2008 THE NEW FINANCIAL WORLD AND ITS IMPACT ON REAL ESTATE! Presented by: Gary Watts

Gary Watts is a local area (Orange County, California) real estate economist that has been doing his forecasts/predictions on the market for years. He is very well respected and seems to know what is going on and where it is all going. The following was an outline of his most recent presentation.

How Did This Mess Happen?
I. Repeal of the Glass Steagall Act!
Prior to the stock market crash in 1929, both investment and commercial banks took on too much risk, with depositors' money by using those funds for active speculation in the stock market. These banks became greedy, taking on huge risks in the hopes of even bigger rewards. Banking became sloppy and unsound loans were made. Congress deemed that these banks had been the culprit in the crash. In 1933, the Glass Steagall Act was passed to separate investment and commercial banking activities. Now moving to the 1990s . . . after many years of investment bank lobbying, Congress passed the Gramm-Leach-Bliley Act in November of 1999, once again allowing the consolidation of commercial and investment banks into one entity.

II. Now Let the Fun Begin!
From 1999 to 2002, demand for houses and the ensuing price rises could be attributed to economic fundamentals such as low unemployment, expanding household incomes and population growth. Congress told both agencies, in 1999, to ease the credit requirements to low-income buyers. With the events of 9/11 and the Fed's later decision to lower the discount rate to 1%, future home buyers were lured (by lower interest rates) into acquiring property sooner than they had planned. At this time, the biggest players (in home mortgages) were Freddie Mac and Fannie Mae, which actively issued and purchased conventional, conforming mortgage-backed securities.
Loan volume grew to $5 trillion by 2002.
Pay-Option ARMs represented only 3% of loans.
In 2002, federal regulators found (in both companies) irregularities and mismanagement by senior officers, who later resigned. By 2003, regulatory and political factors forced both Freddie and Fannie overstated earnings by $9 billion, which significantly slowed down their future lending volume. With the Gramm-Leach-Bliley Act in place and demand for housing still increasing, the "new" investment banks created private funding in the form of mortgage and asset-backed securities, which replaced the standard conventional lending with looser underwriting standards. In 2004, these investment banks were successful in changing their reserve requirements on securities, which required $1 in reserves for every $12 loaned. The new reserve ratio became $1 to $40! Now new loan programs could be designed to meet the needs of the investment bankers' clients, who were demanding higher returns.
By 2005, loan volume had grown to $9 trillion. 68% of home mortgages were securitized, 33% were non-prime loans, and Pay-Option ARMs grew to 30% of securitized non-prime mortgages. 40% of loans were low or no doc loans These new lending programs allowed less-than-credit-worthy borrowers to obtain loans. With rapidly appreciating home prices, home equity loans were added to the mix and the consumer was living large! Wall Street was now in love with their creation, Structured Investment Vehicles!
(Sources: Glass Stegall Act, Gramm-Leach-Bliley Act, UC Irvine's Paul Merage School of Business, FDIC -1- III. The Structured Investment Vehicle (SIV))

Even by 2005, charge-off rates for mortgages and home equity loans were well below the long term averages (0.05/0.10 versus the long term average of 0.10/0.20). This allowed Wall Street's new credit environment to continue to offer looser lending standards and increased tolerance for riskier, high-yield loan products. The structured investment vehicle was designed to help diversify these risks.
Their Structure: Sub-Prime, 8.3%; Alt-A ,6.7%; Prime, 13.3%; Residential Mortgage-Back Securities, 0.2%. Asset Backed Securities, 12.1%; Collateralized Debt Obligations, 15.4%. Collateralized Loan Obligations, 6.3%; Nonfinancial Corporation Debt, 0.2%. ? Commercial Mortgages, 7.7%; Financial Institution Debt, 28%; Insurance Debt, 1.8%. Ownership Participation: U.S./Foreign Banks, 59%; Hedge Funds/Sovereign Trusts, 28%; Insurance Companies, 6%. Pension Funds, 2%; Corporations, 2%; Mutual Funds, 2%; Others, 1%.
What It Allowed Them To Do:

• Credit was made available to various types of borrowers (sub-prime, businesses, credit card users, leasing contracts, commercial loans, manufacturing, auto loans, etc.) who would otherwise have not been able to obtain such credit.
• Transferred risk to their off-balance sheets (OBSEs), to reduce reserves.
• Permitted exposure to remain mostly undisclosed to regulators and investors.
• Improved loan liquidity; generated fees; obtained relief from regulatory capital requirements.
• From 1997 to 2006, U.S. home prices rose 85% an historical high!
• Their Problems: Default rates exceeded earlier assumptions. The three main credit rating agencies were forced to make precipitous downgrades on a large number of these SIVs.
• Freddie Mac's Alt-A loans are 10% of its portfolio but more than half of its credit losses.
• Option ARMs were 19.5% of loan volume in 2005 and 28.7% in 2006.
• Freddie Mac had a projected model (risk factor) of price declines of 13.4%.

To make matters worse, they made long-term loans with short-term deposits. Investors did not have a clear idea of what portion of an SIV they owned, with whom they owned it with, what portion (if any) was insured, what was their "tranche" position, and were any of the insuring companies covering any of the losses. Due to a lack of this knowledge, many investors withheld funding from these very complex structured products, even those with high-quality underlying assets. By the summer of 2007, the securitization market was dead and the credit crunch hit all aspects of the lending markets. With little money for refinances and rapidly falling housing prices, short sales and foreclosures began to dominate the market. Today, these types of sales contribute to almost 50% of all recorded sales in southern California.

(Sources: Federal Reserve, Standard & Poor's, Federal Deposit Insurance Corporation)

II. The Current State of Orange County Housing As of October 16th:

• 12,722 the lowest number in 18 months and a current housing supply of 4.76 months.
• 49.7% of our entire inventory is priced below $500,000, representing 69% of the demand
• 42.9% of our entire inventory (5,458) is distressed properties, representing 64.2% of demand.
• Short-sales make up 77% of distressed properties with a market time of 6.08 months.
• Bank-owned make up the remaining 23% and have a market time of only 1.22 months.
• In southern California last month, 45.5% of all sales were foreclosed properties.
• 67.5% of distressed properties are priced below $500,000 93.0% of distressed properties are priced below $750,000
• 38.2% of attached homes are vacant
• 25.5% of detached homes are vacant
• 12.0% demand for homes above $750,000
• With 14 months of declining sales in jumbo purchases, the actual median sales price is greatly distorted. Normally, 40% of all sales are jumbo purchases; today they are only 12%!
• Fewer sales reduces the sample size, thus reducing the validity of the conclusions.
• The dominance of foreclosures and short-sales usually concentrated in a smaller area.
• Median sales price is now being distorted by the low-end/smaller property market.
• Larger price declines on distressed sales actually distorts factual metro sales prices.

(Sources: Altera Orange County Market Time Report, John Burns Real Estate Consulting.)

IV. Our Government to the Rescue?

This year, the federal government has tried to "prop-up" both the housing and financial markets through various measures: 1. Economic Stimulus Act of 2008. The IRS mailed out 132 million rebate checks in an effort to help stimulate the economy. Unfortunately, 78% of the rebates went to the payment of bills not to purchase goods and services in the economy! 2. Housing and Economic Recovery Act of 2008 This was to shore up Freddie Mac and Fannie Mae so that they could continue to bring a steady supply of mortgage capital to homebuyers. The Treasury Department was to inject $100 billion into each company. Conforming loan amounts were raised and FHA was authorized $300 billion to help troubled homeowners by refinancing their loans. Increasing the loan amounts was also to help lower interest rates for high-priced areas. A new $7,500 tax credit was given to first-time homebuyers, and $4 billion was allocated go to Community Development Block Grant funds to purchase and fix-up foreclosed homes. 3. The Federal Reserve opened its discount windows and allowed troubled banks to borrow from them through "auction securities." This would allow the banks to strengthen their capital reserves and begin making both residential and commercial loans again. By September, banks had borrowed over $500 billion dollars but banking problems still persisted. At the end of September, the Fed agreed to advance another $228 billion in auction securities, through November. 4. Emergency Economic Stabilization Act of 2008 . . . or "Re-arranging cards in the House of Cards!" A massive plan designed to provide the Treasury with $850 billion to buy or insure troubled securities, with the hope that it frees-up the capital markets and helps stabilize future banks from failing. The plan raises the new FDIC limit to $250,000; limits pay and ends "golden parachutes" for those companies who participate; and directs federal agencies to modify troubled loans whenever possible. FDIC has only $45 billion left after paying out $9 billion for IndyMac Bank. Total insured deposits exceed $4.5 trillion, with $3.5 trillion in money market funds.

