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 federal judge, Shira Scheindlin, has ruled that Morgan Stanley, Moody’s rating agency, and the S & P rating agency must defend themselves against fraud charges that have been filed against them for their AAA ratings of sub-prime mortgage packages sold during the height of sub-prime mortgage financing for housing.

While some defendants, including Bank of NY Mellon, have been left off the hook, this ruling opens the door to future and already pending suits against hedge funds and other investors, who reportedly “hyped” these investments as high quality investments to collect massive fees, while hiding the risks involved in these investments.

It’s about time that these companies and rating agencies are held accountable for their ratings of questionable investments. Perhaps this will lead to more responsible ratings in the future.

Foreclosures
Here’s an excerpt from an article in the NY Times published August 30, 2009.

A judge in NY is aggressively denying banks their "right" to foreclose on home owners for multiple reasons, but primarily because these banks cannot prove they own the loans, and therefore have the legal right to foreclose on these home owners. “I don’t want to put a family on the street unless it’s legitimate,” Justice Arthur M. Schack said.

“The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear. He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.”

After reading this article, I immediately called a real estate attorney I have worked with in Oregon. I asked if Oregon judges are helping out homeowners in the same way. He said that sadly, foreclosure laws are very state specific, and homeowners have found little to no relief in Oregon. However, judges in other states, such as Florida, are also taking on some of the biggest banks and ruling against their foreclosure motions for numerous reasons.

As I read this article, I had to think back to Helen, the woman I reported on, who is still in battle with Wells Fargo to get her loan modified. Wells is apparently talking to her now, and she is hopeful, but still cynical, that her loan will be modified. However, at times throughout this process, Wells has told Helen that her loan is owned by an investor which is why they are unable to modify her loan. If her loan is owned by an investor, how did they legally have the right to foreclose on her? Again, according to my attorney contact, servicing contracts between servicers and mortgage loan owners vary considerably. While the contract may provide for foreclosure authorization, it may not provide for modification authorization. Still, his comment about Helen's case is that the excuse about modifications and investors is pure bunk. If the bank wants to modify the loan, they can get it done.

And, so the world turns?

For more information about the law and home owners rights, click here.

To read about Helen and her battle with Wells Fargo, click here.

For more information on how to get a loan modification and tips to avoid foreclosure, click here.

To read more about the HAMP modification program and why it really isn't working, click here.

If you come across any additional news about the law and housing, I would love to hear it. Please feel free to send me an email, so I can follow up.

We have just heard from one lender only, that they are offering a new loan program called MAP. This program is designed to alleviate your fears about losing your job after you buy a house. Here are the details:

This program is for a housing purchase utilizing FHA and USDA rural housing loan programs only.

MAP is a Mortgage Assurance Program that will make up to 6 monthly payments for you, if you lose your job within the first 24 months after your loan closes.

DETAILS
Coverage Period
Twenty Four (24) months from the closing date of the mortgage.
Maximum Benefit
The lesser of the actual mortgage payment (PITI) or $1,800 per month.
Benefit Period
Up to a maximum of six (6) payments during the twenty four (24) month coverage term.
Vesting Period
Sixty (60) days from mortgage closing date (if purchaser becomes unemployed during this Vesting Period, there is no coverage for this occurrence of unemployment).
Waiting Period
Thirty (30) days from commencement of unemployment.
Eligibility
a) 18 to 66 years of age
b) Employed full time (minimum 30 hours/week) at time of mortgage closing
c) Cannot be self-employed
d) Must reside in US
Contribution Clause
When joint mortgagors are involved, benefit amount will be based on the percentage the unemployed person’s income is to total qualifying income at the time of mortgage closing.
Conditions
a) Unemployment must commence during coverage period
b) Coverage is limited to payments due 30 days after unemployment begins
c) Claimant must qualify for state unemployment benefits
d) Claims payments cease immediately upon re-employment
e) In the event of subsequent unemployment, a new 30 day Waiting Period applies
Exclusions
a) Voluntary unemployment
b) Disability or medical (mental or physical)
c) Reasons listed for denial of unemployment benefits
d) Borrowers that are self-employed or are aware of a pending lay-off
e) Strike/Lockout

The program is underwritten by an AM Best Rated Carrier. Seller concessions can be applied towards payment of this program.

