Obama's refusal to push for mortgage cram-down is biting homeowners

[Wineslob]

We didn't get an ARM, never had an ARM.  Our rate we got was 4.75%.  When we first started looking (June 2009) we got a rate at 4.5% but didn't lock it in.  Locking it in wouldn't have done any good though because the date we ended up closing was way past the expiration date of the 4.5% rate. 

BEG, I wasen't refering to your situation. It was to the market as a whole in the area. Sorry if I was not clear. 

As far as realtors, I saw several shows (HGTV) about first time home buyers in the LA basin. People buying 1940's tract homes with 1100 SF. Starting prices were in the mid $500's (K) but sold in the $900K range. One realtor looked at her buyer who had asked if it was a "good deal"(at 900K) and said, "any time you can buy a home is a good time". WTF?

[Wineslob]

But because of the price of homes in certain areas of the country, like CA and NY, the only way people could get a house was with an ARM.  There's nothing wrong with ARM's, it's just a tool to be used towards a certain goal.  Just this time a whole bunch of people got caught behind the 8 ball.

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I can see doing that if you can't afford a house any other way,(the people who waited till they could actually afford a house were the "smart ones" instead of jumping on the bandwagon) however, I think statistically, ARMs will almost NEVER go down. People who got these (for the most part) were hoping to "flip" the house before the rate went up.
What bugs me are the buyers that cried "foul". They knew damn well what they were getting into.

[Texacon]

BEG, I wasen't refering to your situation. It was to the market as a whole in the area. Sorry if I was not clear. 

As far as realtors, I saw several shows (HGTV) about first time home buyers in the LA basin. People buying 1940's tract homes with 1100 SF. Starting prices were in the mid $500's (K) but sold in the $900K range. One realtor looked at her buyer who had asked if it was a "good deal"(at 900K) and said, "any time you can buy a home is a good time". WTF?

Wineslob, it was the market at the time.  The realtors don't make the market the buyers do.  If I was presenting you an offer on your home $400k over asking but told you to decline it because you were sticking it to the buyers you could, rightfully, sue the shit out of me.

If I were to tell those buyers that $900k was way above market then the next buyers that stepped in bought it and my buyers lost out on the home they wanted they could, rightfully, sue the shit out of me. 

The realtors at the time were between a rock and a hard place.

If a seller wants to sell and a buyer wants to buy who am I to put the brakes on the deal?

KC

[debk]

I could see that happening, but as a broker you can only do what you can do to explain it.  When you sit there and tell them "Ok, this is an ARM, the rate is capped the first year, but after that the rate can increase every 6 months, but it can't increase anymore than 2% every year," I always demonstrated the worst case scenerio for the customer.  But even if I hadn't, the customer has some obligation to say "Hold on, I don't fully understand this" or "Show me what that means.  Give me dollar amount."  I also explained to them that from time to time lenders change what they're willing to do at the end, and I had no control over that.

As far as not knowing the conditions of the ARM before they went to closing, I very rarely didn't know the conditions a few days (if not longer) before the closing took place.  On occasion, at the last second, the lender would switch the loan program for which we were trying to qualify to one the customer actually did qualify.  That was always frustrating to me because I always felt like the customer would think it was my fault and that I did it at the last second just to try and make more money or something, which was never the case, and I've been doing this for over 20 years.  In fact, it usually cost me money.  But regardless, it's a pain because now I've got to re-explain what the new terms and conditions are at closing, and things are usually hectic enough as it is.

I had a couple of realtors I worked with who I finally got to understand that they had to control the situation better.  I'm not the lender, and at the last second the lender decides something isn't right, they aren't going to lend, or they're going to change what they are willing to do.  If that happened, I needed the realtor on my side backing me up while I explain to the customer what happened and why.  Way too often I had the realtor in there fighting for the customer over something of which I had no control.  Now if I had been some new kid off the street I might could understand, but they knew me, and/or their office knew of me and we had done dozens and dozens of closings before, and now this one had some unexpected adjustments.  Raising the anxiety level of the customer doesn't help.  Even if you explain to them the new program, they're often so upset they don't hear half of what you said anyway.

