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August 28, 2010, at 9:09 pm
Rarely do you see a mainstream “establishment” media source speak so frankly, but the New York Times did just that yesterday with an excellent article worth reading. Well written, and most importantly, very honest reporting about the reality of where we are:
“You have to wonder sometimes what they’re smoking over there at the National Association of Realtors.
On Tuesday, the self-proclaimed “voice for real estate” released its “existing home sales” figures for July. They were gruesome. Sales were down 27 percent from the previous month, and down 26 percent from a year ago. Annualized, the July sales figures would translate into fewer than 3.9 million homes sold this year — a staggeringly low figure. (The record high occurred in 2005, when more than seven million houses were sold.)
Yet here was Lawrence Yun, the association’s chief economist, trying to turn lemons into lemonade: “Given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs,” he said in a news release.
Mr. Yun also predicted that home values would not fall much further, since they were “back in line relative to income.” In other words, the July numbers were a mere blip.
Clearly, Mr. Yun needs to get out a little more often. Specifically, he ought to talk to people on the ground — like mortgage lenders or prospective borrowers. Talking to these people would probably give him a more sober take on the larger meaning of the latest sales numbers for existing homes.”
Amen. The full article –
http://www.nytimes.com/2010/08/28/business/economy/28nocera.html?_r=1&pagewanted=1&hp
August 27, 2010, at 11:08 pm
American Banker.com posed the question today that many observers have been asking for awhile now: where the heck are all of the foreclosures?
“Ever since the housing collapse began, market seers have warned of a coming wave of foreclosures that would make the already heightened activity look like a trickle.
The dam would break when moratoriums ended, teaser rates expired, modifications failed and banks finally trained the army of specialists needed to process the volume.
But the flood hasn’t happened. The simple reason is that servicers are not initiating or processing foreclosures at the pace they could be.
“All the excuses have been used up. This is blatant,” said Sean O’Toole, CEO of ForeclosureRadar.com, a Discovery Bay, Calif., company that has been documenting the slowdown in Western markets.
Some servicing executives acknowledged that stalling on foreclosures will cause worse pain in the future — and that the reckoning may be almost here.”
The banks have worked to postpone the inevitable, and hide or postpone the losses. Eventually, reality wins, as always.
The full article –
http://www.americanbanker.com/issues/175_165/foreclosures-modifications-california-1024663-1.html
August 23, 2010, at 10:27 pm
Ron Paul had an interesting editorial today which makes sense and rings true:
“The combined policies of loose credit and government backing increased the demand for housing and drove prices sky high. When the housing market heated up to the breaking point everything came crashing down. Those suddenly facing foreclosure saw the reality of government compassion. Truly, when government offers you a gift, you should eye it with great suspicion.
My hope is that for the long term stability and health of the economy, the government will extricate itself from the market altogether and let it normalize. My fear is that in its usual misguided efforts at solving one crisis, it will create a thousand others.”
Not only does this make sense, it will eventually be the only thing that works. Unfortunately, as he suggests, a lot of damage will be done to our economy before we get there.
The full article –
http://www.safehaven.com/article/17931/let-the-housing-market-normalize
August 17, 2010, at 3:09 pm
So long “Yield Spread Premiums” as a device to pad the bottom line of mortgage brokers and banks:
“The Federal Reserve on Monday moved to end a controversial lending practice that had helped propel the housing boom to unsustainable heights and then accelerated its collapse.
The Fed announced that it was adopting new rules banning yield spread premiums, which allowed mortgage brokers and lenders to gain additional profit from loans by charging borrowers higher-than-market interest rates.
Michael D. Calhoun, president of the Center for Responsible Lending, described the action as “a real milestone,” but he said that he had been trying to convince regulators for at least 15 years that yield spread premiums were no more than illegal kickbacks.
Traditionally, mortgage brokers were paid directly by the home buyer. The rise of the premium allowed the brokers to be compensated by the lender as well. Lenders in effect started paying bonuses to brokers who brought them high-interest loans that were naturally coveted by mortgage investors.”
The full article –
http://www.nytimes.com/2010/08/17/business/17mortgage.html?_r=2&ref=business
August 17, 2010, at 6:13 am
I post this excerpt and link only because of it’s monumental and historic cluelessness. Treasury Secretary Timothy F. Geithner wrote a New York Times piece several weeks ago entitled, incredibly, “Welcome to the Recovery,” in which he says, among other things:
“The devastation wrought by the great recession is still all too real for millions of Americans who lost their jobs, businesses and homes. The scars of the crisis are fresh, and every new economic report brings another wave of anxiety. That uncertainty is understandable, but a review of recent data on the American economy shows that we are on a path back to growth.
The recession that began in late 2007 was extraordinarily severe, but the actions we took at its height to stimulate the economy helped arrest the freefall, preventing an even deeper collapse and putting the economy on the road to recovery.
The combined effect of government actions taken over the past two years — the stimulus package, the stress tests and recapitalization of the banks, the restructuring of the American car industry and the many steps taken by the Federal Reserve — were extremely effective in stopping the freefall and restarting the economy.
We suffered a terrible blow, but we are coming back.”
