Real Estate Weekly June 11, 2021

INSIDE

This Issue

INVESTING IN MULTIPLE MORTGAGES UNDERSTANDING MORTGAGE-BACKED SECURITIES PAGE 5 A FAIR APPROACH TO MULTIPLE BIDS PAGE 7 CLASSIFIEDS PAGE 7

JUNE 11-17, 2021

INSIDE

TABLE OF CONTENTS

PAGE

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Investing in multiple mortgages.

Understanding mortgage-backed securities .............................................................................P5 Q&A Ask Our Broker.......................................................................P6

A Fair Approach to Multiple Bids.........................P7 Classifieds............................................................................P7

RE-Weekly To advertise in RE-Weekly or other Skagit Publishing publications, Call: 360.416.2180 or Email: ads@skagitads.com ©2021 by Skagit Publishing | All rights reserved.

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own the local real estate market expand your reach when you combine the power of our digital audience and premium print ads in the re weekly ask your multimedia account executive for details.

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June 11, 2021

STAT Real Estate Stat

1,569,000 The number of housing starts in the month of April, 2021.

Source: National Association of Realtors

FEATURED HomE FRom covER:

525 East College Way, Ste J

W CASCADE WAY #61&62, MARBLEMOUNT

Mount Vernon, WA 98273

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Mission Statement: The North Puget Sound Association of Realtors advocates for Realtors and their clients, and promotes the protection of property rights.

June 11, 2021

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Skagit Tradition Realty LLc 3780 E. college Way mount vernon, WA 360-424-0300 www.skagittraditionrealty.com

$225,000

Sherry Ruderman 360-540-1552

Very few properties manage to beautifully integrate the outdoors into their living space but this cabin in the woods will delight you with wilderness surroundings while cradling you in the kind of luxury you crave after a long hike. Let the magical flow of music from nearby Boulder Creek lull you to sleep in this cozy cabin kept toasty warm with a propane fireplace. Sip wine and relax on your covered deck down the short path from the cabin next to the wood fire in your cedar plank hot tub. This wonderland in the wilderness will certainly capture your imagination while providing a base for all your adventures in the Cascade Mountains. MLS# 1729892

95219-1

NORTH PUGET SOUND ASSOCIATION of REALTORS®

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Now could be the time to sell a new home and earn a slice of the real estate pie.

Record-low interest rates and record-low housing prices are renewing interest in the floundering housing market for many people.

“When sellers are interviewing real estate agents to market their homes, their primary focus is usually on the advertising that the agent will offer them,” says Jessica Goodbody of Weichert Realtors.

Let us help you meet your marketing goals by advertising your listings in Real Estate Weekly.

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RealEstate weekly In print and online goskagit.com ads@skagitads.com

June 11, 2021

m t m t – o t fi t

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Investing in multiple mortgages Understanding mortgage-backed securities

By Erik J. Martin hen you obtain a mortgage loan to purchase a home, you trust that this is a smart investment that will pay you back handsomely when it’s time to sell. But this isn’t the only way to invest in real estate.

You can also explore a mortgage-backed security, a type of asset-backed instrument secured by a collection of mortgage loans – often dozens or hundreds of mortgage loans bundled together into a single financial vehicle available to investors.

With an MBS, the lender serves as a middleman between investors and homebuyers: The lender provides mortgage loans to its borrower clients and then sells them at a reduced rate to be included in an MBS. “An MBS is a group

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June 11, 2021

of mortgages packaged together and securitized so that investors can buy them,” says Ralph DiBugnara, founder of Home Qualified in New York City. “An MBS essentially makes a mortgage bank a conduit between the customer and the investor. Here, the investor is actually who is lending the money to the customer at the end of the process, as the investor is buying it with a specific rate or return on their investment to them. And the lender is selling those mortgages to the investor for an upfront profit rather than a longterm profit.”

MBSs are available to investors typically in the form of mutual funds and exchange-traded funds (ETFs).

“Many large mutual fund organizations sponsor funds that specialize in

mortgage-backed securities.

They invest shareholder funds in a diversified portfolio of such securities,” explains Robert R. Johnson, professor of finance at the Heider College of Business, Creighton University, Omaha, Nebraska.

There are two types of MBSs: pass-throughs and collateralized mortgage obligations.

