Ed's Blog

It is with cautious optimism that I’m going to go out on a limb and say that the worst of the “housing crisis” or “mortgage meltdown” may be behind us. Now, the idea that we’ve seen the worst of the “credit crunch” is merely my opinion, but it’s based on the following observations which individually don’t indicate much, but collectively lead me to believe the market is beginning to stabilize.

*Bank Owned Properties, aka REO’s or Real Estate Owned Properties are beginning to receive multiple offers from interested buyers in some markets. These are properties that were repossessed by the lender, after the owners failed to make their mortgage payments. This is a good sign as it means that buyers and investors are coming back into the markets.

*Rates are holding steady. In fact, Jumbo Conforming rates (as I mentioned last week) are much closer to traditional conforming rates, opening a window for trade-ups, for new purchases, etc.

*Lenders are not taking as big of a write down as many had predicted. In fact, Freddie Mac recently revealed that although they did take a sizable loss of late, it was far less than they had expected to take.

*Lenders are starting to allow exceptions in underwriting, meaning that they will allow for certain “out of the box” exceptions to rigid guidelines. This is certainly the rarity, not the norm, but it’s still an indication that a bit of trust is being restored in the lending industry.

I’m not saying that we’re heading straight back to the top. We’re not. It’s going to take a while to get out of the pit we’re in, just as it took a while to get to the state we’re in. I’m merely suggesting that perhaps we’re not quite at the very bottom anymore, and we’re slowly beginning to see the light at the end of the tunnel.

Stay tuned!

In a move only to be described as encouraging, Fannie Mae recently reversed its decision to automatically reduce the amount of loan you may qualify for, should you be interested in buying a property in a “declining market” or refinancing your home if it happens to be located in a declining market.

This decision comes on the heels of some other very positive indicators that the housing market is recovering. These include:

· Interest rates remaining low

· Interest Rates for Jumbo Conforming Rates on par with traditional conforming loans

· Lenders are starting to make exceptions to strict guidelines (though only in special cases)

· Bank Owned Properties are starting to sell once again

· Lenders have announced losses, but the losses are less than had been predicted

· Economic indicators such as stocks rallying have been positive

There are undoubtedly many arguments that the housing market is not quite out of the woods yet, but consider that many times, by the time we realize that it’s a good time to invest or refinance, the best opportunities have already come and gone.

What do you think?

The interest rates on the newly coined “Conforming Jumbo Loans” have plummeted, and the calls have been pouring in. Let me explain:

Just a few weeks ago the interest rates on Conforming Jumbo Loans were nearly a full percentage point higher than the interest rates on Conforming Loans. Example: a Conforming Loan (under $417K) was carrying an interest rate of 5.75%. By contrast, Conforming Jumbo Loans were carrying an interest rate of nearly 6.75%. That’s a big discrepancy.

But, that is water under the bridge for now. Conforming Jumbo (above $417K but below $729,500K) interest rates are now only .25% higher than Conforming Loans. Example: a conforming loan is at 5.75%, the Conforming Jumbo is now right around 6%.

And one last bit of good news. Freddie Mac (one of the two Government Sponsored Entities or GSE’s) has just announced that it would buy more Conforming Jumbo loans. That’s one small step for homeowners and buyers, and one giant leap towards a return to stability in the housing market.

Stay tuned!

A report released a few days ago announced that foreclosure filings in the U.S have jumped a whopping 112% in the first three months of 2008 when compared with statistics from the same time in 2007. So far this year 156,463 families have lost their homes to foreclosure. Clearly, this is not good news. In fact, in my book, even one foreclosure is one too many.

I would love to personally be able to save the homes of anyone on the brink of foreclosure, but unfortunately, I don’t have that kind of money.

I write today in hopes that anyone who has received a notice of default, or is fearful that they won’t be able to make their mortgage payment in coming months reach out for assistance NOW. There are still options. But you need to take the bull by the horns and seek out those options. Smith Craine Finance is here to help. Call us at 415-406-2330.

On another note, I would like to remind investors of what an incredible time it is to be a buyer. Your real estate purchasing power hasn’t been this strong in years. Despite the drumbeat of negative news, I believe there are situations that warrant your attention. In fact, several days ago, the San Jose Mercury News ran a front page, banner headline article that discussed the fact that bank owned properties are now getting multiple offers in much of Santa Clara County!

If you’re looking for great investment opportunities, we can help. Smith Craine has been helping first time and seasoned investors for more than 2 decades. Call us or email us if you’d like some help financing and finding the properties you’ve been dreaming of investing in.

Until next time…