March 2009

Skimming the bottom in home prices?

Heard any good economic news today? But wait, the Dow and Nasdaq have jumped up, and it is exciting to watch CNBC’s Erin Burnett discuss stocks on the floor of the exchange again. But then the truth hits again when you see that your retirement plan is still down 46% from a year and a half ago.

Head down, blinders on!

Okay, imagine that you are 27, healthy, and have a good job working for an internet security company that has government and private sector business. Actually, too much business since they hired three new people last month. And they know that your skills are in demand and recently gave you a little bonus.

Sound like you? Maybe not, but please know that there are plenty of them out there in the Washington D.C. suburbs.

This group is looking at the best “buyer’s market” in 20 years!

Rates are around 5% fixed for 30-years, there is plenty of inventory to see and to compare, and most sellers are willing to negotiate. Understand dear reader, the market is crossing an important threshold that may be missed. Are we skimming along a local bottom?

One of my listings recently had a full-priced offer within 48 hours, an open-house with 24 groups passing through, 18 agents with clients showing it in four days, and 4 agents asking me to call them if the offer fell out (no one wanted to start a bidding war). It was a real estate buyer stampede in March 2009 on a hot town-home.

Understand that watching The Nightly News can often give us tunnel vision. Yes, it takes a strategy to be successful in real estate, but real estate agents get to see a key ground-floor view of the economy and, in my humble opinion, the tide is turning as the cherry blossoms arrive.

Home search sites are all over, but gimme some help…

There are MLS home search sites all over, but the new Homesdatabase.com looks really sharp and easy to use. And my blog adds more too. Should I just add this link to the blog? These are my thoughts on IDX too, as I try to decide to pay for IDX or link to the free site that my clients already seem to like?

I understand that finding the house is the easy part… it’s putting together the contract offer where my client’s really benefit. Yeah, more in the blog…

So why not compare… this site to this site and give me some feedback!

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Refinancing a mortgage in Virginia

Saving money is always why people want to start the hassle of refinancing. And with today’s fixed rates still around 5%, I get calls and e-mails from past clients with questions about their options all the time. It is nice to be considered their go-to guy when it comes to real estate questions, and now you too shall know the big refinancing secret strategy… as long as you live in Virginia.

In Virginia, it is essential that you start with your exact current lender.

Sure, but Doug the Internet is full of better looking deals than my lender’s web site, you say. That may be true, but the Internet is sometimes filled with people offering too-good-to-be-true deals. Don’t get me started on this topic right now because I will cover that issue later.

Again, in Virginia, if you refinance with the same lender then there is a “recordation tax exemption” for the mortgage. In my case, that would be about a $3,000 savings right off the bat! For those of you with a legal background or curiosity, you may reference §58.1-803 (D) of the Code of Virginia.

Bet this sounds like a good idea for those of you looking over those Truth-in-Lending Estimates right now. Everyone loves to skip paying taxes on anything if it is allowed by law, that’s the American way. But watch out for those pitchmen who say they can pull off that exemption because if it isn’t exactly the same lender then you may be going to jail for six months and paying a $1,000 fine. That will screw up your security clearance!

The refinance needs to be with the exact same lender. It has to do with being the same legal entity and subsidiary mortgage companies do not qualify. A “Division” of a bank does qualify. What?

Here are some direct examples from a recent letter from the Clerk of the Fairfax Circuit Court (3/12/09): {document was removed from site}

This is the case of Bank of America and Countrywide. According to the 10K that Countrywide filed with the Securities and Exchange Commission, the merger agreement between Bank of America and Countrywide provides for Countrywide to merge with and into a wholly owned subsidiary of Bank of America. A subsidiary is a separate legal entity from the parent company. Therefore, an existing Countrywide loan being refinanced with Bank of America is NOT a refinance with the same lender.

Other examples of transactions that DO NOT qualify for the same lender exemption are:

1. JP Morgan Chase and Chase Home Finance, LLC. (Separate entity). However, we just received a letter from JP Morgan Chase stating that JP Morgan Chase is the actual note holder for deeds of trusts issued by JP Morgan Chase Bank dated on or after January 1, 2005, which are currently being serviced by Chase Home Finance LLC. In those instances the transaction would qualify as a same lender refinance.

2. Wells Fargo Home Mortgage and Prosperity Mortgage which is an affiliate of Wells Fargo Home Mortgage. (Separate entity).

3. Wells Fargo Bank, N.A. is a subsidiary of Wells Fargo & Company. (Separate entity).

4. The payoff statement shows that wired funds are to be sent to X bank for further credit to Y lender. If Y lender is different than the lender providing the refinance loan then it is not a refinance with the same lender. We have found this in Bank of America/Countrywide refinances. The Countrywide payoff statements instruct the settlement agent to wire the funds Bank of America and to further credit MRC. MRC is MMA Realty Capital. They are an investment firm. According to our research, MRC is the current lender, not Countrywide. Countrywide appears to be servicing the loan for MRC. This would not qualify for a refinance with the same lender exemption.

