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Economic News - REO Conference Updates

September 2009 - Five Star Conference in Dallas/Fort Worth

Reese Freyer attended the conference. Bottom line. The servicers and lenders have thousands of properties in the default stage and are not releasing them into the market. There are a few reasons why this could be the case.

1. RTC type situation.

2. Mark to market accounting could make them look like they are broke and will be taken over by the FDIC.

The properties are there and will be coming out in the market in some form or fashion. Yesterday, Fannie and Freedie announced they have 100,000.00 in proeprties now.


5/25/2009 - Wells Fargo & Company reports 24% of homeowners have no savings to cover their living expenses should they lose their job. I bet they have a negative net worth as well. Consumers are taking drastic actions to reduce debt, and increase their savings. Lastly, a question was asked to folks what it would take to boost confidence, and many replied, "an improvement in their personal situation"


4/18/2005 - "The Effect of the New Bankruptcy Reform Act"

House passes bankruptcy bill

What you should know about a bill that will make it tougher for consumers to clear their debts.

The House vote on Thursday virtually guarantees the bill will become law since President Bush has indicated he will sign it. The president could sign the legislation as early as next week.

The reform bill will make filing for bankruptcy more difficult, and it will give creditors more recourse in some instances. Under current law, the majority of consumers who file for bankruptcy do so either under Chapter 7 or under Chapter 13.

In a Chapter 7 bankruptcy, assets (minus those exempted by your state) are liquidated and given to creditors, and many of debts are cancelled, giving what‘s known as a "fresh start." In 2004, over 1.1 million people filed for Chapter 7, accounting for roughly 72 percent of non-business bankruptcies.

In a Chapter 13 bankruptcy, borrowers are put on a repayment plan of up to five years. Any debts not addressed by the repayment plan don‘t have to be paid. Last year, there were 445,574 Chapter 13 filings.

After the bill becomes law, fewer people will be allowed to file under Chapter 7; more will be forced to file under Chapter 13.

8 April 2005 - National housing values by local markets

The Local Market Monitor, a Wellesley, Mass., real-estate consulting company, prepared for Consumer Reports this list of more than 125 housing markets in the U.S. The average home price is listed for each metropolitan area. Areas where real-estate values seem unusually high based on historical price/income ratios are rated as "overpriced. " Markets where prices and incomes were near equilibrium ratios, or the "affordable price," are listed as "fair value." Markets where home prices seem low relative to incomes are listed as "undervalued." The right-hand columns list annual price gains (or losses) through the third quarter of 2004, and quarter to quarter for 2004, according to data compiled by the Office of Federal Housing Enterprise Oversight (OFHEO).

Sources: The Local Market Monitor, the Federal Financial Institutions Examination Council, and the Office of Federal Housing Enterprise Oversight.

Home Value Ratings for 2004 (estimated, based on third quarter 2004)

Home prices Rating Annual price increases (OFHEO)
Actual Affordable price Differential 2000 2001 2002 2003 2004
Q1 2004
Q2 2004
U.S. average
$223,400 7% 8% 7% 7% 8% 10% 13%
Akron, OH
160,900 $171,400 -6% Fair value 3 5 3 3 3 3 4
Albany-Schenectady-Troy, NY
174,500 170,500 2 Fair value 3 6 7 9 12 14 19
Albuquerque, NM
171,000 174,000 -2 Fair value 1 4 3 4 5 6 8
Allentown-Bethlehem, PA
171,700 173,500 -1 Fair value 2 5 6 7 10 12 15
Anchorage, AK
243,700 251,100 -3 Fair value 2 5 7 6 9 9 13
Ann Arbor, MI
224,000 206,500 8 Fair value 8 6 5 3 4 5 6
Atlanta, GA
204,600 217,400 -6 Fair value 8 7 4 4 4 4 5
Atlantic City-Cape May, NJ
299,800 191,600 56 Overpriced 11 9 10 13 16 18 24
Augusta-Aiken, GA
140,600 159,100 -12 Undervalued 3 5 2 4 4 6 6
Austin-San Marcos, TX
172,700 169,000 2 Fair value 14 8 1 1 1 1 2
Bakersfield, CA
178,800 142,800 25 Overpriced 2 7 9 13 18 21 31
Baltimore, MD
246,000 219,100 12 Fair value 6 6 9 10 14 16 23
Baton Rouge, LA
145,000 167,600 -13 Undervalued 3 4 3 4 3 3 4
Bergen-Passaic, NJ
370,700 313,700 18 Overpriced 11 9 12 10 NA NA NA
Birmingham, AL
168,900 175,200 -4 Fair value 4 5 4 5 5 4 6
Boise City, ID
156,100 156,200 0 Fair value 3 6 3 4 4 5 8
Boston, MA
365,500 294,900 24 Overpriced 16 12 12 9 9 9 13
Boulder-Longmont, CO
283,800 233,700 21 Overpriced 15 10 4 2 1 2 3
Bremerton, WA
230,700 206,000 12 Fair value 6 6 6 6 9 12 17
Brownsville-Harlingen-San Benito, TX
115,700 120,700 -4 Fair value 2 6 3 4 1 2 4
Buffalo-Niagara, NY
135,100 139,500 -3 Fair value 1 5 4 4 5 7 7
Burlington, VT
216,400 226,000 -4 Fair value 9 8 8 6 10 12 18
Home prices Rating Annual price increases (OFHEO)
Actual Affordable price Differential 2000 2001 2002 2003 2004
Q1 2004
Q2 2004
Charleston, WV
$127,900 $149,400 -14% Undervalued 2% 3% 3% 3% 3% 4% 3%
Charleston-North Charleston, SC
222,900 191,800 16 Overpriced 11 7 5 5 7 7 11
Charlotte-Gastonia, NC
185,200 203,000 -9 Fair value 4 4 2 3 2 3 3
Chattanooga, TN
147,900 146,000 1 Fair value 4 6 4 5 5 5 6
Chicago, IL
257,600 248,900 4 Fair value 8 6 7 6 7 8 11
Cincinnati, OH
177,900 182,900 -3 Fair value 6 4 3 3 4 4 5
Cleveland-Lorain-Elyria, OH
168,200 170,600 -1 Fair value 4 5 3 3 4 4 5
Colorado Springs, CO
211,100 188,500 12 Fair value 7 8 5 3 4 4 6
Columbia, SC
167,800 173,800 -3 Fair value 5 5 3 4 5 4 6
Columbus, OH
189,300 201,800 -6 Fair value 5 5 4 4 4 4 5
Dallas, TX
169,200 186,100 -9 Fair value 7 6 4 3 2 3 3
Davenport-Moline-Rock Island, IL
121,600 129,600 -6 Fair value 5 4 4 4 4 5 6
Daytona Beach, FL
182,000 153,400 19 Overpriced 7 7 9 11 13 16 21
Dayton-Springfield, OH
139,900 157,400 -11 Undervalued 3 4 2 3 4 3 5
Denver, CO
244,100 220,400 11 Fair value 15 9 5 2 3 3 4
Des Moines, IA
168,100 177,000 -5 Fair value 5 5 4 4 5 6 6
Detroit, MI
196,700 182,600 8 Fair value 8 5 4 3 4 4 5
El Paso, TX
121,100 137,200 -12 Undervalued 0 5 2 5 5 4 7
Eugene-Springfield, OR
170,000 157,900 8 Fair value 2 4 2 4 6 8 13
Fargo-Moorhead, ND
136,400 152,200 -10 Undervalued 2 6 5 7 7 8 11
Fayetteville-Springdale, AR
157,000 149,500 5 Fair value 3 6 4 6 8 8 10
Fort Collins, CO
213,700 216,000 -1 Fair value 11 9 6 3 3 4 4
Fort Lauderdale, FL
238,500 175,700 36 Overpriced 9 12 14 13 NA NA NA
Fort Myers-Cape Coral, FL
222,600 200,700 11 Fair value 7 10 13 10 NA NA NA
Fort Pierce-Port St. Lucie, FL
220,600 175,100 26 Overpriced 5 8 14 16 20 23 28
Fort Wayne, IN
128,800 139,300 -8 Fair value 4 3 3 2 2 2 2
Fort Worth-Arlington, TX
146,500 173,000 -15 Undervalued 6 6 3 3 NA NA NA
Fresno, CA
225,500 153,500 47 Overpriced 4 8 13 17 22 24 29
Home prices Rating Annual price increases (OFHEO)
Actual Affordable price Differential 2000 2001 2002 2003 2004
Q1 2004
Q2 2004
Gary, IN
$155,600 $160,800 -3% Fair value 3% 4% 3% 3% NA NA NA
Grand Rapids-Muskegon, MI
159,800 142,600 12 Fair value 7 4 4 3 4 5 4
Greensboro-Winston-Salem, NC
157,400 164,700 -4 Fair value 4 4 2 3 3 2 3
Greenville-Spartanburg, SC
154,400 166,200 -7 Fair value 4 5 3 3 2 3 4
Harrisburg-Lebanon, PA
146,200 165,400 -12 Undervalued 2 4 3 5 5 7 8
Hartford, CT
217,900 216,400 1 Fair value 7 7 8 7 9 10 14
Honolulu, HI
333,900 267,100 25 Overpriced 2 7 7 9 15 17 25
Houston, TX
159,300 179,600 -11 Undervalued 8 6 4 4 4 4 5
Indianapolis, IN
167,800 182,900 -8 Fair value 4 5 3 3 2 3 3
Jackson, MS
141,900 166,800 -15 Undervalued 3 4 3 4 4 4 6
Jacksonville, FL
201,500 180,100 12 Fair value 8 8 8 8 9 11 14
Kansas City, MO
175,200 187,100 -6 Fair value 8 5 5 4 4 5 7
Knoxville, TN
150,900 156,400 -4 Fair value 4 5 4 5 5 6 7
Lakeland-Winter Haven, FL
142,400 145,900 -2 Fair value 4 6 5 6 8 8 13
Lansing-East Lansing, MI
161,100 156,000 3 Fair value 8 5 5 5 5 5 8
Las Vegas, NV
242,900 199,700 22 Overpriced 4 6 6 9 18 27 42
Lexington, KY
162,700 165,100 -1 Fair value 6 4 3 4 6 6 7
Little Rock-N. Little Rock, AR
145,000 154,700 -6 Fair value 3 4 3 4 4 6 6
Los Angeles-Long Beach, CA
384,600 273,700 41 Overpriced 8 9 13 14 19 23 30
Louisville, KY
161,800 167,700 -3 Fair value 6 5 4 4 4 5 6
Home prices Rating Annual price increases (OFHEO)
Actual Affordable price Differential 2000 2001 2002 2003 2004
Q1 2004
Q2 2004
Madison, WI
$216,400 $194,200 11% Fair value 6% 5% 6% 5% 7% 9% 11%
McAllen-Edinburg-Mission, TX
115,100 108,500 6 Fair value 4 4 3 4 3 5 5
Melbourne-Titusville, FL
190,100 163,500 16 Overpriced 4 9 9 12 NA NA NA
Memphis, TN
162,700 185,800 -12 Undervalued 3 4 2 3 2 3 4
Miami, FL
251,600 190,200 32 Overpriced 7 11 14 13 16 17 24
Middlesex-Somerset, NJ
318,000 263,200 21 Overpriced 11 9 11 9 NA NA NA
Milwaukee-Waukesha, WI
201,700 181,200 11 Fair value 6 5 5 5 7 9 13
Minneapolis-St.Paul, MN
247,700 204,600 21 Overpriced 12 10 9 8 9 10 12
Mobile, AL
164,000 150,600 9 Fair value 4 5 2 4 1 2 4
Modesto, CA
250,600 162,200 54 Overpriced 10 20 12 13 14 18 23
Monmouth-Ocean, NJ
316,500 222,200 42 Overpriced 11 11 15 12 NA NA NA
Montgomery, AL
134,700 163,100 -17 Undervalued 1 5 2 3 2 3 3
Myrtle Beach, SC
147,400 154,600 -5 Fair value 5 5 3 4 5 7 8
Naples, FL
324,000 250,900 29 Overpriced 13 12 11 9 11 14 19
Nashville, TN
176,500 173,500 2 Fair value 4 4 3 3 4 4 6
Nassau-Suffolk, NY
392,500 267,500 47 Overpriced 16 11 14 13 NA NA NA
New Haven-Meriden, CT
233,300 242,600 -4 Fair value 8 8 10 10 NA NA NA
New Orleans, LA
170,700 180,600 -5 Fair value 4 6 4 6 NA NA NA
New York City, NY
399,600 318,300 26 Overpriced 14 11 11 10 12 13 19
Newark, NJ
332,900 289,100 15 Overpriced 11 8 12 10 NA NA NA
Norfolk-Virginia Beach, VA
207,600 186,500 11 Fair value 5 5 7 8 13 16 23
Oakland, CA
411,300 285,900 44 Overpriced 22 15 7 7 NA NA NA
Ocala, FL
129,300 131,100 -1 Fair value 4 8 5 7 9 9 13
Oklahoma City, OK
134,400 135,000 0 Fair value 5 5 4 5 6 6 6
Olympia, WA
194,200 182,000 7 Fair value 3 4 4 5 8 10 14
Omaha, NE
158,600 166,500 -5 Fair value 5 3 3 3 5 5 6
Orange County, CA
458,600 288,300 59 Overpriced 11 11 13 13 NA NA NA
Orlando, FL
193,900 173,800 12 Fair value 7 8 7 7 9 11 16
Home prices Rating Annual price increases (OFHEO)
Actual Affordable price Differential 2000 2001 2002 2003 2004
Q1 2004
Q2 2004
Pensacola, FL
$157,900 $164,000 -4% Fair value 4% 5% 4% 5% 8% 10% 14%
Peoria-Pekin, IL
125,300 135,500 -8 Fair value 5 4 3 3 4 5 6
Philadelphia, PA
216,800 188,800 15 Fair value 6 7 9 9 12 14 18
Phoenix-Mesa, AZ
199,200 182,400 9 Fair value 7 6 5 5 7 9 13
Pittsburgh, PA
148,900 151,700 -2 Fair value 5 6 5 5 5 6 7
Portland, ME
236,400 207,000 14 Fair value 9 10 10 10 11 13 15
Portland Vancouver, OR
207,500 171,500 21 Overpriced 3 5 4 4 6 8 11
Portsmouth-Rochester, NH
263,800 235,800 12 Fair value 15 10 11 9 NA NA NA
Providence-Fall River, RI
263,200 192,000 37 Overpriced 11 11 15 14 15 17 21
Provo-Orem, UT
176,700 165,400 7 Fair value 2 4 1 2 2 2 3
Raleigh-Durham, NC
198,400 212,400 -7 Fair value 4 4 2 2 2 3 3
Reno, NV
264,100 224,900 17 Overpriced 4 6 8 9 15 21 32
Richmond-Petersburg, VA
195,900 196,200 0 Fair value 6 5 6 6 8 9 13
Riverside-San Bernardino, CA
268,600 187,600 43 Overpriced 8 9 12 15 22 26 34
Rochester, NY
135,400 160,200 -16 Undervalued 2 3 3 4 4 5 5
Rockford, IL
127,300 141,300 -10 Fair value 3 3 3 3 6 6 9
Sacramento, CA
298,400 199,000 50 Overpriced 12 16 12 13 15 19 27
Salem, OR
161,800 139,600 16 Overpriced 2 5 3 3 4 6 8
Salinas, CA
411,800 267,300 54 Overpriced 23 18 7 10 13 20 28
Salt Lake City-Ogden, UT
176,200 162,800 8 Fair value 2 4 1 2 2 3 4
San Antonio, TX
143,700 153,900 -7 Fair value 4 5 4 5 4 3 6
San Diego, CA
417,900 266,600 57 Overpriced 15 12 15 15 17 21 30
San Francisco, CA
577,000 454,100 27 Overpriced 24 11 4 5 7 11 17
San Jose, CA
463,900 368,900 26 Overpriced 27 11 0 2 3 7 12
Santa Barbara-Santa Maria, CA
479,000 313,700 53 Overpriced 13 14 16 14 15 18 28
Santa Rosa, CA
378,600 248,000 53 Overpriced 24 15 6 8 11 14 19
Sarasota-Bradenton, FL
241,400 212,900 13 Fair value 9 10 10 11 13 15 20
Seattle-Bellevue, WA
275,000 250,700 10 Fair value 9 6 5 4 6 8 12
Shreveport-Bossier City, LA
131,300 133,100 -1 Fair value 3 5 4 5 7 6 7
Sioux Falls, SD
139,100 149,500 -7 Fair value 5 4 4 3 4 6 5
Spokane, WA
143,100 130,700 9 Fair value 0 4 3 4 5 8 11
Springfield, MA
188,900 174,500 8 Fair value 5 8 9 9 11 13 16
St. Louis, MO
173,000 175,200 -1 Fair value 7 5 6 5 7 8 10
Stamford-Norwalk, CT
579,700 - 14 8 10 7 NA NA NA
Stockton-Lodi, CA
274,800 182,200 51 Overpriced 14 20 8 10 12 16 22
Syracuse, NY
126,800 145,000 -13 Undervalued 3 5 6 5 6 8 10
Home prices Rating Annual price increases (OFHEO)
Actual Affordable price Differential 2000 2001 2002 2003 2004
Q1 2004
Q2 2004
Tacoma, WA
$206,000 $190,300 8% Fair value 6% 6% 5% 6% NA NA NA
Tallahassee, FL
171,400 168,200 2 Fair value 3 7 5 8 9 14 15
Tampa-St. Petersburg, FL
186,800 168,100 11 Fair value 9 10 9 9 11 14 18
Toledo, OH
149,300 150,700 -1 Fair value 6 5 3 4 5 5 5
Trenton, NJ
255,900 227,000 13 Fair value 9 10 12 10 10 12 17
Tucson, AZ
185,000 168,300 10 Fair value 5 6 6 6 8 10 14
Tulsa, OK
135,800 153,500 -12 Undervalued 5 6 3 3 4 3 3
Vallejo-Fairfield, CA
348,100 230,500 51 Overpriced 20 16 11 12 14 16 22
Ventura, CA
437,400 276,700 58 Overpriced 12 9 13 14 19 22 31
Washington, DC
310,700 238,900 30 Overpriced 10 11 12 10 14 16 24
West Palm Beach-Boca Raton, FL
262,300 202,800 29 Overpriced 9 9 13 13 NA NA NA
Wichita, KS
124,800 136,600 -9 Fair value 4 4 3 3 3 4 4
Wilmington-Newark, DE
213,800 216,700 -1 Fair value 6 6 7 9 NA NA NA
Worcester, MA
266,000 211,900 26 Overpriced 13 12 13 10 10 11 15
York, PA
143,700 146,800 -2 Fair value 1 5 3 5 7 8 11

