Now could be a great time to buy a million dollar home in a nice area at a bargain price.
Forbes magazine has identified Rancho Santa Fe, Calif., Marco Island, Fla., Castle Rock, Colo., Annandale, Va., and Bergen County, N.J., as five high-end areas where million dollar foreclosures abound.
Traditionally good borrowers with strong credit scores previously purchased a lot of these homes. In many cases, the foreclosure has come about because the homes are now worth significantly less than the inflated prices the owners originally paid. The homes have sunk into negative equity situations and the previous owners don’t want to make the payments, so they walk away, says Wendell Cox, founder of Demographia, a housing research company.
But foreclosures are not all bad news for the high-end real estate market. Nelson Gonzalez, a practitioner with Esslinger-Wooten-Maxwell, specializing in Miami Beach, says that the rash of foreclosures in Florida, which has the second-highest foreclosure rate in the country, has driven interest from out-of-town and foreign buyers looking to snag a deal.
"They think that every house in Florida is in foreclosure," he says. "The offers we're getting are fairly decent, but the sellers are not coming down yet."
Source: Forbes, Matt Woolsey (03/13/08)
Tuesday, March 25, 2008
More Banks Consider Short Sales
After about a year of dealing slowly and reluctantly with short sale offers, many banks are reconsidering, looking for solutions that will allow them to recoup debt in foreclosure situations.
Observers say that if the trend continues, it will reduce or eliminate the need for taxpayer bailouts.
The National Short Sale Center, which helps short buyers negotiate with banks, says three-quarters of its short offers are approved now, up from maybe half six months ago.
"Before, people on the phone at banks didn't even have the authority to negotiate. Now they're calling us with numbers," says Pam B. Canada of nonprofit NeighborWorks in Sacramento, Calif.
To be sure, many agents and counselors think banks still have their heads in the sand. "They're out to get the last dime, even when people don't have a dime," says real estate practitioner Heidi Mueller in San Francisco as she heads to an auction sale on the courthouse steps.
Source: Forbes, Bernard Condon (04/07/08)
Observers say that if the trend continues, it will reduce or eliminate the need for taxpayer bailouts.
The National Short Sale Center, which helps short buyers negotiate with banks, says three-quarters of its short offers are approved now, up from maybe half six months ago.
"Before, people on the phone at banks didn't even have the authority to negotiate. Now they're calling us with numbers," says Pam B. Canada of nonprofit NeighborWorks in Sacramento, Calif.
To be sure, many agents and counselors think banks still have their heads in the sand. "They're out to get the last dime, even when people don't have a dime," says real estate practitioner Heidi Mueller in San Francisco as she heads to an auction sale on the courthouse steps.
Source: Forbes, Bernard Condon (04/07/08)
Wednesday, March 19, 2008
FBI Examining 17 Lenders
The FBI is currently investigating 17 firms involved in the mortgage lending industry, bureau officials told Reuters News in an exclusive interview. The bureau had previously acknowledged it was investigating 16 firms. Officials say the criminal probe could take years to complete.
The FBI has assigned 100 agents to investigate corporate fraud aspects of the housing crisis, including subprime lending and insider trading. Another 150 are looking at related securities fraud, and 153 are looking at loan originations, says Neil Power, economic crimes unit chief of the FBI’s financial crimes section.
The majority of cases are in New York and California, Powers says.
The opportunities for fraud existed all along the chain from mortgage origination to the investors in mortgage-backed securities. But the problems begin in loan applications that required minimal or no documentation, the officials said.
"That's the start of the fraud right there," said Mike Cuff, a supervisory special agent in the economic crimes unit.
Source: Reuters News, Randall Mikkelsen (03/18/2008)
The FBI has assigned 100 agents to investigate corporate fraud aspects of the housing crisis, including subprime lending and insider trading. Another 150 are looking at related securities fraud, and 153 are looking at loan originations, says Neil Power, economic crimes unit chief of the FBI’s financial crimes section.
The majority of cases are in New York and California, Powers says.
The opportunities for fraud existed all along the chain from mortgage origination to the investors in mortgage-backed securities. But the problems begin in loan applications that required minimal or no documentation, the officials said.
"That's the start of the fraud right there," said Mike Cuff, a supervisory special agent in the economic crimes unit.
Source: Reuters News, Randall Mikkelsen (03/18/2008)
Tuesday, March 18, 2008
Fed cuts rates by 3/4 of a point
Central bank lowers key rate to lower borrowing costs for consumers, businesses, as it risks lower dollar in effort to ward off recession.
