Welcome to the North West Real Estate Listing Services BLOG. This blog is a sister publication to our Real Estate Listing Service that is starting here in the North Western U.S.

NWRELS originally was an acronym for NATION WIDE REAL ESTATE LISTING SERVICES. But since we are starting here in the north western part of America, we went with a more regional name. This may turn out to be an error on my part since we already have a good agent in the Eastern Iowa area. So, if you would like to participate with us and market our services in your area, you can make 50% commission and we will train you. Use this form to contact us.

Once you’ve applied for a home loan or you start shopping for a good refinance opportunity every mortgage lender is aware that you have been shopping for a good refinance opportunity because it’s possible the information you gave out when you completed the application isn’t as confidential as you might have thought. Your private financial details may have been sold to the highest bidder.

The top three Equifax, Experian and TransUnion market credit “triggers,” a highly profitable sideline for all of the big three credit collection bureaus, (and business financial analyst Dun & Bradstreet is also a player) although Experian seems to be exploiting their product with great intensity over the last few years.

Lenders and others, can subscribe to a trigger service with one or more credit bureaus. There are over a dozen parameters that a subscriber may chose from and these subscribers will be instantly notified if there are changes in the credit profile of current customers. These triggers may be employed by subscribers as risk alerts, collections assistance, and more recently as marketing opportunities.

In collections, for example, a triggering event might be a change in a person’s or business’s credit history such as a payoff of some delinquent debts that might indicate renewed liquidity or information on a new location for a missing debtor.

A risk alert trigger would be one that indicates that a customer is taking on substantial additional debt or begins to exhibit a pattern of late payments or even of minimum payments on a number of accounts. This is the type of trigger that can result in reduced or even closed credit lines or a sudden increase in interest rates.

Triggers have been available to lenders for years. However, new technology is morphing these reports into a totally new type of product, one that can be customized by combining a number of parameters and is available to subscribers nearly instantly. This is NOT good news for you.

It has gone so far off center that Experian permits a lender to submit a list of names (from its current portfolio? Maybe you?) to be monitored for credit shopping or request that a list of names (not necessarily existing customers) that match a specified profile be generated on a regular basis. In addition, marketing, risk, and retention triggers are now available on a daily, weekly, or quarterly cycle.

It is in the marketing area that Experian has begun to strongly push its trigger products and that could be disconcerting, particularly to the consumer shopping for a mortgage loan.

The credit bureaus have provided trigger service to mortgage servicers for some time; and in the throes of the refinancing frenzy this was a popular product. A servicer wanted to know if a customer was seeking additional credit in order to approach him and try to retain the mortgage business themselves through a refinance or to cross-sell other products such as mortgage insurance or credit cards. As the refinancing boom has waned, however, the credit bureaus are now offering the trigger services to all comers. In other words, they are selling mortgage trigger leads.

Experian touts its product on its website thusly: “you can quickly and precisely find credit worthy customers with recent credit activity who are most likely to respond to your specific offer… And who are the kind of credit worthy customers you would like to attract.”

In other words, if your mortgage customer is shopping around to refinance, we will alert you so you can take action to retain that business. And we will also notify you if a total stranger who meets your parameters of location, credit score, etc. appears to be seeking financing.

Perhaps the borrower will get a better deal – in the words of the Lending Tree ad – “when banks compete you win.” But there are a couple of troubling aspects. First of all, the lender who is initially seeking your business is paying for the credit report that triggers the trigger putting his very own mortgage lead on the open market to be sold as a credit trigger lead for profit to his competitors. Second, it is yet another in the endless examples of how an individual’s privacy is ignored every day.

TransUnion and Equifax in addition to Experian, are selling these kinds of trigger list leads. As stated above, we found only Experian actively marketing the product online.

Brokers would typically pay about $15,000 to sign up for the service plus another $10,000 to $12,000 per month for the lists.

The law requires that anyone contacting a consumer from such a lead do so with a firm offer of credit and Experian’s website specifies that requirement for lead purchasers. However, most often, the calls to consumers are more in the nature of fishing expeditions. You tell us what you’re looking for and we’ll see if we’re doing better.