I have sympathy for the customer because often times they feel cornered.  The lender changed the loan conditions, etc... and now they're at the closing and have to make a snap decision.  More often than not, they feel like they have to take what is being offered.  I'd have loved nothing better than for every deal I ever worked to have been exactly what I told the customer it would be when we first consulted, that would be wonderful PR that I could use, but that's not the real world.  I did my best to prepare them for the unexpected, but you can only do so much.

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One of the biggest problems I think we have as realtors and mortgage brokers....is that just like any business....there are good/ethical ones and there are those that aren't.

However....in our business.....it is such a HUGE amount of money being exchanged and unlike a car....a house just can't be unloaded in just a few days (usually) and there is an even greater emotional attachment to one's home than anything else with the exception of family.

I think it should be mandatory, that lenders provide all documents 48 hours prior to closing for the buyer to read. Then the buyer has a choice of reading them or not, accepting the conditions or not. It would probably result in a lot of deals falling through....on the other hand....maybe fewer people would be losing their homes.

[lastparker]

One of the biggest problems I think we have as realtors and mortgage brokers....is that just like any business....there are good/ethical ones and there are those that aren't.

However....in our business.....it is such a HUGE amount of money being exchanged and unlike a car....a house just can't be unloaded in just a few days (usually) and there is an even greater emotional attachment to one's home than anything else with the exception of family.

I think it should be mandatory, that lenders provide all documents 48 hours prior to closing for the buyer to read. Then the buyer has a choice of reading them or not, accepting the conditions or not. It would probably result in a lot of deals falling through....on the other hand....maybe fewer people would be losing their homes.

I totally agree.  My pet peeve is the big three credit reporting agencies.  They all make mistakes, refuse to correct them, and they have no regulation or oversight to make them do a better job.  I won't get into my personal trials the last time I bought a house, but suffice it to say, this is one case in which I'd support the government regulating an industry.

[debk]

I totally agree.  My pet peeve is the big three credit reporting agencies.  They all make mistakes, refuse to correct them, and they have no regulation or oversight to make them do a better job.  I won't get into my personal trials the last time I bought a house, but suffice it to say, this is one case in which I'd support the government regulating an industry.

TransUnion has an "alias" down for me....that is not me, never has been me and they won't remove it under any circumstances...nor will they prove where they got it from. 

[USA4ME]

I can see doing that if you can't afford a house any other way,(the people who waited till they could actually afford a house were the "smart ones" instead of jumping on the bandwagon) however, I think statistically, ARMs will almost NEVER go down. People who got these (for the most part) were hoping to "flip" the house before the rate went up.
What bugs me are the buyers that cried "foul". They knew damn well what they were getting into.

True.  The market invented the ARM because of markets like CA and NY where prices were so high.

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[USA4ME]

I think it should be mandatory, that lenders provide all documents 48 hours prior to closing for the buyer to read. Then the buyer has a choice of reading them or not, accepting the conditions or not. It would probably result in a lot of deals falling through....on the other hand....maybe fewer people would be losing their homes.

I agree, it would have to be a law to make it happen.  I mean, how many times has the buyer or seller put your back to the wall because they've got to sell this house to have the down payment for closing on the one they're buying the next day, or something else along that line?  Not often, but you do it long enough and it's going to happen.  They book these closing and it's like they're set in stone and no one wants to budge.  Enevitably, it seems something's going to go wrong and throw things out of whack.

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[debk]

I agree, it would have to be a law to make it happen.  I mean, how many times has the buyer or seller put your back to the wall because they've got to sell this house to have the down payment for closing on the one they're buying the next day, or something else along that line?  Not often, but you do it long enough and it's going to happen.  They book these closing and it's like they're set in stone and no one wants to budge.  Enevitably, it seems something's going to go wrong and throw things out of whack.

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I hate "domino" closings.....if something's going to go wrong...it will!!

I had one back in the spring. My buyers were still getting loan documents at the closing table...it took 3.5 hours to close...on a Friday. The sellers had to move their closing to Monday. Fortunately they were buying new construction. We were also still doing documents between the seller and the buyer due to repairs that could not be completed prior to closing. By the time it was over....I had such a horrendous stomachache!!!