Mortgage rates are fantastic today!  We are seeing several lenders with best rates on 30 year fixed rate mortgages at and even below 5%.  There are some lenders offering 5/1 ARM loans under 4% right now, and FHA financing is about as good as we have seen it all year.

The MAP program is being offered by a lender in the Pacific Northwest, but will do loans for other parts of the country on a case by case basis.  Other conditions can apply to acceptance into the program, such as counseling, education, and of course, eligibility.

Please feel free to contact me for more information.

Shelby

I have been posting my articles on Examiner.com for about a month now.  In addition to the types of blogs I used to post here, I have recently posted an article about short sales, "the end of your problems, or just the beginning. I've also recently posted articles about loan modifications.  Why aren't they getting done, and some tips to help you, and potentially avoid foreclosure.  Examiner.com is a site where you can find out all you want to know about any of approximately 2200 cities across the country.  They are selecting "experts" in many areas to write about their area of expertise.

I will be posting all my articles on Examiner.com going forward, so please click here for access to my page. 

And for those of you who have been following my blogs here, be assured that I will continue to post updates to market news and how it is affecting the mortgage industry and housing in general on Examiner.com.

You can also follow me on Twitter

shelbyb28@twitter.com

Upcoming articles will include:

1.  Green housing in Oregon, including interviews with contractors, photos and news about recent projects, solar installations, etc.

2.  Where is Portland ranked among the top 10, 20, 100 cities, and why?  Are we known for our wineries?  our micro-breweries? our singles scene?  How are these rankings affecting our popularity for those re-locating, and what are those re-locating here doing to our housing market?

3.  Short sales versus Foreclosure or Deed in Lieu of Foreclosure?  What are the pitfalls to avoid?  How do you go about it?  Are there any benefits to these solutions?

4.  Sellers get creative - is a lease option to purchase a good idea for you as a seller or buyer?  How does a lease option work.  What are the benefits?  How can this go wrong?

If any of the above topics sounds like information you would like to read, please go to my Examiner.com site and sign up as a subscriber, so you will be notified when articles are posted. 

Thank you so much for your patience and all your kind comments in the past. 

Shelby

Are you still waiting for a housing bottom? You may have already missed it. According to statistics recently released by Altos Research, housing prices have been on the rise in 21 of the 26 largest metropolitan areas for the last 3 months, while 22 of those areas showed increases last month. Yes, the Portland metro area did show an increase in median income prices for each of the last 3 months ending in June 2009. Our prices rose 0.5% last month, and 0.6% for the last 3 months.

Here are some highlights of the article:

• The largest price increases were in California, most notably in Los Angeles and San Diego.
• Housing prices continue to fall in Las Vegas
• Listed property inventory increased in 16 of the 26 markets, while it dropped in 10 of those markets. However, the rate of increase is slowing.
• In all areas, except Boston and San Francisco, the median period of time on the market was 100 days or more. In Portland, that number has increased to 110 days. Thank goodness we’re not in Miami where the median time it took for a house to sell was 262 days during the month of May 2009!
• The median price of homes listed in the Portland metro area as of the end of June was $342,133!
• The number of homes on the market in Portland, increased 1.8% for the month of June (these are houses listed by realtors, and does not account for homes for sale by owner). Total inventory as of the end of June was 14,336.
• Housing sales continue to increase, though most of the activity is in the lower end of the market (houses priced $250,000 and below.)

The article does mention that it is possible that median housing price increases peaked in June, and could even potentially drop again in the coming months.

All eyes remain on recovery from this economic crisis and the halt to increasing unemployment numbers. While most potential home buyers said they were waiting for the bottom before they buy, the truth is that many home buyers are still very nervous about losing their jobs, AND, many buyers either cannot qualify for financing, or think they cannot qualify. Because the media talks so much about how hard it is to obtain financing, many potential home buyers are not aware of the options that exist that might help them.

Please let me know if you have thought about getting into the housing market, but found you could not qualify for financing.  I can't promise to find a loan, but I will try. 

Best regards,

Shelby

I'm sure you all remember the "house flipping" phenomenom that contributed to the housing boom just a couple years ago. Guess what - it's back, but with a different twist. Investors are out there taking advantage of the glut of foreclosed properties on the market, and flipping these properties quickly, often without spending a cent on home repairs or upgrades.  Of course, the investor is making a profit on this sale, so, would you, as a home buyer, be getting a bargain? Possibly - that's really outside the scope of this "buyer beware." I do expect that most of you will do your own research to determine if these properties are a good value.

