OREGON REAL ESTATE ROUND TABLE

Tag: Finance

  • The War on Housing, Posted by Vince, Realtor Magazine


    There is a “war on housing” brewing in Washington.  Homeownership seems to be under attack.  As 2010 NAR First Vice President Moe Veissi pointed out in his recentblog, ill-informed views on homeownership are appearing more and more in the media.

    Last week, industry leaders, executives and policy makers gathered in Washington, D.C., for a housing conference sponsored by the Treasury to discuss the future of the housing finance system and the fate of Government Sponsored Enterprises (GSE’s) Fannie Mae and Freddie Mac.

    The conference featured panels moderated by Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan, as well as breakout sessions that focused on topics from the “Role of the Private Sector and the Government in a Reformed Housing Finance System” to “Managing the Process of Transition to a New Financial System”.

    I was assigned to participate in the breakout session entitled, “Aligning Private Market Incentives in the Housing Finance Chain”, moderated by FHA Commissioner Dave Stevens.  In recent weeks, long-term fixed rate mortgages have come under increasing pressure from pundits who believe this product is partly the crux of the nation’s housing finance problem.

    During the session, I had the opportunity to briefly share NAR’s views regarding the importance of maintaining the 30-year fixed rate mortgage, which is an extremely safe mortgage product.

    While some at the conference, advocated the need to support a mortgage market for all types of housing, in all market conditions, other speakers questioned the level of government support for the housing industry. 

    What did they say? 

    They asserted that taxpayer money is better spent on other industries with the greater promise of job growth and productivity for our economy.

    The debate we’re starting to see over the government’s role in housing touches on many issues:  over-housed citizens, the deficit, tax incentives (MID andcapital gains) the GSE’s, and other public incentives.  

    Homeownership is not for everyone, surely.  But if you are prepared for its responsibilities, it’s an excellent way to invest your money and receive financial and social benefits in return.

    At the conference, Secretary Geithner stated that: “Fixing our housing finance system is one of the most consequential and complicated economic policy problems we face as a country”.

    REALTORS® know this to be absolutely true.  We recognized this early on.  In late 2008 we started formulating a reformation plan for the GSE’s.

    While there is no clear consensus in Washington as to what needs to be done to fix Fannie Mae and Freddie Mac, participants at the conference generally advocated a need for some level of government support for the housing finance sector for the foreseeable future.

    So as the Administration focuses its attention on the future of housing finance and the GSE’s, NAR-together with your support-will continue to espouse the virtues of homeownership and of providing a mechanism to ensure that qualifiedbuyers have access to the capital they need to become homeowners.  This is how we will respond to the “war on housing.”

    While we face one of our greatest industry challenges, it does provide us with a tremendous opportunity to energize and engage homeowners and prospective homeowners in this housing debate.  Vince Malta, 2010 Vice President and Liaison to Government Affairs

  • 5 Reasons to Stop Worrying About Home Prices, by Eric Schurenberg, Huffingtonpost.com


    The New York Times more or less pronounced the single family home dead as an asset this week. Data from the National Association of Realtors and theFederal Home Financing Agency hammered some nails into the coffin. But come now, folks. Let’s apply a little perspective:

    1. The pessimistic scenario isn’t all that pessimistic One downbeat economist quoted by the Times predicted that housing will rise at the rate of inflation for the foreseeable future. The rate of inflation happens to be roughly the long-term return on residential real estate over the past century, according to Robert Shiller, the Yale economist and real estate historian. So the bubble of 2000 to 2006 was the anomaly, not the “grim” long-term future foreseen by the Times. (Speaking of anomalies, Shiller in this interview warns against over-reacting to the lousy housing numbers that came out this week since they were skewed by the expiration of Uncle Sam’s homebuyer’s credit.)
    2. You can still make money on a house, even if the pessimists are right. If you put 20% down on a home and it rises by the rate of inflation, your equity appreciates at five times the rate of inflation. There’s no guarantee that there will be any appreciation at all–that’s the risk–and maintenance and taxes will take away some of your return. But you don’t need a bubble to be rewarded for taking the risk.
    3. You still get plenty of value from owning a home, even if you don’t make a killing. As my colleague Charlie Farrell points out, paying down a mortgage allows you to accelerate your single biggest housing expense into your peak earning years when you can best afford it. Once you’ve paid it off-at retirement, presumably-you’ve significantly pared your living expenses. And as my colleague Linda Stern points out, you also get a place to call your own for all that time-which is really the point, after all.
    4. If history is any guide, the Times story is a buy signal. These are the kinds of stories that tend to appear on front pages at market bottoms. Yes, the weak economy is keeping home buyers off the market. Yes, foreclosures are clogging the market, and smart people like Barry Ritholtz believe that homes have further to fall. There are dozens of reasons no one will ever buy a home again. But that’s how it always looks at a bottom.
    5. At some price, people will still buy. A house in a reasonably viable neighborhood is not an AIG bond or a share of Lehman Brothers. It has an intrinsic value. People need somewhere to live, and prices have been falling faster than rents. The National Association of Home Builders Affordability Index is near record levels. The CoreLogic home price to rental ratio, which compares prices and rents, shows that the rents and ownership costs are coming back into line, even if they’re not historically cheap yet. But at some price, a home becomes so attractive compared to renting that it becomes foolish not to buy. That price may not be what you hoped. It may well be even lower than today’s price. But your home’s price now is far closer today to that intrinsic value than it was in 2007. Why wasn’t theTimes calling the housing market dead then?

     

    http://www.huffingtonpost.com/eric-schurenberg/5-reasons-to-stop-worryin_b_696437.html

  • Jumbo Mortgage Rates Continue to Fall, by Rosemary Rugnetta, Freerateupdate.com


    Just as conforming mortgage rates continue to be unpredictable, the same can be said for the jumbo mortgage rate market. As the housing market continues to correct itself, mortgage rates across the board continue to get lower. Purchasing and refinancing higher priced homes just got a little easier as jumbo mortgage ratescontinue to fall to record lows at 5%.

    Jumbo loans are those mortgages that are above the conforming loan limit of $417,000 and are not backed by Freddie Mac and Fannie Mae. This conforming lending limit is higher in some high cost areas around the country. With jumbo loans popular in locations such as New York and California, the current low jumbo rates are making it an opportune time for many borrowers to refinance. In some areas where regular sized homes cost above $750,000, the low jumbo mortgage rate is spurring up home sales and refinances, thus bringing life to a stalled market.

    Just a little over a year ago, jumbo mortgage rates were approximately 1.5% higher than today. With record low jumbo mortgage rates, many borrowers throughout the country are finding that this is the opportunity they have been waiting for to refinance from a higher interest jumbo loan. By refinancing a jumbo loan to the current lower rate, borrowers are saving hundreds of dollars each month. Most of these people will often reinvest these savings back into the economy which will help the economic recovery get off the ground. At this time, lenders are finding that the availability of money has improved while, at the same time, the price of that money has also improved. If banks continue to gain confidence with their lending in the jumbo mortgage market and do well with their returns, they may begin to ease up their lending in the remaining tighter markets.