More Potential Problems on the Horizon! U.S. Credit Card Debt . . $ 1 Trillion

Corporate Debt . . . . . . . . . . . . . $ 12 Trillion

Mortgage Debt . . . . . . . . . . . . . . . $ 14 Trillion

Credit Default Swaps . . . . . . . . . $54 - $62 Trillion

Derivatives . . . . . . . . . . . . . . . . . .$370 - $583 Trillion

Note: AIG had $1 trillion in assets to back insurance policies. Their problem was the $500 billion of exposure to corporate debt and credit default swaps. On Oct. 10th, Lehman's bankrupt bonds sold for 8.62¢ on the dollar and the credit default swap holders (insurers) paid out 91¢ on each dollar!

(Sources: FDIC, Federal Reserve, Economy.com, Bureau of Economics)

The Challenges Our Economy is Currently Facing Various Headwinds:

1. Wealth Effect - due to declining assets The Federal Reserve reported that real estate "net" equity declined $879.6 billion in 2007. Household equity is at 46.2% vs. 57% ten years ago a record low since post-WWII. CA foreclosures in 2007 totaled 94,969 versus 110,282 for the 1st half of 2008. Through September, Orange County is averaging 1,012 foreclosures monthly. 2. Price Effect - due to higher energy and food prices Commodity prices are on the rise due to a weak U.S. dollar. As prices rise, consumer and business spending decreases. 3. Income Effect - due to higher unemployment Current U.S. unemployment is at 6.1% 760,000 jobs have been lost in the past year. California's current unemployment rate is 7.7%, the highest in 12 years. Orange County's unemployment rate is 5.7%, with job losses exceeding 29,600 in the past year. Less income, less paid taxes, more pressure on federal, state and personal budgets. 4. Funding Conditions - due to the "credit crunch" This is the 20th month since sub-prime, housing woes, and weak financials were reported. Regulators and thus the banks have tightened credit standards for all types of loans. Many loans require larger down payments, actual verification of assets and income. Appraisers are "adjusting" appraisals for the market conditions 5. "Spill-Over" Effect The September delinquency rate on single-family loan balances were 12.5%. If prices continue to decline, another tier of properties with exhausted home equity lines or increasing loan balances could set off another round of very large foreclosures. 75% of Option ARMs borrowers are paying the minimum payment. This is causing the recast date to be reached earlier than had been projected. There is $500 billion worth of Option-ARM mortgages that have yet to recast, with $300 billion worth of mortgages on California properties.

(Sources: Mortgage Bankers Association, U.S. Bureau of Labor, Ca. EDD, Federal Reserve, DataQuick)

VI. How The Financial World Is Changing Real Estate For The Buyer:

There are 71% fewer mortgages available than a year ago. There are no more "Bail & Buy" loans. All assets and income must be verified. Larger down payments are required, with points to be paid on the loan. Fixed rate mortgages account for 69% of funded loans. FHA is the new "big" player. (a) up-front insurance premium is now 1.75%. (b) "Kiddy Condos" for kids in college. (c) down payment goes to 3.5% on Jan. 1st. (d) gift still available for down payment

For The Lender: FHA appraisers must be certified, which will cause a decrease in the number of appraisers. Some lenders may no longer use "in-house" appraisers. Financial institutions will be held liable for any misleading advertising. Adjustable sub-prime loans cannot have a pre-payment penalty for 4 years. Fixed sub-prime loans can not have a pre-payment penalty for 2 years. Truth in Lending statement must be printed in the native language of the borrower. Jumbo loans will be set at $625,500, as of January 1st.

For The Investor: 25% down or more offers the best rates. 20% down will cause rate to rise approximately 3/8% less than 20% down, introduces PMI; higher rates; added approval by insurance companies.

For The Seller: Foreclosures and short-sales will continue to dominate the 2009 real estate market. Listing prices must be competitive with these properties for a successful sale. Regardless of their expectations, their house will be appraised conservatively. Expect the short sale process to take 4 to 6 months. The buyers are still in control of pricing: (a) give careful consideration to a counter offer. (b) expect to pay for all termite work and repairs disclosed by the inspection report. (c) length of escrow will be the buyer's choice, but market conditions can push it longer. (d) making necessary repairs and improvements ahead of time will help the marketing.

(Sources: FHA, Mortgage Bankers Association)

VII. A Final Perspective For 2009: Delinquent December tax bills should give us a peek into potential problem properties. It will be early January before we know the full impact of the latest bailout. The housing market below $250,000 has most likely reached the bottom. Prices now in the $350,000 range are close to the bottom. The rest of the housing market still must suffer a restructuring of price levels. Expect foreclosures and short sales to dominate the market through 2010. Listing inventory should rise due to the large number of foreclosures set to enter the market.

The Light In The Tunnel: The credit conditions should greatly improve, bringing more buyers into the market place. Demand for properties will continue to be higher than the past three years. American households have $7.4 trillion in checking, savings, and money market funds. Americans have $4.1 trillion stashed in Treasury bills and other bonds. This total of $11.5 trillion could pay off every home mortgage in America! Investors have "parked" $3.5 trillion dollars in money market funds and it has to eventually move someplace. Hopefully, a large chunk goes into real estate lending. Most lenders will recover 70% of their outstanding loan balances through repossessing homes and then reselling them. If not, they can sell them off to the Treasury at auction, at the current rate of "X" cents on the dollar (unknown at time of print). Price declines have allowed first-time buyers back into the real estate market. Pent-up demand from buyers, who have been "fence-sitting" for the past couple of years and are now re-entering the housing market, should help reduce our current housing supply. The U.S. income this year will be $14 trillion, while global income will be $53 trillion. The U.S. economy earns $26 billion every day and, even with loan write-downs in the hundreds of billions, it will represent less than ½ of 1% of the combined assets of all U.S. households and non-financial corporations.

Orange County: It has 4 of the top 20 income-earning cities (NB, YL, IR, MV) in America. It has the 5th lowest unemployment rate in the State and job growth is projected to grow next year at a rate of 1% - adding 14,000 new jobs. There are 94,000 small-business employers, of which 62% have fewer than 5 workers and 95% employ fewer than 50 people - leading to stability through diversity. There are 8 billionaires who call this county home. This county ranks 4th in the nation with 315,396 millionaires Rents are up 4.5% (June to June), making OC the 6th highest rental market in the U.S.

(Sources: OC Business Journal, WSJ, Federal Reserve, World Wealth Report, U.S. Census, EDD, REIS Inc. )

On Success "Every man should make up his mind that if he expects to succeed,he must give an honest return for the other man's dollar." Edward Harriman

Some Fast Facts on California Real Estate

To keep you updated with our local real estate marketplace, here are some fast facts:

Calif. median home price - August 08: $350,140(Source: C.A.R.)
Calif. highest median home price by C.A.R. region August 08: Santa Barbara So. Coast $930,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region August 08: High Desert $169,200 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)
Mortgage rates - week ending 10/16/08 30-yr. fixed: 6.46% Fees/points: 0.6% 15-yr. fixed: 6.14% Fees/points: 0.6% 1-yr. adjustable: 5.16% Fees/points: 0.6%(Source: Freddie Mac)

List of Lenders Who Are Participating in the HOPE for Homeowners (H4H) Program

I received this from the California Association of Realtors and thought that it would be good to post on my blog to get the word out.

NOTE: Homeowners, contact your existing lender and/or a new lender to discuss how you may qualify for the H4H program.
The lenders listed below have indicated an interest in refinancing loans under the HOPE for Homeowners program. When contacting any of the lenders listed below, you are strongly encouraged to contact your servicing lender and any subordinate lien holders since their participation is vital for you to refinance into a HOPE for Homeowners mortgage. It is important to remember that the HOPE for Homeowners program is voluntary and your servicing lender may offer different solutions for avoiding foreclosure.
If you are experiencing difficulty in communicating with your current servicing lender and/or subordinate lien holders, you may wish to contact a housing counseling agency to ask for advice and assistance in reaching a mutually agreeable solution for avoiding foreclosure.
To view the list of lenders who are participating in the HOPE for Homeowners program click on the link below. Your browser will open an Excel Spreadsheet.
The H4H Lender List was updated on October 17, 2008. We will refresh the list on most Fridays.

This was in an excel spreadsheet, so if you can't follow it, let me know by sending me an email and I will forward the information that you need.