Wow. Breathtaking, but it explains everything. Seeing the world thru Geithner’s eyes explains why we should really be fastening our seatbelts.
The full article –
http://www.nytimes.com/2010/08/03/opinion/03geithner.html?pagewanted=2&_r=1&sq=welcome%20to%20the%20recovery&st=cse&scp=1
August 16, 2010, at 9:26 pm
The Daily Times had an article today highlighting some of the features of Maryland’s new foreclosure law revision:
“Several amendments to Maryland’s foreclosure law became effective July 1. Among many changes, a homeowner can now request mediation.
A mediation is basically a meeting to discuss and explore options. A foreclosure mediation involves the homeowner, the lender’s representative and an Administrative Law Judge, or ALJ.
Mediation might involve discussions of loan modification to save the home from foreclosure, but if a loan modification is not practical, the discussion can also involve options for surrendering the home while minimizing the consequences of foreclosure, such as a short sale, a deed in lieu of foreclosure, waiver of a deficiency, or more time for the homeowner to move.”
A homeowner facing foreclosure is very strongly advised to seek the advice of legal counsel.
The full Daily Times article –
http://www.delmarvanow.com/article/20100816/BUSINESS/8160324
August 8, 2010, at 3:32 pm
There has been a lot of buzz as of late about a new refinancing initiative that promises to “reduce principal.” While there are many conditions on eligibility, and while as proposed it would only be available to “primary home” borrowers (thus excluding the second home and investment property owners here in the Ocean City Maryland area), it is revolutionary in that it includes principal reduction as one of it’s features:
“Starting September 7, the federal agency will offer new FHA-insured mortgages to certain underwater, non-FHA borrowers who are current on their mortgage payments and whose lenders agree to write off at least 10 percent of the unpaid principal balance.
To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth, be current on their existing mortgage, and occupy the property as their primary residence. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal of at least 500.
Participation in the program is voluntary and requires the consent of all lien holders. The borrower’s existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance to bring the borrower’s combined loan-to-value ratio to no more than 115 percent.”
If you think you may be eligible, it would be wise to contact your lender for details. The full article –
http://www.dsnews.com/articles/fha-rolls-out-principal-reducing-refi-program-for-underwater-borrowers-2010-08-06
August 1, 2010, at 11:13 pm
DSNews.com reported some good news for prospective home buyers (who qualify) last Thursday:
“Mortgage rates continued to slide downward for the week ending July 29, 2010, marking yet another round of record lows, Freddie Mac and Bankrate reported Thursday.”
“For the sixth week in a row, interest rates on fixed-rate mortgages eased to all-time record lows during a week of mixed housing data reports,” said Frank Nothaft, Freddie Mac’s VP and chief economist.”
The full article –
http://www.dsnews.com/articles/mortgage-rates-dip-to-new-record-lows-2010-07-29
July 29, 2010, at 8:13 pm
Yahoo Finance has an interesting article on buyer and seller attitudes when buying and selling real estate. Looks like it is genuine, based on real research. Of particular interest to buyers of Ocean City Maryland properties, was this quote:
“Welcome, Out-of-Towners!
Out-of-state buyers tend to pay more than locals for properties of equal value, particularly when they come from states with higher real estate prices, according to a study from Brigham Young University. Researchers looked at apartment sales in the Phoenix metropolitan area-2,854 transactions from 1990 to 2002-and found that, on average, out-of-state buyers paid more than 5 percent more than their in-state counterparts.
BYU’s Grant McQueen says it often makes economic sense for out-of-state buyers to find homes fast, even if it means shelling out more money than if they shopped more or negotiated longer. Otherwise, they can end up paying more in travel costs than they save on the price of the home. The other reason, though, is less rational: In what’s known as “anchoring,” buyers tend to pay more for a home when they’re used to paying a higher price elsewhere.“
This is a phenomenon that has always been in play here in the greater Ocean City Ocean Pines Maryland real estate marketplace, but never more than the past 10 years and especially during the peak of the bubble. Yet another compelling reason for Ocean City condominium and home buyers to trust the guidance of a seasoned exclusive buyer agent when making pricing decisions on any offer.
The full article –
http://realestate.yahoo.com/promo/the-psychology-of-real-estate.html
July 24, 2010, at 8:28 pm
Business Insider is reporting what many believe is happening nationwide and what could have a profound impact on Ocean City Maryland’s future real estate inventory of homes and condominiums for sale:
“With the expiration of the first-time buyer tax credit on April 30, there are now two main props keeping the housing market afloat. One is the growing percentage of home sales financed by Federal Housing Administration (FHA) loan guarantees. The other is the refusal of banks to put on the market foreclosed homes over $300,000.
Will this bank strategy keep the market for homes over $300,000 from imploding? Not a chance.
Housing markets throughout the United States for $300,000+ homes are in for rough sailing and prices are extremely likely to be headed for a real plunge.”
The full article –
http://www.businessinsider.com/banks-cant-hold-back-highend-mortgage-repos-for-long-2010-7
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Contact Us 
Joe Warth, President & Broker
Email: Joe Warth
Voice: 410.524.5000
HomeBuyerPower, Ltd.
7800 Coastal Hwy., 2nd Floor
Ocean City, MD 21843-0677
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