For complete Ratings and recommendations of appliances, cars & trucks, electronic gear, and much more, subscribe today to access all of ConsumerReports.org.

Filing A Dispossessory - Eviction Process

This is the process to file a Dispossessory. To do that I will need the date of the foreclosure, the full property address and the name of the borrower or borrowers as they apppear on your Security Deed. If you can get that to me I will file the Dispossessory today.

Once the Dispossessory is filed, it will then need to be served by the Marshall on the Defendant(s). This will usually take between 3 and 7 days. After service, the Defendant(s) have seven days to file an Answer. If an Answer is filed, the Court will set a hearing date. If no Answer is filed our Writ of Possession will issue. Once the Writ issues then we can schedule the set out.

Assuming no Answer is filed, I would expect this to take somewhere around 30 to 45 days to completion. If an Answer is filed, 60 days is more likely. These are Fannie Mae guidelines.


Closing a Client

Too often I see agents turn uncertain when it comes to getting a client to sign an agreement. It is that moment of indecision that causes agents to lose sales and listings. Here are a few thoughts that can take you over the threshold to more listings and sales.

You have to assume success. The Champion agents who assume that they are
going to get a contract signed have much greater success. Don‘t go in asking for the business first. Assume you are going to get it, then ask.

Once you assume, then you must decide that you are going to get it done. Don‘t let anyone take you off the track towards your goal. I had a coaching session recently with a Champion agent. She was working with a problem buyer. The buyer was getting on her nerves. She had an appointment later that day to show the buyer a house that really fit her needs. I asked her a series of questions about the buyer. She concluded she needed to sell her this house tonight or cut her loose. I counseled her to assume and decide that she was going to get this lady sold. That evening she did exactly that. Her mental decision to take action with this client made the sale.

The next step is to keep asking. Don‘t be stopped by the first no. If you ever watch a four-year-old, no doesn‘t bother him. He will continue to ask until he gets a yes. Did you know that the average sale is made after five noes? Do you stop before or after the fifth no?

Make sure to get a few yeses through trial closes along the way. Trial closes are the little yeses of agreement to the little things.

For a seller it could be:

Do you have a key ready tonight?
Where in the yard would you like the sign to be put?
Is this Tuesday all right for the Broker‘s open?

For a buyer it could be:

I noticed you both like the swing set. Should we ask for it in the offer?
Do you want possession the end of this month or next?
What is a convenient day for a home inspection for you both?

Trial closes build momentum. Momentum is crucial in any sales process. Most buyers and sellers would not jump in front of a train. That is what you are doing when you build momentum through trial closes. They may try to slow you down with a little objection. Just handle it and throw a little more coal in the furnace to get the train up to speed again. The coal is another trial close once the objection is handled.

The last is to keep writing and filling out the purchase or listing agreement. If they don‘t stop you, keep going. They have every opportunity to stop you or slow you down. If they don‘t jump on this opportunity, keep writing. In my experience, almost all prospects signed with me once I had finished the paperwork, and they will sign with you, too.

Closing a client is a step-by-step process. Practice these steps and your sales volume will increase dramatically. You won‘t have to resort to phrases of manipulation. It‘s like the life insurance salesperson who told the prospect, "Now, don‘t let me pressure you. Sleep on it tonight, and if you wake up in the morning, you can give me a call."

Written By Dirk Zeller of Real Estate Champions
Click here to learn more about Dirk Zeller‘s Real Estate Training

What People Earn
A Special Report in Parade Magazine

Blackjack Dealer – Minot - North Dakota - $10,000

Executive Assistant – Forest Heights - Maryland - $40,000

Basketball Player – Cleveland – Ohio - $21 Million

Transit Operator – Snoqualme - Washington - $53,000

Crawfish Processor – Lake Charles - Los Angeles - $30,000

Actress/Singer – Los Angeles – California - $10 Million

Short-Order Cook – Hampton – Virginia - $23,000

SFC, U.S. Army – Burley – Idaho $65,000

College Instructor – Tucson - Arizona - $80,000

Secretary of State – Washington -D.C. - $180,000

Registered Nurse – Omaha – Nebraska - $85,000

Webmaster – New York – New York - $60,000

Professional Skier – Cordova – Alaska - $30,000

Water Specialist – Garner – North Carolina - $75,000

Legal Secretary – Sumter – South Carolina - $30,000

Orchestra Manager – Springfield – Illinois - $24,500

Mayor – Wilmington – Delaware - $91,000

What People Earn
A Special Report in Parade Magazine

Martial Arts Teacher – Ann Arbor – Michigan - $12,000

Insurance Agent – Columbus - Missouri - $150,000

Dietitian – Hartford – South Dakota - $49,000

Barber/Hairstylist – Indianapolis – Indiana - $50,000

Actor – Ocala – Florida - $25 Million

Pet-Boutique Owner – Honolulu – Hawaii - $150,000

Horror Writer – Berkeley – California - $18,500

Intern Architect – Wilkes-Barre – Pennsylvania - $30,000

Flower-Shop Owner – Carroll – Iowa - $37,500

NASA Scientist – Mooresville - Alabama - $79,600

Youth Minister – Clovis – New Mexico - $30,000

Child-Care Provider – San Antonio – Texas - $32,000

CEO – Tech Firm – Fort Collins – Colorado - $250,000

Fry Cook Cartoon – Ocean Floor - $1.5 Billion

State Trooper – Hamilton – New Jersey - $100,000

Social Worker – Wasilla – Alaska - $60,000

ER – Technician – Oklahoma City – Oklahoma - $24,000

What People Earn
A Special Report in Parade Magazine

Professional Cyclist – Austin Texas - $19 Million

Teacher – Prattville – Alabama - $29,500

Airport Screener – Bakersfield – California -$29,800

Job-Safety Specialist – Lawrenceville – Georgia - $85,000

Building Restorer – Plainville – Connecticut - $80,000

Singer/Songwriter – Brentwood – Tennessee - $80,000

Restaurateur – Washington - D.C. $130,000

Home Organizer – Forest Hill – Maryland - $60,000

Co-Owner – Talent Agency – Minneapolis – Minnesota - $50,000

Landscape Architect – Charlotte – North Carolina - $40,000

Singer/Personality – Los Angeles – California - $4 Million

RN/Hospice Manager – Albuquerque – New Mexico - $60,000

Artist/Gallery Owner – Powell – Wyoming - $38,000

Fire Fighter – Fairfax – Virginia - $58,000

Bank Branch Manager – Paxico – Kansas - $28,000

City Clerk – Manchester – New Hampshire - $90,500

Museum Director – Philadelphia – Pennsylvania - $37,000
What People Earn
A Special Report in Parade Magazine

Artistic Director – Denver – Colorado - $62,200

Chef Instructor – Chicago - Illinois - $47,000

Haul-Truck Driver – West Jordan – Utah $68,000

Tax Clerk – Fort Lauderdale – Florida - $22,900

Pharmacy Technician – Central Point – Oregon - $29,000

Nonprofit Administration – New Orleans – Louisiana - $40,000

Community Organizer – Central Falls – Rhode Island - $49,000

Probation Officer – Los Angeles – California - $65,000

Power-Plant Worker – Rock Hill - South Carolina - $125,000

Instrument Repairer – Richmond – Kentucky - $20,000

Mortgage Broker – Wilmington – Delaware - $280,000

Calligrapher – Winthrop – Massachusetts - $38,000

Wildlife Veterinarian – Bozeman – Montana $45,000

Service Engineer – Dayton – Ohio - $60,000

Public – Health Administrator – Columbia - Missouri - $25,000

Actress – Los Angeles – California - $27 Million

Dancer – North Las Vegas – Nevada - $29,900

What People Earn
A Special Report in Parade Magazine

Office Manager – Bismarck - North Dakota - $32,000

Archaeologist – Kamiah – Idaho - $53,000

Information Systems Analyst – Union City – New Jersey - $55,000

Coal Mine Forman – Charleston – West Virginia - $67,000

Brewery Worker – Milwaukee – Wisconsin - $55,000

Dog Groomer – South Bend – Indiana - $45,300

Deputy D.A. – Fresno – California - $51,000

Associate TV Producer – Washington - D.C. - $50,000

Tow-Boat Captain – Ponce de Leon – Florida - $85,000

Production Artist – Billings – Montana - $24,000

Publicist – Eagle – Idaho - $40,000

Actress – Los Angeles – California - $ 21 Million

Highway Maintenance – Belleville – Illinois - $29,000

ER Nurse – Williamsburg – Virginia - $47,000

Owner – Coffee Company – Honolulu Hawaii - $50,000

Sleep Technologist – Huntington – West Virginia - $61,000

Car-Systems Developer – Detroit – Michigan - $54,000

What People Earn
A Special Report in Parade Magazine

Truck Driver – Las Vegas – Nevada - $75,500

Chemical Processor – Vacherie – Los Angeles - $102,000

Photographer – Bayville - New York - $41,500

Actress – New York – New York - $18 Million

Artist – Baraboo – Wisconsin - $25,000

Teacher – Stockton - California - $ 88,000

Sales Trainer – Cambridge – Massachusetts – 63,000

Electrical Engineer – Baltimore - Maryland - $ 69,000

Veterinary Technician – Royalton - Vermont - $17,900

Layaway Clerk – Fairbanks – Alaska - $17,500

School Bus Driver – West Deptford – New Jersey - $26,000

Union Labor Attorney – Mont Vernon – New Hampshire - $63,000

Sales Director – Topeka – Kansas - $110,000

Drill Engineer – Harriman – Utah - $55,000

Driver’s Ed Teacher – Bay Village – Ohio - $25,000

Environmental Technician – Liberty - Pennsylvania - $28,000

Olympic Swimmer – Ann Arbor – Michigan - $1 Million

What People Earn
A Special Report in Parade Magazine

Owner of a Consulting Firm- Honolulu – Hawaii - $215,000

Wood Worker – Berea - Kentucky - $65,000

Tennis – Court Maker – Belmont – Vermont - $65,000

Mail Handler – Fort Worth – Texas - $47,200

Fitness Director – Minneapolis – Minnesota - $50,000

Visual Stylist – Chicago – Illinois - $39,000

Theater Director – Cleveland – Ohio - $48,000

Television Host – Jackson – Missouri - $50,000

Truck Driver – Shelley – Idaho – $71,000

Human Services – Miami – Florida - $39,900

Merchandiser – Huntington – Indiana - $ 11,000

Secretary – Pittsburgh – Pennsylvania - $23,000

Equipment Tester – Warner Robins – Georgia - $44,000

Registered Nurse – Fort Worth – Texas - $69,000

Firefighter – Oklahoma City – Oklahoma - $34,000

Singer/Songwriter – Alexandria – Virginia - $12,000

Wildlife Administrator – Pierre – South Dakota - $45,900

What People Earn
A Special Report in Parade Magazine

Public Relations – Barrington – Rhode Island - $50,000

Hospital Food Server – Nampa – Idaho - $25,000

Special Investigator – Wichita – Kansas - $42,500

Power-Grid Operator – Leona Valley – California - $162,000

Football Player – Indianapolis – Indiana - $42 Million

Community Advocate – Enderlin - North Dakota - $18,600

Building Engineer – Newport News – Virginia - $58,000

Restaurant Manager – Portland – Main - $62,000

Real – Estate Broker – East Rutherford – New Jersey - $600,000

Teacher – Plymouth – Indiana - $24,300

Conservationist – Lander – Wyoming - $28,000

Meeting Coordinator – Bettendorf – Iowa - $32,000

INSIDE ADVICE: Second home can be tax-break piggy bank
John Adams - Contributor
Sunday, February 6, 2005

For the past two weeks, I have used this space to explore the benefits and possible pitfalls of owning a vacation home. There has been a big increase in prices in beachfront homes and North Georgia mountain property, leading me to believe that many Atlanta residents are looking in those directions.

The topic of second homes and vacation residences always brings follow-up questions, and here are a few you may be thinking about:

Q: I plan to eventually sell my residence in Atlanta, then retire to my home at the beach. Since we have owned both homes for many years, there is a large profit built up in each residence. How will that work for tax purposes?

A: If you are like most people, your principal residence is the one in Atlanta. That is where you spend most of your time, and that is where you live. Under Section 121 of the IRS code, you can exclude capital gains of up to $250,000 per owner on the sale of your principal residence if you have owned and occupied it for any two of the five years immediately preceding the date of sale. So if you and your spouse have lived in the Atlanta house for at least two years, you can sell it and not pay any tax on the first $500,000 worth of profit. Then you could move to the beach and convert your vacation home into your principal residence. After two years of occupancy, you would likely qualify for Section 121 treatment on your house at the beach if you decide to sell it. The favorable tax treatment of Section 121 only applies to the sale of your principal residence, not to second or other homes.

Q: How do I decide which is my principal residence and which is a second home?

A: The IRS will look first at where you spend most of your nights. Other factors also may be taken into consideration. Where are you registered to vote? Where do you list on your tax return as your principal residence? Where do you receive mail and where do you work?

Q: Can I have more than one principal residence?

A: No. While you may own many homes for your personal or family use, only one house at a time can qualify as your principal residence. However, you are free to move into your next principal residence at any time.

Q: So if I sell the Atlanta house we lived in for many years and take Section 121 treatment on it, then move into the house at the beach, when will Section 121 treatment apply to that house?

A: The full exclusion of $250,000 per owner would be available to you after you owned and occupied the house as your principal residence for two years. You are limited to a maximum of one exclusion every two years.

