Top Ten Credit Do’s and Don’ts

Did you know that most lenders pull your credit report a couple of times during the loan process? If your credit scores have dropped, you may no longer qualify for the rate or program that you are attempting to get. Credit scores are very important as all lenders qualify you by your credit score as to which criteria you fit and every loan has different criteria attached. The loan to value, the debt to ratio and so on, etc.

Why it matters: Knowing what you should and shouldn’t do can affect the terms of your loan. It is always best to be as educated as possible in the loan process to ensure you are getting the best deal.

What you need to know: Following are some helpful tips to avoid the credit mistakes that many borrowers make during the loan process:

DON’T APPLY FOR A NEW CREDIT OF ANY KIND. Including those “You have been pre-approved” credit card invitations that you receive in the mail. Every time that that you have your credit pulled by a potential creditor or lender; you lose points from your credit score immediately. Depending on the elements in your current credit report, you could lose anywhere from 2-50 points for one hard inquiry.

DON’T PAY OFF COLLECTIONS OR CHARGE OFFS during the loan process. Paying collections will decrease the credit score immediately due to the date of the last activity becoming recent. If you want to pay off old accounts, do it through escrow, and make sure that 1) you validate that the debt is yours, and 2) that the creditor agrees to give you a letter of deletion.

DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account it will appear to the FICO that your debt ratio has gone up. Also closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account, do it after the loan process, and make sure it is a more recent account.

DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS. This is the fastest way to bring your score down 50-100 points immediately. Try to keep your credit card balances below 30% of their available limit at all times during the loan process. If you decide to pay down balances, do it across the board. Meaning make an extra payment on all your cards at the same time.

DON’T CONSOLIDATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS. It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above. If you want to save money on credit card interest rates, wait until after the closing.

DON’T DO ANYTHING THAT WILL CAUSE A RED FLAG TO BE RAISED BY THE SCORING SYSTEM. This would include adding new accounts, co-signing on a loan, or changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.

DO STAY CURRENT ON EXISTING ACCOUNTS. Like your mortgage and car payments. One 30-day late can cost you anywhere from 30-75 points.

DO CONTINUE TO USE YOUR CREDIT AS NORMAL. Red Flags are raised easily with the scoring system. If it appears that you are changing your pattern, it will raise a red flag and your score could go down.

DO CALL YOUR LENDER if you receive something in the mail from a creditor or collection agency that you believe may affect your score during the loan process. We may be able to supply you with the resources you need to stop any derogatory reporting to the bureaus.

DO GET A FREE COPY OF YOUR CREDIT REPORT. https://www.annualcreditreport.com is a free resource to the public that allows you to get a complimentary copy from each of the three credit bureaus every 12 months.

Lbar Stats for October 2008

Below is a link to download the October Stats from Lexington-Bluegrass Association of Realtors.






http://jonahmitchellrealestate.googlepages.com/home

Lbar Stats for September 2008

Below is a link to download the September Stats from Lexington-Bluegrass Association of Realtors.



http://jonahmitchellrealestate.googlepages.com/home

Lbar Stats for August 2008

Below is a link to download the July Stats from Lexington-Bluegrass Association of Realtors.




http://jonahmitchellrealestate.googlepages.com/home

LBAR Stats for July 2008

Below is a link to download the July Stats from Lexington-Bluegrass Association of Realtors.



http://jonahmitchellrealestate.googlepages.com/home

LBAR Stats

Below is a link to download the June Stats from Lexington-Bluegrass Association of Realtors.




http://jonahmitchellrealestate.googlepages.com/home

LBAR Stats

Below is a link to download the May Stats from Lexington-Bluegrass Association of Realtors.


http://jonahmitchellrealestate.googlepages.com/home

Housing Flu Running Its Course

The Housing Flu has spread from the three sickest hosts to the rest of the country, says a new report by Global Insight, a financial analysis firm.

