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California Shoppers Have Online Opportunities

Fri, 29 Aug 2008 04:03:00 +0000

LOS ANGELES - Mortgage lenders have raised the bar on what it takes to qualify for a home loan the past couple of years, but shopping for a loan online has actually gotten a bit easier, if not necessarily less confusing.

Where mortgage-scouting Web sites traditionally required users to enter a swath of personal information to generate rate estimates, the newest sites offer users a way to comparison shop for a loan under the cozy blanket of anonymity.

This can help allay concerns over turning over too much personal information online or of being hounded for weeks by mortgage lenders soliciting your business.

Question is, do these rates hold up once real names, credit scores and other personal details come into the picture?

“My gut instinct is that there will be a wide disparity about what rates are quoted on these sites and what they actually end up with, and not necessarily due to the borrower,” Robert Statnick, chairman of the California Mortgage Bankers Association. “All the sites may not collect all the data that’s necessary to give an actual price quote.”

In fact, the lenders ultimately do collect the data they need to figure out what to charge for a loan, but these sites have made it possible to delay that step to give the prospective borrower enough time to shop incognito.

Zillow.com and Mortgage Marvel.com have embraced this consumer-friendly concept in the past year, although that’s where similarities end.

Mortgage Marvel bills itself as the mortgage-shopping version of travel sites Orbitz.com or Expedia.com.

The site, which officially launched in the spring of this year, is operated by Milwaukee, Wis.-based Mortgagebot LLC, a provider of online loan-origination technology for banks and other lenders.

Like the online travel sites, Mortgage Marvel lets users enter details on the kind of mortgage loan they need and the site rounds up real-time rate and lender fee quotes directly from hundreds of lenders.

The site boasts that users don’t need to punch in personal details to get real rates, not teaser rates used to bait visitors. But the catch is users must have a credit score of 720 or better.

Mortgage Marvel says it can make this claim because it’s tapped directly into the 250 banks and credit unions’ own automated loan pricing databases. (It gets a fee every time a user fills out an application with a lender on the site.)

The site requires users to enter only three pieces of information: the loan amount, the property’s value and its ZIP code. Users can toss in a few more variables, including specifying whether they’re looking to buy a condo or a detached home, whether they’d prefer a 30-year, fixed-interest rate loan or an adjustable rate mortgage.

The site then displays a list of any lenders offering quotes on the loan.

But there’s where your anonymity ends. To find out whether you qualify for the rate, you must now fill out an application full of personal information with the lender.

“It’s easy, reliable, accurate and fast - there’s no bait-and-switch,” says Dan Welbaum, chief marketing officer for Mortgagebot.

Zillow’s Mortgage Marketplace page also doesn’t ask for identifying information. It only requires an e-mail address.

Instead, Zillow relies on the honor system, counting on users to fill in accurate information about their personal financial profile, such as their credit score - unlike sites that actually ask you for your Social Security Number so they can run the credit check themselves - and their annual income, how much money they’ve saved, and so on.

Of course, Zillow users are also asked to enter how much money they’re looking to finance, as well as preferences on their loan type.

The site broadcasts this information to its roster of participating mortgage brokers and lenders - 3,332 as of Friday - who then e-mail you with loan rate quotes.

Once you select the broker whose offer you like the best, you’ll have to submit a formal application with personal information.

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Riverside County Homes Getting a AA from Fitch

Thu, 28 Aug 2008 00:39:44 +0000

SAN FRANCISCO, Aug 27, 2008 (BUSINESS WIRE) — Fitch Ratings confirms the ‘AA-’ rating on approximately $37.4 million County of Riverside’s certificates of participation (COPs) (Public Safety Communication and Refunding Projects), 2007 series B and assigns an ‘AA-’ rating to $79 million County of Riverside Asset Leasing Corporation’s (corporation) variable rate demand leasehold revenue refunding bonds, series 2008A (Southwest Justice Center Refunding). Both the COPs and the bonds are scheduled to price on September 16. In addition, Fitch affirms the ‘AA-’ rating on various outstanding lease obligations and COPs as well as the ‘AA’ implied general obligation (GO) bond rating. The Rating Outlook on all obligations is revised to Negative from Stable.

The Negative Outlook reflects Fitch’s growing concern that the effect on the economy of the real estate market’s severe deterioration will stress the county’s traditionally well-managed finances. Reserve levels remain strong but are declining according to fiscal 2008 estimates. Average home sale prices have declined each quarter from September 2006 to June 2008, falling 25% in total so far. Based on Fitch’s residential mortgage backed securities (RMBS) data, which includes only a subset of mortgage activity, delinquencies and foreclosures in the county have increased dramatically since their previous peaks in January 2003 and March 2002, respectively. Creating further pressure on the overall credit is the recent increase in unemployment, a reduction in tax collections and the fact that California’s budget, once enacted, is likely to contain significant cuts to county programs which will add to the county’s budgetary pressures.