Following this scenario, you can begin to see how powerful the principal residence exclusion might be for a couple approaching retirement.

First, buy a house to live in. That‘s simple enough. I‘ve been recommending that for years.

Next, buy a vacation home in a location where you might retire. Whether it‘s the lake or the mountains, the country or the beach. Use it for year-round rental or family vacation time. Either way, if it goes up significantly in value, it can be a tax-free piggy bank for retirement.

This action became available to all Americans in 1997 when Congress changed the laws on the sale of your home from a once-in-a-lifetime event for folks older than 55. The current exclusion is available to all taxpayers of any age and can be repeated every two years indefinitely.

But before you rush out and begin buying everything in sight, please accept these two pieces of advice:

> Talk to a tax professional before you embark on any major investment program, especially real estate. There are many exceptions and exclusions I have not covered here, and your situation may be different from that of most taxpayers.

> Don‘t rush into a purchase. The process of shopping and comparing locations and amenities can be loads of fun for you and your family, and the resulting benefits can last a lifetime.

The tax benefits from Section 121 are one of the most popular and widely used parts of the tax code, and I think it is unlikely Congress will tamper with such a popular tax break.

John Adams is a broker and investor. His Web site is www.money99.com.

1/25/2005 - Mortgage Loan Lingo

LIBOR - London Interbank Offered Rate

MTA - 12 month average of the treasury bill. THis is a slow moving index.

COFI - Cost of funds index which is an average cost of savings, borrowings, and advances on members of the Federal Home Loan Bank in San Franscisso, California. This is a slow moving index.

12/17/2004 - Economic Update

Economic Update

U.S. Government Watch

The Office of Federal Housing Enterprise Oversight (OFHEO) released its third quarter 2004 House Price Index (HPI) earlier this month, which tracks housing price appreciation trends in repeat sales and refinances in single-family homes. The report showed average U.S. home prices increased nearly 13 percent from third quarter 2003, and 4.62 percent from the second quarter of 2004. “The appreciation reflected in this quarter’s report shows further acceleration from already rapid increases” said Armando Falcon, Jr., Director of OFHEO. “The growth in house prices over the past year surpasses any increase in 25 years.”

OFHEO’s Chief Economist Patrick Lawler noted in the report that the HPI increase is especially significant when compared to the Consumer Price Index’s measurement of non-housing goods and services which grew by only 2.68 percent last quarter. Lawler indicated that the HPI increase may be due to decreasing long-term interest rates, which have made purchasing a home less expensive. Another contributing factor is likely the decrease in the volume of home refinances, which fell substantially last quarter.

According to the report, Florida experienced a house price appreciation of 19.60 percent over last year, the seventh highest in the nation. Georgia had only a 5.59 percent one-year increase, ranking 40th, and North Carolina had a 4.96 percent one-year increase, ranking 43rd.

U.S. Economy

Amidst trade deficit concerns discussed during a two-day conference of economists and executives that began December 14th, President Bush made a bid to restructure Social Security and make tax cuts permanent. In an interview from the summit in Washington, U.S. Secretary John Snow defended Bush’s plan, which would allow younger workers to divert part of their Social Security taxes to private accounts to be invested in stocks and bonds, saying that it would not push up interest rates. “If we fix Social Security we’ll reduce the long-term outlays and be able to finance the short-term transition costs,” Snow said.

The cost of this initiative is estimated at $1 trillion to $2 trillion over 10 years according to the Congressional Budget Office.

Fed Watch

The Federal Reserve’s rate setting Open Market Committee unanimously decided to raise its target for the federal funds rate by one quarter of a percentage point to 2.25 percent on Tuesday. A statement issued by the Committee said “…even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity.” The next Fed meeting is scheduled for February 2nd.

Source: Bloomberg.com, ofheo.gov, bankrate.com

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12/3/2004 - Economic Update

U.S. Government Watch

The U.S. Department of Housing and Urban Development recently announced a new initiative which is designed to reduce regulatory barriers to affordable housing through local governments. The Affordable Communities Awards Program will honor 10 state or local governments in 2005 that have demonstrated extraordinary achievements in reducing public statutes, ordinances, regulations, fees and processes that restrict the development of affordable housing. The program is an extension of President Bush’s Opportunity Zone project, whose goal is to increase the supply of affordable housing by seven million over the next 10 years.

U.S. Economy

Although the economy grew by 3.9% from July through September, the dollar declined steadily, renewing concern over inflation. Short-term rates will likely rise; if the dollar continues to weaken, it is very likely that long-term rates will also increase.

Fed Watch

The Mortgage Banker’s Association recently reported that U.S. mortgage applications fell for a second week due to the highest mortgage rates in two months. As a result, home purchases dropped by 0.6%. Although it is still expected that the Federal Reserve will once again raise interest rates on December 14th, economists believe that the housing market will stay strong for a long time due to a robust demand for housing.

Source: Bloomberg.com, bankrate.com, realtor.org

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11/29/2004 - Price of Average U.S. House Rises 8.5 Pct

WASHINGTON (Reuters) - The October average U.S. house price jumped 8.5 percent from a year ago, setting the stage for mortgage giants Fannie Mae and Freddie Mac to raise the limit on mortgages they can buy, a Federal Housing Finance Board survey showed on Tuesday.

The average house prices rose to $264,540 last month from $243,756 the same month a year ago, the FHFB said in a statement.

The increase paves the way for Fannie Mae (NYSE:FNM - news) and Freddie Mac (NYSE:FRE - news) -- government-sponsored enterprises that buy mortgages from lenders and hold them or repackage them as securities for investors -- to buy loans up to about $359,500. Their current limit is $333,700.

The increase would mean that home buyers could borrow up to that amount, known as the conforming loan limit, at interest rates of about a half of a percentage point lower than for bigger mortgages, referred to as jumbo loans.

11/20/2004 - One in Four Californians Consider Moving

By JIM WASSERMAN, Associated Press Writer

SACRAMENTO, Calif. - A fourth of all Californians are thinking about moving — either out of state or just to another town — to bring down their housing costs, a new survey shows.

High rents and rising home prices have residents, particularly younger ones, rethinking the value of the mountain views and ocean shores they say they treasure. Of the respondents under 35, for example, nearly half say they might relocate to somewhere cheaper.

The study, released Thursday by the Public Policy Institute of California, found that even many homeowners now see little upside to rising prices that have greatly inflated their property values, with many believing they couldn‘t afford to buy another house in their own neighborhoods. Sixty percent of the respondents worry their children won‘t be able to buy homes in their part of the state.

Instead of being optimistic about life in California, a new generation "coming into the owning stages of their lives ... are exactly the people who are talking about moving elsewhere, " said the institute‘s Mark Baldassare, author of the statewide study. "You‘re talking about your work force. You‘re talking about your future."

The survey, the most comprehensive of its kind in years in California, reveals the moving-out sentiment is highest in coastal areas and many are acting on it. Since 1995, according to the institute, more than 350,000 residents have moved from the coast to the less expensive Central Valley.

California‘s traditionally high mortgage costs are also further discouraging renters, the survey reports. Only one in five who hope eventually to buy a house are confident they can do it.

The results dovetail with findings this month by the California Association of Realtors showing that only 19 percent of the state‘s households can afford the state‘s median-priced home of $465,000. That‘s a 5 percent drop from a year ago. Nationally, the median-priced home — where half cost more and half cost less — was $186,600 in September.

The survey of 2,502 people was taken from Oct. 21 to Nov. 1 and has a margin of sampling error of plus or minus 2 percentage points

11/20/2004 - Economic Update From Gary Welch - HomeBanc

Existing home sales activity in the U.S. has led to a strong third quarter performance with 7.66 million units sold, up 4.1% from the third quarter 2003, according to a recent study by the National Association of Realtors. The survey reported that the annual rate of existing single-family, condominium, and co-operative home sales in the South totaled 3.16 million units, which is a marked increase over last year’s report.

Tight housing inventories across the nation continued to drive increased home prices last quarter. The national median existing-home price was $188,500, up 7.7% from 2003. Likewise, home prices in the South have averaged $170,400, up 7.4% over last year.

Last week, the Fed raised rates as expected. Mortgage rates have begun to slowly increase causing concern over higher mortgage loan costs and a possible decline in home sales next quarter. Signs of rising inflation are on the horizon and may give the Fed a reason to raise interest rates again on December 14.

- Source: Bloomberg.com, realtor.org

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11/12/2004 - As of 2004, 60% of the nations homes are over 30 years old. 70% of the REO properties in the Atlanta metro market needs some type of repairs.

Not many people pay attention to bank credit and the money supply, but the Federal Reserve sure does. In fact, if you visit its Web site, you‘ll discover that the Fed tracks enough money and credit data to make your brain explode (unless you‘re an economist, in which case the damage is already done).

M1, M2, M3, Aggregate Reserves of Depository Institutions and the Monetary Base, Charge-Off and Delinquency Rates on Loans and Leases at Commercial Banks ... and more, so very much more -- all seasonally adjusted, or not, depending on your preference.
11/4/2004 - Article On The Money Supply

Now, the Fed goes to these lengths, because it‘s supposed to "control" the money supply. Yet this control is simply a means to a greater end for the Fed -- namely, to expand credit.

A growing money supply normally means growing deposits for financial institutions, which means -- presto -- more lending and borrowing, i.e. the expansion of credit.

And make no mistake: there‘s been borrowing aplenty, notwithstanding the slow economy in recent years. Consider home equity. Fed data shows that July 1997 was the first time the total amount of home equity loans reached $100 billion. And it took more than five years for that figure to double, not reaching $200 billion until September 2002.

How long do you think it will take to double again? Don‘t blink, you might miss it when it happens. The total amount of home equity loans stood at $381 billion on October 20; in other words, homeowners are on pace to convert $400 billion of their assets into debts by the end of this year.

What does it mean?

10/26/2004 - Consumer Confidence Falls on Job Worries

NEW YORK - Continuing job worries drove consumer confidence lower in October for the third consecutive month, a New York-based private research group said Tuesday. The decline was steeper than expected.

The Consumer Confidence Index (news - web sites) dropped 3.9 points to 92.8, down from a revised 96.7 in September, according to The Conference Board (news - web sites). Analysts had expected a reading of 94.

"Subdued expectations, as opposed to eroding present-day conditions, were the major cause behind October‘s decline in consumer confidence," said Lynn Franco, director of The Conference Board‘s Consumer Research Center. "And, while consumers‘ assessment of the labor market this month showed a moderate improvement, the gain was not sufficient to ease concerns about job growth in the months ahead."

Economists closely track consumer confidence because consumer spending accounts for two-thirds of all U.S. economic activity.

The Expectations Index, one component of the Index that measures consumers‘ outlook over the next six months, declined to 92.0 from 97.7. Meanwhile, The Present Situation index dipped to 94.2 from 95.3.

Consumers‘ assessment of overall current conditions was mixed. Those saying business conditions are "good" declined to 21.7 percent from 23.4 percent. Those saying conditions are "bad" edged up to 21.4 percent from 20.4 percent. On the employment front, consumers saying jobs are "plentiful" increased to 17.4 percent from 16.6 percent, while those claiming jobs are "hard to get" eased to 27.8 percent from 28.0 percent in September.

Consumers‘ outlook for the next six months turned more cautious. Those anticipating conditions to worsen increased to 10.3 percent from 9.4 percent. Consumers expecting business conditions to improve decreased to 20.6 percent from 21.6 percent.

The employment outlook was also more subdued. Consumers expecting fewer jobs to become available in the coming months rose to 18.4 percent from 16.2 percent, while those anticipating more jobs to become available slipped to 16.5 percent from 17.8 percent. The proportion of consumers expecting their incomes to improve in the months ahead dipped to 18.4 percent from 20.0 percent last month

More homes going back to lenders

By Lisa R. Schoolcraft

Atlanta Business Chronicle

Updated: 8:00 p.m. ET Sept. 26, 2004

Atlanta may be one of the hottest housing markets in the nation, but the number of homes being foreclosed by lenders continues to climb.

From January through Oct. 5 (the next date homes under foreclosure will be auctioned off), 30,407 homes in metro Atlanta‘s 13 core counties have faced foreclosure, according to the Atlanta Foreclosure Report, a division of Atlanta-based EquiSystems LLC. That‘s up 19.4 percent from the 25,460 homes that faced foreclosure in the same 13 counties during the same period of 2003.

Nationally, the foreclosure inventory of all loans for the second quarter dropped to 1.16 percent, compared with 1.35 percent during the same time in 2003, according to the Mortgage Bankers Association, a mortgage banking organization, which released its data Sept. 8.

In Georgia, 1.33 percent of 1.3 million mortgage loans were in foreclosure during the second quarter, the association said. The association does not break the numbers down to cities.

Lithonia‘s 30058 ZIP code led the 13 metro Atlanta counties with 1,036 homes in the process of foreclosure. Rounding out the top 10 ZIP codes are Atlanta‘s 30310 with 893 foreclosures; Decatur‘s 30034 with 726; Decatur‘s 30032 with 675; Jonesboro‘s 30238 with 651; Lithonia‘s 30038 with 650; Atlanta‘s 30349 with 647; Stone Mountain‘s 30083 with 601; and Stone Mountain‘s 30088 and Lawrenceville‘s 30044 tied with 577.

The Federal Reserve‘s Sept. 21 quarter-point increase in short-term interest rates is unlikely to affect foreclosure rates, said D.C. Aiken, senior vice president of product development and the chief economic forecaster for Atlanta-based HomeBanc Corp. (NYSE: HMB), the parent company of HomeBanc Mortgage Corp., which makes mortgage loans.

Home equity lines are tied into the prime rate "but those are little loans, not $200,000," Aiken said. "Most credit cards are based on prime, so credit card payments will go up."

That‘s where the real trouble lies, said Jeff Humphreys, director of economic forecasting at The University of Georgia.

"It‘s not mortgage debt that causes people to go into foreclosure," he said. "It‘s the high level of revolving credit debt -- credit cards. People are getting into trouble with revolving credit and that‘s affecting their ability to make their mortgage."

Humphreys believes the higher interest rates will affect those who want to use a home equity loan to pay off high credit card and other debt.

The Atlanta foreclosure report numbers do reflect some multiple listings, however, said Bill Bramlett, EquiSystems‘ managing partner. The same home might appear more than once on a list as homeowners manage to find resources to pay a delinquent mortgage, but then run into trouble again, he said.

Bramlett estimates 40 percent of homes made the list more than once in 2004, down from 50 percent in 2003. Historically, a third of homes listed in the foreclosure report appear on the list more than once, he said.

Even with multiple listings, Atlanta‘s numbers "are still extremely high," said Jude Rasmus, president and CEO of National Foreclosure Services in Marietta, which specializes in selling real-estate owned, or foreclosed, homes.

Rasmus said 5 percent to 10 percent of the houses she gets in foreclosure to sell are a result of mortgage fraud, which the Federal Bureau of Investigation says is rampant across the United States.

The FBI announced Sept. 17 it had taken action against 205 people involved in financial institution fraud, which includes mortgage fraud.

Operation Continued Action, which involved 47 FBI field offices, identified more than 245 subjects in 158 investigations that represent potential losses in excess of $3 billion.

Atlanta‘s housing market has continued to lead the nation in single-family building permits.

"While builders are concerned about any foreclosure in housing, the housing market is still pretty darn strong," said Mark Fitzgerald, executive vice president of Greater Atlanta Home Builders Association, which has 4,000 members in metro Atlanta. "We haven‘t see it affect the new home housing market."

No one likes to see foreclosures, "but from the new home market, I don‘t know there‘s been a tremendous negative impact," he said.

But so much new housing product has its drawbacks, said Roger Tutterow, chairman of the department of economics and finance at The Michael J. Coles College of Business at Kennesaw State University.

Atlanta is not alone in increased housing starts. Housing starts in the United States rose by 0.6 percent in August to their highest level in five months, the U.S Department of Commerce reported Sept. 21. Nationally, housing starts were up 9 percent over August 2003 figures.

"When you are bringing forward so much product and putting people into homes, you would not be surprised that people are moving into properties that they may not have been able to afford," Tutterow said.