Among the most comprehensive of the home price analysts covering 84 percent of all housing units, the House Prices in America report covers 330 housing markets, 262 of which experienced declines in the first quarter 2008. Most of the contagion is in California, Florida, and Michigan where 45 of the 50 worst performing markets are located.

Flu can be miserable, and there's no question that most of the country is feeling the symptoms. Home prices dropped 6.7 percent in the first quarter 2008, mostly due to overpriced areas being put to bed to rest.

Five symptoms need to get better before housing is healthy again -- price, credit, expenses, supply and foreclosures.

Price is already well on the road to recovery. In 2006, Global Insights found that 53 markets were overvalued. By the end of March, only eight housing markets were. Researchers say that the Northeast and coastal California and Florida are now fairly valued.

The next biggest hurdle is credit. Banks are currently looking at more than credit scores and housing comparables -- they're looking at how long homes have been on the market, and disregarding individual features as relevant to price. The pendulum has swung the other way in credit with lenders saying yes only if the loan is insured by Fannie Mae, Freddie Mac, PMI, or other third-parties. They've also all but shut down equity lines of credit, and if a homeowner is planning to rent a home and re-buy, the bank wants more than a signed lease - they want proof that utility bills have been transferred to the tenant's name.

These requirements aren't unreasonable, they are just unexpected by homeowners and buyers used to getting what they want.

It will take time for bad loans to be spun into good loans.

Tight household expenses are depressing consumers. Gas and food doubling in price since the housing boom says it all. When those come back down, consumers can breathe a sigh of relief.

Excess supply. Nationwide, housing is at about 11 months on hand, which means it would take that long to sell every house on the market if no more listings were added.

Last, foreclosures are up. According to RealtyTrac, banks will seize about 60,000 properties a month through December 2008. By then, about 1 million U.S. homes, or a quarter of all homes that are for sale, may be bank-owned.

Flu is a virus that simply has to run its course. It doesn't respond to antibiotics, and housing won't respond to quick fixes either, but it will respond to the greatest healer of all -- time.

Commercial Leading indicator

The latest index suggest reduced business opportunities for commercial real estate practitioners over the next six to nine months.

Jonah's thoughts: Lets keep an eye on this one.

Home Sales Index was lower by 1%

As Blanche Evans says, in Realty Viewpoint:

Add to the toxic brew of today's market, the steady drumbeat of pundits that housing sales haven't bottomed yet, and its amazing that pending sales held up as well as they did.

Sales will most likely remain flat, says the NAR.

Afteshocks are expected

Today’s bad news aftershock......for the first time the world’s largest home improvement store chain has closed a flagship store for performance reasons. The Home Depot says of the 15 stores that it plans to close within the next two months, 4 of the 15 stores are in the surrounding states of Indiana and Ohio, Home Depot also plans to close a store in Frankfort KY.

Today’s good news aftershock.... The Dow Jones industrial average rose nearly 190 points to finish above 13,000 for the first time since Jan 3. Banks, home builders, chip makers, and retailers surged.

The aftershocks are still coming. No new news there.....the good news, however, is they are aftershocks. We need to adjust to the settling of this market over the next 24-36 months.

Before You Buy a Foreclosed Home

Your Money
Parade Magazine
March 16, 2008

With foreclosures hitting record highs, some people are looking for real estate at bargain prices. “It’s not unusual for buyers to save up to 20% with a foreclosed home.” says David Webb of foreclosure auction firm Hudson & Marshall. What should you know before you buy?

1) Unlike regular home purchases, says Webb, “many foreclosures are sold in as-is condition, with no inspections.” So the burden is on buyers to make sure they know what they’re bidding on – or be willing to take a risk.
2) Before making an offer, he adds, you also should check that there are no liens against the property or back taxes owed, which will add to the total cost.
3) Finally, since most foreclosure sales require quick closings, buyers may need to pay in cash or get immediate financing.

