Tag Archives: Economy

Would You Catch a Falling Knife?

Leave a reply

The question arises, has the real estate market bottomed out? And is this a good time to buy? Can you compare buying real estate today to catching a falling knife?

If you ever wanted to see a super analysis of the real estate market check out this article by Jeff Harding. He covers the many aspects of both residential and commercial and what I read, it ain’t pretty. He has great information and much more than I could tell.

he bottom line on the residential market is that home values will continue to decline in 2012 on a national basis, and if, as we are forecasting, the economy continues to flatten or decline, there will be no good news next year. Again, as we know, there is no “national” market and each locality has its own dynamics. But these data will have a negative impact on home buyers’ attitudes about the housing market.

The bottom line on the CRE markets is that prices appear to be flattening, but there is a substantial refi problem continuing to overhang the markets. As the bulk of these loans need refinancing at their maturity dates, it is likely that many of them will not be able to replace their loans and will face the requirement to come up with additional capital or face foreclosure, thus delinquency rates will remain high, especially in the sub-Class A markets. This has been the story of CRE for the past four years and there are no economic dynamics that would change it.

It is unlikely that investors and home buyers will be willing to catch a falling knife.

As he mentions, this describes a nationwide market and the reality is that all real estate markets are local. What happens nationally may not be the story for here in Nevada or in the Reno-Sparks area.

You may also be interested in . . .

Unemployed Borrowers Get Break from Fannie Mae

Leave a reply

New guidelines from Fannie Mae followed similar guidelines from Freddie Mac on forbearance for homeowners that are unemployed and facing foreclosure. The loan servicer can grant six months forbearance without the GSE’s approval.

If the borrower is still unemployed Fannie Mae can approve an additional six months forbearance. After that the lender and borrower must consider other options.

The borrower is expected to repay the lost payments over a longer period. But in reality, in many cases the forbearance would simply amount to one year free rent.

This follows a similar program last summer for FHA loans and loan modifications.

Read more: http://www.nytimes.com/2012/01/12/business/unemployed-mortgage-holders-get-payment-extension.html

You may also be interested in . . .

Mortgage Interest Rates at Record Low

Leave a reply

The rate on the 30-year fixed mortgage reached a new record low of 3.91 percent. This marks the third new low this year. The 15-year fixed mortgage rate, remained unchanged at a low of 3.21 percent.

The exceptionally low rates and the depressed prices have created a superb buying opportunity, but the opportunity is lost for many potential buyers because of the difficulty qualifying for new loans.

With so many homes underwater here in Reno and Sparks very few homeowners can qualify for a re-finance. Additionally, Nevada’s real unemployment further reduces the chances to re-finance.

Read more: http://www.businessweek.com/ap/financialnews/D9RPKO100.htm

You may also be interested in . . .

Has the Housing Market Hit Bottom?

Leave a reply

Luxury home builder, Toll Brothers entered the Seattle market by buying CamWest development.

So what does this mean for Reno, and why should we care? Motley Fool takes this as a sign that we are now at the bottom of the market, and even though we may not increase quickly, we will probably not see significant decreases in prices in the near future. The larger operators will take this opportunity to buy smaller operators.

However, don’t take this as a sign that everything is suddenly all rosy. Prices have still fallen in the most recent months. Remember, the interest rates are at near historic lows. What would happen if the rates should suddenly climb?

Read more: http://www.dailyfinance.com/2011/11/28/one-sign-that-the-housing-market-has-hit-bottom/

You may also be interested in . . .

How Hard is it to get a New Mortgage Loan?

Leave a reply

Is it really hard to get a mortbgage loan? Some folks think so, but is it really the case? According to stan Humphsries, it”s acturally easier today than it was in 2000 or 2006.

In 2000, 54 percent of applications for conventional, owner-occupied, home purchase mortgages on one- to four-family homes resulted in mortgage originations (the balance being denied, withdrawn, or approved but not accepted by the borrower). By 2006, standards were indeed looser and 61 percent of applications for conventional mortgages resulted in originations. So what happened after the bust? Would it surprise you to learn that in 2010 63 percent of conventional mortgage applications resulted in originations? That’s right, for conventional mortgages, the conversion rate between applications and originations was actually higher last year than in either 2000 or 2006.

Now, I”m not sure that it’s easier. More loans may be approved, but from my experience the banks manage to find more hoops for a borrower to jump through, and consequently, fewer low quality borrowers actually try.

Read More: http://www.cnbc.com/id/45402953?__source=RSS*blog*&par=RSS

You may also be interested in . . .

Nevada Ranks # 46 in List of Best Run States

Leave a reply

Here’s another one of the “Best of” and “Worst of” lists that must fill journalists need for “product.” This time it is ranking the best of and the worst of the 50 states according to their arbitrary opinion.
These are the same kinds of lists that the politicians and the activist refer to when they seek to further pick the pockets of the public. Notice that they don’t include the per capita taxes the states collect.

FWIW, Nevada ranks #46 on the list:

46. Nevada
> State debt per capita: $1,690 (6th lowest)
> Pct. without health insurance: 22.6% (2nd highest)
> Pct. below poverty line: 13.0% (24th lowest)
> Unemployment: 13.4% (the highest)

Nevada has dropped five places in our rankings. This drop is due primarily to its credit downgrade this year from AA+ to AA. Surprisingly, the state has one of the lowest debts per capita in the country, at just $1,690 per person. However, it has other financial woes that make it a long-term risk. Nevada properties declined 44.5% in value between 2006 and 2010, the worst decline in the country. In October alone, one in every 180 homes was foreclosed upon, easily the worst rate in the country. The state also has the second lowest percentage of residents covered by health insurance and the highest unemployment rate in the country.

