Recent Underwaters

People who bought in the last two years did so knowing that we have been in the biggest downturn in the history of Amercian real estate – if you didn’t, you should sue your realtor for not telling you!  Plus, what does it mean when he says “borrowers continue to be quickly wiped out” Are people dying from being underwater?  Pull them out of the pool! 

Hat tip to daytrip for sending this in from 

More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.

That figure, provided to Reuters by tracking firm CoreLogic, represents about one out of 10 home loans made during that period.

It is a sobering indication the U.S. housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.

As of December 2011, the latest figures available, 31 percent of the U.S. home loans that were in negative equity – in which the outstanding loan balance exceeds the value of the home – were FHA-insured mortgages, according to CoreLogic.

Many borrowers, particularly since late 2010, thought they were buying at the bottom of a housing market that had already suffered steep declines, but have been caught out by a continued fall in prices in wide swaths of America.

Even for loans taken out in December – less than four months ago and the last month for which data is available – nearly 44,000 borrowers, or about 7.5 percent of the total, now find themselves under water.

“The overwhelming majority of the U.S. is still seeing home prices decline,” said CoreLogic senior economist Sam Khater. “Many borrowers continue to be quickly wiped out.”


Costco Mortgages

Thanks Mr T!  From

NEW YORK (CNNMoney) — Not only can Costco shoppers find bulk-packs of chicken wings, 24-rolls of toilet paper and large-screen TVs at a discount, they can now land themselves a mortgage.

After a year of testing, Costco is rolling out a full-service mortgage lending program on its website in partnership with First Choice Bank, a New Jersey-based community bank, and 10 other lenders.

Costco’s partners have issued more than 10,000 mortgages to members under the program. But Lauren Kutschka, Costco’s manager of financial services, expects that number to swell as the warehouse retailer markets the service more aggressively to millions of members in its stores and in its weekly publication Connection.

“I went in to buy some bottled water, big bags of chips, cereal and some Nutri-Grain bars that I eat on my route,” said Ray Sheets, a FedEx courier from Canton, Ga. “I saw a home loan brochure on my way out and picked it up.”

Sheets went onto Costco’s site, put in his information and quickly accessed offers from four lenders. The rates, closing costs and terms were listed up front. And the closing costs — of about $2,500 — were about a third of what he would have had to pay through other lenders, he said.


Renovate to Sell

This house in Carmel Valley was listed since May, 2011, and by the end of the year the price was down to $999,000 – but no takers.  They went off-market for renovations in February and March, 2012, and came back on priced at $1,150,000.  After 25 days, it went pending!

MBA Fraud Conference

The Mortgage Bankers Association has been holding their fraud conference over the last four days, with 660 industry professionals in attendance.

I was on the speaker panel today for the “Stories from the Street” portion of the event, along with the Chief Compliance and Ethics Officer for Fannie Mae, and the president of a local 100-person mortgage-banking company.

My takeaways:

1. With all the new regulation of the mortgage industry, it is hard to fudge on your loan application, and get away with it.

2. The regulations have added considerable cost to running a mortgage operation, and the threat of buying back loans has run many out of the business.

3. In other words, the mortgage business has cleaned up nicely, and full-doc is good-doc.

4. Fannie Mae believes that effective short sales are generally a good thing, providing a gracious solution for people in their time of need.

5. Realtors are under-regulated, and are having their run of the joint.  Guided only by the flimsy Code of Ethics without any enforcement whatsoever, realtors see other realtors committing fraudulent acts that cause big paydays, and figure they should do it too.

One of the best parts of these speaker panels is getting to meet attendees at the end.

I met one of BofA’s main fraud prevention guys, who told me to report any and all fraudulent behavior to him regarding BofA-related short-sales, and he has the ability to take corrective action.

Then a H.U.D. representative said that anyone can report mortgage fraud here:

If you know of any fraudulent behavior on an active BofA short-sale, forward it to me and I will get it in the right hands.

