Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.

Seattle Bubble - News & discussion about real estate & the housing bubble in the Seattle area.

Entries Tagged as 'S-Crow'

Seattle Bubble: Hindering the Market?

By S-Crow on November 10th, 2008 at 10:15 PM · 49 Comments

Seattle Bubble scaring away buyers, sellers and refinance consumers?

I’m really not convinced Marlow Harris of Coldwell Banker Bain feels that Seattle Bubble is all about fear mongering and scaring the public away from buying a home.  I know she mentioned it, but I don’t believe it.   Marlow and many other agents and loan officers have not had a chance yet to meet several of the commentator’s and readers as I have.  I think most agents and brokers would find that the readership at Seattle Bubble and those active in looking to buy, sell or refinance are very similar to, well, any other client they’ve ever had—pretty well rounded in housing issues.

You see, I have tangible evidence to the contrary that Seattle Bubble is fear mongering.  In fact, I have referred numerous Seattle Bubble readers to loan officers and agents.  Some have worked out, some have not.   When is the last time an agent or loan officer generated business from title and escrow referrals?   They do at Legacy Escrow Service.    As I recall, we even had one transaction where a referred Seattle Bubble reader obtained financing from Rain City Guide’s Rhonda Porter, who was gracious to turn around and have our office close the transaction.  This is what goes on behind the scenes. One client who bought a home remarked on the way out of my office that he really enjoyed the discussions at Seattle Bubble, but felt it was the right time for his family to purchase.  You can’t argue with that.  It is a very personal decision to buy.

Why does Seattle Bubble inherently rub the real estate community the wrong way?

  • Gives a counterpoint to claims by NAR and others in the real estate community both nationally and locally.
  • Provides open data, opinions and …open for criticism.
  • From time to time points out miscues, miscalls, and gaffs from local professionals  and economists.
  • An amateur citizen is providing data in a meaningful manner, more comprehensive than much of what I’ve ever read by agents and local brokerages.
  • Key:  Tim Ellis was sounding the alarm, among other minions, myself included that we were in a Bubble.   When 2/3rd of your purchase business was financed 100%, it was pretty obvious to me.  For example, many in the real estate business remarked that Seattle was not in a real estate bubble.   We keep hearing, for example, that all real estate is local.  We’ll, tell that to the several thousand local WaMu employees that will lose their jobs by year’s end.  Where were most of WaMu’s loan’s originated?  Outside of Washington State.
  • Blogging was not around during the last major correction.  Information is now instantly available for dissemination.

How has Seattle Bubble helped consumers?

  • Tim Ellis has built his community where consumers are residing.  And it’s growing as he evolves the blog.
  • This blog has, at minimum, given consumers pause prior to entering into a purchase.  For some, it may have saved them tens of thousands in possible financial losses if they are buying with a short ownership horizon or were to suddenly have to move for whatever reason.  In a declining market, you can’t put a price tag on that.
  • Likewise, the blog has warned sellers, to their benefit, that they should not sell if they don’t have to—this has to be a tremendous gift to the local real estate establishment in keeping inventory somewhat stable. We’ll see how inventory goes after the Holidays are over.
  • Earlier this year I warned about the advantage of reduced interest rates.  It helped several save money by refinancing.   A few even sent me thank you’s.  One even sent me a gift certificate (thanks Angie!)

There are probably countless examples from the readership where Seattle Bubble has been helpful.  We are all rascals at Seattle Bubble, myself included, but my commentary and others here and at Rain City Guide is never intended to hinder the real estate community, put off sellers who believe the website is hurting their chances at selling,  but to shine a light on what goes on in the business in a public way, so that professionals in the business can become better agents, better loan officers and better escrow owners.  Much of this is to help build a foundation on solid ground as opposed to the dry-rot we have now discovered was under our feet.

Those frustrated at this blog, the market or their listing agent, should direct their frustrations at those who perpetrated fraudulent transactions that impact communities across the country.  Perhaps they should look in the mirror themselves.  They should direct their frustration at those loan officers and lenders who engaged in putting people into toxic loans, many times because the yield spread premiums “were so good.”   Direct your frustration at the ratings agencies, Freddie and Fannie and their corrupt leadership in recent past years or the excessive greed that had a choke hold of CEO’s souls.

