Lenders: Don’t Shrug Off Borrowers With Low Credit Scores

That was the message from FICO to the mortgage industry in this article from RealtorMag dated 05/13/2014…

Executives at FICO, the creator of a credit score widely used in the mortgage industry, say that the high credit score “cutoffs” that mortgage lenders imposed following the housing crisis are stricter than necessary, and executives urge lenders to consider lowering minimum score requirements.

low credit scoresFICO credit scores that were once acceptable risks in the early 2000s — the 640 to 680 range — for mortgage applicants are rarer these days. In more cases, borrowers with FICO scores of 700 are struggling to get approved. (FICO scores run from 300 to 850.)

But the risk of default on more recent borrowers is much lower than at the onset of the recession, says Joanne Gaskins, senior director of scores and analytics for FICO. The company’s analysis shows that more borrowers are paying on time.

For example, in a FICO-run analysis of a FICO score level of 700 in 2005, about 36 borrowers paid their loans on time for every one who went into serious default. In 2011, about 91 borrowers paid their loans on time for every one defaulting mortgage borrower, marking a big decrease in risk to the lender.

VantageScore Solutions, another credit score company, says its analyses have shown similar results in an improvement of borrowers’ payment behavior. Barrett Burns, president and chief executive of VantageScore, says that mortgage lenders could expand home purchase possibilities for a large pool of consumers by lowering their credit score requirements – even without loosening up on their other standards of down payments or debt ratios.

Every 10 point reduction in a credit score requirement on mortgages has the potential to increase the pool of potential borrowers 2.5 percent, according to a study conducted last year by the Urban Institute and Moody’s Analytics. Therefore, a 50-point reduction in score requirements could potentially increase home purchases by 12.5 percent or by more than 12.5 million households, according to the study.

Some banks recently have moved to cut credit score requirements. For example, Wells Fargo, the nation’s largest mortgage lender, reduced minimum acceptable scores for conventional loans from 660 to 620. It also lowered score requirements for FHA loans to 600.
source: realtor magazine, daily real estate news, the los angeles times

Donald Horne, Team Success Listing <<<
Associate Broker for Coldwell Banker Shooltz Realty
810-338-0628 or 248-969-8065


Incentives For Short Sales

Banks offer more cash incentives for short sales…Article in RealtorMag on how banks are offering incentives to homeowners.

More banks are offering home owners incentives to sell their houses in a short sale to prevent a costly foreclosure to the bank. In fact, some banks are offering struggling home owners as much as $35,000 to do a short sale, according to an article at CNNMoney.

Many home owners have been surprised at banks’ recent willingness to approve short sales.

“Initially, the home owners are skeptical,” says Elizabeth Weintraub, a real estate professional in Sacramento, Calif. “The bank may have already turned down their request for a modification. Then, one day, they call and say, ‘Let us give you some cash.'”

For banks, the incentives have proven to be a smarter move than letting a property fall into foreclosure.

“The first choice is a modification, but if that’s impossible then a short sale is a faster, more efficient solution,” Tom Kelly, a spokesman for Chase Mortgage, said.

With a foreclosure, home owners stop making their mortgage payments and usually property taxes as well. They also often put off maintenance issues, which can cause the home to lose value even more. Foreclosed homes sold, on average, for 22 percent less than homes not in foreclosure in December, according to National Association of REALTORS®’ data. For comparison, discounts for short sales were about 14 percent.

“I’ve seen a lot of foreclosures for sale where it would cost a lot more than $20,000 to get them into condition to sell again,” says John Hayton, a short sale specialist in Orlando, Fla.

Source: “Banks Pay Delinquent Borrowers $35,000 to Sell Their Homes,” CNNMoney (Feb. 10, 2012)
references: realtormag, daily real estate news, NAR




Peace of Mind While You’re Away

Easy to install security cameras let you keep an eye on your home from afar, ensuring safety and security for you and your family.

Thanks to internet based web cameras, adding home security cameras is an affordable weekend project and you may get a discount on home owners insurance, depending on the system you’ve installed.

Network Cameras:

Internet based network cameras are a quick solution in setting up home surveillance. They connect to your broadband connection and don’t require difficult wiring or mounting.

Riding The Z-Wave:

If you have a Z-Wave based home automation system installed, you can add wireless cameras to create a security network inside and outside of your house.

DIY Camera:

You can turn a basic computer webcam into a surveillance system using free down-loadable software from Yamcam and EyeSpyFx. You’re required to have your computer remain on, but once set up you can log in remotely from another computer, say, at work and view streaming video of your home. Just position the camera at what you want to monitor.

An affordable webcam like Microsoft’s LifeCam VX-2000 costs about $30 or less.
references: houselogic, les shu, NAR

Stay Warm In Metamora Mi And Keep In Budget This Winter

Energy efficient wood burning fireplaces

If you’re adding a wood burning fireplace to your Metamora home, avoid the standard design, which sends too much of your home’s heated air up the chimney. Consider these energy efficient wood burning fireplaces:

Rumford fireplaces, feature a shallow box design that reflects more heat into the room.

EPA rated fireplaces, have good performance and high energy efficiency ratings. They are designed to pull in outdoor air for combustion and circulate room air around the firebox to extract as much useable heat as possible.

Fireplace inserts, are sealed metal boxes designed to fit inside masonry fireplace openings. They use outside air for combustion and are designed to circulate and warm inside air. Make it more energy efficient by installing glass doors.

Energy efficient gas fireplaces

If you want the convenience and low maintenance of a energy efficient gas fireplace, you have 2 good options:

Direct vent gas fireplace, which use two-way vents that supply outside air for combustion, have energy efficiency ratings as high as 77%.

