When someone gets a loan (mortgage), whether it is a home purchase or a refinance, there are closing costs involved in the transaction.  Even “no cost” loans have closing costs associated with them, but they are not evident because the costs are paid by the lender.  But every transaction has fees associated with it in four main categories. 

These categories are standardized by HUD and identified by number throughout the industry as follows:

• 800 – Items Payable in Connection with Loan
• 1100 – Title Charges
• 1200 – Government Recording & Transfer Charges
• 1300 – Additional Settlement Charges

It is recommended that borrowers always ask the lender for a Good Faith Estimate which will outline these fees by category, and to go over that estimate in detail.

Fees that are included in the 800 series are lender and third party vendor fees such as loan origination or discount fees, processing, underwriting and wire transfer fees, appraisal, credit report, and tax service fee.  These fees may vary slightly from lender to lender, with the major difference most likely being whether the lender is charging points or not. 

The 1100 series fees come from the title companies and are things such as escrow fees, document preparation, notary fees, and title insurance.  If it is a purchase transaction, there will be title insurance for the property and a lender’s policy.  If it is a refinance, there will only be fees for a lender’s policy.  These fees vary slightly from title company to title company.

The 1200 series fees are for recording fees and any city/county transfer tax.  These vary depending on where the property is located.

While fees associated with the 1300 series are not often included in a Good Faith Estimate because they will not be known at the time of providing the initial GFE, they may, in fact, be a part of the transaction at closing.  These fees may include such things as the pest inspection.

One of the grievances of borrowers is finding out that they have to bring in more money than they thought they would, or getting less back in the case of a cash-out refinance, at the end of the transaction.  This is largely due to the prepaid interest, hazard insurance and/or mortgage insurance (shown in the 900 and/or 1000 sections) that are not really fees, but are dollars needed to finalize the loan.  If an escrow or impound account is being established for the loan, the borrower will be required to fund that account at the close of escrow which can also increase the money needed.  Although the dollars shown in this section are not really “closing costs,” it is important that the borrower has a clear picture of the total funds needed to close the transaction.

Stacy Kennedy real estate auctioneer extraordinaire – she can talk faster than three real estate agents in a bidding war – has brought to the attention of the Valley Marketing Association the need of 3/7 Lima Company.

#/7 Lima Company is on its second tour of duty in Iraq. Staff Seargent Aaron Belt of Lima Company is Stacey’s brother. 3/7 Lima is stationed out in the boonies and they suffer from a lack of what we might consider “basic necessities.”

The VMA has adopted 3/7 Lima Company, as a way to show our support for all of our troops. Please read this File Attachment: lima_company.pdf (759 KB)to see how you can help. 

Whether you’re asked to be a guest on CNN or a blog video, you want to come off as an expert, not an idiot. The following pointers from Media Training 101 by Sally Stewart can help:

1. Know what you're talking about and to whom you're saying it. Jot down a few key points you want to make on note cards.

2. Give some thought to what you don't want to mention, as well. Set boundaries and watch out for topic drift.

3. Remember, the person you're talking to is not your friend and will use anything you say — especially the asides.

4. Prepare mentally for the pressure, but don't try to be perfect. A little stuttering is OK. It shows you're human.

5. Be succinct. Limit your responses to three sentences or less for print media and a single sentence for television.

6. In a television roundtable, you might get to respond to one question during the entire show. Make it count.

7. Don't talk over another guest. A little interplay is good, but too much pegs you as a bully. No one can hear you anyway.

8. Avoid these terms: frankly, truthfully, Web 2.0, proactive, impactful, paradigm, synergy, no-brainer, empower, Web 3.0.

I read this in Wired magazine and thought it worth noting and passing along.

It took more than 26 days of tense negotiations but the garbage lockout in Alameda County has finally come to an end. With first shifts for returning workers beginning at 8:00 Sunday night, neighborhood trash pickups will generally resume the following morning.

Members of Teamsters Local 70 voted 363-3 to ratify a new five-year contract that touched  on health care benefits and picket lines. Workers will receive 5% pay increases, meaning that the new average salary for a driver would range between $70,000 to $74,000 annually.

Though many county residents breathed a sigh of relief at this problem’s resolution, it didn’t stop retired librarian Cindy Simons from filing suit against the Waste Management of Alameda County last Thursday. She is demanding compensation for all the days missed by Waste Management during the lockout.

Over 200,000 households and 9000 businesses have been affected, although no other city has had more complaints over the duration of the garbage lockout than in Oakland (over 3,400 complaints as compared to only 126 at the same time last year).

- Joseph Natividad 

California First-Time Buyers on the way to Extinction

Can you think of a better scenario for first-time buyer extinction than:

• The average cost of a house is $600K. Entry level condos $350K.
• No 100% financing
• Tighter lending standards based on verifiable income and higher FICO scores.

Gone are the hay days of 80/20 notes, over-stated appraisals, taking a buyers word that their $50K income is really $75K.

It’s DejaVu all over again.

Seriously, here in the San Ramon Valley and TriValley areas of California, the first-time buyer may soon be an extinct species. The housing affordability in this area is heading downwards of 20%. Jeff Davi, the California Commissioner of Real Estate, says the situation is a crisis. The Governator sees the state’s infrastructure in crisis and higher on the list of priorities.

How much of this state’s economy is driven by housing? A lot. When first-time buyers become extinct and are no longer entering the market to push move-up buyers out of entry level homes – what will the impact be?

Condos are going up faster in Dublin, CA than prairie dog holes in Wyoming. Are we about to have a condo glut – the likes of which have not been seen in this area for years??

The subprime apocalypse may soon be upon us. The National Association of Realtors just revised their time line for a housing market turn around to 2008. In the following days, Wells Fargo, WaMu, Countrywide and First Franklin all announced the discontinuation of the 2/28 subprime mortgage products. In the same period, about $2 billion dollars of subprime losses are acknowledged by major players.

Any day now we can expect a new NAR timeline on the housing market recovery. It makes me wonder if anyone at the NAR is actually involved in any critical analysis of what is really happening.

The population of California grows by 400,000 people a year just from instate reproduction. The most obvious scenario for California first-time buyers seems to be –  mom and dad pull $50K to $100K of equity out of their house to help the kid get started.

Am I overreacting? I don’t know. This whole subprime thing seems primed to make Enron and all the other economic messes of 2001 look like walks in the park.