Improved Foreclosure News – Time To Read Carefully

April 11, 2012 By Ted Mackel Leave a Comment

RealtyTrac recently reported that 1st quarter 2012 shows the lowest foreclosure filing activity since 2007. This news sent waves of cheerleaders spreading the news of improving real estate market conditions. Recently and more locally, Simi Valley and many parts of Southern California are seeing reduced inventory. This reduced inventory is giving the appearance that market conditions are improving. Low interest rates and reduced pricing are adding to this very rosy picture, but the underlying details cannot be ignored.

In RealtyTrac’s April 5, 2012 Forclosure Market Report, Brandon Moore, chief executive officer of RealtyTrac stated:

“The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated, there are hairline cracks in the dam, evident in the sizable foreclosure activity increases in judicial foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and non-judicial states in March. The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short sale activity.”

As I mentioned in my Simi Valley March 2012 Market Report, Wells Fargo projects 2 million homes making up the shadow inventory that are up to 90 days behind in payment, with no filings or proceeding against those properties. Wells also projected another 6% decline in pricing for 2012. I am not sure that following the filing activity is going to do anything other than create more frustration. In my dealings with Short Sales over the last 3 years, many of the people in these properties are many months behind before starting the foreclosure process and that process takes another 4 months to complete. Understanding that the banks are trying to keep from flooding the market with foreclosures and approving more Short Sales, reports on filings can be misleading.

We still have a significant way to go before any real recovery can be claimed. The process is going slow and I do not see anyway the banks or the government will favor any plan to speed it up. Realtytrac’s report seems to support that stating that the average time for a foreclosure in California is currently trending at 350 days.

RealtyTrac’s report included the following for California:

Although California default activity increased from February to March — up 14 percent — the state’s overall foreclosure activity in the first quarter was down on a quarterly and annual basis. The California foreclosure rate still ranked second highest among all states in the first quarter, with one in every 103 housing units with a foreclosure filing.

This all is good new for home buyers and any chance of a run up in prices will be held in check by the distressed market. This is a great time to take advantage of low interest rates and prices that are at all time affordability levels.

Filed Under: Real Estate News Tagged With: foreclosure, realtytrac, Simi Valley, southern california

I’d Like To Buy Your House For Cash – Beware of Short Sale Flipping

June 9, 2011 By Ted Mackel 4 Comments

A series of news reports over the last few years are covering a problem that has hit the Short Sale Market. As in any market, if there is an opportunity, the opportunist go to work. This time they are trying to create screaming deals out of Short Sale properties.

These flippers target houses on the verge of foreclosure and persuade banks and mortgage companies to accept lowball buyouts, sometimes by using questionable appraisals and not disclosing that a quick sale at a higher price has already been arranged, experts say. (source: Herald Tribune The New Flipping:Short Sales)

If you are having trouble with your mortgage, have been trying to get a Loan Modification and you have fallen behind in your payments, now is the best time more than ever to be skeptical of anyone who approaches you about your home.

Once you get behind on your loan payments, here in California it won’t be long before your lender will file a Notice Of Default (NOD). The NOD is a public record filed at the county recorder’s office and there are several private companies that mine these records and provide a subscription to interested parties. RealtyTrac and ForeclosureRadar are two of the better known services. Investors, home buyers and real estate brokers subscribe to these services.

Real Estate professionals use the public filings on properties in foreclosure to find more business as a means to see if those in foreclosure would like to try and Short Sell their homes.
Investors are looking to get homes below market value so they can clean them up and put them on the market for a profit.
Home buyers typically believe they are going to get a home significantly below market if they can contact a home owner in foreclosure directly.

Once an NOD is filed against your property, expect your phone to ring and possibly people come to your door. If they are offering to buy your house and help you avoid foreclosure this should be a very big red flag. Let’s assume your house has a market value of $400,000 and you owe $500,000. You have know way of knowing the true market value of your home without getting an appraisal or broker price opinion (BPO) from a disinterested third party. The person standing at your front door or calling you on the phone is coming to you directly cause they want your property below market value and the farther below market value the better for them.

