The Daily Dirt - Real Estate Outlook: Housing in Recovery

11/2008 Vol 1, Issue 21 Real Estate Outlook: Housing in Recovery Dear E-mail,   I always appreciate your feedback about my eNewsletters.   If you have any feedback, please let me know (good, bad and ugly) at mj@milehighhomehunter.com     By the way, I have set up some real estate resources for you on Amazon.com.     Are you: A first time homebuyer? Check out: The First-Time Homeowner's Handbook Investing in Apartment Buildings? Check out: Investing in Apartment Buildings Investing in Real Estate? Check out: The Pre-Foreclosure Property Investor's Kit Needing tools for your next "Fix n' Flip"? Check out the Amazon.com pre-canned search here  If you are looking for anything else, check out any of the affiliate links under the "Amazon.com: Real Estate" button on the top of my website: www.MileHighHomeHunter.com Market Place Links   Have something to sell? A small business to promote? Contact me to have your link added here:   Shop for real estate books   Shop for home improvement tools   Mary Kay Cosmetics   Send Out A Card - Online! Experience Renewal   Get Financial Renewal Quick Links Foreclosure Homes Market Stats Valued Lender Referral Search for Homes    Join our Mailing List! Don't Forget! Support the Race for The Cure! Help me raise funds for the Race for the Cure! Donate directly to Komen Denver here     Real Estate Outlook: Housing in Recovery   Real Estate Outlook: Housing in Recovery Written by Kenneth R. Harney November 18, 2008   With all the turbulence and losses in stocks and bad economic news in the headlines lately, you can easily lose perspective on what's really going on in the real estate sector.   For example, new mortgage applications increased last week by 12 percent, according to the Mortgage Bankers Association. Applications from people looking to buy houses with FHA loans were up by 15.3 percent, while applications from purchasers seeking conventional mortgages rose by six and a half percent.   How could that be, with all the grim economic news? Well, remember that there is a huge pent-up demand simmering away out there for housing -- especially from first-time buyers who want to scoop up low-priced deals.   When fixed interest rates drop -- and last week they were down by a quarter of a percentage point -- those buyers start doing the math and getting into the market with offers.   Fixed thirty year rates fell from six and a half percent to 6.24 percent during the week. Fifteen year rates broke below six percent to 5.9 percent, down from 6.14 percent.   Another piece of positive news you may not have noticed: Pending home sales were higher than year-earlier levels for the second straight month -- 1.6 percent higher than September 2007.   Although pending sales contracts were down slightly for the month, in the western states they were up by 3.7 percent, and now stand at an extraordinary 39.7 percent higher than they were at the same time in 2007.   At the National Association of Realtors' convention in Orlando, chief economist Lawrence Yun, warned the delegates not to expect a housing recovery overnight, certainly not with unemployment on the rise. But he projected a slow, steady, multi-year upward trend, with 5.02 million total sales this year, 5.3 million for 2009, and 5.6 million for 2010.   Already sales are up significantly in major markets in many parts of the U.S. Yun specifically mentioned the west coast of Florida, the Phoenix area, Virginia, Long Island New York, Kansas City, Minnesota and Idaho.   So here's the key point to keep in mind as you try to make sense of the headlines: The stock market is NOT the housing market. It's on a whole different set of tracks. And it's been in a highly volatile state for more than a month.   Housing, on the other hand, has already endured its painful correction for two and a half years ... is now pretty much stabilized ... and is slowing moving toward its cyclical recovery. Want The Latest Real Estate News? -- Contact me get automated updates for your home, neighborhood or a neighborhood where you are looking to purchase Click Here To See My New Real Estate Video News Channel!   - Realty Times     Click Here To See My New Real Estate Video News Channel! As always, whenever YOU are ready, I am here Bringing The World Home To You™     And, if you know of someone that is looking to buy or sell, I am NEVER too busy for any of your referrals.       Kind regards and happy "Home Hunting",      Michael J. Clarkson   Broker/Owner - Mile High Home Hunter Realty  303.332.6393 MJ@MileHighHomeHunter.com        On the web: http://www.MileHighHomeHunter.com http://www.MileHighForeclosure.com http://www.HomeHunterBlog.com http://MileHighHomeHunter.Blogger.com

Forward email This email was sent to milehighhomehunter.blogger9582@blogger.com by mj@milehighhomehunter.com. Instant removal with SafeUnsubscribe™ | Privacy Policy. Email Marketing by Mile High Home Hunter Realty | 769 Jacques Way | Erie | CO | 80516

