Randy Johnson of Newport Beach, author of “How to Save Thousands of Dollars on Your Home Mortgage” and a mortgage broker since 1983, answers questions…
Mike asks:
Q. We have been watching a Fannie Mae (FNMA) foreclosure for 45 days. We feel like the current price is way off of the current market. My questions is, How long will it take before Fannie Mae reduces the price? (Note: Fannie Mae is now controlled by the federal government).
A. FNMA will have someone like Wells Fargo or BofA “servicing” the loan. It will be up to the servicer to put the home up for sale, presumably after giving their guidance to FNMA about likely value. There are so many that it is likely that they have authority to use their best judgment. They will, in turn, be getting market advice from a local real estate agent. Their job is to get the maximum price, not necesarily sell it quickly. After some period, maybe 60 or 90 days, they will reduce the price if there has been no action. Personally, I would not wait. I’d submit your offer close to the maximum price you’d be willing to pay and see what they do. The worst they can do is come back at some price higher than you want to pay. Then you need to re-evaluate your position, wait some more and see if they revise theirs, or move along to another property.
Jill in Portland asks…
Q. Once you’ve had a Veteran’s Administration (VA) loan, can you use a VA loan again, such as by refinancing?
A. I am not a VA expert — it not being “my market” — but I think that there is no barrier to doing a VA refinance on the same property. VA loans are attractive to those with eligibility because of the low down payment requirements. If you have equity in the home and unless there is some problem, however, I would first seek a conventional FNMA loan, as terms are likely to be better than the VA loan.
Elena in Fountain Valley asks:
Q. First, I have a loan modification that started 10/01/08 with Washington Mutual (WaMu). We are now paying interest and taxes only; it’s a 5-year balloon. My house is upside down. We owe $576,000 and our home is valued at $500,000. Our credit is really bad. Will there be a chance to refinance? Second, we had/have a home in Moreno Valley. This was an investment home. We had a renter, but he moved out. We tried for months to sell it as a short sale but couldn’t sell it. I don’t know what to do. Will you recommend a real estate attorney?
A. I’m glad you got the modification, which gives you some time to sort things out. You are not likely going to be able to refinance until you have some equity in the home. Your most likely lender will be Chase, now that they have bought WaMu. In five years, they will, presumably, be more willing to work with you than anyone else.
As to the Morena Valley property, I don’t know what to say. I believe that the market is weak and will likely continue to be so. So your chances of a sale anytime soon are remote. If you can, try to rent and keep that loan current.
As to an attorney, I would suggest calling the Orange County Bar Association. See information at www.ocbar.org.
That’s it. Read prior questions and answers by clicking on the headlines below…
- Can a church assume your mortgage?
- How long should we wait to refinance?
- Can you be too old to get a mortgage?
- Why aren’t foreclosures cheaper?
- When you can’t afford your mortgage
- How much to put down and other mortgage answers
If you want Johnson to answer a question, email it to Mathew Padilla at mapadilla at ocregister.com. Include your name or nickname and the city you live in — that information will be published with your question. Johnson will answer up to three questions each week, so keep checking back for a response. If many questions are submitted, it could take a while to get a response, or he may never get to it.
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“Personally, I would not wait. I’d submit your offer close to the maximum price you’d be willing to pay and see what they do. The worst they can do is come back at some price higher than you want to pay. ”
I have different advice. Find two or three other comparable houses, and submit offers WELL BELOW the maximum price you’d be willing to pay. Tell all of the agents that you are looking at other options, and that in today’s environment you can only save money by waiting. THEN see what they do.
The best thing they can do is accept your low-ball offer.
“Personally, I would not wait. I’d submit your offer close to the maximum price you’d be willing to pay and see what they do. The worst they can do is come back at some price higher than you want to pay. ”
–I thought this is what we did in the boom period, which got us into this mess (Maximum leveraging)
Advice should always say ” Get an good estimator for the home. Make the estimate for raw land+house . Now what ever you pay above that is your wish”. I feel like the author is saying banks/Govt. has unlimited time, so they can tinker with market. If he reads a little bit of economics, guess he wont have this opinion. If the house prices go down another 5%, stock market goes down around 10-20%. Hopefully folks got the picture.
After dealing with several banks and servicers who have listed REO’s through me in the last 2 years I have found that they have me drop the list price by about 10% every 30-60 days or as the comps warrant a price reduction. I feel they want all of the above, fast sale, best price and one of the most important things, they want a fully qualified buyer and a problem free transaction. Once they agree on a price they want it to close.
Lou Pacific
Real Estate and Mortgage Company Consultant
Serving OC and the Industry for 30 Years.
What Lou and others will never tell you is their bailout programs will hurt the housing market for years. The banks now have taxpayer money to sit on so they have NO incentive to sell at market prices, A LA Japan 1989. The trend is down, for years…down.
TO JILL - VERY IMPORTANT!!!
Inquire of your lender about “VA Loan Streamlining” - this is an incredible benefit of a VA loan. It allows you refinance your existing VA loan, but it requires less paperwork, processing time, and best of all, MUCH LOWER FEES. I don’t know all the details, but I believe that it can all be done with no out of pocket expenses to you.
As a veteran who is considering buying my first home with a VA loan, my loan officer told me about this as one of the many benefits of using a VA loan. Ask your current VA loan officer and see what they say.
How does Greenspan counter his book’s timing with his leaving the Federal Reserve, and our great nation’s Age of Turbulence?
Will congress get to ask him how he neglected to include in his 2007 released tome what Bank of Japan’s CEO said regarding his oberservation of our them looming subprime problems with that of Japan’s economic crisis in the 1990’s?
Throw in Saving The Sun: A Wall Street Gamble To Rescue Japan From Its Trillion Dollar Meltdown, by Gillian Tett, c. 2003, so, therefore,
did Greenspan learn nothing his 18.5 years in appointed office?
WaMu did not make a loan to Elena in Fountain Valley, they are lending to THEMSELVES. Elena simply pays taxes and interest on the loan in exchange for living in it; like a renter. They know as well as anyone that the 5 year ‘balloon’ will not float her family beyond that point, she will not be able to re-finance because she has no equity, and they will kindly ask her to move so they can sell their home after collecting 5 years worth of interest. Elena won’t have equity, but the bank WILL profit from this arrangement.
If Elena were smart, she would attempt to add another $1,000 to her mortgage payment each month. Perhaps she can rent out rooms. This way she will have paid down some of the principal at the end of 5 years, and she can sell without ruining her credit any further. If she cannot afford to pay down the principal, another 5 years won’t solve anything: you’re already upside down in two homes, it’s time to declare bankruptcy and find a nice apartment.
Jill in Portland asks…
Q. Once you’ve had a Veteran’s Administration (VA) loan, can you use a VA loan again, such as by refinancing?
A Veteran’s Administration loan is a great benefit to our nation’s veterans. As long as the borrower qualifies (i.e. good credit etc.) a veteran can use this benefit as many times as they like. However, you may not have more than one VA loan outstanding at a time. Example: You decide to sell your current home which was financed through a VA loan which still has a balance. The proceeds from the sale will go toward paying off the balance of the VA loan. Once this loan is cleared, you may purchase your next home under the same program, that is with a VA loan. The property must be your principal place of residence. If you have a current VA loan on your residence and you’d like to refinance, as Steve says above, ‘a VA STREAMLINE LOAN’ is very simple. A little paperwork, no out of pocket necessary. However, the fees and interest rate are a bit higher. It’s best to contact a lender which specializes in VA loans. They are very easy to find. You’ll also need a copy of your certificate of eligibility from the VA. The lender will also know how to get that too if you are unable to locate yours.