    Although jumbo mortgage rates continue to fall opening up new life to this niche housing market, qualifying still remains stricter than in the past. These large loans carry more risk to the banks than conforming loans. August 26, 2010 (FreeRateUpdate.com) – Those who wish to qualify for a jumbo loan will need excellent credit scores with the minimum score being at least 720. and sufficient income, relevant to the loan, that needs to be documented for at least 2 years. New purchases require a minimum of 20% down payment while refinances require a minimum of 20% equity in the existing home. After all of the calculations have been done, most jumbo loans require that the monthly mortgage payment not exceed more than 38% of income.

    For anyone who can meet these qualifications, now is a good time to trade up to a bigger home that requires a jumbo mortgage or to refinance an existing one. By doing so, these borrowers will appreciate the savings by attaining a jumbo mortgage at such low rates for many years to come. Since no one can predict when the trend will stop and rates will start to rise, it’s time to get the process in motion as jumbo mortgage rates continue to fall and the jumbo loan business heats up.

    http://www.freerateupdate.com/jumbo-mortgages/jumbo-mortgage-rates-continue-to-fall-6087

  • Redefault Rates Improve for Recent Loan Modifications, Conference of State Bank Supervisors, csbs.org


     

    State Foreclosure Prevention Working Group August 2010

    Memorandum on Loan Modification Performance

    Introduction and Summary of Key Findings For over two years, the State Foreclosure Prevention Working Group,

    Our data indicate that some recent loan modifications are performing better than loan modifications made earlier in the mortgage crisis. Loans modified in 2009 are 40 to 50 percent (40% – 50%) less likely to be seriously delinquent six months after modification than loans modified at the same time in 2008. This improvement in loan modification performance suggests that dire predictions of high redefault rates may not come true. This positive trend suggests that increased use of modifications resulting in significant payment reduction has succeeded in creating more sustainable loan modifications.

    In addition, recent modifications that significantly reduce the principal balance of the loan have a lower rate of redefault compared to loan modifications overall. The State Working Group believes that servicers should strategically increase their use of principal reduction modifications to maximize prospects for success. Only one in five loan modifications reduce the loan amount; in fact, the vast majority of loan modifications actually increase the loan amount by adding servicing charges and late payments to the loan balance.

    Finally, while loan modifications have consistently increased over time, the numbers of foreclosures continue to outpace loan modifications. Nearly three years into the foreclosure crisis, we find that more than 60% of homeowners with serious delinquent loans are still not involved in any loss mitigation activity. Furthermore, with the significant overhang of seriously delinquent loans, the State Working Group anticipates hundreds of thousands of foreclosures will occur later this year absent additional improvements in foreclosure prevention efforts.

    1 has collected delinquency and loss mitigation data from most of the largest servicers of subprime mortgages in the country. This memorandum looks at trends in loan modifications of nine non-bank mortgage companies servicing 4.6 million loans across the country as of March 2010. 

    Overview

    This memorandum analyzes data submitted by nine servicers providing longitudinal data on loan modification performance. Since the inception of monthly data collection in October 2007, these nine servicers have completed over 2.3 million foreclosures as compared to 760,000 loan modifications. As of March 31, 2010, these servicers report 778,000 borrowers seriously delinquent (60+ days late on mortgage payments).

    Impact of HAMP Program on Loss Mitigation Pipeline

    As shown in Chart 1, permanent loan modifications dipped in the Spring and Summer of 2009 as servicers transitioned to the federal Home Affordable Modification Program (HAMP). The HAMP program requires a three month trial period. Accordingly, loans that would have been modified immediately in the middle of last year were instead placed into trial repayment plans, which should have become permanent after three months of successful payments from homeowners. For a variety of reasons, servicers have struggled to transition trial plans into permanent loan modifications. As shown in Chart 2 below, it appears that servicers have begun to work through the backlog of trial plans needing conversion to permanent modifications, but servicers’ conversion ratio is still far short of pre-HAMP levels.

    Despite the increase in trial modifications, more than six out of ten (62.5%) seriously delinquent borrowers were not involved in any form of loss mitigation efforts. The biggest failure of foreclosure prevention efforts continues to be the inability to engage homeowners in meaningful loss mitigation efforts in the first instance. Beyond the usual factors driving borrower non-response, some reasons for the low involvement of struggling homeowners include mixed messages communicated to struggling homeowners regarding foreclosure and loss mitigation opportunities, a lack of transparency in loss mitigation options and process, inconsistent and confusing information provided to homeowners during the process, poor customer service delivery, and long delays in the modification process.

    Type of Modification

    The vast majority of loan modifications now involve some reduction in the homeowner’s monthly payment. Of loan modifications tracked by the State Foreclosure Prevention Working Group in the first quarter of 2010, 89.3% involved some reduction in payments, including 77.6% that significantly decreased payments (i.e. decreased by more than 10%). This data is consistent with data for the large national banks covered by the OCC and OTS mortgage metrics report.

    While payment reduction is now commonplace, the State Working Group remains concerned over the absence of loan modifications significantly reducing outstanding loan balances. In the first quarter of 2010, only 13.7% of all modifications reported to the State Foreclosure Prevention Working Group involved principal reductions greater than 10%; in fact, 70.4% of loan modifications

    increased the unpaid principal balance.3 With home price declines of 30% since 20064 and almost 25% of all homeowners with a mortgage owing more than their home is worth,5 the failure to meaningfully reduce principal limits the success of current foreclosure prevention efforts. The HAMP program has recently introduced a principal reduction alternative to its standard waterfall to give servicers the option of prioritizing the reduction of principal; however, we believe the optional nature of this alternative and its inapplicability to GSE loans will likely significantly limit its impact in the HAMP program.

    Redefault

    A loan modification does not guarantee that a borrower will be able to remain current on the mortgage. Even the best-designed loan modification has some risk of redefault; however, a loan modification that fails to address the borrower’s repayment ability and the factors underlying the default may set the homeowner up for failure. Redefault expectations are incorporated into the servicer’s decision whether or not to even offer a loan modification to a struggling homeowner. Therefore, loan modification performance is very important both for the long-run efficacy of the program as well as a factor in determining the universe of eligible borrowers. Some analysts have predicted redefault rates of 65% to 75%.

     

    6 The State Working Group is more optimistic. The reason for our optimism is that loans modified in 2009 are performing substantially better than those modified in 2008, as shown by Chart 4 on the next page.

     

    7 For example, 30.8% of loans modified between August and September in 2008 were seriously delinquent after 6 months, but only 15.3% of loans modified in August and September of 2009 were seriously delinquent after 6 months.8 That amounts to a 50% reduction in the redefault rate.9 The OTS and OCC report a similar reduction. In recent mortgage metrics reports, the OCC and OTS report that 48.1% of loans modified in the third quarter of 2008 were 60 or more days delinquent 6 months after modification,10 but that redefault rate fell by more than 40 percent (to 27.7%) for loans modified in the third quarter of 2009.11

    A comparison of five reporting servicers

     

    12 demonstrates how the improvement in redefault rate is evident even when controlling for the type of loan modification. For instance, the redefault rate at six months for loans with significant payment reductions fell from almost 31.4% for loans modified in August to September of 2008 to just 11.8% for loans modified in August to September of 2009, a more than 62% reduction. Similarly, the redefault rate for loans with significant principal reductions fell from 35.4% to 12.9%, over a 63% reduction. While there is understandable fear that loan modification programs may be overused and that they may become less effective in the effort to reach the maximum number of borrowers, our research suggest that servicers’ loss mitigation offers are becoming more successful for those borrowers that are able to secure a loan modification.