No-down-payment loans or down payment assistance programs are wonderful "but it does introduce a little more risk into the pool of mortgage takers," Tutterow said.

And Atlanta‘s job growth has been anemic, which adds to foreclosure worries, Tutterow said.

The latest Georgia Department of Labor statistics show 11,591 jobs were created in the Atlanta metro area in the past 12 months ending in June, the most recent data available.

"That‘s not a lot of jobs for Atlanta," Tutterow said. "We need to have more job creation to offer opportunities to homeowners and prospective homeowners."

© 2004 Atlanta Business Chronicle

9/20/2004 - Home Sales Slowing in Southland.

Led by strong gains in the Inland Empire, the median price of a Southern California home hit a record $407,000 in August, a 20.4 percent increase from a year earlier, data quick information systems reported Wednesday.

Riverside and San Bernardino counties were the only ones in the region to post year over year sales gains (4.6 percent and 6.2 percent respectively), and the median price -- the point at which half sold for more, half for less -- set records in both counties. Riverside‘s median sales price jumped 28.5 percent to $334,000 Colin San Bernardino‘s, 26.1 percent to $261,000.

But signs of a cooling trend, both in the numbers and in the market, were abundant.

For starters, August‘s price run-up was the smallest this year. Seals across the region fell to 31,131, a 9.6 percent drop from a year earlier and 85.6 percent decline from July.

And a rising tide of homes on the market, coupled with higher prices, is starting to damp activity in the region‘s hottest market.

A telling sign can be found on the wall at Century 21 King Realtors in Chino.

Three bulletin boards track the office’s listings: 2 for homes in escrow, one for properties for sale. In the last few days, however, the balance has shifted.

For the first time in more than year, King has more listings and escrows, agent Sherry Young said.

"Some houses are going three or four weeks and not one offer," Young said. That‘s in contrast with the spring, when nearly every new listing was quickly greeted by multiple offers.

"Prices have hit a ceiling," Young said. "Buyers are saying wait a minute before they take the next step."

For the rest of the Southland, Orange County saw the biggest drop in sales last month -- by 32 percent to 3745, the weakest August in eight years. Still, the county‘s median price rose 25 percent from a year ago, to $543,000, equaling a record set in May. During June and July, the median fell 2500 $40,000 and $525,000 respectively.

Orange County‘s median price was probably helped by interest rates dropping this summer after rising in the spring, said economist Esmael Adibi of the A. Gary Anderson Center for economic research at Chapman University.

Still, he‘s sticking with his prediction that home prices in Orange County will moderate this year and decline by five percent or more in 2005.

"Something you can‘t measure is People‘s psychology," he said. "If people feel the prices are going to go down there could be heard mentality and everybody will feel they have to list now."

With the supply expanding, Adibi said, "demand softens and both home sales activity and the prices have to decline."

In Ventura County, sales fell 31 percent from year ago, to 1,198, and were off from a 1,281 in July. The median price declines to $514,000, compared with $502,000 in July and $404,000 a year ago.

In San Diego County, sales skated 5.7 percent from year earlier, to 5,919, but the median price surged 24.2 percent to $483,000.

In Los Angeles County, the median price was $407,000 in August, up 20.4 percent year over year.

9/2/2004 - Supply of houses is Finally Rising In Parts of U.S.

The Number of houses on the market is finally rising in some parts of the U.S where shortages have led to soaring prices.

The new supply should help soften price increases, and some economists say it may eventually bring prices down in some places where they have risen at double-digit rates in the past few years.

“There’s going to be a day of reckoning,” Said Edward E. Leamer, an economist at the University of California, Los Angeles. “ The question is how that reckoning is going to occur.”

Any reckoning probably will be gradual. Unlike stocks, the general level of home prices couldn’t plunge 20% or 30% in a few days. Many homeowners would refuse to sell if they couldn’t get something near their target price, so it could take years for the market to adjust to a new supply-demand reality. Because local conditions vary, prices may continue to rise in some cities while falling in others.

Rising supplies are particularly notable in California, where the median home price has shot up 21% in the past year to $463,540. The California Association of Realtors says the inventory of previously occupied single-family homes in Orange County was enough to last 7.5 Months at the current sales rate in July, up from 1.4 months in April. For the whole state, the supply stood at 3.3 months in July- the first time since February 2003 that the inventory has topped three months.

Inventories also have risen in some other parts of the Country. A survey by Jeffery G. Otteau, who runs an appraisal firm in East Brunswick, N.J, showed that the inventory of homes in the 18 New Jersey counties he covers was up 14% in July from a year earlier. Inventories are up about 10% from a year earlier in Boston but have fallen more then 50% in Manhattan. In Las Vegas, where the median home price has soared about 50% in the past year, developers are responding with more plans for high-rise housing.

Nationwide, the inventory of newly built homes in July jumped 14% from a year earlier. The National Association of Realtors says the national supply of resale homes remains tight at 4.3 months, down from 4.7 months a year earlier. But realtors report fewer bidding wars and more over priced houses that linger for months rather than selling in days. Ben Coleman, owner of Century 21 Hartford Properties in San Francisco, said the market is still strong but no longer “on fire.”

Many realtors and housing-industry executives insist the boom will continue. David Lereah, chief economist for the National Association of Realtors, is so confident that he is finishing a book titled “Are You Missing the Real Estate Boom?” due for publication early next year. Because interest rates are low, he said, many people can afford “exorbitant” prices. Mortgage payments account for about 18%of home buyers’ income, down from more than 30% in the early 1980’s when rates were high.

But economists except interest rates to rise, and some worry that home prices have raced too far ahead of income. Median U.S. home prices rose 33% in the four years ended june 30, while per-cap-ita personal income climbed just 10.4%. “You are pricing a lot of people out of the market,” Said Sung Won Sohn, chief economist at Wells Fargo & Co.

Another danger signal is that home prices have risen far faster then rents, said UCLA’s Mr. Leamer. In the long term, the price of a home shouldn’t be too far out of line with the rent it could fetch, he argued.

Realtors note that there hasn’t been an annual decline in U.S. median home prices in the past five decades. That is true on a national basis, but prices have fallen brutally in some places, such as Los Angeles, where they sank nearly 30% in the early 1990s. On an inflation-adjusted basis, the national median home price has declined in eight of the past 33 years.

Frank Borges Llosa, a real-estate agent who works in the Virginia suburbs of Washington, said he warns his clients they can’t bank on continued price gains “Do I think it is bubble? I don’t know,” he said, “But I’m sick of agents pretending like it is an impossibility.” He is giving his customers T-Shirts that read,” I bought a house during the ’04 bubble and all I got was this lousy T-Shirt!”

8/31/2004 - Hot Housing market Simmers Down

The housing market is showing signs of cooling.

The number of previously occupied homes sold in July declined 2.9% from June’s record pace, and the median price of those homes was essentially unchanged, the National Association of Realtors reported. In California, the median price of homes slipped 1.1% from a month earlier, as agents found themselves with an increasing number of houses on the market.

Realtors insist the boom that has enriched American homeowners during the past five years isn’t over. “There are those who talk about price bubbles, and I continue to tell you there are no price bubbles,” said David Lereah, chief economist for the association. He said the supply of new homes remains tight by historical records in much of the country. Meanwhile, mortgage interest rates have fallen in the past few weeks, making house payments more affordable.

Even so, some home shoppers are becoming less aggressive in their bids amid fears that a slowing domestic economy and an eventual rise in interest rates could end, or at least interrupt, the boom. At the same time, the huge increase in home values in the past few years has emboldened some sellers to put unrealistic prices on their homes. A widening gap between bids and offering prices in some areas has slowed sales.

Federal Reserve chairman Alan Greenspan, in a letter to the chairman of the Senate Banking Committee released yesterday, seemed to suggest that he shares some of these concerns. Responding to questions about the U.S. housing market and other issues posed by Senator Richard Shelby following Mr. Greenspan’s appearance before the panel last month, the Fed chairman said he agreed with the assessment of Fed Governor Donald Kohn, who in a speech this year said, “The odds have risen” that house prices in some parts of the country could be too high for current market conditions. He added that the Fed is monitoring real-estate prices closely in developing its economic projections.

The market “is not quite as wacky as it was, but it’s still strong,” said Pamela Liebman, chief executive of the Corcoran Group, a large real-estate broker-age firm in New York.

On a national basis, home resales slipped to an annual rate of 6.72 million units last month from June’s revised 6.92 million annual pace. Despite the fall, July was the third-highest monthly level on record, Mr. Lereah said. Sales were down in all regions except the South, where sales rose 0.4%. Home resales fell 1.4% in the Northeast, 4.8% in the Midwest, and 6.6% in the West.

The inventory of resale homes on the market was equivalent to a 4.3-month supply, slightly up from a revised 4.2 months in June, the association said. The median home price was $191,300, up 8.7% from a year earlier but barely changed from a revised $191,000 in June.

In California, where the boom has been particularly strong, the median price of a single-family detached home in July was $463,540. That was down 1.1% from June but up 21% from July 2003. The inventory of unsold homes was 3.3 months, up from two months a year earlier. It was the first time since February 2003 that the inventory has exceeded three months, according to the California branch of the Realtors.

The interest charged on 30-year-fixed-rate mortgages increased in may and June but has fallen in recent weeks, hitting an average of 5.81% last week, according to a survey compiled by Freddie Mac.

The Commerce Department is due to report July sales of newly constructed homes today. Economists polled by Dow Jones newswires and CNBC expect a decline of 2.3% to an annual rate of about 1.3 million

8/17/2004 - Get Ready for A Paradigm shift.

In today’s market, we see more and more buyers in the middle and low housing markets opting to purchase new homes rather than renovating an existing home

This is due in great part to the market, which has lowered the price of new builds. Developers are building master planned communities in the low – and medium – size markets, which typically cater to first – time buyers and low – income buyers.

However, with the housing bubble being what it is and interest rates on the rise, we believe we will see those who have locked in ARMS and other risky loans falling out of “the Bubble” through loss mitigation and firmly into the foreclosure market. If the short sale does not save the homeowners’ credit, then they most likely become renters.

Given this situation, there will be a couple of paradigm shifts. The need for good rentable homes will increase. For those who have been looking for investing opportunities, we believe your time is about to come.

Now, More than ever, non-first-time buyers will be looking for creative ways to roll back the clock and their credit tot he time when they were able to buy the home of their dreams. In a give-and-take world, the lure of the new home will fade, and the realty of buying a used home and fixing it up will enter the picture.

This brings us to our next exciting issue: “ Reaping the Rewards of Renovation Lending.”

The low-and medium-income buyer can now buy more home for less money, as these creative solutions will have 100 percent to 125 percent of repaired value on an existing home. Keep in mind many of these purchases will be later-model homes, and repairs will vary but should afford everyone a second chance, a first home or an excellent investment opportunity.


Some economists are predicting a real estate recession. Does this harbinger a buyer’s market where there are too many listings and too few buyers? If a real estate downturn is on the way, will you be a survivor or a casualty?

If you think competition is tough during a seller’s market when there are too few listings, wait until you experience a true “buyer’s market.” Contrary to what most people believe, buyers rather than sellers drive sales. Without buyers, your listing inventory burns marketing dollars.

Desperate sellers expect more and more services in a futile attempt to sell. When sellers receive an offer, it’s usually so low they often refuse or accept it. When inventory increases, prices decrease. Sellers know the market is difficult; however, few believe their own properties have declined in value.

To cope with this dramatic change in the market, you must first prepare your business for a recession. This involves three steps:

1. Identification of current “profit centers” as well as “loss centers.”

2. Strategic plan to maximize profit and reduce loss.

3. Creating and implementing a business plan that allows you to change focus quickly when market conditions shift.

Identify Current Profit & Loss Centers

A “profit center” is any revenue source where income received is greater than expenses incurred to earn it. Unfortunately, agents normally focus on “revenue,” rather than how much they keep after expenses (profits). Almost no one bothers to break down how much income and expenses is associated with each aspect of his/her business (I.E “profit center.”)

To determine your personal profit centers, make a list of all closed listings and all closed buyer transactions and follow the steps below.

1.Calculate gross revenue (Income before expenses)

Using the “profit center” approach, each listing and each buyer is treated as a separate profit center. Your “gross revenue” is the commission you earned prior to deducting any costs you incurred during the sales process.

2. Calculate gross profit

To calculate “gross profit,” subtract all expenses related to closing the sale, including advertising, web promotion, open house supplies, and vehicle expenses. This includes driving to and from properties for showings, offer presentation, inspections, etc. Do this for each closed sale.

3. Rank order your profit centers in each category

Starting with the transaction where you earned the most income, rank each one of your “profit centers.” Once you have finished, which list was more profitable, listings or buyers?

4. Determine your personal “profitability patterns”

Which listings were the most profitable? For example, a $150,000 listing that sells in two days may actually be more “profitable” than a $500,000 listing you have to market for 10 months. As you evaluate your two lists, do you notice any patterns? Are you selling more properties in a given location? Are you more effective in certain price ranges or geographical locations (I.E first time buyers vs. estate properties)? Note both your strengths and weaknesses.

5. Calculate “net losses”

To calculate your “net losses,” identify each listing that did not sell, as well as each buyer who did not buy from you. Add all expenses incurred

6. Rank order “net losses”

Identify the listings and the buyers who cost your business the most money (I.E they did not close.) Carefully evaluate what went wrong in each case. Did you knowingly take an overpriced listing? Did you work with a buyer for moths when you really should have fired them? Were you unable to negotiate price reductions when necessary?

7. Identify the source

For each profitable seller and buyer, as well as for each “loss,” list how you generated the lead. Is there a pattern? Are you referrals more profitable, or is calling on expired listings more profitable? Is open house making money for you or is it really a loss? Did the 100 hours of floor time you sat through this year really generate enough sales to make it worth your while?

8. Build on your strengths

If most of your listing business comes from a single geographical area, focus on obtaining more listings in that area. If you have trouble obtaining price reductions and consistently have listings expire, avoid taking over priced listings in the first place.

The key to increasing your profits is to expand the areas that make you money and to be ruthless about eliminating areas where you experience loss. Actively tracking your profits and losses is only the first step in surviving a buyers’ market.

6/10/2004 - Housing-bubble theory full of hot air
By Doug Duncan • Bankrate.com REBUTTAL by REOCALGUY

Doug Duncan, senior staff vice president/chief economist at the Mortgage Bankers Association of America, wrote this commentary for Bankrate.com.
Ever since the NASDAQ meltdown some folks have been waiting for the next big bad equity story. Since most equity is found in peoples‘ homes, that‘s where pundits have been focusing. They face disappointment however as they watch and wait for the "house-price bubble" to burst.
It‘s not going to happen -- there isn‘t one.
There has not been a single year since World War II in which house prices across the United States have declined; local markets, yes, but the whole United States, no. Homeowners know this intuitively and view housing as a solid, if conservative, investment. After all, you get to live in your house, you can‘t live in your stock portfolio, and you do have to live somewhere. Since there are more and more of us living in the good old United States, we will need more and more places to live. And the number of us is growing faster than the number of houses. Ergo, no bubble!

REBUTTAL: A similar explanation was given by pundits during the peak of the stock market bubble. They pointed to the unending demand for American securities by foreign investors. They said this demand would only increase over the coming years due to the political uncertainties affecting the globe. As foreign money migrated to safety provided by our safe shores, U.S. exchanges would see even higher highs in the future. Ergo, no bubble!
Additionally, using the national average when speaking to real estate value swings is misleading. After all, one does not purchase a "national" property, instead a purchase is made in a specific neighborhood with its own pricing dynamics. The problem here is that most people live on the coastal portions of the country where the overwhelming amounts of jumbo loans are made. These areas have typically over-performed more stable markets elsewhere in the country. Since the majority of home purchasers live in these overheated areas, the "bubble" problem is perceived as a nationwide issue. Mr. Duncan is correct in saying there is no national "house-price bubble." After all, we can all agree that St. Louis, MO has under-performed in terms of property value increases when compared to Culver City, CA. Ergo, no bubble in St. Louis, MO, but very likely in Culver City, CA.

