New home sales fall in August

Numbers hit lowest level since June 2000By JEANNINE AVERSA, Associated Press Read Comments-->09/28/2007 -->
WASHINGTON -- New-homes sales tumbled in August to the lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump.
Sales of new homes dropped by 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate of 795,000 units. That was the lowest level since June 2000, when sales clocked in at a pace of 793,000.
The home sales report came on the same day that the government reported a relatively brisk business growth rate in revised figures for the second quarter. But the 3.8 percent pace was less than previously estimated and it occurred before the credit crisis and its repercussions across the broad spectrum of the economy had taken hold.
The median sales price in August fell by 7.5 percent from a year earlier to $225,700. That was the biggest drop in percentage terms in nearly 37 years. The median price is the middle point at which half sell for more and half for less. The average sales price dropped by 8 percent in August from a year earlier to $292,000. That was the biggest decline in 17 years.
Sales fell in the South and the West in August compared with July. Sales, however, rose in the Northeast and Midwest.
The Commerce Department does not break down new homes sales by state.
The new-homes sales report, combined with other recent economic reports showing a sharp drop in demand for big-ticket manufactured goods in August, suggested the economy lost momentum as it headed into the fall.
On Wall Street, investors looked to the weak home sales report as justification for another rate cut by the Federal Reserve. The Dow Jones industrial average was up around 20 points in morning trading.
Another report issued by Commerce showed the economy staged a rebound in the spring before a credit crisis raised new fears about longer-term business health.
The economy's 3.8 percent growth rate in the April-to-June quarter was the strongest showing in just over a year.

Home Sales and Prices Fall Sharply

New York Times (09/28/07) P. C1; Grynbaum, Michael M.The U.S. Commerce Department reports that sales of new homes slid to an annual pace of 795,000 in August, a drop of 8.3 percent from July as the number of months needed to unload builder inventories climbed to the highest level since the end of this year's first quarter. At the same time, the median price for a new residence decreased 7.5 percent from a year ago to $225,700--the sharpest monthly decline since December 1970. August's drop-off in new-home sales was largely concentrated in the South and West, the two regions most affected by the subprime mortgage crisis. Lehman Brothers economist Michelle Meyer warns, "If sales continue to fall, builders will continue to cut back on construction, which will be a direct drag to economic growth. Inventories remain elevated, home prices will fall as a result, and a decline in home prices will depress consumer spending."

No Housing Revival Seen in '08

Seattle Times (09/28/07); Cook, Peter; Tyson, JamesFannie Mae CEO Daniel Mudd expects home prices to decline 2 percent to 4 percent in 2007 and by even more in 2008. In an interview in Washington, D.C., on Thursday, Mudd added that credit losses will continue to rise at Fannie Mae because of the housing downturn and record foreclosure rates. He also said Fannie Mae is likely to meet all the requirements needed to lift constraints on growth and reserve capital by filing its results in February. "Let's loosen this up a little bit and give us a chance to respond in a market where all the other investors have gone away," said Mudd, who wants the Office of Federal Housing Enterprise Oversight to raise the limit on Fannie Mae's mortgage assets.

More Homeowners Hold Mortgages Into Retirement

Pittsburgh Post-Gazette (09/28/07); Grant, TimUnlike the generations before them, which tended to pay off their homes as quickly as possible and retire with no mortgage debt, more and more of today's seniors are carrying their home loans into their golden years. Modern-day retirees increasingly are taking advantage of reverse mortgages, home equity loans and refinance opportunities; but the result is that, according to the Employee Benefit Research Institute in Washington, D.C., the number of families that have housing debt and are headed by a person aged 55 of older has grown steadily to 36 percent as of 2004 from 24 percent in 1992. While some financial advisors warn that the practice is a risky one, others say having a paid-off mortgage only provides a sense of false security. "Many people enter retirement with a house fully paid for and no money and that's dangerous," insists investment advisor and Lies About Money author Ric Edelman. "It is much safer to have a lot of money readily at your disposal and a mortgage enables you to do that."

Fixed-Rate Mortgages Rise; Adjustables Drop

Boston Globe (09/28/07)After hitting a four-week low of 6.31 percent two weeks ago, long-term mortgage rates continue to climb. Freddie Mac reports that interest on 30-year fixed loans spiked up to 6.42 percent this week from 6.34 percent a week ago, while 15-year fixed mortgages moved up to 6.09 percent from 5.98 percent. Contrary to the upward shift in long-term rates, initial interest on one- and five-year adjustable-rate mortgages dipped for the fourth week in a row, according to Freddie Mac. The Mortgage Bankers Association, meanwhile, says that ARMs continue to lose market share and currently are at their lowest level in about four and a half years.

6 Seabright Way, Seabright Village, Rehoboth Beach, DE 19971

Address:REHOBOTH BEACH, DE 19971MLS ID# 552936$339,9004 Bed, 3 Bath
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Located on the East side of Rt One with access to the beach without going on the highway. First and second floor masters, large rear patio, large kitchen, community pool, and one car garage are just a few of the great features that this twin home has to offer. Call Anthony today to schedule a showing of this Showcase Property. 302-644-3144Condo/Townhome/Coop Property, County: SUSSEX, Year Built: 1999, Garage, Central air conditioning
To access this page directly, use http://homes.realtor.com/prop/1088924278
Property Features
Condo/Townhome/Coop Property
Status: Active
County: SUSSEX
Year Built: 1999
4 total bedroom(s)
3 total bath(s)
3 total full bath(s)
Style: Duplex
Family room
Garage
Central air conditioning
Interior features: Breakfast bar, Cable TV avail., Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Microwave, Range and oven, Security feats, Tile flrs, Vinyl flrs
Exterior features: Deck, Irrigation well, Partially fenced, Porch, Public sewer srvc
School District: Cape Henlopen
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25 Sawgrass Road, Hunter's Mill Estates, Milton, DE 19968

