HGTV

Just wanted to let everyone know how excited I am to have just finished another episode of "House Hunters" for HGTV. I also did an episode of "My House Is Worth What" in July with more HGTV shows to be filmed next year. I'll be keeping you all posted as to when those will air. Any opportunity to tell people how great Portland is, I'll take!

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Want to Buy a Forclosure

Are you hoping to be one of the buyers out there who score a deal during the bad housing market? Taking a look at foreclosures are a good bet for you but there are some things to keep in mind.

There are plenty of foreclosures out there right now and lenders are definitely looking to get rid of them. This isn't exactly the time to be holding on and waiting for a better offer.

Apparently there are different stages of foreclosure and they all have different amounts of risk and reward so you can choose what fits your comfort level.

Pre-Foreclosure

A home goes into pre-foreclosure when a borrower has fallen behind on his payments, but the house has yet to be auctioned off. If you wanted to go over all the delinquency notices that are filed with the county by the lenders when an owner misses a payment, then you can see if any of the homes meet your criteria.

Then you have to approach the home owners and see if they want to sell. This has potential to go really badly because people often don't want to move and a low ball offer could be insulting. Wording is important. You need to point out that you are offering them a way out of trouble.

You are essentially offering them a short sale, which is a buyer paying less for a house than the mortgage owed. The lender has to agree and then forgive the rest of the debt. Normally this would take some persuasive power but today's market certainly makes it easier.

Sheriffs' Sales

Homes in default are auctioned off on the county courthouse and can be real bargains, but the process is a crap shoot.

There is no inspect the property, so there's no telling how much work it needs. You also don't know what kind of liens there are against the home so you don't know what you end cost will be. Most importantly, you need to come with cash. 10%-20% has to be put down on the spot, and the rest in a matter of days.

Even after all that, you decide to make the purchase and feel it's a good move it can still fall apart. If the current owner can come up with enough cash to repay the buyer the amount of the winning bid then they get to keep it.

Post-Foreclosure

When a lender takes a house back from an owner the property goes back on the market. This is called an REO (real estate owned) property. This is a normal listing with a broker and the deal to be had is not as big as the other stages.

These homes are often listed on the lenders websites, including Freddie Mac and Fannie Mae. This is a less risky way to go because the title is clear and the home is vacant.

There are also REO auctions. Some auction companies will buy a bunch of these properties from the lender at once and then put them on auction. These can be sold quickly for quite a low price and can start the rebuild of a neighborhood.

http://money.cnn.com/2008/08/06/real_estate/Foreclosure_bargains/index.htm?postversion=2008080811

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Fixed Mortgage Rates

Have you locked in your mortgage rate. Some people simply haven't been paying attention and think the housing market and mortgage rates are the same as 2005. It is no longer the best idea to wait for rates to drop. More than likely you are going to miss out if you don't act now.

Rates are no longer stable like the used to be and people don't seem to realize that. Many people didn't get their rates locked back then when it would have been easier, and at the time there was no need. Things are different now and things can change drastically at anytime.

If good rate presents itself you need to get it locked in, in writing from your lender. The way things are now, even if the rate dips down it won't be by much and it will be very temporary. You've got to take the deal when you have the chance.

Rates are expected to go up in the next six weeks, and even hit 7% by the end of this year. Every half point of an interest rate increase, the monthly payment on a typical $200,000 mortgage jumps about $70.00. That is around $800.00 a year!

Getting a rate locked in is easier than you might think. As long as you have a contract or a binder on a home the lender should be willing to give you a commitment in writing. A lock is good for 60 days at a very low cost.

http://money.cnn.com/2008/08/04/real_estate/mortgage_rate_lock/index.htm?postversion=2008080405

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Last Thursday

Last Thursday has been an event in Northeast Portland for about a decade. The last Thursday of every month the streets, stores and restaurants of Alberta street are flooded with people. It is thought that there are currently around 10,000 people participating in this event each month.

Now it is time to take measures to keep up with growth. Vendors are putting merchandise on the sidewalk, which is already over flowing with pedestrians. There are also some sanitation issues to deal with.

No one wants this to go away so steps need to be taken to ensure safety of participants and those who live in the area. They are even having TriMet re-route some buses. The Northeast Portland area has made great strides in recent years and keeping the community involved will only improve it more.

http://www.msnbc.msn.com/id/25959344/from/ET/

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Bailing Out Sub-prime Borrowers

The Congressional Budget Office estimates that 400,000 borrowers with $68 billion in loans may benefit from a rescue bill. This bill is to help homeowners avoid foreclosure by offering at-risk borrowers the chance to refinance their old mortgages into new low-cost fixed-rate loans.

