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Home Forum Extra

Seattle Times business reporter Elizabeth Rhodes posts the answers to your real estate questions as they pop up during the week. Join this ongoing discussion, which also features reader reaction to real-estate articles appearing throughout The Times.

Home Forum, Seattle Times, P.O. Box 1845, Seattle, WA 98111

* Sorry, no personal replies.

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October 15, 2008 8:00 AM

Predicting the mortgage crisis

Posted by Elizabeth Rhodes

Q: In April 2006 you quoted a local appraiser who predicted home prices here would rise substantially in 2006 and 2007. How could an experienced appraiser not have seen how the impending mortgage crisis would affect our housing prices?

Continue reading this post ...


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March 17, 2008 3:50 PM

A reader recounts Rex Agreement experience

Posted by Elizabeth Rhodes

The Rex Agreement, a new way for equity-rich homeowners to cash out some of it, was the subject of a story on Sunday, March 15. Offered by a California firm, the agreement was rolled out in Seattle recently. North Bend reader Hal Williams considered signing a Rex Agreement. He offers his observations.

Continue reading this post ...


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February 14, 2008 11:04 AM

Readers comment on story about regulation's impact on housing costs

Posted by Elizabeth Rhodes

The Feb. 14 story, "Rules add $200,000 to Seattle house price," that appeared on Page 1, has generated considerable reader comment.
Here's what some are saying. Additionally, University of Washington economics professor Theo Eicher, whose research formed the basis of the story, has a Web site with more information on the topic.
If you have questions about his study, you may find them there.

From a reader named Gayle:

Thank you for this lucid and well-researched column. The exaggerated costs of Seattle's building requirements came home to us when we wanted to replace our 1910 vacation shack in southern Seattle. Because we were on a slope, we were required to retain all the run-off water on the site. The cost to build concrete underground structures to retain the rain water came in at well over $100,000 - and that was before any building was done! We had a very modest 1,400-square-foot house planned, and the total costs were over $500,000, about twice what we wanted to spend.
Thanks again; both your reporting and your writing are a delight; what I think of as true journalism.

Clay, a Seattle reader, says:

Thank you for writing the article.
As a developer of in-city multi-family housing, I face the costs and barriers referenced in your article on a day-to-day basis. Consumers (both renters and buyers) often complain about the cost of housing, but, as your article illustrates, this cost is not due to the "greedy" developer, but rather the prolific regulation and onerous review cycles imposed by the state and local government.
Providing housing in this city is a noble and challenging endeavor. It is about time someone pointed out the government's culpability in the gap in affordability and overall historical housing price increases.

A reader named George comments:

The basic assumption, that high prices are necessarily bad, and low prices are good, comes from lobbyists with a special agenda, not from thoughtful people trying to create more beautiful, safe and comfortable communities.

Scott in Ballard says:

"Good intentions" huh Elizabeth? These warm and fuzzy feelings brought to me/you be whom? Just who runs this state? Just who really lives here these days? Didn't "good intentions" bring us busing, too? Didn't "good intentions" bring us "the great society" Elizabeth? These "good intentions" are going to be the ruintation of our country as we knew it. So now we'll get these same limo-liberals bitching for controls. The same idiots that a mere 20 years ago has thos "die yuppy scum" bumper stickers on THEIR VW vans etc!! Yup, now they have nannies, 3-4-5 vehicles per household, kiddies in private schools, and they still feel guilty about something. Guilty white folks, next on Oprah. I can see that. Born/raised here, I have witnessed this area go from Hooterville (with some skyscrapers) to Berkley North, with a few more skyscrapers, and a whole lot more lear-jet liberals, and their little dogs. Perhaps most can't see the forest, due to all the trees Elizabeth? Or tree huggers?

Burt, a builder, wrote:

Thanks for your article. I am building a 40-unit apartment in Seattle and I figure the design review and related approval delays have added $500,000-600,000. to the cost to build. It took me 18 months for the design review and 11 months for the permit. The cost estimate I received at the start of the process and the actual contract increased by $1 million. The building is economically inferior to what I proposed because they forced me to change the driveway access to a steep side street, which took away from the commercial space. Every idea anyone at the meeting proposed they included in the requirements.
I could go on and on but your time is valuable. It might be interesting to look at Greg Hill and what he has cost Seattle or what he has added to the cost of housing. He is a housing activist that sits on one of the design review committees. He sat on mine and told the committee that developers just site the building to suit them and it is no problem to move it to suit the committee. We will just move it back 5 feet, no problem. His vision of Seattle is no building over two stories.
Thanks again for shining a light on a very significant problem and its relation to the high cost of housing and apartments.

