Archive for September, 2009

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The “EYE” of the foreclosure storm

September 26, 2009

As a native Floridian, I know a lot about hurricanes and the one thing I know – Expect the unexpected.

Hurricanes are somewhat predictable. As the hurricane blows through you have destruction followed by a peaceful, tranquil lull where the sun may even reappear and you will walk outside your secured dwellings to survey the damage. It’s called the “eye” of the storm. For a short while, during which the eye passes over land – nothing happens and it is as if there is no storm. That’s where we are right now in FORECLOSURES. We are in the eye of the storm.

The federal government, banks and agents are all predicting we have hit bottom and personally, I think we have. But NO ONE is talking about the fact that the eye of the storm is upon us and a second wave of SERIOUS FORECLOSURES are about to hit the market. We are talking about people who once made a good living, bought an expensive home and are now underwater.

As a real estate agent, I see the forecast CLEARLY yet no one in Congress seems to understand the urgency of working to help homeowners – massive FORECLOSURES are forecasted. Congress needs to help homeowners negotiate the short sale process  or there will be a lot of homes foreclosed. In addition, there are so many people out of work, across all economic categories, that without a job – homes are lost. It’s just that simple.

Health care reform is important – but it is NOT as important as fixing our economy. With no jobs, massive foreclosures and people running out of savings – we are in crisis mode but because we are sitting in the eye of the storm – we don’t see what is coming on the horizon and it’s ugly.

WAKE UP WASHINGTON and start working on the economy and keeping people in their homes. The eye is upon us and the storm approaches.

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Banks are Bogus

September 16, 2009

As a real estate agent in the trenches, if you asked me to point the finger (and I don’t like to point) at anyone holding up the recovery of our economy – I would have to point at the banks.

Lenders received bail-out funds to stabilize their systems and promptly bonused their executives while then HOLDING the federal funds internally. In other words, the banks are doing exactly what they don’t want the general public to do – HOLDING ON TO THEIR CASH. They are certainly not re-distributing the wealth and they are certainly not giving out MORTGAGE LOANS to WORTHY borrowers.

To get a loan today is a lesson in frustration and there are no guarantees until the money is in the bank. LITERALLY. Recently one of my real estate transactions was cancelled one day before closing without cause and it took us two weeks to find another lender to consummate the transaction. Absolutely ridiculous!

Congress needs to take action to ensure that ALL LOAN NEEDS are being met; not just FHA underwritten loans – but loans for people who exceed FHA limits. The market over $400K has come to a screeching halt. I point the finger at the banks. They are so risk adverse that they aren’t willing to loan even to the most qualified buyers.

I understand the need to work on health care. What I don’t understand is how it takes precedence over economic and housing recovery. I will say it again – as the housing market goes – so goes the economy.

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FHA loans are hottest on market

September 2, 2009

FHA on track for busiest year

WASHINGTON – Sept. 2, 2009 – Almost a year after the federal government launched its rescue of the housing market, nearly one in four new mortgages is insured by the Federal Housing Administration (FHA).

With less than a month to go in the 2009 fiscal year, the FHA is on pace for its busiest year.

From Oct. 1 through mid-August, applications for FHA single-family-home mortgages were up 50 percent, to 2.52 million, from the same period a year earlier.

Approvals for purchases, refinancings and reverse mortgages rose 70 percent to 1.67 million.

Eighty percent of the FHA mortgages for purchasing homes went to first-time buyers drawn to the FHA’s low-downpayment requirements, starting at 3.5 percent. Private lenders making conventional loans typically require at least 10 percent down.

The FHA’s market share, about 3 percent in 2006, has swollen to more than 23 percent. With credit still tight, many borrowers could not get a mortgage without FHA help.

FHA loans “are one of the most important sources in this market,” says Mark Zandi of Moody’s Economy.com. “Without FHA, the housing slide would be much more severe. We wouldn’t be talking about a recovery now. We’d still be talking about a crash.”

FHA loans also have become more popular because of the demise of many subprime lenders, which sometimes allowed buyers to purchase a property with nothing down and no documentation of income.

In addition, FHA increased its loan limits at the beginning of the year. Previously, the maximum had been $362,790. The new ceiling raised that to $729,750 in high-cost areas such as Boston, New York and Washington, D.C.

Also fueling demand for FHA-insured loans is this year’s tax credit of up to $8,000 for first-time home buyers.

But as FHA insures more loans, it is also assuming more risk.

Foreclosures on homes with FHA mortgages rose to 1.76 percent in June from 1.6 percent a year ago, and the default rate – for mortgages 90 days or more delinquent – was 6.88 percent, up from 5.57 percent.

“I’m very concerned about risk,” says FHA Commissioner David Stevens, who adds that risk is mitigated in part because applicants today are more solid than those in recent years.

Borrowers with FHA-insured loans now have average credit scores of about 690, compared with about 630 two years ago.

FHA also has tightened lending standards, requiring a 10 percent downpayment for those with credit scores below 500.

Copyright © 2009 USA TODAY, a division of Gannett Co. Inc., Stephanie Armour.