Jonah's Thoughts: Note the above things about buying a foreclsure

Foreclosures, Foreclosures, Foreclosures

from the Lexington Herald Leader
Friday 3-14-08

The overall U.S. foreclosure rate last month was one filing for every 557 homes. February marked the 26th consecutive month with a national year-over-year increase in foreclosure-related filings.

Kentucky bucks national trend

Kentucky continued bucking the national trend in foreclosures in February, when the state rate plummeted 24.2 percent over the number in February 2007.

Kentucky’s total of 476 foreclosures in ferry also dropped by 16.78 percent from January, according to Realty-Trac.

The total of 476 new foreclosures was equal to one for every 3,919 households in the sate, which gave Kentucky a ranking of 45th among the sates down from 38th in January when the state had 572 new foreclosures.

Only Mississippi, South Dakota, North Dakota, West Virginia, and Vermont had lower ranking than Kentucky.

Jonah's thoughts
If you want 10 tips to avoiding foreclosure e-mail me jonah@jonahmitchell.com. 15 year fised rate will fall below 5% soon.

U.S. Foreclosure Starts Hit New Records

Falling Home Prices Create Less Incentive to Make Payments
Inman News


Loans entered the foreclosure process at a record rate during the fourth quarter, and things are likely to get worse before they get better, the chief economist for the Mortgage Bankers Association said today.

Although reductions in short-term interest rates have lessened the shock of interest-rate resets for many borrowers with adjustable-rate mortgage (ARM) loans, falling home prices are leaving more homeowners with little or no equity in their homes -- and less incentive to keep up on their mortgage payments, said MBA Chief Economist Doug Duncan.

That's particularly the case in states such as California, Florida, Nevada and Arizona, where overbuilding created surplus inventories that will take some time to work through, Duncan said.

The rate of foreclosure starts in Florida more than tripled between the fourth quarter of 2006 and the fourth quarter of 2007, and more than doubled in California.

Nationwide, the rate of loans entering the foreclosure process hit a never-before-seen 0.83 percent during the fourth quarter, up from 0.54 percent a year ago and 0.78 percent in the third quarter.

That pushed the total percentage of loans in the foreclosure process, which stood at 1.19 percent at the end of 2006, to 2.04 percent in the fourth quarter 2007 -- also a new record.

The delinquency rate rose to 5.82 percent during the fourth quarter -- the highest the MBA has seen in its quarterly survey of lenders since 1985. The delinquency rate stood at 4.95 percent during the same quarter a year ago, and at 5.59 percent in the previous quarter.

"Our general outlook is as long as house prices are declining, we expect to see some continued increase in delinquencies and foreclosures," Duncan said. With the continued seizure of credit markets and tightened underwriting standards, "we don't expect to see the peak (in foreclosures) until mid- to late-2008."

If there's any good news in the latest numbers, it's that there's been little growth in the rate of foreclosure starts in Midwestern rust-belt states such as Michigan, Ohio and Indiana, where different factors are in play. Job losses and outmigration, rather than overbuilding, have contributed to the decline in demand in those states, Duncan said.

Duncan said the nationwide increase in foreclosure starts was due to increases in both prime and subprime loans, with adjustable-rate mortgages (ARMs) of both types accounting for 62 percent of foreclosure starts.

Since the fourth quarter of 2006, the foreclosure start rate for prime ARMs increased from 0.41 percent to 1.06 percent, while the rate for subprime ARMs increased from 2.7 percent to 5.29 percent.

Subprime ARMs represented just 7 percent of loans outstanding, but accounted for 42 percent of foreclosures starts during the fourth quarter. Prime ARMs represented 15 percent of outstanding loans, and 20 percent of the foreclosures started.

While millions of ARM borrowers still face interest-rate resets, Duncan said the impact of those payment adjustments will be less than feared because cuts in short-term interest rates made by the Federal Reserve have also brought down the six-month LIBOR rate, the index used for many subprime ARM loans, by 2.5 percent since last September.

Duncan said the MBA forecasts at least one more cut in the federal funds rate this month.