Here is the rub, if they promise to handle everything and work with the bank to short sell your home, if they then can convince the bank to take an amount significantly below market value, that could be seen as defrauding the bank. In this article from Bloomberg, Banks face fraud from short sales as home flopping spreads you can see that the banks and FBI are catching on to this scheme.

Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.

Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.

The Federal Bureau of Investigation, the California Department of Real Estate and mortgage finance company Freddie Mac have warned that such schemes may be spreading after a plunge in values left homeowners owing more than their properties are worth.

When you get approached directly by people trying to make deals, they aren’t at your door for charity. Also other promises such as selling you back the property, letting you stay as a renter or that they will give a cash incentive after escrow closes are all signs of more trouble. Every single Short Sale transaction I have worked on in the last year has involved a document from the Short Sale Lender, that is signed and notarized by both buyer, seller and all real estate agents involved. This document has all parties acknowledge that the transaction is at “Arms-Length” and that the Buyers are not getting money at or after closing (there is one exception I will explain later), there are other terms as well.

If a Real Estate Professional approaches you to help you with Short Sale, then interviewing properly is very very important. A Short Sale transaction is complex and not for just any agent. Those of us who have completed many Short Sale Transactions will tell you that each and every one is different. In my opinion there is no possible way to claim to be an expert or specialist in Short Sales because no two short sales are the same. Experience, closing percentage and the agent’s support structure are some of the better indicators to show if the agents you are interviewing can get the job done. Unknown to the consumer, real estate agent email in-boxes receive offers for short sale training every week. Each course offers a designation of “specialist”. While there is value in these classes, nothing beats the experience in putting these transactions together. There is no cookie cutter formula, it is good old fashioned negotiating and doing the legwork necessary to get an approval.

I have experience in closing HAFA and regular Short Sales with most major banks, including Wells, Chase, IndyMac (One West), GMAC, HBSC, HOME EQ etc. I have closed Short Sales in as few as 60 days from offer to close of Escrow with the typical short sale talking 120 to just under 180 days from offer submission to closing. I use a third party negotiator who is a licensed Real Estate Broker and practices Real Estate Law. We have closed every single one of our Short Sale Transactions we have worked on together. It takes a coordinated effort to keep the loss mitigator’s attention on my client’s file and be able to deliver information in a timely manner to assist the bank in expediting an approval decision.

I have represented buyers on Short Sale purchases and this is why I believe I am qualified to offer the advise that not every real estate agent is cut out to work on a short sale. I wrote about Short Sales from a Buyer’s point of view in Simi Valley Home Buyers 3 Important Concerns with Short Sales Offers

A good review would include:

If your trying to modify your loan, contemplating a Short Sale and you are getting calls from investors and real estate agents to help you with your house, proceed with Skepticism and Caution. Consider that if you are in danger of losing your home to foreclosure, what benefit is it to you to help someone pull a fast one on the bank so they can get control of your property and flip it for a profit? We are seeing, as in the articles I quoted above that the FBI and the banks are watching, is it worth the risk? If Short Sale is your only other option beside a foreclosure, I can help you move through the process discreetly. Many times my clients have not want for sale signs in their yards and want to keep this part of their financial life as low key as possible and I try to accommodate that where I can.

Disclaimer: Seek advise from a Tax professional and Attorney as there may be issues related to Loan Modification, Short Sale or Tax Implications. Keller William Exclusive Properties & Ted Mackel is not associated with the government, and our service is not approved by the government or your lender. Even if you accept an offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.

Filed Under: Sellers, short sales Tagged With: foreclosure, GMAC, HAFA, Indymac, Loan modification, NOD, Property Flipping, Short Sale, Simi Valley, Wells Fargo

Simi Valley Foreclosures For Sale 671 Azure Hills Drive Video Tour

March 24, 2010 By Ted Mackel Leave a Comment

Simi Valley Foreclosures For Sale 671 Azure Hills Drive

Simi Valley Home For Sale – 671 Azure Hills Drive produced by Ted Mackel on WellcomeMat

Price = $639,000.00
Bedrooms = 4
Bathrooms = 3
Interior = approx. 2407 sq ft
Lot Size = 12,302 sq ft
Pool & Spa = Inground – Gunite
Upgrades = Windows, Flooring, Ceilings, Kitchen
RV = Boat or smaller RV
MLS# = 10004666

This Simi Valley Foreclosure property is lender owned. I am an REO/ foreclosure specialist working with a regional bank. My assignments cover properties in the West San Fernando Valley including West Hills, Woodland Hills, Winnetka, Canoga Park, Northridge, Granada Hills, Chatsworth and East Ventura County including Simi Valley, Moorpark, the Conejo Valley.