OK, let‘s look at the issue a bit more systematically to see why from the economist‘s point of view the issue is overblown. I work for the Mortgage Bankers Association whose members make about 70 percent of all the home loans in the country, so it is important that you see the logic in the argument against the "price bubble" to overcome any suspicions of an inherent bias based on who I work for.
Trouble with the bubble
First, let‘s define the term bubble. The Oxford English dictionary defines it as "a gas-filled cavity in liquid or in solidified liquid." One might say it has form but no substance -- the outward appearance of something substantial, but once the outside is pierced it is revealed to be based on a false impression. In the case of home prices, the interpretation would be that current home prices or price increases will be revealed to have been based on a false impression and when the surface is pierced we will see a substantial fall in prices.
About the only way an economist can find agreement with that argument is by discussing the role of expectations in decision making by consumers and investors. That is to say, consumers and investors might engage in speculation that prices will continue to rise as they have been (50 percent over the past six years), thus bidding house prices above the level indicated by the current supply-and-demand fundamentals. This speculative bidding would be for the purpose of capturing gains unrelated to their need for housing. To confirm that this is happening, there would need to be evidence that there was a growth in the number or share of residential home sales that were sold to purchasers not intending to live in them. It is difficult to find any confirmation of such a trend in the current market.

REBUTTAL: Tracking the growth in the number of residential homes sales sold to purchasers not intending to live in them is only one indicator. Some pundits have pointed to the liquidation of other investments that have in turn migrated to real estate purchases. Its difficult enough to purchase one property, let alone a second home to speculate upon; instead, many purchasers have migrated investment funds to purchase their primary dwelling seeking a piece of the overheated pie. Within those areas that could be termed as being overheated or suffering from a "bubble," there is an expectation from buyers that their primary dwelling will increase substantially over the coming years in advance of any other investment instrument currently available. This means that the speculative bidding noted in Mr. Duncan‘s thesis is occurring. Can you hear that bubble stretching?

Another way an economist would accommodate your thought that home prices might unexpectedly fall is if you argue that interest rates will rise rapidly and far enough to make people stop buying houses. The economist would call this an affordabilty issue, not a price bubble. Roughly nine out of 10 people who buy a house do so by borrowing money. When interest rates rise, the monthly payment on a given amount of borrowed money rises also and can exceed the maximum size payment the family budget can support. This can change the balance between the cost to rent and the cost to buy. The attached chart shows the recent relationship between average monthly rent and average monthly after-tax mortgage payments and gives a good picture of why people are buying homes.

REBUTTAL: Real Estate sales will continue but at a different price point, in those areas that have sustained noticeable increases over the past years. For instance, homes continued to be sold in the early 1980‘s when interest rates peaked over 20%. However, as interest rates increased motivated sellers adjusted their sales price to meet the loss of buying power from prospective purchasers.
In this instance, the term "bubble" is applied because the same home can not command the same price with a 20% mortgage than it can with a 5% mortgage. Put simply, most home buyers can not immediately elevate their income to accommodate their home purchase. Also, the home buyer is subject to the available loan programs and interest rates at the time the loan is made. The only variable in the equation is the seller‘s motivation and what sales price is pinned to the property. Motivated sellers will likely accept a lower price (or assist in the sale by financing it) to consummate an immediate transaction. These new lower priced sales will be the benchmark used by appraisers to value future homes, thereby lowering the average value for a home in that vicinity. Depending on what local wages can support without the uplift of low interest rates, that new property value may be substantially less than what it was just a year prior.
And where will the buyers come from? Many of today‘s buyers are folks leveraging their new home purchase using profits obtained from the sale of their own home. If values drop, so will home equity, removing the ability from many move up buyers from completing further home purchases. So suddenly, the negative pressure upon property values discussed previously, along with a smaller buyer pool, will result in a change in the market from a "sellers to a "buyer‘s" market. The most leverage being held by those few available buyers with ready cash who can close right away. As the months pass and further value erosion occurs, the anxiety to sell will increase as home sellers attempt to liquidated whatever equity remains in the home, in particular by owners who originally purchased their home as an investment.

Outsmart rising mortgage rates
Several strategies can offset the effects of rising interest rates and keep the housing markets strong. People can use adjustable-rate mortgages that typically have lower interest rates than fixed-rate mortgages and therefore lower monthly payments. Another mortgage product that assists in overcoming the affordabilty problem is the interest-only mortgage. Also, the family can adjust the kind or size of house they are buying or the amount of down payment they are making.

REBUTTAL: These measures just help the bank. An adjustable rate mortgage will increase along with the benchmark that loan type is hinged to. It is a bitter pill to discover that not only have you lost a substantial (if not all) of your home equity and still have to shell out more and more for the same property. An interest only is even a more ridiculous idea because after several years of paying your mortgage you still own zero percent of the property. With an interest only type of loan you will find yourself not only without any equity but without any reduction of your principal debt. The big question is what a mortgagor will do once their expectation of value increase in their property fails, and instead they‘re left holding a property that is worth less than their mortgage? I believe it is this question that disturbed the Federal Reserve enough to raise its concern over the dramatic growth of both Fannie Mae and Freddie Mac in recent Congressional hearings.

That said, if interest rates were to rise above 8 percent in the near term there would definitely be at least a temporary slowing in home sales and price appreciation though the economist wouldn‘t call it a price bubble, but rather an affordabilty problem.
It is exceedingly hard to tear an economist away from the concepts of supply and demand when discussing price changes whether you are discussing houses or oranges. To really convince the economist that there is a house-price bubble, you will have to convince him or her that somehow price has decoupled from the intersection of supply and demand.

REBUTTAL: Supply and demand have benefited by low interest rates. If interest rates go up, property values in these "bubble areas" will naturally drop.

More demand than supply
Housing supply in the United States is growing slower than housing demand. That means prices will rise; not in every individual market but across the whole national market.
Supply is growing more slowly because it is constrained by local growth control ordinances, increased environmental cost, time requirements for land development and by the fact that construction lenders have been more conservative recently in lending terms. In addition, a higher percentage of homes are being built by companies who are owned by stockholders, which makes them more conservative in attempting to prevent oversupply.
Demand will grow faster because demographic factors like population growth, household formation rates, immigration, employment growth and income growth are all going to push demand forward more rapidly.
Contrary to the view of some observers the "boomers aren‘t yet done buying." Also, there were 11 million immigrants to the United States over the past decade that will create 4 million new home buyers over the next two decades. Recent gains in the economy‘s rate of productivity mean that income growth will be strong for probably the next decade. When placed in the context of conservative supply growth, this is a recipe for real price increases, not collapse.

REBUTTAL: This is a very rational and well supported argument, but its very similar to arguments used in the late 1990‘s to support the stock markets continued future growth. Nonetheless, this argument supports the national increase in property values, but not specifically the market where you will purchase your home.
Part of the problem that is not covered here is the amount of funding by Wall Street for new growth. In the past, it was primarily local lenders that supplied the funding for new developments. Now, Wall Street has largely replaced these funding conduits and generated hyper growth. A similar environment was seen in Denver during the 1990‘s but in regards to commercial real estate. As the boom went past its peak, new commercial buildings continued to be built increasing the amount of commercial square footage available, and lowering its eventual value once the boom was over. Since Wall Street investors largely go by the past 3 to 6 month performance, it was difficult to gauge when to turn off the money spigot. The same is occurring in many hot markets accross the country lacking growth control ordinances.
Another problem within these "bubble" areas is the lack of available homes for sale. For instance, in one zip code area within the densely packed Los Angeles metropolitan area, there were only 14 available listings! These homes will sell for a huge premium due to the scarcity of local product. The question many are considering is, "Why is there less ‘move-up‘ activity given the robust demand for housing?" The answer is likely due to the huge surge in refi‘s and home equity loans that have driven lending activity these last several years.
People have been moving their consumer debt to their home, thereby reducing their equity. As they consider a move-up purchase they see that their remaining home equity and income are not sufficient to bring down the new loan balance to a manageable level. So, instead of purchasing a new home with additional features, they‘re left remodeling their current home to add a few new comforts. Anecdotal support for this theory is given by the explosion in home remodeling over the past same period.

Can prices fall?
Yes, there will almost certainly be some communities in which they will, perhaps because the biggest employer in the town closes down thus reducing jobs and demand. Is there any evidence that it will happen across the United States as a whole? None. The equity in their home is the single largest source of wealth for the median income family in the U.S and it will remain so for the foreseeable future. No fear where bubbles are concerned.

REBUTTAL: Many recent articles have covered at nauseam the quantity of American jobs leaving these shores for India and other destinations. And, although the economy has posted sizeable gains in the creation of new jobs, many of these are either low paid or part-time positions. Surely, these newest of jobs can not support the inflated property values found within the bubble areas.

6 June 2004
Eased credit adds up to more foreclosures
Homeowners flirt with disaster

The Atlanta Journal-Constitution
Published on: 06/05/04

Ebonie Strickland has been packing up after losing the house she bought last year.

It wasn‘t much of a surprise: She started missing mortgage payments early this year, so foreclosure was all but guaranteed. Or perhaps foreclosure was a good bet from the March day that the Snellville nurse bought her house with a $160,877 loan.

Ebonie Strickland, with daughter Kamiah, 6, and son Anias, 2, is losing the house she bought last year after she fell behind on payments


Year ... Foreclosures
2000 ... 2,309
2001 ... 6,100
2002 ... 8,416
2003 ... 14,043
2004 ... 7,676 (through May)
Source: Foreclosure.com

Homeownership has repeatedly surged to record levels in recent years, and Strickland was among the millions of first-time buyers. Now, she is among millions who have dropped into delinquency and foreclosure.

In Georgia last year, at least 14,043 homes were foreclosed on, up from 8,416 in 2002, according to Foreclosure.com. Through May, the company had recorded 7,676 new listings, a higher count than by the same point last year.

Strickland says she was unlucky: Her cash flow was cut when her hours at Grady Memorial Hospital were trimmed. But some say the odds of foreclosure were high from the start, that her income was too small to offer any cushion.

Strickland, with a co-borrower she said the lender provided and whom she has never met, bought a $156,400 home on her annual salary of $35,000. Her mortgage payment was $1,046 a month — $12,552 a year.

In the past, home buyers couldn‘t qualify for mortgages worth more than — at the very top — three times their income. But lending has loosened up in the past decade or two.

To boost homeownership, the government offers a host of programs that encourage lending to people who would have been rejected in years past. Loans are insured, loans are supplemented, loans are purchased by agencies like Fannie Mae and Freddie Mac.

Lenders, too, now offer more options.

A generation ago, nearly all homeowners had fixed-rate 30-year mortgages. Now, they can have an adjustable-rate mortgage that lets them pay a much lower rate — for one, three, five or seven years, or even monthly. They can choose to pay only interest on the loan — getting dirt-cheap monthly payments but accumulating no equity.

The transformation began with changes in federal law during the late 1970s and early 1980s that freed banks from many restrictions, said Frank Alexander, a professor at Emory School of Law.

Tens of millions of purchasers at all income levels have used the new rules to live at the edge financially, trading equity for cash, he said.

"There has been a major cultural shift," he said.

The dangers are acute for people who start with modest incomes and virtually no savings. They might be able to make the mortgage payment, but they are never far from disaster, Alexander said. "You have nothing to fall back on if you lose your job or if your child is ill."

Of about 40 million residential mortgage loans being serviced, more than 1.5 million are made with help from the Department of Veterans Affairs, according to the Mortgage Bankers Association.

About 4.3 million are enabled by the Federal Housing Administration, according to the MBA.

The FHA helped Strickland get a mortgage. It couldn‘t help her when the hospital trimmed her hours.

"They cut me down to just the three days [during the week]. No overtime, no weekend shift. It makes a big difference in my pay."

By the time she went back to her previous work schedule, she was four months behind on the mortgage.

What the pros see

A steady flow of homeowners goes to the Atlanta Legal Aid Society for help, most of them people of modest income who have fallen behind on their mortgage payments and are hoping to prevent foreclosure.

Most will fail, said attorney William J. Brennan Jr., director of the agency‘s Home Defense Program.

Then again, Brennan said, most should never have been given a mortgage.

"A lot of these people are buying houses that they should never be buying in a million years," he said. "As soon as there is a glitch in their life, that‘s it — they can‘t make the payments."

But the problem is not just among lower-income buyers.

Plenty of home buyers now push their mortgages right to the limits of their ability to meet monthly payments. Some do so to buy a bigger house, others to buy any house at all.

This also left the dream of homeownership vulnerable to sudden gusts of economic change. The closer toward the edge they stray, the smaller the breeze it takes to blow them into the void. And — although the job market is growing stronger — a lot of people have had trouble keeping their balance.

At the Consumer Credit Counseling Service of Atlanta, 7,545 people with housing problems were counseled last year, said Sue Hunt, director of housing counseling at the agency.

"During the last six months, we have seen an increase in the number of people coming to us for housing counseling," she said.

The numbers are higher, but the reasons haven‘t changed: Some have lost jobs. Some have lost spouses. Some have been slammed with unexpected medical expenses.

Since October, one of every four clients with housing problems either lost a house or left it, Hunt said. "People are usually in a pretty critical situation before they call us."

And that crisis affects higher-income families, too, as a glance at foreclosure listings quickly shows.

"The prices are in every price category," said Mike Prewett, an agent for Re/Max of Greater Atlanta who handles the marketing and sale of foreclosed property.

There are condos, starter homes, beat-up shacks. And in the aftermath of the bust in technology jobs on the city‘s Northside, there are some high-end homes, too.

Among properties recently listed: a four-bedroom house in Smyrna for $799,000, a four-bedroom house in Marietta for $399,900, and a five-bedroom Alpharetta house at $475,000.

Prewett believes the surging foreclosures are simply a reflection of metro Atlanta‘s growth. But he agrees that at least some of the problem comes from the greasing of the skids for borrowers.

Unlike the days of going to a closing with 10 percent or more of the down payment, plus various fees, buyers now are able to "roll the costs" into the loan.

"They walk away from the closing, and they‘ve got none of their money in the property," Prewett said. "Two years later, the property is with me."

Lenders are quick to say they are eager to negotiate with delinquent borrowers, that they have a financial interest in finding a way for the owner to avoid foreclosure.

"If you think you are having trouble with your mortgage payment, the first thing you should do is call the lender," said Laura Armstrong, spokeswoman for the Mortgage Bankers Association. "Lenders lose money when a house goes into foreclosure."

Lenders must spend money on the process, then sell the house. The lender is most likely to lose money when the borrower owes an amount close to the value of the home, Emory‘s Alexander said.

Still, when the buyer had accumulated some equity — or when the house value has risen well above the amount owed — the lender stands a good chance of turning a profit.

Foreclosure rates soared after the economy staggered in 2001. They began to decline — at least nationally — in 2003.


Analysts differ on whether foreclosure rates will drop as the economy grows more healthy. Some are concerned a bigger wave is on the way.

Both nationally and in Georgia, the overall rates of delinquency were down slightly at the end of last year, according to the most recent figures available from the Mortgage Bankers Association: 4.49 percent of mortgage loans were past due during the fourth quarter, an improvement from 4.65 percent in the previous quarter.

In Georgia, where delinquencies have been running above the national average, there was also improvement. For the fourth quarter, 6.49 percent of mortgage loans were past due, down from 6.58 percent.

But the lower rate does not mean that fewer people are in trouble. The rate is lower partly because the number of loans being serviced is up. In Georgia, there were 12,163 more mortgage loans at year‘s end than in the third quarter, according to the MBA.

In the fourth quarter, 1.46 percent of Georgia mortgages were in foreclosure — up from 1.40 percent the previous quarter.

Certain types of loans are less likely to be repaid.

Subprime loans — loosely defined as being mortgages given to borrowers with flawed credit histories — generally are offered at higher mortgage rates. Of the more than 3.1 million subprime loans serviced during the fourth quarter, 11.59 percent were in delinquency while 5.63 percent were in foreclosure, according to the MBA.

Delinquency rates on loans to first-time buyers insured by the Federal Housing Authority have increased in the past two years.

