“We also have an ever-growing supply of short sale inventory” Love, Wells Fargo Home Mortgage Co-President

When we were blogging up a storm we used to always get nice letters to the Editor, but now we just get spam. Something we’ve referred to as RealSpam, you know, the kind that you get from Realtors and those in this industry that you really just want to delete, but the next thing you know you find yourself not only READING it, but posting it to your frickin’ blog!

Well, we thought we’d share the most recent letter from our dear friend at Wells Fargo Home Mortgage, Cara Heiden, Co-President:

Our favorite, or least favorite quote (depending on how you look at it), “We also have an ever-growing supply of short sale inventory-and the sooner those houses can be sold, the better for all involved.

Amen sista! Amen! Thanks for the personalized note to us. We appreciate it.

Ask Us: Refinancing And Appraisals, When The Banks Aren’t Helpful Turn To The Blogs!

Where readers ask, and we (the community) try to answer:

I appreciate all the general information I get from this terrific blog. This is my first question about my own situation.
I’ve been negotiating with the major bank (WellsFargo) that holds my first ($498K) and second ($14K) for a refinance from a 5.5% ARM to 4.75% 30 FRM [Fixed Rate Mortgage]. We paid 10% down and our second -a 5 year ARM is on schedule to be paid off before it adjusts in 12 months.
Our appraisal came back at less than the $625K required to refinance without PMI. Our bank just said “If you want this to go through, you’ll have to bring $28,000 to close.”
Is anyone finding any flexibility for strong credit rated, clear payment history etc? Or is the only way to get a break to stop paying and plead poverty? That would seem self defeating and yet, I’m not finding my bank to be helpful at all.
Thank you for any comments by anyone knowledgeable about this.

Yours truly is not a mortgage expert, and will defer to those that are, as I always do.

So How Much Does A Buyer REALLY Need To Put Down

As our regular readers know, we get every type of question under the sun, most of which we post directly to the site and let the community answer. Sometimes answers aren’t so cut and dry and there are certainly differing opinions. One very common question these days is “How much money do I need to put down” to buy a house. The long and short of it is to plan on 20%, but there are exceptions and we asked a mortgage expert, and generally the rules go like this:

3.5% to 30% –depends on loan amount.

Jumbo loans (greater than $625,000) require 30% down

Loans up to $625,000 require 20% down and smaller than $417,000 are min 3.5% (FHA) down.

Basic guidelines indeed, but something to keep in mind when looking for your home. Remember, these are LOAN amounts, not purchase prices, and any day that $625k limit will be raised to the new $729,750 amount. You can also get FHA loans up to $729,750 and put as little down as 3.5% (we’re told); however, for most condo developments, you are required to put at least 10% down on FHA loans. It’s all really confusing, and if you have more questions, give us a shout and we’ll put you in touch with a mortgage expert. (thefrontsteps@gmail.com)

Ask Us: Can The Bank Take My HELOC?

Where readers ask and we (the community) try to answer:

Question for any mortgage experts out there. I have a large heloc line. If I don’t use the line, I am at risk that the bank will decide to take it away. If I use the line (even if I keep it in cash), can the bank call me on it (i.e., slash the line anyway and tell me to pay it back)?

For the readers out there that follow the comments, you’ll know this question came up yesterday, but as we know only about 10% of you actively participate in comments, we thought we’d put this to the front and fish for some more (not necessarily better) answers.

Mortgage experts? This one is for you….

One reply yesterday from our very own “the Banker”

Great question. Draw the money and draw it today. It certainly depends on your equity situation and the neighborhood/city that you live. But, it is far better to pay the interest for a few months as opposed to having the line freeze up. If the lending standards lighten, then perhaps you cost yourself some “mortgage interest,” perhaps a writeoff, unless you exceed the cap.
Until, there is truly resolve, banks will continue to constrict. But, look for my next post, perhaps this housing bill may make a little sense.

Any other experts, please answer in the comments below.

Ask Us: Your Mortgage Insurance Company Drop The Ball Too?

Where readers ask and we (the community, because Lord knows we don’t know everything) try to answer:

Hey there,

Wondering if anyone else there has gotten wind of a problem we’ve been running into:

My partner and I put in an offer on a 2 bed/1 bath condo in the Mission in mid-November. Offer price was $740K, and we put down $75K. A mortgage broker had confirmed that he would be able to get a loan with only ~10% down, as my partner and I both have steady jobs with good income (~$200K/year total), and our credit scores are both around 800. We went through the whole process and the loan came through fine, but the deal fell through at the last second because the mortgage insurance company claimed that they had had a significant change in policy a few days before and were “no longer insuring condos with loan amounts over $650K in California.”