“A pass-through is the simplest form of an MBS. Cash flow proceeds are passed through to investors, who receive principal and interest payments on that pool of mortgage loans after servicing fees are subtracted,” says Katsiaryna Bardos, associate professor of finance at Fairfield University in Fairfield, Connecticut.

Collateralized mortgage obligations (CMOs) are more complicated.

“CMOs are synthetic

instruments consisting of multiple mortgage-backed security bundles whose value and rate of return depends on the underlying quality of the component loans,” Brian Martucci, a Minneapolis-based finance expert with Money Crashers, says.

Put another way, a CMO is a group of MBS securities pooled together and given a rating; investors are paid based on the rate of return determined by that rating, per DiBugnara.

The good news? The average person can invest in an MBS. “Mutual funds and ETFs are particularly attractive to small investors who may not be able to invest directly in mortgagebacked securities due to the large minimum investment required and most securities. These funds and ETFs often also offer automatic

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monthly reinvestment of interest, principal or both for investors who do not need additional income,” Johnson says.

Martucci says there’s another quick path for average investors with relatively modest resources to easily invest in the MBS market.

“You can choose a government bond fund that invests in MBS products backed by governmentsponsored enterprises, such as Ginnie Mae. Government bond funds are among the lowest-risk investments available to ordinary investors,” notes Martucci.

It pays to keep an eye on the MBS market, particularly if you invest in government bonds.

“There’s a good chance your retirement plan invests in government bonds, unless it’s entirely composed of stocks,” Martucci says. “For homeowners, it’s not as important to monitor the MBS market. But it is important to understand that securities can affect housing prices and liquidity.”

Before the financial crisis occurred, MBSs were extremely popular investments. That insatiable demand led mortgage bankers to loosen their lending standards.

“Lower lending requirements led to lenders aggressively competing for customers, resulting in mortgages that relied on little to no documentation required,” Johnson explains. “That resulted in a spiraling of housing

prices, as many unqualified buyers were able to obtain mortgages and bid up the prices of homes. Mortgage brokers were more than happy to provide questionable borrowers with loans.

That’s because these brokers didn’t hold the mortgages – instead, they packaged and sold them to investment banks that created mortgage-backed securities based upon these loans.”

At the same time, rating agencies, paid by investment banks, “failed to properly estimate the riskiness of mortgage pools they rated. Buyers of mortgagebacked securities blindly relied on the ratings and assumed they were buying low-risk assets,” says Bardos.

Fortunately, MBSs are safer investment vehicles today than years ago.

“The Dodd-Frank legislation passed as a result of the financial crisis addresses previous flaws in mortgagebacked securities and collateralized debt obligations.

This legislation provides for increased scrutiny of credit-rating agencies, such as Moody’s, Standard & Poor’s, and Fitch Ratings.

It also mandates that a firm that puts these securities together retain at least 5 percent of the credit risk of those assets,” says Johnson.

In other words, investment banks and firms today are obligated to have some “skin in the game”; if the value of an MBS goes down, that firm will suffer consequences, just like investors will.

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Will the Lending Process Return to Pre-Pandemic Ways?

Question:

During the COVID-19 pandemic a lot of lending rules changed to avoid in-person meetings. Can we expect pandemic rules to end once things get back to normal?

Answer:

As the pandemic’s threat recedes it’s likely that a number of emergency changes will remain in place.

First, experience during the pandemic showed that distant closings were generally workable.

This will be a great convenience for those settling on properties bought online or where a need to be physically-present for closing is inconvenient.

For example, I know of one refinancing where the lender was in Illinois, the loan officer was in Missouri, and the closing and the property were in Florida. The process went off without a hitch.

Second, some employment verification standards established during the pandemic are likely to remain in place, but not others.

• A requirement for self-employed borrowers to

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provide bank statements for three months rather than two months will likely continue.

• Dual employment verification standards will likely become more common with a written verification at the time of application and at least a verbal check just before closing.

• The self-employed will need to provide an unaudited year-to-date profit and loss statement showing income, expenses, and net income within one month of application.

• A requirement for the self-employed to provide a business plan will likely end as a matter of common sense. How many 2019 business plans included provisions for a 2020 pandemic? Such plans are notoriously incomplete.

Third, look for a return to traditional appraisal standards. The idea of an appraisal is to protect the lender and the borrower, the former from overlending and the latter from overpaying. Look for required interior property examinations to come back when appraisers are involved and also for the use of electronic valuations to be more common.

