Taking the mystery out of the mortgage process, part 2

To continue the discussion about mortgages from the previous blog post, Steve Nimmer, Coldwell Banker Mortgage (912-604-3834 NMLS #: 186680) emailed me more information.

What happens behind the scenes after closing?

• Warehousing: About 10 days after closing, the lender uses their warehouse line to finance the new loan until it is "sold" to an investor on the secondary market.

• Secondary market: Allows lenders to sell mortgages to investors, providing them with new funds to offer home loans to new borrowers. Your customers' mortgage rates are influenced by the yields demanded by these investors.

Typical investors of mortgage-backed securities in the secondary market include:

• Fannie Mae and Freddie Mac for conventional loans
• Ginnie Mae for FHA and VA loans
• Insurance companies, pension funds and private investors

• Shipping and delivery: Once an investor is secured, the loan is packaged with other loans and applicable documentation and becomes part of a mortgage-backed security (MBS). These mortgage-backed securities are then delivered to the investor. 

• Loan administration/servicing: A loan servicer takes care of the administrative duties once the mortgage-backed securities are delivered to the investor. This includes: customer support, collection of mortgage payments, management of escrow accounts and fund recovery efforts.

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

Low interest rates + multiple offers = bad time to buy

Everyone is howling about the low interest rates, even myself on occasion, as THE reason to buy property. "Buy now while rates are low!" It is the ticking clock method of persuasion.

However, if your market is particularly hot, and properties that fit your criteria are receiving multiple offers, then it might not be the best time to buy.

"What?" you may ask. "How can things not be on sale already since prices are so far off from 2007?"

Keep in mind that 2007 prices were hyper-inflated, nobody is predicting yearly future appreciation rates, and low interest rates don't justify a bidding war.

In many markets and in almost every sector, investors are trying to buy as much real estate (especially residential) as possible to either rent or flip. If you find yourself in a multiple offer situation on a property where other buyers are throwing cash around like a ticker tape parade, don't buy the property.

There are more foreclosures coming; the shadow inventory is huge. Don't let your emotions hijack your wallet in a bidding war for anything at any time. If you can't sell the property you intend to buy for $X within a week of purchase and get what you paid, you're probably going to pay too much.

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

Q4 2012 CRE Transactions: What we in the industry call "A Boatload"

As expected, and despite my recent post about national statistics, vacancy decreased and rents increased from coast to coast in 2012 Q4. 

Stockpiled demand and fiscal cliff fears proved that CRE is considered to be a sound investment. 

CBRE's report showed continued recovery at a moderate pace.

JLL's global report detailed better-than-expected metrics everywhere. Although mention of the PIIGS was curiously absent.

Regarding the U.S., JLL's report said, "The strong quarter was attributed, in part, to a year-end rush of United States investors seeking to allocate funds to avoid capital gains taxes from the government’s “fiscal cliff” crisis. U.S. volume rose 51 percent quarter on quarter."

Read the JLL report at Exceptional 4Q Pushes Global Commercial Real Estate Investment Volumes To $436B In 2012

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

Taking the mystery out of the mortgage process

The more CRE work I do, the more phone calls I get about residential real estate. Maybe these inquirers are getting burned by residential agents?? I don't know. 

The answers to a recent question about residential mortgages have been provided by Steve Nimmer (912-604-3834 NMLS #: 186680) with Coldwell Banker Mortgage. I also refer a lot of business to Kirsten Ray with IKON Financial (912-313-4128)

Phase 1 – Origination:

This begins the mortgage process and is actually several steps. The loan officer will help the customer learn what their mortgage financing options are through a pre-qualification process, and assist with filling out a loan application and gathering the necessary documents.

Customers should know: They'll need to provide income, asset and debt information, and their Social Security number to allow the lender to pull their credit report.

Phase 2 – Processing:
The loan processor will then collect, verify and review all required documentation provided by the buyer, order appraisals, order a title search and send all this information in a complete package to underwriting.

Customers should know: Processors will be checking for errors, discrepancies and possible missing information, so customers need to understand how critical it is to provide accurate, complete information in a timely manner.