In 2001, less than 1 percent of FHA loans were in delinquency. In 2002, that climbed to 1.08 percent, and in 2003 to 1.58 percent. So far this year, delinquencies have accounted for 1.6 percent of FHA loans, according to the agency.

We shouldn‘t be surprised that many of the loans fail, said Susan Wachter, professor of real estate at the Wharton School of the University of Pennsylvania.

Some, like Strickland, run into trouble within a year. As time goes on, odds grow that more of the gambles will go bad, she said. "It is the aging of the subprime mortgages. The chickens are coming home to roost for subprime lending of three, four, five years ago."

Yes, she agreed, most lenders do prefer taking steps to keep a borrower from plunging into foreclosure. But that often is not enough to save the marginal buyer, Wachter said.

"You try work-outs and it takes time for work-outs to fail. The work-outs don‘t work out — that‘s new in the data."

Wachter doubts that foreclosures will keep receding. "This may be the leading edge. We just don‘t know."

Economic irony

The improving economy could — ironically — be the enemy of many homeowners.

More than 5 million Americans have adjustable-rate mortgages with various different timetables. But rates are rising.

"We feel that there will be more dislocation and foreclosure activity in the next few quarters as marginal borrowers are squeezed by adjustable-rate mortgages," said Greg Sullivan, vice president of Foreclosure.com.

On the other hand, if the economy is truly improving, many homeowners will find their financial situation brightening. Fewer will lose jobs. Raises will be more generous. Mortgage payments will be made on time. Foreclosure rates will decline.

Still, millions of Americans remain at the edge, a paycheck away from falling off.

Michael Froman, an Atlanta attorney who represents many homeowners trying to prevent foreclosure, does not think the situation is worsening. He blamed foreclosures on the broader economy, not a change in lending practices.

"It‘s incremental — a little of this problem, a little of that problem. Generally speaking, foreclosure is the end result of a bad economy, not the beginning."

However, lenders are letting many borrowers set themselves up for problems, he said. "I think the general rule is, everybody is buying more house than they can afford."

3 June 2004

The Daily Communicator ™

Real Estate Industry News….
The next big trend: Foreclosure

Terri Moloney, a real estate agent in Gastonia, N.C., used to sell a couple of foreclosed properties a year.

“Now, they’ve taken over my life,” she said. “In the last three years this area has gone from a bustling economy to “where’s my paycheck?”

In 2003 alone, Moloney sold 168 foreclosed properties, ranging from a $5,000 house in great disrepair to a $225,000 house that was virtually abandoned by the owner after his wife died.

The market for foreclosed homes has grown in many parts of the country in recent years, thanks to unemployment and less stringent lending practices.

Hard times for some, of course are considered investment opportunities for others. Real estate investors, and homebuyers looking for a break, view the foreclosure market as one big bargain bin.

On the heels of a foreclosure.

There are several stages of foreclosure. The first, pre-closure, is the stage at which the owners have defaulted on their mortgage payments but haven’t actually gone through foreclosure proceedings. Experts say it’s difficult to find desirable properties at this stage.

Next, the property goes up for public auction, but this phase is too risky for most buyers because there is little time for inspections, and owners sometimes have the right to buy back the property within a certain period of time.

The third stage, post-foreclosure, is the most accessible to individual buyers and the least risky. At this point, the property is either owned by a bank or by a government agency such as the U.S. Department of Housing and Urban Development (HUD).

According to Robert Irwin, author and veteran real estate investor, the best deals come to those with friends in the foreclosure department of a local bank. The bank-owned properties that aren’t scooped up right away by people in the know are typically listed with a real estate agent who lists the property as they would any other house.

“Turnover of these properties is pretty fast,” said Dominic Muttillo, COO for Foreclosure.com “the average time on the market is about 30 days, though in some places they’ll sell in a matter of five days.

According to Muttillo, Cook County, III. Had the most foreclosures in 2003, with 3,034 foreclosed properties. Counties that are home to Atlanta, Dallas, Detroit, Houston, Indianapolis, Las Vegas, Phoenix and Salt Lake City also ranked high for foreclosures.

Still, while some cities have a plethora of foreclosures, there are some markets where it’s unheard of.

The price is right sometimes.

In theory, homes owned by banks sell at a discount. These properties are seen as liabilities, so the banks are eager to sell them as quickly as possible.

Don’t let the perception that foreclosed properties are bargains keep you from doing your market research. Compare the price with what the foreclosed owners paid, assuming they bought it recently, as well as similar properties in the neighborhood.

Often, people who can’t afford to pay their mortgages can’t afford to make repairs or pay for regular upkeep. “It’s a terrible time and they just don’t care,” said Signorello.

In other words, don’t expect to walk in and smell fresh cookies in the oven. There might not even be an oven. In fact, garbage, rotting food, and missing light fixtures are par for the course.

Banks typically sell foreclosed property “as is” with no warranties, but they do allow time for an inspection. With these properties, and inspection is critical.

Note: This is a condensed version of the original article.

1 June 2004 - Home Price Growth Slows in First Quarter

NEW YORK (Reuters) - U.S. home prices climbed but at a slower rate in the first three months of 2004 after the year-end rush to buy homes on fears of rising mortgage rates tapered off, a government agency said on Tuesday. The 7.71 percent first-quarter increase was below an upwardly revised 8.13 percent year-on-year increase for the fourth quarter of 2003, the Office of Federal Housing Enterprise Oversight said. "That sense of urgency apparently diminished last quarter after rates stabilized. It will be interesting to see what the effects of more recent interest rate increases are in the future," Patrick Lawler, OFHEO‘s chief economist said, in a statement. While economists consider the housing market solid, they say the recent rise in mortgage rates should cool the sizzling pace of home prices and sales in the second half of the year. "They ought to show a slowdown the rest of 2004," said Richard DeKaser, chief economist at National City Corp. Interest rates on 30-year fixed-rates mortgages averaged 6.32 percent last week, up from prior week‘s 6.30 percent. The average 30-year rate has risen nearly 1 percentage point since the end of March, according to Freddie Mac (NYSE:FRE - news).

Home appreciation would increase 3.84 percent for 2004, if it continues at its first-quarter pace, the government agency, which regulates Fannie Mae (NYSE:FNM - news) and Freddie Mac, said. OFHEO tracks home prices based on mortgage data from the two mortgage finance giants.


Annualized home appreciation during the first quarter slowed sharply from the 14.85 percent rise for the fourth quarter. The first-quarter annualized increase was the smallest since 3.23 percent for the second quarter of 1998. "This moderation in growth of house prices is welcome because continued price jumps like those of the fourth quarter last year would raise the potential for declines later on," Lawler said. Economists like DeKaser, in agreement with that assessment, noted that strong price growth an in an environment of rising interest rates could result in price correction. DeKaser said if home appreciation continues at the first-quarter pace as mortgage rates head higher, hot markets like California, New York and Massachusetts could overheat and become vulnerable to price drops. "If we continue to see 7 percent increases, this would concern me. The risk of price correction could be significant," DeKaser said. Between the fourth-quarter and first-quarter, home prices on average grew a slim 0.96 percent, the smallest quarterly increase since the 0.81 percent rise for the second quarter of 1998, according to OFHEO.

Home prices in Hawaii, Nevada, Rhode Island, the District of Columbia and California increased the most during the past 12 months. Average appreciation in those five markets was double the national average. Home price increases were the smallest in Utah, Texas, Indiana, Colorado and Alabama during the same period, OFHEO said. Average home appreciation in Utah was a 1.95 percent, the lowest among all 50 states. For the first quarter, average home values in five states, Vermont, Alaska, North Dakota, South Dakota, Iowa and Nebraska, fell from fourth-quarter levels. In the fourth quarter, no states experienced price decreases from the third-quarter 2003, it said. Among the 220 metropolitan areas tracked by OFHEO, Fresno, California experienced the greatest home price growth, up 21.4 percent for the first quarter from a year earlier.

At the other end of the spectrum, average home prices in the Austin-San Marcos area in Texas rose 0.47 percent in the first quarter from year-ago level

26 May 2004 - New Home Sales Tumble 11.8 Percent

WASHINGTON (Reuters) - Sales of new U.S. homes sagged well below expectations in April to post their biggest monthly drop in more than ten years as rising mortgage interest rates cooled the busy housing market, a government report showed on Wednesday.

Sales of new homes tumbled 11.8 percent to a seasonally adjusted annual rate of 1.093 million units from an upwardly revised record high of 1.239 million in March, the Commerce Department (news - web sites) said.

Analysts polled by Reuters were expecting sales to ease to a 1.200 million unit pace.

April‘s rate was the lowest level of new home sales since November in what is normally the peak season for real estate sales. The decline -- the largest monthly drop since January 1994 -- could signal the end of a housing boom fueled by the lowest mortgage interest rates since the early 1960s.

Mortgage applications fell last week for the third straight week, the Mortgage Bankers Association reported earlier. At the same time, home resales rose to their second highest level on record last month as undecided home seekers acted before rates rise even higher, data released on Tuesday by the National Association of Realtors showed.

Mortgage interest rates have climbed in recent weeks as evidence of economic growth and an improving job market has led observers to anticipate the Federal Reserve (news - web sites) will soon push up short-term interest rates from their lowest level since 1958.

New home sales fell by 22 percent in the South, the region with the greatest volume. Sales fell by 9.4 percent in the West and by 2.5 percent in the Northeast, but rose 10.8 percent in the Midwest.

The number of new homes available for sale at the end of the month was at its highest level since January 1980.

Inflation Predicted to Jump 2.5 Percent

WASHINGTON - Fed by escalating energy prices and a rebounding economy, inflation will pick up more this year than previously thought, a group of economic forecasters says.

In its latest economic outlook, the National Association for Business Economics estimated that inflation, as measured by the Consumer Price Index (news - web sites), will rise by 2.5 percent in 2004. The index is the government‘s most closely watched inflation barometer.

If the new projection being released Monday should prove accurate, it would mark a sharp jump from the index‘s 1.9 percent increase in 2003 and would represent its largest increase since a 3.4 percent advance in 2000.

The association‘s new inflation estimate for 2004 is higher than its previous estimate, made in February, of a 1.8 percent rise.

"Rising prices of energy and other industrial commodities are contributing to the higher inflation, but so too is robust growth," said the group‘s president, Duncan Meldrum, chief economist at Air Products and Chemicals Inc.

Recent economic reports suggest inflation is stirring from its slumber. Other data show businesses are beginning to step up hiring, and industrial activity is brisk. All these lead more economists to predict that the Federal Reserve (news - web sites) may raise short-term interest rates next month.

Other analysts still believe the Fed‘s first rate increase in more than four years will come in August or later. The bank‘s crucial short-term rate is now at a 46-year low, 1 percent.

Inflation is creeping up for a number of reasons, economists say.

Some companies, which have had to keep a lid on price increases during the economic slump, are finding it easier to raise prices in a rebounding economy.

Rising energy costs are pushing up prices for goods and services, including air travel and food.

Higher prices for some commodities, such as steel, also are a factor in some cost increases, analysts say.

Inflation‘s upward movement signifies a big change in the pricing climate from a year ago. Then, the Fed worried about the possibility of deflation, a prolonged and widespread price decline. Still, a 2.5 percent increase in inflation would be considered historically rather low, no threat to the economy.

The economics association‘s forecasters also believe that for all of 2004 economic growth will be higher and the unemployment rate lower than previous estimates.

They believe the economy will expand by 4.7 percent this year, up slightly from a previous estimate of a 4.6 percent rise and exceeding the 3.1 percent advance in 2003. The new estimate, if borne out, would mark the best economic growth since 1984.

The unemployment rate, meanwhile, is expected to fall to 5.5 percent this year. That‘s better than the previous forecast of a 5.6 percent rate and an improvement from the 6 percent jobless rate in 2003.

With the economy back in the groove, forecasters also lowered their estimate for the federal budget deficit this year to $464.4 billion, from $492.5 billion. The new estimate would still be a record in dollar terms.

5/16/2004 - Statistics From GMAC The 4th Biggest Lender In The United STates

GMAC foreclosed on 21 properties in May 2004 in Fulton COunty alone.

Why Housing Could Spring a Leak

It sure looked like good news: On Apr. 2, the government announced that a stunning 308,000 new jobs were created in March (economists were expecting only about 130,000). For the housing market, however, these tidings hit like a ton of bricks. Almost immediately, interest rates started rising, and housing stocks started falling.

KB Homes fell from $80.20 to $76.60 that day and to $75.27 the next (see BW Online, 4/5/04, "KB Home: Cyclical No Longer?". D.H Horton, Lennar and Centex all slumped an average of about 7% those two days before rebounding a bit on Apr. 6.

Are these stocks signaling potential weakness ahead for real estate? You bet they are. While housing experts point to myriad reasons why the real estate market will likely stay robust through 2004, the risk of a serious downturn in the next few years is clearly increasing -- particularly in areas of the country where home prices have risen the most.

"AN ATTRACTIVE ZONE." So far, the interest rate jumps have been moderate. Mortgage rates, both traditional 30-year and adjustable, remain way below their historical average of around 8%. But on Apr. 6, Bankrate.com‘s overnight survey of lenders showed the average rate on a 30-year-fixed mortgage spiked to 5.48%, up from 5.2% a week earlier.

"It‘s hard to be too concerned about such a relatively small backup," notes Mike Sklarz, chief valuation officer for real estate services company Fidelity National Financial in Jacksonville, Fla. "We‘re still in such an attractive zone of interest rates." He believes rates would have to rise to 6.5% or 7% to hurt the market.

That kind of a rise doesn‘t seem likely this year. Indeed, rates briefly climbed above 6% last August, only to retreat quickly when the economy slowed in the fourth quarter. But through it all, sales volume and home-price appreciation nationally have never slumped. And if the economy continues to grow and inflation perks up, a housing market bubble is certainly a plausible scenario a year or two from now.

THE AFFORDABILITY QUESTION. Any downturn in the market could have major economic ramifications. With home ownership now up to almost 70% of households, Americans are pouring more and more of their savings -- as well as their hopes and dreams -- into their homes. "You can‘t ignore the fact that low interest rates haves aided affordability and to some extent deserve credit for continued rapid price appreciation in real estate prices over the year," says Greg McBride, financial analyst at Bankrate.com.

It‘s people‘s ability to afford a high-priced home that is directly affected when rates rise, not the actual home price. For now, buyers are turning to adjustable-rate mortgages (ARMs) to find the same interest rate they could once get through a 30-year fixed, says Paul Fine, senior vice-president at GMAC Mortgage. ARMs provide buyers with a lower rate now, in exchange for lenders gaining the option of raising the rate at a set point in the future.

The increasing popularity of ARMS is likely to keep the housing market strong through this year, says Frank Anton, president of Hanley Wood, a Washington (D.C.)-based media company that serves the residential-construction industry. The problem is that ARMs put homeowners at risk of being unable to afford their home in the future if interest rates rise substantially over the next few years (see BW, 4/12/04, "Home Buyers: ARMed And Dangerous?").

Here‘s a worst case scenario: Today‘s buyer of a $500,000 home finds that in three years she owes that same amount, but has to pay twice as much to finance it, while she can sell the house for only $300,000. It doesn‘t take much imagination to see what such a trend would do to the banking industry, consumer confidence, and the broader economy.

SUPPLY-DEMAND CUSHION. So far, that kind of doomsday appears far fetched, housing experts say. They expect home prices to level off at some point in the future, but not tumble. While regional home values can and often do rise and fall, average home prices nationwide haven‘t dropped in about 35 years of record-keeping.

Plus, housing inventory remains near record lows, and supply is hard to add in areas where prices are rising fastest, says Craig Kucera, who covers homebuilding stocks for brokerage firm Friedman Billings Ramsey. "We still have a significant supply-demand imbalance," he says. "That adds some cushion if there‘s a slowdown in 2005 or later this year, but I don‘t see that."

Plus, if rates continue to rise (which isn‘t a given), that will likely be because the economy is improving, which means personal incomes will be rising, and more people will be able to afford higher-priced homes, Anton says. Even in a rising-rate environment, "it‘s conceivable that the housing market would move ahead with barely a blip," he adds.