"The reduction in LIBOR will mean that the resets of those loans will bring them very close to current contract rates," Duncan said. The problem of payment shock "will be much less than thought, although it won't be ameliorated."

If rising delinquencies and foreclosures were once believed to be largely confined to subprime loans, those days are past. The MBA survey showed prime loans accounted for 38 percent of foreclosure starts, compared with 50 percent for subprime loans. Prime loans made up a much larger percentage of outstanding loans, however -- about eight in 10.

Top 10 Commercial Real Estate IT Issues for 2008

Realcomm recently surveyed our 2008 CIO Advisors on a number of topics from server utilization to staff development and asked what they see as their top IT issues in the coming year. Today's Realcomm Advisory provides some insight as to what's on the minds of the real estate CIO and where IT can play a strategic role in addressing these issues .

In reviewing the CIO Advisor survey responses, there seemed to be an expectation of a general economic slowdown and the requisite drive to increase operational efficiency while providing a higher level of service. The good news is that there are significant opportunities to streamline business processes, further align with the business units, and help drive services that will reduce costs and add revenues to the bottom line.

Here are the "Top 10 IT Issues for Commercial Real Estate CIOs in 2008," (in no particular order):

Virtualization
Virtual machines, both server and desktop, offer a significant means to cut IT costs while "greening" IT operations. Issues pertaining to hardware, provisioning, software licensing, performance, security, and management offer the greatest challenges to the CIO.

Staffing
If you're an IT leader today, you know that locating qualified IT staff (especially management-capable leaders) is becoming extremely difficult. Not only hiring, but retaining and developing staff and well executed performance reviews are essential to today's IT shops.

CRM
New applications are coming to market for the basic contact management (deal workflow and lease pipeline hold promise), but there are still many questions to answer on how we can better manage the huge amount of information in this traditional process.

Vendor Viability
With companies being acquired at an increasingly frenzied pace, the question becomes, "Will the solution I select today still be supported a year from now, and how do you assess vendor viability from both a strategic as well as a financial viewpoint?"

Alignment
Aligning business unit objectives with IT priorities is more important than ever. Are your IT leaders embedded in the leadership teams for various business units? Also, are you maximizing the ROI of IT services by leveraging them across multiple business units?

Global Expansion
As more companies are finding investment opportunities outside the U.S., IT departments are faced with a number of new challenges - from local reporting regulations to differences in time zones and currencies, to name but a few.

Building Automation Strategies
Smart, green, and sustainable have made their way to C-suite conversations, and the enabling technologies are now falling firmly into the lap of the CIO. With the shortage of experienced consultants and integrators here in the U.S. and Canada, where does an IT professional start?

Business Intelligence
Let's face it, more than half the business intelligence initiatives either are never completed or fail to deliver on the features and benefits promised at the outset. Does "one-size-fits-all" apply to an enterprise? Do you "build" or look for an "out-of-the-box" solution? Is SharePoint part of the solution?

Disaster Recovery
If your company suffers a major loss of data, there's a 50% chance you'll close your doors within two years. Recovery Point Objective (RPO), Recovery Time Objective (RTO), business continuity planning, data backups, offsite data replication, SAN/NAS - how seriously has your organization looked at disaster recovery and business continuity planning, in general?

Document Management
Commercial real estate remains the most paper-intensive industry on the planet and, at the same time, offers the greatest potential for paperless workflows. Document and file versioning, indexing, and retention strategies are among the greatest challenges for IT today.

www.realcomm.com

NAR: Home Sales, Prices Expected to Drop this Year

The National Association of Realtors expects the median price of U.S. resale homes to drop 1.2 percent this year, following a 1.4 percent decline in 2007, with sales of resale homes slipping for the third consecutive year.

The forecast report released today also anticipates a 31.1 percent drop in single-family housing starts, a 6.1 percent decline in new-home prices, a rise in housing affordability and a dip in consumer confidence this year compared to 2007.