Phase 3 – Underwriting:
The underwriter analyzes the documentation for accuracy and evaluates the customer's ability to repay the loan based on their credit and employment histories. An appraisal and title review is completed to ensure the loan program guidelines are met, the title is clear, and to determine risk acceptability.

Customers should know: This is "decision time" as the underwriter weighs the risk of lending money and approves or denies the loan – so customers may be asked for additional financial information even at this stage.

Phase 4 – Closing (or Escrow):
The loan processor coordinates all aspects of the closing with the buyer and the closing agent and/or attorney. The closing agent conducts the closing, ensures that all necessary documents are signed, assures closing fees and escrow payments are made, and confirms that all documents are sent out to be recorded according to state and local requirements.

Customers should know: Before closing they should receive information explaining the closing costs, including a standardized Good Faith Estimate (GFE) of how much cash they will need at closing.


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

Gulfstream leases 70,000SF office building

M2 Communications
 
ENP Newswire - 09 January 2013

SAVANNAH, Ga., - Gulfstream Aerospace has entered a 12-year lease with North Point Real Estate for a 70,000-square-foot office building in the Crossroads Business Park.

The building will house Gulfstream's Information Technology Center of Excellence, supporting the company's worldwide business operations. It will house more than 400 professionals, 100 of whom will be new employees hired over the next several years.

Gulfstream has continued to grow its Savannah facilities since the November 2010 announcement of a seven-year, $500-million Savannah expansion. As part of that expansion, Gulfstream committed to hire an additional 1,000 employees over a seven-year period.

'Within the first two years of that seven-year period, Gulfstream has hired more than 1,695 new full-time employees in Savannah alone, nearly 700 more than what we originally estimated,' said Larry Flynn, president, Gulfstream. 'We've also invested more than $175 million toward our $500 million commitment. 

This brings our total employment in Georgia to 8,580 and demonstrates that Gulfstream is a powerful economic engine for both local and state economies.'

Financial details of the North Point transaction were not disclosed. The Savannah Economic Development Authority (SEDA) played a critical role in securing this site, including site selection, acquisition of additional land and lease support consistent with previous agreements between SEDA and Gulfstream.

[Editorial queries for this story should be sent to newswire@enpublishing.co.uk]

Read the full article at Gulfstream Signs Lease for New Office Building



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

Highway 80 Bridge Study

It is amazing how many people living west of Skidaway Road don't know about this study. Get ready for easier access to Tybee! 
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Has Commercial Real Estate Bottomed?

Has CRE hit the bottom? Is it starting to get better? These are the questions Jeff Reeves tries to answer in his latest article.

The problem with this question is that it leaves off a key component- locality.

I think that broad national stats are reassuring, but essentially worthless. Yes, Reeves is writing for a national audience and I don't fault him that. But CRE, like all real estate, is an inherently local business.

Miami and Washington, D.C. have had a great year. Charleston I am told had a so-so year. The Savannah market was on fire- blazing- all 2012. And as soon as the first dredging shovel hits the bottom of the Savannah River, West Chatham is going to explode with development.

A frequent question similar to the article's title was "When will the other economic shoe drop?" Well, again, where are you expecting a shoe to fall? There was no one humongous shoe, but a million little ones. Each market was affected differently.

Reeves' article uses office as a measure of CRE health- and it is an excellent choice. When companies hire, they need a place to do work, so office vacancy rates are a direct correlation to the health of U.S. employment.

National office vacancy rates could not sink past the 17% mark all year. So things aren't getting worse, they might get better or they could stay the same for a while. Half way through 2012, Savannah's office vacancy rate got just below 20%. Not great having 1 out of 5 offices vacant. But downtown Savannah's vacancy is around 9%.

But in an incredibly risky $30 mil gamble, the Cay Building was built downtown and pre-leased 96% at $35/SF. That's 96% of 71,000SF. Wow.

Would I buy an office building for an investment? Not unless I had a lease agreement in place with a tenant who would lease said building. Otherwise if I wanted to buy office space low and have potential to sell high I'd invest in an office REIT.

Invest smart, not spec. Think local, not general.

Update on 1/16/13. Genesis Capital also weighs in on office markets as a sign of market health.

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