Here's the risk to you as a consumer. While there is probably no fraud involved in these transactions, as was the case during the housing boom, and while you may be getting a very good price for a very nice house, you may not be able to find good financing for your purchase.  Before you realize that financing options are scarce, you could jeopardize your earnest money deposit. FHA has had a 90 day "prior owner" rule for years, to discourage property flipping. They recently lifted that rule, but only for bank owned properties (foreclosures), and not even all bank owned properties will qualify for FHA financing. Fannie and Freddie do not have a 90 day flip rule, but they do look at "chain of title" to determine if the property you want to finance appears to be a flip. Most lenders will not finance properties that have not been owned 90 days by the seller.

So, how do you protect yourself? There are a few things you can and should do before you make an offer.

• • Chain of title - a record of who has owned the property and for what length of time, is a matter of public record, and is available to you through the county records.
• • If you are working with a realtor, your realtor can research the MLS for records of prior sales (assuming the house has been listed for sale).
• • Ask the seller. If the seller lies, he/she is commiting fraud and can be fined heavily, as well as be sentenced to jail time, so it is unlikely this information will be withheld. 
• • Make the 90 day rule a condition of your purchase offer, AND detail the type of financing you want, or require, as an additional condition of your purchase. (I strongly suggest you have a realtor or attorney write up your purchase offer, to protect yourself, if you suspect house flipping is part of the transaction you are entertaining.)
• • Talk to your lender, to determine IF financing is available, and what the terms of the financing will be.

When you limit your financing options, you may be forced to settle for higher rates, higher closing costs, and perhaps less attractive loan terms, in order to close your loan.

If any of you has experienced a problem with financing due to a 90 day rule, please comment on this post, to share your experience and to help others.

Make it a great day today. And, try to stay cool. We are in for a very hot week.

Best regards,

There was a lot of positive news this morning which has Wall Street investors happy, and therefore selling off bonds and buying stocks. The DOW is currently up more than 200 points, the highest level in 2009. The NASDAQ is also rallying up close to 50 points today.

• Home resales increased in June 3.6%, more than was forecast. This marks the third consecutive month of increased sales, and is attributed to lower borrowing rates, the $8000 tax incentive, and of course, the lower house prices. This gain in sales seems to confirm Bernanke's remarks to Congress this week, that the housing slump "appears to be moderating." Other economists agree. Michelle Meyer, an economist at Barclays Capital in New York commented that the "bottoming process is under way."
• The percentage of homes that were distressed sales or foreclosed homes fell to 31% last month which is a huge decline from the 45% - 50% we have seen in prior months. FAlling property values are both helping and hurting demand, because some people who wish to take advantage of low prices and move are unable to do so due to owing more than their houses are worth (making them unable to sell right now.)
• Earnings reports from some of the DOW 30 (biggest companies) continue to beat expectations, though most companies are reporting higher revenues based on lower costs, rather than on increased sales.
• The level of continuing unemployment claims decreased by 88,000 for the week ending July 11. This is the lowest number since April 2009. 41 states and territories reported increased claims while 12 reported a decrease.

There was other news today that apparently is already "priced into the market", including:

• Wells Fargo reported that bad loans jumped in numbers last quarter as more and more Americans are unable to keep up with payments. "Assets no longer collecting interest cimbed 45% as of June 30, compared to the first quarter of 2009."
• U.S. initial jobless claims increased by 30,000 last week.

With the stock market rallying so significantly today, and breaking through all sorts of points of resistance, there have been numerous comments by analysts on Wall Street that this rally could continue at least for the short term.

We are seeing the big investors (mutual funds, EFTs, etc.) moving back into the markets, and bonds are selling off. Mortgage rates have risen this morning along with the 10 year Treasury bond yield. The mortgage market opened with rates higher this morning, and we have seen at least 2 rate increases since the open. However, for those of you with investments in the stock market, this is a great day.!

Are you enjoying the cooler weather today? Get out and enjoy - we're in for a scorcher starting tomorrow and continuing into next week.

