Domestic Partners, Real Estate and Mortgage

In May of this year, Governor Gregoire signed legislation providing registered domestic partners in Washington State the same rights as married couples, which has been confirmed by the passage last week of Ref 71. In our State, domestic partners are defined as either same sex couples or where at least one partner is over the age of 62 (they do not have to be of the same sex).  

From E2SSB 5668:

"It is the intent of the legislature that for all purposes under state law, state registered domestic partners shall be treated the same as married spouses.  Any privilege, immunity, right, benefit, or responsibility granted or imposed by statute, administrative or court rule, policy, common law or other law to an individual because the individual is or was a spouse, or because the the individual is or was an in-law in a specified way to another individual, is granted on equivalent terms…"

When a couple registers as a domestic partner and if one or both partners (or spouse) owns real estate where they reside, they are now subject to community property issues as Washington is a community property state.

From the Washington State Bar Association (regarding community property):

Under this system, all property acquired from earnings during marriage (such as real estate, automobiles or household goods) belongs equally to husband and wife, even when only one is employed.

Similarly, both husband and wife are personally liable for certain types of family expenses, even if both did not agree to the particular obligation….

Moreover, neither may give community property without the consent of the other. Finally, neither may sell, convey or encumber real property (land) without both parties signing appropriate documents.

Recently I was helping a man with a refinance whom I thought was "single".  He was the sole person on loan application and did not indicate that he had a partner.  The title company discovered that he and his partner registered as domestic partners with the State of Washington.  

With regards to the refinance, this meant that my client's partner would need to either be approved on the mortgage as well or have to sign a quit claim deed and acknowledge the transaction to be in compliance with state laws.  NOTE:  Please seek legal counsel before signing legal documents that may impact your rights.

As of today, November 6, 2009, there are 6,311 domestic partnership registrations in Washington.  If you and your partner have a registered domestic partnership–CONGRATS!  If you have a registered domestic partnership and you are involved in a real estate transaction; be sure to inform both your mortgage originator and real estate agent.  One cannot buy or sell or mortgage/encumber real estate with out the other's consent…just like being married.

FOMC leaves the Fed Funds Rate Unchanged

I'm just reading through the Fed's press release which announces that they are leaving the Fed Funds rate unchanged at 0-0.25%.  Good news for those of you with variable rates on your home equity loans–your rate is not going up…yet.

From today's FOMC Statement:

Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.

The Fed's statement is fairly positive and good news for the economy means that investors will trade the safety of bonds (such as mortgage backed securities) for stocks; causing mortgage rates to trend higher.  In addition, the Fed reiterated they will be phasing keeping mortgage rates at artificial low rates by March 2010.

To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010.

The next big market mover that tends to dramatically impact mortgage rates is the Jobs Report.  Watch for it this Friday morning.

Fall Back, Seattle

PA240040Just a reminder to set your clocks back one hour when you go to bed tonight…or you can be official and roll your clocks back at 2 a.m. on Sunday, November 1, 2009.

Daylight saving time is over after this evening.

Friday Funny: Seattle Tunnel Vision

We’ve all seen the nicely produced video (to the tune of $80k) of what could happen to the viaduct if Seattle experiences an earthquake… but have you seen the low budget version of what would happen to the proposed tunnel in a similar circumstance?

Note: I’m trying out posting mortgage rates at Rain City Guide on Friday’s and on Mortgage Porter on Mondays.

PS:  Don’t forget to VOTE by next Tuesday.

Do I Really Have to Provide All Pages of My Bank Statements?

A fisheye image of a mid-30's business woman pouting and looking angry.

A fisheye image of a mid-30’s business woman pouting and looking angry.

When assets are being used for down payment of a new home, towards closing costs on a refinance or even to document that the borrower has enough reserves (typically a couple months of mortgage payments) in the bank after closing; they need to be documented.

[Read more…]

Book Review: The Big Score by Linda Ferrari

Ferraribookcover2 Last month I had the opportunity to speak at The Mortgage Girlfriends Mastermind Summit and to meet Linda Ferrari.  Linda is someone who I’ve known of for a long time.  She’s an expert at credit scoring and is passionate about consumers knowing and understanding their credit score.  She is the author of “The Big Score — Getting It and Keeping It”.

This book is a great resource–for young and old alike.  We are impacted everyday by our credit scores and Linda does an excellent job shedding light on mystery of credit scoring.   Her book is structured in an easy to read and research format.   If you need help working on repairing your credit, you’ll find step by step advice in this book.  It could be the best $20 you ever spend.

For the record, I paid for my copy and I am not receiving any compensation for my review. 

Count Down to November 30th and the First Time Home Buyer Tax Credit

You may be surprised to see how many days are available to close a transaction by November 30, 2009 in King County when you factor holidays and furloughs.  

New Credit Card Regulations and Games Creditors Play

The Credit Card Act of 2009 was recently signed into law by President Obama with many positive benefits for Americans.   Here's some of the Act's features:

  • written notice must be provided at least 45 days in advance of a rate increase or significant change in terms. 
  • prohibition of universal default.

Consumers have the right to refuse a proposed higher rate, and the credit card company may close the account and demand the account be paid off within five years.

One of my clients, with excellent credit scores, recently had two of her department store credit cards inform her that they were going to jack up her interest rates around 5% higher for really no reason at all.   She has the right to refuse this and if she does, they will close her accounts.   This will most likely show on her credit report as a "closed by grantor" which doesn't look pretty.  Even though my client has great credit, this looks as if she had an issue with paying credit and it was the creditor who closed her account–not her.  Regardless, a closed account with a balance on it may be damaging to your credit score.  Here choices were to accept a 5% higher interest rate or have her account closed with a payment amortized for 60 months (much higher payment).

What did I recommend for her personal scenario?  NOTE: Your scenario may require different actions…everyone's situation is unique.

She is currently in the process of a rate-term refinance to reduce her interest rate and to convert her adjustable rate mortgage to a 30 year fixed rate.  With her personal scenario, she will use a combination of the refund of her existing reserve account from the mortgage servicer who is being paid off and the "skipped" mortgage payment to apply towards paying off these two department store credit cards.  She's lucky.

And it's not just department stores who are jacking up credit card rates on consumers…banks are too:

"Millions of Wells Fargo & Co. credit card customers will soon feel the pinch of higher rates, as the bank and other major credit card issuers rush to get ahead of new consumer protection rules that would limit their ability to jack up rates.

The San Francisco-based bank, the nation's eighth largest issuer of credit cards with $22.3 billion in total balances, said Wednesday it plans to raise interest rates by 3 percentage points on the "vast majority" of its 5.9 million credit card customers. The higher rates will go into effect on Nov. 30 — one day before Congress wants to enact new rules that put strict limits on rate increases on existing credit card accounts. Customers of Wells Fargo will begin receiving letters as early as today notifying them of the change."

Although the Credit Card Act of 2009 is intended to help consumers, it's not going to totally stop the games credit card companies and banks play.  Before you react, it's important to know what your options are and how it may impact your credit scores.  This is a great "excuse" to obtain a tri-merge copy of your credit report to review your scores and what's being reported about you and your credit.