FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware

There is no question that things are still tough out there for a great many people. My market like some others has shown improvement. How could it not though? We are slowly coming out of one of the worst periods in out history. Many forget that we are in what is traditionally the best time of year to sell homes (Spring). This could be a blip and things could easily slip backwards as we head into the fall.

I am not sure I agree with you conclusion about 15k not helping. The 8k certainly has in my neck of the woods as the 1st time buyers are dominating the activity.

IT'S TOO LATE.

• Real Estate is very local.  Some markets are flourishing now, some are average, and some are just outright sluggish. Part of the problem is that many first time homebuyers can't buy, which doesn't allow for those that own a home to move up or out. I call this the ripple effect. I'll talk about this later.

NO MARKET IS "FLOURISHING NOW".  Some are experiencing a spring bump.  Even that is anemic.

• The news reports that people are spending more money. Okay, but what about unemployment that might hit 10% very soon. What about the fact that many Americans just got their tax refunds back and might just be willing to spend it, rather than save. The summer and nicer weather makes many of us spend also. 

Folks are not spending if they are paying their last dime to pour money down the black hole of negative equity.

• Many companies reducing their prices, such as airlines and companies that book trips. People are using this to their advantage. Yet, specific foods are costing much more, which isn't mentioned often.  

All staples including food is costing more.  Goods and services on which the consumer relies are going up.  Folks have little to spare and what they have THEY ARE SAVING. 

Anything written to the contrary is either a fig newton of someone's imagination or they can't see the shrunken economy because they're blinded by the dribble from NAR or the media or the government. 

It ain't pretty.  It just is.  No one is being honest with the public.  Our economy is a good 5-10 years from recovery because about 15,000,000 American home owners are out of the market, any market. 

You're exactly right. 

I believe we do need to face reality.  These problems are deep and WA is incompetent (for the most part).

The solution needs to be rooted in sane rationale decisions and your suggestion could be the seed.

I don't know any influential people but I will write my senators and congressmen.  Or anything else I can do to push a sane agenda to fix the market.

The tax credit can have an impact depending on your area. If the 8,000 or 15,000 tax credit gets opened up to all buyers then I think that it will have a big impact. You're right, without the down payments to purchase the homes, the number of foreclosures with only rise.

Interesting post and interesting comments. There is that underlying unease that what we are seeing may only be temporary . It will be interesting to follow. I am hoping the worst is over but uneasy that it may not be

BILL.... .  thanks for making some of my points, that spring has something to do with activity picking up and that this could be a blip in today's market.

In regards to the tax credit of $8,000?  As I stated, many will disagree with me on this. I did state that it has helped, but not as much as it was projected. There are tons of people that could be very good to excellent homebuyers, but they don't have all or part of the down payment. If we could come up with a better solution, I would think we could do much better. Again, just my opinion... and I am working on some stats.  thanks

LENN.... . I will agree that many aren't spending or are having difficulty.  I was just trying to describe why some news reports are saying that the market is getting better, that people are starting to spend more. 

Overall, we both agree that much of what is written about or talked about in the news, is very misleading. And my prediction is that it would take us 3 to 5 years to make a decent recovery. But I think we need to do more what I spoke about now, to make this happen. Thanks for your input.

MARK.... . I don't think many of us are facing reality. I talk to my parents about this and they are hearing the tragic stories from friends and neighbors... but we don't hear about it as much from the media.  And you hit the nail on the head, that we need sane decisions... not pipe dreams and hope.

DARRELL aka Integrity Mortgage..... I will semi agree and state that the 15 k tax credit will help.  But keep in mind, you need people to buy those homes from those that aren't first time homebuyers. It's a cycle and without the first time homebuyer, the 15 k tax credit won't flourish as much as many would think. Besides, I know many that could be 2nd time buyers who don't have as much money to make this work... or who are under water.

CHARLIE.....  hate to pick on your statement, but that is what I see happening... that many "HOPE"... and the gov't, Obama, puts out these programs to help, but you need the investors and lenders to be on board.  To me, it's just smoke and mirrors, just getting our "hope" level to rise more. I hope to see some good thoughts in these comments. I truly think we need to push this in front of our gov't.  thanks

You really hit home with me on investors. Those loans have tightened up so much that it is prohibitive for investors to buy especially if they own 4 properties or more. Investors would absorb much more inventory, and let's face it, we have lots more renters now.

Jeff unfortunately nothing is going to solve these problems except time.  By giving down payment assistance to people who have no savings ability or shouldn't be buying home is just going to restart the problem in 5 years.  Time is the answer 

Way to go and keep giving us updated information so that we can do our jobs in the lcoal markets we serve

Excellent post.  Investors are doing very good business buying below retail value.  Most Realtors business is at retail where we buy wholesale.  Big difference.

