Brent Bruce's Mortgage Insights

One thing that is difficult to understand is that when you listen to the national media, such as CNBC or CNN you are hearing national figures. Recently I heard CNBC note that real estate is down over 10%. I wish that were true here. Southern California Real Estate has dropped in most cases by about 40% from the peak in early 2006. This has left many people upside down in their home and wondering when the bottom will hit.

As you can see with the stock market, and the overall economy as well, no one can really answer this question. Normal fundamental factors are out the window and even the Federal Reserve is just trying to keep up with the day to day changes in the economy. However, there are some simple factors that I feel will give us an indication on when we might settle down here is Southern Cal.

It is really not that hard to have a good idea of when things will change. First, home prices have to come down to a point that first time homebuyers and people with average incomes can qualify for the mortgages. Keep in mind I said “qualify”. This means they are going to have to provide documentation and the bank is going to have to agree that thy can afford the house. Once that happens, the first time homebuyers and all of the people who thought they were never going to be able to buy when houses were $500K will come out of the wood work to take advantage of the discounted homes. Foreclosures will have to subside so that more homes are being bought than foreclosed on each month. This will slowly lower the inventory of home for sale. As inventory gets back to normal levels, prices will stabilize and then, over time begin to rise again.

The good new is that in Southern California I think all of these things are beginning to happen. Prices have come down to the point that people are jumping on them. Sales volume is up! Banks and the Government are putting together plans to slow foreclosures and they will get it right eventually.

Basically I feel that we are very near or at the bottom of the real estate market in Southern California. I think now is the time to buy, and that 2009 will be a better year for us all.

I guess we will see soon enough!

 - Brent C. Bruce

Weeks have now passed and we still do not have a single lender in the US that is willing to participate in the H4H program through wholesale channels (brokers like me). However, I am not hearing about much success from people who have been attempting to use the program through their existing lenders either. I have even had lenders calling me personally asking me to find investors who can help their clients. It is beginning to look like this program might have been useless.

The good news is that, from what I can see, everyone wants to help. We just need a better plan.

Recently I wrote a blueprint to a foreclosure prevention and loan modification plan in detail. After reviewing the plan, and testing it with many scenarios, I decided it would truly work to stop foreclosures and get our economy rolling again. I sent this plan to David Dreier, my local congressman. As you can expect this will take some time before I will be able to get it in from of him.

Fortunately, something even better seems to be coming along. Fannie Mae and Freddie Mac announced plans this week to create another plan for their clients, that is surprisingly similar to mine. I really think this plan will work. (You may have read about it in the paper this week).

HERE IS WHAT I AM HEARING

Basically this plan would have your existing lender modify your loan amount to 100% of your current appraised value. They would work the payment to get it as low as possible including interest rates as low as 3% and loans as long as 40 years fixed. The goal would be to get your mortgage payment, including taxes and insurance to be less than 38% of your current monthly income. This would be a great benefit for most of us. The difference between the new loan amount and the current amount you owe would not be written off by your lender. You would still owe this money and it would be place as a lien on your house, but it is not due until you sell or refinance. This is the best for us and the best for the bank, and that is why I think it will be well received and keep us in our homes.

So what do YOU need to do to find out more?

This new plan is still in the works, but I think it has a better chance of happening than the H4H is looking to have. The plan is going to be completed ONLY through your existing lender. This means I will not be able to assist you on this, but I can keep you informed. I suggest that you go back to your existing lender and try to get into talks again. More and more lenders are offering modifications to avoid foreclosure. Complete all of their forms and get them back to the bank as soon as you can. Do everything they ask and you will have the best shot at success.

 I am still going to keep you informed. If something happens with H4H or any other program that will help, you will hear from me.

I wish I had better news, but we are still looking for the best solution at this time.