by California FHA Mortgage Loan Expert on December 7, 2009
When will the housing market turn around in California? No one knows for sure – but according to the President of the California Mortgage Brokers Association, it could be at least another 18-24 months.
From the San Diego Union Tribune:
Ed Smith Jr., president of the California Mortgage Brokers Association, considers himself an optimist. But even as he mingles with convention-goers in Las Vegas, he’s not jumping on any bandwagon predicting an imminent turn in the housing market.
Smith, a 26-year industry veteran who operates a mortgage referral business in Spring Valley, estimates that it could take at least until the dawn of 2012 for the market to settle. In the meantime, the mortgage industry continues to go through tough times.
Independent brokers, who once held an estimated 60 percent to 70 percent of the mortgage market in California, now represent only 15 percent of the market. The nation’s three top banks — Citigroup, Wells Fargo and Bank of America — dominate more than 50 percent of the market, Smith said.
“It’s not good for the consumers if there’s only three choices of lenders,” he said. “It doesn’t give them a lot of latitude to shop around for the best deal.”
In the meantime, Smith said, one of the big topics of discussion among brokers is whether to merge with mortgage banking operations so that they can build stronger competition to the big banks.
When asked for a timeframe on when he sees the housing market turning:
QUESTION: One of the major questions these days is whether the housing market may be approaching a bottom, now that the economy appears to be stabilizing. What do you think?
ANSWER: I usually try to be as optimistic as possible, but I think it could take another 18 to 24 months for the real estate market to settle. There’s a huge “shadow inventory” out there of homes that have not yet been foreclosed upon. Some people say the shadow inventory may total as many as 7 million homes. Those homes are being slowly dribbled back into the market, but if it comes onto the market much faster, it will destabilize the market much faster than it is right now.
In San Diego, I’m not sure how long it will take for property values to get back to the place they were. And that’s not bad, because at the peak of the market, property values were so out of whack that the average person couldn’t pay for a loan. At the top of the market, I wouldn’t have even bought my own house if it was on the market.
by California FHA Mortgage Loan Expert on November 27, 2009
One of the more frequent questions I am asked is “what is the minimum credit score that I have to have to get an FHA loan?” and the answer I usually give is more confusing than just a simple number.
Officially, FHA doesn’t have a minimum credit score requirement.
But just because FHA doesn’t have a minimum credit score requirement, doesn’t mean that you can get an FHA loan with a bad credit score — because the key is that many (or all) lenders now require a minimum credit score before they will issue an FHA insured loan to you.
And in general – the lenders are generally moving to a 640 mid credit score (you have 3) before they will loan you money (assuming you meet the other criteria). True, some are still at 62o, but the trend has been for more and more lenders to move toward the 640 minimum threshold lately.
And for the last couple of years, as guidelines have been tightening – the minimum credit score requirement for most lenders has went from no credit score requirement to 580 to 620 and now 640.
Will it continue to rise?
I doubt it — but maybe. 3 years ago, anyone with a 680 or higher credit score was considered an “A paper borrower” and maybe it will go that high — but I just don’t see it happening.
But I have been wrong – which means if you have a 642 credit score right now and are considering refinancing or buying a house with an FHA insured loan – it might be wise to act now rather than wait.
Because it is possible that your 642 credit score won’t be good enough in the near future.
by California FHA Mortgage Loan Expert on November 23, 2009
According to a report by the Mortgage Bankers Association, we are nowhere near the end of the foreclosure crisis – and according to the Los Angeles Times, it is going to get worse before it gets better.
One in seven U.S. home loans was past due or in foreclosure as of Sept. 30, putting that quarterly delinquency measure at its highest level since 1972, when the Mortgage Bankers Assn. began reporting it. At the beginning of this year, 1 in 10 loans was past due or in foreclosure.
According to the MBA Chief Economist Jay Brinkman, this foreclosure cycle is different due to the dramatic downturn in real estate prices.
Overall, 14.41% of all U.S. home loans were in foreclosure or at least 30 days past due at the end of the third quarter — 1 in 7 — and up from 13.16% in the second quarter.
As it has for some time, the group’s report on delinquencies blamed job losses, not tricky adjustable-rate loans, for causing most of the recent pain.
The mortgage group’s chief economist, Jay Brinkmann, said he expected the delinquencies to keep rising until the unemployment rate tops out in the first or second quarter of next year.
Normally, foreclosures would continue rising for two quarters past the peak in delinquencies, he said. However, given the extreme decline in home prices, Brinkmann predicted the foreclosure rate would continue to rise longer than usual past the peak in delinquencies.
Lastly, not all states are impacted the same – many of the nation’s foreclosures can be found in just 4 states:
Four Sun Belt states where the housing bubble inflated the most and exotic lending was most prevalent — California, Florida, Nevada and Arizona — accounted for 43% of the foreclosures started in the third quarter.
