Freddie Mac: 81% 4th Qtr. ’07 Refi’s exceeded original loan by 5% or more.

Frank Nothaft, Vice President and Chief Economist of Freddie Mac:

“In the fourth quarter of 2007, 81% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% higher than the original mortgage balances, according to Freddie Mac’s quarterly refinance review. The revised share for the third quarter of 2007 was 86%.”

Looks like people are increasing their debt load (and/or shifting the toy debt to housing debt).

In other news…..

Project Lifeline (up for debate is “just who’s lifeline is it?”)

The new “plan” revealed today by the Treasury Secretary Henry Paulson and Housing Secretary Alphonso Jackson outlined policy in which several leading lenders are working to stem the delinquent and foreclosure crisis by providing a short term moratorium for borrowers currently in or very close to foreclosure.

Matt Carter from Inman News describes the program:

“Participating Project Lifeline lenders — Bank of America, Citigroup, Countrywide Financial Corp., Chase, Washington Mutual and Wells Fargo — are sending letters to seriously delinquent borrowers. Borrowers who receive the letters must call their mortgage servicer within 10 days, agree to seek financial counseling, and provide updated financial information that can be used to draw up a workout plan.

In cases where lenders think a workout may be a better alternative than foreclosure, pending foreclosures will be put on hold for up to 30 days while a review process is undertaken and a new payment plan is drawn up. Borrowers who are approved for a workout plan that lowers their monthly payments will have their loan terms formally modified if they can prove they’re able to meet the new terms by making payments for three consecutive months.”

The end result of this policy will be debated.

As a market enthusiast, one of the items I find of interest is the change of tone and posturing by statements from various CEO’s whether in lending or in housing/building industry. For example, today in the New York Times, Indy Mac CEO Michael Perry was brought to task after revealing significant losses for the company. In 2007, Mr. Perry remarked that IndyMac would largely escape the turmoil in the lending industry due to the health of it’s lending practices and focus on Alt-A products.

Speaking of lending…. it appears that the largest mortgage insurer, MGIC Investment Corp., will impose stricter guidelines for the loans it insures in weaker markets. Beginning on March 3rd, MGIC will require larger down payments and higher FICO scores. Softer markets named include all of California, Nevada, Florida and Arizona. For condominiums, borrowers will be required to put down at least 10%.

All that to say, today’s borrowers are going to have to have some FICO and down payment mojo.

Notable Quote of the day: Mrs. S-Crow says, “Lenders…should have been doing this all along. People with no money should not have been getting loans for homes.” I like that lady!

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About S-Crow

"S-Crow" (Tim Kane) is co-owner (with spouse Lynlee, LPO-Designated escrow Officer) of Legacy Escrow Service, Inc., an authentic independent escrow firm closing residential purchase/sale and refinance transactions.


  1. 1
    stephen says:

    Doesn’t most of that down payment mojo come from selling an existing home at a large gain or some other windfall?

    Sure saving 60-100k is doable but is it really being done that often for RE purchases by the average smo? That kinda savings is generally retirement savings I would think and windfalls go for RE.

    Now FICO is just paying your bills and everyone buying a house should have a solid score or not even be in the market, right?

  2. 2
    Scotsman says:

    The consumer has five fingers on each hand, nine of which are plugging leaks in the dyke.

    He’s spotted the tenth leak, and number eleven is just getting ready to breach.

    He’s gonna drown.

  3. 3
    B&W Nikes says:

    Paulsen is for taking every last diversion right up until January 19, 2009 to finish slowly peeling off these old bandages. We are going to feel every hair pull out one at a time.

  4. 4
    Runs With Scissors says:

    “Lenders…should have been doing this all along. People with no money should not have been getting loans for homes.”

    What? That is the Amercian dream….something for nothing and it’s not my responsibility ;-)

  5. 5
    Angie says:

    I like that lady! I should hope so, iffin’ she’s the Mrs. S-Crow!

    Sure saving 60-100k is doable but is it really being done that often for RE purchases by the average smo
    Sounds like it’s going to have to. If the median in Seattle is in the high 400s, and a first time buyer aims for a “starter home” in say the low 400s, 10% is 40-some K. That’s still a lot of cash, but not quite as daunting as 60 to 100. Back in the “olden days” people used to have to actually save money; it’d take a lot of change in the culture but I’ll bet we can get back to that standard.

    Confidential to S-Crow: looks like we are cleared for takeoff on this refinance, closing in early March–thanks again for the news about those rates. Also, a few weeks ago you suggested buying fixer-uppers as a way to stay afloat in a tanking market, remember? That still works, at least so far. We bought our house as a fixer almost 2 years ago and have made a lot of improvements, inside and out. A drive-by appraisal pegged it at 36% higher than our purchase price, based on comp sales nearby in Oct-Dec 07, and that *didn’t* include consideration of the new bathroom in the basement.

  6. 6
    S-Crow says:


    Re: Fixers….lot’s of work, but I know of no other way to hedge other than not buying. For some people, it is the only viable way to buy something in an area that they desire.

