primary mortgage of 80% and a simultaneous "HELOC" or home equity line of credit for another 10% of the purchase price. These loans are now almost impossible to obtain.

Then there is the subject of new construction. Prior to the current situation, financing was readily available on new coop or condo projects where 50% of the units were sold. Recently, as a result of new Fannie Mae requirements, that number has gone up to 70% and in some cases 90%! This is preventing, or at least inhibiting the rebounding of the new construction part of our market. Factor in new insurance requirements that the banks are demanding, and we see loans on brand new construction where few units have been sold as difficult, if not impossible to obtain. 

Then there are the very small coops and condos, particularly like those located in parts of Brooklyn and Manhattan. As of a month ago, mortgages on 4 unit coops and condos were virtually impossible to get. I'm told that this situation has improved a bit, but not enough. If one cannot obtain mortgage financing on these small buildings, the units become virtually worthless except to all cash buyers. One can only imagine how this makes establishing a true value or price daunting. Which brings me to the subject of appraisals.

Appraisals are now the most difficult aspect of the mortgage process and, by extension, the home buying process. While I agree that the excesses of the past that contributed to the current spike in foreclosures could not have happened without the participation of the appraisers (the appraisers in many cases had to "rubber stamp" higher values in order to enable the excesses referred to), the pendulum has swung way too far in the opposite direction. The banks are now leaving us with appraisers who have absolutely no familiarity with particular neighborhoods and communities. In a city like New York, locations of properties one or two blocks in any direction could affect values significantly. We are seeing appraisals that are so far off as to be almost laughable (if it weren't so serious). I understand the banking industry trying to correct some of the mistakes of the past, but creating new mistakes is not the way to do it, especially when the net effect is to prevent those desperately needed mortgages from getting into the hands of those buyers who deserve them.

While I am not, in any way, suggesting that we return to the careless lending practices of the past, the banking industry must find a way to combine careful lending policies with the needs and realities of the purchasing public to solidify the resurgence of the Real Estate industry. 

And now for some client news: 
We've been patiently waiting for the return of "Candy" to RESCUE ME...well, read on from Milena Govich who plays the "good-hearted hooker":
Hello friends and family!   I hope this message finds you all having a wonderful and joyous summer.   To the point:

You've all been asking, and the wait is over---Candy is back on RESCUE ME!   But why.....?   ;)

Yes, I've returned to my first TV role of Candy, the upscale escort/con-artist who bilked Lou, the firefighter out of his life savings at the end of Season 2.   It's now Season 5 and the drama continues!

When?
Tuesday, 6/9 at 10:00pm est/pst

Where?
FX Channel

If you can't watch the premiere, it will re-air on FX:
Tues 6/9 11pm e/p
Fri 6/12 11pm e/p
Sun 6/14 11pm e/p

Beginning Wednesday, 6/17, this episode can be viewed for free on www.hulu.com or at www.fxnetwork.com.

Candy will be appearing in a number of episodes throughout the remainder of the season, so be sure to keep tuning in or logging on each week!


Additionally, any of you on Facebook can join the new Milena Govich Facebook Fan Page (that my wonderful husband lovingly created) by clicking on the following link:

http://www.facebook.com/pages/Milena-Govich/83546384285?ref=s

Here, you will be able to receive updates on my current and future appearances--if you're interested, of course!

Again, I hope you are all well and I thank you for being so supportive of my career.   I am truly, truly grateful!

7 comments:

Unknown said...

Let me comment on appraisals. Your comments are quite spot on. Wells Fargo did an appraisal for me, and I believe made a typo (using zip code 11207 instead of 11217, and the delimiting blocks were completely unknown to me and then I did a google maps search and figured out that they used East New York to define how much they depreciated the comparables in my neighborhood.

They refused to correct the error, largely because I believe they didn't understand it, but when an assessor also makes fundamental mistakes about the number of bathroom and the amount of outdoor space one has, it feels very frustrating

G

Unknown said...

Enjoyed every bit of your blog. Really Great
Fully renovated 1 Bedroom apartment

Marquezkelly Law said...
This comment has been removed by the author.
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