WARNING SIGNS. None of this means that stable real estate values are etched in stone, however. The country is already dotted with pockets of vulnerability. In parts of California such as Silicon Valley, average prices have climbed beyond the affordable range for the typical income-earner. Sklarz points to places like Key Biscayne (Fla.) and South Hampton (N.Y.), where prices have risen the fastest, as potential trouble spots. It‘s "a pretty good signal" of vulnerability, he says, if prices have gone up more than 150% in the past five years.

Worried about your neighborhood? Watch the local listings for a growing inventory of homes on the market and flattening or falling prices at the high end. That‘s a leading indicator for the rest of the market, says Sklarz. Keep your ears open for signs of speculation: Is your neighbor buying a house with plans to fix it up and flip it?

Kucera also looks at the rental market, which is weakening on a national level, as a gauge of home-price appreciation potential. If you can rent a comparable home for much less than it would cost to buy it, that‘s a worrisome sign.

Also, keep an eye on those homebuilding stocks. For now, Wall Street is signaling only more risk, not the reality of a weakening housing market. Luckily, houses aren‘t like stocks, which are a lot easier to trade. But as mortgage rates rise, fewer people will be able to afford to move up to a nicer house. That‘s a trend today‘s home buyers need to keep in mind, even if any weakening in the housing market is still years away.

REO Conference In Palm Springs, California - 13 - 16 of March 2004 - The Desert Palm Springs, California

I attended the conference this past weekend. On Saturday the 13th, Kelly and I flew into Los Angeles and spent the day and night in Beverly Hills. We enjoyed sight seeing in various fashions and walked around the Hollywood area and saw various landmarks. We ate dinner at a restaurant called, "The Ivy" and saw Paula Abdul. Yippee!

On Sunday, we drove to Palm Springs, CA where the convention was taking place.

The convention had many attendees. Around 1,100.00. There were booths set up from various REO vendors and I was able to see lots of new products regarding the reo business.

The high light of the convention was the program delivered by Christopher Thornberg, a UCLA economist. I also spoke to many people around the US and have picked up and made note of their comments as well. High lights include the following:

Normal growth for the economy is 3 - 3 1/2 % per year. Between 1996 - 1999 the growth was out of whack because of the internet revolution. .

There is a 16% commercial/industrial vacany rate which is not good.

"We are borrowing from the future, and not paying up for the borrowing from the past."

In 2004, 18% of American‘s disposable income is going to pay pback debt. . In 1994 it was 16%.

The trade deficit as a percentage of GDP signifies we as a society, are "Living Beyond Our Means"

The economy will have 4 - 41/2% growth in 2004. There could be a recession in 2005. Mortgage rates will hit 6 - 6 1/2 percent by the end of 2004 and stabilize in 2005.

If inflation goes up (CPI) then the interest rates will go up. An increase in the CPI will be a big problem.

San Jose has lost 20% of their paytoll jobs in a 3 year period.

These companies will do well in the next year to year and a half:

Professional services
Financial centers
South and West
Cities with highly educated people.

Manufacturing and transportation are declining.

Value = Today‘s Rent/D - G

G = Future Rental Gworth
D = Discount Factor (Mortgage Rates, Depreciation, Taxes, Risk Premium)

In Los Angeles, apartment rents are up

If interest rates increase to 7 1/2 %, we will see a 20% drop in home values.

1% increase in interest rates, creates 10% of deflation.

www.uclaforecast.com - Christopher Thornberg ctthornbe@asem.ucla.edu

The market today in GA consists of low interest rates. I am seeing that the buyers trying to purchase a home are marginal and are very wishy washy. They make offers, agree to everything and then back out, re negotiate or change their minds. I recommend mortgage committment letters and certified funds for earnest money.


My name is Tony Sagami, the Texan who Martin wrote about a few weeks ago. I‘m the guy who, despite a respectable income, drives a modest Toyota, owns a modest house, and sends his kids to public schools, while living in the middle of a fantasyland community of conspicuous consumption.

Million-dollar homes, five golf courses, European sports cars in darn near every driveway, and all the stereotypical signs of keep-up-with-the-Jones spending are everywhere in the town I live.


But the signs of wealth are skin deep, and times aren‘t nearly as good as they appear. Indeed, several of my neighbors have recently gotten over their heads in debt and found themselves facing foreclosure on their homes.

These are not just a few isolated cases. Consider, for example, this headline from a front-page article that appeared in the Austin American Statesman on March 18 ...

Hard up, hundreds forfeiting houses
In Williamson, Travis counties, foreclosures reaching peak levels

Nationwide, we have near-record numbers of foreclosures, but it doesn‘t surprise me. Americans have been on a decade-long spending spree, accumulating mortgage and credit-card debt with wild abandon.

As a percentage of disposable income, household debt payments reached a record 13.3% in 2002 and 13.1% last year. The previous peak was 12.3% in the summer of 1987, just months before the steepest stock market crash of the century.

Meanwhile, personal bankruptcies and credit card delinquencies are also at or near record highs.


Wall Street and Washington know all about the "jobless recovery."

What they seem to be forgetting is that the people WITH jobs are also falling behind.

Indeed, according to the Department of Labor, wages rose just 1.6% in the 12 months ending in February — matching the lowest growth rate on record.

This is worse than a jobless recovery. It implies that the underpinnings of the housing boom — and the entire economy for that matter — are a lot weaker than almost everyone previously realized.


Banks are only making things worse.

They‘re relaxing their lending requirements.

They‘re accepting lower down payments.

And they‘re going berserk with aggressive mortgage options such as graduated payments, teaser introductory rates, and interest-only payments.

The goal: To keep payments as low as possible.

The result: To entice Americans to buy more home than they can afford.

Is this a key reason President Bush has been able to brag about a record-high home ownership rate of 68%? I‘m afraid so.


In Alexandria, Virginia, home buyers were so eager to buy luxury townhouses they camped out for seven days for yet-to-be-built units. In fact, the line grew so long that the city shut it down. Prices started at $560,000 and reached $1.1 million.

A recent Bloomberg story says the same thing is happening in California:

"Firefighter Bruno Gonzalez, his wife and three children are moving next week into a new, $1.1 million mini-mansion, as he calls it, in Pleasanton, California. The mortgage requires them to pay only interest for the first seven years. Payments on the $880,000 loan will be $3,300 a month, compared with $5,000 on a conventional 30-year fixed mortgage.

"Since they won‘t be paying any principal, they are betting on rising prices to increase their equity. The value of the family‘s previous home in Castro Valley, California, soared to $745,000 from $375,000 in just over five years.

"‘We know in the long run the house will appreciate so much that we‘re going to walk away without having to pay the principal down, really,‘ Gonzalez said Wednesday in a telephone interview. While the home purchase is ‘a stretch‘ for the family‘s $155,000 annual income, Gonzalez said, ‘we‘re going to walk away millionaires.‘"

But the Gonzales family is not the only one going crazy over real estate.

Last week, the San Francisco Chronicle ran a story — Anatomy of a Frenzy — about just how nuts the real estate market has become.

With the Bay Area real estate market hopping, agents and home shoppers have seen an increase in:

Multiple offers of 10 or more, with most above asking prices.

Purchase offers waiving contingencies for inspections or appraisals.

Pre-emptive offers, or those handed in before the seller officially accepts bids.

Interest-only and adjustable rate mortgages, which let buyers carry bigger loans.

Buyers allowing sellers to live in the home for free for weeks after the sale.


All this is following a very familiar pattern. Just as the stockbrokers were the last to accept the reality of the tech bubble, it looks like realtors, mortgage brokers, and builders will be the last to recognize the real estate bubble.

After the foreclosure article appeared in the American Statesman, my Austin newspaper ran this front-page article two days later.

Builders wager on new homes
Spec houses are on the rise, even with job slump

What this shows is that you should listen with a very skeptical ear to your friends in the real estate business when they tell you how wonderful things are. The so-called professionals inside the industry can‘t see the forest for the trees.


No doubt about it: Real estate is wild.

That doesn‘t mean it can‘t get wilder. But I‘m convinced we‘re close to the top. Unlike stocks that can trade for 100, 200, or 300 times earnings, real estate prices have a natural limit, tied to household incomes.

Sure, some banks may be willing to let a frenzied buyer get away with as much as a 50% debt-to-income ratio ... but rarely more.

I‘m not alone in looking for a top. Dean Baker, co-director of the Center for Economic and Policy Research, thinks that home prices could drop 11% to 22% across the country — perhaps as much as 40% in some areas.

No matter when or how real estate tops, however, it is undeniable that today‘s real estate bubble is just as obvious as the tech bubble.


Even if you are not overexposed to real estate yourself, you may need to take a hard, fresh look at your portfolio, debt situation, and financial goals.

Why? Because when the real estate bubble pops, it will take the economy down harder than the bursting of the tech bubble.

Remember, there are still many Americans who couldn‘t care less about the stock market because they have little or no money invested in it. But you can‘t say that about real estate. The majority of adults past 40 own a home.

The home represents their largest asset and most valuable possession. When they see it falling in value, they are bound to do whatever it takes to keep it.

They‘ll sell their stocks and mutual funds ... cash in their IRAs and 401(k)s ... and sell off other assets. The impact on the stock market and the economy will be severe.

I‘m not suggesting that you should sell your own home. Regardless of what the real estate or stock market does, we all need a place to live. But if you have investment real estate, that‘s another story.

Here‘s the bottom line:

1. The hot real estate market is nothing more than Bubble 2.0.

2. That bubble is about to pop.

3. When it does, the fall-out is bound to affect you, whether you own real estate or not.

4. NOW is the time to prepare!

Pay down your debt.

Don‘t borrow a penny more than you have to.

Don‘t stretch your budget too thin.

Sell off most of your portfolio assets — including stocks and long-term bonds — before everyone else starts selling.

Build CASH.

Best wishes,


Tony Sagami
Contributor, Safe Money Report

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Foreclosure & Loss Mitigation Lingo:

Reinstatement: Payment of allowable fees, costs, and expenses (both
internal to the bank and foreclosure) combined with any delinquent
payments. This amount either satisfies a demand letter or brings the
account contractually up to date. (We like these.) Foreclosure action is
completely cancelled. The borrower sends in the total amount to cure the loan payments in default.

Stipulation Agreement: A payment plan that lasts up to six months that is
not designed to bring the account contractually current. The customers are
informed that the account will still be past due when the plan is
completed. Foreclosure actions are placed on hold where applicable (by
state law). Similar to forbearance. The debtor pays up almost 50% of the back payments.

Forbearance Agreement: A payment plan that lasts up to six months that is
designed to bring the account contractually current. Foreclosure actions
are placed on hold as previous, but upon completion (if done in a timely
fashion), are cancelled completely. The debtor sends in a partial payment of the back debt.

For accounts that have filed a Chapter 7 BK and not reaffirmed or are in an
active Chapter 13 BK, we completely cancel any foreclosure action.

We have written agreements that customers sign for the non-bankrupt
accounts. We consider a payment plan started when we have received the
signed agreement and the first payment. As always, there are exceptions to
every rule.

Short Sale - The note is sold to a third party for a dicount.

Foreclosure - Bank forecloses the mortgage under the law.

Offensive Foreclusre - Attorney foreclosus and takes name back in mortgagee.

Defensive Foreclosure - Attorney goes to the sale of the senior lien holder and competitively bids on behalf of junior lien holder. First and second mortgages are usually the situation here.

Safety Check - This is the process of activating utiltiies. The homes are de winterized. When we receive a contract the buyer usually has an inspection period. To cut on the furnace, gas water heater, etc. we must make sure they can hold gas and water so the home does not have problems with leaks. That is why the homes are winterized, and then de winterized/safety inspection.

Fannie Mae states that a foreclosure attorney should take 67 days to process a foreclosure sale.

On the heels of a foreclosure
As we pointed out in our July 2003 article "Foreclosure: Hit or myth?" there are several stages of foreclosure. The first, pre-closure, is the stage at which the owners have defaulted on their mortgage payments but haven‘t actually gone through foreclosure proceedings. Experts say it‘s difficult to find desirable properties at this stage.

Next, the property goes up for public auction, but this phase is too risky for most buyers because there is little time for inspections, and owners sometimes have the right to buy back the property within a certain period of time.

The third stage, post-foreclosure, is the most accessible to individual buyers and the least risky. At this point, the property is either owned by a bank or by a government agency such as the U.S. Department of Housing and Urban Development (HUD).

According to Robert Irwin, author and veteran real estate investor, the best deals come to those with friends in the foreclosure department of a local bank. The bank-owned properties that aren‘t scooped up right away by people in the know are typically listed with a real estate agent who lists the property as they would any other house.

You can search these listings at Foreclosure.com, which charges a $23.80 monthly subscription after a seven-day free trial.

"Turnover of these properties is pretty fast," said Dominic Muttillo, COO for Foreclosure.com. "The average time on the market is about 30 days, though in some places they‘ll sell in a matter of five days."

According to Muttillo, Cook County, Ill. (Chicago) had the most foreclosures in 2003, with 3,034 foreclosed properties. Counties that are home to Atlanta, Dallas, Detroit, Houston, Indianapolis, Las Vegas, Phoenix and Salt Lake City also ranked high for foreclosures.

Still, while some cities have a plethora of foreclosures, there are some markets where it‘s unheard of.

"In California, you‘re just not going to have many opportunities to buy a foreclosure," said Irwin, explaining that in hot real estate markets homeowners have no problem selling if they need to get out from under their mortgage payments.

The price is right sometimes
In theory, homes owned by banks sell at a discount. These properties are seen as liabilities, so the banks are eager to sell them as quickly as possible.

"We‘ve seen discounts up to 50 percent off, but those are not the norm," said Greg Sullivan, vice president of marketing for Foreclosure.com. But it‘s more common to see prices 10 percent to 20 percent below market value.

Don‘t let the perception that foreclosed properties are bargains keep you from doing your market research. Compare the price with what the foreclosed owners paid, assuming they bought it recently, as well as similar properties in the neighborhood.

"These properties are usually in bad shape," said Nik Signorello, a Chicago real estate agent.

Often, people who can‘t afford to pay their mortgage can‘t afford to make repairs or pay for regular upkeep. "It‘s a terrible time and they just don‘t care," said Signorello.

Related articles and tools

• Bracing for higher rates

• A surge in second homes

• Avoid the home equity hangover

• How much house can you afford?

In other words, don‘t expect to walk in and smell fresh cookies in the oven. There might not even be an oven. In fact, garbage, rotting food, and missing light fixtures are par for the course.

Maloney has a $300,000 house on the market. A bargain, right? Only if you like fixer-uppers.

"The owner took the fireplaces, the heat pump, the central vacuum system and everything else he could take with him," said Maloney.

"I‘ve even seen people take the pipes from under the sink," adds Sandy Montanino, a real estate agent in Salt Lake City.

Depending on how much work the house needs, a lender may require more cash down than with a typical loan, said Signorello. "A lot of the buyers I deal with are able to pay in cash."

Banks typically sell foreclosed property "as is" with no warranties, but they do allow time for an inspection. With these properties, an inspection is critical.


Selling? Buying? Click to compare top local real estate agents


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Information on replacement titles for mobile homes

Good Afternoon - You need to find out either the VIN or Serial No. of the mobile home. If CitiCorp does not have this info, you can find it on the appraisal somewhere or on the Manufactured Housing Addendum, if the appraisal contains one. Once you get the VIN or Serial No., call the county tag office and ask them who is listed as owner and who is listed as lienholder. If the county tag office won‘t tell you (they are not supposed to, but some county agents will give you the info), you write
to the DMV requesting a copy of the mobile home title history. I have the address at work and will email it to you tomorrow. You also need to send a check for $.50. The letter must state that CitiCorp has an interest in the mobile home and we attach back-up documentation (a copy of the Security Deed, a copy of the Deed Under Power, etc.) If CitiCorp (or whoever they foreclosed in the name of) is listed as the lienholder, and the borrower is listed as the owner, you can get replacement titles, and then get titles in the name of Citicorp with the titles, an affidavit of repossession and a copy of the foreclosure deed. If CitiCorp is not listed as the lienholder, get the settlement statement and see if there was a payoff to the lienholder or another company (could be a servicer for the lienholder). First call the closing attorney and see if the closing attorney has the titles in his file (we have had this happen). If not, contact the company that was paid off and see if they have the titles (sometimes the titles aren‘t sent to the closing). If not, see if you can get a lien release - or see if you can get the lienholder to sign off on an MV-1 (application for title) requesting a duplicate title, and have it sent to you. Then you can have the lienholder either sign off their lien on the title or execute a lien release - then you will be able to get new titles with an Affidavit of Repossession and a copy of the foreclosure deed. If none of this works and CitCorp or the foreclosing lender is not listed on the titles as lienholder, and you cannot get titles, you may have to get a title bond.

the address of the DMV for the title history. Its:

Georgia Dept. of Public Safety
Attn: Research
P.O. Box 740381
Atlanta, GA 30374-0381

The phone number for the GADMV Tag & Title Dept. is (404) 362-6500.
But, dealing with the county tag offices is much easier than dealing with the GADMV.


