Fed’s exit strategy to impact mortgage rates
Mortgage rates remained near historic lows for most of 2009.  That was one of the Federal Reserve’s aims, a play to help the housing market stabilize.  By keeping short-term interest rates near zero, longer-term rates remained low, as well.   The Fed also kept the mortgage market directly stocked with cash, purchasing prodigious amounts, a total of $1.25 trillion, of Fannie Mae and Freddie Mac mortgage-backed securities.  

This program will end after March.   The Fed stepped in where private market investors were too fearful to tread and kept mortgage lending alive.  There is guarded optimism that when the Fed completes its MBS purchase program, private investors will be ready to return to that market in greater volume and make up the difference.   As the housing and financial markets continue to heal, the focus of the Fed will turn to how it will unwind its unprecedented steps to provide liquidity and backstop the financial system. 

Most economists believe that will begin in 2010.  Some say it already should have started.  The danger in waiting too long is that inflation will get away from them.  The danger in not waiting long enough is that higher rates will cause the economy’s rebound to fizzle.  It’s a tricky call.  For now, Fed Chairman is sticking with his “rates will remain low for an extended period” mantra. 

If all goes well and the economy continues to improve, interest rates, including mortgage rates, will be going up.  The Fed will either push rates up, or the financial markets, worried about inflation, will run ahead of the Fed and pull them higher.  In December, the markets were betting that short-term rates would be 0.5 percent points higher in mid-2010 and a full percent higher by the end of the year.  Most forecasters expect much of the increase to filter into mortgage rates, and so expect to see rates just under 6% by the end of next year. © 2010, Real Estate Information Services, Capitol Assets & Choice Finance®

Brent Mendelson, Loan Officer

Special rules for military, foreign service
The 10% federal housing credit, of up to $8,000 for first-time homebuyers and to $6,500 for qualifying current homeowners will be a big boost to buyers (and sellers) early in 2010. 

To qualify for the 10% first-time homebuyer credit, you must not have owned a principal residence in the three years prior to the date of purchase of the home for which you are claiming the credit.  Buyers who have owned a home can also get the 10% credit if the home being sold or vacated was used as a principal residence for five consecutive years within the last eight.  To qualify for either credit, you must write a contract by April 30 and close on the home, which you must use as your principal residence, by June 30. 

The latest (probably last!) version of the credit law has an $800,000 maximum for the home’s cost.  An income limit also applies.  Your “modified” adjusted gross income (MAGI) cannot exceed $225,000 if you are filing a joint return to get the full credit. If you are single, your MAGI can be as high as $125,000 and get a full credit. 

There is a group that will get another year to take advantage of the credit and reap the benefits:  armed services members and intelligence and foreign service personnel who were on active duty outside of the U.S. for 90 days during 2009.  These individuals have through April 30, 2011 to write a contract and must close by June 30, 2011. 

While other buyers who sell their home after fewer than three years occupancy have to repay the credit, armed service and foreign and intelligence service members who must sell due to official business do not have to repay it. © 2010, Real Estate Information Services, Capitol Assets & Choice Finance®

Brent Mendelson, VA Loan Officer

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The Holidays are upon us.  There are very few things we want as adults that we dream of getting for the holidays.  As kids, we would look forward to this time of the year. We looked forward to all the family gatherings and the presents.   No worries of what we would get others, we were receivers not givers. 

Fast forward a few decades.  Our priorities have changed.  We are now the givers.  While it is great to receive a surprise gift, what gives us the most joy is giving.  The smile on a loved one’s face when they pull off the wrapping paper to reveal a brand new something.  Don’t forget yourself this holiday season.   Mortgage interest rates continue to be low.   If you are one of the millions of homeowners with a mortgage rate above 5%, you should make sure this holiday season you don’t overlook the one person who would appreciate the gift of savings, YOU! 

Some facts. It costs money to refinance.  On average, the cost to refinance a loan with zero points is some where around $3000.  When you consider the monthly payment savings a reduction of just a 1/2% makes on a loan of $417,000, you will recoup your closing costs in less than 24 months and save approximately $45,000 in interest paid over a 30 year period.  Refinancing your current mortgage could very well be the Gift That Keeps Giving. 

Some More Facts.  The government has already given the American public a time-line for keeping interest rates artificially low.  This coming March 2010, the government has stated that it will stop buying mortgage debt from banks and Wall Street at the same rate they have been.  Rates will start increasing to follow normal market trends – Higher.  Your opportunity for a lower monthly mortgage payment is slowing slipping away.  This holiday season give yourself the gift of savings. 

