Real Living in Atlanta

What are the 'Real Estate Experts' Thinking?... Not to Mention, the Government!

Only 15% of the subprime loans became foreclosures, but we got rid of ALL subprime loans.

They also got rid of 80/20 loans, which can be good.  This, I feel, is one of those things that can and does hurt lenders.  If no one is investing in the home, and the market value goes down, it is easy to walk from the property.  And, the lender has all the risk with no PMI on this 100% loan.  Often, they lose all of the second 20% mortgage when they foreclose.  This is often called a 'short sale.'

They also got rid of the 'stated income' and 'no asset' mortgages.  Now, this one makes it now difficult for some to get a mortgage as this group contains people who cannot easily document their income.  This includes many self-employed people and small corporations.

The government just eliminated many of the FHA loans where the seller can contribute the down payment as well as non-profit organizations.  They are now proposing that any debt forgiven, such as short sales, foreclosure, or deed in lieu of foreclosure should be treated as income and be taxed.  I guess they think this is a gift and be taxed when people are already down and out.  These taxes will probably drive people to bankruptcy, but they will still owe the taxes!  Go Figure!

Guidelines have tightened on all 'jumbo' loans, currently over $417,000.  This not only affects larger homes, but unusual properties that don't fit in the standard guidelines.

Now, it is difficult for many of the buyers who could get a loan a year ago, as they can no longer do so.  So we have a large inventory of homes and reduced prices to be able to compete.  This hurts entire neighborhoods, not to mention the foreclosures and short sales.  Builders and loan companies are going bankrupt and we have 70,000 people who have lost their jobs in just the mortgage industry alone.

Yet, we still have decent rates in the low 6's.  I think with the recent data of increased unemployment and lower factory sales, these rates will go lower.  As I say, "bad news for the stock market, is good for interest rates."  Is the glass half full, or half empty?

Other good news is that you can still get a 100% loan, but with PMI.  If you qualify, the PMI is tax-deductible.  More good news for buyers is that there are really good values on the market today, and they are not foreclosures.  Please contact me to understand foreclosures before you attempt to buy one.  I am a specialist in this area.

Hopefully, the penduluim with swing the other way soon.  There has to be a 'happy' balance between these extremes.

Published Thursday, October 04, 2007 7:55 PM by Janet Carpenter