Despite these challenges, the county’s ratings reflect its current financial flexibility which is the result of strong fiscal management focused on conservative budgeting, reserve designations and structural balance. Continued credit strength will depend on the county’s ability to control spending and maintain its above average reserves throughout the economic downturn. Further deterioration of the strong, currently well-diversified economy could also pressure the rating.

The COPs are being reissued as fixed rate certificates from auction rate certificates. In addition, a cash debt service reserve will be funded as part of the reissuance. The certificates were originally issued in 2007 to finance a portion of an 800 MHz public safety radio communications system and to refinance outstanding 1997 COPs. The COPs are secured by lease payments made by the county for use and occupancy of the County Administrative Center and several facilities financed with the 1997 COPs. Once completed, the project may be substituted into the lease. Lease provisions are standard and typical of California leases, including two years of rental interruption insurance and the debt service reserve fund. To date, the project is proceeding on budget.

The series 2008A bonds are being issued to refinance the corporation’s leasehold revenue bonds (Southwest Justice Center), series 2000 and will be secured by lease payments made by the county to the corporation for use and occupancy of the justice center. Lease provisions are standard and typical of California leases, including two years of rental interruption insurance and a debt service reserve fund.

The county experienced rapid population and economic growth since 2000, increasing in population by over 30% from 2000-2007. Job and labor force growth was likewise strong, increasing by 3.6% and 3.7% annually, respectively on average from 1999-2006. However, employment growth slowed in 2007 to 1.4% and unemployment increased to 6.2%, compared to 5.0% in 2006, rising to 7.7% in May 2007. The construction and real estate-related sectors have seen significant job losses in the Riverside-San Bernardino MSA, shedding 13% and 4% respectively, in 2007.

The population and job growth fueled residential and commercial construction, resulting in extraordinary assessed value (AV) gains averaging 15.5% annually from fiscal 2002-2008. For fiscal 2009 AV growth slowed dramatically to just 1.5%, with gains from new construction and property sales ($20 billion) largely offset by the county assessor’s reduction of the AV of over 200,000 properties ($16 billion). The county is projecting no AV increase through fiscal 2011. Residential construction in recent years was further supported by the availability of subprime mortgages and other new loan products, which are defaulting at record levels and pressuring home prices. Commercial and industrial real estate development has mitigated the decline in the housing market somewhat, but that sector is starting to soften as well, exhibiting lower absorption rates and rising vacancy rates.

On a positive note, several years of strong economic and tax base growth coupled with good cost controls enabled the county to steadily add to its fund balance while also building flexibility into its budget. Audited results for fiscal 2007 show a remarkable third year of a general fund surplus over $100 million, bringing the total fund balance to $571 million, or 26% of expenditures and transfers out. The county’s 2007 fiscal year-end unreserved fund balance rose to $483 million, a strong 22% of expenditures and transfers out (up from 13% in fiscal 2005), providing an important financial cushion as the county adjusts to slower or negative revenue growth. As the outlook for the county’s economy changed throughout fiscal 2008, the county took action to limit the long-term impact on its financial position. Fitch notes that the county’s sound budgetary achievement while also including substantial capital and other one-time spending, also avoided incorporating unusually strong tax performance into recurring expenditures.

For fiscal 2008, the county projects a drawdown on reserves and designations of about $100 million, and the budget for fiscal 2009 includes the use of a net amount of about $63 million in reserves or designations. At these reduced levels, Fitch believes the reserve levels remain consistent with the rating category, although deterioration beyond the budgeted level could lead to a rating downgrade. Departments have already been directed to reduce their spending targets for fiscal 2010 by at least 8%. Fitch views the county’s budget policies, which include a reserve for economic uncertainties sized at 15% of discretionary revenues and a contingency reserve at 4% of discretionary revenues, as positive and effective in retaining sound finances. Both are fully funded in its fiscal 2009 budget.

The county’s tax base is diverse. The top 10 taxpayers contribute just 1.9% of property tax revenues; however, four of the top 10 taxpayers are homebuilders reflecting their important role in the economy. In spite of the current housing downturn, long term prospects for economic growth remain positive in the county due to the availability of affordable land and the county’s location along major transportation corridors and near major seaports and a cargo-oriented airport.

The county’s direct debt burden is low, equaling just $534 per capita and 0.45% of market value. Including overlapping debt, debt ratios remain moderate, with issuance offset by population and AV gains. Overall debt totals about $3,896 per capita and is about 3.3% of market value.

The county’s pension system is well funded and the county took action in August 2007 to reduce its exposure to other post employment benefits (OPEB), eliminating the implicit subsidy to retirees and reducing its OPEB liability to about $50 million (with a $1.5 million annual required contribution [ARC]) from $237 million (with a $16 million ARC). In addition, the county has prudently set up an OPEB Trust with CalPERS and budgeted $10 million in fiscal 2008 and $5 million in fiscal 2009 to begin funding its OPEB liability.

Note: Fitch issued an exposure draft on July 31 proposing a recalibration of tax-supported and water/sewer revenue bond ratings which, if adopted, may result in an upward revision of this rating (see Fitch research ‘Exposure Draft: Reassessment of the Municipal Ratings Framework’).

Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.