I am also unclear as to how a mortgage broker who purchases these lead can get around the Do Not Call regulations. These regulations do not allow calls unless one has a prior relationship between the caller and his target. Is a borrower’s involuntary relationship with the credit bureau enough to satisfy this requirement? I don’t know, that is something our legal beagles are looking into, more on that in the near future.

Using this credit trigger list allows a company to increase the response rate to send you “pre-approved” credit offers by reaching you at the precise time you are actively shopping for credit. You are identified as an “opportunity” to make firm credit offers, as often as daily.

On another scary note, these sales leads that look as though they must be coming straight from a credit bureau are available not only to lenders but also to companies who then resell them, probably in smaller packages to those seeking leads. There are ads online by several companies marketing leads.

The Federal Trade Commission says these lists are perfectly legal and most of the offers are legit. But if you want to remove your name from the “trigger lists,” here’s how to opt out:

Call 1-888-5-OPT-OUT (1-888-567-8688).

You can also contact these companies and complain about their practices and maybe, just maybe someone at their company will give a hoot about you and your credit worthiness. Personally, I doubt it.

• Equifax
P.O. Box 740241
Atlanta, GA 30374
(800)-685-1111
Web site: www.equifax.com

• Experian
PO Box 9554
Allen, TX 75013
(888) 397-3742
Web site: www.experian.com

• TransUnion LLC
P.O. Box 1000
Chester, PA 19022
(800) 888-4213
Web site: www.transunion.com

October 16, 2006 by Jim Knox.

More home markets ‘extremely’ overvalued

Despite a cool-off in home prices, many markets are overpriced more than ever in the U.S. and they have now climbed into a dangerous territory according to some experts. This is partially due to the perception of home values by owners that have experienced huge gains in value the last few years. Markets with premiums above 34 percent of “fair market value” were deemed at risk for price corrections.

Home buyers are waiting to see if the real estate values hold or start to drop before buying. Those properties that merely a year ago would have sold in 2 weeks are now on the market over 90 days and still not receiving any offers.

Presently, in the Sacramento California area, it has been reported that there are 87 homes for every qualified buyer and those buyers arte looking for a deal.

Higher interest rates, especially for adjustable-rate mortgages (ARMs), helped push some housing markets into the overpriced category last quarter, according to Jeannine Cataldi, an economist with Global Insight, which conducted the analysis with National City.

Though rates have declined since the end of the second quarter, the 30-year fixed rate is still at 6.1 percent versus 5.8 percent a year ago. The difference for ARMs is even bigger. “Price growth will have to be stagnant while income and employment rises for housing valuations to fall,” said Cataldi.

Despite a substantial cooling of real estate markets, home prices were still 10.6 percent higher nationwide than a year ago, according to the Office of Federal Housing Enterprise Oversight.

Seventy-nine of the 317 markets studied in the Global Insight/National City report were judged to be “extremely overvalued,” up from 68 during the first quarter.

The pace of housing price increases has definitely slowed. More than two-thirds of the markets – 219 metro areas – saw a decline in the rate of price appreciation during the second quarter, according to the report.

“Significant slower appreciation, or outright declines, among overvalued markets are a signal that we are in the early stages of a correction,” said Richard DeKaser, National City’s chief economist.

DeKaser suspects that this correction will be gradual but lengthy, and the oldest bubble markets are the shakiest. “What we see happening is that markets early to the boom – Boston, California – are now showing adjustments,” he said.

On the other hand, “Some of those late to the party such as North Carolina, are still showing heady appreciation.”

Naples, Florida, remains the most overvalued market in the nation, deemed 101.5 percent above what National City considers fair value. Bend, Oregon, was second to Naples, 89.3 percent overvalued.

The five most undervalued markets were all in the state of Texas, with College Station, at a discount of 22.3 percent from fair value, leading all others. Dallas (21.2 percent) was second.

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October 10, 2006 by Jim Knox.