    Conclusion

    While servicer performance is still short of what is needed and the HAMP program has not been a silver bullet, we find that there has been some improvement in foreclosure prevention efforts.

    Loan modifications have increased, significant payment reduction is the norm, and loan modification performance is improving. The improved performance of recent vintages of loan modifications validates the policy of offering sustainable loan modifications. We encourage servicers and the Treasury Department to monitor this trend and to adjust redefault expectations in their models as evidence permits. If experience reflects lower redefaults than anticipated, revised adjustments will enable the HAMP and non-HAMP loan modification programs to reach more struggling homeowners.

    Despite the progress noted in this memorandum, the number of seriously delinquent loans moving toward foreclosure remains at near all-time highs. As servicers pass through the initial wave of successful HAMP-eligible borrowers, the State Working Group is concerned that many of the currently delinquent loans will accelerate into foreclosure in the second half of the year. The State Working Group believes that unnecessary foreclosures will occur without further efforts and resources of servicers to reach homeowners, and, where appropriate, to offer loan modifications with significant principal reduction. These unnecessary foreclosures will be a needless drag on the recovery of the housing market and will continue to delay a broader economic recovery.

     

     

     1. The State Working Group is more fully described in our first report from February 2008, available at: http://www.csbs.org/regulatory/Documents/SFPWG/DataReportFeb2008.pdf. The State Working Group currently consists of representatives of the Attorneys General of 12 states (Arizona, California, Colorado, Florida, Illinois, Iowa, Massachusetts, Nevada, North Carolina, Ohio, Texas, and Washington), three state bank regulators (Maryland, New York and North Carolina), and the Conference of State Bank Supervisors. Data analysis and graphs for this memorandum were prepared by Center for Community Capital, University of North Carolina at Chapel Hill.

    2. For the first quarter of 2010, the OCC/OTS reports that over 87% of all loan modifications involve a payment reduction, with 72% reducing payment by more than 10%.

     

    See OCC and OTS Mortgage Metrics Report, First Quarter 2010 (Jun 2010) at p. 33, available at: http://www.occ.treas.gov/ftp/release/2010-69a.pdf.

     

    3

     

    This is generally consistent with results from the OCC/OTS metrics report. The OCC and OTS report that only 2% of modifications in the fourth quarter of 2009 involved principal reduction, while 82% included the capitalization of missed payments and fees, thereby increasing the amount owed. See OCC and OTS Mortgage Metric Report, infra note 2, at p. 26. The State Working Group notes with some surprise the decline in the percentage of loan modifications with principal reduction for the large national banks and thrifts between 4th quarter 2009 and 1st quarter 2010 (from 7% in 4Q 2009 to 2% 1Q 2010).

    4

     

    The S&P/Case-Shiller National House Price Index fell 32% from its peak in the second quarter of 2006. See S&P/Case-Shiller Home Price Indices: 2009, A Year In Review (January 2010).

    5

     

    First American CoreLogic estimates that more than 11.3 million, or 24%, of all residential properties with mortgages, were underwater at the end of 2009. See Media Alert: Underwater Mortgages On the Rise According to First American CoreLogic Q4 2009 Negative Equity Data (February 2010), available at: http://www.loanperformance.com/infocenter/library/Q4_2009_Negative_Equity_Final.pdf

    6

    U.S. RMBS Servicers’ Loss Mitigation and Modification Efforts Update II, Fitch Ratings (Jun 16, 2010)

    7 For purposes of this memorandum, redefault is defined as 60+ days late or foreclosed.

    8 Due to limited data availability, August and September are the only months for which we have overlapping redefault rates specifically for 6 months after origination; however, a decline is evident with other cohorts. For example, the redefault rate at 9 months for loans modified in May and June fell from 37.4% in 2008 to 26.7% in 2009, a 29% reduction.

    9 The decline in default rate has been broadly consistent across all nine servicers. The range of redefault rates six month after modification was 17-46% for loans modified in August and September of 2008 and only 10-25% for those modified at the same time in 2009.

    10

    OCC and OTS Mortgage Metrics Report, Fourth Quarter 2009 (Mar 2010) at p. 34, available at: http://www.occ.treas.gov/ftp/release/2010-36a.pdf.

    11

    OCC and OTS Mortgage Metrics Report, infra note 2 at p. 36. 12 Note that the redefault rates of loan modifications with payment and principal reductions are based on the 5 (out of the 9 total) servicers who provided performance data on all types of modifications. The overall redefault rate for loans modified in August and September by these 5 servicers was 32.3% in 2008 and 15.2% in 2009.

     

    Conference of State Bank Supervisors

     

    http://www.csbs.org

  • Procrastination on Foreclosures, Now ‘Blatant,’ May Backfire, by Jeff Horwitz and Kate Berry, American Banker


    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.

    By postponing the date at which they lock in losses, banks and other investors positioned themselves to benefit from the slow mending of the real estate market. But now industry executives are questioning whether delaying foreclosures — a strategy contrary to the industry adage that “the first loss is the best loss” — is about to backfire. With home prices expected to fall as much as 10% further, the refusal to foreclose quickly on and sell distressed homes at inventory-clearing prices may be contributing to the stall of the overall market seen in July sales data. It also may increase the likelihood of more strategic defaults.

    It is becoming harder to blame legal or logistical bottlenecks, foreclosure analysts said.

    “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.

    Banks have filed fewer notices of default so far this year in California, the nation’s biggest real estate market, than they did 2009 or 2008, according to data gathered by the company. Foreclosure default notices are now at their lowest level since the second quarter of 2007, when the percentage of seriously delinquent loans in the state was one-sixth what it is now.

    New data from LPS Applied Analytics in Jacksonville, Fla., suggests that the backlog is no longer worsening nationally — but foreclosures are not at the levels needed to clear existing inventory.

    The simple explanation is that banks are averse to realizing losses on foreclosures, experts said.

    “We can’t have 11% of Californians delinquent and so few foreclosures if regulators are actually forcing banks to clean assets off their books,” O’Toole said.

    Officially, of course, this problem shouldn’t exist. Accounting rules mandate that banks set aside reserves covering the full amount of their anticipated losses on nonperforming loans, so sales should do no additional harm to balance sheets.

    Within the last two quarters, many companies have even begun taking reserve releases based on more bullish assumptions about the value of distressed properties.

    Now there is widespread reluctance to test those valuations, an indication that banks either fear they have insufficient or are gambling for a broad housing recovery that experts increasingly say is not coming.

    Banks did not choose the strategy on their own.

    With the exception of a spike in foreclosure activity that peaked in early-to-mid 2009, after various industry and government moratoriums ended and the Treasury Department released guidelines for the Home Affordable Modification Program, no stage of the process has returned to pre-September 2008 levels. That is when the Treasury unveiled the Troubled Asset Relief Program and promised to help financial institutions avoid liquidating assets at panic-driven prices. The Financial Accounting Standards Board and other authorities followed suit with fair-value dispensations.

