More Credit Mess, Foreclosures Going Down & Stuff

Credit markets are still a mess, they aren’t showing much sign of improvement, and the Fed seems to be running out of cards. Noah Rosenblatt over at Urban Digs analyzes the current state of affairs on Wall Street. If I seem to be obsessing on the global credit situation, forgive me, but it can’t be ignored as it all affects the ability for buyers to borrow money to buy homes here and elsewhere.

The RGJ was a little glum yesterday, I’d say, when they ran that piece about the housing slump persisting. But two things caught my eye. One was near the bottom when Bernard Baumohl of the Economic Outlook Group declared that "the worst of the hemorrhaging is behind us" which might be possible on a national scale, but I’m not convinced that holds here where we had such a dramatic run-up. The other thing I noticed is that Mark Vitner of Wachovia called the bottom of the market for late this year or early next year, which is awfully close to Smarten’s January 11, 2009 birthday bottom prediction. (Still hoping he’s wrong so that we can cash in on that free dinner at the Lone Eagle Grill…. mmmm, love that place!)

Today the RGJ seemed a little more upbeat with the news that foreclosure filings had dropped by 10% in June, which is of course, positive. (Though Mike McGonagle scooped that news right here on the blog a few days ago.) But is it seasonal, tied to spring homebuying patterns? A dead cat bounce before the Alt-A onslaught looming on the horizon? Or with notice of defaults down, are we seriously working through the foreclosure problem here in Washoe County?

Bloomberg doesn’t seem to think the worst is over yet, but I’m sure some will simply blast them as being the negative media. Still, a million foreclosures is tough to ignore and something our markets will have to deal with.

BTW, did anyone notice that ad on page 6D the paper ran back on July 3? The one with the list of 68 properties destined to go to auction due non-payment of Reno Special Assessments? Just eyeballing the list, I’d say about half were in Somersett, though the online list is much shorter, so I guess owners are finding ways to pony up the cash necessary to bring their accounts current. I’m sure the list will shorten as the day of reckoning approaches. The sale is scheduled for 1:30 pm on Tuesday, July 15 at the Reno City Hall Council Chambers, 1 East First Street, and starting bids are low. I wonder how this works. Do the banks show up to bid on these properties to retain title, or do people just buy them for whatever price, the city transfers title, and that’s the end of it? Or do buyers end up with clouded titles that require a lengthy, expensive process to clear?

On another note, be sure to check out our cool new Zillow mortgage widget right below the Zestimate box (scroll down, middle column). It’s a quick and easy way to get a quote without being hassled by salespeople who eat their young. Enjoy!

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38 Responses to More Credit Mess, Foreclosures Going Down & Stuff

  1. Avatar GreenNV says:

    Way to tee it up for me, Diane! I’ve been meaning to do a post on Special Assessments and specifically about the Somersett properties listed on the Notice of Sale for Delinquent Assessments.

    Special Assessment Districts are created to fund the construction or reconstruction of roadway infrastructure benefiting specific areas. In the case of Somersett, it was a mechanism to publicly fund the roadway improvements using the city’s bonding power, instead of having the developers front the cost. Individual lots are assessed their prorated share of the overall cost, usually by the lot’s front-footage on the street. The homeowner then pays the special assessment to the city biannually for 10 or 15 years to pay off the city’s principal and interest on the bond.

    If a Special Assessment becomes delinquent, the city is required by law to initiate a foreclosure sale. This prevents the city going delinquent on their special assessment bond if individual homeowners stop paying. The homeowner can come current on the principal, interest, penalties and fees, which usually happens. Or the property is offered “for sale” for the outstanding amount of the assessment, plus the delinquent amount. This is NOT an auction – you can “buy” the property for the outstanding balance.

    For instance, 7730 Harvest Hill had an original assessment of $4898.59 and the outstanding principal balance is $4202.26. The owner could come current by paying $1872.25 ($154.31 principal, $329.07 interest, $1014.57 penalties, plus $375.00 fees). If they don’t come current by the sale date, the property will be offered for “sale” for $5955.57. If more than one party is interested in “buying”, the winner is determined by a random drawing.

    What you get at these sales is a “Certificate of Sale”, not title to the property. The owner of the property has 2 years to redeem the property by paying the certificate holder the amount due plus 1% per month interest (120 days for raw land). If the property is not redeemed within these time frames, the certificate holder can request a deed to the property.