Refinance your mortgage and receive years of happiness with your brand new mortgage terms.  Its not a new bicycle but can make you just as happy.  Call today and see what refinance opportunities are available to you. 

Eric Strasser
301-881-8900 x102
Check rates daily here

Alex Echeandia, Loan Officer | 301-881-8900
If you are a first-time homebuyer, be prepared to have at least 5% of the purchase price sitting in your bank account BEFORE you start looking.  As a basic proposition, lenders now want borrowers to have cash on the line when they buy a home. “Skin in the game” is the phrase of the day.  So having accumulated funds for a down payment and closing costs is, once again, the major concern for first-time homebuyers. 

The best choice for most first-time home buyers with limited cash available is FHA, which, like the Phoenix, has risen from its ashes to become the most important source of mortgage funding for first-time buyers.  With FHA, a downpayment of as little as 3.5% of the purchase price is required, and that can come as a gift from a family member, an employer or from a non-profit institution or government grant.  

First-time homebuyers eligible for the $8,000 federal tax credit and who use FHA financing have access to a mechanism that can advance them the credit to use at settlement toward closing costs or an interest rate buydown.  The credit cannot be used for the downpayment.  While FHA has no credit score requirements, individual lenders who process FHA loans will usually have their own score standards.  Expect scores below 660 to pay a price; scores in the 620 range can expect another “hit” to the price; approval for loans with scores of 580-620 is dicey.  Scores under 580 may find a lender but the premium may well be expensive.  Most traditional banks will not, currently, originate a loan with a score under 620. 

First-time buyers with non-traditional credit histories (i.e., have no credit cards and pay for everything in cash) have some hope with FHA.  Alternative  scoring assesses risk based on a person’s rental and utility payment history when there is not enough credit information for a regular FICO credit score.  Expect to pay a higher rate.  FHA will insure to a maximum loan amount of $271,050 anywhere in the U.S. and up to $729,750 in high-cost areas like here in the counties in Maryland and Virginia close to D.C.  Loans over the maximum “conforming” limit for the area will pay an additional premium. 

Borrowers pay an upfront fee of 1.75% of the loan amount as an initial mortgage insurance premium (MIP).  The seller is permitted to pay this or it can be rolled over into the loan amount.  Another 0.55% premium is paid monthly (1/12 x 0.55%). 

If you are a veteran, qualifying reservist or National Guard member, you have the rare no-downpayment option available.  A veteran with full eligibility can purchase a home costing up to $417,000 anywhere in the U.S without a downpayment.  VA financing and the VA program does this by guaranteeing the last 25% of the loan.  Temporary legislation enables VA loans through 2011 to be available without a downpayment for loan amounts up to 125% of the median price for a single family residence in a county.  This has been very big in some high cost parts of the country.  VA now sports no-downpayment loan maximums of up to $1,094,625 in the very highest cost areas of the lower 48 states.  The VA program comes with significant upfront (“funding”) fees for those making no downpayment, but motivated sellers will often pick up the tab.  The funding fee must be paid in full or rolled into the loan. Fees are lowest for those using the VA program for the first time or making a downpayment and are waived entirely for veterans with a service-connected disability. 

With both VA and FHA, there is flexibility with respect to the “holy trinity” of income, credit history and financial reserves. A ding in one of these areas can be offset by strength in one or both of the others.  Ultimately, for FHA and VA to be approved, a mortgage application, the loan has to make financial sense.  What about programs at Fannie Mae and Freddie Mac? There are 100% financing programs on the books, but these rely on private mortgage insurance (PMI) and mortgage insurers are refusing to underwrite 100% loan-to-value purchases.  The option of using a second trust to achieve 100% financing is also dead since there is no secondary market to purchase these second mortgages.  If you want to buy using conventional Fannie and Freddie financing, expect to make a minimum downpayment of 10% and have at least a 720 credit score.  PMI companies are especially risk averse these days and may deny mortgage insurance coverage even if the lender has approved the loan. © 2007, Real Estate Information Services, Capitol Assets & Choice Finance®

If you are a first-time homebuyer and have never applied for a mortgage, you should understand that being totally prepared takes advance planning.  The biggest mistake for many first-time homebuyers is waiting until they start looking for a home before getting their financial house in order. 