    These changes made it easier to avoid fire-sale marks — and less attractive to foreclose on bad assets and unload them at market clearing prices. In California, ForeclosureRadar data shows, the volume of foreclosure filings has never returned to the levels they had reached before government intervention gave servicers breathing room.

    Some servicing executives acknowledged that stalling on foreclosures will cause worse pain in the future — and that the reckoning may be almost here.

    “The industry as a whole got into a panic mode and was worried about all these loans going into foreclosure and driving prices down, so they got all these programs, started Hamp and internal mods and short sales,” said John Marecki, vice president of East Coast foreclosure operations for Prommis Solutions, an Atlanta company that provides foreclosure processing services. Until recently, he was senior vice president of default administration at Flagstar Bank in Troy, Mich. “Now they’re looking at this, how they held off and they’re getting to the point where maybe they made a mistake in that realm.”

    Moreover, Fannie Mae and Freddie Mac have increased foreclosures in the past two months on borrowers that failed to get permanent loan modifications from the government, according to data from LPS. If the government-sponsored enterprises’ share of foreclosures is increasing, that implies foreclosure activity by other market participants is even less robust than the aggregate.

    “The math doesn’t bode well for what is ultimately going to occur on the real estate market,” said Herb Blecher, a vice president at LPS. “You start asking yourself the question when you look at these numbers whether we are fixing the problem or delaying the inevitable.”

    Blecher said the increase in foreclosure starts by the GSEs “is nowhere near” what is needed to clear through the shadow inventory of 4.5 million loans that were 90 days delinquent or in foreclosure as of July 31.

    LPS nationwide data on foreclosure starts reflects the holdup: Though the GSEs have gotten faster since the first quarter, portfolio and private investors have actually slowed.

    “What we’re seeing is things are starting to move through the system but the inflows and outflows are not clearing the inventory yet,” he said.

    Delayed foreclosures might be good news for delinquent borrowers, but it comes at a high price.

    Stagnant foreclosures likely contributed to the abysmal July home sales, since banks are putting fewer homes for sale at market-clearing prices.

    Moreover, Freddie says a good 14% of homes that are seriously delinquent are vacant. In such circumstances, eventual recovery values rapidly deteriorate.

    Defaulted borrowers were spending an average of 469 days in their home after ceasing to make payments as of July 31, so the financial attraction of strategic defaults increases.

    One possible way banks are dealing with that last threat is through what O’Toole calls “foreclosure roulette,” in which banks maintain a large pool of borrowers in foreclosure but foreclose on a small number at random.

    O’Toole said the resulting confusion would make it harder for borrowers to evaluate the costs and benefits of defaulting and fan fears that foreclosure was imminent.

    http://www.americanbanker.com/issues/175_165/foreclosures-modifications-california-1024663-1.html

  • Multnomahforeclosures.com: Updated Notice of Default Lists


    Multnomahforeclosures.com was updated today (August 24th, 2010) with the largest list of Notice Defaults to date. With Notice of Default records dating back over 2 years. Multnomahforeclosures.com documents the fall of the great real estate bust of the 21st centry. The lists are of the raw data taken from county records.

    It is not a bad idea for investors and people that are seeking a home of their own to keep an eye on the Notice of Default lists. Many of the homes listed are on the market or will be.

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures

    http://multnomahforeclosures.com

  • Post-Mortgage Meltdown, Where Do We Go Now?, National Public Radio (NPR)


    For more than 20 years, the mantra in Washington has been “more, not less” when it comes to Fannie Mae, Freddie Mac and the expansion of homeownership.

    But in light of the financial crisis and Fannie and Freddie’s near-collapse, policy leaders are also rethinking the government’s role — and many Americans are starting to question whether homeownership is the only path to the American Dream.

    Fannie and Freddie function by buying, bundling and then stamping a government guarantee on mortgages. Then they sell them to investors. It keeps the banks happy because it keeps capital flowing, and it keeps consumers happy because it makes low, fixed-rate mortgages possible.

    At least that how things were supposed to unfold. But the two mortgage finance giants “made astonishing mistakes,” Raj Date, executive director of a financial policy think-tank called the Cambridge Winter Center, told NPR’s Audie Cornish.

    ‘It Has All Come Back To Haunt Them’

    “As normal people everywhere in the country realized that housing prices seemed to be growing straight into the stratosphere, instead of becoming more conservative about lending against those ridiculously high values, Fannie and Freddie just continued to make the same kind of loans and indeed made more aggressive loans during that period of 2005, 2006, 2007,” Date said. “And it has all come back to haunt them.”

    So instead of rationally-priced credit, he said, the country wound up with a $6 or $7 trillion bubble in housing values. And all of Wall Street and most of the country’s banks made the same sort of mistakes, Date said.

    Policy makers are at a bit of a crossroads, said Date, who was among a number of industry leaders who huddled with Treasury Secretary Timothy Geithner this week to figure out a new way forward on housing.

    Fannie and Freddie have dramatically scaled back their level of aggressiveness in underwriting credit, Date said. But, he added, “the fact of the matter is that on average and over time, Fannie and Freddie represent an economic subsidy from the public at large to middle and upper middle-income homeowners.”

    Despite talk on Capitol Hill of dismantling the two organizations, it might be tough to get rid of them. That’s because Fannie and Freddie, along with the Federal Housing Administration, are responsible for some 95 percent of the mortgages in the country today, Date said.

    “If you think that the fall of 2008 was calamitous, believe me, you haven’t seen anything yet if you were just somehow to turn off the lights on Fannie and Freddie today,” he warned. “That said, I think the policy makers are trying to be thoughtful about the right long-term answer is for housing finance more broadly, and that involves revisiting some issues that have been treated as sort of untouchable for quite some time.”

    Ultimately, Date said it might be time to rethink homeownership as an American ideal.

    The White Picket Fence Reconsidered

    “The world we live in today is not quite the world that existed in 1950,” he noted. “The nature of households and the rate at which they dissolve and reform, the nature of work and its transient nature across geographies are all things that suggest that maybe, just possibly, a middle-class American shouldn’t stake themselves to an illiquid, very large, concentrated, leveraged asset —- that is to say, a house.”

    Alyssa Katz, author of Our Lot: How Real Estate Came To Own Us, also thinks America needs to reconsider the American Dream.

    “Homeowenership has gone from being pretty much an unmitigated good — something that would provide stability — and instead has thrown a huge cloud of doubt over the value of homeownership for a lot of people.”

    Even so, there also are downsides to renting, she said.

    “Some of the common beliefs about renting are absolutely true,” Katz said. “Being a renter has very little security. They don’t have any promise they’ll be able to live in the apartment or home for more than a year or two. Renting is also perceived as something that really divides Americans by class. So I think for a lot of potential renters, or people who own and are thinking of making that transition to renting, they have to overcome this sense that they are giving up a sense of status.”

    That’s a tough thing to shake for many Americans, she said.

    If more people rent, the benefits of homeownership will only increase for those who own homes because the pool will shrink, Katz said.

