Benny Moo

TLI equals TBD: Big Truth in Lending Changes that WILL Delay Closings

The following is courtesy Jim Harmelink, ERA Mortgage

Critical read -- MDIA/ Mortgage Disclosure Information Act

This message is to alert you to changes in the federal Truth in Lending Act regulations which will have an impact on our mortgage processes. It will require a fundamental change to how we finalize loan terms for the borrower prior to closing. Changes at the closing table could require the borrower to reschedule the closing date if a revised Truth In Lending (TIL) is needed. *This is a rule all lenders will need to follow, not just ERA Mortgage.*

We are actively working on implementation, scheduled to be complete at the end of July, 2009.

Summary

The rules for the Mortgage Disclosure Improvement Act were finalized Friday, May 8th and it is applicable to all mortgage lenders (federally chartered or state licensed). For applications taken as of July 30, 2009, new requirements about the delivery and the accuracy of disclosures will apply. One of the new requirements is that the borrower must be provided with an accurate APR disclosure at least three business days prior to closing. It must be in their hands three business days prior to closing and they are permitted to close on the 3rd business day after receiving it, or later.

An easy way to remember new rule is “3/7/3.” This means:

3 days after application – An initial Truth In Lending statement must be provided no later than 3 business days after receipt of the loan application. Our current process which generates an auto-compliance package complies with this requirement so no changes are needed.

7 business days after initial application – Waiting period - the borrower is not permitted to close until at least seven business days have passed since the TIL was placed in the mail or provided to the borrower.

3 business days prior to closing – Waiting period - The borrower must receive an accurate APR on their TIL at least 3 business days prior to closing. If it was provided before that period of time, because the loan terms were locked in earlier in the process, no new TIL is required if there is no change to the APR or the change is less than 1/8th of a percent (¼ percent for construction loans).

If the final loan terms cause the TIL / APR to be understated by more than 1/8th of a percent, a revised TIL with an accurate APR must be provided to the borrower, so that they receive it at least three business days prior to closing. It must be in their hands at that time, and they may close on the 3rd business day after that day.

Some issues to consider and address:
All Realtors need to be advised of these new timing requirements which will limit rush closings, and could delay closings.
For loans where the final loan terms change the APR by more than 1/8th, a revised TIL is required to be received by the borrower at least 3 business days prior to closing. This means closing table changes may result in having to reschedule the closing date.


Jim Harmelink
ERA Mortgage
office : (719)535-7405
toll free: (866)820-5526
mobile : (719)651-0291
fax : (719)535-7393
http://jimharmelink.eramortgage.com/

Free Friday: I'm headed to Trader Joe's and taking orders!

I'm a huge fan of grocery stores.

It's this dominant gene in my family that likes free samples, fresh fish on ice, a wide variety of cereal boxes, cheese, etc.

My kids love going to Whole Foods. There isn't some bait or treat or inducement that's the special prize (although the monster cookie is a $0.99 family favorite)... they just like to look around and point at stuff.

Our place of staple is Vitamin Cottage Natural Grocers. My buffalo fix is satisfied here and they always have good prices and friendly staff.

The opening of Sunflower Farmer's Market at Dublin and Academy has created a bit of a stir. First, the place is twice the size of VC. Second, they have fresh fish. Third, they are packed. There prices are good on a lot of things and their fresh produce is quite a bit better than VC (let alone the deli which is non-existent at VC). But their prices on other things, the stuff you always need at the store, are usually more than our old friends at Vitamin Cottage.

The one name not mentioned here of course is Trader Joe's. Californians love them Trader Joe's. They don't have any in Colorado. If this is this is a consideration in your reloction to Colorado, stay in California or Oregon or Washington DC. We don't have them.

But Santa Fe does.

I'm headed south Sunday for a week.

I'm taking orders. I'm already committed to a case of $2 Chuck ($2.99 in Santa Fe) for Rob. I'm trying to keep the mini van packed light.

