Posted on 03/28/2006 9:40:42 PM PST by ex-Texan
Bankers, lenders remain bullish, but rate hikes may collapse house of cards
As the home-loan delinquencies rise nationwide, Nevada's numbers remain surprisingly strong. However, the pending interest-rate hikes by the Fed, the day-to-day fluctuations in oil prices, and the Silver State's high percentage of interest-only and adjustable-rate mortgages have left some lenders and analysts wondering if the bubble will burst.
"Where you will probably have problems is with the no-down-payment, 100-percent-financed ARM (type of loans), and interest rates go up," Nevada State Bank Senior Vice President Jeff Bargerhuff said. "It's kind of like the perfect storm of mortgage lending."
Nevada ranks second in the nation at 61.3 percent, behind only California (69 percent; in 2004, it was 46 percent), in the percentage of potentially negative-amortizing mortgages, including interest-only and products with ARM options, according to the Federal Deposit Insurance Corporation's most-recent numbers. Nationwide, 49.5 percent fall into that category. "ARMs tend to have a higher rate of foreclosure," said an official from the Mortgage Bankers Association. Realtor Linda Rheinberger shows a house in Summerlin to prospective buyers.
The year-end 2005 FDIC statistics show a sharp jump from the same time 12 months before, when Nevada's interest-only and adjustable-option loans were more in line with the rest of the country. The state had 39.5 percent of its mortgages in that category at the end of 2004, compared with 31.1 nationwide.
"It jumped for the nation and for Nevada. The reason is affordability," explained John Anderlik, the acting regional manager in the FDIC's San Francisco office. "With price appreciation in Nevada, it is getting more difficult for people to afford their homes. These products have become more attractive as affordability goes down."
Nevada has struggled with affordable housing issues as land prices skyrocketed in the past few years. Statewide, home prices rose 18 percent during 2005 and 37 percent in 2004, which enabled buyers to flip their properties if they couldn't afford to pay their mortgages, Anderlik said. "If they've been in them two or three years, they have pretty good price appreciation. That's the reason we have seen very few foreclosures."
A recent survey conducted by the Mortgage Bankers Association found that only 0.3 percent of the home mortgages in Nevada were in foreclosure as of the end of 2005, making it the 48th-lowest out of the 50 states, the District of Columbia and Puerto Rico. Nevada also showed one of the lowest home-loan delinquency rates in the country at 3 percent, according to the Mortgage Bankers' report. Past-due loans are defined as those 30 days or more behind in payments. Hurricane-stricken Louis-iana led the way in past-due loans with 21 percent, while Ohio ranked first in foreclosures with 3.2 percent.
EXCELLENT RATIO
Bankers like Nevada State Bank President Bill Martin are happy with the performance of their mortgage portfolio. "We have over 4,000 first mortgages, and only three are delinquent, and none over 90 days, which is when they usually trigger default," he said. "The economy is that good, but we also try to select very well. When somebody asks for a loan, we have to look at their ability to pay at a higher rate. With some of the others, there is no question there is a risk of default."
Wells Fargo has enjoyed a strong loan portfolio in Nevada as well, said Ed Delgado, the bank's vice president of default information. "I have not seen an increase, fourth quarter 2004 to fourth quarter 2005, in terms of Las Vegas." The bank would not release specific loan numbers, but the banker did say Wells Fargo tries to be proactive with its loans. "We might get involved in past-due loans before the 30-day point. We might call the consumer at 10 days or 15 days past due." At that point, the lender might be willing to adjust terms or make other arrangements to help the borrower.
Problems can show up when underwriting standards are relaxed, Martin added. "It just depends how tight the lender tied it and if they just didn't care because they wanted the loan. You have to realize people have car payments and other things to pay."
RISKY ARM LOANS
Some of the riskiest of loans -- the subprime ARM loans -- showed an increase in delinquencies at the end of 2005. The Mortgage Bankers reported 7 percent of such loans were 30 days or more past due in Nevada, compared with 5.2 percent the year before. The U.S. averaged a 12.6 percent delinquency rate in subprime ARM mortgages as of December 2005, which was up from 10.7 percent the year before. "They have shown some deterioration," Anderlik said of Nevada, "but they remain strong compared to the rest of the nation."
The last year was tough on mortgage holders. Nationwide, borrowers faced higher interest rates and fuel costs and mortgage delinquencies rose 4.7 overall, hitting its highest point since the middle of 2003.
"It's what we have been expecting," a Mortgage Bankers representative said. "There are so many new loans out there that haven't been seasoned. Interest rates may play a role in the future, but right now, it is just the economy -- job loss and low (home) appreciation."
Fortunately, those are two things that Nevada has not had to contend with in quite a while. "Nevada is anchored in the West Coast, where a lot of the home market is strong," said Wells Fargo's Delgado, who expects interest rates hikes to halt soon with inflation in check.
San Francisco-based RBC Capital markets analyst Joe Morford pointed to the Silver State's economy: "The healthy job market should keep loan losses to a minimum," he said.
One Source Realty broker and owner Linda Rheinberger believes there might be too much emphasis put on Nevada's interest-only loan numbers anyway. "It's just to maximize return," she said of the financing's popularity among investment buyers. "If you don't hold the properties that long, it doesn't make sense to put money down."