To qualify borrowers must live in their homes and have loans that were accuired between January 2005 and June 2007. Also, they must be spending a minimum 40% of their gross monthly income on all household debt to be eligible for the program. They do not necessarily have to be in default but they do have to prove that they will not be able to continue to make the payments. This is to avoid people defaulting purposely to get a lower payment.

There are more contingencies to this refinance offer. All other home debts like equity loans or lines of credit have to be closed. In fact, they will not be allow another home equity loan for 5 years unless it is an absolutely necessary home improvement.

The original lenders do have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home's current value. In some hard hit areas that will mean a substantial loss for the lender. So the lender is going to have to believe that they would loose more money if they let it go into forclosure in order to go along with the refinance.

Each of these new loans will be underwritten by an FHA lender so banks will do all new appraisals. The income statements, bank accounts, job hisoties and credit scores will all have to be revisited also.

As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal.

There will be some fees to consider, including a portion of any profits from future home-price appreciation. They aren't going to just bail everyone out. The FHA will get a 3% exit fee of the mortgage principal when the borrowers resell or refinance. If someone decides to sell or refinance within a year they will be giving 100% of the profits to the FHA. Each year after it will drop 10% till it reaches a minimum of 50%.

Even after all fees considered, it would be a blessing to many people. Not only do they get to stay in their home but they'll finally have a reasonable, fixed interest rate and no forclosure.

http://biz.yahoo.com/cnnm/080723/072308_housing_rescue_guide.html?.&.pf=loans

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Helping the Mortgage Market

The next big plan for helping out the mortgage industry is to full inform investors of the types of mortgages they are buying into. The idea is to promote confidence in the investment they are making so that mortgage-backed securities will be bought once again.

A group representing the buyers and sellers of mortgage backed securities unveiled a plan on Wednesday to recharge the moribund mortgage market.

In order for lenders to raise enough money to offer as many loans as they do, they have to bundle their mortgages and sell them to investors as mortgage backed securities. Lenders such as Countrywide, Wells Fargo and Wachovia will package a random assortment of these loans together and sell them to investors with very little information offered to the purchaser.

But then the losses began to add up and naturally people and institutions stopped buying these pools of residential mortgages. Therefore these lenders didn't have the extra cash for home buyers to get loans.

The American Securitization Forum has a plan, Project RESTART. The idea is to increase the supply of mortgage loans available to borrowers and also make them cheaper. Because of course if you jumpstart the mortgage market you jumpstart the housing market.

Part of the plan includes making these packaged loans more transparent. Clearly there is going to be more confidence in your investment if you are presented with all the facts and amount of risk ahead of time. This should also allow for more accurate pricing.

Previously the loans were packaged with a mixture of high and low risk. This makes it more difficult to understand what you're really getting into and makes pricing more vague. Obviously it's not feasable to provide all the information on each individual mortgage borrower but there is certainly more information that can be offered.

Also these loans would be bundled together by type. So that an investor can choose a group of mortgages that all are from prime borrowers with documented income, 720 credit score and a 20% downpayment. If a particular investor is into higher risk and higer payoff they could buy loans with subprime borrowers and low credit scores. The big idea here is that the investor would know which they are getting, and pay accordingly.

I think this sounds like a great idea. My only issue with this is, why is this just happening now?

http://money.cnn.com/2008/07/17/real_estate/jumpstarting_mortgage_markets/index.htm?postversion=2008071716

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June Market Report

June Residential Highlights

June sales activity was mixed when compared to that of May 2008. On the other hand, activity continues to follow a downward trend compared with 2007. From May to June, there was a 0.8% increase in closed sales (1,877 v. 1,863) - the second straight month of increasing sales. New listings also grew a slight 0.6% (5,213 v. 5,182). Pending sales, however, dropped 6% (1,996 v. 2,124). On the other hand, comparing June 2008 with June 2007, closed sales dropped 31.3% and pending sales decreased 30%. New listings were also down 16.3%. See table below. At the month’s rate of sales, the 17,788 active residential listings would last approximately 9.5 months, up slightly from 9.2 months in May.

Second Quarter

A look at the second quarter of 2008 compared with the same period in 2007 shows a 34.7% decrease in closed sales (5,461 v. 8,361) and 31% drop in pending sales (5,972 v. 8,652). New listings also fell 8.1% (15,973 v. 17,386).

Sale Prices

The average sale price for June 2008 was down 1% compared to June 2007, while the median sale price dropped 2%. See table below. Month-to-month, the average sale price and median sale price are both up over May 2008 levels; the average sale price rose 4.1% ($348,800 v. $335,000) and the median sale price was up 0.5% ($289,000 v. $287,500).

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