What is 10.2?

What is 10.2? 10.2 is a section of Real Estate Purchase Agreement, which specifically talks about 5 items sellers warrant to buyer:

1. broom clean and free of debris property
2. heating, cooling, electrical, plumbing and sprinkler systems and fixtures, appliances and fireplaces will be in working condition
3. roof and foundation shall be free of leaks known to seller
4. private well or septic tank servicing the property should have correct permits
5. property, improvements, including landscaping, will be in the same general condition as they were on the date of acceptance

Sometimes, Sellers concern than after the inspection, buyer will use "written objection" period of time as a renegotiation period. While it might be true, and I almost strong suggest to work reasonable things out, seller must be aware what items he/she must to repair, and what items are not up for negotiation.

On the date seller deliveres physical possession to the buyer, those 5 items should be completed. And, they are not up for discussion.

Let's review short scenario, seller and buyer under contract, and after the inspection, buyer requires seller to change the roof because it is an old one. Does he have to do that? As long as this roof does not leak, no, he does need to do that.

Help for Troubled Borrowers

Bush's Hope Now initiative is a voluntary accord entered into by lenders, loan servicers, and mortgage investors to help borrowers who face dafault when their subprice adjustable-rate mortgage resents at a higher rate.

what to do?

1. call the national counseling hotline President Bush publicized. The number is 888-995-4673 (888-995-HOPE) is available on a 24/7 basis.
2. Expect to be on the phone for at least 45 minutes.
3. Expect a counselor to recommend a course of action
4. Servicers are increasingly amenable to be flexible
5. Borrowers are receving fast-track workout plans based on their eligibility

Different Help for Different Borrowers:

1. Owners who are able to stay current even with a rate reset

Solution: counseling and refinancing. Lenders may be able to take these borrowers through a fast track Process ionto a more affordable plan

Potential Pitfall: Prepayment Penalty. Borrowers are encouraged to time their refinancing tp after the rate reset, since penalties often apply only during the initial rate period

2. Owners who face defalt after a rate reset

Solution: Counseling and rate freeze of up to five years. To qualify, they must be ineligible for refinancing (e.g., have a loan-to-value ratio of greater than 97%), occupy the property as a primary residence, and have a credit score of less than 660 that hasn't improved more than 10% since the loan was originated

Potential Pitfall: The rate freeze is temporary; borrowers still need to work out a long term solution

3. Owners already in default

Solution: Counseling and a loss-mitigation strategy, such as a short-sale or deed in lieu of foreclosure. Under the mortgage debt foregiveness law signed by President Bush Dec. 20, borrowers who receive debt foregiveness as part of a loan workout over the next three years won't have to pay federal tax on the forgiven amount.

Potential Pitfall: Those who dont' call in time may not be able to avoid foreclosure

Market Update

Last Updated: 11/19/2007

Monday's bond market has opened in positive territory following another weak morning in stocks. The Dow is currently down 167 points while the Nasdaq has lost 35 points. The bond market is currently up 10/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point.
There is no relevant economic news scheduled for release today. The rest of this holiday-shortened week brings us the release of three factual economic releases. However, none of them are likely to affect mortgage rates much. The bond market is expected to close early Wednesday and Friday and be closed the entire day Thursday in observance of the Thanksgiving Day holiday. In addition, I expect to see light trading in the financial markets most of the time that the markets are open.

Wednesday's bond market...

Wednesday's bond market has opened in negative territory despite weaker than expected economic news. The stock markets are relatively calm with the Dow up 20 points and the Nasdaq down 1 point. The bond market is currently down 8/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.
The Commerce Department gave us October's Retail Sales figures early this morning, saying that sales rose 0.2% last month. This matched forecasts, therefore, has not had a significant impact on the bond market or mortgage rates today.The Labor Department posted October's Producer Price Index (PPI). They said that the overall index rose 0.1%, while the more important core data reading remained unchanged from September's levels. These readings were 0.2% below forecasts, which is very good news for bonds and mortgage rates. However, the bond market has failed to react to the news as it was expected to, keeping this morning's mortgage rates from improving.October's Consumer Price Index (CPI) will be released early tomorrow morning. This index is similar to today's PPI, except it measures inflationary pressures at the more important consumer level of the economy. The overall portion is expected to show a rise of 0.3% while the core data is expected to rise 0.2%. If we see weaker than expected readings as we did in today's report, we should see mortgage rates improve tomorrow.