The Renton Wa Realtor Blog !: September 2008

If My Mortgage Lender Fails, Are My Renton Home Payments Still Due? YA THINK!!!

If my mortgage Lender Fails, Are My Renton Home Payments Still Due?

If my mortgage lender fails, are my payments still due?Yesterday, I got asked this twice. Once in person and one was a call to the office of the Gary McNinch Team. Of course both people who asked this were mostly laughing. Like there is ever a chance we don't get to pay our mortgage!?!.

Thursday, federal regulators seized mortgage lender Washington Mutual. Since WAMU is local this is a monstrous hit in our local economy. That aside, the Seattle-based thrift became the third "big name" lender to close its doors since July, joining IndyMac and Lehman Brothers.

In 2007, these 3 lenders represented about 10 percent of the mortgage market and their subsequent failures are confusing American homeowners.

The most prevalent question:

If my mortgage lender fails, are my payments still due?

And the answer is an unequivocal "yes". If a mortgage lender is seized, goes bankrupt, or is otherwise closed, it doesn't change the terms of the bank's mortgages whatsoever -- just maybe the mailing address.

This is because a mortgage (and its corresponding note) is a legal contract between the lender and the lendee, signed on the date of closing. It is binding and cannot be altered by either party. The only way to "end" the contract is to pay the loan in full.

This can happen in one of 3 ways:

  1. The home is sold and the mortgage is repaid
  2. The home is refinanced and the mortgage is repaid
  3. The home loan is paid down to $0 balance by the homeowners

So, if a mortgage company fails, its doesn't cause the loan to be paid-off and, therefore, the mortgage contracts is still valid. Payments are still due.

However, because its mortgages are an asset, the failed lender will usually transfer them to a new lender's servicing department. This means that homeowners will write the same check for the same mortgage but to a different company.

To reduce confusion around transactions like this, the government puts two safeguards in place. First, it requires the former lender to send a 15-day advance notice of the change to the homeowner. And second, it requires the new lender to do the same.

In situations like this, the onus is ultimately on the homeowner to open and read his mail, and make changes accordingly. It's especially important for people who pay their bills online as opposed by paying them manually; you likely won't get notified if you're sending payments to the wrong place. And be careful of scammers. Scammers can mail or email you a notice that "looks" to be official and try to get you to send some money to the wrong address. So the best is to double check. More great info and answers to your questions from Gary McNinch your Renton realtor. Always looking for more great clients to help buy and sell Renton homes, so send them our way.

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3 comments • Gary McNinch Realtor Renton WA Real Estate • September 27 2008 02:58PM

WHY DO THE BANKS DO SUCH A TERRIBLE JOB OF SELLING FORECLOSURES??

This post was written by Lenn Harley in Virginia.  It answers the questions my buyer clients in Renton have been asking since we made a strong offer to buy a foreclosure in Federal Way.  We made the offer 5 weeks ago and no in the bank will respond. 

Lenn hits the nail on the proverbial head.  Thanks for helping all the clients of the Gary McNinch Team at www.RentonHomeFinder.com.

Via Lenn Harley:


                                                 * * * *  HARD CORE REAL ESTATE TALK  * * * *

FAX THE OFFER TO 222-555-8888.  YOU WILL BE NOTIFIED OF ANY DECISIONS IN 2-8 WEEKS.

Over the past year, we've read many posts by real estate agents and brokers detailing their frustration trying to SELL foreclosure or short sale listings.

LET'S SET THE STAGE.

  • Buyer is fully approved for more than the list price.
  • Buyer is non-contingent and ready to take possession.
  • House has been on the market for more than 6 months.
  • House has been reduced in price from $379,900 to $299,000.


Buyer's Agent has a few questions about the existence of other offers and tries to contact the listing agent.  Buyer's Agent gets Listing Agent's voice mail with the instruction:  "Fax offers to 222-555-8888.  You will be notified in 2-8 weeks of any decisions.

BUYER'S AGENT WRITES AN OFFER FOR THE BUYER AND FAXES IT TO THE LISTING AGENT FOLLOWING THE INSTRUCTIONS IN THE MLS LISTING. 

  • Buyer waits 3 days and calls his agent. 
  • Buyer:  "Have you heard anything?" 
  • Agent:  "No, the agent says it may take weeks to get an answer."
  • Buyer:  "Call the listing agent and tell them that if we don't hear something in 24 hours, we'll buy something else."
  • Agent:  "I'll do that and get back to you."


AGENT CALLS LISTING AGENT AND LEAVES THE MESSAGE THAT THE BUYER IS WAITING 24 HOURS FOR A RESPONSE OR THEY WILL BUY SOMETHING ELSE. 