Copy of LIST OF H4H PARTICIPATING LENDERS

Pan American Mortgage, LLC
John Palla
6232 N Pulaski, Chicago, IL 60646
Alaska, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Missouri, North Carolina, Nebraska, Nevada, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Wisconsin
773-493-8979
773-493-8981
Citizens Home Loans
Chris Rines
7601 Paragon Rd Ste 104, Dayton, OH 45459
Indiana, Kentucky, Michigan, New York, Ohio, Pennsylvania, West Virginia
888-342-6550
937-886-6588
Chicagoland Mortgage Services, Inc.
Nathan Reynolds
15 Spinning Wheel Rd Ste 15, Hinsdale, IL 60521
Iowa, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Tennessee, Wisconsin
630-734-3900
630-734-7583
Kinetic Mortgage Group
Christy Celi
5300 NW 77 Ct, Doral, FL 33166
Alabama, Florida, Georgia, Mississippi
305-592-9265
305-592-1782
Valley National Mortgage
Mark Gutweiler
4400 E Broadway Blvd Ste 805, Tucson, AZ 85711
Arizona, California, New Mexico, Nevada
520-323-3811 x101
520-323-2050
Trenchant Mortgage
Tory Teunis
8778 S Maryland Parkway Ste 105, Las Vegas, NV 89123
Arizona, California, Nevada, Idaho, Oregon, Utah
866-728-3560
866-728-1340
Amera Mortgage Corporation
Thomas Ciotti
20300 Superior Rd Ste 260 Taylor, MI 48180
Illinois, Indiana, Michigan, Ohio
734-530-2002
734-287-4747
American Liberty Mortgage & Loan Corporation
Gloria Kapurch
195 Lake Ave, Worcester, MA 01604
Connecticut, Massachusetts, Maine, New Hampshire, New Jersey, New York, Rhode Island, Maine
508-793-8637
508-793-1919
Great Lakes Mortgage Funding
Jeffrey Marsack
14460 Lakeside Circle Ste 180, Sterling Heights, MI 48313
Illinois, Indiana, Michigan, Ohio,
586-421-1639
586-532-0700
American Security Financial
Leeann Simpson, Cynthia Ruiz
1501 F St, Modesto, CA 95354
Arizona, California, Nevada, Oregon
209-544-3164
209-593-5713, 209-593-5722
First Universal Financial, Inc
Concha Taylen
8630 Technology Way Ste C, Reno, NV 89521
Arizona, California, Idaho, Nevada, Oregon
775-850-1070
775-850-1080
Primary Residential Mortgage Inc.
Al Norman
126 Wilshire Blvd Ste 160, Casselberry, FL 32707
Alabama, Florida, Georgia, Mississippi
407-622-2020, 866-310-3999
866-208-9185
First Florida Financial Group, LLC
Ashley Cochran
907 Jennifer Ln, Fort Myers, FL 33919
Alabama, Florida, Georgia, Mississippi
239-206-1115
954-919-6330
American Eagle Mortgage
Joe Kowalczyk
1505 Tamiami Trail S #401A, Venice, FL 34285
Florida
941-496-9800
941-492-6300
Kinetic Mortgage Group
Lilliam Fernandez
5300 NW 77 Court, Doral, FL 33166
Florida, Alabama, Georgia, Mississippi
305-592-9265
305-592-1782
Security One Mortgage Corp
Valerie Jones
1051 Winderley Place Ste 100, Maitland, FL 32751
Florida, Alabama, Georgia, Mississippi
407-681-9800
407-681-9877
1st Lending Solutions, inc
Alan J. Vogan
6370 Magnolia Ave Ste 350, Riverside, CA 92506
Arizona, California, Nevada, Oregon
951-684-3307
951-684-3962
Ace Mortgage Funding, LLC
Jeremiah Wean
7820 Innovation Blvd Ste 300, Indianapolis, IN 46278
Arkansas, Alabama, Alaska, Arizona, California, Colorado, Connecticut, Washington D.C., Delaware, Florida, Georgia, Hawaii, Idaho, Iowa, Illinois, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Maine, Minnesota, Michigan, Missouri, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Hampshire, New Jersey, New York, Nevada, Ohio, Oklahoma, Pennsylvania, Puerto Rico, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, West Virginia, Wyoming
317-246-5740
317-227-2684
Edwards Mortgage LLC
Erich Edwards
210 E Mount Vernon St, Nixa, MO 65714
Colorado, Iowa, Kansas, Missouri, Nebraska, Oklahoma
417-724-0300
417-724-0329
Tandem Mortgage
Rita Moskalenko
19520 Nordhoff St Ste 7, Northridge, CA 91324
Arizona, California, Nevada, Oregon
818-700-6300
818-993-9914
HomeTeam Equity, LLC
Quita Williamson
670 N Orlando Ave Ste 1003, Maitland, FL 32751
Alabama, Florida, Georgia, Mississippi
407-599-6888
407-599-6889
Allied Home Mortgage Capital Corp
Michael Huffman
858 Cherry Rd, Rock Hill, SC 29732
South Carolina, Tennessee
803-619-5251
803-948-0264
Southwest Funding
Rich Juge
15280 Addison Rd Ste 120, Addison, TX 75001
Arkansas, Louisiana, New Mexico, Oklahoma, Texas
972-485-5300, 866-594-9200
972-485-5301
American Capital Financial
D.J. Davenport
1905 Sherman St Ste 810, Denver, CO 80203
Colorado, Kansas, Nebraska, New Mexico, Utah, Wyoming
303-830-2208
303-830-2213
Red Brick Mortgage/ Artisan Mortgage, LLC
Sherod McGuire
9101 Antares Ave, Columbus, OH 43240
Indiana, Kentucky, Michigan, New York, Ohio, Pennsylvania, West Virginia
614-785-9900 x123
614-802-3010
ARISE MORTGAGE LLC
Julia Sotomarino
15800 Crabbs Branch Way Ste 120, Rockville, MD 20855
Washington D.C., Maryland, Delaware, North Carolina, New Jersey, Pennsylvania, Virginia, West Virginia, Virginia
301-978-9722
301-978-9726
Regal Lending Group Inc
Ana Young
5220 S University Drive Ste C-201, Davie, FL 33328
Alabama, Florida, Georgia, Mississippi
954-680-5650 x308
954-323-5093
Saab Financial Corp DBA Saab Mortgage
Kathy Saab
2070 Chain Bridge Rd Ste G3, Vienna, VA 22182
Washington D.C., Maryland, Delaware, North Carolina, New Jersey, Pennsylvania, Virginia, West Virginia, Virginia
703-288-0777
703-288-0300
SD County Financial, Inc.
Mark Revetta
860 Jamacha Rd Ste 208A, El Cajon, CA 92019
Arizona, California, Nevada, Oregon
619-889-6275
619-334-7790
Nunez Corporation / Lender Name: Professional Mortgage
Bo Nuñez
2101 S Bristol St, Santa Ana, CA 92704
Arizona, California, Nevada, Oregon
714-436-9990
714-436-9991
American Pacific Mortgage Dba Beaver Mortgage Services
1. Kristin M. Eklund, 2. David Kimmer, 3. Don Beazely
3309 SW Arrowood Drive, Portland, OR 97219
California, Idaho, Nevada, Oregon, Washington
Eklund: 503-768-9270, Kimmer: 503-780-7783, Beazely: 503-780-7783
503-452-4140
1st Alliance Lending, LLC
John DiIorio, Huong Do
111 Founders Plaza Ste 1102, East Hartford, CT 06108
Connecticut, District of Columbia, Delaware, Massachusetts, Maryland, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia
866-546-7298
860-289-0557
American Bancshares Mortgage Corporation
John Cosculluela
14211 Commerce Way Suite 100, Miami Lakes, FL 33016
Alabama, Florida, Georgia, Mississippi
305-817-2160
Stateline Funding Incorporated
Debbie Arthur
1401 Hillshire Drive #150, Las Vegas, NV 89134
Arizona, California, Idaho, Nevada, Oregon, Utah
702-871-7800
JMO, Inc.
David Connelly
27290 Madison Ave Suite 205, Temecula, CA 92590
Arizona, California, Nevada, Oregon
Priority Partners Lending Group
Anthony Lombardo
15005 Telegraph Rd Ste 201, Flat Rock, MI 48134
Illinois, Indiana, Michigan, Ohio
951-296-1234
Del Sol Financial Corporation
Joe Del Sol