Jeff thanks for the post.   As stated before I believe 100% FHA Financings could help more than some other options.   As a Tax Payer, I see little incentive to offering free money as the $8,000 or $15,000 do.   I say that because money does not just get printed nor does it grow on trees, it is paid by one taxpayer or another.   Where I might contradict myself is with Local Incentives, the offering of other incentives on a City, County or State Basic would be much better than a one size fits all policy or Tax Credit. 

You many not have the problem of investors imposing restrictions above and beyond FHA or FannieMae's guidelines, But I see that as an additional source of the shrinking pool of potential buyers.  

Really good points all Jeff. We've both talked about how we fear the long term effect of our government spending and inflation.

Recent slowdowns in our industry, prompted by rate increases are going to bring us front and center of a lot of government discussion too I think. Your timing is very right and your message spot-on. We who are on the street need to make our voices heard and I look forward to helping out however I can.

That said, I've let you down on those USDA stats. I'm calling as soon as I send this comment!

Thanks buddy!

Gerry Suarez, Jr.

Your FHA Loan Pro!

The record needs to be set straight here, many people lost their homes to foreclosure here because it was a conscious decision after losing VALUE!  Not because of readjusting ARMs, bad loans, subprime, so on and so forth.  If ANYTHING tightening guidelines and loss of liberal lending products caused the loss in value due to buyers inability to finance so it was a simple supply and demand issue.  I don't want to minimize the fact that there are foreclosures from hardships but if you are a pretend investor and your pretend (no money out of pocket) investment loses money on paper, the numbers don't make sense.

ON THE FLIP NOTE, we have very little inventory here and I don't know how much more we can stimulate our buyer demand.  We need the inventory before we can start pushing newer products with great incentives.  I do realize real estate is local too so I am just saying what is going on in my part of the world.

Good article, but with regard to the Title:  The housing market isn't broken.  It's working just as it should to flush out the greed and senseless hazard of over consuming, buying without thinking and speculation.  With all due respect to those who were innocent bystanders and got caught up in the mess, lost their job lost their savings and in some cases lost a marraige.

When markets retreat, it's not because something is wrong, its because something was wrong.  We are reaping what has been sown

Hi Jeff, Good post. Thanks for sharing.

Best - Sash

Jeff - you're right, there are still a ton of problems. Yes, the tax credit has spurred lots of activity, but may who want to buy can't despite this because the short sales languish, there is tremendous competition for the these and there is only 1 winner. Yep, lots more activity, which is great, but we are heading into summer when it tends to slow down - time will tell if the increases in volume and declining inventories will shfit or not.

Interest rates have gone up significantly and this has pushed many out of the market pretty quickly.  Higher end buyesr with great incomes and credit cannot get loans so they can buy.

Oh, and gas prices here, at least, are almost all at $3.00 for regular - hmm, are the banks and the gas companies in cahoots?

Jeff

I have written a book and dedicated my blog to a solution for this housing depression.  Apparently nobody is listening. :)

Jeff, very worthy of a Feature!  Congrats!

Once again, the varying opinions interest me as much as the blog.

#'s are regional, cultural, and market area driven.  Ideas and hard work are not.

I have heard so many times, "that doenst work here", or " we dont' do that here", or we dont do alot of that here in our area: etc...etc...etc..  I completely disagree.  Consumers are consumers.  Selling is selling.  Hard work is hard work...not matter where you are!!!  Why do you think people in the midwest, when they move to another part of the country, have such an easy time of getting a job...it is because of work ethic!

part of that work, hard work, and work ETHIC involves staying on top of changes in the industry, getting them RIGHT, and getting the word out in a positive manner!

Your blog here accomplishes a few of these things...It states fact, opinion, and forecast, all in the same sentence!  Nice job...I think this is a good example of WHY people blog in the first place!

Open discussion, debate, arguements (if done professionally), and most importantly, for fact finding missions!

I got you some #'s as you know Jeff, and will work on more.  My local office and AE"s are not coming through very well!

Thanks!  -  Darin

Jeff - I'm trying to decide whether to leave my (most likely) lengthy comments here or reply in a post.  I have so many pull quotes that I want to discuss in my "retort" that I'm torn on what to do.  Give me a couple of minutes and I'll figure it out.

Really good post and I like your ideas with the tax credit and down payment assistance. 

Jeff - I'm a firm believer in opening up credit to seasoned and capable of Real Estate Investors.  I think this will help clean up the inventory and also help heal the loss reserves of the Banks.  I also agree with you in listening to the folks that are in the trenches, their experience and voices need to be heard and will probably help more than it could possibly hurt.  Nice work here, man.  This is more fodder that will hopefully lead a pro-active effort in curing some of the wounds that our industry and economy are experiencing.

Jason - Just out of curiousity, what do you feel about opening credit up for non-investors?  Not to the levels once seen before, but a least a little less stringent?

