R. Fred Cope

Luke,

I've continued to read your posts: "Will we see significant price reductions in Nashville, TN due to the credit crunch and the rising inventory?"

My answer remains the same: "NO!, homes in Nashville are not over priced.!" As in any market, some are, and they set. Others are not, and they sell. You want to compare this year to last year, but this years in a part of a broader graph. There is, and always has been, ups and downs in the market. The Nashville Real Estate Market is sound, and homes remain sound investments. Many homeowners, like myself, are NOT putting our homes on the market; but that doesn't mean they would not sell, nor does it mean they have lost significant value.

I listed a home in a "soft market" neighborhood, and got full price. Full price was based on an appraisal done in the Fall of 2007, which the appraiser told me that the comps still support that value. Three "buyers" made low-ball offers, and the seller stood firm. Value remains the price at which buyer will buy, and seller will sell. Only panic will "significantly reduce" Nashville prices, and I DON'T SEE PANIC. - Mon Sep 15 2008, 15:24

Hello Luke,

To answer your question in a word: NO.

But, you ask a very important question--one many people have. You reflect what millions of Americans have formed from watching the nightly news and reading newspaper headlines. Every day, we are bombarded with poorly researched, sensationalized and half-baked commentary on the Nation's economy. There are a lot of Chicken Little's out there, screaming "The sky is falling."

Truth is, current home sales are strong--not as strong as a couple of recent years, but stronger than most years. Like the unemployment figure, the bad news leads at 6pm and 10pm. 95% of workers are employed. The current President gets no credit for raising the traditional 94% being up to near 96% until recently. He is being blamed for it being down 1%. I certainly don't want to minimize the plight of the 4 to 6 percent who are not employed; and to the same extent I don't want potential home buyers mis-led into thinking houses are over-priced. There are bargains out there, but not every seller is in a desperate situation and looking to unload their house. Personally, my house will not bring what it would in 2006, but I'm not going to have a fire sale. I know the value is returning, and will continue to rise.

Bottom line, NOW IS THE TIME TO BUY--HOUSING IS IN DEMAND--VALUES ARE ON THE REBOUND--YOU WON'T GET AS MUCH HOUSE FOR YOUR DOLLAR IF YOU WAIT. Like fresh donuts, grab one quick--because demand is greater than supply. I PROMISE. - Wed Aug 6 2008, 03:15

Hello Pam,

Come on down to Nashville. Of course from Denver--most every place is down. You live in a beautiful part of the world, and so do I. Middle Tennessee is beautiful.

In a word, the answer to your question is "YES." Many homes in Tennessee do have basements. There is a lot of limestone in the area, so foundations are prevalently either crawl space or basement. There are homes built on concrete slab as well. Many homebuyers want basements because they offer additional space for very little more cost. Family rooms, rec-rooms, workshops, additional bedroom space are all popular uses of basements.

As in other areas, each basements must stand on its own merit. Have you had good/bad experiences with basements? Are you interested in inished or unfinished basement space?

You are welcome to go to my website, select the GREATER NASHVILLE MLS tab, and search homes isted in Middle Tennessee. Refine your search for homes with basements, etc. You can choose the LOOKING FOR A HOME search tab, and set up an email alert to let your know immediately when new homes (meeting your criteria) come on the market. ALL OF THIS IS FREE and without obligation. The only information required of you is a valid email address for the reports.

I'm happy to answer any additional questions you may have. Feel free to use my website...http://www.LookingForHomes.org

Respectfully,

Fred Cope,
The Realty Association - Sat Sep 6 2008, 19:30

Susanne,

Check into permits with Metro Codes Dept.--make sure you know requirements and cost of permits. Resale value could be harmed if construction permits are not pulled and appropriate inspections performed. An ounce of prevention - Sat Sep 6 2008, 18:04

Hello Susanne,

Congratulations on your home purchase, and good luck on your contractor search. I do not know a contractor in East Nashville to recommend; but would like to pass on a couple of things that may be of help.

DO require references, and check them out. Lowest Price is not a recommenation--it may be a recipe for disaster.
DO insist on seeing their license (or at least confirm it on the state website). Ask for their License number, what classifications it intails. Go to http://state.tn.us/commerce/reports/index.html If you have difficulty with the link, delete everything after commerce/ and try again. Follow onsite directions.
DO get more than one bid, and ask tough questions.