Typically these properties come back and pretty poor condition. Mostly from deferred maintenance which sometimes leads to serious issues. This property is an exception is prior owners appear to have taken good care of this property and left the property clean and peacefully.

This property is located in the Oakridge Estates on the south west end of Simi Valley near 1st St. and Royal. This neighborhood has a lower than average turnover rate and an HOA which has done a good job in maintaining the community. Call to make an appointment today and see this great property and terrific community.

Filed Under: Buyers, Foreclosures, homes for sale, Simi Valley Tagged With: foreclosure, homes for sale, lender owned, oakridge estates, REO, Simi Valley

Foreclosure Pitfalls – Buying Bank Owned Properties Part II

March 23, 2009 By Ted Mackel 1 Comment

Foreclosure Pitfalls – Buying Banked Owned Properties Part II

The following photos really illustrate how tricky the foreclosure market can be. The damage in this property pretty much eliminates 75% of all qualified buyers as only very particular financing is available for this type of property. What I could not capture in the photos is that this home is built on a hill and the whole front of this house is failing and sitting on unstable soil. Prior Seller repairs cosmetically covered some of the evidence; unfortunately the next owner of this property will need to fix the hill, repair the foundation and the front walkways on this home.

The numbered list corresponds with the pictures. The condition of Bank Owned – REO – Foreclosure properties is very uncertain and if you plan to write offers on these properties, it is important that you take the right people with you. Even more important you need to work with a real estate agent that can help pre screen these properties for serious issues. There is no need to tie a property up into escrow only to cancel that escrow after spending money on inspections when many of these problems can be identified early. Additionally, because lending is very tricky for these properties, your real estate agent can waste your time with these properties if your financing requirements do not match the property.

The photos below show a home that was looted by the prior owner before leaving.

1. Master Bath Vanity and sink Removed.

2. Recessed Lighting Removed.

3. Stove Removed.

4. Dishwasher Removed.

5. Master Bath tub Removed.

6. Air Conditioning Removed.

7. More evidence on Air Conditioning Removed.

Foreclosure purchasing pitfalls

For the first part of the Series Foreclosure Pitfalls SEE: Top 3 REO Buying Pitfalls

Filed Under: Buyers, Foreclosures, Real Estate News Tagged With: Bank Owned, damage, foreclosure, REO, Vandalism

Top 3 REO-Forclosure Purchasing Pitfalls (Simi Valley Real Estate)

March 12, 2009 By Ted Mackel 2 Comments

Top 3 REO-Forclosure Purchasing Pitfalls (Simi Valley Real Estate)

REO-Foreclosure homes problems and pitfalls Simi Valley California I am going to focus several blog posts on REO purchases. The Simi Valley Real Estate market is experiencing more than half of it’s sales with distressed homes; a good portion of these being REO or otherwise known as foreclosures.

1. Getting caught up in the hype. There are two kinds of hype to watch out for. There is hype that is generated by Real Estate Agents who’s commission is driving their eagerness to close a sale. There are under 600 real estate agents in Simi Valley and approximated 100 home sales per month, many people are not making a living. If you take in account that many of our sales involve agents from out of the area, there are Simi Valley Real Estate Agents desperate for a sale. Desperate is not what you want to take to the negotiation table.

I take a pretty bearish position when commenting on the current market which is not popular with those who think we should will the market back with positive spin. The facts are that the economy is in trouble, the mortgage industry is on the ropes and these things take time to work themselves out. The positive truth of this is that careful, diligent people can make smart buys in troubled times like these.