Jeff - I decided to make it a post and not a comment.

I have always liked Seller DPA but I felt that it should be more risk based or have minimums for reserves, credit scores and DTI ratio.

I think that the $8,000 is a very good incentive but it should be opened up to more than just first time buyers.

Foreclosures are not that bad in my area but I could see aprogram for them such as HUD or Fannie Mae's Home Paths where a first timer can get a low down payment and have money available to fix up these properties.

I also like using the $8,000 being used for down payment. That would be skin in the game, as it is money you would be receiving if you close. Why not monetize?

So far no one has figured out what to do.

Lenn says it's too late. I hope not, but she's right way too often to ignore, so buckle up for a bad ride!

Others offer wishful thinking. I wish they had some answers!

The news media can't do anything helpful, because good news (real or fictional) isn't great for selling papers and the bad news (all too easy to find) isn't great for selling papers, either. Quandary!

Simply put, housing and jobs are the keys to recovery. I agree. We who are in the industry should keep working on it until we have more solutions than problems.

I think your trying your best with good ideas already presented.  I'm in IL so every politician I know is in jail, going to jail or being investigated!  The media is no help because you just can't explain this situation in a 10 second media spot then go to commercial.

Jeff: Your right. Allowing the $8000 credit toward a down payment for FHA loans would unlock the market. Raising the $8000 credit doesn't solve anything. The big problem in the real estate market is that people are upside down. This, as you know has nothing to do with rates. A 4% mortgage doesn't overcome a negative loan to value. The 105 program was a start but does not go far enough. Keep up the good fight.

Jeff,  Not an attempt to high-jack or interfere with your post.   

Pete,  How would it UNLOCK THE MARKET????  8,000 More of a down payment equates to approx 48.00 per month. even less if the 8,000 was the total.  If that is the difference between approval and not, I might be concerned if the loan should be approved in the first place.  

Because of the past, I can see where a lender might increase the closing costs to the buyer telling them they are not really paying them it is from the Federal Government.    Just as the buyer sees it as Free Money, the lender of course would Like some.   I can even imagine some Realtors adding a Buyers Brokers Fee. 

JOE.... .  in regards to how many properties you can have, Fannie Mae changed this to 10. Now, many lenders/investors have lowered this to 6, 5, or 4.  But I can still do up to 10. The only problem is that there is a 1.75 penalty in points, even at 25% down.  But yes, we could really use some investor loans that would allow less restrictive guidelines and or pricing penalties. And as I mentioned, to make sure that these investors would be very qualified and proven.  thanks

RUSS.... .  I am going to agree to disagree.  I do say that in due time, the market will correct itself. But you talk about the buyers having time to save. I hate to burst that bubble of thinking, but it's harder for many to save, just because everything else is more expensive now.  And if you think about it, if people are renting and can pay their rent, and their housing expense is no more than 10% than what their rent was, then what's the real issue?  Seriously, it's tougher to save now, especially depending their situation.  And keep this in mind... I have been doing seller-funded DPA's since 1997 and I haven't had one foreclose on me. I take pride in this and how I qualify people. ANd you know what, most of my DPA loans, my clients were coming up with anything from $1,000 down to $100 out of pocket. At my current company, we like to see at least $500 into the transaction. You might be surprised, but I believe that there are plenty of first time homebuyers that don't have cash, that would be excellent buyers. So I disagree with your overall statement.  But thanks for your input.

ERIC.... .  my pleasure and thanks for the polite compliment.  I hope this information does help some.  thanks

TONY.... .  investors are in a good market now, with prices being much lower. The problem is that guidelines are stricter and that you need at least 20% or more down now. And thanks for the polite compliment.

TIM.... . sure, 100% financing could help more than the other solutions that were mentioned.  But what about the no skin in the transaction?  I would rather see the money being used as part of the down payment.  We do both agree that we don't see as much value if they were to raise the 15 k.

But I will say this, the state, local, and federal sources, we the tax payers pay for this.  So how is this better than the tax credit?  Especially when there are other restrictions on these specific programs. Also, sometimes the rates are higher.  Just my food for thought.

GERRY.... . I agree, recent slowdowns and higher rates, will bring us front and center on these problems. ANd I am looking forward to those figures. chop chop...  ;o)   And thanks for those very kind words & compliments.  thanks

Jeff, the market is different in every area. That is true. I had no idea Renee's area had a shortage of homes.

We are very busy right now and have been for the last month, yet the prices are so low that our average sales price in April was 154K.

Terrible...

Jeff,   Most of the other options call for the buyer not to have any SKIN in the transcation either.  And actually worse because of the Free Money. 

Regarding the City, County or State Program, I am talking about ones that have been around a lot longer than the 8,000 Tax Credit.  I would much prefer these extra dollars to be administered on the local level than a one size fits all program which the 8,000 was.  