The federal funds rate is expected to average 3 percent in 2008, compared with 5 percent in 2007, according to the NAR forecast.

Sales of resale homes are expected to fall to 5.38 million this year, compared with 5.65 million in 2007 and 6.48 million in 2006. The association expects a 4.2 percent rise in resale home sales in 2009 compared to 2008.

The aggregate resale home price is projected to fall to $216,300 this year and then increase 3.5 percent to $223,800 in 2009, with the median new-home price falling to $232,200 this year and rising 5.1 percent to $244,100 in 2009.

Single-family housing starts, which fell 14.6 percent in 2006 and 28.6 percent in 2007, are expected to drop another 31.1 percent to 721,000 units this year, and to fall 5.6 percent to 680,000 units in 2009.

New single-family home sales, which dropped 18.1 percent in 2006 and 26.4 percent in 2007, are expected to fall another 23.7 percent this year compared to 2007. New single-family home sales are expected to turn around in 2009, rising 7.2 percent.

The average mortgage rate for a 30-year fixed-rate loan is expected to be 5.8 percent this year, down from 6.3 percent in 2007, with the average rate for a one-year adjustable-rate loan falling from 5.5 percent in 2007 to 4.8 percent in 2008, according to the NAR forecast.

An index measuring pending sales of previously owned homes, also released today by NAR, was down 19.6 percent in January compared to the same month last year and remained flat compared to December 2007, the National Association of Realtors trade group reported today.

The Pending Home Sales Index is based on contracts signed in January, and a sale is listed as pending when the contract has been signed but the transaction has not yet closed. A sale is typically finalized within one to two months of a contract signing.

In January the index stood at 85.9 -- an index of 100 equals the average level of contract activity in 2001, which was the first year examined for the index and the first of five consecutive record years in sales of resale homes, the association reported. In January 2007 the index was 106.8.

Regionally, the index plunged 28 percent in the Northeast, 23.8 percent in the South, 13.3 percent in the Midwest and 12.7 percent in the West in January 2008 compared to January 2007.

NAR will release resale home-sales data for February on March 24, and the next Pending Home Sales Index and forecast report is scheduled for release on April 8.

The prognosis remains the same; we’re not out of the woods yet.

Today it was reported that the nationwide sales of single-family homes and condominiums dropped to a seasonally adjusted annual rate of 4.89 million units. In November 2007 I posted that this was coming. See Post Here

The realignment is on target to reduce the record inventory, prices still have to fall. Joel Naroff, chief economist at Naroff Economic Advisors said "Eventually, sellers will end their denial and realize that if they want to unload their homes, they will have to cut prices even more." Lowes and Home Depot blame the weak housing market for a drop in fourth-quarter earnings. (Lowes 33 percent) Inventory has to reduce.

2008 is the year of Realistic Realignment. In 2009 we will begin to reap the benefits from this induced weight reduction program. (1) inventory will begin to reduce (2) prices will have realigned enough from the sellers emotional price to the new market price to encourage the buyers out of their nice warm caves of induced hibernation.

LBAR Stats

Below is a link to download the latest Stats from Lexington-Bluegrass Association of Realtors. While you are there you can also download December 2007 stats, as well as, the year ending stats for 2007.


http://alpaha.googlepages.com/home

LBAR Stats

Follow this link to see the YTD and 1 Year Stats from LBAR you can also get the monthly stats as weel by folloing the links.

http://alpaha.googlepages.com/morejonahmitchelldownloads

New home sales take record hit

Decline 26.4% in '07; prices fell sharply in December

By Martin Crutsinger
ASSOCIATED PRESS

WASHINGTON --New home sales plunged in 2007 by the largest amount on record while home prices tumbled sharply in December.

Analysts forecast more trouble in 2008 as housing tries to emerge from its worst slump in more than two decades.

The Commerce Department reported Monday that sales of new homes dropped by 26.4 percent last year to 774,000. That marked the biggest decline on record, surpassing the old mark of 23.1 percent in 1980.

