Dean's Blog

You can help support West View Elementary School just by purchasing your favorite meal from McDonald’s on Goldenrod in Burlington on Wednesday, October 7, 2009 from 5pm to 7pm.

The teachers from West View will be operating the registers and PTA members will be helping throughout the restaurant. Kids will enjoy seeing their teachers working in a different environment. 20% of all sales purchased in that time frame will go to West View as their fundraiser.

So, when planning your family meal for Wednesday night, swing by McDonald’s and pick up something for the whole family. Remember, it’s one night only from 5pm to 7pm.

BusinessWeek Magazine reports that the U.S. Treasury is expected to issue rules soon aimed at streamlining the short sale process. The Treasury Dept. will offer subsidies – $1,000 to the mortgage servicer and $1,500 to home sellers – to encourage short sales. The fees are designed to incentivize the servicer for the extra work and get the seller to leave the house quickly and in good condition.

Of course, servicers and sellers aren’t the real reason short sales take so long and often fall apart. The problem lies with the lenders or mortgage investors who, justifiably, don’t want to take the kind of hit that is often necessary to sell a house in today’s market. This long process is causing some Realtors® to avoid short sales completely.

These new rules are scheduled to come out just as some banks are changing their stance. With profits improving and access to capital loosening, lenders can afford to play hardball. Today, banks take 9.5 weeks to respond to short-sale request, vs. 4.5 weeks a year ago, according to research firm Campbell Communications. “When the banks couldn’t make payroll, it was a lot easier to deal with them,” says Jake Naumer, an adviser in St. Louis who has negotiated with lenders on behalf of homeowners. “Now they want to extract every nickel.” Lenders argue they have every right to pursue the money they’re owed.

Government incentives or not, short sales are likely to be a big factor in the real estate business going forward. That’s because the pool of bank-owned homes is shrinking and many of the people selling today are in distress and trying to get out from under a mountain of mortgage debt.

Short sales were about 12% of all sales in August, versus 18% for bank-owned homes, according to the National Association of Realtors. But that ratio has changed since earlier this year. At their peak in March, bank-owned sales were 31% of the market vs. 18% for short sales. “We’ve gone through the subprime foreclosures,” says Thomas Popik, director of research at Campbell Communications. “The next wave is short sales by people who lost their jobs.”

Congress has agreed to renew funding for the Guaranteed Rural Housing program for another year!

In case you’re not familiar with this program, Rural Housing provides 100% financing and no monthly mortgage insurance for home purchases in areas that meets its eligibility requirements. In Northwest Washington, that includes just about everywhere north of Marysville, including Island County and San Juan County except:

• City of Mount Vernon
• City of Bellingham

To verify a particular address for eligibility, use the Rural Housing lookup tool.

Of course, this does nothing to address the backlog of files Rural Housing is currently reviewing. As of this posting, they are underwriting files received on August 28^th, which means they are about 39 calendar days out from reviewing a newly received file. You can watch their backlog grow yourself – fascinating! Notice in my previous blog post on Rural Housing in June of this year that their backlog had grown from 2 days to 7 days…

It’s important to understand why this backlog exists. Currently, the only programs which allow 100% purchase financing is Rural Housing and VA financing. This is in stark contrast to the multitudes of 100% financing options that existed just 2 years ago.

The other reason Rural Housing is increasingly popular is the income limit. Your family cannot earn more than the allowed threshold, but that income limit was raised significantly this last summer. In Skagit County, a family of two can now make up to $73,600, where it was in the mid $40,000s just a few months ago.

Both of these issues have created a tremendous demand for this product. As you can see by the chart, volume has increased 1,721% in the last 2 years. Anytime a business increases sales by that number, there are going to be delays in processing orders. Rural Housing has also announced that as we approach the expiration of the $8,000 first time home buyer’s tax credit on November 30, 2009, expect to see their processing times increase to between 45 and 60 days.

Remember that in contrast to other financing options, the Rural Housing underwriting approval is in addition to any underwriting the lender may performed, and it’s required for any loan approval, no matter where the loan originates. If your bank is saying it will take 30 days to process and close your loan, add another 38 days – for a total of 68 days – if you’re using a Rural Housing loan product.

Don’t want to wait that long? Start saving for a down payment – at least 3.5% with FHA.