If the 100% financing on FHA were approved it would be to all Owner Occupied Buyers regardless of first time status.    As to investors some of the local city and county programs do offer assistance to Investors to rehab homes.  Again on a LOCAL level versus a Nationwide basis.   One size does not fit all. 

One last thought, how many times have you seen the Federal Government Throw Money at a Problem and saw where it actually worked. 

Jeff- Great thoughts !  And thus, thought provoking.  Matt did a great job with his follow-up post as well.  I agree that there is much we all can do being on the front lines of the industry.  I recently wrote a blog post saying that this is probably the best time in someones lifetime to purchase a property, especially being a first time homebuyer !  I cited NAR's housing affordability index as one of the main reasons.  I have always said that the tax credit should have been higher and available to ALL buyers !  It was a shame as it was so close.  I also agree that there should be more stimulus for investors to buy properties.  Right now, it is basically impossible without super credit and an A plus report card and if you own more than 4 properties, forget it.  Love the ideas !  Let's make some things happen !

Obviously we need to come up with ideas - NAR cant.

Just as values were inflated 2 years ago, they are depressed now.  Its not too much to ask for borrowers to have some skin in the game when they are buying a home for 50-75 cents on the dollar.

It sounds like history repeating itself.

But this time, instead of the Republicans waiting to act two years after the fact, they tried to do something about it right away - and it wasn't the right action to take.

Oh, wait...I think I might need to turn this comment into a blog post....

RENEE.... . I will agree & disagree. I agree about those that put hardly any money into the transaction that were so-called investors, that there were many that walked away from the property. I spoke to a few of them, that they were running into trouble and that they wanted to save their primary house first... and didn't care about the investment property. So a very good point that I forgot about.

But I know more and have spoken to many that even lost value in their property, yet it was their primary property, that they fought to keep their property. The people that I found that were upside down, but just couldn't make their payments, they left their properties. I am sure that there are many different stories on this. But I think we could best say that those inexperienced/fake investors, just tried to make a quick buck and got caught with their pants down.

In regards to your area, that inventory is moving very well, this is great for you all. Thanks for your input & feedback.

AARON... . I agree with your statement that something was wrong. But I also feel that something is wrong also... and it's those programs that the gov't comes out with now, trying to stimulate the economy. But in regards to your statement about my title, that you said the housing market isn't broken???  I never said broken.  Just because I said that we need to fix it, you are assuming that I am stating broken. But why couldn't I say that it's broken? You can fix something that is wrong, not on target, etc, etc... and this doesn't state that it's broken. I will agree that it takes time for the market to fix itself. But at the same time, I also believe that you can intervene to make something work better. And I believe if we don't try, that it will get worse before it gets better. I personally think that we don't have that "time" that we have had in the past, to allow the market to adjust by itself.. thanks

SASH..... . my pleasure and thanks for the compliment.

JEFF D. ...... . we will agree that it has sparked interest.  But interest rates are in the mind... rates were higher back in Jan. of 2009 and even in October of 2008.  In my opinion, this is more of a mind thing. I remember being just as busy back in Sept. & Oct. of 2008, when rates were higher and that there was no tax credit. I just think we need to educate better... but if we can use this tax credit better and use it for the down payment, I truly believe that would open up the flood gates.  thanks

MARK.... .  thanks for the link.  I will take a look at it later... maybe I'll listen some.  ;o)

DARIN.... . we definitely can't leave out the fact that markets are different. And I will agree, work ethic is critical in many areas, even in real estate & such. Overall, thanks for the kind words and for the polite compliments. I love thought provoking topics and conversation. Thanks for adding to this.

MATT.... . and that you got 25 pts... ;o)  <teasing>  seriously, I see that you wrote a post, so I will be reading it soon. I just wanted to get back and comment to some.  thanks

One thing aout Real Estate is that it is local.. some areas are doing better than others...

How about . . . we make it a point that borrowers can't re-fi on equity that is only there on paper (an appraisal) for the first 5 years of their mortgage?

They can re-fi for better interest, or to buy down points, but to pull cash OUT within the first 5 years (or 7) they can't do.  Period.

CHUCK.... . I truly think if we can work on the tax credit & down payment assistance, that it would really help this economy. Thanks for the polite compliment.

JASON..... . this is so true, getting real estate investors into our market, capable ones, that would clean up the inventory and help with the banks losses. And overall?  The gov't does need to hear those in the trenches.  Thanks for the kind words.

MATT S. .... . In regards to your question to Jason... are you talking about making it a tad easier on those for conventional loans?  Because if I am correct, FHA hasn't really changed much, except for the investors wanting a 620 credit score. In most other cases, the credit stuff hasn't changed as much. Just a very small change.  I would really want 600 credit scores across the board, I think this would help a lot. Yes, there are some companies that can still go below 600, but I don't see these companies actually closing these people, not unless your ratios are extremely low and or you have like 20% down. That is not the norm. And Matt... I read your post... excellent job, and thanks.