Address:MILTON, DE 19968MLS ID# 551725$279,0003 Bed, 2 Bath2,000 Sq. Ft.0.61 Acres
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Single Family Property, Subdivision: HUNTERS MILL ESTATES, County: SUSSEX, Approximately 0.61 acre(s), Garage, Central air conditioning
To access this page directly, use http://homes.realtor.com/prop/1086796012
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: HUNTERS MILL ESTATES
3 total bedroom(s)
2 total bath(s)
2 total full bath(s)
Approximately 2000 sq. ft.
Style: Contemporary, Ranch
Garage
Central air conditioning
Interior features: Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Kitchen isle, Microwave, Range and oven, Vinyl flrs
Exterior features: Clear lot, Deck, Fenced, Porch, Storage/out-building(s)
Approximate lot is 150X189
Corner lot
Approximately 0.61 acre(s)
Lot size is between 1/2 and 1 acre
School District: Cape Henlopen
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Presented By! Atsidis Donna
I Sell Rehoboth BeachHome Office: (302) 644-0117Mobile: (302) 542-1787Office: (302) 644-7965
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20457 Old Meadow Lane, Harts Landing, Lewes, DE 19958

Address:LEWES, DE 19958MLS ID# 552691$449,0004 Bed, 3 Bath2,700 Sq. Ft.
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Owners love the Community so much - they are selling and buying a bigger home in Harts Landing! Gorgeous Home built by Pulte, wood floors, granite counters, tile in bathrooms and laundry, trex decking, stone front, walking trails,, fishing pier, pool, and no lawn maintenance. Home War. still good.Single Family Property, Subdivision: HARTS LANDING, County: SUSSEX, Year Built: 2006, Garage, Central air conditioning, Fireplace(s)
To access this page directly, use http://homes.realtor.com/prop/1088446986
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: HARTS LANDING
Year Built: 2006
4 total bedroom(s)
3 total bath(s)
3 total full bath(s)
Approximately 2700 sq. ft.
Style: Contemporary
Fireplace(s)
Garage
Heating features: Gas
Central air conditioning
Interior features: Breakfast bar, Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Fireplace(s), Microwave, Range and oven, Security feats, Tile flrs, Wood flrs
Exterior features: Deck, Irrigation well, Porch, Public sewer srvc
Approximate lot is 85X160
School District: Cape Henlopen
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Presented By! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127Office: (302) 644-3133Mobile: (302) 841-2127
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Visit Our New Homes Showroom Covering All of Sussex Countybroker: (302) 644-6880Fax: (302) 644-6881Toll Free: (866) 639-4287
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Lot 102 Nassau Loop, Nassau Station, Lewes, DE 19958

Address:LEWES, DE 19958MLS ID# 552675$205,0000.25 Acres
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Land Property, Subdivision: NASSAU STATION, County: SUSSEX, Approximately 0.25 acre(s)
To access this page directly, use http://homes.realtor.com/prop/1088447010
Property Features
Land Property
Status: Active
County: SUSSEX
Subdivision: NASSAU STATION
Approximate lot is 90X125
Approximately 0.25 acre(s)
Lot size is less than 1/2 acre
Topography: Public sewer srvc, Trees
Utilities present: Public sewer srvc, Public water supply
School District: Cape Henlopen
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Presented By! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127Office: (302) 644-3133Mobile: (302) 841-2127
Brokered ByBEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex Countybroker: (302) 644-6880Fax: (302) 644-6881Toll Free: (866) 639-4287
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32227 Maid Marion's Retreat, Sherwood Forest, Millsboro, DE 19966

Address:MILLSBORO, DE 19966MLS ID# 552925$289,0003 Bed, 2 Bath2,000 Sq. Ft.
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Single Family Property, Subdivision: SHERWOOD FOREST, County: SUSSEX, Year Built: 2002, Garage, Central air conditioning, Fireplace(s), Den
To access this page directly, use http://homes.realtor.com/prop/1088924258
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: SHERWOOD FOREST
Year Built: 2002
3 total bedroom(s)
2 total bath(s)
2 total full bath(s)
Approximately 2000 sq. ft.
Style: Contemporary, Ranch
Den
Fireplace(s)
Garage
Heating features: Gas
Central air conditioning
Interior features: Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Fireplace(s), Microwave, Range and oven, Security feats, Vinyl flrs
Exterior features: Deck, Fenced, Porch
Approximate lot is 46X158
Located on a cul-de-sac
School District: Indian River
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Presented By! Atsidis Donna
I Sell Rehoboth BeachHome Office: (302) 644-0117Mobile: (302) 542-1787Office: (302) 644-7965
Brokered ByBEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex Countybroker: (302) 644-6880Fax: (302) 644-6881Toll Free: (866) 639-4287
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501 First Street, Rehoboth Beach, DE 19971

Address:REHOBOTH BEACH, DE 19971MLS ID# 553134$235,9003 Bed, 2 Bath
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Single Family Property, Subdivision: TRU-VALE ACRES, County: SUSSEX, Year Built: 2006, Central air conditioning, Laundry room
To access this page directly, use http://homes.realtor.com/prop/1089235088
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: TRU-VALE ACRES
Year Built: 2006
3 total bedroom(s)
2 total bath(s)
2 total full bath(s)
Laundry room
Central air conditioning
Interior features: Breakfast area, Cable TV avail., Carpet, Laundry rm/area, Microwave, Range and oven, Tile flrs, Washer/dryer hookups
Exterior features: Clear lot, Deck, Porch, Public sewer srvc
Approximate lot is 35X100
Corner lot
School District: Cape Henlopen
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Presented By! ANTHONY M KULP
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108 Cascade Lane, Creekwood, Rehoboth Beach, DE 19971