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December 30, 2007 4:33 PM

Readers comment on real-estate forecast

Posted by Elizabeth Rhodes

A number of readers have commented on Sunday's page one story headlined "Real Estate Anxiety: What's Next for 2008?"

Some readers made observations about Paul Kelly, who was featured in the story. Kelly is trying to sell his downtown Seattle condominium.

To set the record straight, Kelly is not a speculator. He bought the condo to live in, which he does.

He's selling because a recent job change includes overtime and a long commute. He's decided he'd rather live closer to work.

Kelly bought his home in April and paid $604,000. He's has priced it at $599,000 if the buyer works with him directly, or $624,000 if an agent is used.

In the latter case, he'd pay an $18,720 real-estate commission (figuring 3% to the buyer's agent) and net $605,280, or $1,280 more than he paid for the unit. He'd also have to pay excise tax and other transaction costs.

The owners before him, a young couple, bought the unit before the building was built and intended to live there. (The sale was recorded in April, when the building was completed.) In the meantime, they had 2 kids. They sold because a one-bedroom on the 17th floor no longer worked for them.

A reader named John comments:

I just read your article on the Seattle real estate market, and decided to do some research on Paul Kelly's condo that you used to illustrate the worsening Seattle market. Paul bought the condo in April of 2007 for 604k. The people he bought it from paid 545k in February of 2007.
He is asking for 10% more than it sold for in 10 months ago. Maybe that is not as good as we have become used to, but in the big picture that is a pretty good appreciation rate. Based on long term real estate history, no one should ever EXPECT to make a profit on real estate held for less than one year. I don't feel this type of anecdotal evidence validly describes the current market situation. This sounds more like speculation, (a property that is being sold for the 3rd time in less than a year). Maybe your article should be about speculators not being able to make 20% returns on homes in six months anymore.

Thanks to everyone who commented. Keep reading for more:

Continue reading this post ...


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October 17, 2007 10:30 AM

Lack of affordable housing frustrates reader

Posted by Elizabeth Rhodes

Denise, a reader, shares her concerns and frustrations about real-estate prices and the lack of affordable homes. While there's really nothing -- save pressure from buyers -- that will cause sellers to make their homes less costly, there are resources for middle- and lower-income buyers that can lead them to in-state programs geared for them. Some are housing programs. Some are loan programs.

The nonprofit Washington Homeownership Center is a central clearinghouse for this information. They have a website as well as a toll-free line (866-600-6466).

Denise writes:

It is time for the real-estate industry to admit housing prices have outpaced incomes in this area.

When will the lenders and real-estate agencies admit the current glut is due to pricing homes in excess of what the market will bear? Adjustable-rate loans have added to foreclosures. When will they understand their actions lead to stratification of income earners? The market glut will continue to rise if the current trend does not change.

The Seattle Times published an article stating the current sluggish market is due to falling prices; buyers are adopting the "wait and see" attitude. Again, this erroneous statement points to the fact the industry does not understand the buyer, nor are they willing to admit their errors. Buyers are not waiting to see what the market is going to do. We are waiting for affordable homes, just like we have for years.

Reading real-estate articles for the past nine months concerning the housing market glut of available homes, sluggish buying and difficulty obtaining a loan in this region is embarrassing (we have a great city) and depressing. In all of the articles written in this area and other states, I have read only one line (it was from your column) that refers to the housing market prices rising faster than the low and median income.

It is not only the first-time purchasers who are affected. Many families who have homes to sell cannot because the market prices have risen to the point purchasing their next home becomes impossible. First-time buyers with median incomes cannot obtain loans for the current market. Lending agencies consider a loan for $4000,000 a risk. Since an average one-car garage in an alley costs $400,000, it makes obtaining a loan impossible. Median-income buyers, those who earn roughly $40,000 to $50,000 are hardest hit by mortgage rates. Families surviving on low incomes have many grants and low-cost loan options available to purchase a home. Median income earners do not.

