[AK]

Sure, the banks are servicing many more loans than they actually hold in portfolio. But they’d still have a motivation to use their servicing rights to manipulate the value of their own holdings.

Think about it this way. You’re a bank, and you’re managing 1000 REO properties, of which 100 are “yours” and 900 are serviced on behalf of investors. If you drag your feet on marketing those 900 REOs and on pushing other defaulted loans through the foreclosure pipeline, you expose yourself to some tiny risk of being sued by MBS investors … but you also prop up the value of the 100 houses you do own.

The “cleanest” way to do this would be to keep your loss mitigation department chronically understaffed. This gives the appearance of earnest effort, as long as no one asks why you can’t just hire more people to handle the load.

In the last year I’ve noticed this pattern:

Fall 2008 – winter 2009: Banks dump the worst of the REOs on the market, presumably to save the best properties for the expected rebound. This backfires by driving down comps.

Spring 2009: Banks put some of the better properties on the market, sometimes even trashing them out or even repainting. This stimulates demand and creates an apparent market bottom, but keeps inventory low. Throw in the effects of government cheese and market frenzy results.

Early summer 2009: Banks respond to the frenzy by putting a trickle of the best REOs on the market, often throwing in new paint and carpet. This stimulates demand even more. Inventory reaches new lows. Buyers go wild, to the point where appraisals become a problem.

Late summer 2009: Banks release a bunch of so-so inventory. New higher comps have been set, so perceived value and asking prices are higher. Demand still high enough to support the higher asking prices.

Here’s what I’m hoping for fall 2009: Banks continue to release decent-quality REOs. Supply and demand more in balance, therefore non-cash buyers are able to get decent homes at fair prices.

[AK]

[quote=propertysearchaddiction]Who is giving you this info? You do not need to go FHA if you have 10% down. That is a total waste of you money because you are going to pay PMI and an upfront PMI fee.
You can go conventional with 10% down as long as you are under the $417,000 which you are!!!
PMI will be about $200 extra month. Your closing costs will be about $4,000 for a conventional and about $12,000 if you go FHA.[/quote]

You’ll still need PMI at 10% down, and for any conventional loan with LTV > 80%. If your credit is merely “good” and not “immaculate” FHA might be the better deal. Plus there’s a big difference between 3.5% and 10% … and these are crazy times, liquidity is important 🙂

Single-premium mortgage insurance is another option … I think you’ll end up paying at least 3% up front on top of 10% down, but no monthly premiums after that … but I’ll leave the detailed analysis to the mortgage experts.

Sometimes I really wonder about sellers’ thought processes … but if I were a seller, I’d give a strong FHA offer the same consideration as a 10% down conventional offer. FHA will insure any eligible property that passes inspection and appraisal, while from what I’ve seen, mortgage insurers have complex and bizarre underwriting rules that put even lenders to shame.

[AK]

[quote=propertysearchaddiction]Who is giving you this info? You do not need to go FHA if you have 10% down. That is a total waste of you money because you are going to pay PMI and an upfront PMI fee.
You can go conventional with 10% down as long as you are under the $417,000 which you are!!!
PMI will be about $200 extra month. Your closing costs will be about $4,000 for a conventional and about $12,000 if you go FHA.[/quote]

You’ll still need PMI at 10% down, and for any conventional loan with LTV > 80%. If your credit is merely “good” and not “immaculate” FHA might be the better deal. Plus there’s a big difference between 3.5% and 10% … and these are crazy times, liquidity is important 🙂

Single-premium mortgage insurance is another option … I think you’ll end up paying at least 3% up front on top of 10% down, but no monthly premiums after that … but I’ll leave the detailed analysis to the mortgage experts.

Sometimes I really wonder about sellers’ thought processes … but if I were a seller, I’d give a strong FHA offer the same consideration as a 10% down conventional offer. FHA will insure any eligible property that passes inspection and appraisal, while from what I’ve seen, mortgage insurers have complex and bizarre underwriting rules that put even lenders to shame.

[AK]

[quote=propertysearchaddiction]Who is giving you this info? You do not need to go FHA if you have 10% down. That is a total waste of you money because you are going to pay PMI and an upfront PMI fee.
You can go conventional with 10% down as long as you are under the $417,000 which you are!!!
PMI will be about $200 extra month. Your closing costs will be about $4,000 for a conventional and about $12,000 if you go FHA.[/quote]

You’ll still need PMI at 10% down, and for any conventional loan with LTV > 80%. If your credit is merely “good” and not “immaculate” FHA might be the better deal. Plus there’s a big difference between 3.5% and 10% … and these are crazy times, liquidity is important 🙂

Single-premium mortgage insurance is another option … I think you’ll end up paying at least 3% up front on top of 10% down, but no monthly premiums after that … but I’ll leave the detailed analysis to the mortgage experts.