Higher appraisals may be result of shifting market

Kenneth Harney -- Nation's Housing
September 23, 2007
What's going on with appraisals in some parts of the country? Mortgage lenders -- and appraisers themselves -- say they're increasingly coming in with valuations higher than the contract prices agreed to by sellers and buyers. The differences can range into the thousands of dollars.
Are some sellers giving in to lowball offers, fearful that they can do no better in the wake of the subprime mortgage implosion and home sale bust? Or are appraisers simply lagging behind downward market adjustments?
"We're seeing it a lot now," says Patrice Yamato, president of Plaza Mortgage Group in Jacksonville, Fla. "Appraisals are coming in higher than the contract" -- a reversal of the pattern during the housing boom years, when appraisals often came in at or occasionally below the contract price.
"I think buyers are pushing very, very hard," says Yamato -- and they're walking away with steals.
For their part, appraisers insist that their value opinions are based on hard numbers: recently closed comparable sales, current comparable listings, pending sales, statistical trendline analyses and adjustments for special features of the property and its location.
"We've got to use the most recent market data that is available to us," said Pat Turner, an appraiser in the Richmond, Va., area. "We can't just make it up" in order to hit a contract price. "If [the appraisal] comes in above the contract, that tells you something unusual is happening out there" -- perhaps too much property has been sitting unsold for too long, and some sellers are suddenly feeling time pressures.
Generally, appraisers perform their valuations for lenders to help determine whether the collateral -- the real estate securing the mortgage -- is adequate. The prospective buyers typically receive a copy of the appraisal but sellers do not. If it indicates they sold for less than the appraiser's estimate of true market value, they are none the wiser. Nobody in the transaction has any incentive to break the bad news to them.
"It certainly puts us [appraisers] in an uncomfortable position when we find that the selling price is below market value," says Karen J. Mann, a veteran appraiser in the San Francisco area. "We wonder what's going on out there -- are sellers giving in to the bottom-feeders" who are trolling for any hints of distress or urgency?
The rapid contract price changes under way in some areas raise a fundamental question for sellers and buyers: What is true market value anyway? One simple definition might be: It is whatever an arms-length, ratified contract says it is, adjusted downward for whatever concessions or inducements the seller packed into the deal. For example, if a contract is for $250,000 but the seller is paying $10,000 of the buyer's closing costs, the actual market value should be $240,000.
Another approach incorporates a time element and is used by corporate relocation specialists who resell the houses of executives transferred from one part of the country to another. Relocation firms often ask appraisers to do projections on what the property would likely sell for within specific time periods -- 90 days, 60 days and the like. A house that might reliably sell for $400,000 during a 120-day listing period might well have to be priced lower to guarantee sale within a shorter time period -- say 60 days.
Not all appraisers are surprised that appraisals are beginning to come in above contract prices. Gary Crabtree, president of Affiliated Appraisers in Bakersfield, Calif., says bloated sales prices over the past five years, plus hidden concessions and fraud, "have distorted the data" and the public records in some parts of the country.
"When mortgage fraud and concessions get built into" local recorded sales prices and tax assessments, he suggests, those inflated values "become the new comparables" that appraisers use. In effect, hard-bargaining buyers today may be squeezing some of the cotton candy fluff out of prior sales.
Frank K. Gregoire, a longtime appraiser based in St. Petersburg, Fla., and chairman of the Florida Real Estate Appraisal Board, argues that "when the market is moving" -- up or down -- appraisers "have to look not only at closed sales and current listings," but tap into sources of dynamic information, such as realty agents who specialize in the micro-market where the property is located, and who know how fast the inventory is building, where the concessions are buried, and what's motivating active buyers.
Serious sellers can protect themselves against lowballers and vultures by hiring an experienced appraiser before listing. Though they rarely advertise it, many appraisers are willing to conduct independent appraisals for homeowners for modest hourly or set fees. The top professionals often carry the "SRA" (senior residential appraiser) designation and can be located nationwide through the nonprofit Appraisal Institute's Web site, appraisalinstitute.org.

Commercial Real Estate Remains Stalled

Wall Street Journal (09/26/07) P. B4; Dunham, Kemba J.Despite last week's interest-rate cut by the Federal Reserve, the 10-year Treasury yield has increased since then and caused borrowing costs to rise as well. As a result, many commercial property deals could remain in a holding pattern for at least the foreseeable future. Evidence of the ongoing credit crunch can be seen in last week's decision by Marylebone Warwick Balfour Group PLC to pull the sale of its US$1 billion hotel portfolio for the second time due to "current uncertainties in the markets." Some companies are pressing on undaunted; Lehman Brothers Holdings Inc., for instance, confirms that it has secured buyers for $8.9 billion worth of commercial mortgage-backed securities that will go toward funding its joint acquisition of Archstone-Smith Trust with partner Tishman Speyer Properties.