The Daily Dirt - Credit Unions To The Rescue

11/2008 Vol 1, Issue 18 Credit Unions to the Rescue: Been down to your friendly, neighborhood credit union lately? Dear E-mail,   I always appreciate your feedback about my eNewsletters. This month, I address what seems to be two separate markets developing in Denver.   If you have any feedback, please let me know (good, bad and ugly) at mj@milehighhomehunter.com     By the way, I have set up some real estate resources for you on Amazon.com.     Are you: A first time homebuyer? Check out: The First-Time Homeowner's Handbook Investing in Apartment Buildings? Check out: Investing in Apartment Buildings Investing in Real Estate? Check out: The Pre-Foreclosure Property Investor's Kit Needing tools for your next "Fix n' Flip"? Check out the Amazon.com pre-canned search here  If you are looking for anything else, check out any of the affiliate links under the "Amazon.com: Real Estate" button on the top of my website: www.MileHighHomeHunter.com Market Place Links   Have something to sell? A small business to promote? Contact me to have your link added here:   Shop for real estate books   Shop for home improvement tools   Mary Kay Cosmetics   Send Out A Card - Online! Experience Renewal   Get Financial Renewal Quick Links Foreclosure Homes Market Stats Valued Lender Referral Search for Homes    Join our Mailing List! Don't Forget! Support the Race for The Cure! Help me raise $2,500 for the Race for the Cure! Donate directly to Komen Denver here     Credit Unions to the Rescue   Credit Unions to the Rescue By Broderick Perkins   Been down to your friendly neighborhood credit union lately?   You could find that elusive home loan you been unable to get anywhere else.    Credit unions didn't need a bail out during the Great Depression, they didn't need federal intervention during the Savings & Loan debacle and they don't need government assistance now. In fact, right now, they are rolling out the red carpet for home loan borrowers.   During the boom, credit unions avoided writing subprime home loans and other easy-money mortgages. They also shunned selling packages of mortgages to Wall Street moguls who packaged them into now low- to no-return securities. That means credit unions are relatively untainted by the credit squeeze and they have both money to burn and a sound business foundation that allows them to keep on lending.    Instead of fearing the next Great Depression, member-owned credit unions are bracing for what could be their boom time in home loans and other financial services, now that banks and mortgage lenders are crashing and burning.   Mortgage production among credit unions is small by comparison to banks and mortgage lenders, but their originations rose a whopping 10.1 percent during the first half of 2008, according to the industry's federal regulator, the National Credit Union Administration (NCUA).    The Mortgage Bankers Association recently reported bank and mortgage lender loan originations took a nose dive, falling 17 percent during the same period.    Credit unions are more willing than many lenders to make homes loans for the creditworthy, but the old fashioned way. If you go shopping for a credit union mortgage, leave your subprime attitude at the door. You won't be coddled, you can't get away with lying on your application, your creditworthiness will have to pass muster and you likely won't get more home than you can truly afford.   Credit unions are non-profits in the business to make money, but not profits. They serve members who pool their money to get a decent return, either in the form ofsavings interest or competitively priced loans.    The fundamentals apply: Credit unions take in deposits. They use the money to make loans. They charge more on those loans than they pay on deposits. Voila! A thriving business.   It's the lack of the profit motive that kept credit unions out of harms way during the mortgage meltdown. They have no incentive to get involved in the subprime racket, no reason to sell and repackage loans as investments and no need to otherwise venture into untried and untrue investment schemes.    Credit unions hold most loans to maturity and return the interest to members in the form of interest-bearing checking, savings and CD accounts. The rest they invest smart so they can continue to help members. Also, because credit unions didn't hop aboard the home loan assembly line, their members aren't suffering the kind of housing hangover many home owners face today.    Less than 1 percent of all credit union mortgages are 60 days or more late, according to their Credit Union National Association (CUNA). And, along with fixed-rate 30-year mortgages they also offer conventional adjustable rate mortgages (ARM) and hybrids.    As with other financial products -- savings and CDs -- rates on loans are often better at credit unions. The spread isn't as much with mortgages as it is with credit cards and car loans, but credit unions' mortgage rates are competitive.   As of October 15 UNA reported the average rate on a 30-year fixed rate mortgage was 6.27 percent; for a 1-year ARM, 4.91 percent. Meanwhile, the MBA reported an average 6.47 percent for a 30-year loan and an average 6.67 for a 1-year ARM.    "Credit unions are the safest depository institution in the country to put your money in right now," says Dan Mica, President and CEO of CUNA.    He has room to boast. Just as the Federal Deposit Insurance Corporation (FDIC) insures accounts up to $250,000 in federally insured banks, credit unions are likewise regulated and federally insured by the NCUA for the same amount.    -  Realty Times     Click Here To See My New Real Estate Video News Channel! As always, whenever YOU are ready, I am here Bringing The World Home To You™     And, if you know of someone that is looking to buy or sell, I am NEVER too busy for any of your referrals.       Kind regards and happy "Home Hunting",      Michael J. Clarkson   Broker/Owner - Mile High Home Hunter Realty  303.332.6393 MJ@MileHighHomeHunter.com        On the web: www.MileHighHomeHunter.com www.MileHighForeclosure.com www.DenverHomesRealty.com