Those who earn more than I have a variety of homes they can purchase. I am a single parent with a master's degree, 20 years experience in my profession earning $54,000 per year. I have very good credit, yet I cannot afford a home, condo, townhouse or tree house more than $170,000. On paper, I earn $54,000 a year, however with my net monthly income, I cannot afford a mortgage in excess of $1,300 a month. I work in South Seattle, however; if I want to buy a home I will need to purchase in Ashford, Ocean Shores, Lakewood or Arlington. It makes the commute a bit long.

Housing prices will need to drop $30,000 before most of us can purchase a home. Since this is unlikely to happen, what are the real-estate and lending agencies plans to correct the market glut, making homes more affordable for more people? Or are these industries willing to take a "wait and see" attitude while their head rests safely in the sand?

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October 12, 2007 4:18 PM

Reader protests "gloom and doom" news

Posted by Elizabeth Rhodes

A local real-estate professional takes issue with the Oct. 6 story headlined: "Let the buyers rejoice; home sales, prices fall."


Well Elizabeth, you've done it again and I cannot refrain from a response. The media feed on any glimmer of bad news they can find and over the recent few weeks it has been refreshing to see some very positive articles regarding the Seattle housing market but you have undone all the good they may have provided.

The Seattle Times has focused on the doom and gloom of the national housing market and mortgage lending issues. We, in the Seattle area, have been insulated from most of this in our marketplace. Foreclosures are low, people are paying their mortgages and prices have continued to rise. This is due to the fact that there is a healthy job market in our area, limited land on which to build new homes and a healthy supply of buyers.

Buyers have been frightened away from the market with all the doom and gloom. Those who waited out the frenzy find they will pay more for the home than last year. There very few areas where this is not the case. Sales have slowed because buyers fear the banks are going out of business and prices of homes will fall dramatically and they will ultimately loose money. This is what you and others at the Times seem to promote with scary headlines.

We are in a natural cycle and home prices may dip slightly but there is too much going on in our area favorable to a healthy housing market for it to last long. How about selling the idea that owning a home is a good thing, it is shelter, a tax write off, a potential savings plan as a result of appreciation over time. Flipping homes is not a wise idea in this market. Most home owners do not plan to sell in the short run. If they do they should be advised to not buy today but the normal buyer should get in while they can because we are not building any more land so prices will not stay down for long!

Growing inventory is a result of an unnatural low number of buyers in the market due in part to fewer mortgages available to riskier borrowers and in part due to fear. Many buyers are out there, sitting on the fence because you and other Times writers do not encourage them to jump in while the going is good. Fourth Quarter is the best time to buy and now is the time to get a home, before the spring rush and escalating prices!

The home with the 100,000 dollar price reduction, it was overpriced for the features and benefits it provided. The Seller is not loosing money. The law of supply and demand caused many buyers to buy homes with less features just to get a home. Today, they can select from several that meet their wishes and will not settle for inferior properties that are overprice for what they offer.

Sellers thinking of moving up should consider selling now and reap the benefit of today's prices. They may net less but they should also be paying less. If they buy up, even minimal appreciation on the new home will be more than that same percentage of appreciation on their existing home so they come out ahead.

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October 11, 2007 9:30 AM

Reader questions median home price relevance

Posted by Elizabeth Rhodes

An Eastside reader sends this comment and question:

It seems to me the "Median Home Sales Price", used to indicate how much homes are appreciating, is skewed by new home prices, especially in neighborhoods like mine where older homes are being torn down and mega-mansions are being built. Wouldn't the median price of "re-sale" homes be a more accurate indicator of housing appreciation?

A:I absolutely get your point and I'd separate new and resale home statistics if I could. However the Northwest Multiple Listing Service, which furnishes housing sales statistics to the press, doesn't break them apart. That said, area-wide medians are only indications of where the market is moving. That's their strength. They're not a reliable indicator of the value or appreciation of any one property. For a ballpark indication of what a particular home is worth, try Zillow.com.


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October 9, 2007 9:48 AM

Reader wants home-sales numbers

Posted by Elizabeth Rhodes

A reader responded to the Saturday, Oct. 6 story about September home sales by asking:

Q: Do you know how I can get a hold of the Northwest Multiple Listing Service data?