Have a fabulous day today. The week is almost over.

Best regards,

Shelby

Lic # ML-3604

Mortgage rates are falling today! Almost all lenders now have "best" rates on the 30 year fixed rate mortgage a bit below 5% this afternoon. Rates on other types of loans are falling in tandem. Jumbo loans are making a comeback. Please call for more information on rates and terms available. Jumbo loans (since they are not regulated by Fannie and Freddie) tend to differ a lot from lender to lender, so we need quite a bit of information to determine which lender fits you best.

While the stock market closed up for the 7th straight day, based on better than expected earnings reports, there was also news that has put "fear" back into the hearts of some of the larger institutional investors, driving those funds back into bonds. The 10 year Treasury bond closed below 3.5% today for the first time in over a week.

Oil crossed over the $65/barrel price again this morning, but closed just below $65/barrel. Nevertheless, I noticed gas prices falling? I don't know what's going on there, since wholesale prices for gasoline are up. I have to confess that oil and gasoline are not areas that I follow closely, except to watch their effect on inflation (and therefore bond yields). I'm happy to see prices dropping at the pump though.

News that is driving fear into investors surrounds CIT group, one of the major lenders for small and mid sized businesses. The government has decided that CIT is "not too big to fail" and has left this financial giant to flounder, seeking private capital, and perhaps heading for a Chapter 11 bankruptcy. CIT did receive TARP funds in the original round of bailouts, so if they file for bankruptcy, those TARP funds will not be repaid to taxpayers. The reason for the investor fear though is if CIT collapses, it could deal a "crippling blow to an economy still bleeding hundreds of thousands of jobs a month..." Apparently CIT is a very big player in the clothing and merchandise industries.

In the meatime, we are hearing more and more that the recession is winding down and we should start looking for recovery mode in the next 1 to 2 quarters (by the end of 2009!). Your mantra today is "please let this be true." It would be so great to see our economy stabilizing, people back to work, housing prices stable and even rising? Is that too much to ask?

Fed Chairman Ben Bernanke was testifying before Congress today, giving his state of the economy speech, and trying to assure Congress that the Feds do have a handle on this runaway government spending, and can take on a "supercop role" if need be, in policing and monitoring the big financial institutions.

It's amazing and disconcerting to me that one body (the Feds) should have the power to control monetary policy, police the financial institutions, and is now getting involved in the policing of the mortgage industry as well. Fed Chief, Bernanke, is urging Congress to keep proposals to audit the Fed away from monetary policy duties. Excuse me, but does this man think he should have absolute power over the monetary policy of this country, without being subject to audit? OK - stepping off my soapbox, because I've wandered away from the subject of mortgages...

Say YAY today. With all this turmoil up on Capitol Hill, the investment community is nervous enough to be moving funds back into Treasury bonds and driving mortgage rates down. That's the crux of the news today, in a nutshell.

Make it a great afternoon.

Warm regards,

Shelby Bateson

503-819-6545 phone

Lic # ML-3604

* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.

Happy HOT Monday. If you love hot weather, you're going to love this week. It is forecast that we could hit 100 degrees by this weekend. For myself, I'll stay inside thank you. I melt in the hot weather.

The stock market is up again, for the 6th straight session. So far, the DOW is up approximately 7% since last Monday. Usually when we see the stock market up, we see investors running from bonds, so mortgage rates rise too. But, here's what we're hearing today. So far, 69 of the companies on the S & P 500 have reported earnings. 59 of those companies have beat estimates on earnings, so the investors on Wall Street are happy folks and buying. BUT, this is a huge earnings week with many of the major S & P players yet to report. Oil is up to almost $65/barrel, and most metal commodities, like gold, silver, etc, are way up as well.

Companies like Apple and Caterpillar are "biggies" that sometimes put a damper on earnings week, and have yet to report. While they may report good earnings, they tend to also add comments that earnings going forward are iffy. So, some investors are still buying bonds. Also, we have to keep in perspective that some of these great earnings are from banks and investment companies, that are cashing in on higher fees and stock issuance to cover their TARP loans. Others are retailers that are reporting better than expected earnings, but have slashed their workforces and inventories to bare minimums to survive. So, yes, investors are still nervous, especially as Fed Chairman Ben Bernanke will be testifying before Congress this week again about the state of the economy and an exit strategy from all this stimulus and federal spending, to keep future inflation at bay.