(1) Ensure that you have a credit history.  Your credit history is usually the most important single factor in determining whether your loan is approved and at what interest rate.  If you pay for everything in cash or with a debit card, that doesn’t help establish your creditworthiness.  You need to get credit, even if it has to be by using a secured or high interest rate card and making payments on time.  

(2) Check your credit report for errors, oversights.  Credit reports often contain errors that can lower the credit score derived from it (which is what lenders look at).  Check your report for inaccurate information and get mistakes corrected BEFORE you apply for a mortgage.  You need to check all three credit reporting companies—Equifax, Experian and TransUnion—to see if your report contains inaccuracies or oversights.  Common errors that can hurt your scores include: not clearing a balance when a loan has been paid off, listing accounts you’re not responsible for or failing to include a credit account. 

You are entitled to one free report from each of the agencies every twelve months.  To obtain one, go to annualcreditreport.com or call 877-322-8228. If you find an error, you need to dispute (correct) it. A fact sheet at the Federal Trade Commission web site, www.FTC.gov/bcp/edu/pubs/consumer/credit/cre21.htm tells how to dispute errors.  If there are errors, deal with them immediately.  The credit reporting companies will charge you if you want to see your credit score, not just your report.  An alternative is to see a mortgage specialist, who can run your credit report for you, let you know your scores, and advise you about how to increase them. 

(3) Keep credit lines open to optimize your credit score.  Closing open credit lines usually hurts, not helps, your credit score.  It’s the relationship between your available credit and what you owe, along with how long you have been managing that credit, that largely determines your score.  Consolidating several credit cards into one shows up as a “maxxed-out” card.  But having lots of available credit and using a small percentage of it scores higher. If you do close an account, make sure it is not one with a long (and valuable) credit history. The longer you have a good credit history with a creditor, the better your score. 

(4) Put off any major purchase until after you are in their new home.  Getting a new car loan will significantly and unfavorably alter your debt ratios.  Further, the new loan will not have a payment history, so it will also lower your credit score.  You can damage your credit score just by going out to shop.  Each time a store runs your credit, it affects your score. 

(5) Get a bank account.  You should expect to be asked to show the source of funds for closing costs, prepaids and escrows, reserves and any downpayment.  To do this, you will need a visible trail for the money.  Mattress money and unexplained large deposits invariably raise questions about the source of the funds.   A gift from a parent or relative is viewed as a loan (though some programs do allow for gifts) unless the funds have been in your bank account for at least three months.

(6) Postpone switching jobs or making a career change until after you settle.  Lenders double check loan applications before settlement to verify that you are still working at the job you listed on the application. Purchasers who quit their jobs before settlement in anticipation of finding employment closer to their new home could wind up losing the house. © 2007, Real Estate Information Services, Capitol Assets & Choice Finance®

Josh Burley | 301-881-8900

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The House passed the $8,000 first-time homebuyer tax credit earlier TODAY.   The legislation will be sent to the President, and upon his signature, made law.. 

*Recipients of the tax credit must ratify a contract no later than May 1st and close on their purchase no later than June 30, 2010.

*The tax credit gives up to $8000 for first time buyers (defined as not having owned a home for the past three years)

*This revised version also allows up to $6500 credit for move-up buyers (those who have owned and occupied their current homes for at least five years).

*You have to be an owner occupant of this primary residence as there are no provisions for investors.

*Qualified recipients of these tax credits will have an income cap of $125,000 for single filers and $225,000 for joint filers.

*The purchase price of the subject property has a cap of $800,000.

*If the property being purchased fails to remain a primary residence anytime within the first 36 months, the tax credit will have to be repaid in full for that tax year.

Homebuyers will qualify for the tax credit until April 30, 2009, and have an additional 2 months (until 6.30.09) to close the transaction. 

Mark Zaidan, Maryland loan officer
301-881-8900

The deduction is phased out for taxpayers (both single and married filing joint returns) with adjustable gross incomes over $100,000. © 2007, Real Estate Information Services, Capitol Assets & Choice Finance®

 

Many of you probably have a second mortgage in the form of a HELOC (Home Equity Line of Credit).  But do you know how it differs from your conventional loan?

HELOCs are just that, a line of credit. They are not an amortized loan with a fixed rate over a fixed time period.  HELOCs are adjustable.  Typically the rate is the Prime Rate (which can fluctuate) plus a margin.