A: We publish much of the monthly home-sales data the MLS gives to the press.
The first numbers are printed in chart form with the monthly overview story, the one you referenced in your question. (They also accompany the online version of the story.)

Then on successive Sundays, in the Real Estate section, we run maps and neighborhood breakouts for King and parts of Snohomish and Kitsap counties. The first Sunday we do houses, the second we do condominiums.

When we run these depends on when we get the numbers from the multiple listing service; we don't get them on the same day of the month, so we can't guarantee when the Sunday maps/numbers will run. But generally it's the second and third Sundays of the month.

Otherwise, the Northwest Multiple Listing Service makes some monthly numbers available on its public website. Here
you will find the most current news release and statistical charts.

You can find them on the website of the Seattle-King County Association of Realtors. Click on a link for the news release or the "Northwest REporter" logo.

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October 8, 2007 1:32 PM

Questioning home sales numbers

Posted by Elizabeth Rhodes

A reader named Don sends this question regarding the home-sales story that ran on Saturday, Oct. 6:

Q: I am a bit confused by the information in your article. The stats you show for the number of closed condo sales comparing September 2006 to September 2007 show 866 closed sales in 2006 and a total of 798 closed sales in 2007 or a total decrease of 68 closed transactions in Sept. 2007.

In the body of your article you said; "Meanwhile, sales are lagging. Offers accepted last month on 1,541 King County houses - a 32 percent drop from the number in Sept. 2006. Likewise, the county's condominium offerings were up (a startling 74.2 percent, including new condos)..."

Can you please clarify these facts for me?


A: With pleasure. The story was based on the two sets of sales numbers released by the Northwest Multiple Listing Service.

One set is "closed sales," i.e. sales transactions that have been completed. Those are the numbers you refer to that run in the charts that accompany the story.
We use those numbers for two reasons: we're absolutely sure the sales went through and those numbers are accompanied by median sold (not listing) prices.

But their drawback is this: They reflect deals that were first inked anywhere from two weeks to two months earlier and simply closed in the same month.

The other set of numbers provided by the MLS are called "pending sales." They're deals agreed upon by the buyer and seller in a given month, but not yet completed.

The drawback to them is that they can fall through. But the plus is that they're more current than closed numbers because they, much more than closed sales, reflect sales activity in a particular month. That's why I said "accepted offers" in the story; that's all they are. The MLS doesn't provide sales prices for pending sales because officially the homes are not yet sold.


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September 4, 2007 9:57 AM

Considering a hybrid hotel/condo purchase

Posted by Elizabeth Rhodes

Times staff writer Amy Martinez' Tuesday story about "owning a hotel room for pleasure/profit" has intrigued readers. Their comments:

From a Bellevue mortgage professional:

One key point about this type of real estate was not addressed - that is the problem of available financing. I have been in the local mortgage industry for 22 years and have been aware of the underwriting guidelines of most of the lenders in the industry.

Condo-hotels have traditionally been very difficult to finance if the property was outside the Manhattan or Vegas footprint. Any lender that might consider financing a condo-hotel outside the traditional locations will be charging a significantly higher interest
rate.

Now that the mortgage lending industry is in great turnoil and
revising their definition of acceptable risk - what kind of finanacing is now available for anyone that wants to purchase a unit in "1" Condo-Hotel?

From a Seattle appraiser:

Well done. Good balance. Another way to put the calculation is: This guy is putting at least 250k down so he can have the same hotel room when he is in town for a visit and he is taking a big financial risk. He could have a big financial drain when the revenue does not cover the mortgage, taxes, insurance and home owner dues. $600K is a lot for a fancy studio. Why not just buy a studio and be done with it?

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September 3, 2007 3:03 PM

Neighborhood noise draws reader reaction

Posted by Elizabeth Rhodes

A reader whose sleep is interrupted by neighborhood noise responded to an item in Home Forum Extra (below) from Aug. 30 that touched on that issue:

I know you meant well by stating that sounds of birds and water flowing to be restful, but for others these sounds are disruptive. I do not mind hearing birds, tame or wild, during the day, but when I am attmpting to get sleep, they are anything but restful. The same goes for waterfalling. If I am on a vacation near a stream of lake, I expect to hear those sounds and not the sounds of the city. However, here in the suburbs, they become blaring in my ears at night.