Last Updated: March 18, 2008: 2:42 PM EDT
NEW YORK (CNNMoney.com) -- The Federal Reserve slashed a key interest rate by three-quarters of apercentage point Tuesday, the latest in a series of moves by the central bank to try and restore confidence in the economy and battered financial markets.
The Fed cut its federal funds rate, an overnight bank lending rate, to 2.25%. It is the sixth cut in the past six months and comes at a time when the Fed is trying to keep the economy from slipping into recession - although many think it's already entered one.
Interest rate cuts are usually viewed as beneficial for the economy since they typically lead to more lending. The federal funds rate affects how much consumers pay on credit cards and home equity lines of credit, as well as the rate paid by many businesses on loans tied to banks' prime rate. But some experts think lower rates won't solve the credit crunch paralyzing Wall Street.
The Fed cited a weakening labor market and a slowdown in spending by consumers, as well as a continued crisis in financial markets and tight availability of credit to justify the cut. U.S. employers have cut 85,000 jobs so far this year, according to the Labor Department, the most in four years.
But two members of the central bank's policymaking body - Dallas Fed President Richard Fisher and Philadelphia Fed President Charles Plosser both voted against the cut. According to the Fed's statement, they "preferred less aggressive action."
Some economists have argued the rate cuts will cause a continued weakening in the value of the dollar and a further spike in commodity prices -- which could lead to higher prices for gas, food and imported goods. According to a new national CNN/Opinion Research Corp. poll released Tuesday, Americans said inflation is their top economic concern.
The Fed acknowledged in its statement that inflation pressures have grown more than expected, and it promised to monitor prices in the months ahead. But it said it still believed the greater risk to the economy was that of slowing growth, not a spike in prices.
To that end, many investors were hoping the Fed would cut rates even further. According to federal funds futures on the Chicago Board of Trade, investors had priced in a 100% chance of a full percentage point cut Tuesday. What's more, traders are betting on another half-point cut by the end of April, the Fed's next meeting.
First Published: March 18, 2008: 2:18 PM EDT
Find this article at: http://money.cnn.com/2008/03/18/news/economy/fed_rates/index.htm?eref=rss_topstories
Last Updated: March 18, 2008: 2:42 PM EDT
NEW YORK (CNNMoney.com) -- The Federal Reserve slashed a key interest rate by three-quarters of apercentage point Tuesday, the latest in a series of moves by the central bank to try and restore confidence in the economy and battered financial markets.
The Fed cut its federal funds rate, an overnight bank lending rate, to 2.25%. It is the sixth cut in the past six months and comes at a time when the Fed is trying to keep the economy from slipping into recession - although many think it's already entered one.
Interest rate cuts are usually viewed as beneficial for the economy since they typically lead to more lending. The federal funds rate affects how much consumers pay on credit cards and home equity lines of credit, as well as the rate paid by many businesses on loans tied to banks' prime rate. But some experts think lower rates won't solve the credit crunch paralyzing Wall Street.
The Fed cited a weakening labor market and a slowdown in spending by consumers, as well as a continued crisis in financial markets and tight availability of credit to justify the cut. U.S. employers have cut 85,000 jobs so far this year, according to the Labor Department, the most in four years.
But two members of the central bank's policymaking body - Dallas Fed President Richard Fisher and Philadelphia Fed President Charles Plosser both voted against the cut. According to the Fed's statement, they "preferred less aggressive action."
Some economists have argued the rate cuts will cause a continued weakening in the value of the dollar and a further spike in commodity prices -- which could lead to higher prices for gas, food and imported goods. According to a new national CNN/Opinion Research Corp. poll released Tuesday, Americans said inflation is their top economic concern.
The Fed acknowledged in its statement that inflation pressures have grown more than expected, and it promised to monitor prices in the months ahead. But it said it still believed the greater risk to the economy was that of slowing growth, not a spike in prices.
To that end, many investors were hoping the Fed would cut rates even further. According to federal funds futures on the Chicago Board of Trade, investors had priced in a 100% chance of a full percentage point cut Tuesday. What's more, traders are betting on another half-point cut by the end of April, the Fed's next meeting.
First Published: March 18, 2008: 2:18 PM EDT
Find this article at: http://money.cnn.com/2008/03/18/news/economy/fed_rates/index.htm?eref=rss_topstories
Wednesday, March 5, 2008
New FHA mortgage limits in California give 14 counties maximum $729,750, more states to follow
By Marcy Gordon
ASSOCIATED PRESS
11:26 a.m. March 5, 2008
WASHINGTON – The government on Wednesday raised the mortgage limits for loans guaranteed by the Federal Housing Administration in 14 high-cost California counties.
The Department of Housing and Urban Development released the new loan limits for California – a hotbed during the housing boom that now is suffering the worst home-price declines in the nation. The limits, with the maximum at $729,750, are derived from median home prices in each county.