California ranks the worst, # 50, but you probably already knew that.

Read more (To save you time, Nevada is on page #6.).

You may also be interested in . . .

Bank of America Will Accept Back-up Offer in Short Sale

Leave a reply

One of the problems with short sales is the amount of time they take to complete, often as much as 4 to 6 months, or more. The typical retail buyer is not willing nor able to wait around that long and the buyer then walks away from the transaction.

Short sales approval typically take 60-90 days \ after the buyer and seller have signed their contract and all the corresponding paperwork has been submitted to the bank. Closing then takes another 30 days or so. Most buyers don’t want to stick around for 120 days with the uncertainty that they don’t know if the bank will even agree to the short sale or if the terms of the agreement will be acceptable to the seller.The biggest challenge with short sales is to keep buyers interested in the property long enough to see the entire transaction through to the end.

Bank of America recently notified real estate agents that they can now substitute a new buyer without having to initiate a new short sale. This is in the case of the original buyer walking away from the deal. For home buyers and sellers reading this who may not be involved every day in dealing with short sales, this really big change in the real estate market.

This development should help to speed up short sales, if for no other reason that they no longer need to start over.

Read the B of A document: http://sdshortsaleexperts.com/virtualoffice_files//bank-of-america-back-up-offer.pdf

You may also be interested in . . .

Fannie Mae Discloses that it Pushed Foreclosures Over Mods

Leave a reply

It appears that Fannie Mae lied and was pushing foreclosures instead of loan modifications as they had originally insisted.

Fannie Mae has released papers and internal memos indicating that the government-controlled GSE has been pushing its lenders to opt for foreclosure instead of loan modifications and threatening to “charge a penalty to lenders who allowed foreclosures to wait too long before they were executed” . . . Ethical arguments about this policy aside, these memos are dated from the same time that Fannie Mae officials were testifying in congressional hearings that they “were doing everything in their power to prevent foreclosures.”

Nearly everything we see coming out of Washington is complete corruption and lies.

“I am thoroughly disgusted by the actions of Fannie Mae,” said Ingham County Register of Deeds Curtis Hertel, who is currently suing Fannie Mae and other lenders arguing that they failed to pay Ingham county millions of dollars in title transfer taxes. “What these internal documents show is that while Fannie Mae was being bailed out by taxpayers they were systematically pushing for citizens to be foreclosed. The reason for this is even worse. Right now we as taxpayers pick up the cost of every foreclosure, because we pay Fannie Mae’s loss in the foreclosure process. In other words they actually get paid more for a foreclosure than for a reasonable modification.”

Neeta Delaney, co-director of the Michigan Foreclosure Task Force, had a slightly more muted response.

“We see this on a daily basis. It is what we have been characterizing as the right hand not knowing what the left hand was doing,” she said. Her coalition represents nearly 200 groups with a stake in ending the foreclosure crisis and is working to push new foreclosure related legislation through the legislature. “It’s not new news (foreclosures during modification negotiations). But the documents are new news. These documents are implying a policy behind this. It’s not just the banks being overwhelmed.”

Read more:http://michiganmessenger.com/51716/officials-angered-over-fannie-mae-disclosures

You may also be interested in . . .

Are Reno Home Prices at the Bottom?

Leave a reply

Have the home prices finally hit the bottom?  The question arises on a regular basis and the answers seem to be as reliable as a weather report.  But remember, people have been predicting the bottom from as long ago as 2008 and we still don’t know for sure.

The Reno-Sparks Realtors are fairly  sure we are bouncing along the bottom.  But, notice that the prices have dropped in the last few months, even while the sales were significantly higher.

REReno recently questioned if Reno home prices had hit bottom yet.

Mike Shedlock said that the housing price bottom will not be this month, but that’s as certain as he gets.  He has gathered a lot of information with charts and graphs that compares other situations to where we are now.

We should be aware that although the economic situation is world wide, that each locality has its own market.  Reno was earlier and more severe that many parts of the nation.

We can always hope.

You may also be interested in . . .

Couple Battles Wells Fargo Bank

Leave a reply

Here’s an interesting story about a couple taking on Wells Fargo.  The accused Wells Fargo of funding a home here in Reno based on a fraudulent appraisal which inflated the value of the home by $200,000.

From my vantage point the story is loaded with too many inconsistencies and sounds much like someone playing the victim card too loud and too often.

According to the Vieiras, the mortgage loan they took out in 2005 with Wells Fargo was based on a fraudulent appraisal that inflated the property’s value by more than $200,000. The appraisal was ordered by the bank and determined the couple’s mortgage, which they were eventually unable to pay, like tens of thousands of other homeowners across the country.

I’m not aware of any cases where appraisals are used to determine anyone’s mortgage.  They are used to determine the value of the property, supposedly to protect the bank’s interest.

The Vieiras said they were first late for their mortgage payment in September, 2009; Wells Fargo foreclosed on the home in June, 2010. Nuno, who is an appraiser himself, said the original home appraisal set him and his wife up for an unwieldy mortgage, and even though it was ruled fraudulent, the couple had no legal recourse.

Notice that even though Nuno is and appraiser himself, he was willing to complete the purchase without disputing the price.  He apparently agreed with the appraisal ath that time.

The Vieiras claim that they have been fighting this battle for the last 6 years.   They purchased a home in Reno, Nevada in 2005.  Coincidentally, that happens to be about 6 years ago.  That would suggest that they had been fighting Wells since the day they closed their escrow.  The home was foreclosed in June of 2010.

I must admit that I’m not always a fan of the banks, but this time I side with Wells.

Read the rest:

http://sanleandro.patch.com/articles/local-couple-takes-on-wells-fargo-bank

You may also be interested in . . .