Nobody wanted this result, but collectively, we are all responsible for this mess.   A frank conversation I had with a very long standing managing Sno. Co. real estate Broker this past Friday was almost therapeutic for me and the Broker—the Broker spoke of the real estate market correction as a “crash.”  That Broker get’s it.

Nothing discourages me more than seeing the financially destructive (self inflicted or not) nature of this correction destroy families and marraiges of those whom we have worked with over the past 5 yrs.  It really sucks…and I’m constantly trying to think of ways to get title and escrow people back to work, even part-time.   Perhaps I’m naïve.

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WAMU offering 5% CD’s & other bits

By S-Crow on August 25th, 2008 at 8:59 PM · 75 Comments

Side Commentary and thoughts: Sorry I’ve been unable to post much over the summer here and at RCG.  I’ve been exceptionally busy with lots of projects and family stuff.   Plus, I’m freaking out that one of my kids is going to be a Freshman in high school starting in a week or so.   But, I’m intensely following the developments of the Agencies (Freddie and Fannie) and the changing mortgage guidelines (FHA, Conventional programs) and how it will impact the market and what it means for positioning our small business going forward.   Unfortunately, in the escrow business, our business is highly dependent upon how real estate agents and loan officers perform and have positioned their business to weather this storm.  If they do no business, we follow suit.   There are some exceptions to this, but it is mostly the way it is.

I could write lots of posts on the challenges escrow firms (true independents like our office that are not owned by mortgage brokers or real estate brokers or title companies) face when our incomes are derived from our customers (agents and lending industry) and not our paying clients: buyers, sellers and those refinancing.  It is one of the other great wonders of the world and in my view, costly to consumers.  I suppose you could say, “when in Rome, do as the Romans do.”

The IndyMac debacle was interesting because we received work from their Bellevue office.  It was interesting because about a week prior to their FDIC takeover (which many argue quite effectively due in large part to the lovely Senator from New York, Mr. Schumer’s letter to the OTS which subsequently initiated some $1.3 Billion in depositor withdrawals in an 11 day time period) we e-mailed staff that we worked with and they indicated no talk of problems at all.   Why is it that staff sometimes is the least likely to see the writing on the wall?  Anyway, the rest is history.   Losing the IndyMac work was not helpful.

Money is what drives this real estate market folks and the tougher it is to obtain financing the tougher time this market will have, both nationally and in our Puget Sound region.   Following all the developments in the local and national scene has been exhausting to keep up with, but I must comment that I’ve really enjoyed the conversations here and the active debates.

I have to confess that I have never been so fascinated by this economic-environment-lesson in business, banking, finance and how it all works.  I have learned so much, and yet still feel as if I’m not even scratching the surface of understanding it all.   I know I don’t understand it all.  If there is any discouragement or frustration I have about this correction, it is still centered and pointing clearly at the real estate industry’s moving parts (with emphasis on the lending community) for creating and fostering this mess.   There are still countless industry participants that still blame the media for this (I heard this again at a BBQ I attended a few days ago).   And, there are a lot of frustrated sellers who just can’t sell in this environment.  Got some friends in that situation.  It is not fun observing  the financial bleeding and you can do nothing, never mind the social impacts and families being broken up over finances.   The social-economic issue is for another blog.

WAMU

A few days ago Mrs. S-Crow received an e-mail from a loan officer/customer who is at WAMU.  I presume that we were one of many recipients of the e-mail that discussed WAMU’s offer of 5% CD’s which is higher than most banks and credit unions are offering.

Calculated Risk also mentioned the development this afternoon.    Lots of speculation about what this means for WAMU.

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The most valuable real estate is that of the mind: bloggers are having an impact.

By S-Crow on April 20th, 2008 at 1:10 AM · 23 Comments

Note: Once again, if you are looking for data and graphs, this post is not for you.

So much could be said about this issue. One of the most fascinating developments to see unfold and the one theme I keep coming back to is how powerful blogging has been in shaping the mind-set of the public when it comes to the real estate market, both nationally and locally. Not only is it powerful in the psyche of the buying or selling consumer, but also to those who actively work in real estate.

For example, there has been an enormous effort within the real estate community to combat negative housing sentiment. It is understandable. But, I also think that the effort serves two purposes. First, it is to combat a deteriorating market perception for the public. Second, it is to thwart the potential fallout from within the rank and file who work in the industry.