    Your chances of scoring any of these properties, not to mention a specific one, are slim to none. This sale will draw hundreds of people, mostly professionals who go around the country to these sales. If you did happen score a Certificate, it is basically a 2 year CD at 12% interest. (NV has the lowest statutory interest around. Most other states are 18-24%) It is incredibly rare for the owner or lien holder not to redeem the Certificate during the redemption period.

    Assessment Management Group http://www.amgnv.com/home.asp runs most of these sales, and their web site is incredibly useful. You will find Notices of Sale, descriptions of the Foreclosure process, and the ability to search for all Special Assessments, not just delinquencies, by street address or parcel number.

    Check out the Bella Vista condos on W. 4th Street with a$20,000 delinquency and a $79,000 payoff.

  2. Avatar Reno Ignoramus says:

    Excellent post GreenNV. Informative. Insightful. Useful. Educational.

    So much superior to the adolescent mine is bigger than yours nonsense that has become all too common here.

    Do you think, perhaps, that this thread can make it all the way to the end without a personal insult or a cheap shot?

  3. Avatar billddrummer says:

    This tactic is being used by the scam artists who advertise “buy a house for just a few hundred dollars with our proven system.”

    GreenNV is correct that you receive a Certificate of Sale if you happen to bid successfully. But if you do want title to the property, you’ll have to pay off any other liens, including mortgages. Now, if a homeowner isn’t current on the Special Assessment, chances are good that other items are in arrears if the property is vacant (utilities, etc.).

    But the worst part about the deal is the number of unsophisticated people who see infomercials about buying ‘tax sale’ properties or ‘delinquent assessment properties’ and think that other debts are discharged. The people find out that they have to qualify for a mortgage on the new property, just like anyone else would.

    Not sure about one thing, though: Why would you go through the process to gain an interest in the parcel to begin with, if not just for the yield? And if that’s the only reason, why not do it in an area that allows more interest income to the investor?

  4. Avatar smarten says:

    Good post GreenNV. The process seems similar to the way judicial real property sales [those after execution] in California used to work. Since the process you describe raises a couple of questions in my mind, I’ll throw them out for anyone’s consideration/comment. For instance,

    1. The bonding vehicle you describe is similar to what has evolved in California. But here’s the twist. In California [because of Proposition 218] local government must first secure the majority consent of affected property owners [as opposed to the residential electorate]. So the next time Somersett or some other element of local government wants to pull a similar special assessment stunt [and BTW, in California property owners can be specially assessed for such benefits as Open Space and Mosquito Abatement], are local homeowners going to be excised from the process altogether?

    2. Were not the bonds you describe in place before many of the properties in Somersett were sold? If so, why wouldn’t these assessments, just like ad valorem taxes, be liens against properties due but not yet payable and thus senior to subsequently recorded mortgages? Stated differently, if tax sales wipe out junior mortgages, why not these special assessments? And why don’t mortgage holders step in to cure these assessments prior to sale just the way they would if a property were going to sale because of delinquent ad valorem taxes?

  5. Avatar GreenNV says:

    Billdd, my reading of NRS 271.420c is that Assessment Liens are superior to all other liens, and coequal to tax liens. Foreclosure and exercising the Certificate of Sale would wipe out junior liens, including the mortgage, utility and mechanic’s liens. Interesting, any delinquent Property Taxes and penalties would have to be paid before the city could issue a deed for the property. Since the property owner is still liable for Property Taxes and Special Assessments during the 2 year redemption period and probably not paying them, the certificate holder can be biting off a lot more than they thought (unless they pay the taxes and assessments during the redemption period – the penalties are killer).

    5 or 6 of the delinquencies in Somersett are on bank held REO properties! The banks are not paying assessments, property taxes, HOA, sewer. Debatable if these are sins of omission or commission, but the banks will most likely have to pay off the delinquencies prior to the sale to protect their lien positions. And if they don’t now, they will almost surely step in at the end of the redemption period to clear things.

    To turn your Certificate of Sale into a deed, you have to notify everyone involved 60 prior to to end of the redemption period. So unless someone is really asleep at the wheel, these sales don’t end up being sales at all. But stranger things have happened.