The second kind of hype is eBay hysteria. I joined eBay in 1998, have sold and bought on eBay over the years. My most successful auctions as a seller occurred when the bidders got caught up in hysteria with a “win at all costs attitude”. Relax, take a step back and be prepared to walk away, there will be another better house down the road at a better price.

2. Working with an inexperienced Agent. Loans are very difficult, business relationships mean everything now when there are multiple offers, buyers more than ever need an agent that knows what to do when everything starts falling a apart and even better knowing when to go ask for help when an escrow looks like it is dead. Understanding how loans work, where the money is coming from, the differences between FHA, FHA 203k, VA, Conventional, Warehouse lines, direct lenders, mortgage brokers, etc.; this is not all common place knowledge. Knowing if loan conditions are common conditions or uncommon conditions. Sensing if a desperate loan broker is trying to force something. Knowing to bounce every loan off two or three other lending professionals to make sure the loan can go through. An agent who puts all their eggs in one basket when it comes to lending today is foolish. Experience cannot be underestimated.

Experience can kill your transaction as well. All the servicers and asset managers on these REO-foreclosure sales require offers to be emailed as one file. Older experienced agents in my field are very reluctant to embrace new technology and lag in this area. If your offer is faxed and broken up into several difference files, your experienced agent has just made the listing agent’s job harder and the asset manager’s job harder, so finding that balance between experience and a modern practitioner will be hard to find. One hint….if their email ends in “aol.com” they probably have no idea how to use PDF files.

3. Understanding property conditions. How that will affect the loan and more importantly how that will affect you the buyer after you have moved in and the excitement of the hunt is over? What I am seeing now with the inventory on the market has been very interesting. Several trends have appeared.

Foreclosed homes are in typically poor condition. The prior owners could not afford to make payments and if they were short on money, then regular maintenance and upkeep was often neglected. The prior owner(s) knowing they would lose the home, had no incentive to care for the home. Most REO-foreclosures are loaded with deferred maintenance issues and many times unknown issues, as the prior owners do not leave a list of items or conditions when they leave. In some cases the prior owners are angry when they leave and they take appliances, light fixtures, carpeting, Toilets, sinks…I even saw one home where the air conditioning and heating system was removed.

REO-Forclosure Problem properties During the hype of the up market, buyers overlooked serious defects on homes and serious deferred maintenance on homes because of the low inventory and the fear of being priced out of the market. I am seeing serious un-repaired issues left over from the 1994 Northridge earthquake on many of these homes. In the last couple of months I have been in a dozen homes with cracked foundations, chimneys that were broken off at the roof and repaired. Un-repaired cracks in the walls. Homes with soils issues. The house in these last pictures has a few problems that were visible to start. The first picture shows the back yard and how the pool parallels a down sloping hill. A repaired crack in the bottom of the pool runs the length of the pool parallel to the hill. The deck is sinking and pulling away from the pool on the same side as the hill.

Further investigation inside the home shows that the kitchen, which is next to the down slope of the same hill is sinking. The picture of the kitchen has a yellow line drawn on it with and when I was in the hom REO- Foreclosure Problems e, if you stood back, the sinking ceiling and un-level floor line on that side of the house were evident. I have a level program for my iPhone and confirmed my suspicions. These are the kinds of things picked up from my construction experience and close work with home inspections, foundation engineers and structural engineers. While I am not qualified to make findings and suggested corrections on these kinds of issues I helped my buyer decide to either move forward with the purchase and hire the right people to advise on repairs or just walk away an look for another home.

A few years ago when homes were selling as fast a McDonald’s dollar Sundaes in a heat wave, many agents were able to get by selling homes as almost every escrow closed because lending was easy and deferred maintenance issues did not cause concern with many buyers. Today this is very different; an agent needs experience in many areas and needs to be a constant practitioner honing his/her skills. Please ask yourself who is in your corner.