251 North Avenue W 3rd Floor, Westfield, NJ 07090
Connecticut, District of Columbia, Delaware, Massachusetts, Maryland, New Jersey, New York, Pennsylvania, Rhode Island, Virginia
Chesapeake Residential Finance Corp.
Bill Hicks
4275 Hawthorne Rd, Indian Head, MD 20640
District of Columbia, Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia
301 743 6622
301-743-6623
NorthStar Mortgage Group
Sue Botelho
543 Harbor Blvd Ste 102, Destin, FL 32541
Alabama, Florida, Georgia, Mississippi
850-424-6866
850-424-6873
Strydio Mortgage Corporation
Sarah D. Cabrera
6435 Coral Way, Miami, FL 33155
Alabama, Florida, Georgia, Mississippi
305-266-1190
305-266-1055
OrlandoHomeMortgages.com, Inc.
Jeffery Perdue
4725 S Orange Ave, Orlando, FL 32806
Florida
407-816-3863, 888-511-6060
407-209-3582
Liberty Residential Mortgage
David D McElroy
5151 Belt Line Rd Ste 600, Addison, TX 75001
Arkansas, Louisiana, New Mexico, Oklahoma, Texas
214-830-9078
866-380-3988
Net Rate Mortgage Inc.
Rich Mitchell
108 4th Ave S, Safety Harbor, FL 34695
Alabama, Florida, Georgia, Mississippi
727-796-7200 x211
727-796-7205
Equilliance LLC
Adriana S. Gibbs
3501 Quadrangle Blvd Ste 100, Orlando, FL 32817
Alabama, Florida, Georgia, Mississippi
888-682-6556
407-470-1771
All Western Mortgage
Lisa Walters
5580 W Flamingo Rd Ste 106, Las Vegas, NV 89103
Arizona, Idaho, Nevada, Oregon, Utah
702-369-0905 x251
702-253-0630
Brown Lending Group Inc
Adelheide Dixon
2033 N University Dr, Sunrise, FL 33322
Alabama, Florida, Georgia, Mississippi
954-326-0904
954-318-4004
Washington Capitol Financial Corporation
Tony Scardelletti
1700 Research Blvd Ste 210, Rockville, MD 20850
District of Columbia, Delaware, Maryland, North Carolina, New Jersey, Pennsylvania, Virginia, West Virginia
301-309-0084
301-309-8953
Interstate Mortgage Service
Ryan Ingram
4135 S Power Rd Ste 133, Meza, AZ 85212
Arizona, California, New Mexico, Nevada
480-926-1118 ext.101
480-926-8557
Great Western Financial Group, Inc.
Joe Mueller
41391 Kalmia St Ste 300, Murrieta, CA 92562
Arizona, California, Nevada, Oregon
951-696-4401 x207
951-696-4413
Top Flite Financial
Steve Tardiff
22705 Northline Rd, Taylor, MI 48180
Illinois, Indiana, Michigan, Ohio
734-287-5962
734-287-6407
WCS Lending, LLC
Miles N. Rosenthal
6501 Congress Ave 3rd Floor, Boca Raton, FL 33487
Alabama, Florida, Georgia, Mississippi
561-864-2562
561-864-2662
Mortgage Services, Inc
Ronald A. Giannamore
193 Grand St 2nd Floor, Waterbury, CT 06702
Connecticut, Massachusetts, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont
800-922-3210
203-841-2513
Universe Financial Corp
Alex Bejerano
2530A SW 87th Ave, Miami, FL 33165
Alabama, Florida, Georgia, Mississippi
305-557-0507
305-557-4646
Capital Mortgage Finance Corp.
Jim Nixon
6310 Stevens Forest Rd, Columbia, MD 21046
District of Columbia, Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia
800-836-6670
443-656-0232
Skofed Mortgage Funding Corporation
Brenda Bloomer
2610 S Jones Blvd Ste 1, Las Vegas, NV 89146
Arizona, California, Idaho, Nevada, Oregon, Utah
702-362-2626
702-362-2169
Melody Mortgage, LLC
Ken Ziehm II
2 Winnhaven Dr, Hudson, NH 03051
New Hampshire
603-886-1980
603-883-9528
Grewal Mortgage Company
Christie Lo Iacono
3120 Pine Tree Rd, Lansing, MI 48911
Michigan
517-393-3400 x323
517-393-1488
Group Capital Mortgage, Inc
Sandra Mosley
18000 Studebaker Rd Ste 795, Cerritos, CA 90703
Arizona, California, Nevada, Oregon
562-207-6840 x550
562-207-6858
Affinity Home Loans, Inc
Heidi Lawler
10650 Treena St Ste 103, San Diego, CA 92131
Arizona, California, District of Columbia, Florida, Michigan, Nevada, Oregon, Virginia
866-365-6428
858-764-2835
Flagship Financial Group
Peter Brown
1349 Galleria Drive Ste 110, Henderson, NV 89014
Arizona, California, Idaho, Nevada, Oregon, Utah
702-476-9000
702-982-4367
Kaiser Financial Services
Roger Chandler
7290 Engineer Rd Ste B, San Diego, CA 92111-1413
Alaska, Arizona, California, Colorado, Florida, North Carolina, Nevada, Oregon, Tennessee, Washington
858-751-0700 x104
858-751-0744
Black Mountain Community Bank
Claude Rosenthal
1700 W Horizon Ridge Parkway #101, Henderson, NV 89012
Arizona, California, Idaho, Nevada, Oregon, Utah
702-990-5920
702-990-5950
Mortgage House, Inc.
Ferry Ajdari
6351 Owensmouth Ste 102, Woodland Hills, CA 91367
Arizona, California, Nevada, Oregon
818-227-0922, 800-645-1301
818-227-0911
Peoples Mortgage Inc.
Jeff Ocasio
309 Little Grove Lane, North Fort Myers, FL 33917
Florida, Kentucky, Tennessee, Indiana, Kentucky
239-652-6800
239-652-0600
Mortgage Source Lakeland
Trina Kingery
4732 U.S. Highway 98 North, Lakeland, FL 33809
Alabama, Florida, Georgia, Mississippi
863-858-6700
CasaBanc Mortgage Corp.
Janye Seppinni
17870 Skypark Circle #106, Irvine, CA 92614
California, Arizona, Nevada, Oregon
949-681-7280
949-681-7290
Primary Residential Mortgage Inc.
Vonda Allen
2201 South W S Young Dr Ste 104C, Killeen, TX 76543
Arkansas, Louisiana, New Mexico, Oklahoma, Texas
254-554-7764
254-554-7765
United Capital Financial, Inc.
Ruben B. Gonzales
8560 Vineyard Ave, Rancho Cucamonga, CA 91730
Arizona, California, Nevada, Oregon
909-980-4611
909-495-1961
Topline Mortgage Solutions
Bonita Turner
102 E Cary St, Richmond, VA 23219
District of Columbia, Delaware, Kentucky, Maryland, North Carolina, New Jersey, Pennsylvania, Tennessee, Virginia, West Virginia
804-225-9566
804-225-9266
M2 Lending Solutions
Chris Murphy
2000 S Colorado Blvd, Tower One Ste 1-3400, Denver, CO 80222
Colorado, Kanasas, Nebraska, New Mexico, Utah, Wyoming
720-529-1880 x12
720-529-1880
Progressive Lenders Inc
Bernard Cohen
12490 NE 7th Ave Ste 201-202, North Miami, FL 33161
Alabama, Florida, Georgia, Mississippi
305-895-6055
305-895-6056
Direct Access Lending
Dennis Thomas
650 White Drive Suite 200, Las Vegas, NV 89119
Arizona, California, Idaho, Nevada, Oregon, Utah
702-617-9900
702-617-9970
APMC dba TreeHouse Mortgage Group
Lorisa M. McKelvey
451 Washington St, Monterey, CA 93940
Arizona, California, Nevada, Oregon
734-782-5626
Delta Home & Lending Inc.
Mark Anya
931 Howe Ave Ste 101, Sacramento, CA 95825
Arizona, California, Nevada, Oregon
916-565-3856
916-848-3359
Patriot Home Funding, Inc.
John Seybert
101 Wymore Rd Ste 320, Altamonte Springs, FL 32714
Alabama, Florida, Georgia, Mississippi
407-389-5132, 866-701-4346
321-281-4725
All Western Mortgage
Emelie Maybrook
5580 W Flamingo Rd Ste 106, Las Vegas, NV 89103
Arizona, California, Idaho, Nevada, Oregon, Utah
702-369-0905
702-974-1973
Sky Valley Financial, Inc.
Mitchell Chernock
1090 Adams St Ste L, Benecia, CA 94510
California
707-745-9600, 800-557-9944
707-748-5960