What’s so different about our market correction today than last time?

  • Access to information.
  • Bloggers vs. NAR. (real estate industry unable to counter bloggers using both video and blogs)
  • Bloggers vs. Newspapers.
  • Bloggers breaking down data.
  • Bloggers sharing news or breaking news.

Rather than have circa 1990 technology to obtain information regarding all things real estate related, today we have what I consider information overload. I can’t keep up with it myself. It’s overwhelming.

Zillow.com, for my money, was instrumental in removing the price curtain from the real estate machine. This forced an entire industry to change or adapt. While people will argue about current value accuracy or Zestimates, the compelling number of immeasurable value is the disclosure of what a property recently sold for. Armed with this information, consumers can make decisions along with their real estate agent as to how to best position offers or whether or not purchasing is best for them at a given time.

In a classic case of blogging for mind share, I see countless references by real estate agents locally and around the country arguing to “put the market into perspective, only 1 percent of all outstanding mortgages are in default.” Quite swiftly, a contrarian blogger responds, that’s “good news, because if it were more than one percent, I can’t imagine how bad things would be. Bear Stearns would be only one of scores of financial players to collapse, and who knows, maybe we will have more to come?”

To conclude:

If contrarion bloggers on Seattle Bubble find that the market has shifted in a positive direction, it could very well be that those very contrarions will lead the charge to a swift and meaningful recovery, one of which could rival anything we’ve seen to date.

And then, The Tim will have a conundrum on his hands. What then to do with the “bubble” part of the title.

S-Crow

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Stare Down: who blinked first? The loan officer or the borrower?

By S-Crow on April 2nd, 2008 at 11:41 AM · 26 Comments

You know the drill. You and your siblings pile in your parent’s 1982 Chevrolet station wagon for the long 10 hr. drive to the summer vacation hot spot. Lots of games took place and many were invented to pass the time: Hold your breath through the tunnel, Stratego (tough in a bumpy ride), card games among others and the grand-daddy….Stare Down!

Stare Down is when you and your brother or sister touch nose-to-nose, staring into each other’s eyes to see who blinks first and loses the game. In real estate, there are times when questions arise that create that same type of tension. I’ve written over at Rain City Guide about a variety of issues that deal with transactional problems. Some topics are based from experiences our office has had, other topics from discussing transactions with other colleagues in the escrow business. The hope is for those real estate professionals to look inward to challenge them on effective ways to create smooth transactions.

How to potentially save hundreds of dollars or more

This discussion is geared towards providing suggestions to the audience at Seattle Bubble which involves mostly consumers who are both homeowners and those who are looking to buy or refinance an existing mortgage.

When selling a home, buying a home or refinancing, you are intimately involved in the process that revolves around money. It is imperative that you check and double check your estimated fees with the Settlement Statement that is provided to you when you are signing your paperwork. The Settlement Statement is the form escrow provides that is a itemization of debits and credits in connection with your transaction.

During the frenzy, much was on the line. Borrowers had little time and leverage on their side when making decisions about a purchase or in questioning fees when at the signing table. Borrowers knew that they had to perform or lose out on the purchase of their home. Any deviation from that could have detrimental consequences both financially and personally. After all, who wants to start the buying process all over again? In that environment, next to zero. There are probably stories from readers here that could empathize with the pressure cooker of signing documents that are foreign and difficult to understand.

For example, last evening my wife signed a client in their comfort of their Windermere neighborhood home at 7:30 pm. Their loan package was just shy of 200 pages. One of the bigger packages we see. How in the world can someone in the scope of an hour or so, have an opportunity to digest and understand all that they are signing?

Recently, a client did reference their GFE (Good Faith Estimate) with the actual broker fees as itemized by the Settlement Statement. A large enough discrepancy was found that it triggered further scrutiny by the borrower. Escrow does not have borrower GFE’s. We are not in a role to advise a client whether to proceed or not or whether a loan is a good program depending upon the borrower’s financial circumstances.

Naturally, the discrepancy for this client created a situation in which the loan officer needed to explain why the overage. In the meantime, the borrower did what many do not know they have the capacity to do. They gave written instructions to escrow to not close the transaction until this issue was resolved.

Thus, the Stare Down game began in earnest. The Loan Officer blinked and the client saved a lot of money. A lot. It pays to shop and it pays to be patient and it pays to be informed.

