Jerry LaRose Waterford Lakes, Avalon Park Fl. Realtor

About the author:

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://www.jerrysellsorlando.com/ for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011

Home foreclosures hit record high

Home foreclosures soared to an all-time high in the final three months of 2007 and probably will keep rising, evidence of homeowners' suffering and the economic danger from the meltdown.

The Mortgage Bankers Association said Thursday the proportion of all mortgages that slipped into foreclosure set a record, 0.83 percent, from October through December. The previous high, 0.78 percent, came in the July-through-September period.

"Clearly it's the worst it's been," At the same time, more homeowners fell behind on their monthly payments.

The delinquency rate - when payments are at least 30 days past due - for all mortgages climbed to 5.82 percent, the higher since 1985. The rate was 5.59 percent in the third quarter last year.

Homeowners with tarnished credit who have subprime adjustable-rate loans took the hardest hits. Foreclosures and late payments for these borrowers swelled to all-time highs, too, in the fourth quarter.

The portion of subprime adjustable-rate mortgages that entered the foreclosure process set a record, 5.29 percent. The previous high, 4.72 percent, came only three months earlier.

Late payments skyrocketed to a record, 20.02 percent, compared with the mark of 18.81 percent from July through September.

The association's quarterly snapshot of the mortgage market covers almost 46 million home loans.

"Mortgage credit quality is deteriorating fast," said Mike Larson, a real-estate analyst at Weiss Research.

Already there are fears the country is teetering on the edge of a recession, if not in one now.

The wave of foreclosures threatens to depress the housing market even more. The homes people are forced from add to the glut of unsold ones on the market. That means greater cutbacks by homebuilders, affecting economic activity.

Credit is harder to get, thwarting would-be buyers and aggravating problems in the housing market.

President Bush "understands that it's traumatizing for people who are at risk of losing their home," press secretary Dana Perino said. "There is a concern that there's a large amount of people who are facing foreclosure," she said. "We do not believe that the American taxpayer should be bailing out lenders or borrowers, but what we do believe is that we can help try to bring them together."

For many with subprime loans, initially low interest rates have adjusted much higher. With home values dragged down, many borrowers were left with mortgages that eclipsed the value of their homes.

"Declining home prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state," Americans' percentage of equity in their homes has fallen below 50 percent for the first time on record since 1945.

Homeowners' percentage of equity slipped to 49.6 percent in the second quarter of 2007 and reached 47.9 percent in the fourth quarter. It was the first time that homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

One idea promoted by the administration would allow some homeowners with certain subprime home loans to freeze their interest rate for five years.

Florida represent a disproportionate share of the new foreclosures. The state accounted for 30 percent of mortgages starting the foreclosure process.

About the author:

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://www.jerrysellsorlando.com/ for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011

(Copyright © 2008 By Jerry LaRose, P.A. All Rights Reserved.)

Don't wait too long to buy a home in today's market?

While today's market plays to your advantage as a buyer, with reduced housing costs and favorable interest rates, are you sitting by waiting?

When the market turns, today's bargains will be yesterday's missed opportunities.

While it is conceivable that home prices may drop further, it is likely that the decreased prices will be accompanied by increased financing costs due to rate cuts by the Fed. This means that any money saved on paying less for a house in a few months time will be offset by having to pay off your mortgage at a higher interest rate making "playing the waiting game" a waste of time (and very little fun).

This rate increase isn't just speculation. Just a couple of weeks ago, in early February, the fixed mortgage rate jumped a full half-percent, making it the fastest rate increase in 20 years.

The table below demonstrates how even as home prices may drop, monthly mortgage payments basically stay the same; due to increased interest rates:

Scenario 1:
Prices decrease by 5% and interest rates increase by 0.5%

Scenario 2:
Prices decrease by 10% and interest rates increase by 1.0%

Table: Kadlec, Dan. "Ignore the Headlines!" Time 25 February 2008

Why should you spend months in a situation that you want out of when you can begin your new lives in your new home today, with less interest?

Published: March 3, 2008

Within days, the federal department of Housing and Urban Development plans to unveil sweeping proposed changes to the American mortgage application process and real estate settlement system.

The rule changes are the end-product of HUD's five-year effort to streamline mortgage disclosures, promote comparison shopping by loan applicants, and to stamp out eleventh-hour surprises at closings -- where fees come in hundreds or thousands of dollars higher than initial estimates.

Realty Times obtained a point by point summary of the proposals in advance of their official release by HUD. The changes are designed to radically overhaul the current, much-criticized "Good Faith Estimates" (or GFE) disclosures and the "HUD-1" closing procedures.

Among the key changes in the 250-page HUD proposal:

1. Transformation of the GFE into a consumer education and shopping tool. The GFE will now explain in detail to an applicant how a particular loan works, how high monthly payments could rise, disclose any potential fees such as prepayment penalties, and provide information about escrow items.

2. New, strict limits on how much settlement charges can depart from the Good Faith Estimate stage -- within three days of the loan application -- to the HUD-1 closing stage. Total settlement charges could not be more than 10 percent above the initial estimates, absent tightly-defined "unforeseen circumstances" limited to acts of God, war and disasters, among others.

3. The Good Faith Estimate and the HUD-1 forms are aligned with each for easy comparison, with similar categories and graphic displays of loan origination charges and settlement cost items on both.

4. All fees paid to mortgage brokers by a lender in connection with the interest rate charged to the consumer must now be disclosed and listed on the Good Faith Estimate as a "credit to the borrower." Brokers are likely to oppose this strenuously, arguing that competing loan originators -- such as retail bank personnel -- are not required to disclose fees they receive in connection with higher note rates.

5. All settlement agents will now be required to "read aloud" a new "closing script" to mortgage borrowers. The script walks consumers through the various charges on the revised HUD-1, and whether and why they differ from earlier estimates. Finally, the script requires the settlement agent to explain the loan terms and mechanics as stated in the mortgage note itself.

The proposals will have a 60 day period for industry and consumer comment, after which HUD is expected to issue them in final form with a period of months set aside to allow lenders, title companies and attorneys to gear up for the new forms and procedures.

Though the national index figures reflect the illusion we most favor -- a steady and virtually guaranteed rise in home prices -- a very different picture emerges when you examine price indexes by state or metropolitan area. Here are some examples.

• In Houston, the first Texas city to fall in the oil bust, the home-price index peaked at 108.5 in 1983. It also bottomed early, hitting 81.5 in 1987. But it was a long bottom: The index didn't recover to its 1983 level until 1997. So recovery from the market top took a full 14 years.

• San Antonio peaked in 1984 at 109.7, didn't bottom out until it hit 82.5 in 1990 and didn't recover to its old high until 1995, a period of 11 years.

• Austin peaked in 1986 at 100.1, falling to 72.7 in 1991 and reaching recovery in 1994, about eight years.

• Dallas also peaked in 1986, at 110.1, bottomed at 94.3 in 1989 and regained its old peak in 1997, a period of 11 years.

The Texas template tells us we could be in for a 14% to 25% decline and an eight-year to 14-year wait for recovery. That's real history. It's not hyperventilation from the Chicken Little chorus.

You should also know that big-time housing comedowns aren't unique to Texas. Comedowns also hit other markets. Los Angeles peaked in 1990, bottomed in 1995 and wasn't fully recovered until 2000. Boston peaked in 1988, bottomed in 1992 and hit its recovery number in 1997.

Bottom line: Love your house for the shelter and peace it provides.

About the author:

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://www.jerrysellsorlando.com/ for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011

(Copyright © 2008 By Jerry LaRose, P.A. All Rights Reserved.)