Okay, I have taken the time to summarize the latest in real estate news…. Call me with any questions, Kurt Galitski- your source in real… real estate news.


Former Federal Reserve Chair Alan Greenspan told officials in Mexico on Wednesday that he believes U.S. home prices have hit bottom. However, home owners are still unnerved by the decline in value, and until prices stabilize, the economy will remain weak.

“We will not be out of this crisis until home prices truly stabilize in the United States. They appear to have stabilized, but they are very fragile,” Greenspan said in a televised interview.

“Eventually housing will come back; it can’t get any lower,” he added.

Source: Reuters News (03/25/2010)
Housing and jobs must stabilize before we truly see our way out of our economic woes.

Markets Where Home Prices Could Rise Most
Money Magazine has released its latest home-price projections for the country’s largest metropolitan areas. Here are the 10 cities where it believes home prices will rise the most in the next year, and the 10 where it foresees the most substantial declines:

Where prices will rise:

• Santa Rosa, Calif., 6.0 percent
• Cheyenne, Wyo., 4.7 percent
• Kennewick, Wash., 4.6 percent
• Merced, Calif., 4.4 percent
• Bremerton, Wash., 4.2 percent
• Fairbanks, Alaska, 4.2 percent
• Corvallis, Ore., 4.1 percent
• Tacoma, Wash., 3.9 percent
• Anchorage, Alaska, 3.8 percent
• Bend, Ore., 3.3 percent

Where prices will decline:

• Miami, -22.5 percent
• Fort Lauderdale, Fla., -21.3 percent
• West Palm Beach, Fla., -18.5 percent
• Phoenix, -18.5 percent
• Las Vegas, -15.4 percent
• Tampa, -13.8 percent
• Pensacola, Fla., -13.6 percent
• Gainesville, Fla., -13.4 percent
• Suffolk, N.Y., -13.4 percent
• New York City, -12.9 percent

Source: Money Magazine (03/20/2010)
Nice to see some California cities on the expected to rise list. Some of the other sand States (Arizona, Nevada and Florida) have cities that are expected to continue to decline. Where is the bottom for them?

Investors to Pick Up Slack in Mortgage Backs
The Federal Reserve ends its purchase of mortgage securities this week and private investors are expected to step in.

The change probably won’t push mortgage rates up very much. Analysts expect they will rise less than a quarter of a percentage point in the next three months. That gain would increase a monthly payment on a $250,000 mortgage by $30.

In a statement released March 12, Freddie Mac predicted that mortgage rates would average 5.2 percent on a 30-year fixed loan after the Fed stops buying. Fannie Mae put the rate slightly higher at 5.13 percent.

Source: Bloomberg, Kathleen M. Howley (03/30/2010)
Keep an eye on this. My best guess would be that we will see higher rate increases then this article predicts.

Bank of America makes major step to right troubled mortgages, will reduce some loan principal
CHARLOTTE, N.C. (AP) — Bank of America is taking a major step to help some of its most troubled mortgage borrowers. The bank says it will forgive up to 30 percent of some customers’ loan principal.

The bank has said Wednesday it will start forgiving principal for homeowners who owe more than 120 percent of their home’s value. The plan, to begin in May, is among the first by a U.S. mortgage lender that takes a systematic approach to reducing mortgage principal when home values drop well below the amount owed. The effort is aimed at preventing foreclosures. Bank of America, based in Charlotte, N.C., is the largest mortgage servicer in the country. Ieva M. Augstums, AP Business Writer, On Wednesday March 24, 2010, 11:40 am EDT
Who will be the next bank to follow suite? When someone has a good idea, others like to copy it.

Wells Fargo Will Modify Second Mortgages
Wells Fargo & Co. has joined Bank of America Corp. as the first two banks to sign onto the federal government’s program to modify second mortgages.

Under the government’s plan, borrowers who have been extended loan modifications on first mortgages can now apply to reduce their second mortgages.

Analysts say banks have been reluctant to adopt this part of the government’s loan modification program because they continue to hold most second mortgages and forgiving them will be costly.

Source: The Associated Press (03/17/2010)
Same comment here…Who will be the next bank to follow suite? It makes sense for banks to modify instead of charging off and it going to a collection agency.

Loan Changes Could Alter Market
The FHA’s move to raise upfront mortgage insurance premiums takes effect next week, soon to be followed by a reduction in allowable seller concessions toward a borrower’s closing costs.

Speaking to a Housing Financial Services subcommittee earlier in March, MBA President John Courson expressed concern that “this could be another policy change that would have an adverse effect on the population that traditionally has sought FHA’s assistance to purchase a home.” He added that the cut in seller concessions would largely affect low-to-moderate, first-time, and minority home buyers.

