Enjoy!

http://www.truliablog.com/2011/08/16/rent-vs-buy-homeownership-beats-renting-in-3-out-of-4-us-cities/

Virtual Tours in Colorado – Front Range and the Mountains

Admittedly, the recent years when the mortgage industry was run like the Wild West and all you had to do was fog a mirror to get a loan, contributed to the mortgage meltdown and the mess we are in today.   What do we have to do to bring back common sense?

I currently have clients that are putting down 40% on a $250000 home, have 800+ credit scores,  no debt, have over $750000 in the bank and retirement accounts, and because they are retired and are living on a fixed income, they are getting jacked around!  It has to stop!  Not all people are round pegs!  I actually asked the lender to reject the loan causing them to take another look at it and realize that they couldn’t reject it so they had to approve it!  Where has common sense gone?

Appraisers are hand cuffed as well.  Sellers are not getting true value for many extras that they put into their properties.  Common sense must return to lending or we will kill the goose that lays the golden eggs!

Fortunately, there is a mortgage product out there that can help people get around the appraiser challenges, the FHA 203K home improvement loan.  With the glut of short sales and foreclosures out there many of these homes are in need of repairs.  You can buy your new home and finance it based on what it will be worth after you make the repairs and any improvements.  This is a winning strategy and one that should be investigated by all potential home buyers.

Find more articles on this and other topics at www.MikeHaywood.com

After doing some research on market statistics for western Jefferson County, I found that certain zip code areas were performing quite well compared to the over all Market for the last quarter of 2010 and the first few months of 2011.

Zip code 30232 in south central Lakewood, prices were up 4.3% and average days on the market was down to 64, according to the Denver Multiple Listing Service.  80228 consisting of mostly Green Mountain was up 2.9% over the same time period. 

Most of what I attest this to is the recent trend of young people and families moving closer to major cities.  This creates a conflict for most as many are finding that the older homes in the close in neighborhoods are not as large and do not offer as many amenities as what you can get in an older neighborhood in the suburbs.  You just get more home for the money!

Check out Lakewood/Golden Homes and see for yourself!

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  7 Tips for Improving Your Credit

  Here’s how to clean up your credit so you get the least-expensive home loan possible. Read

This article continues comment from Dr. Lawrence Yun a highly respected enonomist relating to Real Estate issues.  Enjoy!

The latest news from the National Association of Realtors is good. According to their latest survey, home sales rebounded in 49 states during the fourth quarter with 78 markets – just over half of the available metropolitan areas – experiencing price gains from a year ago, while most of the rest saw price weakness.

Lawrence Yun, NAR chief economist, had positive things to say about this gain. “Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they’ve been selling well and housing supplies have trended down,” he said. “A recovery to normalcy requires steady trimming of the inventories.”

Total state existing-home sales rose by 15.4 percent in the 4th quarter. The median existing single-family price was $170,600 — up slightly from the 4th quarter of 2009. Distressed properties, approximately 34 percent of 4th quarter sales, sold at a discount of 10 to 15 percent, a similar trend to what was seen a year earlier.

The NAR believes a housing recovery still rests firmly on a jobs recovery. Yun noted, “An improving housing market and job growth will go hand in hand. The housing recovery will mean faster job growth.”

This is welcome news in a market where much remains unsure and unstable. The White House missed a recent deadline last week for a decision on what to do with mortgage giants Freddie Mac and Fannie Mae, who are currently under the conservatorship of the Federal Housing Finance Agency.

According to the New York Times, “The diminished urgency on both sides reflects the political realities of power-sharing, the fear of doing further damage to housing prices, and a great deal of uncertainty about the best approach to rebuilding the mortgage business.”

What is on the horizon for the economy? Federal Reserve Chairman, Ben Bernanke, reported last week to the U.S. House of Representatives’ Committee on the Budget, that it was a hard battle last year, as economic growth slowed in the Spring as a result of concerns over inventories, fiscal stimulus and the European debt crisis.

He noted that, “The initial phase of the recovery, which occurred in the second half of 2009 and in early 2010, was in large part attributable to the stabilization of the financial system, the effects of expansionary monetary and fiscal policies.”

He reports that “construction remains weak, though, reflecting an overhang of vacant and foreclosed homes and continued poor fundamentals for most types of commercial real estate. Overall, improving household and business confidence, accommodative monetary policy, and more-supportive financial conditions, including an apparently increasing willingness of banks to lend, seem likely to result in a more rapid pace of economic recovery in 2011 than we saw last year.”

We all have our fingers crossed that jobs and housing will recover in 2011, but only time will tell.

Does it need Revamping?

The following article was gleened from the Wall Street Journal and offers some insight as to what steps the government is taking to correct what they see as problems.  As always watch the money.  Who is benefiting from these changes?  You decide.

By NICK TIMIRAOS

More than two years after the government seized Fannie Mae and Freddie Mac, the Obama administration will recommend phasing out the housing-finance giants and gradually reducing the government’s footprint in the mortgage market, according to people familiar with the matter.