SPOTLIGHT ON THE BRIGHT SIDE OF THE MORTGAGE MARKET

I read this article today by syndicated columnist Kenneth R. Harney and felt that those of us that need to see the glass as half full would appreciate this interesting perspective on the current real estate market.

"Credit squeeze, credit freeze, credit-system seizures: Everybody knows how severe and painful the global financial breakdown has been, with banks unwilling to lend even to other banks. But what about mortgages and real estate? Can you still get a home loan with less than a 20 or 30 percent down payment? Or with a credit score below 720? Absolutely.

It would be a big stretch to label housing the sunny side of the market at the moment, but there's a lot more light there than in most other financial sectors. Consider these facts:

• There is no shortage of money for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because the mortgage market effectively has been federalized — at least for the time being. More than 90 percent of new loans now are being made through the Federal Housing Administration (FHA) insurance program, plus Fannie Mae and Freddie Mac. FHA is owned by the federal government, and Fannie and Freddie are operating under federal conservatorship. All three have unfettered access to global capital markets at rock-bottom costs because their borrowings are fully guaranteed by the Treasury. Ginnie Mae, which is FHA's pipeline to the bond market, recorded an all-time high of $29 billion in new mortgage-backed securities issued in August.

• Loan terms and credit underwriting standards have been toughened up, but you can still put down 3 percent (3.5 percent after Jan. 1) on an FHA-insured mortgage and 5 percent on certain Fannie Mae and Freddie Mac loan programs with private mortgage insurance. FHA's credit standards are generous and forgiving; the agency exists to help people with less-than-spotless credit histories. Fannie Mae and Freddie Mac have raised their credit-score requirements over the past year, but buyers and refinances with scores in the upper 600s can still qualify for loans having reasonable rates and fees.

• Despite the global financial system's quakes, mortgage rates not only remain low by historical standards but have actually declined. For the week ending Oct. 8, according to the Mortgage Bankers Association, average 30-year fixed rates nationally dropped to 5.99 percent, and 15-year mortgages averaged 5.71 percent. Freddie Mac said 30-year rates dropped to 5.94 percent.

• Maximum loan amounts through FHA, Fannie and Freddie in high-cost local markets on the West and East coasts, such as Seattle, continue to be $729,750 through December. In January, the high-cost maximum is projected to dip to approximately $625,000.

• Home prices — pushed by foreclosures and short sales — have rolled back to 2003 and 2004 levels or lower in many former boom markets. As a result, buyers are coming off the sidelines, making offers and writing contracts. The pending home-sales index jumped by 7.4 percent based on purchase contracts signed in August, according to the National Association of Realtors.
The heaviest increases — pointing to higher closed sales in the coming two to three months — were in California, Florida, Nevada and the Washington, D.C., area. Housing and mortgage leaders say consumer worries about the stock market have obscured positive developments in real estate, where pricing pain and downsizing have been facts of life for 2-½ years.

David Kittle, president and CEO of Principle Wholesale Lending and incoming chairman of the Mortgage Bankers Association, says, "the mortgage market has never shut down" despite the global financial crisis. Money is "clearly available as long as you can qualify for it" with at least a modest down payment and decent credit history," Kittle says. Matt Vernon, a national retail mortgage-sales executive for Bank of America, said, "We've got more than enough liquidity" to handle mortgage demand. "We are open for business." Most of the bank's production is now funded through FHA, Fannie and Freddie.

On the front lines, mortgage-company owner Jeff Lipes, president of Family Choice Mortgage near Hartford, Conn., says: "I don't think consumers really know how free-flowing capital is right now in the residential mortgage market. There are no shortages, no breakdowns. People ought to be aware of that." Bottom line: Scary as the news has been about stocks and banks, this is not the case for mortgages. Besides shopping at large national lenders, check with local banks and credit unions that may be originating loans for their own portfolios — not for Fannie, Freddie or FHA. Many of them are healthy, have cash to lend and may be surprisingly competitive on terms and rates with the big boys.

Kenneth R. Harney: kenharney@earthlink.net
Copyright © 2008 The Seattle Times Company

Part II: 2008 Economic & Housing Report Presented by Gary Watts, Real Estate Economist

THE SUB-PRIME AND PRIME LOAN MARKET

Today’s various media outlets play up bad economic news more than ever, which leads to misconceptions about economic reality. In dealing with the news about sub-prime loans, they have greatly over-exaggerated the true situation. David Wyss, chief economist at Standard & Poor’s in New York said on January 4, 2008: “You look at the magnitude of the sub-prime problem, and it’s just not that big relative to the size of the economy or the financial market.”

It may surprise you to know that including Alt-A loans (less than prime but better than sub-prime) with sub-prime loans only makes up 13.1% of mortgage market.

Market Share of Loans: Sub-Prime Prime Loans FHA/VA
Fixed ARMs Fixed ARMs

U.S. 6.3% 6.8% 63.1% 14.5% 9.3%
California 15% 83% 2.0%


Delinquencies – 3rd Quarter Findings:

A delinquency in a mortgage payment occurs when just one monthly payment has been missed. In California, 21% of the loans that are delinquent are non-owner occupied home loans. The U.S. average is 13%.

Sub-prime: Fixed & ARMs Prime: Fixed & ARMs FHA VA Combined

U.S. 16.31% 3.12% 12.92% 6.58% 5.59%
California 12.6% 14.20% 1.00% 3.25%(2Q)

Notice that the combine d rate of delinquencies for all loans in the U.S. is 5.59%. The media never asks, “What was the all-time low delinquency rate?” The answer is 4.0%, which occurred in the 4th quarter of 2005! Also notice that 84% of sub-prime buyers have never missed a payment!

Notices of Default – 3rd Quarter Findings:

Notices of Default are filed when lenders’ loans have been delinquent for a specific period of time. This begins the foreclosure process. Most of the rise in this process is due to Florida, Ohio, Michigan, and California loans.

Sub-prime: Fixed & ARMs Prime: Fixed & ARMs FHA VA Combined

U.S. 1.38% 4.72% 0.22% 1.02% 2.22% 1.03% 1.69%
California Figures for California could not be found

Although the four states of California, Florida, Nevada, and Arizona currently have the largest amount of loans in foreclosure, in the 1st quarter, 24 states saw a decline in foreclosure starts. By the 2nd quarter, 36 states saw a decline. California and Florida hold 28.1% of all sub-prime ARMs, yet 33.7% are in the foreclosure process.

The media will report that 72,571 notices of default were filed in the 3rd quarter – a new record for California, surpassing the 1st quarter of 1996 with 61,541 filings. Nowhere do they say that since that time, California has built 2 million more homes and condos. By the way, those filings were on 68,746 properties.

Foreclosures – 3rd Quarter Findings:

Foreclosures occur when the buyer has been unsuccessful in curing the debt, and either a lender or an investor has acquired the property.

Sub-prime Prime: Combined vs. 2006

U.S. 3.12% 0.79% 1.45% 1.09%
California n/a n/a 2.08% 1.17% (2Q)

Sub-prime adjustable loans represent only 6.8% of the market, yet they create 43% of all foreclosures. Over the past 20 years, the average foreclosure rate in the U.S. has been 1.09%. The lowest foreclosure rate ever was 0.86%. In California, 54.6% of homeowners emerge from the foreclosure process by bringing their payments current, refinancing, restructuring their loan or successfully selling their home and paying off what they owe.

Last year, 43 states had fewer foreclosures in 2007 than in 2006. Only 7 states have a foreclosure problem. One third of all foreclosures come from just two states – California and Florida. The other two thirds come from Nevada, Arizona, Indiana, Michigan, and Ohio.

Reasons for Foreclosure:

The #1 reason: Fraud and/or Speculation! As of 12/1/07, the FBI reported 46,717 cases of mortgage fraud. As of 8/30/07, California investors (those not living in the home) represented 21% of the loans in default. In Nevada, the number is 33%, Arizona is showing 26%, and Florida has 25%.

The #2 reason: Unethical Lending! The government has enacted new standards for lenders including more education and licensing. New Truth in Lending guidelines are being put in place and so far 21 states have enacted new rules and regulations, including California.

The #3 reason: Loss of a Job, Medical Problems or a Change in Marital Status

Financial Support for Housing:

Since housing is so important to the overall economy, it will always receive help when things go wrong. Today, lenders are modifying existing loans to prevent foreclosure. Other lenders are not adjusting the interest rates upwards when the rollover period comes due. Congress has passed legislation allowing Freddie Mac and Fannie Mae to buy more sub-prime loans. FHA may raise their loan limits and cut in half, the down payment. The Federal Reserve has reduced the discount rate, and is pumping money into the credit markets. The European banks put $400 billion dollars into the credit markets in December. Investment firms, private equity companies, giant bond companies, and hedge funds are all planning on buying up delinquent mortgages. The big money houses have pretty much written off their bad loans’, getting ready to institute new underwriting standards, and will once again enter the home lending business.