This potential fluctuation can be concerning to more conservative borrowers. Another thing to be aware of is how they are amortized. Typically, when you borrow against your HELOC, your statement will only ask for the interest on that money borrowed.  Unless, you volunteer monies above and beyond what they are asking for, you won’t make any progress on your principal.

Other pitfalls include the fact that HELOCs often don’t have caps. As long as the Prime continues to rise, so will your payment. Also, keep an eye out for the terms of your pre-payment penalties.  If you close out your line within 3 years, you will most likely incur a fee ranging from a few hundred dollars to 3% of your loan.

HELOCs can be very beneficial, Just make sure you understand them. They are often much cheaper to get than a conventional loan. In fact, they are often a no-closing costs loan. 

With homes depreciating over the past 2 years, many lines of credit have been ‘frozen’ by the lender.  Guidelines have tightened, particulary with the Loan to Value ratio you can go up to.  In the past, you could get a HELOC up to 100% of your home’s value.  Now, most lenders are capping this ‘LTV’ at 75% and lower. 

Many lenders are no longer even offering this product.  As we move forward we are finally seeing some HELOC programs come back into play.  Contact me for more information.

MD DC VA Loan Officer, Bob Kearns

Fannie & Freddie 125% LTV Refis

In an effort to reach out to more homeowners who are paying their mortgage, but could benefit from a refinance, Fannie Mae and Freddie Mac have further liberalized their underwriting rules under their special program created to help carry out the administration’s Making Home Affordable foreclosure prevention program.

Fannie’s Home Affordable Refinance and Freddie’s Relief Refinance Mortgage are now available for homeowners even further underwater (with home values less than the current mortgage).

The programs now will accept loan-to-value ratios of as high as 125% (up from 105%).  The refinance opportunities are available only for borrowers with mortgages currently held or guaranteed by Fannie Mae or Freddie Mac.

Borrowers should work with their existing servicer to refinance their mortgage. In the vast majority of these cases, the current servicer will not have to re-underwrite the borrower. © 2007, Real Estate Information Services & Capitol Assets

Mark Zaidan, Virginia loan officer

Most of the use of the new FICO 08 scores are being used by credit card companies and auto dealers. Currently, no mortgage lenders are using the new system. They are in the testing phase to see whether to incorporate it yet or not.

Changes were made available last month at all of the 3 major credit bureaus: Equifax, Experian, and TransUnion. The new system aims to focus less on minor infractions and concentrate more on larger trends in your spending habits.

-Small missed payments and amounts in collection of less than $100 will no longer negatively affect your credit scores.

-Nor will a more typical delinquency as long as it happened more than 2 years ago and assuming your credit is otherwise in good order.

-A deceptive practice known as “piggybacking” is also a target of the new scoring system. Piggybacking is when a person becomes an authorized user of a credit card of someone, who has much better credit. Previously, associating yourself on paper with someone with good credit would result in your credit scores being raised. The new system will seek to isolate the individual for his or her actual habits.

Bob Kearns, Maryland licensed loan officer

Fall homebuyers and sellers should be prepared to deal with one very exasperating issue: off-base appraisals.  At a time when home prices have been under downward pressure, appraisers have continued to scuttle contracts with low appraisals.

The problem is the current crop of appraisers being used has included some who are inexperienced in or unfamiliar with the local market.  In addition (or, perhaps, as a result), too often they have used distress sales (foreclosures and short sales) to provide comparable sales data. A recent clarification of acceptable procedures may start to improve things soon, we hope.

The problems all started with the Home Valuation Code of Conduct, which was implemented May 1 by Fannie Mae and Freddie Mac. The HVCC was created to settle a lawsuit that had been threatened by New York State Attorney General Andrew Cuomo.  The HVCC was meant to make appraisals more accurate and reliable by keeping the appraisal process at arm’s length from the undue influence of real estate agents and mortgage lenders.

The way that many lenders have chosen to deal with HVCC is to engage appraisal management companies (AMCs), even though the code does allow lenders to engage individual appraisal companies directly.  The AMCs redirect each appraisal to one of its contract appraisers (at about half the fee they were getting when they worked directly for the lender).

Unfortunately, in the recent past, that has not always been someone who has the kind of local knowledge that is necessary for an accurate appraisal.  Local expertise is crucial in a market where there are fewer comparables and where many of the ones that are on the books may be distress sales.

