This last spring new-home sales jumped 16 percent -- the
biggest percentage increase since 1993 -- but despite the
positive news, sales and construction activity may not have
hit bottom yet because the U.S. Census Bureau reported new
single-family home sales rose from a seasonally adjusted
annual rate of 844,000 in March to 981,000 in April.
This data flies in the face of predictions of doom and the
lowering of prices around the country. It seems that this
cycle will seem more like a dip than a wave because the
information on prices flew around the market via the
Internet, causing people to adjust their behavior and
modify their listings.
Here is another way of looking at things. Any time
inventory disappears, homes that come on a healthy market
disappear fast, which takes down the average listing time.
This causes people to put inventory back on the market at
increased prices. Inventory disappears when the average
time on listing goes higher than around 60-70 days. Through
a price slump, people keep watching the correct indicators
to wait for the inventory to bottom out.
Realty Trac released its May 2007 U.S. Foreclosure Market
Report on June 12, showing a total of 176,137 foreclosure
filings - default notices, auction sale notices and bank
repossessions - during the month of May, were up 19 percent
from the previous month and up nearly 90 percent from May
2006. Home sales prices were falling, with a saturated
supply of for sale signs. All this pushes new homes prices
down.
Ultimately it is the responsibility of the broker or loan
officer to determine if the borrower can indeed make the
monthly payments. The problem with many of these default
loans is that loan officers encouraged people to exaggerate
their ability to pay while the lenders abetted the deal by
allowing these highly suspect loans to be funded.
Investors, companies and people who buy the loans from
lenders, also suspended disbelief, that overleveraged
people with weak credit histories deserve a loan, and
bought the collateralized debt obligations that the loans
are based on. Many loans are packaged into large CDO
packages designed to spread the risk and allow single large
transactions instead of hundreds or thousands of single
loan purchases.
Mortgage brokers and banks typically start their interviews
with those seeking a home mortgage lender by asking about
the person's credit in general, then working their way to
the critical question: What is your Social Security Number
(SSN)? They need to do it this way because the rate sheets
are divided between credit and collateral. Almost all
mortgage brokers take into account three things when
looking at credit: credit which is the probability that the
borrower will pay; collateral which is the value of the
property which ultimately acts as a guarantee of last
resort for most loans; and capacity to pay the monthly
payments.
However there are new companies such as Dogtor Paco, Inc.
doing what's is known as the frictionless loan, which
starts off with mortgage quotes and moves quickly to the
loan application and an electronic submission. The
conditional letter of approval (CLA) details the steps to
close the loan. If the initial submission is denied,
Dogtor Paco will help users select and resubmit to
alternative banks that will do the loan. The goal here is
to lock the loan transaction to processing within two hours
after the start of the loan application.
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Dogtor Paco, Inc. (http://www.dogtorpaco.com ) is a
patent-pending online lending services engine where real
estate agents, brokers and lending professionals can
facilitate the approval and processing of loans for
customers faster. Dogtor Paco's powerful on-demand mortgage
payment calculator provides good faith estimate (GFE)
quotes with full disclosure including monthly payments and
all closing costs. Dogtor Paco uses instantaneous rates to
calculate closing costs and monthly payments for a
particular property. The powerful Loan Organizer' tells
licensed subscribers how much they will make by submitting
a client's application electronically through Dogtor Paco's
engine where the loan will be completed quickly and
frictionlessly.
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