Riverside? Las Vegas?

Hat tip to Mr. T for sending this in from

CHICAGO (MarketWatch) — Home prices in a majority of the markets covered in Zillow’s Home Value Forecast are set to bottom this year — if they haven’t already, according to a Zillow report released on Wednesday.

“From an economic perspective, the latter part of the first quarter is full of positive news as the spring selling season gets underway,” said Stan Humphries, Zillow’s chief economist, in a news release. “While it is unlikely that national home values continue to rise at this rate through the rest of the spring and summer, it is undeniable that we are seeing sparks of life in the housing market.”

Nineteen out of 30 markets in Zillow’s monthly report are expected to hit a bottom, in terms of home prices, at some point in 2012, according to the real-estate website.

The Phoenix, Miami-Ft. Lauderdale and Tampa areas are expected to see significant home-value increases over the next year, with prices in Phoenix expected to rise 6.5%, prices in Miami-Ft. Lauderdale expected to rise by 5.6% and prices in Tampa expected to rise 2.5%, the release said.

Markets where prices are expected to keep dropping include Atlanta, where prices are expected to fall 4.1% over the year and Chicago, where values are forecast to decline 3.8%.

Overall, U.S. home values rose 0.5% in March, compared with February, according to the report. That’s the largest monthly increase since May 2006, according to Zillow.

The report was released a day after the latest Case-Shiller report, which found that average home prices were at their lowest level in February since late 2002. Read more: U.S. home prices fall to nearly decade low.

Below are the 19 metropolitan areas where Zillow expects prices will hit a bottom in 2012:

  • New York
  • Los Angeles
  • Dallas-Ft. Worth, Texas
  • Philadelphia
  • Washington, DC
  • Miami-Fort Lauderdale, Fla.
  • Boston
  • Riverside, Calif.
  • Phoenix
  • San Diego
  • Tampa, Fla.
  • St. Louis
  • Baltimore
  • Denver
  • Pittsburgh
  • Orlando, Fla.
  • Las Vegas
  • San Jose
  • Virginia Beach, Va.

Bill Davidson

It was a pleasure today to meet Bill Davidson, legendary builder of Davidson Communities.

Davidson Communites has won the local Grand Award for Community of the Year 14 times, the local Home of the Year award 11 times, the Pacific Coast Builders Home of the Year 11 times, and the National Association of Builders Project of the Year 5 times (among others!).  Bill is also in the local, state, and national Builder’s Hall of Fame!

Bill was gracious enough to spend 90 minutes talking about homebuilding, and the future of real estate.  For those of you who are considering a custom-built home, Davidson Communities can help you!  Contact Keith at the office.

This video is the last portion of our talk, but it summarized the topics nicely so let’s use this as our introduction, and follow up with more specifics later:

San Diego Case-Shiller Up


U.S. single-family home prices rose for the first time in 10 months, in an encouraging sign the battered sector is starting to stabilize, a closely watched survey said on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.2 percent in February on a seasonally adjusted basis, matching economists’ forecasts.  It was the first time prices have gained since April 2011. That gain was itself an anomaly in a string of declines stretching back to May 2010.

Still, David Blitzer, chairman of the index committee at Standard & Poor’s, cautioned that while there were some pieces of good news in the report, some areas still continued to decline.

On a non-seasonally adjusted basis, the 20-city index was down 0.8 percent at 134.20, the lowest since October 2002.  Seven of the cities saw prices drop on a seasonally adjusted basis, while two cities were unchanged.


San Diego Case-Shiller Index

SD CSI Feb11 Jan12 Feb12 YOY% MOM%
SeaAdj 157.52 150.49 151.47 -3.8% +0.7%
Non-SA 155.05 148.74 149.07 -3.9% +0.2%

The actual change is just noise, but casual observers might think that “things are getting better”. Every little bit helps?

Case-Shiller HPI: San Diego, CA Chart

California Zillow Home Value Index

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