    “Those who have access to homeownership and the benefits that it brings, as a result of policy, will be even more privileged than they are now.”

    http://www.npr.org/templates/story/story.php?storyId=129348144

  • Foreclosure rate soars in suburbs, Steve Law, Portland Tribune


    While Portlanders continue to be plagued by home foreclosures, the number of distressed homeowners is spiking even faster in the suburbs these days.

    Foreclosure actions filed against homeowners in upscale Lake Oswego mushroomed 20 percent the first six months of this year, compared with the same period last year, and rose 10 percent in jobs-rich Hillsboro, according to RealtyTrac Inc., an Irvine, Calif., real estate data services company. RealtyTrac counted nearly 300 Lake Oswego properties socked with foreclosure actions from January through June and more than 500 Hillsboro properties.

    Foreclosures also shot up at a rate faster than Portland in suburban Oregon City, Milwaukie, Tigard, Tualatin, Sherwood and St. Helens.

    “The foreclosure activity that is occurring in suburban markets in Oregon is unprecedented,” says Tom Cusack, a retired federal housing manager in Portland who continues to track the issue via his Oregon Housing Blog. “It’s affecting not just rural areas, not just inner-city neighborhoods, but suburban neighborhoods, probably more substantially than any time in the past,” Cusack says.

    From January through June, foreclosure filings grew 6.5 percent in the city of Portland, compared with a year earlier, and 8.5 percent in Portland suburbs, not counting Clark County, according to RealtyTrac data.

    In 10 different local ZIP codes — three in Portland and seven in the suburbs — foreclosure actions were filed against more than 2 percent of all properties the first six months of 2010.

    Dominating local market

    Realtors say a record number of foreclosures dominates the area housing market, depressing home prices but also attracting bargain-hunters looking for distressed properties.

    “Either you’re helping people get into them or helping get out of them,” says Fred Stewart, a Northeast Portland Realtor who operates a website listing foreclosed homes for sale in Multnomah County.

    Distressed properties account for “40 percent of the business right now,” says Dale Kuhn, principal broker for John L. Scott Real Estate in Lake Oswego.

    Every suburb is a unique real estate market, so it’s hard to generalize why some are experiencing more foreclosures now than before. In West Linn, for example, foreclosure filings were down the first six months of the year compared to a year earlier, while things are going in a different direction in its affluent neighbor to the north, Lake Oswego.

    Explanations vary

    One factor could be that many borrowers of modest means took out subprime loans, which were the first to go through foreclosure when those loans “exploded” and reset to much-higher interest rates. Working-class neighborhoods had the highest foreclosure rates in the early months of the Great Recession.

    “They got hit the hardest first,” says Rick Skaggs, a real estate broker at John L. Scott in Forest Grove.

    In the Portland area, an unusually high number of middle-class and affluent borrowers took out interest-only loans and Option ARM or negative-amortization loans. Option ARMs (adjustable rate mortgages) allowed the borrower to pay a minimum monthly mortgage payment — akin to a credit card minimum payment — while tacking more principal onto the loan. Option ARMs and other alternative loans took longer to unravel than subprime loans, and many are now winding up in foreclosure. And those mortgages were more common for more expensive properties.

    They were ticking time bombs, like subprime loans, but they had longer fuses, says Angela Martin, of the Portland public interest group Our Oregon.

    Stewart offers another reason for the surge in suburban foreclosures. He’s noticing a larger pool of buyers now for closer-in Portland neighborhoods, as people seek to avoid long commutes. People selling distressed properties in Northeast and Southeast Portland have more options to sell than someone saddled with an unaffordable mortgage in a suburb, Stewart says.

    Tables turned

    Recent state and national statistics also reveal a counterintuitive trend — affluent homeowners are going into foreclosure lately at a higher rate than others.

    Cusack recently analyzed data for Oregonians who took out traditional 30-year Federal Housing Administration loans since mid-2008. He found that the greater the loan amount, the greater the chances those became problem loans.

    “The default rate and the seriously delinquent rate were higher for higher-income loans,” Cusack says.

    Business owners and other affluent homebuyers who settled in suburban markets also had more resources available to hold onto their homes than lower-income homeowners, at least during the earlier stages of the Great Recession. That may explain why places such as Lake Oswego are seeing such an upsurge in foreclosures now.

    “If you paid a half-million for anything in Lake Oswego in 2007, you’re ‘under water,’ ” Stewart says. That’s the term for people who owe more on their mortgage than their home is worth.

    Portland bankruptcy attorney Ann Chapman, of the firm Vanden Bos & Chapman, is seeing an uptick in affluent clients coming to her office.

    They had been turning to pensions, savings and family money to hold onto their homes and businesses, Chapman says. But as the economic downturn grinds on, some clients see the best option as dumping their home and filing for bankruptcy reorganization.

    Affluent homeowners make a more sober assessment when they realize their homes aren’t going to be worth the mortgage amount for many years, she says. “They’re going to potentially be less emotionally involved when it comes to stopping the bleeding.”

    It’s often a different story for lower-income homeowners who hope to hold onto the only homes they’ve ever had, or hope to have. “They get blinded by their optimism or their paralysis,” Chapman says.

    Little relief in sight

    Many Realtors say it’s a great buyer’s market now for those who have steady jobs, because interest rates are low and prices have fallen so much. But don’t expect the onslaught of Portland-area foreclosures to end any time soon.

    “We are nowhere near the end if you look at the number of homeowners that will ultimately be at risk,” says Martin, citing a new study by the North Carolina-based Center for Responsible Lending. Based on that study, she figures Oregon is only halfway through the foreclosure crisis, in terms of the number of people affected by foreclosures.

    Skaggs says he wishes he could be more positive, but he doesn’t see the light at the end of the tunnel. He just spoke with an investor last week who is about to walk away from five rental homes and let the bank take them back. Three of the homes are in the Beaverton area, one is in Bend and one is on the Oregon Coast.

    “I probably know at least 15 people that in the next month or two are going to walk away from their homes.”

    stevelaw@portlandtribune.com

    http://www.portlandtribune.com/news/story.php?story_id=128216600543594000

  • New Fed rules aim to protect home buyers


    WASHINGTON • In a move long sought by consumer advocates, the Federal Reserve issued on Monday rules intended to prevent brokers and lenders from unfairly profiting from new mortgage loans.

    The rules ban the abuse of the yield-spread premium, a practice that often put buyers into unstable and expensive loans simply to generate extra commissions.

    “This is a real milestone,” said Michael Calhoun of the Center for Responsible Lending, which had long argued against the premiums.

    “People didn’t just happen to end up in risky loans during the boom,” Mr. Calhoun added. “Mortgage brokers and other people on the frontlines were getting two to three times as much money to push buyers into those loans than they were into 30-year fixed-rate loans. So what do you think happened?”

    In some cases, borrowers never knew they were paying more in interest than they needed to. In others, they thought they were saving money by exchanging lower fees for a higher rate. But consumer groups argued that the borrowers often ended up paying both higher fees and a higher rate.

    While the new rules prohibit payments to a lender or broker based on the loan’s interest rate, they allow for compensation based on a fixed percentage of the loan amount.

    The Fed rules take effect in April. Similar and in some ways more comprehensive rules are in the financial reform bill that passed Congress this summer. Those rules will take effect later.