The administration is expected to include three options for a post-Fannie and Freddie world when it releases a long-awaited proposal for the future of the nation’s $10.6 trillion mortgage market, which could come as soon as Friday. Together with federal agencies, Fannie and Freddie have accounted for nine of 10 new loan originations in the past year.

The White House’s “white paper” will begin what promises to be a prolonged and fiery debate about the future of how homes are financed across the U.S. Any wind-down of Fannie and Freddie would happen gradually to avoid roiling markets, and the central, unanswered question is what kind of federal function, if any, the administration and Congress will invent to take their place.

Steps to reduce the government role in the mortgage market likely would raise borrowing costs for home buyers, adding pressure on the still-fragile U.S. housing markets. Consequently, analysts believe any transition could take years and would be driven by the pace of the housing market’s recovery.

The fight over how to restructure the housing-finance system has roiled Washington, and yet both parties have been hesitant to propose detailed legislation.

For conservatives, Fannie and Freddie played a starring role in the financial crisis, and any solution that is viewed as replicating their function could face fierce opposition from some Republicans. But more moderate Republicans may resist such an approach and could join Democrats who have said a federal role is necessary to ensure broad access to home ownership.

While advancing one detailed plan risks providing fodder for partisan battles, offering multiple proposals may help the administration force those views into the open, said Michael Barr, a former assistant Treasury secretary in the Obama administration.

“If you focus on the steps everybody agrees on—here are the 10 things you’ve got to do—that gives people a chance to unite behind a set of steps,” he said. A list of options he added, has the benefit of forcing Republicans “to come up with their own plan, and make their own mistakes.”

The administration’s proposal to Congress is likely to assess the merits and drawbacks of each of the three options. The most conservative would propose no government role in the mortgage market beyond existing federal agencies, such as the Federal Housing Administration.

The two others would create a way for the government to backstop part of the secondary mortgage market, a role long- filled by Fannie and Freddie. Under one, that government backstop would kick in primarily during periods of market stress; under the other, the government would play a role at all times.

For 40 years, the housing-finance system has featured a blend of public and private entities. Fannie and Freddie buy mortgages from banks and other originators, repackage them for sale as securities and make investors whole when borrowers default. Investors long assumed the two shareholder-owned firms had an implied federal guarantee, which let them borrow at below-market rates and facilitate 30-year fixed-rate loans.

As the recent housing bubble inflated, Fannie and Freddie joined private lenders in loosening standards. Mounting defaults wiped out the pair’s razor-thin capital reserves, spurring the government to take over both. The White House has committed unlimited amounts of aid to ensure that the firms meet their obligations to debt and securities holders. So far, taxpayers are on the hook for $134 billion.

Treasury Secretary Timothy Geithner told PBS’s Charlie Rose earlier this month that the housing-finance business was a “mess” and that the administration’s plan would “crowd private capital” back in. That, he said, would curb the government role and leave “a system that will not be vulnerable to the really tragic colossal failures” of the past.

The administration’s paper will focus on three levers to help withdraw the government from the mortgage market, each of which promises to raise costs for borrowers. Officials are likely to call for lower maximum loan limits for mortgages Fannie and Freddie can purchase. Limits are set at $417,000 nationally but Congress approved emergency measures two years ago raising the limits to as much as $729,750 in high-cost areas. Unless Congress passes a third extension, they will fall to $625,500 in October.

Policy makers could also encourage Fannie and Freddie to steadily raise fees they charge banks to guarantee mortgages. As the fees rise, loans offered by private lenders that aren’t government-backed will become more competitive. And they could push for gradual increases in the minimum down payments on government-backed loans.

While Fannie and Freddie are already on track to reduce their combined $1.5 trillion mortgage portfolios by 10% annually, the paper could also recommend accelerating that run-off if market conditions can support it.

Housing and Treasury aides met Tuesday with President Barack Obama to review their report. Top administration officials have publicly discussed the merits of a limited but explicit government guarantee of securities backed by certain types of mortgages. The housing and banking industries have advanced proposals arguing that such a guarantee is needed to maintain a healthy market, particularly for long-term, fixed-rate loans that remain a keystone of U.S. housing.

Others argue that because investors might assume the government will step in during a crisis, it is better to make guarantees explicit and charge up front for them. Industry and academic proposals have called for a new entity to regulate the market and any government guarantees, just as the Federal Deposit Insurance Corp. charges fees to insure deposits and handle bank failures.

But some economists and regulators have warned any new government backstops would put too much risk on taxpayers. In exchange for guaranteeing loans, policy makers could face pressure to under-price guarantees. Any options must also navigate a mortgage market that has grown increasingly consolidated and risks shifting the “too-big-to-fail” risks from Fannie and Freddie to U.S. megabanks.

—Damian Paletta contributed to this article.

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S&P: Slower liquidation rates to blame

BY INMAN NEWS, WEDNESDAY, FEBRUARY 2, 2011.

Inman News™

It may take more than four years to clear the “shadow inventory” of distressed homes lurking on the sidelines in the U.S., a factor that’s likely to undermine real estate prices as the backlog clears, analysts at Standard & Poor’s Ratings Services say.