No response from listing agent in 5 days after leaving many telephone messages.  Buyer instructs his agent to withdraw the offer and show him other properties, IF the buyer's agent is lucky.  Often, a buyer will hold his agent responsible and move to another buyer's agent.  This is one of the reasons so many experienced buyer's agent decline to work with buyers who include foreclosures in their search for a home to buy.

The above is a "worst case" scenario.  But, the result is the same in that the property has been listed for months, has lost significant value and there is a viable buyer and offer on the table that goes nowhere.

WHY DIDN'T THE LISTING AGENT RESPOND TO THE BUYER'S AGENT'S CONTACTS?  Because the listing agent:

The listing agents has no authority to negotiate for the bank.

The listing agents has no management authority to do anything other than transmit the buyers contract offer.

The listing agent has many listings from the same mortgage company and would be bogged down all day on the phone if they took a personal contact approach.

The listing agent has given the foreclosure listings low priority because the mortgage company listings pay far less than consumer listings.

WHY DOESN'T THE MORTGAGE COMPANY THAT FORECLOSED ON THE PROPERTY ACT IN WAYS THAT WOULD MAKE THESE PROPERTIES MOVE FASTER??

BECAUSE THEY DO NOT KNOW WHAT THEY ARE DOING!!

The mortgage company employee that is in control of the portfolio of foreclosures,

  • is NOT a real estate agent, real estate broker,
  • has never sold real estate,
  • has no understand of the real estate market,
  • does not have any experience negotiating real estate sales,
  • is a salaried employee and will receive a pay check no matter when the properties in their portfolio sell or for how much.
  • final decisions for price, terms and conditions for ratified contracts is not in the authority of the loss mitigation clerk communicating with the listing agent.
  • final decisions on contract approvals are often scheduled weekly or bi-weekly by committee. 


The primary reason these transactions are so difficult for the buyers agents, buyers and listing agents is because the neither the mortgage company nor their representatives communicating with the listing agents have no experience selling real estate.

Real estate agents and brokers sell a lot of real estate.  We know how to manage a real estate transaction.  We also know that the bank or mortgage company property owners have no experience or knowledge about selling real estate and getting the contract to the settlement table. 

  • They have never been to real estate school.
  • They do not have a real estate license.
  • They have never showed a home to buyers.
  • They have never written an offer for a buyer.
  • They do not understand the industry standards for real estate brokerage.
  • They do not understand that "time is of the essense" when selling homes.
  • They have never presented a contract to a seller.
  • They have no understanding of the real estate market.
  • They do not understand the limitations of the "as is" clause.
  • They have no knowledge of real estate brokerage.
  • They have no knowledge of condition or inspections.
  • They have no understanding of disclosure.
  • They have no understanding of presenting offers, counters timely.
  • They get paid whether or not the contract closes.
  • The bank addendum is ignorant of state required seller disclosures and consumer protections.


The skill sets required for employees of the mortgage companies for loss mitigation representatives are not transferable to real estate sales or real estate brokerage. 

FACT:   BANKS AND MORTGAGE COMPANIES DO NOT KNOW HOW TO SELL REAL ESTATE.

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

Lenn's Blog

2 comments • Gary McNinch Realtor Renton WA Real Estate • September 17 2008 11:37PM

Letterman on Fannie Mae and Freddie Mac ... Can You Even Guess??

So Renton home buyers and sellers and also my great friends on the Active Rain web network.  I'm blogging along tonight and Letterman is on in the background.

Letterman says "I'm so tired of this Fannie Mae and Freddie Mac story, but it is taken care of now....  (of course I'm thinking about the US government bailout to stabilize our markets and bring down the interest rates)

But Letterman was somewhere else altogether.David Letterman responds to Gary McNinch Realtor

 

                                  Ready for this ???

 

"I'm so tired of this Fannie Mae and Freddie Mac story, but it is taken care of now....

                                   Ya sure??

"They are ok now, Angeline Jolie is going to adopt them."  LMAO!!!!!

Just a little sick and crazy real estate, mortgage and investment advice from your Gary McNinch Team Renton Realtors.     I usually tell everyone to call us... but don't call me on this, except to have a laugh with me.

 

 

3 comments • Gary McNinch Realtor Renton WA Real Estate • September 10 2008 01:54AM

When and How to Fly the American Flag --- September 11 Tribute to the USA

Cross in Our American Flag

 

We all go our separate ways in our daily lives.  Busy, hurrying, being distracted, our own thoughts.  As I was coming home today, I saw a large construction crane.  On the very top was an American Flag.  Looked small from the ground, but was higher than any other point in this area of Renton.  