  6. Avatar Paul says:

    Hi Diane, what is your experience with lending on deals you have in the pipeline right now? I had an extensive conversation with a mortgage banker in Incline Village during an open house a few weeks ago. His song and dance was that under 417k [Conforming loan limit in Washoe County] liquidity and availability of credit was fairly good with 3 – 10% down and even modest credit scores. This explains the activity at the low and moderate end in Reno.
    The problems in the Jumbo market, however, are hitting Incline like a torpedo. Basically, you need 25% -35% down, a 750 plus FICO, and even some of those deals are cratering before COE. At least Placer and Nevada [CA] counties [Tahoe City, KB, Truckee] have a higher conforming limit [550k]and lower median prices.
    I’m saving my downpayment until Incline prices adjust downward to the new price level that reflects the lack of liquidity.
    Many Incline agents claim at least half of their buyers pay cash. Even if this is true, I think the credit situation sidelines even the cash buyers. Here’s why – often the cash buyer is such because he or she just sold a free-and-clear or low mortgage balance property in CA. If the jumbo financing isn’t there for the buyer of the CA property, the chain of dominos ends and the “cash buyer” disapears.

  7. Avatar MikeZ says:

    Bernard Baumohl of the Economic Outlook Group declared that “the worst of the hemorrhaging is behind us”

    He’s delusional. Look at the reset schedule for the next 24 mos.

    The worst is behind us? Not a chance.

  8. Avatar Tom says:

    The state legislatures have provided statutory preferences to certain special liens, such as property tax liens, which take priority over even prior-recorded consensual liens. This is how in California, for example, a lien for unpaid property taxes will ultimately defeat a prior recorded mortgage, once all rights of redemption have expired. At that time, the prior recorded mortgagee–who was actually senior in time, under the Recording Act–will nonetheless be treated the same as if it were a sold-out junior lienor, but only after the redemption period passes and a deed is delivered to the purchaser at the tax sale. This special priority exists as a matter of public policy in the statute, and that statute can just as easily “save” other public agency liens as part of the same policy. Thus the Certificate holder would generally not get the Assessment District lien wiped out along with the prior consensual mortgage. So a preliminary title report becomes important before shopping at such foreclosure sales, because as mentioned above, there will probably be other things delinquent, also.

    As pointed out in a comment above, because the redemption period is lengthy, if there is truly any equity in the property, someone will invariably be around to redeem. This also illustrates the risk of being a lender in that chain of title–you need to monitor the status of the borrower in keeping tax payments, etc, current, as you may have to step in to “save” your interest as a lender, and the tax penalties and interest can be considerable.

    For anyone having the need and the time to burn reading a scholarly article on this subject, there is a discussion in the Real Property Sales Transactions practice book (Calif. CEB), which should be available in the stacks at the larger of the county law libraries in California and Nevada.

  9. Avatar Reno Ignoramus says:

    Bernard Baumohl is a legitimate guy. Unlike a lot of the shills in disguise from the NAR, he has genuine credentials. He was Time Magazine’s economic reporter for many years. He has been pretty bullish on the economy for the past couple years.
    I personally agree with Mike Z that Mr. Baumohl is going to end up wrong on the state of the housing market. So many economists appear to working off of models that have no capacity to account for the downside of the biggest housing bubble in history. They keep working off of models that assume that we are in a normal cyclical downslide. Whereas there was nothing normal, from any historical perspective, about the Voodoo money juiced bubble from 2002-2005.
    I suspect that we may see Mr. Baumohl start to engage in some revisionist interpretations of his predictions as the market continues its slide with the upcoming Alt-A and prime defaults. In that respect he will be not different from a lot of other “experts”.

  10. Avatar potential buyer says:

    Any one care to comment on the Fannie and Fredie situation? Their stock holders took a real bath this week. The question is could that affect the flow of conforming mortgages.

  11. Avatar CommercialLender says:

    I do Fannie and Freddie multifamily lending. In the past few days I/we have been reassured by these companies that they are still in business, still buying loans, still committing loans, still closing loans, still buying loans, etc. albeit some underwriting criteria are being tightened and spreads have increased a bit. However, they are still the best game in town for apartment lending, bar none. I issued 2 new freshly quoted quotes today alone, at a time when Freddie was in the $5 range for their common stock. In my opinion, what has happened and is happening to them is overblown.

    That said, multifamily loans are a small drop in the bucket relative their single family portfolios. If they decided or were forced to stop buying single family conforming loans, well, then we’d all have much, much more to worry about than the median price of Reno’s single family homes.

