All Forum Posts by: Corey Dutton

I was prompted to write on this topic by an article posted on Mortgage Professional’s America Magazine or MPAMag.com . Borrowers these days have a very disillusioned view of what “normal” interest rate ranges should be. Ask a Baby Boomer what interest rates were like in the late 1980’s on For example a recent survey by Redfin polled homebuyers on what they thought “normal” interest rates looked like. The majority had expectations of a “normal” interest rate to be under 5%. Baby boomers are a generation that could certainly scoff at this survey result, as many boomers remember interest rates in the 1980’s in upwards of 8-9% for a 30-year mortgage. Because we are a private money, hard money lender, we often cite this same example when prospective borrowers complain about our interest rates being high. During the late 1980’s, private money interest rates could be seen as high as 10% per week!! With new usury laws imposed in some States since then to avoid such “loan sharking,” these types of interest rates are virtually non-existent these days. A typical private money interest rate these days can range anywhere from 7% to 15%.

As quoted from the MPA article,

“In the 1980s, rates bounced anywhere from the giddy heights of about 18% to around 10%, according to data from the Federal Reserve Bank of St. Louis – but they never even got within shouting distance of 5%.”

I think the message here is take advantage of cheap credit while it’s available and interest rates are low. Whether you’re getting a private money, real estate loan or a bank loan, I would say get money while you can.

Posted by Corey Curwick Dutton

With the end of 2013 rapidly approaching, many real estate professionals are dashing to try and close their deals before years end. There are those who have been waiting on a short sale acceptance for months, and are suddenly awarded with a December closing deadline. Or there are the banks who have decided to rid their balance sheets of toxic assets before years end. And what about those who have certain tax advantages for liquidating real estate assets before the start of the new year? With sudden opportunities in real estate, such as the ones in these three examples, real estate investors must be able to act quickly. And unless you've got a ton of cash to finance these opportunities, your best bet in such a short funding timeframe is to obtain a hard money loan.

In many cases, particularly in the case of short sales or foreclosures that banks are looking to liquidate before years end, sellers want to move quickly. And most real estate investors aren't able to come up with all of the cash quickly, particularly if more than one real estate transaction is in the works. A good example is a deal that came to us recently. The borrower had plenty of cash but he had a foreclosure purchase a few days before Thanksgiving and he also purchased a property at auction last week. And wouldn’t you know, this week a short sale he had been waiting on for 6 months finally got a settlement deadline from the bank. Because the borrower had used all of his own cash on the first two real estate transactions, he will be short on cash to close this short sale by December 18th. For this reason he came to us for a hard money loan to close the short sale transaction by the settlement deadline. Need to close a real estate transaction before years end? Consider using a hard money loan because it can function similar to an “all cash” transaction and can close before years end.

Posted by Corey Curwick Dutton

If you have a family member or friend that works in real estate, whether as an agent, mortgage broker, real estate investor, or title officer, you may be stumped as to what type of gift to buy for him or her. Below are 3 holiday gift ideas for your family member or friend who works in the real estate industry:

1. Tablet Device: These days there are a bunch of real estate-related applications that will make your real estate professional’s life so much easier. Particularly for realtors, applications like “HomeSnap,” work well on tablets and are perfect to use while taking clients to look at properties to buy. For others, a tablet device is simply an excellent sales presentation tool.
2. Gift card from a local eatery near office or home: Restaurants, lunch spots, or even local coffee shops offer gift cards for your real estate professional. Find one near your professional’s home or office, or somewhere you know he or she likes to eat. A gift card from one of these places is a great gift that keeps on giving.
3. A Day of Play: What does your real estate professional and his or her family like to do? A day pass for skiing, a coupon for a local trampoline park for their kids, or a day at the spa. Whatever he or she likes to do, treat your real estate professional to a day of play or a day of relaxation. The gift of an experience is something that he or she will never forget.

What other holiday gift ideas would you add to this list for a real estate professional? Please share your ideas below.

@Bill Gulley

And with the new international banking standards imposed by the Basel III that U.S. banks must comply with by 2015, lending will probably just stay tight. This is more related to liquidity and leverage standards than compliance but still worth mentioning.

According to an article from MPAMag.com, lender’s profits have been affected by the high costs of compliance that have been mounting since 2008.

According to MPAMag.com, “Production expenses in the third quarter were the highest recorded since MBA began keeping statistics in 2008.”

These high compliance costs are passed on to the borrower and have substantially increased the overall cost of borrowing. Not only does the high cost of compliance affect the borrowers’ pocket book, but also affects borrowers’ ability to even qualify for a loan. Most lenders can’t qualify borrowers because of so many new compliance-related items that come up during the underwriting process. According to mortgage business development manager for Security National, “In over 25 years of doing loans, I’ve never seen so many hurdles in the loan approval process. It has certainly gone way too far in one direction with regard to compliance.”

Posted by Corey Curwick Dutton

They say the memory of the market is the shortest memory of all. Will banks ever go back to their ‘loose lending’ ways of the years 2005 to 2008? With more stringent banking standards imposed by the international regulatory body, the Basel III, many industry insiders say, “No way!” With higher standards of liquidity and leverage that U.S. banks will have to adhere to by 2015, most banks are tightening up the purse strings, not loosening them.

But it’s not the stated income loans that were the villains in this real estate meltdown drama, but rather the banks themselves and Wall Street. Placing the blame on the stated income loan products is like saying a vicious dog is at fault for biting someone, when really it’s the abusive owner of the dog who is at fault. Personally I think eventually banks will go back to their loose lending practices of 2005 to 2008, but there will be a new loan product, like the stated income loan product, that banks and Wall Street will be pushing. Again, the memory of the market is the shortest memory of all. What is your opinion on this topic? Will banks ever go back to their loose lending practices of 2005 to 2008. Please comment below.

Posted by Corey Curwick Dutton

I never thought Redbox would work but it's just a Blockbuster Robot!! So easy and simple, yet so brilliant!

There is no moderator so, no, the owners don't care. They left it alone a long time ago because it wasn't making them any money I suppose....I don't know but it's a crap show over there!!

Bad deal for Dish....

The fat lady officially sang for Blockbuster this month as the entertainment retail chain’s new owner, Dish Network, announced the closure of 1,500 stores. The failing Blockbuster chain was purchased by Dish Network in 2011 in a bankruptcy auction for $320 MM. Many industry observers thought this was a smart purchase as they speculated that Dish Network’s strategy was to revamp the chain into a new concept. But since the purchase, Dish Network has done nothing with the chain of 1,500 stores until their recent closure, announced officially this month. I guess industry observers were wrong, maybe this wasn’t a good acquisition by Dish Network after all? (Source: National Real Estate Investor: http://nreionline.com/blog/blockbuster-close-remaining-stores#comment-3261 )

This is another example of the how our new economy has transformed the way we consume media and entertainment. Blockbuster’s business model was essentially annihilated by new media consumption. The Internet has allowed people to access infinite titles from infinite genres. And as the average household has become more and more comfortable with the Netflix medium, this was certainly the death knell for Blockbuster. A poor business decision by Dish perhaps? What are your thoughts on this sour topic?