Crows rarely fly in my yard and land when I am awake and never do so when I am asleep. Caged birds chirp and cry out all hours of the day, that is why I keep my birds indoors, and especially at night. I think a water fountain on during the day, is OK, but let's turn it off at night.

We have had to deal with this in our neighborhood. The owner complained to my request, too. Her statement was that no other neighbor had mentioned a problem. Of course not! No other neighbor shared her bedroom window with her fountain, or her dogs yapping, or her 11 wind chimes. Please, no wind chimes! I was constantly trying to figure out where the running water sound was coming from until I realized a 2nd water fountain had been put in to the home behind us.


It is bad enough that over the past 25 years planes from SeaTac have managed to create new routes and to hear an engine roar at 3 a.m. is a startling wake-up call.

But there are other rude sounds that have denied me sleep over the years. The Seattle Times paper delivery truck backed up into my neighbors driveway around 2 a.m. and its safety back-up beeper woke me every single night until I finally begged the neighbors to have them stop. They tried and eventually they stopped the paper route.

Another neighbor lets her dog out every morning and it yaps, as it is right this minute, and she does not care. She is home and can hear it so there is no need for me to record the dog at its worse and let her hear the not so joyful sound she makes us all hear.

There once was a time that I could hear the sweet sound at children at play, or the twitter of little birds. Our world has become a very rude one, and the sounds now would be classified as an assualt.

Just turn off the noise when we sleep, and if you have day sleepers, or those extremely ill around you, then turn it off until a more suitable time. I need my windows open for fresh air, not for fresh noises. Even with my large yard, your sounds are not restful. I cannot help being a light sleeper who cannot remember when I had a full night's sleep. Neighbors can help the amount of noise they throw out in the air.

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August 29, 2007 2:34 PM

More reader thoughts about mortgage crisis

Posted by Elizabeth Rhodes

A Denver reader, David, sent this response to Sunday's article about jumbo mortgages:

I read your article on how jumbo loans are now being affected by the credit crunch. I live in Denver but log on to the Seattle Times website all the time to get news from home. I grew up in Kent.

I think the comments of Rich Bennion that were cited in your article were the most pertinent, especially his quote about 'excesses of the past several years.'

However, what I'd really like to see a financial writer tackle is the Alan Greenspan effect on today's mortgage crisis. When Rich Bennion referred to the Federal Reserve's cutting of interest rates, he was on to something.

The beginning of today's mortgage crisis rests in the 'excessive exuberance' cited by Greenspan in the stock market in the late '90s. At that time, long before 9/11, Greenspan rapidly ratcheted up the discount rate to slow the surge in the technology stock market, which he thought at the time was inappropriate. In actuality, the Federal Reserve should have nothing to do with the stock market, and let it correct itself. It's private business.

Nevertheless, Greenspan wanted to stop the 'excessive exuberance' in the tech sector, and he quickly raised interest rates to do so.

That move came back to bite him in the rear. He raised the discount rate so fast, it significantly slowed the credit markets, slowed the economy, and we were put into a brief recession. The events of 9/11 didn't help.

Knowing he made a mistake, Greenspan had only one choice--which is the only mechanism the Federal Reserve has at its disposal--he then began to lower the discount rate faster than he had raised it in the first place. If you remember, Greenspan lowered the rate to 1% at one point. He couldn't put it any lower than that, because if the rate was 0$, he would have no leverage or credibility left at all.

With mortgage rates linked to the discount rate, or overnight, interbank lending rate set by the Fed, mortgage rates fell to their lowest levels in US history. Greenspan was using the housing bandaid to fix the recession that he himself created when he was artificially trying to stop the 'excessive exuberance' in the stock market just a couple of years earlier.

It worked. Housing supported the US economy for about 4 solid years. In many areas, housing prices doubled, everybody and their brother were qualifying for loans, and Greenspan was seen as a hero.

Many people who are now defaulting on their mortgages did not get subprime loans. They took out regular ARMS, or the 2/28 loans, which adjust after the initial two years of the loan. They easily qualified at the lower interest rates hinged to Greenspan's discount rate, and now that mortgage rates are higher, they can't keep up.

