Mortgage Changes to Know in 2014

RISMEDIA, Thursday, December 19, 2013— The New Year is almost here, and with it comes a bevy of legal and regulatory changes, especially for the mortgage industry. To help potential homebuyers understand how the changes will affect their mortgage processes, Don Frommeyer, CRMS, President of NAMB (The Association of Mortgage Professionals), outlines some of the regulations set to start in January 2014.

“Since 2009, the housing market has been working to create standards and regulations that minimize the risk of another mortgage industry fiasco,” says Frommeyer. “The ability-to-repay mandate is a perfect example of this and it exemplifies how mortgage professionals are taking extra caution with every customer.”

Upcoming mortgage industry changes include:

- Ability-to-Repay Mandate: The CFPB designed this regulation to set a gold-standard for lending to ensure each and every borrower is a qualified borrower. Lenders will follow a set of guidelines to establish a consumer’s income, assets and obligations before deeming them eligible. The CFPB rules establish a standard for what the government considers a “qualified mortgage.”

- Decrease in FHA Loan Limit: The Federal Housing Administration (FHA) announced that beginning January 1, 2014, mortgages will be limited to $625,000, down from $729,750. Homebuyers looking to obtain a larger loan will have to apply for a jumbo loan, which will most likely come with a higher down payment. “For many areas of the country this change won’t be a huge issue as average home prices fall below the established limit. However, borrowers in metropolitan areas with higher average housing prices may face challenges when applying for mortgages as the 20 percent down payment associated with jumbo loans will be an enormous increase from a traditional loan’s 3.5 percent down payment,” notes Frommeyer.

- Caps on Loan Origination Fees: January 10, 2014 brings a rule for the Qualified Mortgage that points and fees on mortgages cannot exceed 3%.

- Tighter Regulations for Self-Employed: As the rules to create a QM (qualified-mortgage) take effect, people without a W-2 will face difficulty when they apply for loans. It’s more of a task for individuals to prove their debt-to-income ratio without the proper documentation, even if they have a high net-worth and perfect credit. The income is calculated bringing into play the customer write offs to reduce taxable income.

For more information, visit www.namb.org.
If you are in the Savannah area, you can also call Kirsten Ray with Fidelity Bank:
Kirsten Ray
Fidelity Bank
200 Stephenson Ave
Suite 101
Savannah, GA 31405
912-692-8022                              

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
912-790-6999

Real Estate Q&A: How the Self-Employed Can Get a Mortgage

Real Estate Q&A: How the Self-Employed Can Get a Mortgage

By Gary M. Singer

RISMEDIA, Saturday, December 14, 2013— (MCT)—Question: I am self-employed and make a good living. I want to buy a house, but it’s hard to document my income. So I’ve been getting turned down for a mortgage, even though I’m willing to make a large down payment. Any hope for me? —Trevor Answer: With banks and the federal government tightening lending requirements, it has become increasingly difficult for people who don’t get regular paychecks to qualify for loans. Although still rare, “stated income” loans are making a comeback. But they require very high credit scores, large down payments and deep cash reserves. If this is not available, you will have to try to get a loan based on your tax returns. Still, this can be difficult because the self-employed tend to use expenses to offset their net income, resulting in low numbers. That forces them to choose between favorable tax treatment or getting a loan. If you can’t find a loan from a traditional bank, there are a growing number of private lenders. Some, such as “hard money” lenders, will offer a smaller amount based only on the value of the house, perhaps lending 50 percent of its value. Others also will look at your credit, income and debts and lend larger amounts. Because these kinds of loans are risky for the lender, be prepared to pay a higher interest rate and higher closing costs. Shopping around is especially important with these loans because the costs and rates vary greatly from one lender to another. Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. ©2013 Sun Sentinel (Fort Lauderdale, Fla.) Distributed by MCT Information Services RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. A. Joseph Marshall Coldwell Banker Commercial Commercial Real Estate Advisor Savannah, Ga 912-790-6999

Coastal Empire Economic Index Q2 2013

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
912-790-6999

What homeowners need to know about avoiding foreclosure

I am reposting this article word for word that I got from Steve Nimmer here at Coldwell Banker Mortgage. (912) 604-3834 NMLS #: 186680.

Even though the recovery is over and people are getting rich in real estate(Flip That House Now! radio ads are playing again) there are plenty of home owners bank borrowers that are still struggling. And for some reason I sense there is a kind of stigma against them now that it is common knowledge that the recession is over.

So, here is Steve's article to help you out.