At 49 months, the estimated time needed to clear shadow inventory at the end of the fourth quarter of 2010 was up 11 percent from the previous quarter and 40 percent from a year ago. With the lone exception of Miami, the months’ supply of shadow inventory grew in almost all of the nation’s 20 largest metro markets.

But much of the increase in the estimated months needed to clear shadow inventory is due to the fact that it’s taking longer for lenders to liquidate distressed homes — not because the number of distressed properties is growing, analysts said.

Standard & Poor’s defines shadow inventory as properties with borrowers who are 90 days or more delinquent on their mortgage payments, properties currently or recently in foreclosure, or properties that are real estate owned (REOs).

Although shadow inventory peaked in the first quarter of 2008, loans that are 90-plus-days delinquent and foreclosed properties are taking longer to become REOs. That’s once again lengthening the overall timeline for resolving troubled assets, Standard & Poor’s analysts said.

Shadow Inventory: top 20 U.S. markets

Source: Standard & Poor’s Ratings Services

INFO THAT HITS US WHERE WE LIVE… There’s good news in the latest housing market forecast for 2011 from the National Association of Realtors (NAR). After dipping 4.8% last year, sales of existing homes are predicted to grow 7.9%  this year, to 5.3 million. The gain for 2012 is forecast to be a little less, up 4.5%, to 5.53 million. The existing home median price went up 0.3% in 2010, a nice recovery from the 12.9% price drop of 2009. For 2011, the NAR sees it rising 0.5%, to $173,000, then another 2.4%, to $177,900, in 2012.

New home sales are forecast to come back more briskly, up 17.7% in 2011, following their 15.5% drop in 2010. The 2012 projection is for a strong 51.1% sales gain, to 565,000 homes. The median price for new homes, which gained 2.2% last year, should go up another 1.8% in 2011, to $224,700, then 1.9% in 2012, to $229,000. The NAR’s chief economist says this rebound in home sales does depend on an improvement in the jobs market. Affordability also matters and in Q4 of 2010 housing was the most affordable on record, according to NAR numbers going back to 1971. The NAR feels the current situation of low home prices along with low interest rates should continue.

>> Review of Last Week

HELLO, 12,000!… Last week saw strong corporate earnings, more indications the economy is healing, and Ben Bernanke telling the National Press Club the Fed won’t be withdrawing its policy support anytime soon. The net result? The Dow shot up five days in a row, crossing the 12,000 threshold and staying there, trading near its highest levels since the middle of 2008. All three major indexes delivered impressive gains, with the S&P 500 enjoying its best January since 1997. Investors shrugged off worries the Egyptian protests might further de-stabilize the whole Mideast.

Corporate earnings are running way ahead of expectations and, even more encouraging, future earnings estimates are up. The week’s star performers included mammoth Exxon Mobil, drug biggie Pfizer, and video gamer Electronic Arts. The vast majority of companies reporting beat their Q4 earnings expectations, as retailers chimed in with better than expected monthly same store sales results for January.

Investors also liked the economic data. Q4 productivity was up 2.6%, proving that, yes, we ARE working harder. But we’re also being compensated for that extra effort, as personal income rose in December along with personal spending, which helps fire up the economy. But things aren’t overheating yet, since Core PCE Prices, the inflation number the Fed watches, was up just 0.7% the past year. ISM Manufacturing and Services indexes both showed strong economic growth. The January Employment Report showed a gain of just 36,000 jobs, but this was put to the unusually bad weather preventing people from working — several hundred thousand more than usual. Private sector payrolls were up 50,000, their 11th monthly gain in a row, which helped drop the unemployment rate to 9.0%.

For the week, the Dow ended UP 2.3%, at 12,092; the S&P 500 was UP 2.7%, to 1,311; and the Nasdaq shot UP 3.1%, ending at 2,769.

While stocks soared higher, bonds got hammered. Even the Egyptian unrest couldn’t ignite a flight to safety, as investors wanting to catch the rising wave of stock prices took their money out of bonds. The FNMA 4.0% bond we watch ended down 187 basis points for the week, closing at $97.22. In spite of this drop, news of an improving economy and low inflation kept mortgage rates at historically low levels. Freddie Mac’s weekly survey of conforming mortgages reported average fixed-rate mortgage rates pretty much unchanged.

>> This Week’s Forecast

A QUIET WEEK… We’ll have the usual weekly and continuing jobless claims, and no one is expecting huge drops in these numbers just yet. Optimistic observers expect serious declines in claims in another month or so. We’ll also see the December Trade Balance showing imports growing versus exports, although U.S. companies’ export revenues are still strong, a good thing. Finally, consumer confidence in the economy is forecast to be growing, at least the way the February Michigan Consumer Sentiment Index sees it on Friday.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of February 7 – February 11

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months  Fed Chairman Bernanke spoke before the National Press Club last week and certainly left the impression that the Funds Rate will stay at its rock bottom level for a decent while longer. This week’s economic reports shouldn’t inspire the Fed to hike the Rate any time soon. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.