(Source: Mortgage Bankers Association, Federal Reserve, FBI, Inside Mortgage Finance, U.S. Congress, and DataQuick Information Systems)

2008 Economic & Housing Report Presented by Gary Watts, Real Estate Economist

The following are the notes provided by Gary Watts to attendees to share with their clients. He feels that only as buyers and sellers are knowledgable about the market will the market start to improve. His first comments included "If you don't have to sell, then get off the market!"

FACTORS EFFECTING AND AFFECTING HOUSING

The Economy:

Over the past 12 months, our economy grew at a very healthy rate of 2.8% and creted a $11.52 trillor dollar economy. Since 2003, the U.S. has created over 5 million new businesses and almost 8.3 million new salaried jobs - employing 1.3 million more people over the past year. Add the 16 million self-employed and the 25 million part-time workers, and you can see why the government has received a lot of extra tax revenue this last year. Last year our government projected a deficit of $177 billion dollars. that would have been a 28.7% reduction from the previous year's budget. As the government's fiscal year came to an end, the deficit was only $162.7 billion dollars.

Since 1980, the Gross Domestic Product has risen 70% and helped to shrink our federal deficit. Today, our national debt is less than 1.2% of the GDP, compared with 6.0% in the 1980s and 4.7% in the 1990s. this current percentage level of 1.2% is below the 40 year average.

Corporate Profits:

The 3rd quarter numbers showed that U.S. corporations are still doing very well. They now have 21 straight quarters of double digit earnings, and corporate profits are running at an annual rate of $1.62 trillion dollars. These profits have almost doubled during the past 5 years.

Financial Corporations:

The media only talks about their huge write-downs due to the sub-prime crisis, and fails to mention that the majority of these financial companies still have surprisingly strong cash flows, and continue to pay big dividends. Since the market has already driven down their share prices, they have very little to lose by writing off any potentially bad loan. These write-offs include bad: business loans, credit cards, leasing contracts, currency fluctuations, bond devaluations, collateralized debt obligations, structured investment vehicles, mortgages, and failed mergers. If they hold these securities to maturity, they will likely get 98 cents on the dollar.

During the 3rd quarter of 2007, banks took write-downs of $43 billion dollars, yet they still made a net profit of $28.7 billion dollars - even after putting aside reserves (a 20 year high) for more potential loan losses. Here is a look ats some of the larger banks' profit positions (in billions) from the 3rd quarter; Citigroup: $2.38; Bank of America: $3.7; JP MOrgan Chase: $3.4; Wells Fargo: $2.8; Morgan Stanley: $1.54; and Goldman Saks: $2.85

(Source: Bureau of Labor Statistics, Bloomberg, Bureau of Economic Analysis, Federal Reserve)

Income Growth:

In 2006, the IRS reported that wage earners in the U.S. had their highest income growth in 5 years, and that personal income grew more rapidly than spending in 2007. Since the housing slowdown began two years ago, personal income has risen 7% leading to a $1.35 trillion dollar rise in the nation's income.

Employment:

December marked the 52nd consecutive month of job growth - this is the longest period of uninterrupted job growth on record. Over the past year, 1.3 million new jobs were created and the current unemployment rate is at 5.0%. Since 3% of the population won't work, even if you give them a job, we are near full employment. for 2007, the unemployment rate averaged 4.6%, the same as 2006.

Interest Rates:

Current conforming rates for mortgages are within 3/4 of a percent of historical lows. Last summer, rates rose to 6.75%, but by the end of the year they had fallen into a range of 5.75% to 6.12%.

With the benchmark 10-Year Treasury trading around the 4% range, interest rates for home mortgages should be around 5.5%. The reason they are higher is the lenders are still adding extra basis points for the fear premium.

Lending:

The financial markets have been in turmoil since summer. This was largely due to an over reaction in the subprime market, whereby financial institituions had bundled all types of loans into mortgage-backed securities. With investors not knowing exactly how much of their portfolio was sub-prime, they panicked and pulled the plug on additional funds being available for mortgages. As the investors either put on hold or adjusted their lending criteria, the whole landscape of lending changed.

(Source: Federal Reserve, U.s. Treasury, U.S. Bureau of Labor, IRS, Mortgage Bankers Association)

South Orange County Real Estate Blog

It is February and properties are coming on the market when our old inventory is still sitting. This is going to make a really tough Spring unless the economoy bounces back with a flourish. Homeowners please note, the old rules don't apply right now. Putting your home on the market now for it to sell by May is not the way this market is moving - unless of course you have priced your house based on 2004 comps. Sellers do not want to hear this news, but please wake up and take note. If you don't have to sell, DON'T! Get your property off the market. There are way too many real estate agents out there that are not being honest with you. They want the listing and will tell you whatever you need to hear. Agents are even letting sellers set the sales price. Why bother with an agent if you are not going to take their advice?

Our preview sheet this week there were 48 listings; 20 in Dana Point, 2 in Laguna Niguel, 19 in San Clemente, and 7 in San Juan Capistrano. If you are looking for a large flat lot with a quaint New England feel and beautiful gardens, there is just the property for you in San Juan Capistrano, 4 bedrooms, 3 baths with about 3,000 square feet on the market at $1,345,000.

In San Clemente's newer community of Talega there is a bank owned property with a huge backyard that has a canyon/hills view in the neighborhood of Farralon Ridge. The home has 3 bedrooms, 2.5 baths with approximately 2,000 square feet - it is listed at $761,000!

There are a number of new listings or re-listed listings in Southwest San Clemente. Unfortunately, many of these remain over-priced for today's market. One listing has been on the market for over 8 months and the price has still not been adjusted.

L.A. Times Article On Real Estate Agent Blogging

In today's L.A. Times, author Ann Brenoff, Times Staff Writer talks about agents blogging. The article goes onto say that working with an agent that doesn't blog is a disadvantage, since you can get to know an agent and their personality by the flavor of the blog. Many agents are blogging, but it is really difficult to keep up. Life has so many ups and downs and dedicating to writing about property when the market is slow takes alot of creativity.

A great super new construction property is just about ready for sale listed at $4.4 million in San Clemente. The homes boasts 6 bedrooms and 6.5 baths in about 5,800 square feet. What is so amazing about this property is the attention to detail as well as the spectular views that the home has been built around. It is currently bank owned and as they say today "make us an offer".

There is a nice roomy family home on the market in Capistrano Beach with 4 bedrooms, 4 baths at a little over 2900 square feet for $1.15 million. Recent remodel and the owners are relocating out-of-state. The home has a room addition over the garage built out for a mother-in-law with kitchenette and ocean view balcony. Well done and maintained off of Camino Capistrano.

Great listing up in Richmond Pointe with sitdown ocean views. This is a 3 bedroom, 2.5 bath with approximately 1800 square feet on the market for $875,000. This is a wonderful kid-friendly neighborhood.

The deals are out there we just need buyers to realize this is a fabulous time to buy!

Tax Break for Mortgage Debt Forgiveness

Just a reminder that President Bush signed into law the end of last year, a new measure that gives tax breaks to homeowners who have a mortgage debt forgiven. Prior to this new measure, if your lender forgave part of your debt under a short sale or refinance, you were responsible to pay income tax on that debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does NOT have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.

This tax break applies to debts discharged from January 1, 2007 until December 31, 2009. This applied to principal residences up to $2 million for refinances. To read the full text of this Act, go to http://www.govtrack.us/congress/bill.xpd?bill=h110-3648

Real Estate Update: San Clemente, Dana Point, San Juan Capistrano and Laguna Niguel

Welcome to the new year and what our local area real estate has to offer. Broker preview is back for the new year and there were a total of 39 properties on the preview sheet for this week. Of these listings, 14 of the properties have been on the market for over 30 days - which means these are repreviews, trying to generate interest in a property that might have been overlooked - or was overpriced and has gone through a price adjustment recently.

Dana Point had 7 properties on preview this week, all single family residences with 2 properties having been on the market for over 30 days. One very interesting property to note is a new listing from my office, Keller Williams OC Coastal. This is a property on the bluffs in Capistrano Beach with fabulous ocean views. It is legally two lots, with a house on one. There are a multitude of options with this property and it has not been on the market for over 40 years. The current list price is $5,565,000 - but the agents say "make us an offer". If you have been looking for great ocean views on the bluff - you can't afford to miss this one.

