"The term mortgage meltdown has become so common -- on television, in headlines and even casual conversations -- that you might assume that this is a tough time to get a mortgage."

"But the reality is different: Mortgage money is plentiful, most mortgage products remain unaffected by troubles in the subprime segment, and interest rates for 30-year fixed-rate loans remain in the low 6 percent range for people with reasonably good credit. Even interest rates on loans of more than $417,000 have fallen after spiking during the summer." - Kenneth Harney, Nation's Housing

The main change during the past several months, said Ted Grose, president of 1st Mortgage Advisors in Los Angeles, is that "the products that allowed people to buy houses they couldn't afford have disappeared."

"Larger mortgages, which always have carried higher rates than loans eligible for purchase by Fannie Mae and Freddie Mac, have recently been in the low 7 percent range, down from the 8 percent and higher levels of a couple of months ago."

"Nonetheless, say lenders and brokers, there is a widespread and persistant belief by consumers that the entire mortgage market is in crisis."

"Other than subprime and high LTV (loan-to-value) stated-income" programs, Jim Brown, chief executive officer of Veteran Mortgage said, "we've got pretty much everything now that we did before. We've got a lot of outlets."

"Most lenders and investors are quick to note that while mortgage money is plentiful, underwriting standards are stricter than they were a year ago."

"Similarly, FICO score standards generally are higher than a year ago, stated-income mortgages with no verifications are hard to find, and major investors are on the prowl for anything hinting at fraud."

"Lenders are especially wary of excessive "layering of risk" - combining low down payments with marginal FICO scores and high-to-income ratios - in markets where prices are falling."

"A major legislative development under way on Capitol Hill could expand consumers' range of good mortgage choices even further."

Read the entire Article HERE.

Labels: Bay Area Real Estate, Fico Score, Interest Rate, Jumbo Loans, Mortgage Lenders, San Francisco Chronicle, Subprime Loans

Money's tight these days, so for the first time in many tears, seller financing is making a comeback. To get deals done, people are turning their backs and doing "the old end around." - Marni Leff Kottle, San Francisco Chronicle.

"Seller financing is simple in theory: The buyer and seller settle on a price and then the seller agrees to extend some amount of credit back to the buyer. The loan is secured by the property. Typically, the seller provides financing in the form of a second mortgage after a buyer has obtained a first mortgage from a bank."

"Sellers are still able to push their price points, and buyers are getting interest rates that are lower than the retail market." Heidi Rickerd-Rizzo, Branch Manager for Pacific Union-GMAC in St Helena.

Read the entire article HERE.

Doing the deal
If you're thinking of using or offering seller financing, here are some tips from real estate experts for buyers and sellers:

Buyers
-- Agree on a price with the seller and secure a first mortgage, if applicable.

-- Your agent can serve as the arranger of credit.

-- Terms are typically outlined in a standard three-page form provided by the California Association of Realtors, so you can often complete such a transaction without a lawyer.

Sellers
-- Make sure the buyer is creditworthy.

-- In a typical transaction, you're entitled to review a buyer's credit report, financial statements and other information.

-- You may want to consult with an attorney or accountant to understand the tax implications.

Source: California Association of Realtors, Pacific Union.

Labels: Bay Area Real Estate, CAR, Interest Rate, Mortgage Lenders, Seller Finance

Money Supply Drying Up - jumbo loan rates soar, even for buyers with excellent credit.

"Need a mortgage this month? It's going to be harder - and more expensive - to get one. In the past week, turmoil in the mortgage markets has caused increasing problems for home buyers in the Bay Area and around the nation." Read the Full Story, by Carolyn Said & Kelly Zito, in today's San Francisco Chronicle.

Fannie Mae's Berson said the tightening mortgage situation is likely to hurt the already troubled housing market.

"There are people who could have qualified for a mortgage a month ago who can no longer get that mortgage," he said. "That means there will be fewer home sales or else people will have to buy less expensive homes. The practical impact is that some people will choose not to buy now. This is an additional negative factor on housing demand. It means home sales are likely to be weaker than we thought they would be just a few months ago."

Labels: Bay Area Real Estate, Interest Rate, Jumbo Loans, Ken Rosen, Mortgage Lenders, Real Estate Cycles, San Francisco Chronicle, Subprime Loans

"By rushing into the mortgage business big-time, homebuilders helped fuel the housing crisis. Now they're hurting—and so is Wall Street." by Mara Der Hovanesian, BusinessWeek. Go to the Story.

"Traditional mortgage companies and banks unleashed a barrage of loans, many to borrowers with iffy credit histories who didn't bother to read the fine print about upwardly mobile interest rates. Wall Street egged on the often-reckless underwriting by buying vast quantities of home loans for repackaging as securities. Now that the boom has fizzled and foreclosure rates are rising, the important role of large homebuilders as lenders is also coming into sharper focus."

"Even as the housing supply began to exceed demand last year, builders kept sales brisk by pushing adjustable-rate, interest-only, and other risky loans."

