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Gordon Team - Weekend Report - September 17, 2009

INTEREST RATES ARE DOWN THIS WEEK.   Rates are currently at a
three-month low.  

15 year mortgages are at the lowest they have been since 1991!!

IMPORTANT REMINDER:   THERE ARE ONLY 74 DAYS LEFT FOR THE $8,000 FIRST
TIME HOMEBUYER'S TAX CREDIT.

The tax credit expires on November 30, 2009, if not extended.   If you
do not close escrow by this date, you will be ineligible for the $8,000
tax credit.   You should allow 30- 45 days to close escrow today.   This
means you want to be in contract by October 15, 2009.

That's 28 days to find a house.

WEEKEND RATES - PLAN ON AROUND (rates subject to change until locked):

4.875% (APR 5.139) FOR A 30 YR FIXED CONVENTIONAL LOAN (OWNER OCCUPIED
OR SECOND HOME) with 1.250 points, NO ORIGINATION FEE!

4.250% (APR 4.663) FOR A 15 YR FIXED CONVENTIONAL LOAN (OWNER OCCUPIED
OR SECOND HOME) with 1.000 point, NO ORIGINATION FEE!

4.875% (APR 5.129) FOR A 30 YR FHA / VA LOAN, WITH 1.125 POINTS, NO
ORIGINATION FEE!

4.375% (APR 4.783) FOR A 15 YR FHA / VA LOAN, WITH .750 POINTS, NO
ORIGINATION FEE!

5.625% (APR 5.879) ON A 30 YR JUMBO LOAN OVER $417,000 with 1.000
POINTS, NO ORIGINATION FEE!

5.125% (APR 5.361) ON A 5 YR JUMBO ARM OVER $417,000 with 0.875 POINTS,
NO ORIGINATION FEE!

5.875% (APR 6.144) ON A 30 YR INVESTOR (NON-OWNER OCCUPIED) LOAN UNDER
$417,000 WITH 20% DOWN with 1.125 POINTS, NO ORIGINATION FEE (720 mid
score)!

5.375% (APR 5.625) ON A 30 YR INVESTOR LOAN (NON-OWNER OCCUPIED) UNDER
$417,000 WITH 25% DOWN with 1.000 POINT, NO ORIGINATION FEE (720 mid
score)!

NO ORIGINATION FEE ON ANY OF THE LOANS ABOVE.   NO PROCESSING FEE.  NO
UNDERWRITING FEE.  NO ADMIN FEE.    Rates subject to change until
locked.

These rates assume your credit history is in good standing.  This is not
a credit decision or a commitment to lend; credit is subject to
approval. The actual terms of your loan will vary depending on factors
such as your credit history when you apply. Until you lock your rate,
rates and terms are subject to change without notice. Additional
programs are available.

Unless otherwise noted, these rates are based on an Owner-occupied
residency in Nevada

For adjustable-rate mortgages, rates are subject to increase after the
initial fixed-rate period. A 30-year loan term applies to
adjustable-rate mortgages.

Mortgage insurance may be needed, which could increase the monthly
payment and APR.

============================================
QUESTIONS OF THE WEEK

Q: Can a buyer use the $8000.00 tax credit as a down payment?  I have
also heard that using it for the down payment is actually a loan for the
$8000.00.  Is this true????

A:  CURRENTLY YOU CANNOT USE THE TAX CREDIT AS A SOURCE OF DOWN PAYMENT.
THE TAX CREDIT, IF YOU ARE ELIGIBLE, COMES AFTER CLOSING.  THERE WAS
SOME TALK ABOUT LENDERS DOING BRIDGE LOANS FOR THE DOWN PAYMENT AND THEN
YOU WOULD PAY THEM BACK WITH YOUR TAX CREDIT.  WE DON'T DO  BRIDGE LOANS.

Q:  I have a client that would like to rent out their current house and
purchase another house to live in.  They owe $175,000 on this home and
the value today is $190,000.  They have owned their current house since
7/06.  Would a current lease agreement work for qualifying?

AG: DEPENDING ON THE LOAN PROGRAM THEY SEEK, IF THAT CURRENT  HOME DOES
NOT HAVE AT LEAST 25-30% EQUITY, WHICH THEIRS DOESN'T, THEY WILL NEED TO
PROVE ENOUGH INCOME TO QUALIFY FOR BOTH HOUSES (CURRENT AND NEW) WITH NO
RENTAL INCOME COUNTED. THEREFORE, THE LEASE AGREEMENT WILL NOT SUFFICE.

If you have any questions, please don't hesitate to contact me.

Have a great weekend!

