Part Two: Who is to blame? The Housing Crisis and the
New Laws Aimed at Fixing It
As promised, in this article I will summarize some of the
laws that have been passed recently in response to the overly lax financial
environment that caused a meltdown of the housing market.
Home Valuation Code of
Conduct -- One of the more pernicious contributors to the destabilization
of the market was collusion between mortgage brokers and appraisers to
manipulate home values for the purpose fueling the mortgage refinance
boom. To curb this practice,
effective May 1, 2009 Freddie Mac will no longer purchase mortgages from
lenders that do not follow the Home Valuation Code of Conduct which
1) prevents brokers from choosing appraisers or having
any contact with appraisers
2) requires independent appraisers to join AMC's
(Appraisal Management Companies)
One problem, of course, is
if a lender can't get a loan done and the borrower switches lenders, a new
appraisal has to be paid for--not the end of the world. The bigger issue is that the assumption
here is that lenders will not use their exclusive access to appraisers to exert
pressure on the appraisers to their advantage.
SB 94-The huge number of mortgage defaults has spawned a new
industry of companies offering loan modification services. Many of the unscrupulous companies that
gravitated to this industry were collecting loan modification fees upfront and
not actually performing loan modification services. By the time complaints caught up with these companies they
had already collected hundreds of thousands of dollars of fees. SB 94 aims to rid the loan modification
industry of these companies by prohibiting upfront fees for loan modification
services.
SB 1137-- Prior
to filing a notice of default, lenders must contact borrowers to set up a
meeting where the lenders and consumers will discuss potential ways to avoid
foreclosure. Also offers
additional protections to tenants of homes being foreclosed upon.
These laws are helpful but here's the problem. Every time home prices reach the point
where only a small percentage of the population can afford to buy a home,
lenders introduce loan products to stretch affordability. Lenders were pushing negatively
amortizing loans in the late 80's at the peak of the previous market cycle. If there are no laws regulating the
kinds of loan products lenders can promote, the cycle will repeat itself and
the only question will be who are the participants.
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LOL - Laughs OnLine
"Creator of the Tsunami Dive"
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What's the big idea?
I recently saw a sign in a Starbucks thanking
customers for voting Starbucks coffee the best coffee in America. I find this curious because many people
I know prefer a different brand of coffee. Peet's Coffee, Coffee Bean and Tea Leaf, Seattle's Best
Coffee and It's a Grind all seem to rank higher on the list of best coffees
whenever I personally ask the question.
I actually think the success of Starbucks is not at all
attributable to their coffee; I think sugar is their secret. I never drank coffee before I
discovered the Frappuccino and I gravitated to the Frappuccino because as you
know I have an irrepressible sweet tooth.
Over time, I was converted slowly into a coffee drinker as I
experimented with how different drinks tasted with an old fashioned donut. I think Starbucks created a new
generation of coffee drinkers as opposed to winning over existing coffee
drinkers.
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Share If You Care
Our goal with this newsletter is simple: Cover every important topic that might help homeowners and investors make more informed decisions concerning real estate. You can help in two ways:
1) Send us any articles or information you come across that might be of interest to other readers
2) Forward this newsletter to anyone and everyone you know that owns or plans to own real estate!
Sincerely,
Kwame J. Granderson
Equinaire
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Deal Summary
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2005 Hemminway Place
San Jacinto, CA 92583
Acquisition Costs
Purchase Price $123,000.00
Loan Amount N/A - All Cash
Closing Cost N/A - Trustee Sale
Total Acquisition Costs $123,000.00
Renovation Costs $7,000.00
Miscellaneous Costs $498.17
Total Capital Outlay $130,498.17
Sales Price $176,500.00
Sales Costs $16,932.52
Sales Proceeds $159,567.48
NET PROFIT $29,069.310
Purchase Date 7/30/09
Sales Date (Close of escrow)
10/01/09
63 days
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Upcoming Webinars
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Be on the lookout for upcoming webinars in the "Flipping the Smart Way" Series:
How to Identify a Profitable Flip Project
How to Write a Winning Offer
What to Look for in the Home Inspection
How to Market for Resale
Analyzing Your Profits
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Need a Loan Modification?
AmeRestart Can Help
Lender: Bank of America
Old Principle Amount: $397,483
Old Int. Rate: 5.25%
Old Payment $1,739
New Principle Amount: $421,053 ($23,570 of late payments capitalized)
New Int. Rate: 2.75%
New Payment: $965
(Savings of $774 per month w/no neg. amortization)
THIS WAS AN INVESTMENT PROPERTY!
These are real numbers!
Click Here to learn more.
Call 877.619.3258
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