    Fannie Mae and Freddie Mac in spotlight • The administration of President Barack Obama will bring together bankers, investors, housing experts and policymakers today for the Conference on the Future of Housing Finance. The goal is to address the problems of Fannie Mae and Freddie Mac.

    Practically all new U.S. mortgages are guaranteed by Fannie Mae and Freddie Mac and the Federal Housing Administration. Since the credit crisis began the Federal Reserve has purchased $1.1 trillion in agency mortgage securities as a means of propping up the market and keeping loan rates low. This creates great risk for the taxpayers.

    Fannie Mae and Freddie Mac “are quite profoundly broken,” economist Raj Date of the Cambridge Winter Center told CNN. “But no one wants to disrupt the only thing that’s working right now in the mortgage market.”

    Congress under pressure • Rep. Barney Frank, D-Mass., said the House Financial Services Committee would hold hearings in September on the Fannie Mae and Freddie Mac situation.

    Lawmakers agree that Fannie and Freddie should stop borrowing heavily from the capital markets. Beyond that, there is little agreement.

    Democrats seem to be moving in the direction of turning Fannie and Freddie into much smaller entities that buy individual mortgages, pool them and sell them back into the market to private investors. Republicans who don’t back a fully private market are likely to push for a government guarantee that is available for any corporate mortgage investor packaging loans, not just Fannie and Freddie.

    However, some sort of government guarantee is likely, largely because of the influence of the housing lobby, including the Mortgage Bankers Association, the National Association of Realtors and the National Association of Home Builders.

    “The housing industry is dead set on having guarantees,” said Mark Calabria, of the CATO Institute in Washington.

    http://www.stltoday.com/news/national/article_36fd938b-22ec-518b-a5ec-73b2b104ec24.html

  • Oregon’s homeownership program to receive an additional $49.2 million, by Jeff Manning, The Oregonian


    Though it’s months away from awarding a single dollar to struggling homeowners, Oregon’s newly established foreclosure-prevention program keeps growing.

    Oregon’s Homeownership Stabilization Initiative is in line to receive another $49.2 million, the U.S. Treasury Department announced Wednesday. That’s on top of the $88 million already awarded by the Treasury.

    Oregon officials are still refining the details of its program and won’t be ready to begin dispensing money until the end of the year, said Michael Kaplan, director of the program.

    “We’re thrilled,” Kaplan said. Even with the addition of the new money, he said, “we have so much more demand than we have resources.”

    The foreclosure epidemic has claimed thousands in Oregon, largely due to the state’s high unemployment. Though it remains far behind foreclosure epicenters like Nevada and California in sheer numbers of foreclosures, Oregon is now seeing new mortgage defaults increase at the third-fastest rate in the country.

    The new funding comes amidst a heated debate in Washington, D.C. about government spending and the spiraling federal deficit. While many economists argue the government needs to increase spending to jumpstart the economy, others maintain the country is drowning in red ink.

    With the new anti-foreclosure money, the Obama administration is sending a clear signal it intends to continue to inject public money into the economy.

    In addition to the new foreclosure prevention money, the Department of Housing and Urban Development announced Wednesday the launch of new $1 billion short-term loan program for at-risk homeowners.

    The 24-month loans will be available to homeowners facing foreclosure in part due to “a substantial reduction in income due to involuntary unemployment, underemployment or a medical condition,” HUD announced.

    Sen. Jeff Merkley, D-Ore., who has emerged as a vocal advocate for individuals slammed by the economic crash, hailed the new programs. “This funding will help Oregonians who have lost a job through no fault of their own while they get back on their feet,” said Merkley.

    Obama first announced formation of the Hardest-Hit Fund in February, steering money to the 17 states most impacted by the foreclosure wave. The Treasury Department announced Wednesday that it is sending another $2 billion to the program, aimed at states where unemployment has remained high.

    Qualifying standards for Oregon’s program are still being worked out, as are many of its details. Tentatively, the state envisions four different types of aid:

    Loan modification assistance will help homeowners who are on the verge of successfully modifying their existing mortgages but require a small amount of additional financial resources to do so.

    Mortgage payment assistance will help economically distressed homeowners pay their mortgages for up to one year.

    Loan preservation assistance will provide financial resources that a homeowner may need to modify a loan, pay arrearages, or clear other significant financial penalties after a period of unemployment or loss of income.

    Transitional Assistance will help homeowners who do not regain employment during the period of mortgage payment help with the resources needed to move to affordable, most likely rental, homes.

    http://www.oregonlive.com/business/index.ssf/2010/08/oregons_homeownership_program.html

  • Oregon gets federal money to help unemployed avert foreclosures, Charles Pope, The Oregonian


    WASHINGTON — The Obama administration released $600 million Wednesday to help unemployed homeowners in Oregon and four other states avoid foreclosure.

    Oregon, where one in every 76 homes is facing foreclosure, qualifies for $88 million.The money will be used to help distressed homeowners.

    The money will be available to state housing authorities in Oregon, Ohio, South Carolina, Rhode Island and North Carolina “to support local initiatives to assist struggling homeowners in these five states that have high percentages of their population living in areas of economic distress due to unemployment,” the Treasury Department said.

    According to Treasury, the money will augment “targeted programs to expand options for homeowners struggling to make their mortgage payments because of unemployment, as well as programs to address first and second liens, facilitate short sales and/or deeds-in-lieu of foreclosure, and assist in the payment of arrearages.”
    State officials in Oregon estimate that up to 7,400 homeowners will be helped.

    Among other things, Oregon will:

    — provide funds to assist with loan modifications, including through principal reduction and arrearage payments.

    — provide up to six months of mortgage payment assistance for an unemployed borrower or a borrower experiencing other financial distress. Lenders or servicers would be required to match for up to an additional six months.

    — offer funds to ensure a successful modification or pay arrearages or other fees incurred during unemployment or financial distress once a homeowner has regained employment or recovered from that financial distress.

    — provide assistance to borrowers who participated in the state’s Hardest Hit Fund unemployed borrower program but did not subsequently regain employment in order to facilitate a short sale or deed-in-lieu of foreclosure. This assistance would be matched by lenders or servicers.

    In all, states estimate that approximately 50,000 struggling homeowners will receive aid.

    Wednesday’s announcement is only the latest in the Obama administration’s efforts to dent the foreclosure crisis.

    The money is part of the $2.1 billion is directing from its existing $75 billion mortgage assistance program to a total of 10 states. Each state designed its own plan. Treasury approved money in June for Arizona, California, Florida, Michigan and Nevada.

    In the latest package of aid, Ohio will receive $172 million — the largest amount of money. That could aid around 15,000 homeowners by helping borrowers pay their mortgage for up to a year while they search for jobs. It could also provide incentives for mortgage companies to reduce borrowers’ mortgage balances.

    North Carolina is receiving $159 million, and South Carolina is in line for $138 million while Rhode Island is receiving $43 million.

    http://www.oregonlive.com/politics/index.ssf/2010/08/oregon_gets_federal_money_to_h.html

  • Multnomahforeclosures.com: Bank Owned Property List Update for July 2010


    July REO list for bank owned property has been added to Multnomahforeclosures.com . REO lists for Clackamas, Multnomah and Washington County has been addd to the site. The homes listed in these files were deeded back or returned to the investor or lender due to the finalizing of the foreclosure process. Many of these homes may already be on the market or will soon will be. It would not be a bad idea to contact the new owner of these properties and find out what their plans are when it comes to their future ownership of the property.

