But don’t worry, your funds are safe and accessible through Mutual of Omaha according to online sources. Just another sign of the times as the domestic house of lending continues to fall. Thank goodness the system still works, for now.

Meanwhile, liquidity options for WaMu are running low, though I’m sure the government won’t let that one unravel, much.

Word on the street is that the IndyMac bailout will cost the FDIC 10% of its reserves… true or false?

Then (toward the end of the ego-fest in the UK Telegraph) Donald Trump says buy real estate now, as it’s the place to be.

Some poor woman back east committed suicide just before her house went to foreclosure. Please, if anyone is even considering this, don’t do it! It’s just money. What’s important is you, not your insurance payout.

And then there’s that mystery surrounding the Wells Fargo Earnings Report… fact or fiction?

But here’s the good news: Brian Kaiser sees a light at the end of the tunnel based on recent numbers.

And today the House passed the "Housing and Economic Recovery Act of 2008" which introduces several key programs to help homeowners refinance out of toxic loans and get first time buyers into home ownership. Overall it’s a mixed bag, but I think it will prop up the system and have some positive benefits.

Back to the topic of buy now or wait, in the lower price range stuff is really starting to move. Over at Carson City-based Creative Real Estate Online, the investor forums are totally active. They are coming into the marketplace nationwide for deals that cash flow. The contrarians are here, and they’re buying properties.

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!

Last week the Telegraph UK ran an article about the Royal Bank of Scotland’s recent red-alert to investors on the state of global credit. They are predicting a full-scale stock and credit meltdown as central banks worldwide are paralyzed by inflation. I know to some this may sound extreme, but the article make some good points, and the comment stream that follows is pretty insightful. I’m curious to know what you guys think about the current state of affairs. (And yes, you can talk about oil.)

Noah Rosenblatt over at Urban Digs, who watches Wall Street like a hawk on behalf of Manhattan real estate, is also seeing signs of deterioration.

Even ritzy Aspen, Colorado, has begun to feel the pain (minus the $36 million sale to the Russian oil tycoon, of course).

The State of the Nation’s Housing Market 2008, courtesy of the Joint Center for Housing Studies at Harvard University. The summary in a recent California Association of Realtors newsletter, courtesy of my good buddy Jeff Brown, summarizes as follows: 

"HOUSING DOWNTURN SLOW TO REVERSE, BUT DEMAND EXPECTED TO CLIMB OVER NEXT DECADE. Record numbers of foreclosures, coupled with tighter lending practices, will make it more difficult for the country to recover from the current housing slowdown, but immigration growth is expected to create a demand for more homes over the next decade, according to a new study released Monday by the Joint Center for Housing Studies at Harvard University."

American Express says late payments on credit cards are on the rise (thanks, RI).

 A few items from our wacky world of real estate, and some speculation for your consideration:

The Summit at Grand Sierra Resort now  has 2 units in foreclosure.  The original room count was 825 - DataGuy, any update on how many have sold?

R & K Homes is in default on their Grand Vistas project in Hidden Valley.  The NOD is for $3,565,030.  The project was to include 74 homes, and quite a few are already built.

5 PM Friday News Flash - Reynen & Bardis just defaulted on their Regency Park development in Stead.  Phases 1A and 1B were scheduled for 157 homes. The whole project looks like closer to 600.   I know site work has started, but don’t know the actual construction status.  R & B doesn’t show this as one of their active communities on their web site.  Anyone up that way want to check it out?  Corners of Stead, Echo, and Military.

260 Lakeview in Verdi was the house that went up for auction in January, and "sold" for $338,000.  The sale still has not closed, the auction signs are still up, the trees are still fallen over in the front yard.  It doesn’t look like the deal took.

The new back door to Somersett is almost complete.  The last item of work is the roundabout on Old US 40 / 3rd Street, and the are pouring the curbs for it today.  It will be great to have two ways out of Somersett in case of fire, right Diane?  Also planned for the roundabout is a Shell gas station with a mini mart and restaurant.

Here’s my bottom call - you will know we are there when the median drops to $235,000.  The simplified version of my guess is peak median ($345,000) less 20% (banks write-off 2nd mortgages) less 15% (builder competition, banks needing liquidity, must-sells).  I’ll allow you to add 50% of your post purchase upgrades to your basis.

A lot of the A and Alt-A adjustable loans are tied to 6 Month LIBOR +2.25 - 2.75%.  LIBOR is currently at 2.616, down from 5.329 a year ago.  Many mortgages are actually adjusting DOWN from their initial rates.  Even some of the Subprime loans are adjusting down, or at least remaining pretty constant.

