More about interest rates

All I’ve heard and read about for the last couple of days are the interest rates. Agents, buyers, and sellers are all anxious to get back to “business as usual”. The agents know that changing the interest rates isn’t going to help things. In fact, many blame interest rates that were too low for too long. Others, myself included, blame boiler room mortgage houses. They have no reason to create, and then sell, loans that are viable. They were not and are not accountable to anyone. It’s going to take governmental regulation to change that.

My crystal ball says there are lawsuits in our future – mass tort litigation. Let’s start it now and get it over with. Both the homeowners and the investors on Wall Street will probably try it. But I think only the investors are going to have any chance of getting back some of their money.

Prime Cut

As expected, the Federal Reserve Board cut short-term interest rates; this time by one-half a point.  CNN heralds this as relief for “some beleaguered home borrowers who are set to see monthly payments on adjustable rate mortgages rise later this year”.  The New York Times reports that “the Fed’s move could mean lower borrowing costs on major loans like mortgages”.  But as pointed out by Bloomberg news, what we need to be watching is the Libor. (London Inter-Bank Rate)

The Feds cut interest rates not to directly alter the mortgage market, but to address the fallout surrounding a failing market: lay-offs by mortgage lenders, the down turn in new construction, etc.  The buying and selling of real estate in this country affects more that just the buyer, the seller, and the agents involved.  It is this constant turn over in property that keeps escrow and title companies in business.  As well as lenders, inspectors, makers of carpet and paint, and all those home renovation warehouse stores.  It also is big bucks for plumbers, electricians, landscapers, and carpenters who work on all these home improvements.

Mortgage rates, however, especially variable and adjusted rates, are based on the bond market and the Libor.  The Prime Rate may affect the bond market and the Libor, but not necessarily.  I have to assume that one of the reasons the Fed made a half point as opposed to a quarter point cut was to affect the bond market and influence the Libor.  It’s still a wait and see game.

Paint the door red

There’s an old superstition in real estate that when a property doesn’t sell - paint the door red.  I never have found out where the belief came from, but I’ve known agents who swear by it.  In difficult markets, we often turn to superstitions and look for the magic formula.  Agents who use the red door concept say that they use it to create an invitation into the home.  It’s what we refer to in the business as a “spot of color” – a.k.a. a focal point.  The focus becomes on the door, the entryway into the home.  People are intrigued and it creates a curiosity to explore the home.  It is the ultimate in curb appeal.  Most homes won’t sell if the buyers never get to see the inside.  If the front doesn’t look inviting, they will just drive on past.  So, find a way to make your home looking inviting.  Give it some color.  Cut back the shrubs and let them see the front door.  Rake those leaves.  Mow the lawn.  And if all else fails, paint the door red.

Giving Back

For many of us in Real Estate we feel a sense of duty to our community.  We feel that is not only our responsibility to know about our community, but to give back to it.

Yesterday morning my office presented a check to the Burbank Association of Realtors in the amount of $5,000 to be used for scholarships.  Both the association and Dilbeck have charitable foundations.

Sold Down The River

It’s an old story, one I’ve heard too many times before.  A homeowner receives a letter saying that their mortgage has been bought by a company they’ve never heard of before.  Payment coupons may or may not arrive prior to the next due date on their mortgage.  There may be confusion over payments because the new lender hasn’t provided the necessary information to make payments.  A few phone calls later and the homeowner thinks everything is fine. Then a letter may arrive saying that they don’t have proof of insurance.  A few more phone calls, a certified letter, and maybe a fax or two later and the homeowner again believes that everything is okay.

But it doesn’t end there.  Payments get lost or late fees are applied to on-time payments.  A bill for an insurance policy that was never ordered by the homeowner will arrive with a payment demand.  It is the stuff of nightmares.

If this is happening to you, you’re not alone.  You may want to get a financial councilor to help negotiate with the lender; you may even need an attorney.  For others, refinancing is the answer.  With adjustable rates thrown into the mix, this can result in an insurmountable predicament.  In the worse case scenarios, homeowners will have to sell their homes.

If your loan is sold be vigilant.  Keep records of all communications with the new lender.  Not all lenders are predators, but if your home is being attacked – defend yourselves.  You worked hard to purchase your home.  Don’t let unscrupulous businesses take it away from you.

If you have Litton Loan Services, please see this website  http://www.lieffcabraser.com/loan-servicing.htm