We moved on to a lender at Bank of America, who assured us that “they have different relationships with the MI companies” than the brokers do. We gave him the whole story, but lo and behold–same exact thing happened. He acted all surprised and said that even the MI underwriter had just told him the day before that everything looked good, and then she found out about this new policy (which supposedly went into effect 11/30).

The MI company both lenders were trying to use was Radian, but they supposedly weren’t able to find a work around with any of the other MI companies, either. It just seems strange that none of the lenders we’ve worked with (we’re on our 3rd one now and fully anticipate running into the same problem, though he also is assuring us it won’t happen but can’t even tell us what MI company they use) seem to know about this at all. And it seems odd that the mortgage insurance underwriter didn’t find out about it until reviewing our application in mid-December after the change went into effect 11/30.

Has anyone else run into this? Is nobody in this city buying places that require MI anymore? Any thoughts or ideas on ways around it? Thankfully the sellers have been very patient and understanding–I can’t say that I would have been if I were in their situation, but we’ve done everything we can.


Thanks for the email and question. We’re sure there is someone out there (the Banker) that might be able to shed some light on this, or perhaps another buyer. Luckily, our recent transactions have been with cash buyers, or 20-30% down, and we have not experienced this. So….we’re calling on the community. Let’s not disappoint this reader, because all we can do on this end is thank him for hanging out on theFrontSteps, emailing in, and hope he comes back.

Rates Rising For TIC Loans

For those that aren’t quite aware, there is this great little invention called email that allows you to send questions, comments, topics directly to us. The email is thefrontsteps@gmail.com. Go ahead, give it a try. ;-)

From “Noe Guy“:

This is so way off topic, that I sincerely apologize in advance, but we had a thread last week regarding TICs and whether or not they were more risky. Fluj said that banks like Sterling were doing quite well with fractional loans, so I wanted to point out an article in [11/12/2008] WSJ:

Sterling Bank & Trust FSB recently raised its rate for TIC loans to 7.75% — a loan for a similarly priced condo would require only 6% to 6.25% interest — and now requires a down payment of at least 20% of the purchase price. Other banks are now requiring 30% down. In the past, lenders required buyers to put 10% down.

Residential TIC loans “are definitely more risky,” says Richard Yurich, a loan officer at Sterling Bank. “Once we make the loan it’s ours; nobody wants to buy them.” His bank raised rates and requires more money down to protect itself from a bad investment, he says.

There is another catch: There are no fixed-rate loans for TICs, meaning that buyers are forced to accept new terms after three to five years. This wasn’t a holdup when property values were increasing and mortgage rates were trending down, says Glenn Rodriguez, a mortgage broker. “That’s where we’ve lost a lot of the buyers over the last couple of months,” he says. “People are worried.

Just sayin’.

You are forgiven for “just sayin'”, because we can’t even find that thread you were talking about (truth be told, we didn’t look that hard), but thanks for sharing and thanks for reading!

If you care to send the link to the article, we’d be happy to pass it along.
[Update: Damn, that was fast…Residential-TIC Tack Hits Snags-WSJ.]

What a shame. . .

I recently inquired with Alex if I could post on theFrontSteps. I have written in the past, actually have a degree in writing, but more than that, I think this site is well thought, well done, and has gathered a nice following. My

name, TheBanker,

says it all. I hope to provide insight, a different twist, and perhaps a bit of truth and reason. Alex has warned me, so, my disclaimer, these are just my opinions, period. Now, on to it. . .enough with the intro.

Now the Shame of it all. . .

Rates are strong. Company earnings this week have forced money out of the stock market and into treasuries causing a drop in the 10 year yield, thus affecting mortgage rates. These days, there is no rhyme or reason in pricing loans, or what we call around here; RISK! So, rates are strong and a slim number of the population can afford to buy(down payments), refinance(income,etc), or eat dinner out. We have been completely stalled by the current state of the market and all the while interest rates are still at fantastic levels and we are running out of time for the Jumbo Conforming Loan changes. . .this is currently $729ish and will be reduced to $625ish.

One last blow. . .E loan is now gone and Downey Savings, one of the negative amortization kings, is also gone. Lastly, Gateway Bank wholesale has also left the building.

My point; rates are good, property is moving at so called “deals,” and we are running out of time!