  12. Avatar DonC says:

    Diane — thanks for the mortgage widget. It’s pretty cool. Nice add.

    Here’s my anecdotal gloom and doom story — from the locker room no less. A couple of guys were talking today about buying a few condo units in San Diego. The units are/were around $250K which makes them middle of the road. What they’re doing right now is negotiating by going between sellers and trying to get better pricing. Their view is that the units are pretty fungible so one is more or less much like another.

    The gloom and doom point is that the price has dropped markedly. One guy said that when he started looking a few months ago the price was around $236K. Now it’s $195K and he’s trying to work it down to $185K. Assuming this is true, and I’m confident it is, the bar is still being lowered in at least one area.

    This represents an awfully fast drop in prices, suggesting the bottom is not right around the corner. Perhaps smarten has the January 11 date right but the year wrong?. As he has pointed out, however, you can only call a bottom well after the fact, so you may have to come back from the Bay Area to get that meal.

  13. Avatar billddrummer says:

    To GreenNV & Tom,

    Thanks for clearing up the issue of priority for me. I haven’t had any experience with those type transactions, but it sounds to me like there’s a lot of work involved after you step up and cure the assessments.

    Goes back to the old saying “If it was easy to make money, everyone would be rich.”

    That doesn’t sound real easy to me.

  14. Avatar smarten says:

    Question for you CommercialLender –

    I was always under the impression that Freddie Mac and Fannie Mae actually purchased portfolios of packaged loans from originators. But in a recent conversation I had with a residential mortgage person, I was told no – all they do is provide guarantees so the portfolios can be sold to hedge funds, foreign investors, and others.

    I can’t imagine this is true because if so, how would Freddie Mac and Fannie Mae generate the income [and dividends to investors] they do? Can you clarify?

  15. Avatar DonC says:

    Someone in a different thread asked how the problems at Fannie and Freddie Mac would real estate. Here’s a NY Times article on the subject (it also answers, at least in part, smarten’s question to CommerciaLender):

    http://www.nytimes.com/2008/07/12/business/smallbusiness/12money.html?_r=1&hp&oref=slogin

  16. Avatar DonC says:

    Just a follow up:

    smarten — given the problems at the Macs it seems we’ll get to test whether rising interest rates knock down the median sales price. 🙂

  17. Avatar Sully says:

    Diane, a while back I mentioned a chart comparing home builders stock price to new house pricing.

    You wondered if home builders had hit bottom, as I said it appeared they did in Jan. Well, they hit a new low this week…….

  18. Avatar NAS says:

    http://www.latimes.com/business/la-fi-indymac12-2008jul12,0,6071779.story

    IndyMac failure is big news in my part of the country. Supposed to “re-open” on Monday under FDIC jurisdiction. ATM’s, bank cards, checks, etc. are not accessible. I read an
    estimated 10,000 customers are over FDIC insured limits. If all goes well, they might be able to collect 50%.

  19. Avatar bondstevenbond says:

    Last week’s action is not so much a story about Freddie and Fannie as it is a story about many financial institutions who will need to continue to delever and raise capital. In the past six months they did this often by selling equity to foriegn investors such as sovereign wealth funds. The trouble is that these investors have lost ton of money. The second time these financial institutions try to go to the well, the next round of funding will come at a steep price. Institutional bond markets know this is the case and as result, many wonder who will supply the next round of capital. This will affect all financial institutions. Freddie and Fannie will continue to enjoy the best relative funding, followed by the largest banks, and this leaves the smaller regional institutions, such as Indymac, City National, Wamu as the most vulnerable. Institutions like Citibank, Bank of America and Wachovia will survive, but some even wonder about Wachovia, because it is choking on its Goldenwest acquistition. The base case the smart money for the next year is as follows: Expect real estate prices, as measured by the Case Shiller index to be down 30% from their peak nationally and down about 45% in places like Sacramento, Reno, and the Southern California Inland Empire. Expect several more regional banks to fall into receivership. Of course, this environment will weign heavily on voters minds by the end of the year and it will time and a lot more governent intervention to restore confidence. Sadly, we really don’t have much precedent for this, it reminds me of 1933 when FDR gave his “we have nothing to fear except fear itself” in speech the day he entered office in early 1933. At that time the banks had been closed for many months and the country was desperate enough to cheer the new deal and the alphabet soup of government agencies that were created as part of the new deal. Expect a lot more government response, but only time will tell how well it will work. I am looking forward to lunch at the Lone Eagle Grill next January, but I seriously wonder if any of us will be ready to buy by then. Perhaps we won’t be in that mood until January 2009 or Janaury 2010. Investor’s club to buy Condo’s at auction in San Diego in a couple years anyone?