Since September 2008, the industry has seen some 4.5 million foreclosures completed, according to the June 2013 CoreLogic® National Foreclosure Report. And while those numbers have been coming down, it is still important that borrowers and homeowners understand what they can do to prevent foreclosure.

That means taking action at the first sign of trouble, such as the first time a homeowner makes a late payment or misses a payment altogether.

1. Analyze the cause
Was the payment late because the borrower had an unexpected expense, like a car repair or a medical bill? Or is the problem due to a job loss, disability or serious illness that could affect income for an indefinite period of time? The answers to these questions can help determine the best next steps.

2. Understand the foreclosure timeline
For most mortgages, a payment made one to 14 days late falls within a grace period. Payments 15 to 30 days late incur a late fee, which must be included at the time of payment. After 30 days, missed payments impact the borrower's credit score. Foreclosure procedures usually begin after four missed payments.

3. Optimize cash flow
Regardless of the scenario, it may be helpful for borrowers to revisit their budget and consider trimming extras like eating out, entertainment and other discretionary spending. It may also be necessary to generate additional income through part-time work or a second job.

4. Make a full payment – including late fees
A partial payment is usually credited as a principal reduction, not a regular mortgage payment. It's better to make a full payment, including any late fees, as soon as the money is available.

5. Communicate with their lender
The lender can help determine whether the borrower is eligible for any of several alternatives to foreclosure, such as refinancing or loan modifications. Even if the mortgage amount is more than the home is worth, the lender may be willing to accept a short sale or a deed-in-lieu of foreclosure.

The bottom line
A willingness to step back and assess the financial situation, take positive action to address shortfalls and work with the lender can go a long way toward helping borrowers avoid becoming foreclosure statistics.

Sources:
CoreLogic® National Foreclosure Report, June 2013
Freddie Mac: Alternatives to Foreclosure
7 Steps to Avoid Foreclosure by Tara-Nicholle Nelson, Esq.


A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
912-790-6999

AASU Coastal Empire Economic Monitor Q1

Dr. Toma has published the 2013 Coastal Empire Economic Monitor Quarter 1 report.

Summary: We are treading water in a sluggish stream that is moving in the right direction. Consumer confidence is weak, but tourism is up and so is housing. (In fact, in many areas of Savannah we are in a seller's market!)

Click on the images for enlargement.

 

Roubini Gets It If Only Everyone Else Did

A. Joseph Marshall 

Coldwell Banker Commercial

Commercial Real Estate Advisor 

Savannah, Ga 

912-790-6999

Tampa Luxury Retail Market Report

This has been your Tampa Luxury Retail Market Report.

A. Joseph Marshall 
Coldwell Banker Commercial
Commercial Real Estate Advisor 
Savannah, Ga 
912-790-6999

Healthcare Real Estate: Looking Beyond The Indicators

I don't know who is reading this blog in India, but thank you very much! If you've got investors in Pune who in interested in property over here, give me a call.

Healthcare Real Estate: Looking Beyond The Indicators is such a good article that I am posted some of it here. It was published 10 days ago by Wayne Grohl for The Source blog.

With only a few exceptions, the mood was decidedly up at Thursday’s Healthcare Real Estate Conference in Chicago.  The investors, brokers, tenants, developers and managers who met at the University Club came to hear about strategies and trends in development, management and capital for medical properties ranging from medical office buildings (MOBs) to large healthcare campuses to retail outpatient facilities. 

 Superficially, the first indicator from 2012 was a drop in medical facility construction starts. Usually, when a sector sees a drop in national groundbreaking, it's kind of tough to read the tea leaves as anything other than a negative.

That wasn't the diagnosis at the conference.

On a panel including Shawn Janus of Jones Lang LaSalle's Healthcare practice, the drop in starts was likened to a deception associated with long-term factors finally clearing up. "We saw a decrease due to the capital markets still rebounding, and a SCOTUS ruling on ACA, then an election," said Janus. "With all that behind us we're going to see greater activity. On the acute care side, that has dropped off. Community hospital starts has slowed down. But we're going to see high-acuity activity driven into the outpatient environment. 

On a side note, my colleague Linda agrees with the conference's tone. This field is growing steadily, but now cautiously. She works extensively in healthcare real estate and sold two hospital sites in the last two years. The third, which was to be a community hospital, was indefinitely delayed. 

•  Acute care: more or less means large hospitals.