Contrast this with Wells Fargo Home Loan which is a DIVISION (not a separate entity) from Wells Fargo & Company and BB&T Mortgage which is a DIVISION of BB&T Bank. A division is not a separate entity. Transactions in these situations would qualify for the refinance with the same lender exemption.

Why does the Clerk care so much about this issue? Because the Clerk may be personally liable for the uncollected money!

So now you know a little inside secret. If you are starting to look into refinancing then contacting your current lender is a must and absolutely the first call that you should make… and do your homework to make sure it is the same legal entity.

The law firm McGuire Woods posted a legal update on Refinancing with the same Lender in Virginia which is also worth reading. (I have no professional relationship with the law firm).

I am looking for comments from readers who have tried to refinance and their experience… successful or unsuccessful. It may help the next reader!

My insider’s tip to refinancing your mortgage… in Virginia

Saving money is always why people want to start the hassle of refinancing. And with today’s fixed rates around 5%, I get calls and e-mails from past real estate clients with questions about their options all the time. It is nice to be considered their go-to guy when it comes to real estate questions, and now you too shall know the big refinancing secret strategy…  as long as you live in Virginia and are looking at your current mortgage statement.

In Virginia, it is essential that you start with your current lender.

Sure, but Doug, the Internet is full of better looking deals than my lender’s web site, you may be thinking to yourself. That may be true, but the Internet is sometimes filled with people offering too-good-to-be-true deals. Don’t get me started on this topic right now because I will cover that issue later.

Again, in Virginia, if you refinance with the exact same lender then there is a“recordation tax exemption” for the mortgage. In my case, that would be about a $3,000 savings right off the bat! For those of you with a legal background or curiosity, you may reference §58.1-803 (D) of the Code of Virginia.

Bet this sounds like a good idea for those of you looking over those Truth-in-Lending Estimates right now. Everyone loves to skip paying taxes on anything if it is allowed by law, that’s the American way. But watch out for those pitchmen who say they can pull off that exemption because if it isn’t exactly the same lender then you may be going to jail for six months and paying a $1,000 fine. That will screw up your security clearance!

The refinance needs to be with the exact same lender. It has to do with being the same legal entity and subsidiary mortgage companies do not qualify. A “Division” of a bank does qualify. What?

Here are some direct examples from a recent letter from the Clerk of the Fairfax Circuit Court (3/12/09): [document removed from site]

This is the case of Bank of America and Countrywide. According to the 10K that Countrywide filed with the Securities and Exchange Commission, the merger agreement between Bank of America and Countrywide provides for Countrywide to merge with and into a wholly owned subsidiary of Bank of America.A subsidiary is a separate legal entity from the parent company. Therefore, an existing Countrywide loan being refinanced with Bank of America is NOT a refinance with the same lender.

Other examples of transactions that DO NOT qualify for the same lender exemption are:

1. JP Morgan Chase and Chase Home Finance, LLC. (Separate entity). However, we just received a letter from JP Morgan Chase stating that JP Morgan Chase is the actual note holder for deeds of trusts issued by JP Morgan Chase Bank dated on or after January 1, 2005, which are currently being serviced by Chase Home Finance LLC. In those instances the transaction would qualify as a same lender refinance.

2. Wells Fargo Home Mortgage and Prosperity Mortgage which is an affiliate of Wells Fargo Home Mortgage. (Separate entity).

3. Wells Fargo Bank, N.A. is a subsidiary of Wells Fargo & Company. (Separate entity).

4. The payoff statement shows that wired funds are to be sent to X bank for further credit to Y lender. If Y lender is different than the lender providing the refinance loan then it is not a refinance with the same lender. We have found this in Bank of America/Countrywide refinances. The Countrywide payoff statements instruct the settlement agent to wire the funds Bank of America and to further credit MRC. MRC is MMA Realty Capital. They are an investment firm. According to our research, MRC is the current lender, not Countrywide. Countrywide appears to be servicing the loan for MRC. This would not qualify for a refinance with the same lender exemption.

Contrast this with Wells Fargo Home Loan which is a DIVISION (not a separate entity) from Wells Fargo & Company and BB&T Mortgage which is a DIVISION of BB&T Bank. A division is not a separate entity. Transactions in these situations would qualify for the refinance with the same lender exemption.

Why does the Clerk care so much about this issue? Because the Clerk may be personally liable for the uncollected money!

So now you know a little inside secret. If you are starting to look into refinancing then contacting your current lender is a must and absolutely the first call that you should make… and do your homework to make sure it is the same legal entity.

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