So it got me to pause and think.  What does it mean to be an American?  How did we get here? What battles have been fought over the generations to keep us here and free?  How will our nation look in 100 years, when our great grandkids are keeping us free?


I hope this makes you take a second to pause, consider the foundations of our nation, say a prayer for our country and especially our soldiers, law enforcement officers and firefighters.




WHEN TO FLY THE AMERICAN FLAG

The flag can be displayed on all days, but especially on:

 

 

New Year’s Day (January 1)

Inauguration Day (January 20)

Martin Luther King, Jr. Day (Third Monday in January)

Lincoln’s Birthday (February 12)

Washington’s Birthday/Presidents’ Day (Third Monday in February)

Easter Sunday (Varies)

Mother’s Day (Second Sunday in May)

Armed Forces Day (Third Saturday in May)

Memorial Day (Last Monday in May, half-staff until noon)

Flag Day (June 14)

Father’s Day (Third Sunday in June)

Independence Day (July 4)

Korean War Veteran’s Day (July 27)

Labor Day (First Monday in September)

Patriot Day (September 11, half-staff until sunset)

Columbus Day (Second Monday in October)

Veteran’s Day (November 11)

Thanksgiving Day (Fourth Thursday in November)

Pearl Harbor Remembrance Day (December 7, half-staff until sunset)

Christmas Day (December 25)

 

 

HOW TO FLY THE AMERICAN FLAG

 

The flag should be raised briskly and lowered slowly and ceremoniously.

The flag should be displayed only between sunrise and sunset. If displayed at night, it should be illuminated.

The flag is never allowed to touch the ground or the floor.

When hung over a sidewalk on a rope extending from a building to a pole, the union stars are always away from the building.

When vertically hung over the center of the street, the flag always has the union stars to the north in an east/west street, and to the east in a north/south street.

The flag of the United States of America should be at the center and at the highest point of the group when a number of flags of states, localities, or societies are grouped for display.

The flag should never be drawn back, nor up in folds but always allowed to fall free.

Never fly the flag upside down except as a signal of distress in instances of extreme danger to life or property.

The flag is never flown in inclement weather except when using an all-weather flag.

The flag should be displayed at half-staff until noon on Memorial Day then raised to the top of the staff.


Thanks for listening.   God Bless America and God Bless You.

 

 

 

 

4 comments • Gary McNinch Realtor Renton WA Real Estate • September 09 2008 07:58PM

Fannnie and Freddy-the government bailout is on!

Mortage and loan info for Renton home buyers and those thinking of selling a Renton home from Paul McFadden, Renton loan officer.  As one of the good lenders, Paul is always watching the financial news and paying attention to what it means to our clients that buy and sell Renton Real Estate.   This article is about the takeover of Fannie and Freddy ...  I think Paul is right on with this time frames for recovery.  Another reason to work with (hire) a real estate and loan professional.

 

 

Via Paul McFadden:

Good morning! I picked up my local paper this morning and saw that Fannie Mae and Freddy Mac will probably be taken over by the government. It could be as soon as Monday. Although I'm not a big fan of government intervention (I'm a free market guy), I suppose this will help our world recover a little bit quicker. The bad news is you (think taxpayers) will be footing the bill for this bailout estimated at $25 billion dollars.

The other piece of the puzzle is what happens to all the banks who are so heavily invested in Fannie and Freddy's stock? They're in trouble. With the FDIC's current watch list (banks in trouble) at 117, I heard the list of bank failures could grow to 300 if the government had to rescue Fannie and Freddy. This, then, is the last shoe to drop. Before our market can recover, we will have to let the banks go through their challenges. And it's just beginning. So far there have been 11 bank failures this year. Expect over the next year or two for that figure to grow in multiples. Will it be as bad as the S&L crisis of the early '80's? Probably not but when you add everything else up that has happened, it's been called the most challenging period in real estate in the last 25 years.

Does this mean it's all doom and gloom out there? No. There are mixed signals. In parts of California and Nevada, home sales are picking up due to affordable pricing once again. Credit is still awfully tight and, chances are, will not be eased until the lenders feel safe to do so. My prediction? Look for the start of an upturn either in the Spring or Summer of next year. For those of us who can hang on, look forward to numerous opportunities as the buyers return to the market. It will be interesting to see how this all plays out. I plan on hanging in there and enjoying better times soon! Have a great weekend!

 

Paul

1 comment • Gary McNinch Realtor Renton WA Real Estate • September 06 2008 10:34PM