• High acuity: medical interventions for seriously ill people. Typically conducted on inpatients, that is people who stay over night. But the general trend in medicine and the incentives are to take some higher acuity patients and treat them not in hospitals, but in specialized outpatient settings. One classical example of this trend is the dialysis clinic. There was a time that dialysis for kidney patients was conducted primarily inside a hospital: that has changed in a great many places today.

• Outpatient: a patient not hospitalized overnight.

What he's describing is a trend - several trends, in medical payments, technology and facilities management- that will cause an explosion in non-hospital medical facility utilitization for outpatients. Strip mall spaces, office renovations, all manner of off-campus medical facilities are going to form the demand nationally going forward. Consider it a retailization of medicine.

Read the rest of the article by clicking the link at the top of the page.

A. Joseph Marshall 
Coldwell Banker Commercial
Commercial Real Estate Advisor 
Savannah, Ga 
912-790-6999

Why Low Interest Rates Matter to CRE

Last Friday night I went out for drinks with an investment banker, a financial advisor, an accountant and the owner of a remodeling business.

As the evening relaxed (e.g. Booze!), I mentioned I was going to New York in May and June for meetings regarding distressed assets to drum up some business. The banker asked me, and I'll paraphrase, "Don't you think you'll be wasting your time speaking to those people? Don't you think the worst is behind us and bank owned properties are dwindling?"

And I said, "No, I think that this [2009-present] is just Round One."

And the banker said, "I agree!"

Why did we agree? Well, the systemic causes that lead to the recession are still in place: consumer debt, over-leveraged banks and business, and corruption on Wall Street. And now we're betting that sovereign leverage is the way to go. We have been told that pre-crash normalcy is returning because housing prices are increasing, the stock market is reaching new heights, CRE is back, gold prices are down, etc... And we are told that all this is inherent, indigenous... like creativity without a source.

But there is a source: low interest rates. An interest rate is how much you pay to borrow money. Banks don't make money with annualized interest rates of 3.25% or whatever it is today. But we have low interest rates to encourage people to borrow money to buy things. As an example, Americans are buying cars left and right and European manufacturers are depending on us. Did you know that about 80% of vehicle purchases are financed right now?

When you read in the paper that a million dollar property sold to whoever, chances are they did not pay cash, but borrowed most of the money for the acquisition. The low interest rates for CRE debt means more people will risk an investment.

But what happens when interest rates increase? Suddenly that debt costs more even though you may have "locked it in" and less goes to the principal. People may take less risks and buy less property. Small rate increases aren't a problem. Big rate hikes are.

This article explains that "low interest rates are one of the only things supporting commercial real estate prices." The author concludes that

"Cap rates are close to their historic lows for most property classes. At the same time, other commercial real estate fundamentals are still weak. This apparent disconnect- low cap rates and weak fundamentals- has prompted some observers to question the Federal Reserve's low interest rate policy. The concern is that low rates may be boosting commercial real estate prices excessively." 

But on the surface things look great! So let's focus on arguments that the market is nuanced, complex, dynamic, etc...

The banker and I are hedging by betting that our future income will come from the sale of more distressed properties coming to market as the rates increase. And we're both hoping people will have the means to buy. Got an income producing property in sight? Is it a good calculated risk? Jump on it now!

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
912-790-6999

Commercial Real Estate Beige Book Breakdown

Ok, this post is excerpts taken directly from Commercial Real Estate Beige Book Breakdown: March 6, 2013 by the National Association of Realtors Commercial Division, which of course was published by the Federal Reserve.

The commercial real estate industry finds good news in the most recent beige book, along with somewhat mixed indicators.  March 6, 2013′s Beige Book reports:

Most [Federal Reserve] Districts reported expansion in consumer spending, although retail sales slowed in several Districts. Automobile sales were strong or solid most Districts, and tourism strengthened in a number of Districts. The demand for services was generally positive across Districts, most notably for technology and logistics firms. Transportation services activity was mixed among Districts, although the majority of contacts were optimistic about future activity. Manufacturing modestly improved in most regions, with several Districts reporting strong demand from the auto, food, and residential construction industries. Residential real estate markets strengthened in nearly all Districts and home prices rose amid falling inventories across much of the country.

Commercial real estate activity was mixed or improved slightly in most Districts, and financing for commercial development remained widely available. Overall loan demand was stable or slightly higher across nearly all Districts, and several bankers noted stiff competition for qualified borrowers. Agricultural conditions varied across the country, with some areas continuing to suffer from drought while others reported considerable precipitation and improved soil moisture levels. Districts reporting on energy activity indicated modest expansions in crude oil and natural gas exploration, while mining activity slowed.