Forward email This email was sent to milehighhomehunter.blogger9582@blogger.com by mj@milehighhomehunter.com. Instant removal with SafeUnsubscribe™ | Privacy Policy. Email Marketing by Mile High Home Hunter Realty | 769 Jacques Way | Erie | CO | 80516

A solution for the housing crisis

In the interest of full-disclosure, I am a Realtor®. I think this bailout is insane and incredibly short-sighted!

Taking my Realtor® hat off and putting my MBA hat on, let me offer the following:

• I understand that liquidity is the problem, but injecting money does NOT guarantee that liquidity will improve nor will resolve the housing inventory glut.
• Looking at the St. Louis Fed's credit numbers, credit is at literally an all-time high.  

This is like putting water in a blocked toilet and flushing again and again…it doesn't break the blockage!

Now, I have not necessarily heard how this package directly addresses dealing with:

1. Oversupply of inventory, created by
2. Rampant foreclosures

which seems to be at the core of the crisis (foreclosures – really oversupply).

I think the most conceptually simple approach (the devil is always in the details) is:

1. Provide a 40, 50, 60 year amortization for loans in trouble (at market rates), not a 30-year rework…which essentially gets you to a minimally different payment.
• This keeps homes off-market, creating price support due to the current level of demand competing for a reduced supply (inventory) of homes.
• This has the ancillary benefit of keeping property values up (not artificially, but by ACTUAL, desired home ownership) which benefits state and local economies (who rely on property taxes) based on valuation
2. Trade off a portion of the equity on the back end of the sale for the privilege of doing this rework, say 10%, for the opportunity to do this.
• This would have the effect of neighborhood stabilization (lest remaining homeowners just get fed up and leave the keys on the counter and leave at some point, if they see their homes go underwater to the tune of $50k, $100k or $200k as their neighborhoods implode). This encourages value preservation.
• This 10% trade off would also discourage homeowners from "working the system" - and hold the homeowners accountable for getting in over their heads - if they had to provide an additional lien for $20k on a $200k home (present value); while permitting a MEANINGFUL adjustment to payments of homes that are in trouble.  Also, this additional lien discourages churn of those homes when
• values start to improve and brings them into the market only when appreciation is substantially over the encumbrances (including the 10% trade-off noted in #b).  The homes would HAVE to be owner-occupied.
• Now, I would waive the 10% if they paid their homes off earlier than the 60 years (say on the original 30 year schedule) – to encourage equity accrual.
• Require homeowners to purchase some sort of life insurance policy that pays off the mortgage, should they pass away prior to the 60 year mortgage being paid off.  Guess what? This creates a wealth transfer to the heirs of the troubled homeowners, too!  (Great reason to abolish the death tax!)
3. How do you fund the gap between the cash flow of the 30 year loan vs the 60 year amortization? 
• Create a private investment fund for raising funds for this endeavor, perhaps with tax free benefits paying, say, 7%, after all, at 10% return on the back end, you would make 3% differential (mind you, I haven't done an NPV analysis or time-value of money analysis on this).
4. Moreover, this would ESTABLISH VALUE of these mortgage assets due to increased (or, really, commencing) cashflows from the DISTRESSED loans.
• Moving from a 30 year to 60 year loan would reduce payments by 15% (from $600 per $100k @6% to $514 per $100k @6%).  (That doesn't take into account the differential from reducing the rates based on percentages.)
• That benefits banks as 85% of something is better than 100% of nothing. This should increase cashflows in the credit market and permit the ability/encourage willingness to loan in the market. The differentials (the remaining balance of the loans in distress) would be funded through the private investment fund noted above.
• If there were a gap remaining there, THEN fund THAT. I mean, we are putting 1/14th of the GDP into Wall Street in one bill. That's insane.

 

The net-net is: You keep supply of available homes down. Due to the implicit requirement of having any given home needing to overcome its encumbrances, these homes should not churn until value (and equity) is acquired. That is equity that can be used to move up somewhere down the road, or provide a legacy to these homeowners' family and children.