Laguna Niguel only had one condo on the preview sheet this week, its a 1 bedroom, 1 bath with 747 square feet for an unbelievable price of $249,000! It seems the owner started to remodel - and never finished so it needs work, but what a deal less than two miles to the beach!

San Clemente had 23 listings on the sheet this week with only 3 of these being condos. One property in Talega is a short sale in the neighborhood of Seaside. It's amazing how there are still new properties coming onto the market that are overpriced for the current market conditions. One really cute single level detached home in New Providence is just adorable with 2 bedrooms and 2 baths with less than 1,000 square feet. This would be a great starter home or a move down for empty nesters and it even has ocean views! Another single level home to note is in the Broadmoor track (above from San Clemente H.S.) This is a 4 bedroom, 2 bath home with loads of potential. It has an end of cul-de-sac location with a nice rear yard and lots of privacy. One property that was on a repreview is on Avenida Salvador with great views! The price on this one has been reduced $200,000 so it is starting to come into line. Shows very well with 3 bedrooms and 3 baths in 2400 square feet - it has already been done so it is in move-in condition. There was also a very noteworthy property on preview this week in Sea Pointe Estates. It has 4 bedrooms and 3.5 baths in 3800 square feet of custom Italian delight! It is extremely tastefully done with so much attention to detail. It is on the market for $1,995,000.

Only five properties in San Juan Capistrano this week with three of them having been on the market for over 30 days. One condo in Captain's Hill has recently been staged and is a great 3 bedroom, 2.5 bath unit that shows beautifully. This one should have sold! An add-on listing in San Juan is a horse property on 3 acres off Ortega Highway with a 4 bedroom, 4.5 bath, 3000 square foot home. Property has 4 stall barn and is on the market for $2.7 million.

A Tall Ship In The Distance From The Bluffs On Camino Capistrano

On a grey and foggy morning during broker preview, this tall ship was spotted on the horizon from the rear yard of a property on Camino Capistrano.

South Orange County Real Estate Update

Well, I haven't been on blogging for the past several weeks for a couple of great reasons. First, my 9 year old doberman Deon, broke his femur on December 9th, so everything else was on a temporary hold due to his hospitalization and surgery. Then Christmas was upon us, and the market comes to a grinding halt. Then the New Year, and now kids are back at school and life resumes.

The market trends statistics are out on December 2007. The good news is that our inventory is shrinking in San Clemente, Dana Point, San Juan Capistrano, and Laguna Niguel. With current inventory numbers for each of these areas being closer to the inventory we started the year with. Obviously, pendings and solds are down with closed sales representing only around 5% of the current inventory for the month. This is low, but it is some activity with a total of 92 closed sales in these four communities. Market analysts are predicting that sales will continue to be slow for the first quarter of 2008, with some market recovery happening here locally come the later part of March 2008.

There are still some really great real estate opportunities in the marketplace and if you are looking for what is still considered a great investment, now is the time to enter the market since I don't think we will see prices this low again.

San Clemente Real Estate Blog

There were only forty-one properties on the South Area Preview Sheet this week and many were re-previews of listings that have not sold. Since it is not humanly possible to see all of the listings on preview every week, you have to choose, and from my selection, I blog on what was interesting and/or great deals.

In Dana Point this week there is a new listing for a 2 bedroom, 2 bath condo with really great ocean views. This is on the pricey side, but shows like an "artists" getaway. A little funky and you need good knees for all of the stairs, but worth seeing.

For seniors, a new listing in Sea Bluffs at Dana Point has recently come on the market. This two bedroom, two bath unit has wonderful ocean views. This is a single level condo within a full-service retirement community. There is a monthly clubhouse fee of $2,640 which covers utilities, maintenance, housekeeping, two meals per day, insurance, parking, security, transportation, etc.

San Clemente had several new listings that were noteworthy this week. A new listing in Forester Highlands for a 5 bedroom, 2.75 bath home with 3000 square feet. The home is nicely done and has great curb appeal.

There are several new listings in the Vilamoura condo development in Rancho San Clemente. All units that were on the preview sheet this week were 2 bedrooms with either 2 or 2.5 baths. They ranged in price from a low of $499,000 to a high of $749,500 for an end unit with an ocean view.

Another great condo property in Ocean Hills came on the market and this unit has just been redone - it shows like new and has fabulous ocean views for a 3 bedroom, 2.5 bath unit.

I previewed two great homes that just have a ton of potential - both in Southwest San Clemente. The first is a 4 bedroom, 3 bath with approximately 3000 square feet that backs onto the coastal canyon with an amazing feel. This property has so much potential for the right buyer who can enjoy and appreciate a part of San Clemente many don't even know exists. The mature trees and creek running by lend a very serene and relaxing atmosphere with wonderful decks to take it all in.

The second noteworthy home is also located in Southwest San Clemente and is a 3 bedroom, 3 bath single level home with 1800 square feet. This home shows like a staged property and the attention to detail is amazing. Behind the detached over-sized garage is a small studio that is detached and would make a great office/studio and playhouse. The large grassy yards, front and rear lend themselves to children or dog play or the house can be expanded. This has loads of potential and feels great!

San Clemente Real Estate Blog: November 2007 Update

The November 2007 market trends reports are in and are based on data and/or estimates provided by the Southern California MLS (Multiple Listing Service). I will review this data by city.

San Clemente active real estate listings continue to be up over the same period last year. At the end of the month we had 534 active listings in the city compared to 466 for the previous year. Pending sales were down slightly being 55 in 2007 compared to 61 in 2006. And, solds were down to 44 this year over 52 for the same period last year. As you can understand the market is down, but not to the huge extent that the media wants you to believe.

Dana Point active real estate listings were also up over the same period last year, with 332 active listings this year compared to 273 for the prior year period. Pending sales were down to 27 in Dana Point over 2006 who posted 37 during the same time period. Solds were also down to 20 from 26 during the previous year's period.

San Juan Capistrano had 301 active real estate listings during November 2007 compared to 228 during November 2006. Pending sales were down to 21 from 35 during the same period the previous year. Solds were down slightly to 23 from 27 during 2006.

Our inventory is slowly shrinking which is what it needs to do to help the market recover. I continue to hear the experts predicting that by the 2nd quarter of 2008, we will start to see prices start in increase and the market here locally recover.

San Clemente Real Estate Blog

I took a peek today at the MLS to see what the activity has been in certain communities in San Clemente. For instance, in Talega as of today, there are 162 active listings. 31 of these are condos and the remaining 131 listings are single family residences (SFR). On the low end with price, a two bedroom, two bath condo with 1358 square feet is on the market for $419,999 - while on the high end, the pricest home is listed at $2,899,000 with 5633 square feet, 5 bedrooms and 5.5 baths.

This indicates that the real estate inventory in Talega is slowly shrinking. At the beginning of November, there were 183 properties in Talega on the market. Average list prices for condos is in the low $600,000's while for SFRs, the average list is in the $1.2 million range. It is still taking on average over 80 days to sell.

This time of year the market usually picks up slightly for those corporate transfers that want to be in place by the beginning of the new year. This is also an excellent time to pick up good deals since homeowners are usually motivated to sell.

San Clemente Home Sales Statistics- October 2007

Recently released statistics from DataQuick Information Services comparing home sales for October 2007 with sales from October 2006 show that sales volume for this time period is down in our two zip codes 92672 and 92673 of only -6.5% Statistics for Dana Point's two zip codes vary from -10.3% for zip code 92629 and -57.1% for zip code 92624. Sales volume in San Juan Capistrano was also down -38.1% for the same time period. These statistics reflect resale houses, condominiums, and new home sales.

The median sales price in San Clemente zip code 92673 was up 6.4% to $965,000 while in zip code 92672 the median sales price dropped -32.5% to $691,500. Median sales prices in Dana Point were only down slightly with zip code 92624 being down. -0.5% to $920,000 and zip code 92629 down -4.1% to $839,500. The median sales price in San Juan Capistrano was up 65.9% to $962,500.

What these statistics show is that we are in a fluctuating market, but the news is not as grim as the major media want you to believe. If you have to sell now, than you have to sell. But this is one of the best buyer's markets we have seen in recent years. Whether for investment, or a move - up or down, now is a great time to be shopping real estate.

