My New Blog

We may not hear much about it these days, with politics, earthquakes, credit crisis, economic downturns, etc., but ID theft is still happening.  I see it all the time.

When you decide you want to buy a house, or refinance the loan on your current house, it is almost too late to start looking at your credit for the first time in months or years.  You need to be monitoring your credit report ALL the time.

As a Loan Officer, I see new or updated credit reports all the time.  I see ID theft probably at least once a month, if not more often.  ID theft is one of the hardest things to prove and get removed from your credit report, especially if it has been there for longer than 60 days.

Because Creditors are writing off so much bad debt, and because ID theft has been an issue for a few years now, some credit card companies, in particular, will not honor your claims of ID theft if a debt has been outstanding against you for more than 60 days.  If you have not been monitoring your credit, you may not know about this problem during that time frame.  Here's an example:

I personally have been a victim of ID theft several times, but one time I didn't know about it for 6+ months.  I had moved from Maryland to Oregon in the 90's.  One credit card company sent me those blank checks along with a pre-approved credit application, with a credit limit of $15,000!  Since I had moved many years earlier, the mail was not forwarded, but someone completed my application, and cashed the checks. 

Of course, the bills were sent to my Maryland address - so I never saw them.  When the creditor turned my very delinquent account over to a collection agency, that agency did find me - and the phone calls started.  It took 6 months to get that debt removed from my credit report and my scores restored, and I know how to work with credit.  Now I have credit monitoring.  If that were to happen again, I would know immediately that someone had opened an account in my name.  I could go to my credit monitoring company and file a dispute, and it would be handled for me.  That peace of mind is well worth the $10 a month I pay for this monitoring and protection.

Do yourselves a favor and sign up for a credit monitoring service.  I highly recommend the service that Costco offers, if you are a Costco member.  If not, most banks now also offer a similar service.  Check with your bank to see how to sign up.

Please be very careful if you choose one of the internet based companies.  My understanding is that the monthly charges are much higher (after the first FREE report), and that most do not report scores that coincide with the scores that are reported to us in this industry.  Some of these companies do not check all 3 bureaus, and that is critical.  Also, if you sign up with one of the bureaus, such as Equifax, you will get only Equifax information.  Often, collection agencies, and companies such as wireless companies do NOT report to all 3 bureaus, so you still might not know all you need to know to protect yourself.

As always, if you have questions about this blog, or any other information on this website, please feel free to call at any time.  I'll be happy to help any way that I can.

Warm regards

Shelby

That's a hard one to call, and is very much dependent on who you listen to.

In the Portland metro area, we were one of the last areas to feel the huge escalation of housing prices, relative to other large metropolitan areas in the country.  Conversely, we were also one of the last areas to feel the drop in housing values when the "bubble burst."  However, with all the national headlines and media blitz about the housing bubble burst, it was only a matter of time before we felt it in Oregon as well.  So, following this logic, will we be one of the last areas to see a recovery? 

Logically, Portland is very well positioned for a recovery as early as, or even earlier than many other metro areas.  Our foreclosure rate is low, our employment is strong, and we still have a large influx of people into our beautiful state.  Unfortunately, the media does not broadcast our strengths, but rather focuses on the economy nationwide.  It is my opinion that the media escalates problems, rather than reporting good news. 

Nationally, and even worldwide, there are issues, other than housing, that are keeping the housing market in crisis.  The rapid escalation of oil is at the forefront of all issues.  This alone is reducing disposable income for everyone.  It has been reported on CNBC, Bloomberg, and almost all other national news, that the current oil crisis is due mostly to supply and demand.  However, just today, CNBC reported that Saudi Arabia is releasing an extra 3M barrels of oil into the world supply, but there are few takers.  Does that sound like a "supply and demand issue?" Of course, I don't have all the answers. 

As a mortgage loan officer, I do know that most buyers in this area are still waiting for housing prices to bottom.  Unfortunately, this mentality just perpetuates the problem.  If buyers don't start buying, how can we see the recovery we all want?  There are some "killer good deals" out there right now.  The inventory has never been higher.  Buyers can pick the "perfect house" without pressure of making quick decisions.  Rates are still historically low, albeit extremely volatile.  But, it has been 20-40 years since we've seen rates under 6% (except during the housing boom.)  Economists nationwide have already forecast that when the recovery gets into full swing, we will likely see rates rise.

Lots to think about as we move into a holiday weekend.

Should be a good weekend to go house shopping.

Enjoy your holiday.

Shelby 

Recently, Fannie and Freddie, and the FHA all introduced strong loan pricing adjustments based on what they call "risk based" pricing.

Everyone has known for some time that borrowers with better credit scores get better rates on almost everything.  But, with the recent credit crisis, most lenders have taken this process to a whole new level - one that makes pricing a loan a much more involved process.  Basically, this is a system that rewards those with great credit, and really punishes those with OK or poor credit. 

Lenders look at many factors in pricing a loan, but the two factors that most affect rates are credit scores and Loan to Value ratio.  Here's an example:

Borrower A and B both want to buy a house for $250,000.  Both borrowers have $50,000 for a down payment.

Borrower A has a credit mid score of 774, Borrower B has a credit mid score of 685.

Borrower A will be rewarded for the credit score, and as of today's rates will be looking at a rate of 5.75%

Borrower B will be penalized for the credit score and will be looking at a rate of 6%! 

If the Loan to Value were increased to 90% (borrowers each have only 10% down payment), the rates for both borrowers would increase .125% (1/8%).  In addition, both borrowers would have to add PMI to their monthly payments to protect the lenders against borrower default in payments.

This risk based pricing goes even further than just scores and LTV though.  It also looks at whether this is a purchase or a refinance, and whether or not this property is owner occupied, a 2nd home, or an investment. 

>If the refinance is for rate and term only, there are no rate adjustments. 

>If the refinance is to pull cash out, there is a rate adjustment if the LTV goes above 60%. 

>If this is also an investment property, there is yet another adjustment UP to the rate. 

So, when I quote BEST RATES, I am looking at a borrower with great credit, low LTV and owner occupied purchase or rate and term refinance. 

There are even more factors that affect the rate you will pay, believe it or not.  This is becoming an increasingly complicated business. 

Not all lenders have the same pricing adjustments for all the same factors.  So, shopping a loan for you takes time, but it is something that I enjoy doing in my effort to find the best loan for your unique needs.

Please call at any time if you have questions, or if I can help in any way.

Warm regards,

Shelby

According to a very recent article in the Wall Street Journal, "it is very likely that April 2008 will mark the bottom of the US Housing Market.  Yes, the market is bottoming now."

How can this be?  Read on

"Most people forget that the current housing bust is nearly 3 years old.  Home sales peaked in July 2005.  Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982."

So, what's going to stop the housing decline?  According to this article - and it makes sense...

"Very simply, the same thing that caused the bust, affordability!  The boom made housing unaffordable for many American families ... especially first time homeowners who were paying up to 37% of their gross income for house payments."  That was just too much.  Prices got so high that people couldn't afford to live in the houses, so the bubble burst.

As a result of declining house values, slightly increased incomes, and lower interest rates, housing is again becoming affordable.  As soon as the public becomes more aware of this, people will start buying again, inventories will decrease, and this housing crisis wil officially be declared OVER!

So, the next question is, How can house prices stop declining?  The very simplistic answer is that "they always do."  Property has proved to be the best investment, over time, that anyone can make.  Most of the very wealthy have become wealthy through investing in real estate.  So, prices will rise again, much more slowly that during the boom, but they will rise. 

Sounds good to me. 

Enjoy your day/