In addition to a proposed exit strategy, it is anticipated that Bernanke wants to keep interest rates low as long as possible to help our employment numbers. But, in order to be allowed that leeway, he will have to convince Congress that he also has a plan to keep inflation in check. (I wouldn't want to be Ben Bernanke right now, would you?)

So far, most economists are saying that "leading indicators signal the U.S. economy is nearing the end of this recession." However, the caveat is that unemployment is still way too high and housing prices, over much of the nation, have yet to stabilize. However, more and more economists are predicting that this recession could end by the end of this year! Of special significance are three factors:

1. The fantastic earnings reports by lenders indicates that credit is loosening up a bit - which is good news for both businesses and consumers.

2. Building permits for new home construction were up 8.9% in June. This will put many people back to work.

3. The Federal Reserve is sitting on $877.1 billion dollars in bank excess reserves. This is money that is "available for lending," but is being held by the Federal Reserve instead to keep banks from pumping those funds into the economy too quickly (which would result in inflation.) The Feds are paying interest on those reserves (with taxpayer dollars, of course), to incent the banks to not lend too much too quickly.

The end result is that mortgage rates are fantastic. Best rates on 30 year fixed rate loans are hovering around the 5% range again. 5/1 ARMs are way down in mid 4% range. However, we probably should not expect rates to stay this low for the long term. One of the leading indicators of a healthy economy is higher yields on long term treasury bonds, so savvy investors are watching for yields to rise as soon as possible. With economic recovery potentially around the corner, bond yields, and mortgage rates will begin to rise.

Have a fabulous week.

Best regards,

Shelby Bateson

503-819-6545 phone

1-866-626-2828 fax

Lic # ML-3604

* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.

Merrill Lynch analysts announced yesterday afternoon that the recession is OVER!! While that is certainly a feel good sentiment, perhaps Merrill is overlooking all those people still out of work, or still in fear of losing their jobs? What about the forecast, just this week, that unemployment could rise as high as 13%? A survey done by Realty.com just released this week, shows that more than 50% of potential first time homebuyers are reluctant to make that purchase for fear of losing their jobs.

Nevertheless, mortgage rates are on the rise today as business earnings continue to come in at or above estimates. Retailers, in general are reporting better numbers than expected (which is what prompted Merrill's remarks). The yield on the 10 year Treasury bond rose to 3.45% yesterday, a huge jump over the close Monday at 3.34%. Today the yield jumped to 3.61%, so yes, mortgage rates are definitely on the rise again! We have had several rate increases already today.

Last night, Intel reported much better than expected earnings, which has led to a huge stock market rally today. Intel earnings are considered very significant because they portend the trend in technology buying, which, of course, is very good news for the economy. In addition, there was some positive news about on orders and shipments in the manufacturing index, the first positive news we've seen in this sector is quite some time. The DOW closed up 256 points, while the NASDAQ closed up 63 points. The S & P crossed a critical point of resistance at 925 to close at 933.

At the same time, global confidence continues to drop to new lows as unemployment is surging worldwide. (Are you listening Merrill?) Government stimulus efforts are doing little to reduce unemployment as most of the stimulus dollars have yet to move into those "shovel ready" jobs out there. But, here's a green shoot for you...combined sales of both existing and new construction homes increased in May for the 4th straight month. Perhaps the housing market really is bottoming out finally at least nationally, even if we're not feeling it as much here in Portland.

So, are we in for another round of gains on the stock market, leading to ever higher mortgage rates? Mortgage applications were up the last two weeks, but then rates had dropped again. Currently, 30 year fixed rate mortgages are above 5%** again, though some lenders do still have ARM loans below 5%**. That still remains to be seen, as many of the "bellwethers" of the market have yet to report earnings. Any really bad earnings reports in the next week or so, could send the stock market tumbling again, with bond yields and mortgage rates dropping in tandem. As always, I'll keep you posted as news unwinds. In the meantime, mortgage rates in the 5% range are still very good rates, historically speaking. We all want to see those rates in the 4% range, but is that realistic long term? I'd love to hear your comments.

Warm regards,

Shelby Bateson

Town & Country Mortgage

503-819-6545 phone

Lic # ML-3604