MARKET UPDATE - JUNE 2010

THE SMARTEST GUY IN THE ROOM IS BULLISH ON REAL ESTATE

“John S. Paulson, the hedge fund manager who made $15 billion shorting the real estate market, said Monday (05/10/10) that he expects housing prices to rise between 3 percent and 5 percent this year and another 8 to 12 percent in 2011.” – cnbc.com

$15 billion with a B! Saying that he called the real estate market crash is a gross understatement at $15 billion. Let’s hope he is right once again this time around.

LIAR LOANS BANNED

“Liar Loans,” a negative spin created by the media to describe “stated income” and “reduced documentation” loans may soon become illegal. The Senate voted on May 12th to ban all reduced documentation loans that contributed to the housing crisis. The Senate bill passed on May 20th and will now go before the House, who has a similar bill drafted.

Reduced documentation loans have not been offered by the industry for years. Despite the negative connotations of “liar loans,” reduced documentation loans were popular with medical professionals, investors, and self employed borrowers due to how income documentation (i.e. tax returns) are underwritten. Many self employed borrowers now find it impossible to obtain a mortgage under “full documentation” guidelines, regardless of assets or credit score.

‘The legislation, part of the broader financial regulatory reform bill working its way through Congress, would require lenders to fully document a borrower's income before originating a mortgage. It would also mandate that lenders verify a borrower's ability to repay the loan.” – CNNMoney.com

HELP ON THE WAY FOR UNDERWATER HOMEOWNERS?

June 1st: Homeowners will have to verify income to qualify for loan modifications. This would require those that do not make enough income to qualify for a loan modification to actually prove that they do not make enough income to qualify for a loan modification.

July 1st: “The administration plans to roll out its new program for the unemployed on July 1. Eligible borrowers could enter a forbearance program, which either suspends their monthly payments entirely or reduces them to less than 31% of their pre-tax household income.” (CNNMoney.com) The unemployed may now be able to modify their mortgage if it is feasible to reduce their mortgage payments to 31% of…. $0?

MARKET SUPPLY

The number of homes on the market for sale is nationally at an eight month supply. A healthy real estate market is closer to a six month supply.

“In March, there were nearly 2% fewer homes on the market than there were a year ago, and 21.7% fewer than the record of 4.6 million in July 2008.” – CNNMoney.com

Demand in some markets is far greater. “In Denver, for example, supply has fallen to 5.7 months from 6.2. In Phoenix it has declined to 4.5 from 5.2; and in San Francisco inventory has halved, to 3.2 months from 6.5 last March.” – CNNMoney.com

TOP 10 FORECLOSURE CITIES

Foreclosures are down in the country’s hardest hit markets. Foreclose filings are down slightly in many of the foreclosure ridden cities in Arizona, California, Florida, and Nevada; those same cities that still lead the nation in foreclosures. Nationwide foreclosures are up 16% in the first quarter of 2010 compared to the first quarter of 2009.

Las Vegas, NV: 3.5%
Modesto, CA: 2.9%
Cape Coral, FL: 2.8%
Riverside, CA: 2.8%
Stockton, CA: 2.8%
Merced, CA: 2.8%
Phoenix, AZ: 2.6%
Vallejo, CA: 2.4%
Bakersfield, CA: 2.3%
Orlando, FL: 2.3%

-Data from CNNMoney.com

INTEREST RATE UPDATE – AMAZING ARM RATES

Mortgage Type Interest Rate APR

30 Year Fixed 4.500% 4.622%
15 Year Fixed 3.875% 4.084%
5/1 ARM 3.250% 3.355%

Call today for your individual scenario rate quote.

Interest rates as of 05/24/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

HOME OWNERS SEEKING HELP

If you owe more than your home is worth and do not know what to do, please give us a call. Geneva Financial, LLC offers federally funded mortgage options that may allow you to refinance your current mortgage into a lower monthly payment. We do not do loan modifications.

Need help with a short sale. Geneva Real Estate & Investments, LLC has many seasoned short sale real estate specialists that will help sell your home at no cost to you.

Our two companies are working hard to help distressed homeowners. Contact us at anytime with any questions.

MARKET UPDATE brought to you by:

Chris Tiller, Realtor
Geneva Real Estate & Investments, LLC
602-561-1346