Recently, Fannie Mae and Freddie Mac took several steps to address appraisal issues that had the real estate community hopeful, though the jury is still out on whether they will have the desired effect.
First, they re-emphasized that appraisals need to be done by appraisers who are knowledgable in the local market.  But the AMCs argue that they are sending out appraisers who know the local market (even if they are from a different market 30 miles away). 
Second, Fannie & Freddie clarified that appraisers are not prohibited from talking with Realtors about such issues as finding better comps or correcting errors.  They are, however, insulated from being jawboned to come up with a set valuation, to “hit the number” necessary for a contract to go through.

Unfortunately, the time for a dialog between Realtor and appraiser is before the appraisal is completed, but there has been little demonstrated willingness to do that.  Getting an appraisal changed after it is done is like getting a baseball umpire to change a strike call. 

In late July, the Federal Housing Finance Agency, which oversees Fannie and Freddie, issued a rather defensive update on how HVCC was being implemented, in which it addressed several pieces of “misinformation.”  The FHFA attributed the additional cost of appraisals to tightened loan underwriting that requires additional comparables or second valuation opinions, not HVCC’s tilt toward management companies. Maybe.

The FHFA also addressed whether, if you change lenders before closing, you have to pay for a new appraisal.  It is at the discretion of the original lender whether they will transfer the appraisal to a new lender, FHFA says.  Sadly, while FHA hasn’t adopted the HVCC, many FHA lenders are using AMCs and charging even more than for Fannie and Freddie loans.

The bottom line for buyers and sellers this fall is that, until we see more reliable appraisals, be prepared to take steps to get better comparable sales data (and hope for the best) or renegotiate terms of the sale. © 2007, Real Estate Information Services, Capitol Assets & Choice Finance®

  JOSH BURLEY, 301-881-8900 x125

If you are first-time homebuyer who has put off getting into homeownership, you only have a few short weeks left to take advantage of a fabulous incentive: the $8,000 first-time homebuyer credit.  Because the purchase must close before December 1, you can’t delay any longer. Mortgages are taking over a month to process these days, so don’t expect to wait until November and still qualify. 

The credit is 10% of the cost of a home, so a house costing as little as $80,000 is enough to qualify for the full credit.   Since the credit is refundable, the government will pay you the difference if your tax liability is less than your credit amount.  Unlike the first version of the credit, you don’t have to pay it back.  There is an income limit to qualify for the credit.  You must have “modified” adjusted gross income (MAGI) of $150,000 or less if you are a couple filing a joint return, $75,000 or less if you’re single to get a full credit. 

To be a “first-time homebuyer” you may not have owned a principal residence in the three years prior to the date of purchase of the home for which the credit is being claimed.  First-time homebuyers are flocking to FHA mortgages because of their low downpayment requirements (a minimum of only 3.5%) and more liberal loan qualification standards.  Making the first-time buyer credit even more attractive is that FHA is permitting the credit to be advanced to a purchaser to cover closing costs, an interest-rate buydown or to increase their downpayment beyond the 3.5% minimum. 

The advance can be paid off in one of two ways: the anticipated credit can be purchased by one of several qualified parties (lenders, certain non-profit agencies or government units) or through a second lien on the property.  In the latter case, FHA has some specific rules about the second lien structure. Talk to your Realtor or mortgage professional about how these rules might affect your purchase.  Could the credit be extended, even expanded? Possible.  But the current climate in Washington is to nix more stimulus spending and programs that add to the budget deficit, so we think an extension is a long shot, at best. 

So, with home sales climbing and prices stabilizing in many markets, this looks to be as ideal a time for a first-time homebuyer to get it the game as they may ever see.  © 2007, Real Estate Information Services, Capitol Assets & Choice Finance®

Alex Echeandia, Maryland loan officer

When am I eligible to drop my MI?
Many people want to know what the best way to get rid of mortgage insurance.  If you want to avoid PMI altogether, you must put 20% down when you purchase the property. Somewhat recently, people could get a 2nd mortgage for that 20%, but many lenders have done away with “piggyback” loans so more people are now buying homes and paying PMI because they are not able to come up with the 20% down.

If you only put 5% down and are now wondering when they are able to get rid of PMI, the answer is when you reach a point where you think you have 20% equity in your property. You should then contact your mortgage servicer. They will be able to tell you what their requirements are and will usually send you a package of instructions that involve getting an appraisal and completing some forms. Many assume that once 20% equity is reached, that there lender will drop the PMI automatically, but that is most likely not the case. When dropping PMI, the factors that your lender will consider are the current value of your home and if you’ve made your mortgage payments on time. Be sure not to spend the money ordering an appraisal to determine your property value until you have spoken with your lender about the process.