Lenders Pitch Their Services as Consumer-Friendly

Inman News (09/26/07); Carter, MattMortgage lenders increasingly are working to become more consumer-friendly as a means of winning repeat and referral business at a time when borrowers are worried about broker compensation and predatory practices. LoanInsights Inc. of San Francisco offers an online search platform that lets borrowers anonymously input down payments and view different loan types from numerous lenders so that they can choose the best deal for themselves. LoanInsights President and CEO Jonathan Strike says the platform "automates the function of a mortgage broker," adding that allowing consumers to do the initial legwork lets the company discount fees by 25 percent to 50 percent. Meanwhile, BuySide Mortgage of Chicago uses salaried "loan coordinators" to arrange loans for borrowers, giving them bonuses tied to customer satisfaction--regardless of whether or not a loan is closed.

Housing Market Slide Continues

Baltimore Sun (09/26/07); Haddad, AnnetteThe U.S. residential property market, already battered and bruised, suffered yet another setback with Tuesday's release of more bad news. The National Association of Realtors' report on August home demand showed a decline to a five-year low in sales volume and an increase to an 18-year peak in unsold inventory. A separate study from S&P/Case-Shiller, meanwhile, revealed that single-family home prices are southbound, falling at the fastest pace in more than 15 years. Finally, the New York-based Conference Board reported that consumer confidence, as measured by its monthly index, is down by nearly six points in September.

Home Sales in 'Free Fall'

Washington Post (09/26/07) P. D2; Lengel, AllanThe National Association of Realtors reports a month-to-month decline in existing-home sales of 4.3 percent and a year-over-year drop of 12.8 percent in August to an annual rate of 5.5 million, marking the lowest level of sales in five years. The report shows the first uptick in median price in a year, rising 0.2 percent to $224,500 from August 2006. However, the supply of resale properties on the market edged up 0.4 percent to a 10-month supply of 4.58 million units. NAR senior economist Lawrence Yun attributes the decrease in sales to turmoil in the subprime mortgage market. Home sellers setting "unrealistic" asking prices also play a role, according to Weiss Research real estate analyst Michael Larson.

Home Loans Altered to Avert Foreclosures

Chicago Tribune (09/25/07)Countrywide Financial Corp. says it is working with borrowers who are having financial problems by offering them repayment plans, postponing payments, refinancing mortgages and modifying the terms of their home loans to avoid default. The largest mortgage lender in the country says its efforts will keep 35,000 borrowers from losing their homes to foreclosure. The Federal Reserve and the Treasury Department have called on mortgage lenders to do what they can to help keep borrowers in their homes. Last week, Moody's Investors Services said mortgage lenders have modified the terms of only about 1 percent of all subprime mortgages.

Mortgage Default Rate Said to Be Stabilizing

Charlotte Observer (NC) (09/25/07)At a recent forum in Singapore, HUD Assistant Secretary Darlene Williams reported stabilization in U.S. mortgage defaults. Although the Federal Reserve's move to lower the federal-funds rate indicates the central bank's willingness to take steps to prop up the economy, Williams said it likely will not impact mortgage defaults. Williams also underscored the importance of subprime mortgages in boosting homeownership rates, noting that they "democratize credit, and so we don't want to throw that option away."

Lenders Require Higher Credit Scores

Wall Street Journal (09/25/07) P. D3; Mincer, JilianTurmoil in the subprime mortgage markets and the resulting credit crunch have made it extremely important for consumers to pay close attention to their credit scores. John Ventura--director of the University of Houston Law School's Texas Consumer Complaint Center--says scores in the upper 700s are necessary for borrowers to obtain optimal interest rates, whereas a score of 720 was sufficient before the problems in the subprime market erupted. A recent Consumer Federation of America and Washington Mutual Inc. report, meanwhile, shows that borrowers could cut finance charges by $76 per person per year or $20 billion total simply by hiking their credit scores by 30 points--which experts say can be achieved by making timely bill payments, keeping credit card balances low and repaying debts. Fair Isaac Corp., developer of the credit-scoring system, notes that $5,148 can be saved in a single year on a $300,000 mortgage with a fixed rate and 30-year term if borrowers increase their scores to the 660-699 range from the 580-619 segment.

Mortgage Rates for September 20, 2007

Loan Program
Loan Amount
Interest Rate
Points

30 Year Fixed
$417,000
6.375%
0

15 Year Fixed
$417,000
6.125%
0

7/1 ARM
$417,000
6.625%
0

5/1 ARM
$417,000
6.500%
0

3/1 ARM
$417,000
6.625%
0

6-Month Interest-Only ARM
$417,000
6.625%
0

1-Month Interest-Only ARM
$650,000
7.250%
0

30 Year Fixed
$650,000
7.375%
0

FOR MORE INFORMATION, CONTACT:
Ronald TennantSenior Mortgage ConsultantDirect Phone: 302.644.7964 Mobile Phone: 302.858.2289 Fax: 610.290.1937Email: rtennant@metrocitiesmtg.comWeb: www.ronaldtennant.com17316 Costal Highway Lewes, DE 19958

