08/29/14 4:00pm
08/29/2014 4:00 PM


Perhaps a 2005 flashback scene from Season 4 of the Netflix comedy “Arrested Development” depicted the lending market best. In it, actor Ed Helms, playing a realtor, tells two of the show’s main — and jobless, and nutty — characters that he can get them into a mansion through a new “NINJA loan.”

“No income, no job and no assets,” he says, to their delight.

It’s laughable now, but local experts say the depiction wasn’t far off for some lenders during the last decade. To be sure, NINJA didn’t mean banks actually wanted to lend money to people without income, jobs or assets. They just didn’t ask for verification.  (more…)

11/04/10 2:37pm
11/04/2010 2:37 PM

Suffolk County National Bank is working with a federal regulatory agency to address what it described as “unsafe and unsound” banking practices by SCNB, bank president and CEO Gordon Huszagh said this week.
“We certainly take this very seriously,” he said. “It’s in all of our interests to comply as quickly as possible.”
The bank and the federal Office of the Comptroller of the Currency (OCC) have reached an agreement requiring SCNB to take several steps to ensure its continued financial strength. They include determining how much money should be set aside for bad risks, defining how the bank will maintain sufficient capital and evaluating the skills and experience of some senior managers, including Mr. Huszagh.
He described the OCC’s findings as “very technical and very administrative in nature,” but vowed the company will work to address the concerns “and comply with the agreement as quickly as possible.”
Just a few weeks ago the OCC gave the bank an “outstanding” rating for its performance in serving the community by providing home and business mortgages.
“We are meeting all our regulatory requirements to be classified as a well-capitalized bank,” said Mr. Huszagh. “We’re certainly open for business and we’ll continue to serve our customers and all our commitments to the best of our ability.”
Suffolk County National Bank has been in business since 1890 and recently opened its 30th branch.
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10/13/10 6:38pm
10/13/2010 6:38 PM

BARBARAELLEN KOCH PHOTO Ulster Savings Bank mortgage consultant Douglas Van Slyke, in his Riverhead office Friday, fields a call about current mortgage rates.

Mortgage interest rates and house prices on the North Fork are at record lows, a perfect time to buy — except that lenders here aren’t too quick to part with the cash people need to seal a deal.

“The banks are looking for perfection. It has to be pretty much the perfect loan” to be approved, said longtime Southold mortgage consultant Richard Winters.

Nationwide, it was loans that required no income verification that helped lead to the real estate meltdown. Those kinds of easy loans have almost completely disappeared, making it harder than ever for some North Forkers, especially the self-employed — from landscapers to contractors to entrepreneurs — to justify their eligibility for a mortgage.

“No doc loans,” as they are called in the industry because so little documentation was required, made up 10 to 20 percent of Mr. Winters’ work before the meltdown.

“It’s almost impossible to do a bank-type loan with somebody that is self-employed and doesn’t fully report their income on a tax return, even if they have squeaky clean credit,” he said of the current market. “The no income verification loan was a good product, if underwritten properly, but a lot of lenders say they’re not going to do them any more.”

Mr. Winters said the only remaining option for homebuyers who can’t verify their incomes is private financing, but most private lenders won’t look at a loan unless the buyer is willing to put down at least 50 percent of the purchase price.

“It kills the young couple,” he said.

Mr. Winters said that the lenders he works with are looking for higher credit scores and are more closely examining the sources of down payments than they did in the past.

He said that he can do little to help anyone who has a credit score under 700 get a mortgage.

“Before, I think the minimum was about 680. You could even get away with a 620 if you had a good explanation,” he said.

“They’re also looking for anything weird about the source of the money coming into the purchase. The documentation has to be extensive,” he said. “If it’s family money, it’s legitimate, but it’s not theirs,” the homebuyer’s, which could raise a red flag. “They’re really looking for personal equity.”

Banks that specialize in mortgages, such as Ulster Savings Bank in Riverhead, may be in a position to gauge each potential homebuyer’s ability to pay better than a nationwide mortgage broker, said Douglas Van Slyke, a mortgage consultant at Ulster Savings. His company offers stated income loans, which are a form of no documentation loan that allows people to supply income figures without backing them up with tax documents.

“We evaluate self-employed borrowers by the stated income, and we go up to 75 percent of the value of the property,” said Mr. Van Slyke. “We use our own portfolio money.”

Mr. Van Slyke said that Ulster Savings offers programs that mirror the federal FHA loans allowing down payments as low as 3.5 percent. But he cautioned that it’s more difficult for people who have trouble verifying their income to obtain loans with low cash down, because mortgage insurance companies are also required to sign off on loans with less than 20 percent down.

Mr. Van Slyke said Ulster will consider applicants with credit scores as low as 640, though before the market downturn they considered borrowers with scores as low as 620.

“But we’re looking for 700 for stated income loans,” he said, adding that a credit evaluation is an important part of a free initial consultation that he does with his clients.

Realtors, including Kathy Rosenbaum of Lloyd’s Realty in Greenport, are urging their clients to seek financing before they begin shopping so they know what they can afford.