Until Trader Joe's relents and either figures out their warehousing needs in Colorado (which doesn't figure since the one in Santa Fe is 500+ miles from the nearest outlet and the only one in the Rockies) or Colorado repeals their grocery store bluelaws (I've heard that's a problem, but apparently they do have Trader Joe's in other locales with similar Blue Laws), this little tradition of buying one-of-a-kind Trader Joe products perpetuates itself.

If you have needs, comment or email. I accept cash upon delivery.

2655 Silent Rain Drive UPDATE: Under Contract in 8 Days

Stage it.
Inspect it.
Price it right.
See every competing listing before putting on MLS.

Tactical Real Estate is Reactionary. Reacting sometimes can get you 2nd place.

Strategic Real Estate is Proactive. Proactive gets you out the door on time with the proceeds you want/need.

2655 Silent Rain Drive, Colorado Springs, CO 80919: $248,000

Darrell and Carrie Cox are officially my first Facebook Referral. Thank you to Mark Winstead for the introduction!

Darrell and Carrie have a corporate sale move out of town and correspondingly, were able to do some things with their home that the average seller could not do:

1. Have it professionally inspected
2. Have it appraised for market conditions by TWO appraisers
3. Have Susie and Mari stage it (via yours truly)
4. Price it for less than the neighbor down the street with the identical floorplan who went under contract at $250,000 in 11 days.

2655 Silent Rain Drive, C/S/C This 1993 built home is over 2300 total square feet. While the lots in Oak Valley Ranch, and especially Silent Rain are on the small side, what this lot lacks in size it more than makes up for in privacy. The neighboring houses make a ring around this property allowing the lot to extend into a deep semi-circle. Mature aspens tower up above the height of the house adding shade and privacy. The front yard landscaping in face is  impeccable.

In the backyard is a nice wood deck with built-in bench seating. The sellers have extended this with a brick-paver patio offering a great outdoor area for al fresco dining or a nice dinner party.

Inside, the condition is nearly perfect. In 2008, every window was replaced with vinyl replacement windows. In the process, the sellers removed a useless upper level deck that stole a lot of the backyard space and added two windows instead to the 11 x 16 secondary bedroom. With glass on either side of the bedroom, the room is filled with natural light, and Spring through Autumn, it enjoys the canopy of aspens outside.
Architecturally, the house benefits from some great benefits:

• Two-Story Vaulted Ceiling in the Living Room
• Living Room Fireplace
• Big Dining Room with Bay Window
• Spacious 14x14 Master Bedroom with walk-in closet easily big enough for a king bed.
• Oversized secondary bedrooms of 11x16 and 10x16 on the upper level and a 14x12 with walk-in in the basement.
• Spacious kitchen with eat-in area.
• Main Level Laundry
• Open Stairwell to the lower level providing an open, airy feeling from one level to the next
• Skylight in the upper level secondary bathroom.

Throughout the home, the cleanliness and care are evident. Consistency is a hallmark of a remarkable property, and here you will find:

• Up/Down Blinds in all the bedrooms
• Vinyl Windows even in the basement window wells
• Super Carpet throughout
• Neutral Paint Throughout
• Upgraded Lighting and Faucet Fixtures

With the market beginning to turn around, the Northwest MLS is increasingly popular. This home sits a mere two blocks from Oak Valley Ranch Park, has trails to both the north and southeast, a neighborhood Starbucks and one of the cities only outdoor pools less than a half mile away.

With almost $20,000 in improvements in the last two years, this is a ready-to-move-in home that you will not want to miss.

Free Friday a Day Early: How to Make Spicy Tuna Rolls

Morgan called last week to tell me the revelation that is Hawaiian Ceviche: Five ingredients, all available at King Soopers, basic knife-skills and refrigeration were all that separated him from a sublime evening pupu (appetizer). It had hit him like a revelation, so much of what he loved about the Big Island, the simple "howzit?" attitude to the question that sinks in on day 6... "what day is it? Do I care?".For $10 at the local grocery store, he was that much closer to island time.