 

Over 150,000 unique visitors come to MileHighHomeHunter.com and MileHighForeclosure.com to find the best that Denver real estate has to offer. 

 

Bringing the World Home to You™

 

 

Kind regards,

 

Michael

 

 

Michael J. Clarkson Broker/Owner, GRI, MBA
Work: 1.303.317.2478 Mobile: 1.303.332.6393 Fax: 1.866.723.4337 Email: mj@milehighhomehunter.com IM: mjclarksondenver (MSN) Home Page Mile High Home Hunter Realty PO Box 837 Erie, CO 80516 USA
See who we know in common	Want a signature like this?

 

 

The Daily Dirt - Markets Not Frozen - FHA Still Strong

11/2008 Vol 1, Issue 16 FHA Still Going Strong: Markets not as frozen as the media claims Dear E-mail,   I always appreciate your feedback about my eNewsletters. This month, I address what seems to be two separate markets developing in Denver.   If you have any feedback, please let me know (good, bad and ugly) at mj@milehighhomehunter.com     Market Place Links   Have something to sell? A small business to promote? Contact me to have your link added here:   Shop for real estate books   Shop for home improvement tools   Mary Kay Cosmetics   Send Out A Card - Online! Experience Renewal   Get Financial Renewal Quick Links Foreclosure Homes Market Stats Valued Lender Referral Search for Homes    Join our Mailing List! Don't Forget! Support the Race for The Cure! Help me raise $2,500 for the Race for the Cure! Donate directly to Komen Denver here     FHA Still Going Strong   FHA Still Going Strong By Kenneth R. Harney   The country's top housing official has an urgent message for potential home buyers: You may have heard that the credit markets were "frozen," but FHA has been open for business throughout the credit squeeze, and so are Fannie Mae and Freddie Mac. In fact, FHA's volume has tripled and the agency is now insuring well over a hundred thousand new loans a month.   In an exclusive one-on-one interview with Realty Times, Housing and Urban Development Secretary Steve Preston said that FHA, Fannie and Freddie -- who account for a combined 90 percent plus share of the entire U.S. mortgage market -- "have kept liquidity alive" for home buyers -- and have virtually unlimited funds for new mortgages.   "There is no credit crisis" for individual home buyers who have at least three percent to put down, documentable employment, and at least a moderately good credit record, said Preston.   Business loans and various other types of credit may have been more difficult to obtain in recent weeks, Preston told Realty Times, but thanks to the government's backing of the three biggest sources of mortgages, buyers and refinancers of houses have had no unusual problems.   Preston and HUD are playing key roles in the $700 billion financial system bailout plan now getting underway. Preston is one of just five members of the Financial Stability Oversight Board that oversees the entire effort. HUD's main task in the weeks ahead, he said, will be to either refinance or help work out thousands of delinquent subprime and underwater homes financed by private lenders during the boom years.   The agency's new "Hope for Homeowners" program, which started October 1, allows it to cut the principal debt, monthly payments and interest rates of delinquent loans through refinancings into fixed-rate FHA mortgages.   In the interview, Preston emphasized the importance of a new, $3.9 billion program that has received virtually no attention in the press, but which could have huge positive impacts on neighborhoods and communities struggling with large numbers of foreclosures.   Congress authorized HUD to provide funds and other assistance to local governments to buy, fix up, resell or rent out foreclosed houses that are dragging down local property values.   Known as the Neighborhood Stabilization program, it offers not only roles for local governments to fight housing blight, but also provides opportunities for alert realty agents, rehab contractors, builders and investors to be involved -- profitably -- in the turnaround efforts. If you're interested, talk to your city or county housing and community development officials for details. Though HUD will be providing the funds, local officials will be calling the shots.   - Realty Times     Click Here To See My New Real Estate Video News Channel! As always, whenever YOU are ready, I am here Bringing The World Home To You™     And, if you know of someone that is looking to buy or sell, I am NEVER too busy for any of your referrals.       Kind regards and happy "Home Hunting",      Michael J. Clarkson   Broker/Owner - Mile High Home Hunter Realty  303.332.6393 MJ@MileHighHomeHunter.com        On the web: www.MileHighHomeHunter.com www.MileHighForeclosure.com www.DenverHomesRealty.com

Forward email This email was sent to milehighhomehunter.blogger9582@blogger.com by mj@milehighhomehunter.com. Instant removal with SafeUnsubscribe™ | Privacy Policy. Email Marketing by Mile High Home Hunter Realty | 769 Jacques Way | Erie | CO | 80516