MICHAEL.... . we seem to agree on most topics then. Yes, go ahead and make it a tad harder for seller-funded DPA loans... maybe keeping the ratios inline and having reserves at least. I helped one couple to where they were able to keep $14,000 in their pocket and only spend $1,000.

In regards to programs for foreclosures...  HUD has a $100 down program if you buy a HUD program. Why can't we do the same for regular foreclosures... or something close???  Is HUD only worried about themselves?  thanks for the input.

DAWN.... . I see where Lenn is coming from, but I try to keep it real, not hoping, that it's not too late. Yes, late to a certain degree, but that doing something now, can still help. The wishful thinkers? I just don't have time for them.  Let's just roll up ourselves and get down to business. None of this smoke & mirrors that the gov't seems to throw our way. Thanks for your input.

LYN.... . how funny... yes, I watch the news from time to time.. lol  But I would agree, that we need huge media coverage for this to possibly have an affect.  In any case, thanks for the polite compliment.

Matt S - "Jason - Just out of curiousity, what do you feel about opening credit up for non-investors?  Not to the levels once seen before, but a least a little less stringent?"  I'm all for that.  It seems common sense has left lending these days.  I'd also be willing to open up the sub-prime market at LTV's of 75% to 85% tops, full doc only, at rates 2.5% to 3% higher than the best rates the market has to offer.  But that's another post in of itself:)

Jeff: I think you are right on. I nominate you, Dan Hartman, and Jason Sardi to represent us in Washington. I'd step forward myself, but for family constraints. Blame for this crisis is misplaced, in my mind. If we could obtain good data about those in foreclosure, we may be able to influence the solutions that are being offered. Intuitively, I doubt that zero down programs were signigicant. I would like to see more thoughtful analysis put forth by news sources, I think it's better than a year ago, but we are still seeing the general public and even policy makers informed by hearsay and speculation. Get on it, I'm backing you!!! Shari Kay Hunter, your personal loan officer in Minnesota

The moratorium on foreclosures has actually hurt.  You now do not have enough inventory on the market and people are still setting in homes they cannot afford.  It just put the problem off and did damage in the interim.

I think a real estate mortgage think tank is just what is needed.  Then both the Realtor(r) lobby and the Mortgage Bankers lobby would be very powerful in getting something done.  One thing I have found out in working on many Realtor(r) issues with our local legislature, is that they do NOT understand our business!  By the way while you are at it, it is important that VA allow the Buyer to fee part of the BA fee if the Buyer so chooses.  All other programs including FHA changed the prohibition against the Buyer paying any portion of the BA fee. 

Regarding investors and foreclosures... when it comes to condominium, the investors are actually making it IMPOSSIBLE for the average buyer to be able to purchase a condomium.  What we have experience is that the investors swoop up the condo, do some cosmestics and rent them out!  Now the investor ratio is to high and FHA buyers cannot purchase even though the condo is on the FHA approved list... so this is a significant problem.

PETE.... .  we mostly agree on what we would think would be the basic concepts.  Hence why our gov't is not great at this, because it deals with common sense, not smoke and mirrors.... in my opinion.  thanks

TIM.... .  I don't consider that hijacking.  But I will disagree with your first statement, questioning on how the $8,000 being used for the down payment would unlock the market.  You made reference to the payment dropping $43 a month.  I think you missed the whole point here.  Many first time homebuyers don't have the 3.5% required down payment. That is my argument. It's not getting the borrower to qualify, by lowering the payment. It goes back to the fact that the average person is having a hard time saving money in today's economy. And just because of this, in my opinion, it doesn't make them a bad borrower. I can elaborate more on this in another post.

In regards to your second part...  I am sure this already happens when the buyers get seller help. So in reality, this will happen with the credit or without the credit. It would come down to HUD watching over the lenders, and it would come down to us good loan officers educating the borrowers in how to shop correctly... and what to watch for. I already picked up 2 new clients over the weekend that read my blogs, and found out a lie.  Please read : Origination fees... what are they and what to look out for...   Overall, I just view the credit differently than you do, not lowering the borrowers payment, but putting money in their pocket to use as the down payment.  thanks for your feedback.

MISSY.... . yes, I knew about Renee's market, just from talking to her and from reading her blogs in the last 8 months.  From talking to her, it's been insane. Hence why I always say that real estate is local. In regards to your market, it's good that you are busy. But it stinks in a way that values are way down. But this is good for the first time homebuyer though, right?  thanks

TIM.... . I agree that there are local, state, and federal programs that have been around for decades.  But with these programs, they still follow the same down payment requirements depending on the type of loan program... ie: Conventional, VA, USDA, and FHA. 