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Q&A

ASK OUR BROKER

By Peter G. Miller Fourth, look for higher credit score requirements to be common. According to Ellie Mae, in March the typical conventional loan borrower had a 762-credit score, very near the 766 October high of 766. In contrast, the typical FHA buyer had a 681 score in March while a refinancing FHA borrower had a 673 score.

Fifth, the government’s Paycheck Protection Program (PPP) has enabled huge numbers of small businesses and the self-employed to remain open during the pandemic. Check with lenders to see whether such funds will be regarded as “income” for application purposes. The answer is likely to be “no” because the program is not a steady income source. If not forgiven a PPP advance will likely be seen as a liability if not repaid before closing.

For details and specifics, speak with loan officers for the latest application requirements.

Email your real estate questions for Mr. Miller to peter@ctwfeatures.com.

June 11, 2021

Real Estate Weekly

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CLASSIFIEDS RENTALS Houses for Rent -Unfurnished 2 bedroom Lyman, 1 bath, large kitchen, large living room, laundry room, large front yard, large front porch, $1500 first, last, $1,000 deposit. (360)-7702137.

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A Fair Approach To Multiple Bids

By Marilyn Kennedy Melia

tor of the Fair Housing Legal Clinic, UIC John Marshall Law School.

Sellers can look to their real estate agent or atellers are enjoying an unprecedented luxury of choice, with scarce inventories prompting torney for guidance. bidding wars in many parts of the country.

Terms Only But that enviable position involves the responIn general though, sellers who consider offers sibility of making a fair choice, defined by federal “strictly on the terms” and apply the same factors law as not discriminating against any buyer based in sizing up all bids received will steer clear of bias, on his/her race, color, national origin, religion, says Bethel. and other factors.

“Avoid making decisions based on characteristics Passed in 1968, the federal Fair Housing Act has or circumstances of the buyers,” she explains. received new attention, with a recent investigation Name Blind in Long Island, New York uncovering many violaNames carry associations for many people – just tions. ask anyone struggling for a baby name.

Many states and localities have ordinances To focus strictly on terms, like the price offer layered on to the federal law, like protections for and contingencies, removing names and focusing sexual orientation, notes Allison K. Bethel, direc- on those numbers helps erase bias.

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Sometimes, a buyer may include a letter to the seller about why he would be the ideal purchaser.

Read these missives with the intent of fair housing laws in mind.

Counter Opportunity When there are several bids on a property – not an uncommon phenomenon in many markets – one likely rises to the top, with the best terms.

But the National Association of Realtors provides guidance on its site detailing that sellers can make other buyers aware of details of a stand-out purchase contract, in hopes of allowing other buyers to improve their initial terms.

Offering “everyone in the pool” a chance to revise their initial bid helps ensure evenhandedness.

Fair housing laws benefit sellers, concludes Bethel, since the intent is to include all purchasers.

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$650,000 2017 CONTINENTAL PLACE, SUITE #3, MOUNT VERNON $1,200.00 PER MONTh

118 E ORANGE AVE, BURLINGTON

Perfect office space; recently remodeled and currently operates as Pacific Northwest Pilates Studio; Approximately 1000 sq. feet.

Parking in front and back.

Lease includes water; garbage; sewer. Available 360-708-8294 June 20, 2021

Great opportunity for a small business.

Includes commercial kitchen & other restaurant equipment. Great space out back for outdoor dining/ drive-thru. There is parking and storage.

It’s located just one door from one of the busiest corners in Burlington; E Orange Ave & Burlington Blvd. Upstairs there is 1BR/.75BA and den. The possibilities are endless in this fast growing community. Sherry Ruderman 360-540-1552 MLS#1780005

Danya Wolf

$777,000 2xxx uRban avenue, MountveRnon $600,000 45153 KoKanee tRaiL Lot # 3C3 $45,000

60102 state Route 20, MaRbLeMount

Mondo Restaurant has a newly remodeled kitchen with beautiful, new appliances. Great work space and tremendous storage. Public area offers very spacious seating. There is also an outside dining option. Small gift shop area. Chef creates incredible and varied menu, both nutritious and delicious. Restaurant is situated in a beautiful location in the Cascade foothills.

