Another Foreclosure Alternative

Homeonwers on the verge of foreclosure will often seek a short sales as a graceful exit from otherwise calamitous financial situation. Their homes are sold for less than the mortgage amount, and the remaining loan balance is usually forgiven by the lender.
http://www.nytimes.com/2010/02/28/realestate/28mort.html

NYC Real Notes February 2010

The State Of The Market

Advertising Review

Stagers Corner

Mortgage Matters

What's Missing

New ‘Good Faith’ Takes Hold

By BOB TEDESCHI, New York Times
Published February 9, 2010

FEW mortgage borrowers have had the fortitude for a thorough reading of all their loan paperwork, often feeling intimidated or overwhelmed by the legalese and numerical complexities in the disclosures. But some mortgage brokers say that such passivity is declining.

A month after new loan disclosure procedures were put in place, some brokers say that borrowers are asking more questions, and are very likely becoming better informed as a result, if a bit frustrated at times. Others report a mere shift in the nature of borrower confusion.
"Consumers are much more involved in the process than in the past," said Richard Martin, a senior vice president with DE Capital Mortgage in New York, adding that not all of his clients may want to be as engaged. "But if you want to be protected, you've got to be involved."
Starting Jan. 1, lenders and brokers were required to provide borrowers with new Good Faith Estimate forms, which were simplified from years past, to show the final closing costs, and the maximum rate a borrower might pay on variable loans, among other things. Borrowers are asked to sign the document and return it to lenders and brokers before the underwriting process can begin.
"That's brought about an increase of 50 percent in the number of inquiries we're getting on these documents," Mr. Martin said.
Research shows that, in the past at least, the dialogue between lenders and borrowers was often sparse. According to a survey of loan officers fielded late last year and released last month by Wolters Kluwer Financial Services of Minneapolis, 36 percent of borrowers asked five questions or fewer during the loan process.
The borrowers may have been so well informed that they did not need to ask questions, but many mortgage brokers and industry executives suspect the opposite.
"Consumers don't understand this stuff," said Brian Benjamin, the president of Two River Mortgage and Investment in Red Bank, N.J. "People will say, 'Just do what you think is right,' but 10 percent of all the people in the industry" are not to be trusted, in his estimation.
Still, Mr. Benjamin says the new disclosure forms have not necessarily helped make borrowers more active participants in the loan process. In fact, he believes the new system has replaced confusion of one kind with confusion of another. Clients have been asking roughly the same number of questions as in the past, but now they ask more questions pertaining to closing costs not itemized in the new disclosure form, he said.
Mr. Benjamin suggested that borrowers also request to see the loan costs broken down on an old version of the Good Faith Estimate, for a more detailed accounting of the loan's costs.
The new Good Faith Estimate has also increased the amount of time it takes to close a loan, some industry executives say.
Mr. Martin of DE Capital says the new disclosure form has added five days to the time it takes to process a typical loan. That is because lenders must seek fee quotations from third parties like title companies and lawyers before sending the form to the borrower.
Guaranteed quotations are important for brokers and lenders, because closing costs must remain posted until the final estimate, which is given three days before the settlement date. If, during the processing of the loan, the costs change the effective rate of interest by one-eighth of a percentage point, a new set of disclosure documents must be issued, and the loan cannot close for at least another three days after that point.
After issuing the first Good Faith Estimate, lenders must wait for borrowers to sign and return the document before ordering an appraisal. That extra time pushes the loan approval process to at least 45 days, up from the typical 40, forcing some borrowers to pay extra fees to guarantee an interest rate, Mr. Martin said.
And these extra fees, he added, can easily add a quarter of a percentage point to the interest rate.

Stager's Corner

Debbie Oulvey, creator of Amazing Space NYC LLC, brings an Interior Design and a business background to her Real Estate Staging business. Debbie, a Real Estate Stager was featured in the November 2009 Real Notes issue.

Here are two examples of her work, showing before and after photos:

Living Room Before


Living Room After



Bedroom Before


Bedroom After







Debbie Oulvey – ASID, CSP, RESA
Amazing Space NYC LLC
http://www.amazingspacenyc.com/
917.428.3965

Mortgage Matters

Adam W. Turkewitz, CMPS, Private Mortgage Banker
Wells Fargo Home Mortgage
530 Fifth Avenue, 15th Floor
New York, NY 10036
(212) 805 1172 Office, (516) 456-3687 Mobile
adam.turkewitz@wellsfargo.com
Wells Fargo Home Page

Advertising Review

In this column we show some of the more interesting aspects of ads. What does and does not work and why? Consider this photo from a recent walk up listing in Greenwich Village:



What thoughts come to your mind when looking at this picture? Perhaps the single most important aspect that stands out here is how much sun is coming in through the windows. Third floor walk up apartments in the Village are not known for being bright so this is a rare quality that needs to be showcased. What about the photo below?



What thoughts come to mind here? Which positive features are being highlighted? This is a photo from a recently posted ad by an owner selling his own apartment in Manhattan. Buyers and agents look at pictures like this and see weakness than can be exploited in negotiations. They are correct to assume that this picture does nothing to educate or motivate the audience to visit or bid on this apartment. As a result the closing price will probably be much less than market value.

What's Missing?

Real Estate marketing has one chance to make a good first impression. Missing or wrong information leads buyers and their agents to feel either the person responsible for the ad is either incompetent, dishonest or both.

Savvy buyers understand that others are also seeing this mistake and as a result are less likely to bid market price. They see one weakness in the seller's position and eagerly look for others to assess how low a price the property is likely to close for. If buyers think the ad is a deliberate attempt to mislead the public they will distrust other things the seller is saying i.e. what the actual maintenance is, building features etc. In either case the credibility of the asking price is compromised.

Real Estate marketing can be broken down into basic elements:

1) Facts. These include the asking price, monthly charges, minimum financing requirements, address, building type (Coop, Condo or Condop).

2) Description. These sentences describe the location, building and apartment's most desirable features.

3) Photos. If a picture is worth a thousand words then this is the most important and best value way to spend advertising money. Pictures are not only another way to show the apartments best features but in some cases the only option. If the description says the living room get excellent light all day and the pictures don't show this, what will the buyer think? Experienced agents know that if the photos don't show something, there's probably a good reason.

4) Floor Plans. It's important to show reasonably accurate dimensions and scale. This is also a chance for sellers to show the public alternate layouts - perfectly ok as long as they are labeled as such.