Finding Bright Spots Among the Dark Clouds

By Kenneth R. HarneySaturday, September 15, 2007; F01
Just how bad is the foreclosure situation? If you caught summaries of the latest delinquency and foreclosure numbers released by the Mortgage Bankers Association, you could only conclude: Yikes, it is getting scary out there.
The percentage of U.S. home loans entering the foreclosure process last quarter hit its highest level in the history of the survey, which dates to 1953. In some states, the mortgage crisis is particularly severe. In Ohio, 5.2 percent of all home loans were either three months past due or in the foreclosure process. Michigan and Indiana were not far behind. In Michigan, one of every 100 houses had foreclosure actions initiated in the three-month period covered by the survey.
News like that is obviously tragic for the families involved and demonstrates that the combination of job layoffs and exotic loans extended to financially strapped home buyers can be highly toxic.
But from a national perspective, how bad is the situation? Not as bad as it may sound. Drill down into the latest delinquency and foreclosure numbers, and you'll find that for the overwhelming majority of homeowners across the country, delinquency and foreclosure are not issues -- at least not yet.
Remember that mortgage delinquency problems affect only people with outstanding loans and that more than one in three homeowners own their properties debt-free. Of the remaining two-thirds -- the latest survey examined 44 million of them -- prime loans that are at least 30 days past due constitute just 2.6 percent nationwide. In other words, among mortgages made to borrowers with good credit at application, 97.4 percent are continuing to be paid on time.
In some states, delinquencies among prime borrowers are far lower -- just 1.35 percent in Oregon, 1.39 percent in Washington state, 1.89 percent in Virginia and 1.9 percent in California. Prime-credit borrowers who took out fixed-rate loans in most states are performing even better than prime borrowers as a whole -- just over 2 percent on average nationally and barely more than 1 percent in California, Oregon, Hawaii and Washington, are paying late.
The numbers get more sobering when you look at borrowers with subprime mortgages: 14.5 percent nationwide are behind on their payments by at least 30 days. That's more than five times the rate of delinquency among prime borrowers. On the other hand, it means 85.5 percent of subprime borrowers are still paying on time every month.
High housing costs and local economic conditions are key factors for subprime homeowners. In California, where borrowers with prime credit outperform most of the country in on-time payments, 12.6 percent of subprime homeowners are now late, and 8.4 percent are 90 days or more delinquent or are already in the foreclosure pipeline.
In economically stressed Michigan, more than one in five subprime homeowners are delinquent. In Ohio, Indiana and Illinois, delinquency rates exceed 15 percent.
The numbers get even worse when you look at the performance of subprime borrowers who took out adjustable-rate loans, such as the notorious "2/28" mortgages that allow low monthly payments for the first two years but then reset upward with a big jolt at the beginning of the third. In West Virginia, 26 percent of owners with subprime adjustables are past due; in Mississippi, it's almost 27 percent.
What about the record jumps in new foreclosure filings? Here again, you've got to look closely at the hard data in the survey. In 34 states, the rate of new foreclosures actually decreased. In most other states, the increases were minor -- except in California, Florida, Nevada and Arizona, where they were attributable in part to investors walking away from condos, second homes and rental houses they bought during the boom years.
Doug Duncan, chief economist for the Mortgage Bankers Association, said that without the foreclosure spikes in those states, "we would have seen a nationwide drop in the rate of foreclosure filings." In Nevada, for instance, non-owner-occupied (investor) loans accounted for 32 percent of all serious delinquencies and new foreclosure actions. In Florida, the investor share of serious delinquencies was 25 percent; in Arizona, 26 percent; and in California, it was 21 percent. That compares with a rate of 13 percent for the rest of the country.
Bottom line: The scary foreclosure and delinquency rates you're hearing about are for real. But they're highly concentrated -- among loan types, local and regional economies, and are especially prevalent among investors in formerly high-flying markets who are throwing in the towel.

Fannie, Freddie Meet Goals

Washington Post (09/19/07) P. D4HUD reports that both Fannie Mae and Freddie Mac satisfied their regulatory mandates for supporting affordable housing. According to the agency, low- or moderate-income households benefited from 57 percent of the residential units that Fannie Mae helped to finance in 2006 and 56 percent of those backed by Freddie Mac. The two government-sponsored enterprises provided $370 billion in loans last year for 3.67 million houses and apartments.

Cut Will Aid Homeowners

Los Angeles Times (09/19/07); Petruno, TomWhile this week's short-term interest-rate reduction by the Federal Reserve is expected to help a multitude of people lower costs on their adjustable-rate mortgages (ARMs) and home-equity credit lines, it is not clear whether it will prop up the nation's troubled residential property market and lead to a rebound. The worst-case scenario is that the Fed's move could stoke inflation fears, resulting in an increase in conventional mortgage rates and adding to the housing market's troubles. Long-term mortgage rates are set by the marketplace, and one of the big considerations of investors in determining long-term rates is what inflation rate they forecast. At the same time, homeowners who have subprime ARMs with super-low teaser rates set to reset soon may still be facing a new rate that is more they can afford.

Mortgage Rates Edged Up

Wall Street Journal (09/21/07) P. C2Freddie Mac reports a small jump in the 30-year fixed mortgage rate to 6.34 percent this week from 6.31 percent a week ago, which is still less than the year-earlier rate of 6.40 percent. Meanwhile, the one-year adjustable mortgage rate dropped slightly to 5.65 percent from 5.66 percent over the same period. Freddie Mac chief economist Frank Nothaft expects the Federal Reserve's decision to cut the federal-funds rate to 4.75 percent to "dissipate some of the volatility in short-term interest rates."

Strapped Borrowers Urged to Act

Washington Post (09/21/07) P. D3; Irwin, NeilMany borrowers facing financial problems are ducking calls from mortgage lenders that can help them refinance their home loans or renegotiate, government officials on Thursday told the House Financial Services Committee, which was looking for ideas on how to address the mortgage crisis. Homeowners who are at risk of falling behind on their mortgage are not returning the calls because they fear the lender wants to claim the property, Treasury Secretary Henry Paulson Jr. said in testimony before the House panel. "Lenders are proactively contacting homeowners facing an interest rate reset that they likely can not afford," according to Paulson. "Yet those calls often go unreturned because many homeowners mistakenly think that their lender wants to repossess their home in foreclosure." HUD Secretary Alphonso Jackson and Federal Reserve Chairman Ben Bernanke agreed with Paulson's sentiment that borrowers need to reach out to mortgage lenders before missing payments to give themselves more financial options for keeping their homes and protecting their credit ratings.