Filed Under: Buyers Tagged With: agent, ebay, foreclosure, real esate agent, real estate, REO, Simi Valley

Phantom Inventories can be Deceiving (Simi Valley housing report)

January 25, 2009 By Ted Mackel 6 Comments

Phantom Inventories can be Deceiving (Simi Valley housing report)

Simi Valley Phantom Inventory Real Estate We are constantly hearing all the time that Simi Valley housing inventories are shrinking and that sales are picking up. I have talked about it in my market updates. Let me put this in context. What most are not aware of is the Phantom Inventory that has not been put on the open market; meaning that the Banks are carrying a much large amount of inventory and this inventory has intentionally not been submitted to the Multiple Listing Services to be marketed.

As a REO agent for a southern California bank, I have seen the Phantom Inventory in action. Just two weeks ago I was assigned a property in Simi Valley. The typical procedure includes determining if anyone is living in the property and if that is the case, then I am authorized to work to get the occupant(s) out. This particular property I was told that if there as anyone occupying the property to report back and wait before proceeding. Essentially the hold over occupants will be living in property and will continue to live rent free until the bank decides it is time to move forward.

RealtyTrac, an online service that provides pre-foreclosure and post foreclosure property data, claims that they have more homes in their database counts than what is listed on the Multiple Listing service according to a recent CNN article.

Several of the listings I have, sat vacant for several weeks before I was given the okay to start marketing. This lag can create a false picture to those agents that are not monitoring the markets and general public who rely on traditional news sources for their information.

Typically real estate performance reports are generated from data provided by DataQuick, however this service does not show the differences between the MLS databases and RealtyTrac. Nor dose the anyone but broker subscribers have access to the MLS data and reports to make those comparisons.

Simi Valley Real Estate Foreclosure Avalanche

What this all boils down too as you hear the hype about increased sales; know that there is still a large volume of foreclosed properties that have yet enter the market. There is still a large number of pre-foreclosure properties that are right behind the Phantom Inventory.

This real estate inventory build up is much like the build up of snow at ski resorts. The ski patrol goes out early in the morning and intentionally creates avalanches to ease the pressure of the snow build up so a larger more dangerous avalanche does not occur while skiers are out during the day.

If the government and the banks are not careful and do not start to release some of the build up in inventory, we could get hit by a avalanche of inventory all at once and drive prices down at much larger percentages than what is already projected.

Filed Under: Buyers, Market Updates, Real Estate News, Sellers Tagged With: foreclosure, housing, inventory, Market Updates, Phantom, pre-forclosure, Simi Valley

Simi Valley Real Estate Homes Market Report through 8-31-08

September 7, 2008 By Ted Mackel 1 Comment

Simi Valley Real Estate Homes Market Report through 8-31-08

The following table is the activity for the home sales in Simi Valley and Moorpark. Combined sales of Attached and Detached homes in Simi Valley for the month of August was 106 units, this trend is slightly lower than the 115 unit average we have seen for the three months prior. The hottest segment of the Simi Valley real estate market currently are the foreclosures on the entry level for single family detached homes. The Simi Valley Condo-Townhouse market remains much slower as the foreclosed detached homes are at a competing price level with no HOA fees.

The cream puffs of the Simi Valley foreclosure market are moving quickly with multiple offers as opposed to the foreclosures that need work which are taking longer to sell.

Activity – Single Family Detached Homes

Active Listings	Simi Valley	Moorpark
Active
# Units	475	157
Average List Price	598,784	918,923
Average Days Listed	93	92

Pending Sales in Escrow
# Units	107	17
Average List Price	522,173	527,852
Average Days on Market	72	122

Total Closed Sales for 2008
# Units	656	148
Average List Price	542,325	620,264
Average Sold Price	521,509	598,925
Average Days Listed	85	100

Average Closed Sales per month	82.0	18.5
Unsold Inventory Index (in months)	6.80	16.68

Activity – Single Family Attached Homes

Active Listings	Simi Valley	Moorpark
Active
# Units	130	46
Average List Price	345,724	401,673
Average Days Listed	114	72

Pending Sales in Escrow
# Units	37	8
Average List Price	276,622	272,575
Average Days on Market	60	92

Total Closed Sales for 2008
# Units	113	37
Average List Price	328,628	325,894
Average Sold Price	316,912	314,330
Average Days Listed	83	86

Average Closed Sales per month	14.13	4.63
Unsold Inventory Index (in months)	12.17	9.94

Filed Under: Market Updates Tagged With: foreclosure, homes, Market Report, real estate, Simi Valley

Simi Valley Housing Market News August 26, 2008

August 26, 2008 By Ted Mackel Leave a Comment

Simi Valley Housing Market News August 26, 2008

Simi Valley Housing Market Update

After four straight months of stronger sales in Simi Valley, the news is trying to find it’s way in this turbulent market. There is no doubt that Simi Valley’s foreclosure and short sale market have brought the bargain buyers out to look to either accumulate investments properties or first time buyers to make that long awaited purchase after being forced to sit on the sidelines for several years.