Good luck,

Fred Cope,
The Realty Association - Sat Sep 6 2008, 17:56

Anxiousbuyer,

This is not an FHA denial. FHA insures the loan--they don't make the loans. You are in Nashville--not Las Vegas. Twenty-five years of doing mortgages in this market [Nashville] has convinced me that FHA is your friend and not your enemy. As I conveyed in an earlier post, there is either a (1) a problem with qualifying income--which should have been caught weeks ago, when you provided tax returns to the loan officer; or (2) there is a communication failure between the processor and underwriter. Conventional underwriting is more restrictive on self-employed income. Tips and percentage pay can be forms of self-employed income, and are governed by different rules, such as minimum 12 months pay history. I think I know how to resolve your problem, based on what you've told me.

Look for the e-mail sent to your personal address. I'll do what I can to help you resolve this...

Fred - Sun Aug 31 2008, 10:50

Anxious,

Just read your latest post...

I have a long and cordial relationship with SunTrust underwriters in Nashville. They are some of the best and most helpful I've ever worked with. I frequently correspond with a couple of them. This makes me more certain that your issue is with the broker.

If your LO is in her 60's, I probably know her as well. Forty years ago there weren't that many female LOs (most were loan processors) and the ones still around generally have good reputations for honesty and hard work. This thing gets more weird...

Assuming your loan is now in the hands of the local SunTrust underwriting staff, I would be reluctant to move it without more information. I don't have details, so I can't send the ST Manager a heads up, and I don't want to give out names a phone numbers on line. You have my personal e-mail address if you want to send details that I could forward to her. That manager is one of my all time favorite underwriters.

My heart goes out to you on this excrutiatingly long weekend.

Fred - Sat Aug 30 2008, 09:44

Anxious,

This getting to be a soap opera...

It sounds like your agent is keeping a cool head, and considering your circumstances--you too! I don't buy the retirement line. In the late 1980s I worked with a loan officer who made promises he couldn't keep and then ducked out when the heat came. I worked with a couple of others in the 90's, but in all cases there were (1) a loan processor taking that heat and working hard to resolve the problem, and (2) a branch manager who got to the bottom of the issue. Do you have a cell phone number on this LO? Dial it.

All we can do is speculate--only that processor and manager can resolve this, IF the LO has truly retired. Twenty-five years in mortgage lending tells me that you are NOT getting ALL the facts, and so I know I don't have them. Furthermore, if the underwriter is having problems with the income, it is either (1) there is a problem with the income, or (2) a failure to communicate. Until you have a face-to-face meeting with these parties, you are not going to get all the facts. Another lender might be able to work it out, but I haven't seen any documentation on which to base that conclusion.

You are in my prayers...

Fred Cope - Sat Aug 30 2008, 08:03

Anxious,

Sorry to hear of your set-back. I understand that you are frustrated--who wouldn't be? Something doesn't jive here: you are led to believe all is well, and now your "case" is having to be re-underwritten. Everyone is singing to different tunes. The basis of my original observations seem to be re-confirmed. Someone is just putting a file in front of an underwriter for the first time. Someone failed to properly analyse your income on the front-end of this loan--a blind man can see that... I wouldn't wait til Tuesday to get the answers to the questions I raised in my original post: "What income was used to secure the pre-qualification/pre-approval"? "How was it derived"? If you have a cell phone number of the Loan Officer, I'd call Saturday morning, set up a meeting for Saturday, and request copies of the original loan submission. I'd request the presence of the office manager and your agent at that meeting. Someone is shoveling snow in August...
IF YOU DON'T PRESS THIS ISSUE, YOU COULD BE DELAYED FOR MORE THAN A FEW DAYS.

DO PULL YOUR DOCUMENTATION TOGETHER: Tax returns, pay-stubs, budget, and strong letter of explanation (detailing hubby's income). Something you said makes me think either (a) hubby claimed a lot of expenses against the income, or (b) underwriter is hitting the income with an expense percentage. Was any of the income, CASH based and unreported?

Again, I'd build my case with compensatin factors: how much in new house payment increasing over current payment. [Example: Going from $800/month to $1200/month is a 150% increase in monthly payment.] I'd document my savings and 401k / IRA to show reserves. I'd stress my good credit history, and/or my limited use of credit...

If you have questions, call me at (615) 587-3500 this weekend. I don't mind answering any questions...

Respectfully,

Fred Cope - Fri Aug 29 2008, 21:13

Anxious,

May I call you by your "first name"? Obviously, you are not as anxious...that's great!!! You've gained a fan club here--just know we are pulling for you. By the way, I want to commend you for (1) expressing your concerns without calling everyone "idiots", (2) weighing the advice you received with good judgment, and (3) praising you loan officer's efforts. You may want to let her name slip out, so others might support her. Too often, LO's name is only attached to negative comments in such a public forum. I know that I would have appreciated your comments above were I in her shoes.