Congress Is Urged to Limit Response to Mortgage Crisis

Investor's Business Daily (09/21/07) P. A1; Higgins, SeanIn testimony before the House Financial Services Committee, Federal Reserve Chairman Ben Bernanke said federal regulators and the financial markets are handling problems in the subprime mortgage sector and urged Congress to consider legislation only to revamp the Federal Housing Administration. Bernanke opposes allowing Fannie Mae and Freddie Mac to purchase bigger loans--except on a temporary basis--because he believes it would imply that the entities have government backing. The economist, who was joined by HUD Secretary Alphonso Jackson and Treasury Secretary Henry Paulson at the hearing, said lenders should work with borrowers to modify mortgages and minimize foreclosures. However, House Financial Services Committee Chairman Barney Frank, D-Mass., insisted that the subprime crisis could have been avoided if the government had imposed stricter regulations. Mortgage Bankers Association Chairman John Robbins, CMB, noted in prepared remarks that "today's market is the toughest environment I have ever seen."

Sell your home fast!

The (Palm Springs, Calif.) Desert Sun
Posted Monday, September 10, 2007Read Comments-->09/10/2007 -->
There are plenty of houses for sale, so if you want your house to sell fast, consider these tips:
• Think like buyers. "That gives sellers a clearer picture as to how their home would compete against the other active homes in the area and in their price range," said Carlo Lombardelli, broker associate with Re/Max Real Estate Consultants.
• Offer a complete package. "Staging a home has proven to be one of the most impactful solutions to selling it -- giving one property the competitive advantage over the rest," said Debbie Toohey of Debbie Toohey and Associates in Palm Springs, Calif. "Discriminating buyers primarily seek a turnkey, finished property that is ready to move in and enjoy."
• Price is critical. "Price your home aggressively and competitively to open it and expose it to the market," said Rich La Rue, president and broker of Realty Executives Desert Cities in Palm Springs. Don't overprice it, he emphasizes, because it will narrow market exposure -- and help sell everyone else's house.
"Price it for 90 days from now. You'll be ahead of the market, stand out from the rest of the inventory and be happily moved while the others sit on the market for sale for another nine months."
• Go for emotional appeal. Use lighting, flowers and accessories to create an emotional tie with the buyer, suggests Susan Eidler, with Desert Dreaming Realty in La Quinta, Calif. Provide buyers with plenty of light by opening curtains, shutters and drapes. Turn on lights at night to add warmth and color that make people feel welcome.
• Use incentives. "Consider offering an incentive to the buyer," La Rue recommends, such as paying closing costs or moving costs.
• Maximize curb appeal. First impressions are crucial, Eidler said. Mow the lawn, paint the front door, plant flowers.
• Take it to market. Seek out an active, aggressive company that knows how to expose your home to the marketplace in numerous ways, La Rue said.

Economist: Fed has the Power to End Housing Slump

Daily Real Estate News
September 7, 2007
Economist: Fed has the Power to End Housing Slump
At least one influential economist is urging the Federal Reserve to cut interest rates quickly and preemptively.Fed Board of Governors’ member Frederic S. Mishkin said in a white paper that the Fed could prevent a lot of damage from a severe housing slump by acting swiftly to cut interest rates aggressively before the slump gets any worse.Mishkin says the harm that falling home prices do to the economy is predictable, so there's no value in waiting until the damage is done. By acting quickly, he says, the Fed can buoy consumer spending and minimize the loss in economic output while suffering only a small increase in the inflation rate. Such a policy, he writes, "can be extremely successful at counteracting the real effects of [a] very large housing slump."The required cuts would actually be slightly less than the total under a typical monetary policy, he says, because they would forestall part of the economic decline. Rates would hit bottom about two years after a price decline begins. Under a traditional strategy, Mishkin says, rates wouldn't hit bottom until three or four years after a housing slump takes hold — and economic output would suffer a much bigger hit.Source: BusinessWeek Online, Peter Coy (09/07/07)

Mortgage Rates for Metrocities Mortgage September 7, 2007

Loan Program
Loan Amount
Interest Rate


30 Year Fixed
$417,000
6.250%


15 Year Fixed
$417,000
5.875%


7/1 ARM
$417,000
6.500%


5/1 ARM
$417,000
6.500%


3/1 ARM
$417,000
6.500%


6-Month Interest-Only ARM
$417,000
6.625%


1-Month Interest-Only ARM
$650,000
6.625%


30 Year Fixed
$650,000
7.375%


FOR MORE INFORMATION, CONTACT:
Ronald TennantSenior Mortgage ConsultantDirect Phone: 302.644.7964 Mobile Phone: 302.858.2289 Fax: 610.290.1937Email: rtennant@metrocitiesmtg.comWeb: www.ronaldtennant.com17316 Costal Highway Lewes, DE 19958

Subprime lending crisis changes buying, selling plans

Subprime lending crisis changes buying, selling plans
New contingencies, larger down payments becoming standard
Tuesday, September 04, 2007By Dian HymerInman News