San Clemente Real Estate Blog

This past Tuesday the Office of Federal Housing Enterprise Oversight (OFHEO) announced that it will keep conforming loan limits at the current level of $417,000 for single-family mortgages in 2008. The conforming loan limit determines the maximum size of a mortgage that Fannie Mae and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan. This announcement is a huge blow to us locally since the median price of a home in California is more than 2.5 times that of the U.S. median price of $221,000.

Now is the time for citizens to contact their legislators and demand that the U.S. Senate pass legislation allowing regional adjustments to Fannie Mae and Freddie Mac and to modernize the FHA loan programs. Even despite falling home prices in many regions in the state, California still remains the nation's least affordable market for homeowners. During the third quarter of 2007, nine of the nation's 10 least-affordable communities were located in California.

San Clemente Real Estate Update 11/28/07

There are some interesting new listings and some re-previews going on this week in the South Area MLS Preview. We cover the communities of Dana Point, San Clemente, and San Juan Capistrano.

One is a new listing in Dana Point - a funky beach charmer that would make a great rental or a wonderful home for a young couple. It is a 3 bedroom, 2 bath with a single car garage (long driveway to fully accommodate another car), with approximately 1400 square feet. The decks and yard surrounding this property give you lots of entertainment room with an ocean view! There are a fair amount of stairs getting to and from so your buyer must have good knees.

In San Clemente there is a property that is now with their 4th agent and the price is getting to where is should be. A great property with beautiful ocean views. The home shows perfectly. There are upgrades galore from a stunning entry and beautiful backyard to granite kitchen counters and an ocean view balcony off the master bedroom. The sellers are now ready to move and are very motivated.

Another property of note here in San Clemente is a very cute beach charmer, 4 bedrooms, 2 baths, single car garage with 1400 square feet. There is also a cute front and rear yard large enough for dogs! The bedrooms are surprisingly roomy and the house feels larger than the square feet indicate. Well maintained and adorable that is finally getting within selling price range.

If you are looking for southwest San Clemente real estate, a new listing has hit the MLS. It is in a prime location and backs to a beautiful open space with wooded coastal canyon and ocean views. It is 3 bedrooms and 2.5 baths, with over 2800 square feet of living space. The kitchen is huge and recently remodeled. Great house as long as you do not need any yard. It is extremely cute from the outside and has a floor plan that is reversed (kitchen and living areas upstairs - bedrooms down).

San Juan Capistrano has a couple of jewels this week. A great starter house in the low $600,000 range with a pool! 4 bedrooms and 2 baths with 1562 square feet on a single level. Another charmer in San Juan is in the Capistrano Royale neighborhood. Huge lot with pool and spa beautifully landscaped. Very private and serene. Loads of upgrades and improvements on this 4 bedroom, 4.5 bath home with over 4,000 square feet including an over-sized 4 car garage!

The market continues to have its ups and downs but the overall trend is if you can buy now - you cannot beat the deals out there. Call me with any questions I look forward to being of service to you.

Reverse Mortgages: How To Better Understand Them

Although the housing market is in a slow down, one area of the mortgage market that is hot, is in reverse mortgages. This gives older homeowners more options to tap the equity in their homes. Some changes have been made to this market and many large banks and mortgage lenders have launched reverse mortgage products with lower fees and larger payouts. Some lenders have lowered the minimum age requirement to 60 from 62, while other lenders are making loans on second homes and vacation rentals. Also "jumbo" reverse mortgages on houses valued at as much as $10 million are becoming more common.

With a reverse mortgage, the borrower (or homeowner) has payments made to them from the lender. The borrower keeps control of the property and does not have to pay back the money as long as he or she lives there. When the homeowner dies or moves out, the loan is typically paid off by selling the house, and any money left over goes to the homeowner or their estate.

Fees are typically steep - more than 5% of the home's value and most borrowing limits are capped based on where the property is. Fees are paid upfront or financed, while interest rates affect how much of your equity the lender ultimately takes. In the past, reverse mortgages have charged variable interest rates; now, fixed rates are available, however they may cost you more.

Taking out a reverse mortgage to travel or spoil grandchildren is very different from a few years ago, when seniors that were financially strapped took them out to pay medical bills and buy food.

Today, a half-dozen investment banks, including units of Lehman Brothers Holdings, Inc. and Bank of America have started buying reverse mortgages, with plans to eventually package and sell them. Just a week or two ago, Ginnie Mae, the federal agency charged with making real estate investment more attractive to institutional investors, announced that they are rolling out a standardized government bond issue backed by reverse mortgages. This is a key step in creating a secondary market that could help lower borrowers costs and increase the loan's availability.

The two primary questions a homeowner needs to ask when investigating reverse mortgages are:

1. What index does the loan use? Traditionally reverse mortgages have used the CMT index, which is based on Treasury bonds. There are some new products that now use the Libor index which should lower interest rates over the long run. But read your product carefully, whichever index is used, one product might add 0.65 percentage point; another might add 2.00.

2. What are the fees? Fees can typically run up to 7% on government backed loans. You may pay higher interest rates in exchange for lower fees.

Some homeowners are using the reverse mortgage product as a type of equity line, and with the recent housing slump, often values are less than what they were a few years ago. Either way there are a variety of options out there for homeowners with significant equity that want to tap the potential of their property.

San Clemente Real Estate Blog Update

There were a couple of really interesting properties that came on the market this week, which proves that not all is lost in our local real estate market. The first property is located in Dana Point on Camino Capistrano across the street from Pines Park - so location, location, location. The house shows well, has a great flow, and is beautifully maintained and upgraded. It feels larger than the 1900 square feet with 3 bedrooms and 2.5 baths. Actually a good buy at the $1,895,000 list price.

Another home to boast about is right here in San Clemente. This is an older custom home that has been well taken care of and although it doesn't get you too excited from the outside, the inside is very charming. It is a 4 bedroom, 2.5 bath home with over 3100 square feet of space. It is basically a single level with a large bonus room over the garage. This home is also a great value priced at $995,000.

There is another property up for auction and this is truly an amazing buy. Minimum bid price is $1.9 million, but the house with a little TLC could be worth double in a better market. The home has 5,000 square feet, 5 bedrooms, 4.5 baths with a three car garage and amazing ocean views. This property is located in Sea Pointe Estates and has one of the largest usable lots in the area.

San Juan Capistrano has a beautiful home in the Sun Ranch neighborhood that has over 2,500 square feet, 4 bedrooms with 2.5 baths. There is also an additional bedroom and bath with a separate entrance off of the garage. Perfect for mother-in-law quarters, live-in nanny, or a young adult that has moved home. This house has recently been upgraded and they did a beautiful job with lots of attention to detail. If San Juan is where you want to be you cannot miss this one. It is currently listed at $1,245,000.

This is one of the best times of the year to buy. If you have already sold and are waiting for the market, it is not going to get much better than this. See you at the beach.

San Clemente, Dana Point, and San Juan Capistrano Real Estate Update

I haven't reviewed the preview sheets on this blog in a while and I thought that there were a few interesting items to note.

In Dana Point on August 8, 2008 a property on Via Verde will be auctioned off. I know we don't hear much about auctions unless the property is in deep trouble, but in many parts of the country, auctions are a normal way of buying and selling real estate. This property was on the market for $1,895,000 and the minimum bid price is $1,250,000. The house was built in 2004 with 3600 square feet, 3 bedrooms, and 3 1/2 baths. It has a finished basement, is fully landscaped, with granite countertops, and stainless steel appliances. If it sounds like something you are interested in, give me a call and I can get you in to take a look.

A property with awesome potential and a fabulous location in desirable Southwest San Clemente is on the market for $2.8 million. This is on a street to street lot, four doors down from Leslie Park and Lasuen's Beach (Lost Winds). A rooftop deck provides unobstructed ocean views from this 4 bedroom, 3 bath, almost 2900 square foot home with a 3 car garage.

If you don't mind being on a main thoroughfare, there is a great deal in San Juan Capistrano. The owner is having some financial difficulties and must sell ASAP. This is a 5 bedroom, 2.5 bath home with almost 2900 square feet at a list price of $799,900! Some remodeling has been completed along with fresh paint - it is priced at $122 per square foot which is way below replacement cost!

Another property in San Juan Capistrano that is noteworthy is the Forster Mansion on Ortega Highway that has recently come on the market. It is priced at $2,999,000 and is registered in the National Register for Historical Properties. It was built in 1910 and is zoned A-1 with commercial, residential, or retail possibilities. The property has 5 bedrooms, 1.5 baths with over 4500 square feet.

Whether you are looking for something really unique and special or a really great deal, I can help! Give me a call or send me an email and we can discuss your buying and/or selling needs.