About the FHA 100%, if it was allowed, I know it would be open to anyone and not just first time homebuyers. But the problem here is that HUD went out of their way to help kill the seller-funded DPA's and congress killed the 100% FHA program.  But you know what, by not having either one of these programs, it hurts the housing market and adds to the crisis. Now, this is my opinion....but I have my good reasons for this.

Lastly, we both would agree that when the gov't throws money at us or at programs, this doesn't work as much as they would make us believe.  Hence why I decided to write this... we need to get more involved and make the politicians and media aware...  thanks

CHRISTOPHER & STEPHANIE.... .  I think many of us would agree that this is one of the best times to buy.  Yes, values are down and rates are/were the lowest... and still very low. But I know of so many other buyers that would be great, if they had the 3.5% down payment.

In regards to the tax credit, I don't think it should be higher... but I do agree that it should be available to all buyers. One of the main reasons is that we, the tax payer, will be paying for this tax credit.

In regards to investors, making it easier for them. I agree with this.. easier and cheaper.   Thanks for your input and feedback.

DENNIS.... . I agree... and we need more people to pitch in with more ideas... or to strengthen the ones mentioned.  thanks

JIM.... . I am going to disagree with that statement. In my opinion, it shouldn't matter how cheaply you buy the house, and that you then should have skin in the game. In order to spark this housing market and to get foreclosures off the market, we need to put money in buyer's pockets so they can buy. What's the really big difference that the $8,000 credit can't be used for the down payment.  We are giving the money anyhow, right?  I truly think that we would see a big change in buying power if that money could be used for the down payment also, for the initial down payment.  thanks

Jeff ... I like some of your ideas, and you seem to be focusing on what we can do to clear the REO properties from the market.

Real estate is local, and here in Orange County, CA, we simply don't have enough good homes on the market. REOs are selling quickly with ave time on market of less than 30 days. We need more REO properties to get to the market, so that we Realtors can sell them, make our buyer clients happy, and get the market moving forward again.

Our Orange County housing market is being hurt by too many short listings, which are clogging up our system, taking way too much time for our buyers, and giving our buyers and folks false expectations.

Thanks for this article.

I agree with Gene R at other comment here ... that slow down by banks and moratorium on foreclosures here in California is not the best solution.  And it's hurting our real estate sales market.  We do not have enough inventory of homes and property on the market here in Orange County.  Let's get the California foreclosures going, get mortgage investors into home ownership, or bank owners after trustee sales, and get the REOs on the market.

WILLIAM.... .  waiting or not, I just think they were careless in their actions. Just putting programs out there, knowing damn well that it would cost money, but only help the few... at least in my opinion. If you write a blog, please let me know.  thanks

ROLAND..... . I would agree with both statements... and I think many others would agree. 

CARLA.... . I would disagree with that.... why?  We can't punish people just because of what happened to the real estate market in regards to values the last 2 1/2 years.  It's my house and if I have decent cash equity, I should be able to get some of it. The problem with some of the past programs was that subprime allowed you to cash-out up to 100% of the value. To me, that's just pure greed on the lenders side.  Some checks and balances should be applied. I think 90% under FHA is a good LTV. And the fact that it's mandatory to wait 12 months, which is a seasoning requirement.  But 5 years?  I think that is too strict....  But thanks for your input.

JASON.... . I will agree, that common sense in some cases, has left the ball field. I am still not a big fan with subprime going up to 85%... besides, would you lower the credit scores if you are talking about subprime?  If not, then they would be a better canidate for FHA loans anyhow...  curious, what other requirements would you have for subprime, other than LTV's from 75% to 85%?  DTI ratios and fico scores?  Because these would need to be discussed, not just LTV. In my opinion was those subprime loans even at 85% with a 550 credit score and DTI's of 50%... yes, a 50% fron end ratio.

SHARI.... . thanks for the endoresment and for the vote of confidence. I will need to go look up Dan Hartman though, since I am not familar with him.  But yes, I also believe that 100% financing wasn't the main culprit, unless.... it was subprime 100% financing, which had much lower scores and higher debt-to-income ratios... or those 80/20 no doc loans that carried 13% interest rates on the 2nd.  Just so someone could buy the house... Overall, thanks for the kind words.

GENE.... . I am semi confused. I think we need to go back to the fact that real estate is local. Sure, in some areas, inventory is low... in many other cases, inventory is high. So you kind of lost me there. But I will disagree that people are still getting into homes that they can't afford. Could you please define this?  Give some examples of this?  FHA, USDA, and VA are great examples with their checks and balances. I would agree with your statement when we had 100% subprime financing with 580 credit scores and debt-to-income ratios of 50%.... or when you could get a conventional loan with 100% financing, with 55% to 60% back-end ratios.  But when I am doing a FHA loan, the client has 4 months in reserves... 3.5% down, good credit scores, good credit history, has a 35% front ratio... and that their back-end ratio is a 52%... and they their new mortgage payment is only about $200 or less than what they paid in rent... I would then still disagree with your statement.  But I would love to listen in detail what examples that you have.  thanks

JOAN.... . I think many of us would agree that hearing these resolutions from those in the trenches would be a great thing. And maybe I am very tired, but you lost me with the BA stuff, stating that you can do it with FHA, but not with VA... could you elaborate on this?