“It’s a lot more hard work to keep deals together. You don’t know if the bank is going to accept the mortgages or not,” she said, adding that a bank can balk on a mortgage for a variety of reasons even after pre-qualifying buyers.

“The banks are tight,” Ms. Rosenbaum said. “If you’re looking to buy a house, you need to talk to a mortgage person and see what you can afford. But that doesn’t mean at the very end they’ll say you can have the mortgage. Mortgages are still being denied.”

Mr. Winters said he can tell a lot about whether or not he can help a prospective client after an initial consultation.

“We do the best we can to try to get them satisfied, but I tell them if I can’t help them at a reasonable price,” he said. “There are lenders out there that will do anything and it’ll cost a fortune. I don’t do those loans and I don’t recommend them to anybody.

“I think we’ve been through the worst of it,” he added, commenting on the mortgage crunch, “but I wouldn’t want to be a young guy starting out in this business. In Southold alone, there were four or even five non-bank mortgage consultants, and now there’s just one. Old Dick Winters is still here.”

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10/05/10 4:37pm
10/05/2010 4:37 PM

BARBARAELLEN KOCH PHOTO This Rolling Woods, Riverhead, house in foreclosure was scheduled to be sold on the steps of Town Hall last Friday. The auction was canceled and the house still has not been sold.

Announcements of foreclosure sales for properties in Riverhead have peppered the legal notices in recent weeks, and although Southold’s foreclosed properties are comparatively few and far between, the statistics on people here who are behind on their mortgages and in danger of losing their homes are staggering.
As of last week, 208 people in Southold Town and 430 people in Riverhead were at least 30 days behind on their mortgages, according to Kristopher Pilles, owner of East End REOs, which specializes in distressed real estate. He says that these figures make him worry that foreclosures will soon be on the rise, even in areas like Southold, which once seemed immune to foreclosure.
“That’s a huge number,” said Mr. Pilles. “I’m just hammered. The North Fork has fared better than the Hamptons but it looks like it’s going to be catching up this winter.”
He estimated that, in a healthy market, only 15 to 20 percent of that number of people in both towns would be behind on their mortgages. Though 30 days behind is a very early stage — before default or foreclosure — mortgages in that condition, known as lis pendens, are the best available statistical indicator of the foreclosure market.
The Multiple Listing Service shows nine houses in foreclosure this week in Flanders, but only one in Riverhead and none on the North Fork. Bank-owned properties do not always appear on MLS, depending on the bank’s strategy for selling the property. The outstanding mortgages on the Flanders properties listed on MLS range from $292,500 to $600,000, well above the bottom end of asking prices in Flanders, where the lowest priced house this week was a two bedroom, one bath for $90,000, less than the loan on it was worth.
“People had a lot of expectations that didn’t pan out” in Flanders and Riverside, said Mr. Pilles. “The value was not what people expected. The whole region was driven by greed and ignorance.”
In Southold, a four-bedroom historic house in foreclosure on the Main Road was initially listed for $247,000 and sold for $220,000 earlier this month, an indicator that even banks are testing the market’s floor.
Kathy Rosenbaum of Lloyd’s Realty in Greenport, which sold the Southold house, said this week that price reductions on foreclosures are not uncommon.
“If they’re getting appraisals from someone who’s not from the area, they could tend to price them higher” than is realistic, Ms. Rosenbaum said. “Sometimes they want to see what they can get” for the property.
She pointed out one example — a three bedroom, two bath foreclosed property on Meday Avenue in Mattituck — that initially listed in May at $319,000 and is now offered at $269,000. Another property, next door to the Blue Dolphin Resort in East Marion, was listed in foreclosure at $450,000 earlier this year and has since been reduced to $362,000, with with no takers yet, she said.
“It will be coming back on the market with a different broker,” she said. “That’s an example of an out-of-the-area broker.”
Mr. Pilles said The Blue Dolphin itself is bank-owned, and several buildings surrounding the motel that are owned by the same company but were financed with different banks are in various stages of foreclosure. He said he sees numerous reports that show commercial properties on the North Fork with owners who are falling farther and farther behind on their mortgages.
“There are some really big assets in Greenport, Cutchogue and Mattituck,” he said, adding that many business owners have been operating on equity lines of credit and will soon be unable to pay their bills.
“If you look at the fact that some people owe $3 million on something they paid half a million dollars for, that explains the situation,” he said.
Though buyers historically needed to pay cash for foreclosures, banks have been willing to finance them in recent years.
“People are looking for what’s cheap,” said Ms. Rosenbaum. “A lot of people don’t understand the process. They need more education on how it works. It’s easier if you have the cash but the banks will also lend money out. It depends on the condition of the property. If the house has been trashed, it may be more difficult to finance.”
“The long-term stability of the region is great,” said Mr. Pilles. “We’ve got to get values back in check. On the North Fork, once properties hit the $300,000 price range, they sell quickly. That’s a really good underlying value of real estate here. It’s a great buying opportunity. In areas in Riverhead, there are a lot of people who rent who could easily afford to own. It’s a matter of knowing that buying a house is possible.”
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