If you have an FHA loan — two things must happen in order to cancel mortgage insurance — the UFMIP account must be depleted completely (this takes 60 months from when you took out your loan) and you must have paid down the principal to 78% of your original loan balance. FHA monthly mortgage insurance does not take in to account any property appreciation that may have occured.

Bob Kearns of Choice Finance^®

Updating a home can be an expensive proposition. Sometimes it is almost impossible to accomplish without some type of loan. If you or a family member happen to be a Veteran, it is possible to qualify for a VA home improvement loan. Taking out and using the equity in ones home can actually help increase the value depending on the improvements made.

Being a Veteran and taking advantage of getting a VA home improvement loan comes with many advantages. For one, most financial institutions do not require cash down payment for VA loans. There can also be the added benefit of no charges if the balance of the loan is paid off early. Additionally, some of the most competitive rates are those offered on VA loans.

Especially for large improvement projects such as roof repair or window replacement, applying for and receiving a VA loan if you qualify can save a bundle of money. These types of loans are guaranteed by the Federal Government to lenders specifically for veterans. The money for the lender is guaranteed, therefore, financial institutions are more apt to loan money.

Many veterans who use the VA Home Loan Guarantee Program to purchase or refinance their homes want to make home improvements. Even if you are buying a pre-existing home, there may be certain improvements you will want to make right away to save on utility bills or make the house more energy-efficient. When you purchase or refinance a home through the VA Home Loan Guarantee Program the VA is willing to finance the cost of your energy-efficient home improvements into your loan, so that you will have money available to make your home improvements now.

The VA will allow you to finance money for energy-efficient home improvements into your new mortgage loan or refinance mortgage loan as long as the money is used to pay for one of the following home improvements:

• Heat pumps
• Thermal or storm doors and windows
• Energy-efficient furnace purchase or efficiency modifications to your existing furnace, this means that you can purchase a new furnace or convert the one you already have to make it more energy-efficient.
• Water heater insulation
• Clock thermostats
• Solar cooling systems
• Solar heating systems
• Insulation in the home, including insulation in the floors, attic, walls, and doors

Bob Kearns of Choice Finance^®

When I meet people and they find out what I do for a living I usually get two questions, “what are rates like”? and “how are home sales”? After a few years of less than positive answers I finally have at least some good news to report. 

It’s still a mixed bag out there but since Jan 09 sales have risen and inventory has fallen in DC, MD and VA. Now there are differences in all three areas and even in a county there are still HUGE differences from city to city.  Let’s look in general at the entire Metro area for now. Last June there were over 51,000 thousand homes for sale and less than 7500 sales. What a difference a year makes. The amount of homes for sale has dropped from over 51,000 to just under 39,000 in about a year. Days on market have decreased in most areas also though the further out you get such as Frederick and Anne Arundel the time to sell a home is still in the triple digits.

Counties like Montgomery that are even partially within the Beltway are doing much better with marketing times less than 100 days. The exception is PG which has seen very sluggish homes sales and a very steep drop in prices from top to bottom. The problem there stems from a larger glut of foreclosures than other parts of the area. Until that back log is slimmed down that will stay the way it is. Also MD hasn’t recovered yet in general when compared to VA. Virginia had the drop in their market first especially Loudon and Prince William and logically has been the first to come back. MD will come back but in my opinion not this year. 

The trend that has continued though is that while homes may be selling a bit quicker these days we are still seeing prices down from the peaks of a few years ago. In most areas this trend has been occuring for years of course but we have seen very steep drops this year even more than 2008. I have a feeling that we will continue to see futher price drops as the foreclosures and short sales will still plauge us into 2010.

Banks aren’t willing to work with homeowners enough to assist homeowners who are underwater or are stuck in high interest rate loans like an ARM that will reset in the next year or so. Loans that have PMI on it are apparently unable to refinance because MI companies aren’t willing to make new committments even though they already have these people on their books. Of course many of these companies are out of business because of all the debt from all the toxic loans they made in the bad old days. 

If some of these ARMS reset now people could actually see their rate drop but this is likely to be a temporary fix.  As our population grows this will slowly even out but this is a longer term fix. Keep an eye on the inventory of homes on the market and sales because in the end that will determine when prices rise across our region.

Brent Mendelson, Choice Finance