    Good to hear about the refi….I just hope there are no delays for you. Funding dept’s & underwriting dept’s are really slammed right now.

  7. 7
    softwarengineer says:



    Its in the 25 February issue, read it for a laugh [or a good cry, if you can’t handle pragmatic facts].

    Dr. Doom says we’ve been in a Recession since Dec, and its gonna be a long protracted one, with real esate taking 30% cuts this year.

    I know, Seattle’s immune. What, did I hear that Rain City supporter sneeze?

  8. 8
    david losh says:

    Fixer uppers?
    I have a blog at it has all the tricks of the trade about finding, buying, and fixing fixers. You don’t need Real Estate Professionals to do any of it. You don’t need a lawyer. You don’t need paper work, because a Purchase and Sale Agreement is only a meeting of the minds. You want to buy they want to sell. I’ve writtin a P&S on a single sheet of lined paper and it closed.
    Owning a Home is a right we all have. It’s easy, quick, and in most cases painless. Everybody wants you to own a home; the goverment, banks, lenders, investors, retailers, and the list goes on. It’s what keeps the economy moving.
    Me? I don’t care about you, any more than you care about me. Until you get into trouble I’m no use to you. When that dream doesn’t sell, or the project is half finished and you run out of money, then I’m your buddy.
    Of course the government encouraged home ownership and they should step in now. Banks should fix bad loans; it’s good business. You should buy more than you can afford because Real Estate pricing is a function of time.
    You people here never think beyond the Real Estate commission. If I can make you a million dollars by guiding you through the Real Estate process why do you care if I collect commissions along the way? There again why don’t I start a blog; then sell advertising, then write a book, give seminars, to sell DVDs, CDs for the car, and a note book so you can record your adventures in?
    Talking and doing are two different things. In order to win you have to take risk, and I think that’s how this blog got started, talking about Donald Trump, and his encouraging people to take risks in Real Estate.

  9. 9

    I’ve made money in fixers, but it’s not an easy process and it’s not without risk. I know people who have lost money in fixers, paying too much at the top of the market and then spending too much to fix them (hey, I wasn’t the agent on that one!).
    What Senor Losh says is true but certainly tactfulness is not his strong point…If an agent is especially adept at finding well priced fixers and has connections to get the work done reasonably, then he or she may be worth the commission.
    But to say ” You people here never think beyond the real estate commission?”
    Um, if I recall, there’s a diversity of opinion here.
    I know that successful real estate agents come in all stripes, and I imagine that Mr. Losh is quite successful , but with the finger pointing and the ” You people here!”, he may not have achieved that success through sweetness?

  10. 10
    Scotsman says:

    I used to have a subscription to Forbes. I let it expire when it became obvious that they were reporting from a different planet than the one I lived on.

  11. 11
    Chris says:

    I don’t have a problem with lenders and borrowers renegotiating their terms as long as thoes renegotiations are not gov’t subsidized and are mutually benefitial to both the borrower and the lender. Foreclosures are not cheap and if there is a better way to collect on the loans, go for it as long as it is not just to delay the inevitable.

  12. 12
    Scuba Steve says:

    I like fixers, but then again swinging a hammer is my idea of fun! It’s less for profit and more of a hobby.

  13. 13
    Angie says:

    Me too, Scuba Steve. I also really like the part where people stop their cars in the middle of the street when they see you out on the sidewalk and yell, “Wow, you really made that place look great!”

    S-Crow, I know, it ain’t over til its over. But we got some preliminary docs from the escrow co. yesterday, will return ’em today, the appraisal is done…I think we’ve jumped through all the flaming hoops. If you have any suggestions for appeasing the Escrow Gods to ensure smooth passage, let me know. I have already made an offering in the form of a Starbucks card…

  14. 14
    singliac says:

    Great stuff on your blog David! I especially liked this part:

    “People like success or being associated with success. As far as being an expert, my brother says there is a hundred mile rule. In your own town you may be a bum, but if you go a hundred miles and claim to be an expert you have a fifty fifty chance people will believe you.”

    So…did you just move here from Bellingham? Ellensburg? Westport? I don’t think your chances are quite fifty-fifty.

  15. 15
    Ben says:

    David Losh,

    I loved the most recent post on your blog where you talked about pictures. It boggles my mind that so many sellers / agents don’t seem to get that the pictures of the property in the MLS listing online is what gets somebody keen to call in the first place. Kudos for posting about it!

  16. 16
    Ken Mott says:

    $200k increase in prices in Seattle only attributed to Land use policy. HAHAHAHA what an idiot.

  17. 17
  18. 18
    Everett_Tom says:

    Lots a new stuff out there today, when do we get a new post?

    The National Association of Home Builders announced it is freezing contributions to federal Congressional candidates because Congress and the Bush administration have not done enough to stabilize the housing market. ( Reported by Aubrey Cohen article)

    Or how about the lack of young real estate agents? (ironiclly enought followed by a article about agents not properly using the internet..)

    or the the two links above from Ken.. ($200K of increase due to land use.. really!) or condos that “guarantee” not to fall ( or you get paid the difference).


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