[Texacon]

Worst closing I ever had involved a mortgage broker from Austin who told my sellers that if they would extend the closing he would pay them $25/day until closing up to a maximum of $350.00.  We hit the maximum days to the $350 due to the appraisal and went to closing.  At the closing table we noticed the sellers were not being credited the $350 so I called the mortgage broker in Austin.

When I got him on the phone and explained that it wasn't on the closing statement he asked me if we were at closing.  I told him we were and he said "Well then, there won't be a credit".  I asked him why not and he said "The sellers won't walk at this point".  I told him he didn't know my sellers very well.  When I told the seller what the mortgage broker said he grabbed his wifes hand and said let's go.  They were walking out.

I told the closing agent to take the $350 out of my commission ... the other agent sat there and said nothing.  She wasn't going to split it with me.  I said no big deal....I'll eat it.

When I got back to my office I called that mortgage broker and asked for his manager.  He wouldn't tell me who it was.  I told him I would find out and it would either be made right or I was going to hop on my bike and make a ride to Austin ... about 3 hours away.  I told him I was always looking for a reason to ride and whuppin' his ass was as good a reason as I could find.

They mailed me a check .... imagine that.  Took me all of 2 weeks to get the check.

True Story and ... yes, I would have made the ride.

KC

[franksolich]

Wow, Texacon, it can really get that dirty?

I wasn't aware.

It seems to me a matter of reneging on $350 to another agent would end up costing (in good will, professionalism, referrals) the reneger a lot more than $350.

Sometimes it doesn't pay to cheat, but people try anyway.

[USA4ME]

Wow, Texacon, it can really get that dirty?

I wasn't aware.

It seems to me a matter of reneging on $350 to another agent would end up costing (in good will, professionalism, referrals) the reneger a lot more than $350.

Sometimes it doesn't pay to cheat, but people try anyway.

Not only that it doesn't make a lot of sense for a broker to delay getting his commission.  Hard to say what he was thinking.  Maybe he was hoping rates would drop and he could lock the borrower in at the same rate in order to get more yield spread on the back, but that's really stupid.  If he had told the borrower or seller he would pay for the appraisal, then he should have figured that into his costs and followed through.  It's odd for a broker to be talking to the seller in the first place.

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[Texacon]

Wow, Texacon, it can really get that dirty?

I wasn't aware.

It seems to me a matter of reneging on $350 to another agent would end up costing (in good will, professionalism, referrals) the reneger a lot more than $350.

Sometimes it doesn't pay to cheat, but people try anyway.

Not often Frank.  This just happened to be a mortgage broker 3 hours from me (which is unusual in my area) and he was doing anything he could to keep the sellers in the deal.  It got REAL ugly.

I was completely unimpressed by the other agent at the table.  I figured when I offered to chip in my $350 she would agree to at least split it.  I was shocked.  In the end it didn't matter ... I got my money back and learned a lot about the other agent in the deal.

The story is actually a lot longer than I posted but that was the overall story behind the deal.  I ended up contacting his manager who ended up paying me while the guy who was pulling the 'crap' was sending me emails telling me he was contacting a lawyer and the cops.  LOL  Good thing I got paid is all I can say because if I hadn't I swear by all that is holy I would have rode over there and whupped his ass.  It was a principle kind of thing.

KC

[Texacon]

Not only that it doesn't make a lot of sense for a broker to delay getting his commission.  Hard to say what he was thinking.  Maybe he was hoping rates would drop and he could lock the borrower in at the same rate in order to get more yield spread on the back, but that's really stupid.  If he had told the borrower or seller he would pay for the appraisal, then he should have figured that into his costs and followed through.  It's odd for a broker to be talking to the seller in the first place.

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USA4ME, the broker wasn't talking to the seller.  This was a VA deal and our VA appraisers are few and far between out where I live.  The closest one to us was about 40 miles away.  He simply didn't want to come out here.  The loan officer called me as our time was running out and asked if I could keep the sellers in.  I told him I had been instructed to let it expire and put it back on the market.  That was when he offered them the $25/day up to $350 if I could keep them in the deal. 

The sellers didn't want to do it but decided to stick it out and see what happened.  I'll promise you this .... they WOULD have walked.  The husband in the deal was a real hard ass.

