From U.S.A. Today:

-------------------Foreclosures Skyrocket 65% In April-------------------

Joel Naroff of Naroff Economic Advisors says he thinks foreclosures could persist at a high rate into 2010. "Prices are dropping and will continue to fall throughout the year," Naroff says. "People want to buy, but they can't get financing."

Read the entire article here:

http://www.usatoday.com/money/economy/housing/2008-05-14-foreclosures-mortgage-a pps_N.htm

The PNW is fairly insulated as of now and has avoided the price decline. California is still overpriced. The bargains are in the east and midwest.......

That's a shorter time-line ( 2010 ) than I would have guessed. But I'm wrong a LOT about stuff like that.

I saw in The O today that PDX home prices declined a bit recently, and more so in Clark county. I wouldn't shop for bargains just yet.

Thats why I'm keeping my 4 rental properties for some time. There is ZERO interest in most houses at this time. Tons for sale and NO buyers......

Really depends on the part of town. In some parts of Portland, houses are still moving, just not very fast.

Andrew

The house two doors down from me just sold after a relatively short period on the market.

The house across from it, however, has been on the market for months. A couple blocks away, there are three in a row!

"People want to buy, but they can't get financing."

I'm curious to know exactly how creditworthy these people are... CJ, can you comment on how the rules have changed recently?

Lenders - ALL lenders - took away just about every program that was even mildly risky. I thought it was understandable, at the time. Now, sure enough, they are starting to relax some of those credit guidelines in order to remain competitive. The climate is much more sane and reasonable right now among lenders. Loan-to-value remains a very high priority to keep in line. As does provable income. But legitimate reasons for lower credit scores and being taken into consideration and on a case by case basis. I like that. If it's explainable and understandable ( as opposed to say, genuine fraud ) burned everyone for about a year there.

Everyone is taking responsibility and trying to do this all over again, but in a more healthy and truthful way. It's only going to help. Lenders that get greedy or clients / buyers that can be sold on crappy loans are few and far between, relatively. The whole mindset is now " Let's see what the truth REALLY is and make a decision based on that." Whereas before it had been " Don't ask, don't tell." That's gone. Thank goodness. That effected lenders and mortgage brokers alike. Lenders closed up shop. Mortgage brokers that didn't know how to close a loan on anything other than funky figures followed the lenders. The system is designed to be pretty uncomplicated and legitimate. It got perverted - people got caught and paid. It was just and the right thing to happen. We were fortunate that it took a relatively short time to eliminate. People that tried to fight the fact that they were committing fraud never had a leg to stand on. It was actually poetic and beautiful. A little tragic too though. There was more genuine intent to defraud than there was " I honestly was set up to succeed in this mortgage, but things changed and I lost." But that happened even during the most tight markets with tight lenders. That will always happen.

While I'm not saying anything all that profound, I just say it as a reminder.

With lenders on the hook for tens of billions of dollars in bad loans, the market (and government) should require some significant changes to the home loan business. People were being sold home loan packages that were wholly unaffordable once interest rates rose. Foreclosures are through the roof in many parts of the country, including California and Florida. This area though seems to be in better shape than the rest of the country.

Hopefully lenders will take to heart the problems of today and be a bit more discerning as to how they package loans in the future.

CJ, so you're saying that people with decent credit and provable income can still get loans for realistic property valuations?

For example, I have great credit, a good tech job, and bought my house with a 100% LTV 0-down loan. Would that be possible today?

Tal- Ultimately, only you know what you can afford to pay for your mortgage. It doesn't take a genius to anticipate that historically-low interest rates will eventually rise. Why should the government or the lender be responsible for the borrower's inability to pay?

We're not talking about reasonable market swings in this last fiasco. Money was so loose that people were getting 110% loans. One local real estate guy in my market was quoted as saying he could get 100% financing for someone a week out of bankruptcy.

The other problems were the various loans that increased in cost several years in. Some people are always thinking things will be better by the time the extra cost kicks in, and it rarely is.

Loans should start loosening up soon in the saner areas (not California or Florida). When institutions aren't making loans, they're not making money. I get no less than two calls a day wanting to loan me money.

CJ, so you're saying that people with decent credit and provable income can still get loans for realistic property valuations?

Yes. I guess I don't understand what you mean by " realistic property valuations " because that's the only variable I see in your statement. Barring that, why else would someone not get a loan? Can people get a loan? Yes.

For example, I have great credit, a good tech job, and bought my house with a 100% LTV 0-down loan. Would that be possible today?

Possible? Yes. Do the very many of lenders I broker to regularly offer that 100% financing with Zero down? No. But I have to admit that it's entirely possible to find someone who does. FHA still offers 3% down programs ( along with " gifted down payment " programs that end up feeling like 100% financing - but Federally Insured and worthy programs ) - and VA offers 100% under the right circumstances.

The next big change in the industry will be to Government programs' guidelines. It will help many people. And while it's been a bit slow in coming, it's coming. I cannot say exactly which guidelines will be relaxed or when, but it will help.

And the good thing about that is that mortgage brokers being FHA certified is a giant, expensive pain the butt that takes place annually. It's been worth it for us to be able to offer it, but the audit process can be brutal and expensive. That weeds out a lot of the more shady brokers who'd love to offer FHA - but can't afford or aren't willing to show their books to FHA auditors. Fine.

And I believe Deane is right on all counts there. Money was loose. That's an important distinction between market swings.

"why else would someone not get a loan?"
I was referring back to the "people want to buy but can't get financing" quote from the article. Apparently those people who want to buy can't get financing because they have no business buying(due to bad credit, low income, etc), not because restrictions are so tight.

Yes. Their ability to repay the loan is too risky on a basic level.

You mean 405 is two low for a home loan? Sheeeeeesh! Anyone got the number for Hayes Barnard, i'll bet he's got some wingding financing option for me.