HUD is expected to raise the limits in other counties nationwide in the coming days.
The economic stimulus package includes a temporary increase in the limit on FHA-backed loans, from $362,790 to as high as $729,750 in expensive areas, to let more homeowners with high-rate subprime mortgages refinance into federally insured loans.
The package also includes a temporary increase in the cap on mortgages that the government-sponsored mortgage companies Fannie Mae and Freddie Mac can buy or guarantee from $417,000 to $729,750.
The idea is to stoke investor demand for securities made up of more expensive mortgages – so-called jumbo loans – backed by Fannie and Freddie, the two biggest mortgage financers in the country. That would drive interest rates lower and spur home buying and refinancing.
Roughly half of all jumbo mortgages are in California, according to federal regulators.
The Federal Housing Administration, a Depression-era agency within HUD, insures mortgages for low- and middle-income borrowers.
Counties that get the $729,750 maximum for FHA loans are likely to get that same level for Fannie and Freddie mortgages, experts said. HUD is expected to designate new Freddie and Fannie limits for other parts of the country too.
In California, the counties at the maximum level for FHA loans are Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Benito, San Francisco, San Mateo, Santa Barbara, Santa Clara, Santa Cruz and Ventura. At the other end, Lassen, Modoc and Trinity counties are subject to a loan cap of $271,050 – which is the lowest possible amount for an FHA-backed loan under the new law.
HUD Secretary Alphonso Jackson said Wednesday the new limits will make FHA-backed loans available to as many as 30,000 Californians and 250,000 homeowners nationwide.
The new limits “will allow for greater economic stability for our communities,” Jackson said in a speech in Los Angeles. A text of his remarks was distributed by HUD.
“We confront an emergency, a crisis,” Jackson said. “Los Angeles has been hard hit.”
He noted that home foreclosures in southern California soared 433 percent in January from a year earlier.
Find this article at: http://www.signonsandiego.com/news/business/20080305-1126-mortgagelimits-california.htm
For San Diego County
Median Home Price: $558,000
FHA Limit: $697,500
Conforming Loan Limit: $697,500
ASSOCIATED PRESS
11:26 a.m. March 5, 2008
WASHINGTON – The government on Wednesday raised the mortgage limits for loans guaranteed by the Federal Housing Administration in 14 high-cost California counties.
The Department of Housing and Urban Development released the new loan limits for California – a hotbed during the housing boom that now is suffering the worst home-price declines in the nation. The limits, with the maximum at $729,750, are derived from median home prices in each county.
HUD is expected to raise the limits in other counties nationwide in the coming days.
The economic stimulus package includes a temporary increase in the limit on FHA-backed loans, from $362,790 to as high as $729,750 in expensive areas, to let more homeowners with high-rate subprime mortgages refinance into federally insured loans.
The package also includes a temporary increase in the cap on mortgages that the government-sponsored mortgage companies Fannie Mae and Freddie Mac can buy or guarantee from $417,000 to $729,750.
The idea is to stoke investor demand for securities made up of more expensive mortgages – so-called jumbo loans – backed by Fannie and Freddie, the two biggest mortgage financers in the country. That would drive interest rates lower and spur home buying and refinancing.
Roughly half of all jumbo mortgages are in California, according to federal regulators.
The Federal Housing Administration, a Depression-era agency within HUD, insures mortgages for low- and middle-income borrowers.
Counties that get the $729,750 maximum for FHA loans are likely to get that same level for Fannie and Freddie mortgages, experts said. HUD is expected to designate new Freddie and Fannie limits for other parts of the country too.
In California, the counties at the maximum level for FHA loans are Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Benito, San Francisco, San Mateo, Santa Barbara, Santa Clara, Santa Cruz and Ventura. At the other end, Lassen, Modoc and Trinity counties are subject to a loan cap of $271,050 – which is the lowest possible amount for an FHA-backed loan under the new law.
HUD Secretary Alphonso Jackson said Wednesday the new limits will make FHA-backed loans available to as many as 30,000 Californians and 250,000 homeowners nationwide.
The new limits “will allow for greater economic stability for our communities,” Jackson said in a speech in Los Angeles. A text of his remarks was distributed by HUD.
“We confront an emergency, a crisis,” Jackson said. “Los Angeles has been hard hit.”
He noted that home foreclosures in southern California soared 433 percent in January from a year earlier.
Find this article at: http://www.signonsandiego.com/news/business/20080305-1126-mortgagelimits-california.htm
For San Diego County
Median Home Price: $558,000
FHA Limit: $697,500
Conforming Loan Limit: $697,500
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