This might buck the typical Simi Valley trend of the slower fall real estate sales we have seen every year for the last 10 years. Starting January 1st 2009, investors will be limited to owning 4 properties total that are financed with Fannie Mae and Freddie Mac backed loans. I would not be surprised to see some increased buying before the end of this year as investors with more than four properties finance additional purchases while they can.

The action in the sales we are seeing in Simi Valley, are on the entry level and lower side of the Single Family Detached homes. Condos and Town home sales are still sluggish as many buyers try to avoid HOA fees. I will have the August Market Numbers Report posted near the end of the 1st week of September.

Related Stories:

Filed Under: Buyers, Market Updates, Real Estate News, Sellers Tagged With: foreclosure, Market Report, real estate, Short Sale, Simi Valley

3 tips for Renter’s Nightmare – Foreclosure and Eviction

August 22, 2008 By Ted Mackel Leave a Comment

As a Realtor that represents a major bank with their foreclosures, this is becoming a real problem in the current market. Imagine you signed a Lease for a home and you have been in the home for 8 months paying on time and one day there is a knock on the door. The representative at your door is now telling you that the property you are leasing has been foreclosed on and you have two weeks to move out and find a new place or face eviction.

Here are several tips to help you deal with this situation.

If there has been a notice of Sale posted on the property you are renting, take this notice very seriously. Your Landlord is very close to losing control of the property.
Start the process of looking for a new rental and begin arranging the help and supplies you need to move.
Think long and hard about making that next rental payment. If a Notice of Sale has been posted on the door of the house you are renting, your landlord is going to have a hard time evicting you from a property that the Landlord will soon longer own. Chances are your security deposit will never be seen again as well. If you are paying a property management company, be careful, withholding payment may affect your ability to get a reference from them when you make application for a new rental. You are really stuck between a rock and a hard place and it would be far better to make plans to move. Then to try and stay. The bank is very non emotional and is looking to sell their asset as quickly as possible.

If you decide to stay and the property is foreclosed on, the bank will begin process to evict you. Some banks will offer assistance if you agree to move quickly.

Home prices are dropping and in many cases may now be lower than the rental payments you are making today. First time buyer assistance programs may help you buy instead of rent. I may be able to help you find a home to purchase. You can reach me through the “How to reach Ted” Tab at the top of the page.

Filed Under: Buyers Tagged With: eviction, foreclosure, landlord, Notice of sale, renters

Layman’s Information on H.R. 3221- Foreclosure Prevention Act of 2008

August 10, 2008 By Ted Mackel 2 Comments

Layman’s Information on H.R. 3221- Foreclosure Prevention Act of 2008

The Good, the Bad and the Ugly: Part II

It has been a few months since my first installment of this “series” and it’s time for some very important updates on the current state of the mortgage market. This information will affect you in the future so please take a few minutes out of your day to read this email in its entirety. This information literally could change your future or the future of those you care about.

The Good:

Congress has finally passed a housing overhaul bill and the President signed it into law for October 1st of this year. Here are some of the provisions that will help the real estate market and homeowners tremendously:

Millions of homeowners that are upside down on their mortgages will be eligible for an FHA program that will essentially forgive any current mortgage debt until the homeowner is back to a 90% “Loan to Value” (LTV)! This alone will turn around the real estate market as it takes people who were likely to walk away from their homes at some point into folks who still have equity and ownership in their home. This is an amazing opportunity for many homeowners and while there are some strings attached, this is a lifeline for many local homeowners who are under water.
Another provision allows for a tax credit of up to $7500 for first time homebuyers. This should help to generate a lot more first time homebuyers who are the driving force of real estate markets around the country including our own.
States will receive billions of dollars to buy and fix up foreclosed homes to avert further neighborhood blight that foreclosures sometimes bring.
Fannie Mae and Freddie Mac are getting an overhaul and so is the FHA. One of the things going away is the ability for homebuyers to 100% finance their homes through the FHA. This program will be gone for good in about 2 months and down payment requirements are actually going up for the FHA.