Best regards,

Aaron M. Gordon
Bank of America Home Loans
Senior Mortgage Loan Officer
Platinum Club - Bank of America Top 5% in Nation

Phone: 1.702.283.2333
Fax: 1.866.905.7922
aaron.gordon@bankofamerica.com
www.aarongordon.net

10190 Covington Cross Dr. #190
Las Vegas, NV 89144

Assistant: Leah Fusco
Phone: 1.702.304.8906
leah.fusco@bankofamerica.com

During the past week, movement in the resale housing market followed its historical trend. The latest reporting period represented the 35th weekly decline in home inventory out of the 38 weeks during 2009. Available listings dropped by 68 units during the past week, reaching a total of 11,950. Compared to the same week of the prior year, inventory is down 10,008 units, or 45.6 percent. Vacant and tenantoccupied listings represent 65.0 percent of total inventory, with owneroccupied properties representing a modest 35 percent of the total.

By: Reuters
U.S. mortgage applications fell last week despite the lowest loan rates in four months, the Mortgage Bankers Association said on Wednesday, in another sign that housing will likely recover slowly from its three-year plunge.

Home loan applications fell a seasonally adjusted 2.8 percent in the Sept. 25 week, driven down by a 6.2 percent drop in demand for purchase loans and a 0.8 percent decline in refinancing requests.

The 30-year rates were the lowest since the week ended May 22, at 4.81 percent, after hitting an all-time low of 4.61 percent in March, according to the industry group.

A year ago, before intensive government interventions, 30-year rates averaged 6.33 percent.

Signs of life have emerged in both home sales and prices, helped by government stimulus programs including an $8,000 first-time home buyer tax credit.

The outlook for housing is split, however. Some in the industry predict another sales slide if the tax credit is not renewed and others say there will be a gradual recovery slowed by the usual winter sales malaise.

"We're going to see another leg down, and if we lose the tax credit it will be a significant leg down," said John Burns, president of John Burns Real Estate Consulting in Irvine, California.

The main concern is "shadow inventory," or the stockpiles of homes held by banks or those about to go into foreclosure but yet to be put on the market, he said.

"The one really positive surprise recently has been falling mortgage rates," and rates at 5 percent or less next year "could definitely help engineer a soft landing," said Burns.

Another concern is that the first-time buyer credit siphoned demand from next year's spring sales season, with buyers rushing purchases before the tax incentive disappears.

Existing-home sales in August fell for the first time in four months, but were at the second-highest pace in almost two years.

Sales of new houses were below forecasts but up in August for the fifth straight month.

Prices Yet to Bottom

Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, does not expect another leg down in home sales but is not convinced that prices have hit bottom because of the large inventory of unsold homes.

Mortgages 

 
   
30 yr fixed 5.12%  5.34%
30 yr fixed jumbo 6.12%  6.43%
15 yr fixed 4.61%  4.86%
15 yr fixed jumbo 5.56%  5.81%
5/1 ARM 4.18%  4.13%
5/1 jumbo ARM 4.75%  4.23%
 
Find personalized rates:
 
 

Bankrate.com
 
Home prices rose in July for the third straight month, surpassing forecasts and bolstering the case for housing stability, based on the Standard & Poor's/Case-Shiller indexes reported on Tuesday.

"I'd rather be a home buyer than a seller right now because I still think the odds are in your favor of getting a good deal," and the freefall in prices is over, Hoffman said.

But caution is advised with the pending demise of the tax credit, rising unemployment and the possibility of more foreclosures, S&P said.

Home prices on average have toppled by more than 32 percent from their peaks in the second quarter of 2006.

"I would definitely characterize it as a slow recovery in housing out of a very deep hole," said Hoffman. "We've gone from the sub-basement to the basement, and maybe we're going to get to the ground floor on housing by next spring. At least I think the process has begun."

By Brian Wargo , In Business reporter

Fri, Sep 4, 2009

Investors and first-time buyers dominate home purchases in Las Vegas, and their investments will be key to burning foreclosure inventory, a research company reported.

Almost 70 percent of the area homes and condos sold in July were foreclosure sales, meaning those homes had been foreclosed in the past 12 months, said Andrew LePage, a spokesman for MDA DataQuick, a San Diego research firm.

July’s percentage of foreclosure sales was the same as June, but up from 62.5 percent in July 2008, LePage said. The peak was 73.7 percent in April.

July marked the 16th consecutive month in which sales of existing homes rose on a year-over-year basis, he said. The 3,925 single-family homes sold in July were the highest for any July since 4,555 were sold in 2005, LePage said.

In addition, condo resales have increased for 13 consecutive months over the previous year and in July were the highest since 2005, he said. There were 956 sales in July compared with 1,073 in July 2005.

In July government-insured Federal Housing Administration loans, a popular form of financing for first-time buyers, accounted for 58.4 percent of the purchases, up from 51.8 percent in June, LePage said. Investors and previous homebuyers bought 39.1 percent of new and existing homes last month — the highest since 39.3 percent in November 2005, he said.

Forty-three percent of buyers are using cash to buy homes, LePage said. Cash deals have become popular in areas where prices have dropped sharply, and sellers prefer the speed and certainty of those transactions, he said.