I heard mention on the radio a few times, but I have not gotten the whole tale. Is there a thread?
Good grief, that's hilarious! LOL
and you'll notice Farmer Brown cannot afford his mortgage
Them devil real-estaters made him sign a 3/27 ARM with a 543 prepay penalty and he done lost hope!
And, the truth is your book isn't even written yet. What type of bloviating, hyperventilating blow hard pimps his own unwritten, unpublished and totally unread book? Petronski!
You are also a Disinformation Specialist that is attacking me personally at every opportunity. You are fixated on the wrong target. I did not write the news report in question. Write the author if you are upset about it. What's a matter, booby? Are you worried about your buddies in the mortgage and real estate industries? [BBC Report About Crooked Brokers] Worried about all your speculator buddies out there flipping houses for hyper-inflated prices?
By the way, that site is NOT a blog .... It is a top rated News Directory The Drudge Report is not a blog. It is a News Directory. You cannot even get your facts right.
I'll be a first class pimp (like you) when (a) the book is completed, (b) has a web presence and (c) gets a link in almost every post I make.
As I told you before, you have no grasp of the subtleties of language. You don't understand the meaning of the word "pimp" as used in this context. You don't recognize the Shakespeare quote from Hamlet you've cited, or understand that "hoist" is already past tense in this case, thus making "hoisted" an incredibly stupid thing to say.
You don't understand what a personal attack is. Like poor Alec Baldwin himself, you cannot win an argument without resorting to name calling ("booby?"), so you cobble together the best you can.
And whenever I catch you in a lie, you dismiss it with advice that I calm down. Your propaganda is hysterical, and I like marking it as such: hysterical and laughable.
Oh, and that gurgling sound you hear is your credibility swirling around the bowl.
Don't bother begging me in private freep mail to stop posting to your threads. I don't answer private mail from fools
(yawn!!) aren't you done yet?
County median home price reaches $604,000
San Luis Obispo Tribune ^ | Fri, Mar. 24, 2006 | Jeanne Kinney
Posted on 03/24/2006 7:05:10 PM PST by Porterville
County median home price reaches $604,000 San Luis Obispo County’s median home price inched past the $600,000 mark last month, reaching $604,170, according to data released by the California Association of Realtors. This was a 2 percent gain from January and a 21.7 percent gain from February 2005, when the median price was $496,430.
February’s median was still lower than the record set in November 2005 of $605,160.
The county saw an 8.1 percent increase in the number of sales of single-family detached homes compared with February of last year. During the same period, the median price of an existing home statewide increased 13.7 percent as the number of sales decreased 15.5 percent.
"As expected, year-over-year sales continued to decline from the robust levels of a year ago," said Vince Malta, association president.
Statewide, there is an unsold inventory estimated at 6.7 months. In San Luis Obispo County, unsold inventory was 7.6 months in February. That compares with 5.6 months in February 2005.
The California Association of Realtors bases its figures and projections on the reported closed escrow sales of single-family detached homes (no condominiums) provided by member associations. — Jeanne Kinney
That was an excellent rant.
Thank you.
His antics are very rantworthy.
I don't choose to take your pathetic advice, nor have I chosen to do so the last eleventy-billion times you made this earth-shattering post.
ROFLMAO!!!
You rant like I tirade.
People in California typically put off children until their early 30's and both partners are professionals. They also invest like mad. That is how we do it in this state.
I grew up in California and lived there for over 40 years.
"Statewide, home prices rose 18 percent during 2005 and 37 percent in 2004, which enabled buyers to flip their properties if they couldn't afford to pay their mortgages, Anderlik said. "If they've been in them two or three years, they have pretty good price appreciation. That's the reason we have seen very few foreclosures."
A recent survey conducted by the Mortgage Bankers Association found that only 0.3 percent of the home mortgages in Nevada were in foreclosure as of the end of 2005, making it the 48th-lowest out of the 50 states, the District of Columbia and Puerto Rico. Nevada also showed one of the lowest home-loan delinquency rates in the country at 3 percent, according to the Mortgage Bankers' report."
Those statistics mean Nevada homeowners have enjoyed high appreciation, have substantial equity, and are NOT letting their loans go delinquent.
This proves the OPPOSITE case, from that posited by our erstwhile poster.
Sure, real estate across the nation has slowed, after years of big price gains.
The national homeownership percent is at an all time high.
And as has always been so, a few homeowners will get in trouble and let the home go all the way to foreclosure.
That will be the exception, because well before foreclosure, strapped owners will SELL, REFINANCE, etc. because they have EQUITY to protect or withdraw.
So if somebody is waiting for foreclosures, good luck. First off, you have to have ALL CASH in my area. And it is reported a few really big players go to the courthouse with big cashiers checks, to buy every property offered.
If you have never bought foreclosures, investigate the facts before getting hopes too high.
Another thing I have observed over 18 years as a RE broker: the banks take the properties back themselves, and market them for going market prices.
Investigate the facts.
You are a Disinformation Artist chasing own pathetic fallacies around in circles.
Citations from Wikipedia. That's !
By the way, Petronski, you are acting in violation of certain sections of U.S. Copyright law [ © ]
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