Sometimes I really wonder about sellers’ thought processes … but if I were a seller, I’d give a strong FHA offer the same consideration as a 10% down conventional offer. FHA will insure any eligible property that passes inspection and appraisal, while from what I’ve seen, mortgage insurers have complex and bizarre underwriting rules that put even lenders to shame.

[AK]

[quote=propertysearchaddiction]Who is giving you this info? You do not need to go FHA if you have 10% down. That is a total waste of you money because you are going to pay PMI and an upfront PMI fee.
You can go conventional with 10% down as long as you are under the $417,000 which you are!!!
PMI will be about $200 extra month. Your closing costs will be about $4,000 for a conventional and about $12,000 if you go FHA.[/quote]

You’ll still need PMI at 10% down, and for any conventional loan with LTV > 80%. If your credit is merely “good” and not “immaculate” FHA might be the better deal. Plus there’s a big difference between 3.5% and 10% … and these are crazy times, liquidity is important 🙂

Single-premium mortgage insurance is another option … I think you’ll end up paying at least 3% up front on top of 10% down, but no monthly premiums after that … but I’ll leave the detailed analysis to the mortgage experts.

Sometimes I really wonder about sellers’ thought processes … but if I were a seller, I’d give a strong FHA offer the same consideration as a 10% down conventional offer. FHA will insure any eligible property that passes inspection and appraisal, while from what I’ve seen, mortgage insurers have complex and bizarre underwriting rules that put even lenders to shame.

[AK]

[quote=propertysearchaddiction]Who is giving you this info? You do not need to go FHA if you have 10% down. That is a total waste of you money because you are going to pay PMI and an upfront PMI fee.
You can go conventional with 10% down as long as you are under the $417,000 which you are!!!
PMI will be about $200 extra month. Your closing costs will be about $4,000 for a conventional and about $12,000 if you go FHA.[/quote]

You’ll still need PMI at 10% down, and for any conventional loan with LTV > 80%. If your credit is merely “good” and not “immaculate” FHA might be the better deal. Plus there’s a big difference between 3.5% and 10% … and these are crazy times, liquidity is important 🙂

Single-premium mortgage insurance is another option … I think you’ll end up paying at least 3% up front on top of 10% down, but no monthly premiums after that … but I’ll leave the detailed analysis to the mortgage experts.

Sometimes I really wonder about sellers’ thought processes … but if I were a seller, I’d give a strong FHA offer the same consideration as a 10% down conventional offer. FHA will insure any eligible property that passes inspection and appraisal, while from what I’ve seen, mortgage insurers have complex and bizarre underwriting rules that put even lenders to shame.

[AK]

[quote=temeculaguy]I was typing at the same time as mortgage mentor, why do you list 1.75 when fha’s website says 1.5?[/quote]

I think it’s 1.75% for purchase loans but as low as 1.5% for some refis.

The link above is to FHA.com which is not an official site. (But it’s just about impossible to find useful information on the actual official government site, hud.gov.)

[AK]

[quote=temeculaguy]I was typing at the same time as mortgage mentor, why do you list 1.75 when fha’s website says 1.5?[/quote]

I think it’s 1.75% for purchase loans but as low as 1.5% for some refis.

The link above is to FHA.com which is not an official site. (But it’s just about impossible to find useful information on the actual official government site, hud.gov.)

[AK]

[quote=temeculaguy]I was typing at the same time as mortgage mentor, why do you list 1.75 when fha’s website says 1.5?[/quote]

I think it’s 1.75% for purchase loans but as low as 1.5% for some refis.

The link above is to FHA.com which is not an official site. (But it’s just about impossible to find useful information on the actual official government site, hud.gov.)

[AK]

[quote=temeculaguy]I was typing at the same time as mortgage mentor, why do you list 1.75 when fha’s website says 1.5?[/quote]

I think it’s 1.75% for purchase loans but as low as 1.5% for some refis.

The link above is to FHA.com which is not an official site. (But it’s just about impossible to find useful information on the actual official government site, hud.gov.)

[AK]

[quote=temeculaguy]I was typing at the same time as mortgage mentor, why do you list 1.75 when fha’s website says 1.5?[/quote]

I think it’s 1.75% for purchase loans but as low as 1.5% for some refis.

The link above is to FHA.com which is not an official site. (But it’s just about impossible to find useful information on the actual official government site, hud.gov.)

[AK]

I’ve heard rumors of the coming “REO flood” for months now …

The first time around, a “well-connected source” was expecting inventory to be released around … APRIL 1.

🙂

[AK]

I’ve heard rumors of the coming “REO flood” for months now …

The first time around, a “well-connected source” was expecting inventory to be released around … APRIL 1.

🙂

[AK]

I’ve heard rumors of the coming “REO flood” for months now …

The first time around, a “well-connected source” was expecting inventory to be released around … APRIL 1.

🙂

[AK]

I’ve heard rumors of the coming “REO flood” for months now …

The first time around, a “well-connected source” was expecting inventory to be released around … APRIL 1.

🙂

[Author]

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