Break out the barbecue, dust off the patio furniture, and enjoy your weekend!

[The following email was sent to me by Lisa Fleck, a Senior Mortgage Planner at Indymac Bank.  Lisa’s email details recent changes to the Nevada Housing Bond Program - a first-time homebuyer’s assistance program.]

I had an opportunity to attend some additional training with the NV Housing first-time homebuyers programs and there have been some great recent changes that really help your buyers.

The biggest recent impact is the increase of income limitations in Washoe County.  For a family of 1-2 people, this includes anyone (children, mother-in-law, brother who can’t get a job) who will be living in the home, the maximum allowable income is $83,400.  For a family of 3 or more the maximum income is $97,300.  These are very generous income limitations

As long as you will not have more than $5,000 in liquid assets (checking, savings, etc) after the close of escrow you qualify for a $10,000 down payment assistance 2nd at a below market rate.  This does not include retirement funds, only liquid funds.  So, if you have $5,000 in checking after your closing but 100K in your retirement account you can still get the 10K.

There is an issue of potential recapture tax but the numbers show that less than .1% of the loans that have been funded, approx 14K plus loans, have ever resulted in recapture tax.  This is an education piece that needs to be thoroughly explained to borrowers but it is not the 500 lb gorilla that it appears to be.

Lastly, we have up to now had only one organization teaching two first-time home buyer classes per month.  Effective immediately a Las Vegas outfit is holding webinar classes at local real estate offices which will make the required education piece more accessible to everyone.

Please go to the website, www.nvhousing.state.nv.us to learn more about the program.

If you have any questions please let me know.

Lisa

P.S. Did you know that as of [March 12th] Countrywide ceased all wholesale operations?  This is similar to Bank of America’s move about 5 months ago and since B of A is in the process of buying Countrywide this move makes sense.  Basically Countrywide is no longer a resource for brokers to originate loans, including NV Housing Bond Programs.  Please be very clear that Countrywide Retail is alive and originating in their local branches.

Thanks to Incline Jim for this doozy… a chart and graph lover’s dream! This informative slideshow presents a compelling case for the we’ve got a long way to go baby argument. Honestly, my head is spinning and I think I may be turning into, gasp, a pessimist. (Say it isn’t so!) Highlights include the salient point that consumer borrowing power is anywhere from 39-41% less than it was just nine months ago, and a sea of questionable loans are still scheduled to reset later this year. These sorts of numbers want to make me downgrade my latest, ever-changing, possible-but not-so-sure local, bottom prediction from 2009 to 2011… What do you guys think?

One new client today was telling me about his experiences with foreclosures and mayhem in the early 90’s in Houston. To him, our current local troubles were mild in comparison thanks to continuing economic growth. He told me the story of a new house that originally sold for $120,000 (a lot at the time in Houston), then sold again to an investor for $80K, then again to another investor for $40K, then again at auction to his landlord for $21K. (When the lumber is worth more than the house, I guess it’s time to buy.) Though neither of us think it will play out that dramatically here, a small part of me says, who knows? Two years ago I was blowing off all the bubble talk as an unimaginative metaphor.

I do watch our numbers with a very close eye. The only positives in our market I see so far are increased pendings, which are suspicious because I wonder how many are useless, fake, short sale escrows that will ultimately fall through as banks take back the houses. I’ve also noticed more builders utilizing the MLS, which means their pendings stay on for months on end as the houses are built, because no builder seems to be building on spec these days. And then of course, it is spring, which always brings a seasonal bump in activity.

The other bright spot is Cyan, the only new home builder I know of doing brisk sales and actually reinvoking the lottery system. With this development, Centex seems to have hit the right price point, the right location, the right value for the dollar, which of course translates into to pending contracts and hopefully closed escrows. I am glad to see that somebody is doing well in this market. It gives me hope. I need some hope.

Asking pricing on REOs and short sales have seemed "sticky" recently at 20% under peak pricing.  No surprise - the banks are loath to  write down the values of the first 80% loans.  And yeah, the higher end sellers seem not to have gotten that memo, and continue to ask dream prices.  I can’t believe how many 7% Solution listings are out there - mortgage balance plus commissions and transfer tax!  But here are a few new listings from the trenches:

