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!

Not a Mirage!

This is NOT a mirage! It is a genuine article from the Times! While it's true that it is from 1982, it's a very real reminder of where rates have been and how great they are today! Over the years, this particular article has come in very handy when I've had clients wrestling with decisions dealing with a difference of 5.25% versus 5.375%.  How a 1/8 % difference could possibly matter would be punctuated with a reminder of the  old 18%  rates.

Note that if the rates had "slid" to 17.54%, they were substantially higher just prior to the slide. We all remember (at least those of us who have toiled in this industry for a while), a "stampede" to refinance when the rates dropped to 13.5%. It seemed to us at that time that a natural place for the mortgage rates to be was between 8.5% and 10%. Those heretofore "normal" parameters were twice the rate that can be obtained today. Currently, an applicant for a mortgage with sound credit and a 20% down payment can expect a mortgage in the upper 4's or low 5's percent! One has to wonder if we will ever see these rates again. Add to the equation the fact that prices of properties have dropped dramatically and we find a buying opportunity not seen for a very long time.

                               While it's true that the banks have become more careful in lending and underwriting criteria have become tighter, the loans do get committed and most which are committed do, ultimately close. 

                               Sure, we have to sweat a bit more, but the deals are out there.

                               

Rental Scams--- BEWARE!

Obviously, much of the focus of my blogs has to do with transactional Real Estate, often referred to as purchases and sales. This particular entry is "off topic" to the extent that it has to do with rentals; more specifically, a new rental scam that I found after a close family member of mine reported to me that he found an apartment in midtown Manhattan in a doorman building for $850 per month.

It's axiomatic that if it seems "too good to be true" it probably is. A rental in midtown for $850? Impossible! Correct!

As we looked into this particular possibility, my "skepticism antenna" went into high alert. I assumed it was some sort of a come-on, but it became much more.

 

Upon my relative's expressing preliminary interest in the apartment to the owner of the apartment via an online ad reply, the "landlord", who stated that they lived in the UK, replied that they were interested in finding tenants who would be the right fit for their precious condo.

Of course, they needed an "application fee" which, because they were in the UK, needeed to be wired to them.  This would have given them access to a bank account.

Next, it was revealed, that of course after the lucky tenant was selected, a routine credit check would have to be done. This would give them access to social security numbers.

Need I say more? Perfect...almost. I'm sure some have fallen prey to this scam; as a matter of fact, after some "googling" I discovered that these "UK" landlords were more likely from Nigeria where many of the internet scams seem to originate.

I also ran across a simpler type of rental scam where a Manhattan women was recently arrested and accused of offering apartments for $538-$823 per month for one and two bedroom apartments.  Her game was allegedly confined to  $5.00 application fees. Yet, when more than 1000 application fees came in,  she was busted.

Too good to be true?  You bet!

CLIENT NEWS:

Milena Govich, who we all enjoyed as she co-starred in Law & Order (the mothership)  has now guest starred in another role a bit less serious in some ways:

The USA network series PSYCH which aired first Friday 1/23 at 10:00pm EST/9:00pm CST.  The
episode is called "Earth, Wind, and ...Wait for it" and it will be re-airing
throughout the week in case you missed it on Friday.  As always, check your
local listings, but for night owls in the NYC area it will re-air:


Sunday 1/25 @ 11:00pm
Tuesday 1/27 @ 1:00am

Additionally, starting on Saturday, you can watch the episode online at

 http://www.usanetwork.com/series/psych/video/fullep/

Wow!.  Be on the lookout for another one of these little reminders later this
spring when Milena, as the infamous "Candy", the good-hearted hooker, returns to RESCUE ME!