Greenspan--with worries of inflation occurring--then started ratcheting interest rates back up again...before he retired. This was the beginning of the housing crunch. Greenspan knew very well that any increase in the discount rate would put the brakes on the housing industry that he used to support the economy over the previous few years, so he got the hell out.

When you look to blame someone for today's credit crunch, you need to look no further than the office of the then Chairman of the Federal Reserve--Alan Greenspan. He created the mortgage crisis and overall credit crisis that we're in today--even though he retired as a well-respected Fed Chairman.

We need to remember that he increased the discount rate faster than it had ever been increased over the 'excessive exuberance' in the stock market. Then, he lowered the rate just as fast as he had increased it, when he realized he f-ed things up.

Now, we have to wait several years for the credit markets to stabilize, and hopefully Bernanke will not over-react to the stock market or credit market by lowering the discount rate like a maniac.

We need to realize that, in retrospect, we did not have the brightest light bulb in the classroom as Chairman of the Federal Reserve when Alan Greenspan occupied that position. He violated basic principles of finance--you do not change the discount rate quickly. It takes the overall economy at least--at a minimum--one month to adjust to any interest rate change. It's better to let the economy adjust over several months--a minimum of two--because of the change in the money supply that occurs with any slight change in the discount rate.

Greenspan was raising and lowering interest rates before the last rate change even had time to take effect. He really didn't know what he was doing.

That's where the credit crunch came from. We're very lucky we don't also have presently a high inflation rate. Had Greenspan not realized his mistake and left rates low, we would have.

One good thing came of Greenspan's mismanagement of the discount rate: now, mortgage lenders are leery to index their rates to the discount rate. If you've noticed over the past two years, mortgage rates have not followed the discount rate as closely. Greenspan taught the credit markets that the discount rate is not stable--or at least wasn't stable when he was in charge.

That's a good thing, and in the future, should lead to a more realistic and stable real estate market.

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August 27, 2007 10:09 AM

Readers react to jumbo mortgage story

Posted by Elizabeth Rhodes

A Sunday Aug. 26 article explaining the growing scarcity of "jumbo" home loans (those over $417,000) and the potential effect of this on the Seattle housing market, brought a number of reader responses.

A reader named Jonathan comments:

Good. I'm glad jumbo loans are hard to come by. This is great! It means that home prices in the Seattle area will plummet, which they need to do. Talk about one of the country's most overpriced areas, the Pacific Northwest is it. It has supplanted California (and why, I'll never know because unlike California, the Pacific Northwest rarely sees sunshine). With Bellevue financed mostly with ARM products, I can't wait for the collapse to begin. I hate to sound bitter or spiteful, but I hate Seattle (after living there for seven years). In a place where you need two incomes to live to afford housing, it is ridiculous. Talk about a poor lifestyle, Seattle is it! May the drop begin!

Robin writes:

Sorry but the conventional market isn't as easy as you make it seem to be. We were just turned down for $350,000 30-year conventional after our broker got us locked in. I have heard other stories as well up here. Anchorage. I think we are in a much deeper crisis then anyone realizes yet.

Phil writes:

I have been a mortgage broker for the last 16 years and I enjoyed your article. I did want you to know that the jumbo market crisis has been going on for about 6 weeks, however things are starting to loosen up a bit. Some of the larger lenders like WAMU lowered their jumbo rates across the board on Friday by as much as a .5 percent in rate. Although jumbo rates still need to come down, things are looking better and there is light at the end of the tunnel. Most experts (if there really is such a thing) believe that we will see a return of the jumbo market in the next 60 days as Wall Street investors start to buy jumbo mortgages again.

Darrell, a loan officer, says:

There are more options available to borrowers then lenders that sell loans on the secondary market. Portfolio lenders offer jumbo 30-year fixed loans with rates in the 6's right now. I can't understand why you didn't mention that. You make it sound like jumbo borrowers have no options and that simply isn't the case. Our clients are not seeing the problems that your talking about.