In regards to condominiums... I hear your frustration... but I will have to agree with those investor guidelines for several reasons. Think about it, if you were a lender, would you lend so freely if the investor concentration was very high?  I value my money... not all investments are sound... and if you have many condos go belly up then, that makes the whole condo association in bigger trouble.  This is something that we are experiencing now... the condo associations budgets, and how in trouble they are or have no reserves.  Just my .02 and opinion, without going into much detail.  thanks for your input and feedback.

HARRISON... . Thanks for your polite compliments.  But I am not fully aware or up-to-date on the short listings and that they are clogging up the system. 

In regards to this comment that you made...  "We do not have enough inventory of homes and property on the market here in Orange County." 

I am semi confused by that comment. If you don't have much inventory, isn't that a good thing, besides not making an income? Couldn't this mean that homes are selling quickly?  Or are you trying to say that many of the foreclosures take forever to get onto the market, hence why inventory is slow...  please clarify if you wouldn't mind.  thanks and thanks for your feedback.

Jeff: I don't see any more opening of the market as far as DPA or anything like that. I think the government is finished with the incentives. And I'm o.k. with that. There comes a time where the market needs to start running its course. Yes, my borrowers who had DPA haven't defaulted yet. And they may not. My wife and I had to save and get gifted money to buy our place. And it worked. Every day people are coming to the table with their own funds. Or they're waiting, just like in the old days. Obviously, it would be great news for us in the mortgage business if DPA or other programs existed again. What may lead to a resugence of these types of programs is a healthy economy again. That will happen again perhaps as soon as next year. Another real estate boom is in the cards. Then more people will qualify due to looser underwriting, etc. At that point, hold onto your hat! After all, we live in a boom or bust business. I'm also not sure we ever learn from our past mistakes! Take care.

Jeff, I have emailed your post to various lawmakers in Maryland asking if they would participate in a roundtable including mortgage lenders, real estate practioners, and lawmakers.  I do hope they read your post and the follow-up post by Matt Stigliano.  Next on my agenda, Dave Stevens who is President of my company and Obama's announced appointee for heading HUD.

What more can I add? The post and comments are great. We did break this. WE broke it. Why would any of us think for one second the government can fix it? What have they EVER fixed other than air traffic control? And the NAR? Save your fees and join the NRA instead.

That dead old lie that people who can't afford a down payment don't deserve a home is the tiredest, lamest babble around. It's not what they haven't saved that matters it's what they haven't paid in the past that matters. There are hundreds of thousands of people who have not missed payments but only have a couple of thousand dollars saved. People who live in apartments with no tax breaks who can buy a home with PITIA lower than their rent, for example. When I read or hear anyone who truly believes you don't deserve a home if you don't have 10% down (or whatever amount) I want to take them around by the hand and show them the 94% of borrowers who used SELLER FUNDED DPA who never missed a payment.

Stop runaway socialism NOW. Reverse the trend. Let the people fix the problem.

Jeff- From a very selfish standpoint, I list short sales and don't work with foreclosures. Why would I want buyers to be given incentives to buy foreclosures? Those are my short sale competition. Does not make sense.

I do agree with 100% financing. Always have, always will.

I also agree with giving huge incentives to investors as I wrote about in my post, Real Estate- supply and demand. If they would waive the capital gains, and give investors incentives to keep the properties and rent them out- that would be a huge help with getting rid of inventory.

Selfishly speaking- I am having a blast in this market. I am busy, having fun, and closing deals. SO I am not complaining. I think this whole mess needs to work itself out through free markets and time. Katerina

Jeff and Jason - I was just curious to hear your opinions on the credit issue as it has been the biggest stumbling block for me in the recent past with clients.  Because lenders are being so cautious, there isn't room for any common sense lending...where lenders would say "ok, so your scores aren't brilliant, but I can see some good signs here...you've done a, b, and c right, so we're going to give you the loan."  It's all so tight that if you don't fit the model of "perfection" they want, lenders will refuse the loan.  There needs to be some common sense in lending.  Like Ken Cook said, just because someone has little cash saved up, doesn't mean they won't make a good borrower.  I say the same with credit.  We all have bumps in the road with credit (well everyone I know does, there are very few perfect people when it comes to credit) and they need to be weighed against the other facts, not just just stuffed in one end of a machine and spit out another.