KC

[debk]

Not often Frank.  This just happened to be a mortgage broker 3 hours from me (which is unusual in my area) and he was doing anything he could to keep the sellers in the deal.  It got REAL ugly.

I was completely unimpressed by the other agent at the table.  I figured when I offered to chip in my $350 she would agree to at least split it.  I was shocked.  In the end it didn't matter ... I got my money back and learned a lot about the other agent in the deal.

The story is actually a lot longer than I posted but that was the overall story behind the deal.  I ended up contacting his manager who ended up paying me while the guy who was pulling the 'crap' was sending me emails telling me he was contacting a lawyer and the cops.  LOL  Good thing I got paid is all I can say because if I hadn't I swear by all that is holy I would have rode over there and whupped his ass.  It was a principle kind of thing.

KC

I just got "stuck" in July by an unprincipled agent....to the tune of $928!!! My sellers offered to split the money with me, but I didn't take it. It's enough that they knew the truth....

It was a mess....and the only thing I could "legally" get him on was going into my listing without permission and then leaving the door unlocked.

However....I will have no problem with him again.....he won't be allowed in any of my listings.

[Texacon]

I just got "stuck" in July by an unprincipled agent....to the tune of $928!!! My sellers offered to split the money with me, but I didn't take it. It's enough that they knew the truth....

It was a mess....and the only thing I could "legally" get him on was going into my listing without permission and then leaving the door unlocked.

However....I will have no problem with him again.....he won't be allowed in any of my listings.

LOL  We could start a whole thread on unethical agents we have worked with.  It shocks the hell out of the public when they find out what actually goes on behind the scenes.

I had a real winner a couple of years ago.  These folks came in from Alaska and we worked with them on a Sunday on 1 hour notice.  Showed them 5 houses over a 6 - 7 hour period.  They told us they had an appointment to work with another agent the next day and would get back to us.

The next day came and went then I got a call from the other agent.  She told me she was going to 'represent' these people in my area.  I told her that was no problem.  As long as she didn't expect to get paid for any of the properties we had already shown them.  She was FURIOUS.

Come to find out ... while she was driving them around all they could talk about was one of the homes WE showed them on Sunday.  She saw the writing on the wall and decided she would step in and 'earn' half the commission on the deal.  Nope.  No way, no how.  We don't play games like that.  If we are the procuring agent and someone tries to step in .... they are more than welcome to do the contract work and I MAY pay them $500 for that but other than that they ain't getting anything.

Thing is what she did was totally unethical.  She told them she knew us and that in our area they would need her representation or they would get shafted!  Our area is very small and I get repeat business all the time ... you can't do that if you are screwing people over.

KC

[debk]

I spent 3 years on our Board of Realty's Grievance committee then 2 years on Ethics. I'm back on Grievance this year. I am just amazed at the crap some agents pull.

Some just make dumb mistakes....like putting the co-op commission amount wrong and don't bother to check their MLS briefs after they go into the system to make sure there are no mistakes. 

I sold a house one time, that a Century 21 agent had listed. The co-op amount was what she was to be paid. Came the day of closing and the title company calls me and tells me I'm not getting the commission amount I submitted to the title company (here, title company is picked by the buyer). I told her it was what was on the brief. She said she would call the list agent. Next thing I know, list agent's broker is calling me. I returned the call from my broker's office. LA broker tells me his agent made a mistake and I should accept 1.5% instead of 3%....because his agent made a mistake and I should let her have the correct amount. (The house had been on the market for a couple of months when my buyers saw it, and we had another month between offer being accepted and closing). I told him No. He said I was unreasonable, and I said no, I was right, and she probably wouldn't make that same mistake again. I got the 3%.

I had sat through a grievance committee meeting the month before with the same situation and the committee ruled in favor of the selling agent. We just had another one last month do the same thing!

It's our responsibility to make sure those MLS briefs are correct....as soon as they get entered into the system. If they are wrong....it stays our responsibility.

Had a closing this morning. I represented the sellers. The poor buyer....I felt so sorry for them. The husband is a cop and their lender had told them how much to bring to closing. It was $400 MORE than what they had been told yersterday by the lender!!!! He said they had it, and he would pay it....but panic set in on all sides when the title agent told him.....   The lender didn't add in this month's interest into the loan.