Foreclosures will keep downward pressure on prices and lure investors and first-time buyers, LePage said. In July, 863 homes and condos were lost to foreclosure in Clark County, up 1.7 percent over June and up 26 percent over July 2008. It was the second highest monthly total behind February’s 3,718 foreclosures.

The use of adjustable-rate mortgages to buy homes is near record lows, representing 1.1 percent of all purchases in July, LePage said. That’s the same as June, but down from 5.2 percent a year ago and down from a monthly average of 32 percent this decade, he said. The lowest was 0.6 percent in March.

The median price paid for all homes and condos in July in Las Vegas dropped to $130,000, down 3.7 percent from June and down 41.4 percent from July 2008, he said.

When combining new and existing homes in Southern Nevada, prices have fallen for 27 consecutive months and in July was 58.3 percent below the peak of $312,000 in November 2006, LePage said.

The median price for existing homes fell in July to $135,100 after holding steady at $140,000 in May and June, LePage said. July’s median price for existing homes was the lowest since June 2000’s $135,000 and was 56.7 percent below the $312,250 peak in June 2006.

Another price gauge fell in July after flattening in May and June, LePage said. The median price per square foot for used single-family homes fell to $75 in July, down from $77 the previous two months. July’s figure was 60.6 percent lower than the $190 peak in June 2006, he said.

MDA DataQuick’s second-quarter data for Southern Nevada shows 19 ZIP codes had price declines of 50 percent or more since the second quarter of 2008.

Twelve ZIP codes had declines of 60 percent or more: 89101, 89102, 89103, 89104, 89105, 89106, 89107, 89109, 89110, 89118, 89146 and 89030.

ZIP code 89103 had the biggest decline — 86 percent — with homes selling for $67 per square foot. The area is west of Interstate 15, south of Spring Valley Road, north of Tropicana Avenue and east of Rainbow Boulevard.

The Clark County assessor’s office reported that from July 1 through Aug. 19, seven ZIP codes surrounding downtown Las Vegas and North Las Vegas had median sales prices per square foot of $50 and lower. They include 89115, 89030, 89106, 89107, 89101, 89104 and 89121.

According to MDA DataQuick, Henderson fared the best with only one ZIP code exceeding a 36 percent decline: 89011’s 47.5 percent drop.

Only two ZIP codes in Southern Nevada had an increase in the median price of a home: 89034 in Mesquite, where prices rose 1 percent and 89124 in the sparsely developed southwest valley, where prices rose 2.3 percent.

ZIP codes with the lowest median prices were $47,000 in 89101 near downtown Las Vegas and $40,000 in 89030 near downtown North Las Vegas. There were 14 ZIP codes with median prices below $90,000: 89030, 89101, 89103, 89104, 89106, 89107, 89108, 89110, 89115, 89118, 89119, 89121, 89156 and 89169.

If you’re renting and have a stable job with some savings, and
a credit score in the high 600 range, you can likely qualify for FHA or conventional financing at historically low rates.

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There have been a lot of accusations on the blogs and on the air that banks are holding on to REO (bank-owned) foreclosed properties because they don't want to put them on the market and push home prices ever lower.

In digging into this, I got a few interesting answers:

Bank of America:

• Foreclosure sales have been abnormally low since we learned of the pending implementation of the administration’s Making Home Affordable program. From that point, we delayed the initiation of foreclosure proceedings and sales for customers that may eligible for a loan modification under MHA. As a result of this policy, our foreclosure sales in recent months have been as little as half the normal pace we experienced before.
• Until a foreclosure is completed, Bank of America continues to exhaust every possible option to qualify customers for modification or other solutions.
• Now that Making Home Affordable programs are operational, we do project an increase in foreclosures as we exhaust every available option to qualify customers for modifications and other solutions.
• While we have very strong loan modification programs now available, unfortunately, these foreclosure projections reflect the increasing number of customers who will not qualify for loan modification because they have suffered major life events servicers can’t solve...primarily unemployment and underemployment.
• We do not hold foreclosed properties off the market. The vast majority of mortgages serviced by Bank of America are owned by third-party investors. We have an obligation to them to prepare foreclosed properties for market and sell them as efficiently as possible.

Then I spoke with Ted Jadlos of LPS Applied Analytics. He says there is no clear evidence of purposeful accumulation by the banks of these foreclosed properties. They are, he believes, working through the huge onslaught of new defaults as fast as possible, but it takes time. He says they are selling REOs at a fast clip as well, within about three months of taking them as REOThen he offered the following very detailed chart of what's called "roll rates" or the rate at which troubled loans are moving through the system.

Note the "average" is a four year average, and two of those years were the worst ever in the mortgage market, so as Jadlos notes: Just getting to the average isn’t saying all that much. We need to be close to the four year low to be fully entrenched in a meaningful recovery. Based upon foreclosure and REO timelines, it’s going to take at least 18 months to flush the system of our current problems. But to flush the problems in only 18 months, more problem loans need to leave the system relative to the new problem loans of today and tomorrow. That does not appear to be the case right now—we aren’t clearing faster than new problems are emerging.