STEALING FROM THE FUTURE
Now it's payback time. It is likely to take two to three years, by various estimates, for the excess supply to be soaked up. The boom stole sales from the future as people bought houses earlier than they might have a few years ago. From the same issue of BusinessWeek, by Peter Coy. Go to the Full Story.

Labels: Bay Area Real Estate, BusinessWeek, Foreclosure, Home Builders, Interest Rate, Mortgage Lenders, Real Estate Cycles, Subprime Loans, Wall Street

Nightmare Mortgages
"They promise the American Dream: A home of your own -- with ultra-low rates and payments anyone can afford. Now, the trap has sprung." - Mara Der Hovenesian, BusinessWeek Magazine.

"For cash-strapped homeowners, it was a pitch they couldn't refuse: Refinance your mortgage at a bargain rate and cut your payments in half. New home buyers, stretching to afford something in a super-heated market, didn't even need to produce documentation, much less a downpayment."

"The option adjustable rate mortgage (ARM) might be the riskiest and most complicated home loan product ever created. With its temptingly low minimum payments, the option ARM brought a whole new group of buyers into the housing market, extending the boom longer than it could have otherwise lasted, especially in the hottest markets. Suddenly, almost anyone could afford a home -- or so they thought. The option ARM's low payments are only temporary. And the less a borrower chooses to pay now, the more is tacked onto the balance."

The bill is coming due.

"Most of the pain will be born by ordinary people. And it's already happening." This is the message brought to us indepth in an excellet article found in BusinessWeek's September 11, 2006 issue. View it in its' entirety HERE.

More evidence of a coming problem; "Real estate foreclosures rise 18% nationwide." as reported by RealtyTrac.

To view additional BusinessWeek articles on mortgages;
Struggling to keep up with your mortgage?
Mortgage Lenders: Who's Most At Risk?

LoanIQ(TM) allows you to instantly identify high-risk loans and reduce overall loan default exposure. Quickly and accurately fast-track low-risk loans and escalate loans with a higher risk of loss to quality control and due diligence.

And finally, here's your resource for mortgage calculators; www.mortgages.interest.com

Labels: Bay Area Real Estate, Foreclosure, Freddie Mac, Mortgage Lenders, Real Estate Cycles, RealtyTrac

"As delinquency rates rise, red flags are flying over some aggressive finance outfits," as stated by Mara Der Hovanesian, of BusinessWeek.

"For months doomsayers have been predicting that the slowing housing market, along with rising interest rates, would lead to mortgage foreclosures and bank losses. That hasn't happened yet, but delinquency rates have started to rise. What's worse, instead of cutting back on the exotic mortgages they've leaned on throughout the boom, many lenders are charging ahead on such high-risk loans full tilt. "Mortgage lending standards show little sign of tightening," says Frederick Cannon, bank analyst with New York's Keefe Bruyette & Woods Inc. investment bank. "[Lenders] should have dialed back the aggressive loans by now."

"The much-feared troubles may finally be arriving. Delinquency rates jumped more than 7%, to 4.7% in the fourth quarter of 2005, from the year before, according to the Mortgage Bankers Assn. Home buyers are becoming over-extended. In California, where seven of the 10 most expensive U.S. cities are located, one in five buyers already spends more than half of pretax household income on housing -- much more than the 30% recommended by the Housing & Urban Development Dept."

"Despite the lenders' precautions, some borrowers will receive a rude shock starting this year. Repayment terms on about $1.3 trillion of adjustable-rate loans will increase in 2006 and 2007, forcing some borrowers to pay up to 150% more per month. "In the hands of an unsophisticated borrower, [these loans are] dangerous," says Robert W. Visini, vice-president for marketing at San Francisco mortgage tracker LoanPerformance (FAF).

"About 10% of U.S. households now face a great risk of running into credit problems, according to research done by Meredith Whitney, senior financial institutions analyst for CIBC World Markets Inc. (BCM ). If borrowers start to default on their loans, their lenders could themselves face mounting problems."

"Real estate rates at highest level in nearly 4 years," according to Frank Nothaft, Freddie Mac, as reported by Inman News.

"Mortgage rates this week climbed for the fourth straight week to highs not seen since the summer of 2002, according to surveys conducted by Freddie Mac and Bankrate.com."

"In Freddie Mac's survey, the 30-year fixed-rate mortgage rose to an average 6.53 percent for the week ended today, with an average 0.6 point, up from last week's average of 6.49 percent. The 30-year fixed has not been higher since the week ending July 12, 2002, when it averaged 6.54 percent.

Foreclosures Soar 63 Percent over Last Year
RISMEDIA, April 19, 2006—RealtyTrac(TM) (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its March 2006 U.S. Foreclosure Market Report, which shows 101,597 properties nationwide entered some stage of foreclosure in March, a 13 percent decrease from the previous month but a 63 percent increase from March 2005.

Labels: Bay Area Real Estate, Foreclosure, Freddie Mac, Housing Market, Mortgage Lenders, Real Estate Cycles, RealtyTrac