Rob, in Arizona, writes:

Your article could not have been published at a more opportune time for us.
Thank you for your work on it. I have accepted a job transfer to Boeing in Everett from Boeing in Mesa, Ariz., of 17 years. I can not move until our house sells here
in Mesa -- a seemingly impossible task in today's market.
Our house has been on the market for one week, with no one looking at it.
Your article reminded me to go ahead and start the home loan pre-approval process.


From Scott comes:

Unfortunately, the people involved in this mentioned transaction in your article could have saved even more money by doing a first mortgage at $417,000 conforming loan, with a second mortgage for the balance of the transaction of about $120,000. The first mortgage would have been about 6.25-6.375 percent with current rates. The second mortgage, also fixed, would have been about 7.50 percent, which as a blended payment. The problem with articles like yours is it is laced with inaccurate information of the actual situation.
Yes, it is a conforming-interest-rate world at the moment. As it relates to
the housing market, everyone needs to take responsibility for why we are now
at the crossroads we are now at: The lenders, the brokers, the "FAST MONEY"
to be made on RAPID APPRECIATION, and consumers, yes consumers, ALL need to take responsibility, and this to, shall pass.

A mortgage planner named David says:

A few comments on your article, from a 10 year mortgage brokerage and lender veteran, if I may:

A) "Their California mortgage broker had unexpectedly lost its ability to provide jumbos - an event being repeated by lenders nationwide as the underlying funding for these large loans grows scarcer."

>>> Broker's don't lose ability, lenders do! Brokers just take the
deal to another lender.

B) "The next day, their real-estate agent, Ryan Rockwell of Coldwell Banker Bain, saved the deal by arranging an extension from the sellers and convincing a loan officer he knew that the couple was "more than qualified."

>>> Underwriters do not care what any realtor thinks or says.

C) "Unlike subprime borrowers defaulting on loans, the couple had a stellar credit score, a 20 percent down payment, strong employment history and had effortlessly purchased three prior homes."

>>> There are plenty of jumbo financing purchase loans for this scenario.

There are definitely challenges to buyers' financing now that weren't there three years ago, but there are much greater problems afoot in the cyclical collapse of buyer's interest levels regardless of financing.


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August 21, 2007 6:31 PM

Sidewalks

Posted by Bill Kossen


"The sidewalk: Actually, it is your problem" (July 8, 2007) and "Giving everyone a sidewalk is no walk in the park" (Aug 21, 2007)

Thanks for these articles on sidewalks. For an even larger view of the
value of sidewalks see "Sidewalks in the Kingdom: New Urbanism and the
Christian Faith" by Eric O. Jacobsen available at Amazon " or read the several reviews there.

Claudia Deibert

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August 21, 2007 6:31 PM

Sidewalks

Posted by Bill Kossen


"The sidewalk: Actually, it is your problem" (July 8, 2007) and "Giving everyone a sidewalk is no walk in the park" (Aug 21, 2007)

Thanks for these articles on sidewalks. For an even larger view of the
value of sidewalks see "Sidewalks in the Kingdom: New Urbanism and the
Christian Faith" by Eric O. Jacobsen available at Amazon " or read the several reviews there.

Claudia Deibert

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August 21, 2007 5:21 PM

More on Rent/Lease Option to Purchase

Posted by Elizabeth Rhodes

A local mortgage underwriter sent this comment regarding an August 19 Sunday story in the Real Estate section about the ins and outs of renting a home to buy (also called a lease-option).

The story said that a portion of the higher-than-market-rate rent is held back to form the renter's eventual down payment.

Dean writes:

One of the things that is misunderstood by the general public is how a lender is going to look at the monies paid for rent in this circumstance. Frequently not very much of it can be counted towards the down payment. Each lender can make their own rules, but in general only the difference between the actual rent and the fair market rent will be counted by a lender as monies paid toward the down payment. This is a fairly standard secondary market guideline.

When ordering the appraisal the lender will usually ask the Appraiser to provide a fair market rent for the subject property based on what and where it is. Then, as noted above, only the difference between the actual rent and the fair market rent will be considered as down payment funds already made by the borrower.

Also, as an aside, on the issue of the down payment funds:

The Lender will want documentation (a paper trail) proving both the payment of the Rent by the borrower and actual receipt of the funds by the Seller (Proof that real funds exchanged hands). If a borrower and seller know this in advance it makes everybody's job easier when the finalization of the sale is ready to take place.


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