Well worth a day trip. MLS# 1757641 Sherry Ruderman

Danya Wolf

360-540-1552 360-708-8294

Lots 2&3 LaKeside dRive, gLenHaven LaKes

$49,900

Build your dream home on these two adjoining lots near Glenhaven community amenities: pool, clubhouse, tennis/basketball courts, outdoor exercise area, playground, enjoy nature with trails and trout stocked lake, 2 boat launches, community events; near several area lakes. Easy commute, 1/2 way between Mount Vernon and Bellingham.

MLS# 1628528 Suzanne Jenkins Carla Fischer 360-941-2983 360-982-0010

i’m a seniors Real estate specialist

Every transition is an opportunity, regardless of your stage of life. By partnering with an SRES like one of us, you gain the help and experience of a Realtor® specializing in meeting the needs of home buyers and sellers 50+. We offer you the opportunity to complete your transaction with patience, professionalism and the expertise you deserve. We are pleased to be Carla Fischer Elva Hunter YOUR SRES® 360-982-0010 360-202-3086

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Prime commercial property with utilities in street, including P.U.D. water, Puget Sound Energy electricity; Cascade Natural Gas, fiber optics; cable; and sewer. Subject To survey and short plat. Property is located between Chicago Title Company easterly parking lot and Max Dale Restaurant’s south Danya Wolf 360-708-8294 easterly parking area. MLS# 1649968

C du

ed

PR

iCe

What To Bring: Wine/Spirits, Snacks, Food, Clothes, Firewood TURN KEY! Sweetest vacation spot located at Lake Tyee. The trailer has a bedroom and bunk beds for the littles. Every little detail of this property is absolutely adorable; from the renovations of the trailer to the cozy deck, engaging yard and firepit area. COME QUICKLY! YOU WANT Sherry Ruderman 360-540-1552 THIS ONE!

44973 KaCHess tRaiL, d3-a4, LaKe tyee $46,000 44979 KaCHess tRaiL, d3-a6, LaKe tyee $74,000

17180 MeMoRiaL HWy Mount veRnon $415,000

So unique in a gorgeous setting. This is the time of year to relax on your deck while smelling the aroma of dinner on the grill and enjoying the sound of the water feature. While you look over to the beautiful territorial hills, crack open your beverage and be grateful you found this perfect lot to begin your summer.

Sherry Ruderman 360-540-1552 MLS#1783232

6.98 acre tract zoned Rural Intermediate. Level acreage with great road access both from Memorial Highway and from Avon Allen Road. Stop light and curbs at the intersection. Special Use Permit potential.The Animal Hospital and an espresso stand is across the road to the west. 980 feet along Memorial Highway (SR-536); 620 feet along Avon Allen Road. Danya Wolf 360-708-8294 MLS# 1572330

63377 HigH Ridge dR. #d3 L115, MaRbLeMount $60,000

63246 W CasCade Wy #135&136, MaRbLeMount $65,000.00

11602 PanoRaMa dRive, sedRo-WooLLey $139,000

Sunny, nice quiet street located in Cascade River Park.

Pack your bags cause she’s ready to go. Turn key with trailer, covered deck, storage sheds and lots of room for parking and tents. This lot is ready for you, family and friends to enjoy this summer.

Sherry Ruderman MLS# 1754582 360-540-1552

This pair of lots are a perfect in planning your dream site in the North Cascades. Along Nugget Creek and in the Cascade River Park, you’ll enjoy this level sunny location.

No need to worry about booking a year out in advance and being in tight camping spots.

Have your own site with plenty of room to Sherry Ruderman entertain friends. MLS#1779553 360-540-1552

Build your dream home on your dream property. 5 acres of

Tucked away on Black Tail Loop at Lake Tyee, this very clean and well maintained travel trailer has room to sleep the family plus extra sleep space in the camper.

This comes with extras so come and check it out. It’s a perfect time to find the camp spot you’ve been wanting.

MLS#1783219

360.424.0300

Sherry Ruderman

360-540-1552

gorgeous, mature trees and all the county work has been done; wetlands delineation completed, mitigation, soil tests and septic permit applied, PUD and PSE on the street.

This corner lot in a wonderful neighborhood is ready for you. Call and set your appointment today.

MLS# 1764328

Sherry Ruderman

360-540-1552

3780 E. College Way, Mount Vernon

www.skagittraditionrealty.com 101414-1

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