Overall commercial real estate conditions were mixed or slightly improved in most Districts. Commercial real estate activity grew modestly in the Philadelphia, Richmond, Atlanta, and St. Louis Districts, and activity in the San Francisco District expanded. Boston and New York reported mixed activity, while the Kansas City and Dallas Districts noted few changes. Although some modest growth was reported in the Chicago District, the level of activity remained weak, and commercial contractors in the Cleveland District noted a slowing in activity, particularly for defense-related projects. Office vacancy rates declined across most of the New York District, and industrial vacancy rates in upstate New York posted their lowest levels in three years. Richmond contacts described the supply of Class A office space as tight, which they attributed to the absence of new construction.

Commercial development and leasing activity increased in the San Francisco Bay and Seattle markets, fueled by sustained growth in the technology sector. Commercial construction improved by varying degrees in the Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City Districts. 

Respondents in the Boston District expressed concerns about overbuilding in Boston’s apartment market and office sector, while Philadelphia contacts noted an increase in energy-related projects and repair work resulting from Hurricane Sandy. Cleveland, Atlanta, and Chicago reported high demand for manufacturing space, with some Chicago manufacturers leasing temporary space to accommodate increased demand. Credit for commercial development and transactions was widely available, although Boston noted a large decline in loan demand and contacts in the Cleveland District said financing difficulties continued.

Loan demand was steady or increased across all the Districts that reported. Residential real estate loan demand was strong in the Philadelphia, Cleveland, Richmond, Atlanta and Chicago Districts, mainly driven by refinances due to continued low interest rates. Demand for commercial real estate loans was also strong in the Cleveland, Richmond, and Kansas City Districts. Auto lending increased in the Cleveland and Atlanta Districts, and Philadelphia and Dallas cited growth in energy-related loan demand. San Francisco continued to report a slowdown in venture capital and private equity activity, but contacts noted an increase in the number of private technology companies moving toward an IPO.

Asset quality improved at banks in the Philadelphia, Kansas City and San Francisco Districts. Philadelphia, Richmond, Atlanta and San Francisco lenders reported high competition for qualified borrowers. Borrowing standards were reported to have been loosened in some Districts. Atlanta contacts noted additional loan capacity, but continued to be cautious with loan activity. Cleveland bankers considered cost cutting measures, including layoffs, due to shrinking net interest margins. New York contacts indicated a decrease in loan spreads for all loan categories, particularly residential mortgages, and bankers in the Chicago District said that very few mortgage originations were being kept on their balance sheets and that interest rate swaps were being utilized to hedge against a potential rise in interest rates. Bankers were generally optimistic about future activity in the Philadelphia and Dallas Districts for the near term, but Atlanta bankers expected activity to ease toward the middle of the year.

 

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
912-790-6999

Mortgage product fundamentals – part 2

Coldwell Banker Mortgage Advisor Steve Nimmer NMLS # 186680 ph. # 912-604-3834 comes through with part two.

Federal Housing Administration (FHA) and Veterans Affairs (VA) loans are both backed by the government and offer similar benefits, including the potential of being a more affordable option for those who qualify.
FHA loans overview

FHA loans can be very appealing to new homebuyers. The federal government insures mortgages for FHA-approved lenders to reduce their risk of loss if borrowers default on their mortgage payments.
Benefits:

• Lower down payment
• Lower monthly mortgage insurance fees than with conventional loans
• More flexible debt-to-income ratios
• More relaxed credit requirements
• Competitive interest rates

General eligibility requirements include:

• Two years of steady income
• Proof of funds for down payment and closing costs
• Bankruptcies must have been discharged for at least two years
• More flexible debt-to-income ratios than for many other types of loans

VA loans overview

VA loans are available to those who served or are currently serving in the U.S. military. The VA does not lend money for VA loans; it backs loans made by mortgage lenders to veterans who qualify.
Benefits

• No money down
• No private mortgage insurance (PMI)
• Competitive interest rates that may be lower than conventional rates
• No prepayment penalties
• More flexible debt-to-income ratios than for many other types of loans

Eligibility requirements include:

• Certificate of Eligibility from the VA to prove eligibility for a VA loan
• The home must be a primary residence
• Ability to meet income requirements and must have a good credit record

Buyers should consult a trusted lender early in the home search process for more information and to find out about the types of home loans which may be right for their needs, including fixed rate and adjustable rate mortgages.

Useful information you need to make an educated decision. And if you live in the Savannah, GA MSA and are ready to buy give me a call 912-352-1222.


A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga