Real Estate Market Focus

Foreclosure Expert Says Time to Buy is Now

By Brad Finkelstein

SACRAMENTO, CA - With all the bad news about the real estate business dominating the headlines, the co-founder of a website dedicated to tracking foreclosures says now is the time to go and buy a home.

Alexis McGee, president of ForeclosureS.com, comments "Today's market could be the opportunity of the decade - and even decades to come - for the average person to pick up affordable housing at cut-rate prices. Homes today are available at discounts of 20%, 30%, and 40% off retail prices in some areas; choices are abundant, and inexpensive, reliable financing is now available, thanks to new higher Federal Housing Administration and Fannie Mae loan limits."

While the Mortgage Bankers Association recently reported record numbers of delinquencies, the states with the highest percentage of loans in foreclosure - Michigan, Ohio and Indiana - saw flat new foreclosure starts on a year over year and quarter-to-quarter basis.

"That's anyone's guess" if the market has hit bottom says Ms. McGee. "But clearly our government has taken essential steps to allow the market to recover in a way that stimulates the economy, keeps interest rates affordable, and helps buyers, sellers, and investors, alike."

Among the recent good news is the defeat of the mortgage cram down bill in the U.S. Senate, which would have undermined investor confidence in the secondary markets and resulted in higher interest rates and larger down payments for consumers, Ms. McGee explains.

Another positive is the injunction baring the Department of Housing and Urban Development from implementing a ban on seller-financed down payment assistance.

The third positive is the temporary increase in the conforming and Federal Housing Administration loan limits, giving those who had to seek "creative expensive mortgage financing options" access to more traditional loan products, she said.

However, while the number of homeowners helped by lender workout programs is growing, so are the number of serious delinquencies and foreclosures. The Neighborhood Assistance Corp. of America states homeowners facing foreclosure are not getting the workout assistance they need from lenders.

Ms. McGee says hopefully things will change as interest rates continue to drop and home prices rebound as expected later this year.

Housing: Best Time to Buy in Four Years

Home values have declined across the country, giving homebuyers the best buys they've had since 2004.

It may be the best time to buy a house in more than four years.

Home prices have dropped so quickly and so far that valuations - the difference between what a home should cost and its actual price - are the lowest they've been since 2004, according to a report.

The Cleveland-based bank National City Corp. (NCC, Fortune 500), together with financial analysis firm Global Insight, revealed Tuesday that more than 88% of the 330 housing markets surveyed showed price declines and improved affordability during the last three months of 2007.

"Housing valuations are almost back to long-term norms," said National City's chief economist, Richard DeKaser. He called current affordability "the best in the past four years."

But DeKaser cautioned that home prices could fall even further.

"This isn't to say home price declines are over," he said. "We could move below historic norms. By the end of 2008, housing markets could be broadly under valued."

Prices still improving

There are still 21 housing markets, or 6% of those surveyed, that are severely over valued, including Atlantic City and Madera, Calif. That's down from 56 overvalued markets at the peak of the housing bubble in 2006.

The report compares actual median home prices with what the authors determine are proper home values based on population density, relative income levels and interest rates, as well as historically observed market premiums or discounts, to determine whether markets are over or under valued.

The report also factors in market intangibles that make some areas more desirable places to live, and more expensive.

"Declines are no longer confined to once-frothy markets," said DeKaser.

The survey covered home valuations during the last three months of 2007, but DeKaser pointed out there's reason to believe that valuations are even more favorable for buyers today.

Price declines have continued into 2008 and interest rates, although they have inced up lately, have been steady or lower compared to late last year. There have even been wage gains; personal income rose 0.5% in December. Soaring foreclosure rates have added inventory to many housing markets, depressing home prices further.

The biggest gains in affordability occurred in California, Michigan and Florida, which are areas that have also been some of the hardest hit by foreclosures. Those states registered 43 of the 50 biggest price declines.

Bend, Ore. currently tops the overvaluation list. Home prices there were judged to be about 59% higher than their fair-market value. Miami, despite a median home price decline of 5.7% last year, is the most overvalued big city, by 44%.

All the best bargains were found in Louisiana and Texas. Houses in Houma, La. were under valued by 31.2%, according to the report. Dallas was the most undervalued big city, by 30%.

-CNNMoney.com

H.R. 5140 PASSED - Relief on the Way!

With an 81 to 16 vote, the Senate passed an amended version of H.R. 5140, a $150 billion plan to jumpstart the economy with temporary tax breaks for consumers and businesses, extend benefits, and most importantly, two provisions designed to assist the housing market.

The bill temporarily increases the size of loans that may be purchased by Fannie Mae and Freddie Mac, raising the current level of $417,000 to reportedly up to $730,000 in the highest cost regions of the housing markets.

Rest assured, we at Loan Source Financial are following this development closely and are hard at work preparing the tools and resources you’ll need to make the most of this important legislation once it actually becomes law.

How does this affect YOU? As a consumer:

1. Refinancing existing larger loan amounts or combining 2 loans. Anyone with an existing first mortgage that exceeds the $417,000 limit today and/or second mortgage could conceivably refinance into a single loan with a conforming loan limit rate that historically is .5% to 1% better than the existing “jumbo” rates.

2. Purchasing a home with better interest rate. Under the new provision, anyone planning to purchase a home this year would be able to qualify for the conforming loan limit rates and enjoy the option of having a rate that would be better than the current jumbo rates.

3. Less documentation needed to qualify: Loans that fall within the conforming loan limits are subject to easier underwriting through streamlined processing. What this means is that if the borrower has good credit scores and solid work history the secondary market (i.e. companies such as Fannie Mae and Freddie Mac) may require less documentation to qualify for a mortgage loan. For example, if a borrower meets the initial requirements for qualifications (Credit score, work history and available assets) the secondary market my not require tax returns or W2’s to underwrite the loan.

We’ll keep you apprised of any developments and opportunities as they become available. Please call if you have any questions or would like to review your situation in anticipation of this potential opportunity.

Rising Foreclosures Open the Hottest Real Estate Opportunity Ever!

2008 projections call for roughly 2 MILLION people to complete the foreclosure process next year. That is 2 Million people who NEED TO LIVE SOMEWHERE. And not everyone will move in with mom and dad. They will move to apartments and in so doing create one of the greatest bull runs in apartment lending ever!

Most apartment complexes across the country run 86-95% occupied. And even at that, they are profitable. But rents have not been raised much at all because of lack of demand. Increasingly easier lending standards over the last 10 years led to constant turnover as people moved out of apartments into their own homes. But those standards have changed. So there will be LESS people moving out of apartments because they can't qualify for a home and 2 Million new people coming in. This will drive most apartments to 100% occupancy. When that happens, there are 3 valuable benefits to the apartment complex owner:

1. Profits go up (the mortgage payment, taxes, etc. don't change when you go from 90% occupied to 100% occupied) - that extra income goes right to the bottom line.
   

2. Values go up since profitability effects the value of commercial properties
   
3. Most importantly, rents can begin to be raised leaving ever increasing profits.

SO HOW CAN YOU TAP THIS CRAZE?

You can BUY - Did you know that you can buy an apartment complex with almost no income verification? With some creative financing and a willing seller; you can do it with no money down as well!

You can Help Others Buy - Create an investment club or pool with the guidance of Loan Source Financial.