Source: Memphis Daily News, Eric Smith (03/30/10)
FHA raises their Upfront Mortgage Premium from 1.75% to 2.25%. FHA loans remain a tremendous tool for buyers who can afford the mortgage payment, but don’t have much money to put towards a down payment. This should not hurt too much.

Survey Shows Frustration With HAMP
Real estate practitioners mostly gave the Obama administration’s Home Affordable Modification Program (HAMP) a thumbs-down, according to a report from Market Pulse Survey for Homes & Land.

Only 10 percent of the respondents — 51 percent of whom had been in the business for at least 10 years — believed the administration’s program had done any good. Sixty-five percent said they didn’t think the program was working; and the remaining 25 percent weren’t sure.

“Clearly respondents to our survey don’t believe this program is helping to reduce foreclosures,” says Eric Adair, business development analyst for Homes & Land.

Source: Inman News (03/03/2010)
Foreclosure inventory is increasing, see below. HAMP is not working.

Foreclosure Inventory Is Increasing
The inventory of foreclosed homes that banks are sitting on is rising, threatening to push home prices down further in some parts of the country.

Analysts at Barclays Capital estimated that banks and mortgage investors held about 645,800 foreclosed homes in January, up 4.6 percent from December. That is down significantly from the peak of 845,000 in November 2008.

States with the largest number of foreclosures are Florida, Arizona, Nevada, California, and Michigan.

Source: The Wall Street Journal, James R. Hagerty (03/19/2010)
Just how big is the shadow inventory? A recent study indicated it was over seven million units, which is well over a full year’s supply at current levels. Only five years ago, the shadow inventory level was just over one million units.

HARP Receives a One-Year Extension
The Home Affordable Refinance Program (HARP), which was supposed to expire June 10, will be extended for another year, the Federal Housing Finance Agency said in a statement.

Since HARP began last April, it has refinanced 190,180 mortgages. It is administered by Fannie Mae and Freddie Mac and aimed at borrowers with little or no equity in their homes.

This program is a sister to Home Affordable Modification Program (HAMP), which was severely criticized by Congress last week for failing to help enough struggling home owners.

Source: Reuters News, Corbett B. Daley (03/01/2010)
That’s a far cry from helping the 4-5 million homeowners that the program originally promised. Another flawed Government program.

Option-ARM Rates Could Spike
Option-ARM loans represent fewer than 2 percent of all home loans, but those loans add up to nearly $300 billion because they were written to finance pricey homes, according to research firm First American CoreLogic.

So far, rates on many option ARMs haven’t risen because overall interest rates have stayed low. But if actions by the Federal Reserve push rates up, then option ARMs will go up as well.

Unless these option ARMS are quickly restructured, a large share of these borrowers will walk away, says Paul Leonard, director of the Center for Responsible Lending’s California office.

Source: Los Angeles Times, E. Scott Reckard (03/20/2010)
$300 billion is huge money any way you slice it. If these loans are not restructured (and most will not be) more people will walk away and the 1+ year of shadow inventory mentioned above will be pushed substantially higher.

Home Equity Loans Available Again
Banks are again offering home equity loans.

Lenders are expected to make about $36 billion in new home equity loans over the next year, according to Moody’s Economy.com. That’s actually more than the $34 billion in home equity loans made in 2008.

The difference will be the way the money is spent, says Frank Nothaft, chief economist at Freddie Mac. Most of it will go for necessary home improvements. “Consumers are better at managing their own personal balance sheet as a result of the difficult recession we went through,” Nothaft says.

Source: Bloomberg, Kathleen M. Howley, Prashant Gopal, John Gittelsohn (03/11/2010)
Yeah! Some good news. Banks are offering HELOCs again and look for them to start offering them in first position soon.

Interest Rate Update
Mortgage Type         Interest Rate             APR
30 Year Fixed         4.750%                    4.969%
15 Year Fixed         4.125%                    4.499%
5/1 LIBOR ARM      3.375%                3.577%

Kurt Galitski

Meet Kurt Galitski - The Kurt Real Estate Group, your new best friend. Distinctive Strategies that Deliver Record-Setting Results. When you combine Kurt’s passion and knowledge of the real estate market, you really gain an appreciation for what makes Kurt different. But what truly sets him apart from the crowd are his 5 distinctive strategies and his property management… For Kurt, getting into real estate was not an accident, it was a deliberate and calculated decision to deliver a better experience to home buyers, sellers, and landlords that they have ever received before. Today, you could ask any one of hundreds of clients, read his Yelp reviews, or look at his track record of being featured in Orange Coast Magazine in excess of eight consecu­tive years and you too will say mission accomplished. www.KurtRealEstate.com www.KurtPropertyManagement.com 877-957-6677

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