PAUL.... . I would agree that we should let the market alone, to rebound on it's own. That would be in an okay world, one that is not really in trouble. But we are truly in trouble. There are now reports that the market is rebounding. I have a problem with that and will write a blog about it tomorrow. The basic reason is timing... we just left spring and just went into summer.  May and June historically have been busy months. Kids now out of school, etc, etc. 

My whole point to this is I truly feel that we need to implement a few things, or we will climb deeper into trouble, especially when we hit the end of the summer and late fall. Just my opinion, but nobody seems to be talking about the writing on the wall. And I don't think we need a healthy economy for seller-funded DPA's to come back... we need programs like this now, not later. Later could very well be to late. As I mentioned, why not tie some of these programs into certain rules. Example.. if you use a seller-funded DPA loan, that it has to be on a foreclosure.  And or that you have to have 2 months of your own reserves. thanks

MARGARET.... . I really appreciate that.  Let me know if you get any responses.  I really want to try and get something together, and I won't be able to do any of this by myself. Let me know what the president of your company says. Maybe he has some ties or knows some people, since you all are closer to D.C and such.  thanks

KEN.... .  I couldn't agree more with your statement, "That dead old lie that people who can't afford a down payment don't deserve a home is the tiredest, lamest babble around."

It really ticks me off and between the two of us, who have done a lot of FHA loans and those that put hardly anything out of pocket, the majority have done well.  Sure, you will have foreclosures, but this wasn't the problem.  With this current attitude, it will hurt us even more now and later in the near future. Sure, we keep hearing ..  I forgot where I left off, considering I started this reply about 5 hours ago.. lol

Overall, we do need to let the people fix these problems and not the gov't.  thanks for your input.

KATERINA... . I will agree with your last statement. That we should allow time so we can work through this crisis.  But I think we need more than time, because of what the gov't has done in recent months and the false hope.  I see other avenues that we can take control to better our economy.

In regards to the short sales vs foreclosures.  I don't think you are being selfish... you just have found a niche and that you are extremely good at, where others just stink at. I also love this kind of market, because it flushes out the bad apples, those loan officers that are barely average. But I am finding out that more of them are hanging onto dear life, lying to consumers just to get a deal or give false hope. I just picked up my 3rd deal in 12 days that was dealing with a previous lender... for various reasons. But the sad part is that I am getting them after the fact, not in the beginning.

Overall, I think many of us would agree that we need some sort of 100% financing, whether it's a program or seller help, or gov't funded in a way. But most of my suggestions up top, aren't going to cost the tax payers any money.  Why can't we start with these?  It just makes me wonder over and over.  Again, thanks for your feedback.

MATT.... . I am thinking about doing a blog on this by the end of the week.  I agree and disagree.  The main thing with the credit scores is that it's a barometer of what can be done and what shouldn't.  It's based on a study of the majority of loans that were done with scores less than 600 and less than 620.  The investors are trying to limit risk, that's all.  Yes, it does hurt some that still have decent credit, that fall below these marks....  but they are the minority.  Yes, we need some common sense, but that is not the majority. If you go back in history, those with lower credit scores are typically your higher risk borrowers. 

Overall, I truly understand with what you are saying and would agree to a certain extent. But the fact of the matter is that we need some cut off and not just maybes. Even those cut offs in regards to many subprime mortgages is what got us in trouble, even with little to no money down.  Greed got the best of us there.  Time will tell... but I don't see the credit scores getting better for over 2 years.  We are not experiencing even pricing hits on scores up to 660... yes, 660... rut row...  so it could get worse, if investors keep losing...  thanks  All of this is just my opinion/.02.

Jeff....I'm all in.  There are more ideas as well.  I'm in for fighting for this. Here's the deal.  There are a myriad of things that the government can do.  The stimulus package equivocates out to each able bodied (and competent) American getting a check for $347,000.  Why not just cut checks to each one?  Oh yeah...inflation.

I'm not all that down with the zero down programs, but with proper overlays, why not?  It's not the skin in the game, its the ability to make money and whether or not the borrower pays creditors back.

Investor stuff....I don't really care.  Let's get more people just buying homes. 

What cracks me up is that Obama is saying that banks need to lend more $$$$.  At the same time he says that they need to show how they can cover all the debts that they have.  If they need to cover the loans they already have, then don't mandate that they make more loans.  You know?  Crazy to say the least.  There are a million more ideas out here.  You have some great ones, but solotions do abound.  I say....GAME ON!

Jeff - I'm here because you pointed me to this from my post. I see your thoughts and I believe that the real estate market needs to correct itself. However, even with some tax stimulation, it may take a while. I'm not saying fixing it band-aid style but many of my clients (I can only speak from my experiences) that they are planning to purchase homes, now have the incentives to make it happen before the dateline. Clearly, this is a selfish reason.