Lexington-area sales also down

Sales of new homes in the Lexington area also slumped in 2007, but not as badly as they did nationwide.

The Lexington-Bluegrass Association of Realtors said Monday that 1,982 new houses were sold in 14 counties including Fayette and those surrounding it. That number is a 22.6 percent decline from 2006, when 2,561 new homes were sold.

Jonah's thoughts: Our predictions are right on. New homes starts turned out as reported and existing homes have fallen below the 5 million sales mark. No one should be any longer looking through rose colored glasses. The two big questions are 1. predicting 2008 numbers. New home starts should level off after a few more big adjustments by the big (track builders) new home builders. The small office (pickup truck) home builders have already stopped building. 2. When does our hibernating buyer shake off this induced sleep? Spring `08 will bring the scouts out and there will be a little bit of relief. But Spring `09 is probably our first hope of returning to a whittled down normal market. There is certian to be a big bounce with the 2010 Alltech World FEI Games.

Rates Update

Rates remain very strong to start out 08 as investors still worry that the economy is slowing. We start this week (January 14, 2008) at 5.375% on a 30 year and 5.0% on a 15 year.

Guidelines for approval have tightened but not much as the media would have you believe.

Sure sub prime is gone but there is still 100% financing available under several Fannie and Freddie programs and especially under the gov’t loan programs.

Jonah’s Thought: Rates are great? And are probably going to get a little better with Fed discount rates sure to come down. The Question! When are the buyers coming out of their induced hibernation? The body temperature of this pent up demand has to be rising... Remember we are still going to sell 5 million houses this year.

Permit report for Jessamine County

This report is for new home starts in Jessamine County.

12/01/07 – 12/31/07 - 4 permits

12/01/06 – 12/31/06 - 7 permits

01/01/07 – 12/31/07 - 114 permits

01/01/06 – 12/31/06 - 145 permits

In the month of December we were down 42% and for the year we were down 21%.

Housing Starts

From the Lexington Herald-Leader 1-17-08

Home builder confidence near record low

A reading of U.S. home builders’ outlook remained near a record low in January as gloom engulfed the housing industry. The National Association of Home Builders said Wednesday that its housing market index, which gauges builders’ perceptions of current conditions, interest from potential buyers and expectations for home sales over the next six months, came in at 19 in January – the second-lowest point on record. The group also revised December’s reading downward by one point to 18, the lowest since the index began in 1985.

Housing starts

Tighter lending conditions, expensive gasoline and tougher job market are helping to limit demand for homes. The supply of homes, meanwhile, is bloated. To compensate, homebuilders have cut back on construction. Economist predict a 4 percent drop in December housing starts, compared with November. Global Insight economist Patrick Newport is looking for housing starts to drop by another 20 percent before turning around later this year.

Jonah’s Thoughts: Although these numbers are extreme they are needed for the correction to happen.

Is your adjustable-rate mortgage (ARM) about to reset?

Do you know the interest rate relief program is starting up as of Jan. 1, 2008? There are three qualifications for the relief program.

1) You must be current on your mortgage

2) You must have less than 3 percent equity in your property

3) You must have a loan that will have an interest rate reset starting Jan. 1, 2008

What you need to do is call the federal government’s tool-free mortgage crisis help line at 1-888-995-HOPE to see if you qualify for assistance. Or you can talk to a housing counselor at the Department of Housing and Urban Development to refinance your mortgage at a lower rate through the new FHA Secure plan. You can go online to www.hud.gove/news/fhasecure.cfm to get contact information or call 1-800-CALL FHA.

Stats from LBAR

December 2007 sales were down 18% compared to December 2006. 615 homes for a total of $103,356,445 were reported to MLS compared to 754 for $130,075,745 in December 2006. HOWEVER, sales for the year 2007 were only down 8% year to date compared to 2006. This is lower than all regions reported throughout the USA.