729 S. Arlington, listed at $249,000 short, sold 7/14/06 at $425,000.  Down 42%.

1444 O’Brian, listed at $159,900 REO, sold 8/25/05 at  $257,000.  Down 40%.

533 Abbay, listed at $199,900 short,  sold 6/16/05 at $319,000. Down 37%.

315 Quail, listed at $204,900 REO, sold 3/15/06 at $305,000. Down 33%.

1845 Graysburg, listed at $799,900 REO, sold 8/15/06 at $1,125,750.  Down 29%.

Tons more I could cite.  Although I generally don’t trust short sales asking prices (Arlington looks like a sweet deal if it is real), the listing prices of some of the bank owned properties piqued my interest.   Are the banks starting to get serious about unloading their holdings?  I took a look at some of the (very few) former REOs that have closed this year:

6796 Magical sold for $299,900, down 37% from its 12/23/05 $474,744 sale.

6070 Quail Meadows sold for $367,000, down 34% from its 9/8/04 $560,000 sale.

1450 Loma Vista sold for $260,000, down 31% from its 10/5/05 $377,000 sale.

Is 40% off peak pricing going to be the new benchmark?  It sort of looks like that’s where we are heading to me, based on the REOs that are actually selling and a lot of the product coming to market. 

 (Cartago Café courtesy of www.lostamerica.com.  Check out the full sized image at http://bighugelabs.com/flickr/onblack.php?id=1955143216&size=large  It is a stunner)

[As a follow-up to yesterday’s post regarding the announcement of the new FHA, Fannie Mae and Freddie Mac loan limits, I’m posting an email I received this morning from Lisa Fleck, a Senior Mortgage Planner at Indymac Bank.]

As expected Fannie and Freddie have announced the new GSE loan limits.  This program, limited to the time period between 7/1/2008 and 12/31/2008, has affected about 250 counties across the nation.  In the state of Nevada the only county impacted by this change is Douglas County with their new conforming loan limit increased to $468,750.  The conforming loan limit of $417,000 remains the same for the rest of the state.

Of course a majority of the counties in CA have been impacted with many capping out at a new conforming loan limit of $729,750.  But don’t get too excited as Fannie and Freddie are not able to lump these new “higher loans” in with the regular conforming product as investors on Wall St are balking.  Expect to see rates for the higher loan limits to be 1-2% higher that existing conforming rates.  This begs the question, since a jumbo loan (over $417K) right now prices about 1 to 1.5% higher than conforming, where is the value?

As mention in yesterday’s email I believe the truer value is in the increase in the FHA lending limit, in the case of Washoe county $403,750.  Bond programs have yet to announce their decision on loan amount increases and I am awaiting confirmation that the new FHA limits will apply to Reverse Mortgages as well.

Please stay tuned for important market updates in this volatile and shifting market.

If you know of anyone else who may be interested in receiving this information as well please let me know.

I am always available to answer any questions that you may have.

Have a great day

Lisa Fleck, C.M.P.S.
Senior Mortgage Planner
Indymac bank Retail Lending Group
5470 Kietzke Ln  Suite 210
Reno, NV  89511
775.332.1434 phone (direct)
866-481-0540 fax
lisa.fleck@imb.com
www.thefleckgroup.net

Today the new FHA and Fannie Mae- Freddie Mac conforming loan limits have been released by the U.S. Department of Housing and Urban Development.

Here’s a link to HUD’s site for finding the new conforming loan limits for a specific area.  Washoe County’s is now $403,750 for a single family home and Carson City is now at $398,750.  These are an increase over the previous FHA loan limit of $367,750.

Furthermore, my lender friends tell me that FHA is not what it was years ago as there is no longer a special required appraisal and the seller only has to pay the 75.00 tax service fee.  Congress is still exploring the option of reducing the required 3% down to 1½% and mortgage insurance is only .5% per month.

…As opposed to severely distressed. Washoe and Storey Counties, along with Carson City, were ranked by Wells Fargo Wholesale Lending as simply distressed, while our sister to the south, Clark County, was ranked severely distressed. This is an improvement over Countrywide’s recent category 5 ranking for us, the worst possible.

What does this mean to you? If you’re a buyer, it looks like you’ll need great credit scores, financial documentation, and 15-25% down to make a purchase. If you’re a seller, it means you’ll be lucky to get a buyer at all under these conditions. Thanks to Robert for the link.

I’ve been out with more buyers again the last two days, this time looking in the low millions range. The interesting thing is, I ran across short sales in Arrowcreek, Southwest Vistas, Mt Rose Estates, St James Village and even Montreux. Our troubles seem to be trickling upward. The higher end is not immune.

And for everyone out there who thinks they can swoop in and get a killer deal from the banks through a short sale purchase prior to foreclosure, think again. Subject to third party approval? Virginia Broker Frank Llosa calls these fake listings. Thanks to Perry for this excellent find.