It's hard to avoid negative news about the mortgage lending business. Defaults are rising, subprime lenders are closing shop, and fortunes could be lost as mortgage-backed securities go up in smoke. Sounds ominous, but how will these trends impact someone who's trying to buy or sell a home?
The first thing to understand is that lenders are moving back to basics. No- and very low-down-payment mortgages are available only to buyers with high credit scores. This means no more 100 percent and 95 percent mortgages for subprime borrowers.
Lenders are also backing away from low-documentation and stated-income mortgages. Many lenders now require buyers to have a cash down payment, good credit and the ability to verify income.
For years, home buyers stretched the price they could pay by using adjustable-rate and interest-only mortgages. Not long ago, lenders qualified buyers for these loan products based on the lower initial rates and on interest-only payments. Now, borrowers must qualify based on the fully indexed rate and amortized payment. In other words, qualifying for a home mortgage is more difficult.
Appraisals are also being scrutinized more carefully. If home prices have dropped in your neighborhood, the lender's underwriter might knock the appraised value down 5 percent and require you to increase your down payment accordingly. Some lenders now require two appraisals. Before the credit crisis, this was required only for loan amounts above $1 million. If your contract includes a contingency for the property to appraise for the purchase price, make sure that you have underwriting approval before you remove the contingency.
HOUSE HUNTING TIP: Buyers who were preapproved a month or more ago should check with their loan agent or mortgage broker to see how the credit crunch impacts them. Many mortgage bankers are either now out of the business or they're not issuing new loans. There were cases recently where fully approved buyers were unable to close because their lender stopped funding mortgages. Some real estate experts now recommend that buyers not remove their financing contingency until their loan is funded.
This can pose difficulties for sellers who often don't want to pack up and move out until they know the sale will close. Loan funding typically doesn't occur until the day before or the day of closing, depending on where the property is located. One way to protect the seller if the buyer's financing contingency is in effect until funding is to include a provision in the contract for the sellers to deliver possession of the property to the buyers several days or so after closing. This way the sellers aren't caught having to move back in if the sale doesn't close.
The good news is that it's business as usual for confirming loans that are sold to Freddie Mac and Fannie Mae. Unfortunately, for buyers in high-priced markets like the San Francisco Bay Area, these loans don't help many buyers. The loan limit for conforming loans is $417,000.
Rates on jumbo loans -- loans for more than $417,000 -- have increased 1 to 1.5 percent with some lenders. However, it's still possible for well-qualified buyers to find reasonably priced financing by going to a financial institution like Bank of America or Citibank. Lenders that have the ability to make loans to hold in their portfolio rather than to sell to investors are a good source of financing now. For instance, on Aug. 20, over a week after the credit crisis broke, Bank of America offered a 7.25 percent rate on a 30-year fixed-rate jumbo mortgage, with one point.
THE CLOSING: Until the dust settles, sellers should be wary of accepting an offer from a subprime buyer, or from any buyer who doesn't have approval from a lender that's likely to be around long enough to fund the loan.
Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

Pending home sales stink in July.

By ALAN ZIBEL AP Business Writer
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WASHINGTON (AP) -- Pending sales of existing homes fell in July to the lowest level in nearly six years as borrowers struggled to finalize home purchases, particularly in expensive areas.
The National Association of Realtors said its seasonally adjusted index of pending home sales for July fell 16.1 percent from a year ago and 12.2 percent from the prior month.
July's reading of 89.9 was the second-lowest ever for the index and its lowest since September 2001, when the economy was jolted by the terrorist attacks.
"Numbers like this should put to rest the belief that we've reached the bottom" in the housing market, said Joel Naroff, chief economist for Commerce Bancorp Inc. "There's still a lot of pain that's ahead of us."
The index is designed to predict sales levels over the following two months. A reading of 100 is equal to the average level of pending sales activity in 2001, when the index began.
Lawrence Yun, the Realtors trade group's senior economist, called the problems "temporary," and related to jumbo home loans above $417,000 that can't be packaged into securities sold to investors by government-sponsored mortgage giants Fannie Mae and Freddie Mac.
Some home purchases aren't closing because mortgage loans have been "falling through at the last moment," Yun said in a statement.
The real estate trade group found the biggest year-over-year pending sales declines in western states, which dropped 21.8 percent. The smallest drop was in the Northeast, which declined 10 percent.
With defaults rising among borrowers with weak credit, lenders have backed off from all but the safest mortgages, and many lenders making jumbo loans have demanded that borrowers pay higher rates.
Democratic lawmakers - and the Realtors' association - have called for Fannie Mae and Freddie Mac to be allowed to purchase loans above the current limit in high-cost areas along the East and West coasts.
So far the Bush administration has rejected calls to raise this limit, as well as limits on the amount of mortgages and mortgage-backed securities that Fannie and Freddie can hold on their books.
Bush on Friday announced his administration's first attempt to help borrowers in danger of foreclosure. He detailed plans to help about 80,000 additional borrowers by using the Federal Housing Administration, an agency that backs loans for low-income borrowers, to insure more loans.
Investors around the world have been spooked by the U.S. mortgage market's problems, amid uncertainty about how much they will grow. The Federal Deposit Insurance Corp. estimates that 2.5 million mortgages given to borrowers with weak credit will reset at higher rates and sometimes dramatically higher monthly payments by the end of next year.
As of June, 17.5 percent of subprime loans given to borrowers with weak credit nationwide were either 60 or more days delinquent or in foreclosure - more than double the last year's rate, according to FirstAmerican LoanPerformance, a research firm that tracks loans that aren't backed by Fannie Mae and Freddie Mac.

Stocks drop as home sales fall.