The local housing market is already starting to show signs of life and we are actually seeing multiple offers and bidding wars at the lower end of the market! Condos are still having their challenges but “starter” houses are now well priced and the competition is getting fierce. We expect that trend to continue until the rest of the market follows suit.

It is my sincere belief that starting in 2009 will see the beginning of the turn around in housing here in Southern California. Get in while it’s still a “buyer’s market” and you still hold the cards. Soon, with the tax incentives and the wider availability of mortgage financing it is going to heat up and you will pay more and lose the ability to negotiate from a position of power.

The Bad:

Mortgage rates are steadily rising and we expect that trend to continue. Fixed rates are now in the low to mid 6’s and we may see 7% before the end of the year if the economy improves. Historically, rates are still excellent but not enough people are taking advantage of the temporary loan limits. These limits are going away December 31, 2008 and it is time to act! If you or anyone you know has a loan amount under $729,750 and they are in any sort of ARM we should talk ASAP. The new housing bill is going to limit the conforming loans to $625,500 which will leave some homeowners out in the cold. PLEASE DO NOT WAIT if you have a loan that you will need to refi in the next few years. The fact is that equity is still declining and loans are harder to get. Fortunately, we have relationships with all the lenders who still want to do mortgage loans and we make it happen. We firmly believe that if we can’t get it done, no one can.

The Ugly:

Banks are failing and it looks like there are more to come before this mess sorts itself out. This uncertainty is very unsettling to the mortgage market and has made my industry even more challenging in recent months. Loans are much more difficult to originate than they have ever been in my career and the simple fact is that the “Age of the Mortgage Broker” is here…

The Feds essentially left mortgage brokers alone in this all of this recent legislation: why? Because they know that without brokers many folks are simply not going to get a loan. A good broker is worth their weight in gold (which in my case is a lot of money!) because we have dozens of relationships with banks around the country that you simply could not make on your own. I can shop 60 banks for you on any given day. In addition, I know who has the best rates, who has an appetite for your sort of loan and how to get you into a position to be the most successful.

I have had an influx of loans from banks and other brokers recently where the loan officer couldn’t get it done because:

A) They couldn’t keep up with guideline changes and they got burned

B) They didn’t have the programs

C) They don’t have the resources

D) They don’t want to work as hard as necessary to get it done

Please let me know if you or anyone you know has any questions about mortgage financing. As always, you will get an honest answer with your best interests in mind. We have the best rates and programs – GUARANTEED!

Other Extremely Important Info:

- Lenders are starting to implement a rule where if you have more than 3 financed properties they will not do your loan for any of your properties! This means the loans you have are the loans you have, period. This is very important and will affect investors very soon. If you know anyone who has 4 or more financed properties we need to talk ASAP or they will be stuck in their loans with no ability to refi.

- The “Buy and Bail” rule is being implemented at many of our lenders and this will definitely affect your ability to buy a new house while keeping your existing home as a rental. In this market it makes sense to keep your existing home and rent it out because of the market and because rents are strong. Soon, unless you can prove at least 30% equity in your current residence (through an appraisal) you will not be able to qualify for a new home unless you can absorb both payments. If you plan to upgrade and keep your current residence we need to talk right away because we can still get it done, for now.

- We have a product that is absolutely unbeatable: a 5 year fixed interest only with loans up to $5 million with rates in the 5’s! This kind of rate doesn’t exist on super jumbo money like that in the open market but we have access to it thanks to our relationships.

I want you to know that you still have a friend in the mortgage business and we will be here next week, next month and next year. While others are dropping away we are still looking out for you and we still care. Please call me.

Have a great day and please share this with anyone you think might benefit. Best regards,