I follow @DenverFoodGuy on Twitter and he posts tons of easy to follow YouTube videos on creating your own delicacies. Sushi rightly has a reputation as being exotic and the difficulty of the Japanese culinary aesthetic too much for the basic chef to attempt. Well, Denver Food Guy has a Morgan-esque appreciation for easy yummies...
How many ingredients? Six. White rice, some water, a little rice vinegar for the rice, sashimi-grade ahi tuna, Nori wraps and Sriracha Hot Sauce. Sure, you can go and spend $7 a roll at a sushi place for these. Or you can make them at home for half the price and live to tell about it!

Inspirational News from the Stat Pack

Author's Note: It will be interesting to see how many more of these educator memos I write to other ERA Shields agents. I have run the numbers now for over three years for ERA Shields and periodically send out "All-Company Memos" to the crew of agents. Some are fans of what I write, some are not, and about half gush about what I write but never actually read it. It's unfortunately obvious.

Today, I wrote such a memo, and as a believer in transparency, I think what is said on the inside, should be said to the outside as well. So another installment in the release of secret insider documents...

Clearly, the tide has turned.

Sales in May 2009 were down from May 2008 by less than 1%, 840 units in May ’08 to 832 units in May ’09.

Average sales price has recovered to just shy of $221,000. I am anticipating that June will be around $230,000.

It still is not clear if we hit peak inventory in March, as the marketplace added units in May, but take a look at the inventory levels at the start of the last four months and compare that to last year and 2007…

                                2009                       2008                       2007

February              5060                       5571                       5202

March                   5075                       5849                       5659

April                       5009                       6175                       6052

May                       5043                       6396                       6567      

In 2008, the market swelled 15% from February through May. In 2007, it grew 26%. This year it has remained essentially flat for 120 days (a 1.3% max variance is as flat as any four month period in the last 16 years.) Consider also that this coincides with the maximum ramp up of supply, and you can see how surprising this trend (or non-trend) actually is.

Other big indicators:

The jump in buying activity from March to May this year was 47%. Last year it was 16%.

The market has 6.06 months of inventory right now.

Last year it was 7.6 months.

We are in a new marketplace that can no longer be compared to 2007. In 2007, the median price was $30,000 more and the average selling price was $37,000 higher. The artificiality of that can be attributed to the last months of exotic, soon-to-foreclose financing. I contend that those numbers are padded by buyers who should not have been buying and we should have been in full-tilt correction at this point (like we were last year), but the marketplace was sustained by jumbo loans within a half percent of conforming rates, 80/20’s, interest-only ARMS… and these were the conforming products!

Here is a graphic example of that: in 2007, there were 292 sales over $300,000 in May of that year. In 2009: 159. There were 1032 sales in May, 2007. There were 832 sales in May, 2009. Wanna take a guess where the activity has remained the same? Wanna take a guess where the activity is almost non-existent? In 2007, over $300,000 was beginning to scale back, but it was still 28% of the market. Now it is only 19% of the market.

Lastly: there are 2348 single family and patio home properties for sale under $250,000. From March 1 to May 31, 1548 sold. That means there is 4.55 months of supply for almost half of the market. NAR uses 6 months of inventory as the dividing line between a buyer’s market and a seller’s market. Present Advantage: Sellers? I have a hard time broadcasting that, again, the market has changed and I wonder if 6 months really is an appropriate baseline. But the relationship to sales and supply is increasingly swinging around to a pre-correction level.

Author's note: Again, realize the following information is from an email to fellow real estate agents.

Don’t go and paint your faces and proclaim the correction over. Don’t buy a bunch of bus benches and try and evangelize the non-believers. I still think prices will FALL between September and February (have you seen the foreclosure numbers? These will hit starting mid-July right as sales activity starts to recede and the first-time buyers will be very active September and October trying to beat the November 30^th deadline… while one is supply and the other is demand, they will work together to drag prices down probably 3%). Additionally, if the market is picking up… this means your competition is also starting to do well. Your competitors are getting healthy. I have also, somewhat controversially, proclaimed that a big problem in our market was too many REALTORS. As a state, we have lost about 10% of our licensed population since the peak in August, 2007. But the national rate of attrition is 22%. As the market begins to stabilize/turn/return… I don’t think many more will be leaving the profession.

The way you grow your marketshare is through listing control. Without listings, you don’t have any market control. Game on.

Stat Pack should be cooked by Wednesday.