Best wishes, and tell your friends about Trulia Voices. I trust that others can see that those in the real estate and mortgage industries are not three headed monsters. Drop in at my website from time to time, and always feel free to shout if you have or know of an issue that could stand a little airing...

Respectfully,

R. Fred Cope,
The Realty Association - Fri Aug 29 2008, 15:01

Anxiousbuyer,

Just checking in to see if you got answers to your questions. No further post by you could be good news--I hope it is. I believe most mortgage lenders do have a genuine desire to help their clients resolve issues. Please let all of us know the outcome. We're pulling for you...

Fred - Fri Aug 29 2008, 14:13

Anxiousbuyer,

I noticed that you have an Inglewood zip code, so I wanted to take a moment to say that 25 years in the Nashville mortgage market has taught me that we are blessed with many good, common sense underwriters, and that your deal is most likely in good hands. I don't know which lender [bank] is making the loan, but I've worked with many of these underwriters, and only wish to say "stay the course--you should be fine."

You mentioned that your husband is a w-2 employee, and I assume you are as well. The base portion of his income will be like yours: 100% allowable. It is that variable portion [tip and production income which fluctuates that is at the heart of an underwriter's concern. You asked about HOW to document that income. I'd do two things: (1) ask the employer for a computer print out of each week's income broken out into base, tips, and credit card percentage [if you have saved paystubs--they may provide the same information]; and (2) a letter from the employers explaining (a) how hubby is paid, (b) what trends are known, and (c) how valuable hubby is to them. Further, if pay raises are coming, have employer to include that information in the letter.

Additionally, IF there are compensating factors--use them. Compensating factors include such things as large savings account--funds that remain after closing; additional sources of income that are not being used to qualify [examples National Guard pay, annual bonuses, history of working a second job, large down-payment, energy-efficient home, no children, company car, strong history of financial responsibility, and a history of making a comparable monthly payment [example: current rent and large car payment recently paid off]. You see where I'm headed... You could also provide a written budget that shows you are able to meet your responsibilities and have money left over [savings].

All of this may not be necessary IF you find out that your debt-to-income ratio is in scope even with reduced income [I hope that is true for you]. . But Time is of the essence, and you may want to load up all your arguments now.

As a loan officer, that is where I would have started: qualifying you on your base incomes, and providing documentation on the tip, etc. as a bonus measure. I'd have asked for the employer letter/pay-stubs at time of application if that income were essential to qualifying. Further, I would have (1) discussed my concerns with an underwriter up front--seeking her guidance, and (2) I'd have composed a precise and analytical cover letter--arguing WHY I THINK YOU ARE A GOOD RISK. - Thu Aug 28 2008, 21:41

Hello Anxiousbuyer,

Congratulations on finding your home, and on finding Trulia Voices. As a former mortgage loan officer [25 years], may I put a couple of things in perspective?

Your pre-approval letter most likely resulted from the loan processor putting your information in an automated underwriting program such as "Loan Prospector" or "DO on the Web". It simply means that you fit into their loan parameters. The income figure used could have been exact [based on analysis of most recent two years taxreturns], or just a general figure pulled out of thin air [most likely the loan officer took whatever figure you said, "We maked $xx,xxxx per year..." and divided it by twelve]. I'd ask to see those original submission documents, and ask "How did you arrive at this income?"

Another "fact" is that your loan is just now going into underwriting. Until now, your loan has been in processing--the fact gathering stage. That is truly WHY the underwriter is just now asking these questions--she is just now getting your file. The loan file doesn't go to underwriting until everything has been verified, and the appraisal has been completed.

Suggestion: ask your loan officer, point blank, if this is true. Do not delay raising these questions. Remember, "the squeeky wheel gets the grease." If your agent has a relationship with this lender, get the agent involved now.

I do not wish to alarm you--most likely everything is fine; but NOW is the time to find out.

You did not indicate how long your husband has been self-employed, nor whether you were tight on your credit score and/or debt ratios. If you are not maxing-out your buying power, there is room to wiggle, and the underwriter will most likely work it out for you.

One final thought, Underwriters are trained to assess risk, and they get paid to make loans--not turn them down. If I may be of further service, you may email me at rfredcope@msn.com . Good luck, and may you have good news soon.

Respectfully,

R. Fred Cope,
The Realty Association
(615) 385-9010 - Thu Aug 28 2008, 13:28