If you are looking to become a somewhat savvy real estate investor, look for a niche, build an abbreviated business plan and go forth. Once you make a decision of which niche you want to pursue, say for instance, PRE-FORECLOSURES, then educate yourself on the fundamentals and the verbiage used in that niche. Understanding the foreclosure process gives you some insight into locating foreclosures at their earliest stages.

A Pre-Foreclosure is a property where the owner has become delinquent on the mortgage payments (on the verge of formal foreclosure proceedings) and is ready to move on whether they formally go into foreclosure or they sell the property at a significant discount, usually giving the buyer all of their equity.

Finding Pre-Foreclosures can be a worthwhile investment yielding higher than average returns. Your primary goal is to find a person that is behind on their payments, before anyone else. Once located, you have two primary options, buy the house from the owner and cure the default or buy directly from the bank. If the value of the property is less than the mortgage balance(s) the lender(s) can allow the buyer to purchase the property for less than the exiting loan balance. Buying a Pre-Foreclosure from a bank is called a “short sale” or “short payoff sale”. This type of purchase can guarantee the purchaser equity on the day of closing.

Banks and financial institutions take back homes that they have loaned funds against. They refer to the properties they retrieve as REO’s or real estate owned. Larger banks have REO departments that are solely devoted to the resale of these properties.

Builders who build “spec” homes, homes not presold but built “speculatively”, finance the construction through banks. If a builder has more inventory than he can afford, these new homes can also appear on bank REO lists.

Once the home is in foreclosure and in the case of bank REO’s, become familiar with local contacts of REO departments at banks in your city. Create a report with these bank contacts and inform them of the type of home and the area you are interested in. Depending on the relationship you build with the bank, you may obtain information on homes prior to it being added to the public database.

Once you become seasoned in Pre-Foreclosure and REO purchases you should notice that many smaller banks do not include their REO listings on their books as purchasable assets. They may have too few foreclosures to have a REO department and therefore they simply contact a local real estate agency and market the properties as is. You can contact these institutions directly and talk to the person designated to dispose of these properties. Again, your effort may reap you information about properties that are not in any public database.

Loss Mitigation Department of the Bank

When a borrower misses payments the loan is sent to the bank’s loan loss mitigation department. “Loan Loss Mitigation” departments handle the “Pre-foreclosure Short Sales” not the REO departments of banks.

All lenders will approve a short sale as a last resort. The circumstances for a short sale for a property are directly related to the property’s value as it relates to the amount owed to the bank.

An example of a reason for a short sale would be; a property purchased in an inflated market that has experienced a severe downturn which creates circumstances where the home may have decreased in value and the loan may be “upside down” – more money is owed than the property is worth.

Another example would be if a property was refinanced at 100 percent or more, leaving the property without any equity.

And yet another example is in the case of a deteriorating property that would require extensive repairs to make it marketable.

To qualify for a short sale, lenders require borrowers to show hardship before they will approve a short sale. These can include financial hardship bought on by: death or divorce of a spouse, catastrophic illness, employment loss or incarceration of the borrower or borrower financial insolvency without any realistic chance of improving in the near future.

Cash Only

A short sale is always a “cash only” sale, which will keep many investors away. Also, it is an “arm’s length sale”, meaning you cannot purchase a home of a relative. If you do you are open to a lawsuit and the sale being reversed.

Buying a foreclosure or a pre-foreclosure from a motivated seller can be a good investment for you and in the case of pre-foreclosure a good solution for someone else. A “short sale” is one way to purchase a home with guaranteed equity to the investor.

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Foreclosure, is it necessary?

It has always been the American dream to own your own home, and the American nightmare to be facing foreclosure. According to USA Today, they are approximately 12 million homeowners are close to foreclosure and potentially losing their homes.

With many risky mortgage loans (interest only mortgages, adjustable-rate mortgages… etc) easily available, buyers are able to purchase a more expensive house than they can afford. Unfortunately, it will be devastating to many home owners when these crazy mortgage loans are converted into higher interest loans or fixed rate loans. This is contributing to rising foreclosures in the US.

In addition to losing a major investment, the homeowner facing foreclosure is also faced with a blot on their credit record that could take years to repair. Losing one’s home is one of the most stressful situations that anyone can encounter.