  20. Avatar Now I am buying says:

    I have posted a couple of times as “Still Not Buying”

    Now I am trying to buy but can’t get a bank to move. Short of finding a real seller (do they even exist anymore?)…
    Has anyone pulled off a multiple bid for a buyer. I have several houses i like and I am willing to buy any of them (really.) I am not in a position to wait. If I can’t get an offer accepted in the next 2 weeks I am going to rent.
    My realtor doesn’t seem willing to even consider it. I am considering finding one that will. Any thoughts?

  21. Avatar Bob says:

    :|, whats the big deal? rent. Prices will go down further, just wait and save in the mean time, so u pay the bank less.

  22. Avatar downtownjunkie says:

    You got to love it… Still can’t even log onto IndyMac.com to make a mortgage payment. Another one bites the dust. It’s sad really for all the people over the FDIC insured rates.

  23. Avatar DonC says:

    If I remember correctly, in the S&L bailouts everyone was covered. I’d think the FDIC would more or less have to do this here.

    At the moment I heard the rule was that as of today all IndyMac depositors would have access to all money up to $100,000 and half of their money over $100,000.

    As the FDIC finds a buyer for the bank or its assets I’d expect they’d get all of it back. Obviously thee are some problem banks but compared to the S&L problem the current bank problem still seems like small potatoes.

  24. Avatar first time buyer...waiting says:

    Check Fraud-Please don’t let this happen to you!

    I have a wonderful hard-working cleaning lady that is trying to establish her new business in Reno. She’s a single-mom of 2 young boys and has a work ethic that seems increasingly rare these days.
    She also cleans for 3 other friends and we all love her, she’s honest and does and incredible job.
    In January she hired another lady to help her and brought her to my house. Within 5 minutes the lady made a comment about how my girls had “way too much stuff”. Instead of showing her the door, I found myself explaining that most of their stuff is gifts and hand-me-downs. She also prooved to be a very lazy and was let go 6 weeks later.
    We found out that she lived in section-8 housing and was collecting disability and social security for herself and brood. She had also asked to be paid cash by my cleaning lady and over the weeks told her about several people she had sued for various reasons.
    I always locked away all of our valuables and financial stuff but did leave the check for that day of cleaning on the counter. My cleaning lady never left her alone.
    Move forward to July 2nd. My husband was looking at our account on-line and called me asking why I was spending $200 at “blue-hippo” and if I had paid a bill of $350 to PG&E? Then he procedded to pull up the pictures of the checks and on one of the four found a name that seemed familiar.
    We concluded that this lady had enough time to simply write down our account number and routing number off the check and with that information was able to purchase/pay bills on-line.
    She was also able to go to office depot/staples and buy blank checks and put her name on the top with our account number and make purchases.
    She was also able to purchase a pre-paid credit card in my name. All to he tune of $600 in 3 days!
    We asked our friends if they noticed any strange things on their accounts and one friend had already closed her account back in March after 2 days of fraud activity totaling over $3000. BofA never found the source. My other friend just noticed activity going back to January totaling also about $3000. also stemming from the same name.
    We called the police and they came to our house that night. The oficer told us that this is extrememly common and that he would rather send cash in the mail than a check.
    Other tips he gave us:
    1. Mail your bills at the post office and never put them in the mail boxes outside after the last pick-up. (I always did that anyway)
    2. Pay as many bills on-line as possible
    3. Don’t use checks!

    This took us hours at the bank to resolve.
    She was “clever” enough to put her name and address on some of the checks and hopefully will be arressted and do some time for this.
    It is very depressing that you can’t trust anybody anymore and it seems like everyone is after the “easy buck”.

    When I have some more time I will tell the story about why we did not buy the house in Arrowcreek.

  25. Avatar NAS says:

    “First time buyer” – As a potential buyer in Arrowcreek, I’ll bite: Why didn’t you buy?
    Or better, log into the FORUMS under Arrowcreek for dialogue.