By TIM PARADIS AP Business Writer
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NEW YORK (AP) -- Stocks fell sharply Wednesday as a jittery Wall Street sold off on a report showing a large drop in pending home sales. The Dow Jones industrial average dropped about 160 points.
The National Association of Realtors said pending sales of existing homes fell in July to the lowest level in nearly six years. Though the report did support the argument for an interest rate cut, it also worried investors who are nervous about the housing market growing so weak that it drags the economy into recession.
Investors' concerns about spreading fallout from market turmoil also intensified after the European Central Bank said it would consider steps to curb recent euro money market upheaval. The statement was a sign the ECB might not lift its benchmark interest rate when it meets Thursday; there had been speculation it would raise the rate a quarter percentage point to 4.25 percent.
Later Wednesday, the Federal Reserve releases its Beige Book, which describes economic conditions in regions around the country. Wall Street could be disappointed if the Beige Book's largely anecdotal findings don't help make the case for a rate cut, which markets have been pining for.
The Fed has held rates steady for more than a year in a bid to reduce inflation that remains above its comfort level. The Beige Book could help indicate whether the economy has been slowed by a stumbling housing market, rising mortgage defaults and tightening access to credit. Stock markets have been volatile for more than a month over such concerns.
Investors had been somewhat more optimistic in recent sessions and sought stocks that have been turned into bargains by declines. The Dow Jones industrial average rose in three of the last four sessions, jumping 91 points Tuesday.
In midday trading, the Dow fell 156.97, or 1.17 percent, to 13,291.89.
Broader stock indicators also dropped. The Standard & Poor's 500 index fell 16.94, or 1.14 percent, to 1,472.48, and the Nasdaq composite index fell 18.05, or 0.69 percent, to 2,612.19.
Bond prices soared as investors again sought the safety of government debt. The yield on the 10-year Treasury note, which moves inversely to its price, fell to 4.48 percent from 4.55 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices slipped.
In corporate news, MGIC Investment Corp., a mortgage insurer, and Radian Group Inc., a credit risk manager, said Wednesday they are dropping plans to merge because of troubles in the mortgage industry. MGIC agreed in February to pay about $5 billion in stock for Radian. Neither side will pay a breakup fee.
Radian rose $1.84, or 10.2 percent, to $19.95, after tumbling in early trading. MGIC rose 63 cents, or 2.1 percent, to $30.96.
The deal's collapse could cause more anxiety on Wall Street as investors have been trying to determine whether the housing pullback and credit tightening might not only slow dealmaking but upend transactions already under way.
Mattel Inc. announced a third major recall of Chinese-made toys in little more than a month because of excessive amounts of lead paint. The world's largest toy maker said the move affects about 800,000 toys. Mattel fell 57 cents, or 2.6 percent, to $21.40.
Costco Wholesale Corp., the warehouse retailer, fell $3.16, or 5.1 percent, to $58.45 after reporting its August same-store sales rose a weaker-than-expected 2 percent largely due to strong international sales. Same-store sales, or sales at stores open at least a year, are a widely followed indicator of retail health.
Most major retailers will be reporting their August sales on Thursday.
Apple Inc. rose 34 cents to $144.53 ahead of an announcement Wednesday that analysts expect will include upgrades to its iPod digital media players.
Declining issues outnumbered advancers by more than 3 to 1 on the New York Stock Exchange, where volume came to 578.5 million shares.
The Russell 2000 index of smaller companies fell 9.16, or 1.14 percent, to 791.53.
Crude futures rose 12 cents to $75.20 per barrel on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average fell 1.60 percent. Britain's FTSE 100 dropped 1.66 percent, Germany's DAX index declined 1.73 percent, and France's CAC-40 tumbled 2.14 percent.
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Lenders asked to work with Borrowers

By MARTIN CRUTSINGER, Associated Press
Posted Wednesday, September 5, 2007Read Comments-->09/05/2007 -->
WASHINGTON -- The Federal Reserve and other banking regulators issued special guidance Tuesday urging loan service companies to work with borrowers in danger of defaulting on their home mortgages.
The new guidelines are not mandatory, but the regulators expressed the hope that companies that collect payments on mortgages would heed the advice.
Sheila Bair, chairman of the Federal Deposit Insurance Corp., said that mortgage collectors have the authority under accounting and tax rules to help deserving borrowers.
"More and more consumers with subprime and hybrid mortgage products are facing the very real prospect of losing their homes through foreclosure as their payments reset and become unaffordable," she said in a statement. "It is vital that mortgage servicers work proactively with borrowers facing much higher payments as their interest rates reset."
The banking regulators' guidance issued by the Fed and the other agencies followed President Bush's announcement Friday that his administration was putting forward proposals aimed at preventing defaults expected in the next two years as the housing industry goes through a serious downturn.
The effort by Bush and the banking agencies is an attempt to deal with growing anxiety as more and more homeowners worry about losing their homes because they can no longer meet the mortgage payments.
An estimated 2 million adjustable-rate mortgages are scheduled to reset by the end of 2008, going from low introductory interest rates to higher rates.
Already there has been a rising number of defaults of subprime mortgages, loans that were extended to borrowers with weak credit histories. Those rising defaults have roiled financial markets in recent weeks as investors have worried about whether the credit markets will be destabilized by a rising tide of bad loans.
The problem facing many homeowners with adjustable-rate mortgages is that those mortgages are now resetting at higher interest rates that in some cases are causing their monthly payments to double or even triple.
The guidelines were aimed at addressing the fact that, in many cases, the company in charge of collecting monthly mortgage payments is not the same company that originated the loan.
The guidance said that appropriate strategies to ward off defaults could include modifying the terms of the loan or deferring payments. Those modifications could include converting the loan from an adjustable-rate loan, one in which the interest rate resets at periodic intervals, to a fixed-rate mortgage, which would keep the monthly payments from going higher.
Other possible modifications would include extending the length of the loan and rolling the amount of payments that the borrower has missed into the total loan amount that must be paid off.