S-Crow

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A remarkable period in time: a changed market.

By S-Crow on March 12th, 2008 at 7:36 PM · 38 Comments

I’ve got so many topics to talk about but very little time. I have to start somewhere.

Just months ago it was not uncommon (understatement) to see 100% financed nothing down purchase transactions with various ARM’s tied to LIBOR or other indices coupled with hefty pre-payment penalties, interest-only hybrids with no escrow impounds for taxes or some other mortgage product. I’m not talking about other communities in other States. I’m talking about right here in the land of Microsoft, Boeing, T-Mobile, Fred Hutch, UW, Costco, Navy, Zillow, Zymogenetics, Google, Amazon, Starbucks, Safeco, Zumiez, PACCAR, Weyerhauser and a myriad of other companies scattered up and down I-5, I-405 and beyond. To be sure, our escrow company was not ordained by the Dept. of Financial Institutions as the “only” place to close these transactions. We are small. The title companies closed thousands of these loans all across the country. Tens of thousands.

Today, March 12th, 2008, the loan packages are so different. For one, they are much smaller in size. They are not littered with ARM Riders, Balloon Riders, Pre-Payment Penalty Riders or 2nd’s/HELOC’s and many other forms that made files so thick. I’m not calling Costco as often to order more business checks that would be allocated for paying off consumer credit cards (Pottery Barn, Nordstrom, Visa, MC, Toyota, GM, Ford Credit, Home Depot, etc…). And the FICO scores are much more improved than before.

Today’s lending environment is what sustains stable markets. It is what keeps people in houses rather than turning them back into renters again. Stable markets are where the conversation with real estate professionals is centered around employment, communities, schools, jobs vs. centered around making a killing flipping houses or it is a no lose proposition as an “investment.” Stable markets are one in which hard working staff in mortgage lending, title, escrow, or related fields such as construction trades etc.. are not looking for new jobs or not walking up to their desk on a Monday morning looking at all their belongings in a box placed on their desk.

A Remarkable Period In Time

I think a lot more people are starting to “tune-in” to what is happening in the housing market and, moreso, the developing story (s) in the credit markets. Over the past five to six weeks, I’ve been all over the Puget Sound region assisting our clients. From Bellingham to Puyallup to those living in condo’s in downtown Seattle and communities in the Eastside. Housing and more specifically the health of the local housing market is on the mind, front and center. No longer is the client sitting across from me talking about the kitchen remodel or trip to visit relatives or making money in real estate. It is “what are you seeing in the market,” “is my interest rate good,” “do you think rates are going higher?” etc… No longer is the conversation couched around “making money on this property,” or “equity.”

I honestly don’t think we can call this market, either across the country or locally, a “changing” market anymore. It has materially “changed.”

From Bloomberg:

“Fannie Mae said it would generally require down payments of at least 20 percent on such adjustable-rate mortgages for home purchases by borrowers with credit scores above 700, out of a possible 850. Freddie Mac said that it would allow such ARMs with 10 percent down. Freddie Mac will require at least 25 percent down payments of borrowers with credit scores between 660 and 700, while Fannie Mae is requiring only 20 percent down.”

Further, Fannie Mae’s CEO Richard Syron, had a blunt assessment of the market and the agency’s role:

“It’s “perverse” that Freddie Mac and Fannie Mae, the two biggest providers of money for U.S. home loans, have been encouraged “to put people into homes that they end up losing,”…..

Courtesy of The Big Picture Blog, Fannie Mae’s Syron also remarks that the market price drops “are only 1/3 done” among more dire analysis.

From Calculated Risk:

JP Morgan Chase…sorry Nevada, 65%CLTV max. Wow.

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Home Show discount coupons

By S-Crow on February 4th, 2008 at 8:43 AM · 13 Comments

I know there are a lot of home improvement hounds out there like me, so…..

If anyone would like discounted ($2 off Adult admission) Seattle Home Show coupons for weekday admission, please e-mail me with your contact information and I’ll get them in the mail to you. Show is from Feb 16-24. Weekday show hours: Monday 10am -8:30pm and Tues.-Friday from 11am -8:30pm.

Bonus: you all can get a t- shirt from Ray at the show. (teasing Ray, just teasing.)

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