  26. Avatar CommercialLender says:

    Smarten,

    Great question and I’ll clarify. But, again, I only speak to their commercial (apartments and seniors housing) and I am not an expert on single family.

    Freddie Mac buys individual loans as long as they fit roughly in the prescribed box. So, I originate the loan and close it, then sell that loan to them. In the case of Fannie specifically, 3rd party buyers will buy the loan that is guaranteed by Fannie, and in many cases the originating lender shares in any loss, too. Built into the rate is a servicing fee for the lender (me) and a guarantee fee for the agency’s ‘insurance policy’ (Fannie) paid each month with your payment. The 3rd party buyer might be any fixed rate desk of a wall street firm, Morgan, Merrill, etc etc. who then sell slices as fixed income bonds to grandma, pension funds, foreign govts, anyone, etc. Look at the WSJ for GSE/Agency paper and you’ll find Fannie, Freddie, Ginnie Mae’s, etc.

    Freddie does it a bit differently in that they buy all our paper directly and they then sell it off or keep it in house.

    At least 1 of my competitors who will go unnamed specializes in smaller MF loans, $1-3M. I do know that they aggregate these loans into pools and then sell them in bulk to Fannie, particularly. I have been fairly vocal over the years that the loans they and some others do are way too aggressive, the terms they offer are too aggressive and that the same underwriting could not be done by those of us doing the larger loans, $3M and up.

    Just like every lender out there who had competition in the marketplace (excepting true Govt programs with no competition like FHA, VA, etc.), when things got hot, they bent some rules and did more aggressive lending.

    What we all are about to experience in the coming days/months is a massive government intrusion back into the capital markets to ‘fix the problem’ which will result in the removal of the vast majority of subprime and alt-A borrowers, in my opinion, resulting in decreased demand for housing, resulting in lower prices, resulting in more of this malaise for many months to come. The government intervention will only prolong finding the bottom or staying at the bottom, not hasten it. I see huge opportunities for those who are sitting on the sidelines watching with cash in hand.

  27. Avatar first time buyer...waiting says:

    To cut it way short- had inspections done, appliances in the kitchen broken despite disclosures that said everything was fine. People were hoping for a lazy inspector. Upon stating this to the other parties agent, she stated it was “an oversight”. I’m sorry, but this was a family and you can’t tell me that they did not know that the appliances in the kitchen were not working…how did they eat?? The repairs for this would be well over the amount alloted, leaving us with the bill. DISHONESTY ABOUNDS.
    Not to mention garage door width was 7’6″ wide!! No joke and we don’t even have a huge SUV. You had to drive dead-straight into the garage and only had 1.5″ on either side of the mirrors. The other half of the garage was not really usable either. So this 2 and 1 garage is really a 2-car garage with storage at best.
    There is just way too much on the market to settle for anything sub-optimal. Plus as you all state, prices continue to fall and I think we can get more of the house we want for less money in the future.
    Club Corp also completely pulled out of the Arrowcreek deal. What does this mean, I don’t know!?! May mean a golf course that will turn back to desert weeds and falling housing value of Arrowcreek homes or not. Any input???

  28. Avatar DonC says:

    “What we all are about to experience in the coming days/months is a massive government intrusion back into the capital markets to ‘fix the problem’ which will result in the removal of the vast majority of subprime and alt-A borrowers, in my opinion, resulting in decreased demand for housing, resulting in lower prices, resulting in more of this malaise for many months to come. The government intervention will only prolong finding the bottom or staying at the bottom, not hasten it.”

    Isn’t it correct that, by definition, Fannie and Freddie never handled subprime or Alt-A loans? If so then their problems won’t directly affect the availabilty of those types of loans.

    Isn’t also true that if Fannie and Freddie couldn’t buy and resell loans the housing market would die an almost instant death? If so then why would the government not step in? Neither of these companies made reckless bets. They are more the victim than the cause of the housing loan problems.

    IndyMac and similar banks are more the cause. No doubt many of them will go under, and with them a lot of risky loans, including many subprime and Alt-A loans. So yes, you’re right that some loans that were made in the past will probably not be made going forward. But isn’t this a good thing?

  29. Avatar CommercialLender says:

    DonC,

    Its a very good thing the lending criteria that became so lax are being tightened, but you’ll likely see the pendulum swing the other way in much tighter regulations and in reduced lender risk appetite. We will all feel the pain increase until this settles out and eventually is forgotten, such as in higher rates and comparatively worse terms next time you get financing.