    Multnomah County Foreclosures
    http://multnomahforeclosures.com/

  • The Future of Fannie Mae and Freddie Mac to be decided August 17th, by Jim Kim, FierceFinance


    The most glaring omission from the Dodd-Frank financial reform act is without a doubt the lack of a plan for Fannie Mae and Freddie Mac. The government-sponsored enterprises remain encumbered with billions in toxic loans, and unfortunately, the movement to fix these institutions has been stuck on the back burner–until now. The Treasury Department has announced it will hold a conference on the future of Fannie and Freddie on Aug. 17. A Congressional hearing will be held in September.

    The administration seems bent on offering a concrete proposal in January, which is welcome news, as the travails of these entities are costing taxpayers a lot of money. So far the tab stands at $145.9 billion; it will likely end up topping $380 billion–which would make it by far the most expensive bailout effort to date.

    What sort of solutions will be discussed? I doubt anyone will argue that having some sort of body that guarantees mortgages and sells them for securitization is a bad thing. The key will be to somehow retain the salutary effects of this process, which can lower costs, expand the ability of lenders to make home loans, and protect lenders from rate shocks.

    Taking the long view, the rise of securitization has been a welcome development. The real estate crash has revealed that there’s a down side if you let securitization run amok. One theory, as noted by the New York Times, is that this process has led to lax lending. “If mortgage issuers passed along the default risk to Freddie Mac and Fannie Mae or to the buyers of mortgage-backed securities, those issuers would have little incentive to screen borrowers properly. While issuers often do have some skin in the game, the enormous amount of both securitization and sloppy lending during the boom made it natural to link the two phenomena.” Indeed, defenders of Fannie and Freddie have long argued that they were pressured to start guaranteeing non-prime loans, to expand the homeownership pie. On top of all of this, securitization has made it harder for loans to be worked out. These are certainly reasonable theories.

    The bottom line is that securitization of mortgage loans based on a sound lending standard is a good idea. But how best to do that? Perhaps the biggest issue is whether the government has a role in subsidizing this effort. And if so, what exactly is that role? What are your ideas?

    FierceFinance
    http://www.fiercefinance.com/story/future-fannie-mae-freddie-mac-be-decided-aug-17/2010-07-29?utm_source=twitterfeed&utm_medium=twitter

  • FHA Loan Gravy Train Derailing?


    After a week of travel to Motown on business, and seeing the housing bust at ground zero, I have to ask you all some questions regarding housing and our government’s role in the quagmire.

    Fannie and Freddie dominated the easy loan space to back all borrowers with a pulse from 2000-2007, and now they occupy a toxic waste dumping ground for many a bank’s bad mortgages while trading as penny stocks with all but explicit taxpayer backing.

    The new game in town when it comes to financing mortgages circa 2008-2010 is the truly explicit government backed FHA. That federal agency is THE mortgage market, without which no private bank/investor in their right mind would loan money to anyone to buy real estate at today’s prices. Private loan origination to purchase real estate has all but disappeared.

    Is the FHA spigot beginning to twist toward the “off” position?

    “The Federal Housing Administration’s Mortgagee Review Board (MRB) published a notice today to announce dozens of administrative actions against FHA-approved lenders who failed to meet its requirements. The total amount of originators that used to write FHA-backed mortgages, the report shows, but are restricted from doing so today, has surpassed the 900 mark.”

    “The rate of seriously delinquent mortgages backed by the Federal Housing Administration (FHA) declined slightly from May to June, but the gross number of mortgages that are either 90 or more days past due or in foreclosure increased 35% year-over-year.”

    “The total value of unpaid FHA mortgages was $865.5bn in June, up 30.3% from $663.8bn one year ago and up 3.3% from $837.8bn in May.”

    So we’re on the hook as taxpayers for Fannie and Freddie, and now the FHA is approaching the $1Tillion mark. Delinquencies are skyrocketing, yet the federal government keeps propping up housing prices despite the reality of stagnant wages. Why? How long can this last? When does cold hard cash flow via wages show up in the equation? Perhaps sooner than we all think…

    “A total of 168,915 FHA loan applications were received last month, down 6.9 percent from May and 29.4 percent lower than levels seen a year ago, according to the FHA Outlook report.”

    How much of an income and/or VAT-sales tax increase is Portland and Oregon willing to pay in order to prop up housing prices via government intervention and real estate bailouts? What business does the government have in financing our privately owned assets?

    The sooner the government gets out of housing finance, the sooner most Americans will be able to truly afford a home based upon local wages. Why do we vote for and pay our elected officials to artificially prop up housing and real estate prices?

    This post is just a few thoughts from the road, after seeing real estate up close in the Detriot and Southern Michigan area at truly rock bottom prices. Based upon what I saw during my travels, wage based reality bites…

    Portland Housing Blog
    http://portlandhousing.blogspot.com/2010/07/fha-loan-gravy-train-derailing.html

  • Demystifying Income Documentation, By Jason Hillard, Fireside Lending Group


    Having discussed the importance of the home loan pre-interview, I would like to dedicate a little time to income documentation. There is a lot of confusion about this subject, and thanks to an atrociously lazy mainstream media, and some irresponsible “new media”, disagreements on the issue are still coming up in day to day business operations.

    This is a list of the items your mortgage professional NEEDS from you, REGARDLESS of what type of home loan you want or what type of borrower you are.

    –most recent 30 days of paystubs
    –most recent statement for any depository account, ALL PAGES
    –most recent statement for any other liquid assets or retirement plan
    –most recent 2 years federal tax returns with ALL PAGES/SCHEDULES
    –any divorce/alimony/child support documentation
    –any bankruptcy discharge documentation from the last 10 years

    The reality is that most loans now are what is referred to as “full doc”, which is to say that you will be subject to a financial rectal exam. There are some stated income programs coming back, but bank on your next home loan funding as a result of a full fledged inquest into your personal finances. We’re talking mortgage court-marshal, so you need to be prepared.

    It may sound funny, but you really should frame your thinking around this analogy. Your mortgage professional is really taking up your case, not just packaging a home loan. The underwriter is the judge, jury, and executioner. That is why you need someone who vigorously represents you, like us. (We are not above plugging our outstanding services.)

    So I am now going to explain the thinking behind each of these items, from an underwriter’s perspective. You know you are a good person who will pay back what is owed, and so do we. Let’s delve into the mind of the cagey underwriter though, and see where it leads.

    30 days of paystubs
    This is pretty simple, obviously. But it does go a little beyond “does this person have a job that pays legal tender?”

    What the elusive underwriter is searching for is your year-to-date (YTD) numbers. Does this person work an average of 40 hours? Is there overtime pay that is consistent? What about commisions and bonuses? And is this borrower’s income consistent with the tax returns provided?

    Now, some check stub formats provide a lot of information, and others leave something to be desired. However, it is estimated that 30 days worth of paystubs will provide an accurate representation of monthly income calculated on a yearly basis. “In plain english”, you say? Your YTD pay divided by the number of months so far this year minus one month equals your monthly income.