Georgia Legislative Update

HB 26 Disturbance of Archeological Sites (By Representative Broome of Donalsonville) A bill relating to prohibited acts as to archeological, aboriginal, prehistoric, or historic sites, notification of the state archeologist before beginning the investigation or disturbance of a site, and penalties, so as to provide an exemption from the prohibition against disturbing certain submerged archeological, aboriginal, prehistoric, or historic sites. House Natural Resources and Environment Committee

HB 142 Georgia Fair Lending Act Amendments (By Representative Floyd of Cordele) A bill to provide for revisions to certain definitions; to provide for changes in limitations on late payment charges; to specify when a reasonable, tangible net benefit occurs; to provide for reasonable attorney´s fees; to provide for certain exceptions and limitations consistent with federal law; to provide the Department of Banking and Finance with express authority to promulgate rules and regulations; to provide for good faith reliance on guidance from the Department of Banking and Finance. PASSED House

HB157 Georgia Coastal Management Act (By Representative Day of Tybee Island) A bill to reestablish or continue the Georgia Coastal Management Act until July 1, 2009. The current act is scheduled to sunset July 1, 2004. House Natural Resources and Environment Committee

HB 208 Georgia Property Owners´ Association Act (By Representative Fludd of Fayetteville) A bill to clarify the definition of "lots"; to clarify the definition of "lot owner"; to clarify the definition of "property owners´ development"; to clarify enforcement powers; to clarify voting procedures for multiple-owner units; to conform proxy requirements to other provisions of the law; to clarify expenses which may be assessed against owners equitably; to clarify that the instrument may provide for assessments to commence on lots after construction of and issuance of a certificate of occupancy on a dwelling on the lots; to clarify that each grantee in a conveyance is jointly and severally liable for unpaid assessments due prior to the date of issuance of a closing statement; to clarify amendment requirements and procedures; to provide reasonable procedures for amending instruments to submit a property owners´ association to this article; to clarify procedures for amendments to change lot boundaries, votes, or allocations of liability; to clarify effective dates of amendments; to clarify incorporated names of associations; to clarify meeting quorum requirements; to clarify requirements for calling annual meetings and for stating purposes of special meetings; to clarify association review powers for owner modifications which change exterior appearances; to increase the maximum late charge on delinquent assessments; to increase the maximum rate of interest on delinquent assessments; to clarify assessment collection and judicial foreclosure powers and procedures and increase the duration of the association’s lien; to increase the maximum fee chargeable for closing payoff certifications; to provide for inclusion of condominium developments within property owners´ developments. House Judiciary Committee

HB 210 Georgia Condominium Act (By Representative Fludd of Fayetteville)

A bill to clarify the relevant date of recording of condominium instruments; to clarify the definition of "unit owner"; to clarify requirements for identifying recorded plats on amendments for expandable condominiums; to clarify requirements for identifying recorded plans on amendments for expandable condominiums; to clarify the classification of pipes and vents; to clarify the classification of decks; to clarify enforcement powers and procedures and assessment of expenses for suspension of utilities; to clarify voting procedures for multiple-owner units; to conform proxy requirements to other provisions of Georgia law; to clarify expenses which may be assessed against owners equitably; to clarify expenses which may be assessed against owners uniformly; to clarify that each grantee in a conveyance is jointly and severally liable for unpaid assessments due prior to the date of issuance of a closing statement; to conform special assessment procedures to other provisions of the article; to clarify limited common element assignment and reassignment procedures; to clarify declarant easement rights for repairs; to correct a typographical error regarding mortgage execution of expansion amendments; to require owners altering or damaging the structural integrity of a condominium to promptly repair such damage; to clarify amendment procedures and requirements; to clarify requirements for amendments which alter allocations of liability for common expenses; to clarify effective dates of amendments; to provide for presumption of validity of amendments after declarant transition; to clarify restoration procedures following casualties covered under insurance required to be maintained by the association; to clarify effective dates of liens against the condominium; to require prompt release of materialmen´s liens on units upon payment of a pro rata share of the encumbrance; to clarify an association’s powers to convey common elements by deed in lieu of eminent domain and special assessments related thereto; to clarify procedures for the withdrawal of submitted property in the event of eminent domain; to clarify requirements for calling annual meetings and for stating purposes of special meetings; to clarify that quorum requirements may be specified in the bylaws; to clarify responsibilities to repair damage to units through which access is taken; to clarify an association’s powers to grant deeds in lieu of eminent domain; to clarify minimum hazard insurance requirements; to clarify distribution of surplus proceeds to unit owners; to increase maximum late charges on delinquent assessments; to increase the maximum rate of interest on delinquent assessments; to clarify assessment collection and judicial foreclosure powers and procedures and increase the duration of the association’s lien; to increase the maximum fee chargeable for closing payoff certifications. House Judiciary Committee

HB 215 Credit Scoring (By Representative Golick of Smyrna) A bill to provide for the use of credit and credit scoring information in underwriting or rating risks by insurance companies; to provide limitations on the use of such information; to provide for dispute resolution and error correction; to provide for notifications; to require certain filings by insurers using credit and credit scoring information; to provide for indemnification. House Insurance Committee

HB 237 State Soil and Water Conservation Commission (By Representative Hanner of Parrott) A bill to provide for certain powers and duties related to water resources; so as to change certain provisions relating to permits for withdrawal, diversion, or impoundment of surface waters and monitoring, recording, and reporting water withdrawn by certain irrigation systems; to change certain provisions relating to definitions relative to ground-water use generally; to change certain provisions relating to permits to withdraw, obtain, or use ground water, water conservation plans, factors to be considered, notice of official acts, administrative hearings, and judicial review; to change certain provisions relating to emergency orders, hearings, and appeals; to change certain provisions relating to permits for farm uses, notice of transfer or modification in use or capacity, nonuse, suspension or modification, priority uses, and effect on existing common or statutory law; to provide for preparation, review, and submission of a proposed comprehensive state-wide water management plan; to provide legislative findings and declarations. This bill is a product of the Joint Study Committee on Water, which made its final report last year. Despite many attempts by various environmentalist organizations this legislation does not change the public trust doctrine. These organizations would like to expand the public trust doctrine so that they would have the legal right to sue property owners for using their own water. Expanding the public trust doctrine would be a serious blow to private property rights. We expect that the environmentalist will attempt to amend this bill somewhere in the process to expand the public trust doctrine. House Natural Resources and Environment Committee

HB 242 Environmental Policy Rationale (By Representative McCall of Elberton) A bill relating to environmental policy, so as to require the publication of detailed statements of rationale for certain new or amended environmental regulations or other related actions of state government; to provide for the effect of noncompliance with such publication requirement; to provide for certain emergencies. House Natural Resources and Environment Committee

HB 244 Timber Harvesting (By Representative Beasley-Teague of Red Oak) A bill relating to providing notice of timber harvesting operations, so as to change certain provisions relating to effect on local regulation of timber harvesting operations. House Agriculture & Consumer Affairs

HB 258 Property Tax Relief (By Representative Royal of Camilla) A bill to repeal the sales and use tax exemption with respect to eligible foods and beverages for off-premises consumption; to amend Title 36 of the Official Code of Georgia Annotated, relating to local government, so as to provide for the allocation of certain revenue to fund homeowner tax relief grants; to provide for a contingent effective date; to provide for applicability; to provide for automatic repeal under certain circumstances. House Ways & Means Committee

HB 285 State Soil and Water Conservation Commission (By Representative Stokes of Covington) A bill to provide for implementation of an education and training program; relating to conservation and natural resources, so as to change certain provisions relating to powers and duties of the Board of Natural Resources and the director of the Environmental Protection Division of the Department of Natural Resources as to control of water pollution and surface-water use generally; to change certain provisions relating to permits for construction, modification, or operation of facilities which discharge pollutants into waters and permits for discharge of dredged or fill material into waters and wetlands; to extensively revise certain provisions relating to control of soil erosion and sedimentation. House Natural Resources and Environment Committee

HR 108 Property Tax Relief (By Representative Royal of Camilla) A resolution proposing an amendment to the Constitution so as to allocate not less than 50 percent of the revenue from the state sales and use tax with respect to the sale of food and beverages for off-premises consumption to fund property tax relief through the homeowner’s incentive adjustment; to provide for the submission of this amendment for ratification or rejection. House Ways & Means Committee

SB 38 Database Protection (By Senator Lamutt of Marietta) A bill relating to selling and other trade practices, so as to provide for limited protections for the owners of databases against unauthorized commercialization; to provide a short title; to provide for legislative purpose; to define certain terms; to provide criminal punishments and civil remedies for certain violations. Senate Science and Technology Committee

SB 39 Electronic Permit Request (By Senator Lamutt of Marietta) A bill relating to general provisions applicable to counties and municipal corporations, so as to provide that counties and municipalities that require building permits for construction or renovation of buildings and structures or for the installation, replacement, or improvement of plumbing, electrical, HVAC, gas, cable, or other systems in a building or structure shall permit applicants to apply for such permits through certain electronic media and shall provide for certain alternative means of paying any fees associated with the issuance of such permits. Senate Science and Technology Committee

SB 53 Georgia Fair Lending Act Amendments (By Senator Cheeks of Augusta) A bill to provide for exclusions to the definition of creditor; to exclude certain fees from the definition of points and fees; to provide for liability of creditors for violations of the Act; to provide for violations of the Act by brokers. Senate Banking and Finance Committee

SB 74 Public Accommodation (By Senator Brush of Augusta) A bill to provide that a person who owns or operates a public accommodation may not restrict an individual from access or admission to the accommodation or otherwise prevent the individual from using the accommodation solely because the individual operates a motorcycle, is a member of an organization or association that operates motorcycles, or wears clothing that displays the name of such an organization or association; to provide that no person who owns or operates a public accommodation may exclude patrons from parking two-wheeled or three-wheeled vehicles in the parking lot of the public accommodation; to provide exceptions; to define certain terms; to provide for injunctive relief and damages involving violations of this Act; to authorize attorney’s fees and court costs under certain conditions. Senate Judiciary Committee

SB 86 Transfer of Development Rights (By Senator Hudgens of Hull) A bill relating to transfer of development rights, so as to define certain terms; to revise procedures relative to the creation of the transfer of development rights within or between political subdivisions; to provide an effective date. Senate Judiciary Committee

SB 97 Real Estate Transfer Tax (By Senators Hamrick of Carrollton) A bill relating to the exemption of certain instruments, deeds, or writings from the real estate transfer tax, so as to provide additional exemptions from the real estate transfer tax. Exempts mergers from real estate transfer tax. Senate Judiciary Committee

Copies of Legislation are easily accessed via the Internet. Contact http://www.legis.state.ga.us/ to check the status of any of the legislation outlined in this bulletin. Because the Legislative process is constantly in motion, the State and Local Governmental Affairs Committee members should address questions regarding GAR’s position. Please contact GAR staff at (770) 451-1831 for the phone number of the member nearest you.

Survey Shows 3rd Quarter Delinquencies Down and Foreclosures Flat Compared to 2nd Quarter of 2002

RISMEDIA, Jan. 7–There is a significant reduction in the number of most homeowners who are delinquent with their mortgage payments, according to the Mortgage Bankers Association of America. Meanwhile, the number of homeowners who are in the foreclosure process remained flat compared to the previous quarter.

"There‘s some good news in this survey. We believe that delinquencies have peaked and, as the economy continues its recovery, the housing market will continue to make its contribution," said Doug Duncan, MBA senior vice president and chief economist for MBA.

He said the data suggest that the economy is recovering, and employment will pick up in the second half of this year.

"We believe going forward there will be fewer households facing the harsh economic reality of unemployment that helped to drive up delinquencies and foreclosures in the first two quarters of 2002. Certainly, that could change with any unforeseen circumstances, but all indicators are pointing toward a growing economy and ultimately an improving job market,” Duncan added.

The seasonally adjusted delinquency rate for mortgage loans on one-to-four unit residential properties was 4.66% at the end of the third quarter of 2002. This represents a drop of 11 basis points from the second quarter and a drop of 17 basis points from the third quarter of 2001.

The decline in the total number of delinquencies was driven by a drop in the percentage of loans that were 30 days delinquent, from 3.20% in the second quarter to 3.06%. The 60-day delinquency percentage was unchanged at .79% and the percentage of loans 90 days or more past due increased from .78% to .82%.

For conventional loans, total delinquencies dropped from 3.10% in the second quarter of 2002 to 3.04% in the third quarter. FHA delinquencies decreased from 11.81% to 11.62%, and VA delinquencies decreased from 8.00% to 7.81%.

Due to the growth of the sub-prime market, generally, the number of subprime loans included in the survey‘s conventional loan category has, over time, begun to increase.

MBA‘s delinquency rate does not include loans in the process of foreclosure. The total percentage of loans in the process of foreclosure was 1.15 at the end of the 2002 third quarter, up from a revised 1.13% at the end of the second quarter. The percentage of loans that entered the foreclosure process during the third quarter remained essentially unchanged, dropping slightly from a revised .38% in the second quarter to .37% in the third quarter, on a seasonally adjusted basis. The 2001 third quarter was also reported at .37%.

Many Retiring Baby Boomers Likely to Move

RISMEDIA, Dec. 10–Retirement will bring a change of scene for many Baby Boomers, as many anticipate relocating or revamping their current homes, according to the second annual Allstate "Retirement Reality Check" survey. Whether moving on or staying put, many surveyed Baby Boomers expect home-related expenses such as a mortgage and home improvement projects to be big-ticket items that will take a bite out of their retirement savings.

Nearly 40% of those surveyed plan to move in retirement, with almost one-third (31%) doing so to downsize. Seventeen percent of surveyed Baby Boomers will move to be closer to family, while another 14% would like to move to a warmer climate, especially those Baby Boomers currently living in the Midwest and Northeast regions. Other surveyed Baby Boomers (13%) will move to have greater access to activities and amenities.

Whether Baby Boomers relocate, stay put or choose to renovate their current homes, dreams of a debt-free retirement may not become a reality.

* Nearly a quarter (23%) of those surveyed expect to carry a mortgage on their primary residence into retirement.

* In addition, surveyed Baby Boomers list home improvement as a top retirement activity, on which they expect to spend approximately $5,800 annually.

"Even those Baby Boomers who have the luxury of a mortgage-free retirement may experience ‘sticker shock‘ from property taxes or the costs of maintaining their home," said Peggy Dyer, senior vice president of marketing for Allstate Financial, a business unit of The Allstate Corporation. "Baby Boomers may alleviate some financial stress by starting to save now for the various expenses they may have in retirement."

The second annual Allstate "Retirement Reality Check" survey was created by Allstate in conjunction with Harris Interactive. Using a random digit dialing methodology, Harris Interactive polled 1,400 people born between 1946 and 1961, with household incomes ranging from $35,000 to $100,000. A sample of 200 Hispanics and 200 African Americans (56% female, 44% male) were interviewed as part of the total sample surveyed. The margin of error is plus or minus 3.1% for the general population, and plus or minus 6.9% for information specific to Hispanics and African Americans.

For more information, visit www.allstate.com

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Publishing date: 12/10/02