    You are correct that Fannie and Freddie were not the ones who directly made the subprime and Alt-A loans, but I believe some number X of them ended up being purchased by Fannie and Freddie anyway. The bigger issue is the ‘contagion effect’ that we are seeing. Supposedly IndyMac specialized in Alt-As, which are now being affected by the Subprimes, but soon you’ll see Prime/conforming loans default. In fact, I believe you are already seeing them, which is 1 of several reasons Fannie and Freddie are doing so poorly now.

    So, for sideline-sitting buyers, the markets are getting ‘better’ while for sellers, well…

  30. Avatar Future Buyer says:

    First Time Buyer–I told you to wait to see what happens with the Arrowcreek Golf Course–seems we are now on the same page. I got the inside scoop that that deal had fallen through. I think they are trying to start negotiations with them again, but I will try to find out what is happening. We are looking at golf course properties and waiting to make sure we are not going to have a pasture view, instead of a golf course view! On a better note, we are enjoying the trial membership, and my family loves the fact that there are two golf courses to choose from. You should try the trial to make sure you like the club. Anyway, does anyone know why Palmer Pointe dropped 300k in price overnight? Foreclosure? It’s those houses that are dropping property values and so many overpriced homes sitting on the market it’s mind boggling. Some of those seller’s will need to sell and I have no doubt First Time Buyer, that you will get a better house for your money! Don’t get discouraged.

  31. Avatar first time buyer...waiting says:

    Thanks Future Buyer-I was relieved to have the deal fall through. I reallt liked the house but in retrospect I would have paid too much, yet I did learn a lot about the purchasing process. A good inspector is worth a lot!
    My kids are too little to golf but maybe in the future. What’s the trial membership about??
    Yes, Palmer Pointe is headed for foreclosure. Did you see the Taos Ranch Ct bank-owned monster? That’s one of three the same person owned.
    I also see a lot of people selling everything off recently (boats, 5th-wheels, campers,etc), I feel people are trying to liquidate everything.

  32. Avatar Sully says:

    First time buyer, I can’t tell if you are an actual first time buyer or first time buyer in Reno area.

    If you are looking for golf course property have you looked at Wingfield Springs area? Prices are about 25% of Arrowcreek and I’m sure the HOA fees aren’t $260/month. I’m sure Derrick will attest to this!

    When you start adding up property taxes, HOA, heating and cooling bills, your monthly costs
    could be more than you were expecting to pay. Then, there’s always the unexpected – like furnace dying in middle of winter; water heater quitting on a weekend, little stuff like that.

    I’ve been there and done that! So, unless, you’re in the very high (over 250K a year) income bracket; you might want to seriously leave the Arrowcreeks for the Donald Trumps. 🙂

  33. Avatar downtownjunkie says:

    Does anyone know what Montreux’s assoc. are?

  34. Avatar smarten says:

    Downtownjunkie, I think $225/month [ http://www.mtxhoa.com/docs/pdf/associationDues.doc ]. Good luck.

  35. Avatar smarten says:

    P.S. downtownjunkie –

    But essentially no recreational elements [like the pool, work out facilities, tennis, etc.] are included in Montreux’s “basic” association dues. It’s my understanding you will have to pay big up front fees to purchase a membership to use these amenities, as well as a hefty monthly fee.

  36. Avatar Future Buyer says:

    First Time Buyer–I just found the website renohomestalk.com courtesy of Ron Bell that explains the Arrowcreek Golf Course situation. Looks like it is still a big mess. The trial membership is–spend $75 in food at the club, and you have unlimited golf on both courses at a really discounted rate. It’s a great deal and was supposed to continue until the sale went through. So with the sale now off, I’m not sure what will be happening. According the Ron Bell’s website, some homeowners want the golf course to go bankrupt, so they can buy it back, etc, etc. I’m not sure they are thinking clearly about what this would do to property values?! This may explain why a lot of builders and realtors have their homes up for sale in Arrowcreek! In any case, I’m happy to continue renting.

  37. Avatar downtownjunkie says:

    Thanks. Ya, I see that golf/rec memberships are 60-100K. I want one of those smaller cottages in the trees bad:)

    Smarten… What do you think mls# 80006604 will go for next year? Right now they are asking 490/SF. Think it will go in the mid 300s?

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