Wasn’t it the Gershwin boys who said “Nice loan if you can get it, and if you get it, won’t you tell me how?” Finally, the national media has picked up the story of what in-the-know Realtors deal with every day. Your great FICO score and the ample down payment may not get you the loan you keep hearing about, especially if your dream castle is a condo.

I called upon respected mortgage expert Michael McGee of Cobalt Financial for perspective. He said, “Even if you don’t qualify for the rock-bottom rate, have less-than-perfect credit history and a low down payment the worst you’d be facing in today’s environment would be a rate in the mid 5% range for a loan up to $697,500” Beats the heck out of the 17% rates of the mid-70’s!

So, if you’ve sailed into the local Big Bad Bank branch to drop off the smudge-free, hand-typed, IBM-Selectric version of your loan application, do yourself a GIANT FAVOR and get a copy to someone like Michael McGee who really cares about you and your satisfaction with his services.

If getting a better loan isn’t enough reason to use a credit union or mortgage broker, here’s a little trade-secret: Under the new Consumer Financial reforms engineered by President Obama, loan reps, brokers and originators must pass a tough new test known as the Nationwide Mortgage Licensing System Examination before advising you on home loan products. Ooh…but guess who doesn’t have to pass the test? That’s right. Big Bad Banking wangled an exemption so that the frontline bad-actors in the financial meltdown remain free from education, certifications and any hint of consumer protection. Really nice.

You, me and a dirty new fee…

If you have been out shopping for any kind of resale property in the last year or so, you have no doubt run into the “short-sale.” As discussed in previous columns these can be the deal of a lifetime for a patient buyer; a way-out for a desperate seller or a miserable exercise in frustration for both.

Due to the perceived (and sometimes genuine) extra efforts needed to complete short-sales many brokers have elected to outsource the processing of short sales to third party negotiators. More often than not, however, the so-called “short sale negotiator” ends up being the listing agent’s assistant or an admin person somehow related to the firm.

As a buyer, keep your eye out for contract clauses that state buyer to pay x% of sales price or $x,xxx for short sale negotiation fees (SSNF). These bad-boys range from about $1500 to a high of 1% or more of the sales price – not chump change either way you look at it. Often, the listing agent demands the buyer sign some innocuous document authorizing these fees as a precondition of forwarding your offer to the seller. Like Amy Winehouse, we say “NO, NO, NO!”

At the federal level, government does a good job of protecting consumers from usurious fees through Department of Housing and Urban Development (HUD) regulations known as RESPA or The Real Estate Settlement and Procedures Act. Cases on SSNF are slowly working their way towards class action status and no doubt will be discussed for inclusion in future RESPA updates. When a consumer in a real estate transaction is mandated to use a specific vendor, pay a non-negotiable fee, AND has no option to evaluate the cost/benefit ratio for services rendered; then the spirit of the existing RESPA rules is certainly violated. Stay tuned for big fines and penalties. In the mean time, it’s the Wild West with agents writing their own contract language with nary a concern for the liability they may be creating for themselves, their brokers and most importantly their clients.

Daina Moore – Rules and Regulations Manager for Sandicor, Inc., which operates San Diego’s Regional MLS suggests buyers visit the California Department of Real Estate (DRE) website for more information at www.dre.ca.gov . Ms. Moore points out that DRE recently made prepayment of SSNFs illegal except to attorneys who are members of the State Bar and clarified that any person involved in the direct negotiation of a short sale on behalf of another person, must have a valid State of California Real Estate license. Smart listing brokers already handle this expense in a way that relieves buyers and their agents of the burden while still compensating a negotiator. If our colleagues need a clue, give a call. 619-398-3888.

Shhhhh…Short Sale Fatigue Gotcha Down? Try these good old-fashioned traditional sales and today’s bargain prices!

Horizons Residence 202….Rare 1BR. Prime Marina District Location 900 sqft for $379,000

Sandra Melville - sandra.melville@argsd.com

Pinnacle Residence 1002 1/1 in Downtown’s Toniest Bldg. Balcony bay views - 737 sqft for $385,000

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