Vent free gas fireplaces, are even more energy efficient because they don’t send exhaust outside. But they release a lot of moisture into inside air.

Certain states, may provide tax credits for various types of energy efficiency improvements, including fireplaces.
references: houselogic, rich binsacca, NAR

Principal Reductions, Outpacing Short Sales?

Found this article in RealtorMag…

Some lenders may be more willing to reduce the mortgage principal than grant a short sale for borrowers under the Home Affordable Modification Program (HAMP). The principal reduction can mean big savings for home owners too — the average amount reduced on a principal reduction is more than $65,000, or 31 percent of the unpaid balance on the mortgage, according to new Treasury Department data.

Principal reductions under HAMP began in October 2010, serving as an alternative to a short sale or deed-in-lieu of foreclosure for cash-strapped home owners. Only loans not guaranteed by Fannie Mae and Freddie Mac are eligible for a principal reduction.

“The median loan-to-value ratio on modifications that went through principal reduction was 158 percent,” HousingWire reports in a recent article. “After the workout was complete, the borrower held an LTV of 115 percent, meaning he or she owed 15 percent more on the mortgage than the home was worth rather than being 58 percent underwater.”

Banks may find a principal reduction is better for them financially too. Banks report an average loss rate of 60 percent whenever borrowers complete a short sale, and an average 70 percent loss for homes in the foreclosure or REO process, according to Moody’s Investors Service.

Source: “Principal Reduction Outpaces Short Sales Under HAMP,” HousingWire (Dec. 12, 2011)
daily real estate news, NAR

East Tawas MI, Offshore Powerboat Racing, Tawas Bay

Offshore powerboat racing may come to Tawas Bay next year

An effort is underway to bring offshore powerboat racing to Tawas Bay next summer.

A local businessman told the East Tawas City Council at its meeting Monday he and 3 other persons are working with a offshore powerboat racing association which holds 2 other events in Michigan.

“They’re looking for a 3rd event for the Great Lakes to hold a triple crown challenge.”

He said the group has been holding offshore powerboat racing the past 17 years in the St. Clair Shores area and last year held it for the 1st time along Port Huron. The event has been popular and successful in both communities.
references: iosco news, john morris, don horne

Credit Score Misconceptions

If you are trying to raise your credit score to get a good rate for a loan or refinance, you might be surprised by what affects – or doesn’t affect – your score.

1. More money improves your credit score = FALSE

2. Ownership of several credit cards can hurt your credit score = MOSTLY FALSE

3. Opening and closing credit lines can hurt your credit score = TRUE

4. Consolidating credit lines will help your credit score = MOSTLY FALSE

5. Changing jobs can hurt your credit score = PARTLY TRUE

6. Co-signing for others can hurt your credit score = PARTLY TRUE

7. Judgments and liens aren’t considered in your credit score = FALSE

Additional details on how to manage your FICO score are available on the FICO site.
references: houselogic, gwen moran, don horne

Walkable Neighborhoods Sell For More

Homes in walkable neighborhoods sell for more: study says

Homes located within walking distance of amenities such as schools, parks and shopping aren’t only more convenient for their owners, often they’re also worth more than homes in neighborhoods where driving is the rule, according to a new study released Tuesday.

The report looked at 94,000 real estate transactions in 15 markets. In 13 of those markets, higher levels of walkability were directly linked to higher home values.

Walkable places have some of the best chances of performing well in years ahead. The premium for homes in neighborhoods with above average walk scores ranged from $4,000 to $34,000, according to the report.

There are environmental and health benefits from living in a place where the car can stay parked. This study, however, puts the focus squarely on housing values. While convenience does play a roll in the desirability of walkable neighborhoods, consumers still haven’t forgotten the days of $4 a gallon gas, and that scar is influencing where they want to buy a home.

If urban leaders are intentional about developing and redeveloping their cities to make them more walkable, it will not only enhance the local tax base but will also contribute to individual wealth by increasing the value of what is, for most people, their biggest asset.
references: amy hoak, marketwatch, don horne

Schoolhouse Lake, Waterford Township, MI

Schoolhouse Lake in Waterford Twp.

Port of Call

Location: Waterford Township, MI

Total Water: 37 acres

Lake Type: natural

Lake Character: warm and cold water, two story

Total Shore Length: 1.1 miles

Lake Bottom: marl, pulpy peat

Best Fishing: panfish, pike

Greatest Depth: 49 feet

Islands: none

Public Access: no
references: oakland lakefront

Nature Preserve Opens In Arenac And Bay Counties

A new nature preserve has opened in the Arenac and northern Bay County area. The Wah Sash Kah Moqua Nature Preserve opened on Tuesday with a dedication ceremony at the preserve’s main entrance.

According to the spokesperson for the Saginaw Chippewa Indian Tribe, the preserve covers approximately 129 acres of land. The land for the preserve was acquired by the Saginaw Basin Land Conservancy through the United States District Court.

The project took 5 years to complete and over 40,000 different trees and shrubs were planted inside the preserve. The preserve is split into 3 parcels.

The Saginaw Basin Land Conservancy currently maintains 10 preserves in the Saginaw Bay region, including 5 in Arenac County in the Standish and AuGres areas.

The preserve is named after Mary Sagatoo, who married a member of the Saginaw Chippewa Indian Tribe. She was given the Ojibwa name Wah Sash Kah Moqua, which translates as “there was darkness but your coming brings light”.

Outdoorsmen will have the opportunity to hunt and fish in the preserve as long as they follow Department of Natural Resources rules (no camping or fires inside the preserve).
references: arenac county independent, james kuch, don horne