    Most Recent Depository Statements
    This is usually your most recent bank statement, for all accounts you have. This helps to verify liquid assets. It is very important when running your situation through the automated underwriting software to have this information accurate. This verifies the number of months of cash reserves you have and/or whether you actually have your down-payment available.

    Why do we emphasize ALL PAGES? We know…your balance is on the first page. However, when an underwriter sees “page 1 of 7″ on your bank statement, they immediately want to know, and quite honestly NEED to know what the other 6 pages say. Are there car loans, lines of credit, etc. that aren’t shown on the 1st page? The underwriter needs to assume the worst at all times in order to protect their mortgage company from exposure to loan buybacks.

    Other Asset & Retirement Statements
    More “liquifiable” assets. Stocks, bonds, 401ks, IRAs, etc. What resources do you have that you can sell to make your payments in the event that your income disappears? That’s why we need proof of these items. Important note: for most loan programs, the value of 401ks and IRAs will be decreased by 3o per cent. The reason for this is that if you lose your job, and have to dip into these funds to make your payments, there will be about 30% in penalties and taxes you will have to pay for early withdrawal.

    Last Two Years Federal Tax Returns (All Pages)
    These aren’t always needed. However, we always ask for them. More and more, the automated underwriting systems are requiring them. And even if the underwriter doesn’t need them, it’s a good idea to show them to your mortgage professional. Why? Because, you will be signing a disclosure (4506T) stating that the lender has the right to request transcripts of your last 2 federal tax returns. This right will be exercised. Having a competent mortgage professional look over them upfront assures a smaller chance of “issues” coming up later. You may have what are called “2106” expenses, which reduce your income in the eyes of the underwriter. If you are riding the fence with your debt-to-income ratio, this can implode your home loan.

    As for the self-employed, we will always need 2 years of federal tax returns. There’s no way around it right now.

    Divorce Decrees & Child Support
    Divorce is a nasty thing, and it can rear its ugly head AGAIN the next time you apply for a mortgage. Is there an alimony agreement? Alimony reduces your income. How long will it continue? Is there child support involved? Again, how long will you be obligated to pay it? Is either amount scheduled to increase? The bank has to look at the big picture when it comes to your overall liabilities, and these can play a huge role in determining your debt-to-income ratio.

    Bankruptcy
    Chapter 7 or Chapter 13? When was it discharged? What was included? What was excluded? The details and date of your bankruptcy discharge is a crucial piece of information. The lender must document what liabilities remain, which are cleared, and that the requisite amount of time, as prescribed by the mortgage product you are applying for, has transpired since the discharge.

    Other Circumstances
    You may have a pension that you are looking forward to in the future. Unfortunately, it doesn’t have any cash value now, so it cannot be considered as an asset right now. And you’re not receiving any income from it right now, so it doesn’t offset your debt-to-income ratio.

    Maybe you just started your own business last year, and things are going great. Unfortunately, current underwriting guidelines do not allow us to consider self-employed income unless you have been in business for two years, as evidenced by 2 years of federal tax returns.

    There are all kinds of unique situations, and we are always happy to help you determine where you stand.

    Please understand that in order to truly apply for a home loan, you need to have these items prepared. We don’t ask for them just to make your life miserable. Your mortgage professional is your advocate, not your enemy. You have to present them with ALL of the information so that they can properly represent you in front of the judge. I mean underwriter.

    If you have any questions about income documentation or mortgages in general, please feel free to shoot us an email! Jason Hillard, Fireside Lending Group jasonh@firesidelendinggroup.com

  • MultnomahForeclosures.com Update: New Notice of Default Lists Posted


    Multnomahforeclosures.com was updated today with the largest list of Notice Defaults to date. With Notice of Default records dating back over 2 years. Multnomahforeclosures.com documents the fall of the great real estate bust of the 21st centry. The lists are of the raw data taken from county records.

    It is not a bad idea for investors and people that are seeking a home of their own to keep an eye on the Notice of Default lists. Many of the homes listed are on the market or will be.

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures

    http://multnomahforeclosures.com

  • Multnomah County Foreclosures


    It has been nearly 5 months since Multnomahforeclosures.com (http://www.multnomahforeclosures.com/) has been updated. As of July 6th, 2010 the site will be updated weekly again. Each week the Notice of Default lists for several counties in Oregon and Clark County will be posted. This information is public information and is provided to make it easier for real estate buyers and the professionals that serve them to develop opportunities in the Oregon market.

    Visit Multnomah Foreclosures, download the Notice of Default reports for free and help the Oregon Market grow!

  • Northwest Residential Apprasial LLC. A Company I will not work with again


    I had an appraiser from Northwest Residential Appraisal LLC (http://www.nwresidentialappraisal.net/) inform me that most people that pay cash for real estate pay more than people that obtain loans. He also asserted that sellers do not consider cash buyers more favorably than they do buyers that obtain loans. In my opinion this Apprasier is either dishonest, ignorant of historical real estate trends when it comes to cash buyers over buyers that seek financing or is covering for some other prejudice he hold against this property. Regardless, I do not want this company around my business again.

    This is the type of professionals we have to deal with in Oregon. Everywhere else on the planet a cash buyer is always considered a better option and a buyer that has to obtain a loan as more risky. That is unless you are working with Northwest Appraisal Services LLC.

    I will never allow a client of mine to become a victim of this company again.

    Fred Stewart
    Stewart Group Realty Inc.

  • Multnomah County Foreclosures Web Site Updated with New Lists


    Multnomahforeclosures.com was updated today with the largest list of Notice Defaults to date. With Notice of Default records dating back nearly 2 years. Multnomahforeclosures.com idocuments the fall of the great real estate bust of the 21st centry.

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures
    http://multnomahforeclosures.com

  • Oregon ended 2009 11th in nation for foreclosure, Portland Business Journal


    Lenders foreclosed on 34,121 Oregon homes in 2009, three times more than in 2007 and well ahead of national trends.

    According to year-end figures released late Wednesday by Irvine, Calif.-based RealtyTrac Inc., there were 90 percent more foreclosure actions involving Oregon residences in 2009 than in 2008 and a whopping 303 percent more than in 2007, when the meltdown began.

    The picture wasn’t any better nationwide, with nearly 4 million foreclosure filings against 2.8 million U.S. properties, 21 percent more than 2008 and 120 percent more than 2007.

    The report showed that 2.2 percent of all U.S. homes or one in every 45 residences received at lease one foreclosure filing during the year.

    “As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans,” said James Saccacio CEO of RealtyTrac. “After peaking in July with over 3621,000 homes receiving a foreclosure notice, we saw four straight monthly decreases driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline.”

    Nevada, Arizona and Florida had the nation’s highest foreclosure rates while California, Florida, Arizona and Illinois together accounted for half of all activity.

    Oregon ranked 11th, with 2 percent of all homes affected, or one in 47.

    Clackamas, Columbia, Deschutes, Jackson, Jefferson, Josephine and Yamhill counties had Oregon’s highest foreclosure ratings.

    Washington state ranked 24th, with 35,268 foreclosure actions, 132 percent more than in 2007.

    http://portland.bizjournals.com/portland/stories/2010/01/11/daily33.html