Howard Sumner

MARKET UP DATE AT GLANCE COMMENTARY THRU JULY 31ST 2009

I'LL BEGIN THIS MONTH WITH THE SAME COMMENT FROM LAST MONTH REVIEW MEASURED OPTIMISM SEEMS TO BE THE BEST WAY TO DESCRIBE THE WAY THE REAL ESTATE MARKET IS BEHAVING IN 2009.

WHEN YOU LOOK AT THE NUMBERS THE THING that JUMPS OUT AT YOU IS A 25% INCREASE IN THE NUMBER OF PENDING SALES YEAR TO YEAR (DOWN FROM A 41%INCREASE LAST MONTH), WHICH IF YOU WANTED, YOU COULD SHOUT ABOUT THE INCREASE, YET WHEN YOU NOTE THAT LAST YEAR AT THIS TIME THE BUYERS WITHDREW FROM THE MARKET PLACE AND CAUSED A PLUNGE IN PENDING SALES, IT TEMPERS YOUR ENTHUSIASM. I BELIEVE MEASURED OPTIMISM IS THE BEST DESCRIPTOR.

THIS BRINGS UP A GOOD POINT IN THE OVERALL NUMBERS WE WILL EXPERIENCE THIS FALL AND THE REST OF THE YEAR. THE MARKET FELL FROM THIS POINT FORWARD FOR THE REMAINDER OF 2008 THIS YEAR APPEARS TO HAVE STABILIZED WITH INVENTORY AND PENDING SALES REMAINING IN A SOLID RELATIONSHIP TO EACH OTHER. THAT FACT IS WHAT DRIVES THE MEASURE OPTIMISM REMARK.

the most active SEGMENT of the market HAS REMAINED between 120k to 180k(PRIME FIRST TIME BUYER PRICE RANGE), that price range share of the market 22% by unit volume in 2008, INCREASED TO 29% by unit VOLUME AT THE END TO JUNE 2009. THE UPPER RANGE SEGMENTS 300K TO 500K HAS SEEN AN INCREASE IN PENDING SALES INDICATING A MOVE UP MARKET TREND. WE WILL WATCH CLOSELY AS THE PENDING SALES SHOW UP IN THE CLOSED SIDE OF THE EQUATION TO SEE HOW THE MOVE UP MARKET PLAYS OUT FOR THE REST OF THE YEAR.

the question ABOUT FIRST TIME BUYERS MOVES TO NOVEMBER 30^TH WHEN THE FIRST TIME BUYER TAX CREDIT EXPIRES, HOW MANY FIRST TIME BUYERS WILL CONTINUE TO COME INTO THE MARKET AFTER the tax credit EXPIRES? IF thE CREDIT MARKETS AND INTERESTS RATES CONTINUE TO BE KIND TO FIRST TIME BUYERS, WE SHOULD CONTINUE TO SEE STABILIZATION IN THE MARKET, YET I SUSPECT WE WILL SOME SORT OF DECLINE IN SALES FOR A TIME MAYBE into the SECOND QUARTER OF THE 2010.

THE inventory levels have CONTINUED TO moderate A DECREASE IN PROPERTIES FOR SALE OF 9% FROM a year ago, AS COMPARED TO 41% HIGHER IN JANUARY AND 9% HIGHER IN MARCH A YEAR AGO, THE decrease from a month ago is AFFECTED by the increase in pending SALES AND STABLE INVENTORY. AS WE PROGRESS INTO FALL WE WILL SEE A GREATER PERCENTAGE OF ACTUAL DECLINES FROM A YEAR AGO BECAUSE A YEAR AGO INVENTORY LEVELS STARTED MOVING UP SUBSTANTIALLY.

THE PENDING SALES LEVELS CONTINUE TO moVE HIGHER, AN INCREASE OF 25% FROM a year ago, AS COMPARED TO 37% LOWER IN JANUARY AND 12% LOWER IN MARCH. THE CONTINUED INcrease from a YEAR ago is AFFECTED by the increase in FIRST TIME HOME BUYERS AND MOVE UP TRAFFIC. THIS MONTH AS IN COMING TIME PERIODS WE WILL SEE INCREASES FROM A YEAR AGO, BECAUSE A YEAR AGO PENDING SALES LEVELS WENT DOWN SUBSTANTIALLY.

CONSTRUCTION numbers in JULY: single family permits, IN TOTAL still show A DECLINE FROM LAST year, 29% LOWER. to put it in PERSPECTIVE the first 7 months of the year are as follows 1. 2009 126 single family permits, 2. 2008 178 Single family permits, 3. 2007 298 Single family permits. WE CONTINUE A TREND IN new CONSTRUCTION market THAT PERMITS IN FOR THE MONTH ARE AT OR HIGHER THAN THE YEAR BEFORE AND JULY DID ADMIRABLY WELL AGAIN 20 PERMITS 2009 AND 18 IN 2008. AS WE MOVE FORWARD THE TREND WILL MOST PROBABLY CONTINUE DUE THE STEEP DECLINE IN PERMITS LAST YEAR, AGAIN THIS SHOWS A MARKET THAT IS STABILIZING AND FOUND ITS FLOOR of activity.

the home sales prices below SHOW a slight price decline year to year YELLOWSTONE county a 4% IN AVERAGE AND 3% IN MEDIAN SALES PRICE. (A SLIGHT IMPROVEMENT FROM LAST MONTHS COMPARISON). I WOULD SAY WHEN THE SMALLER SIZE OF HOME SELLING IS FACTORED IN THE DECLINE YEAR TO YEAR WOULD BE ABOUT 3% WITH HOMES IN POOR CONDITION OR LOCATION EXPERIENCING GREATER THAN THAT.

THE POSITIVE forces in the MARKET REMAIN THE SAME, the STRENGTH of the below $200,000, no SIGNIFICANT FORECLOSURES of HOMES AND HISTORICALLY LOW INTEREST RATES 5.125% FOR A 30YEAR LOAN AND STRONG EMPLOYMENT NUMBERS. the importance of A LOW FORECLOSURE RATE CAN not be OVERSTATED. when you look at other market places AND THE case /shiller index declines, the driving force in downward price pressure is FORECLOSED properties sold by lenders.

unemployment in YELLOWSTONE COUNTY IN JUNE WAS 5%, NOT SEASONALLY ADJUSTED, COMPARED to the state average of 6.4% , GALLATIN VALLEY OF 6.3% MISSOULA OF 6%, THE FLAT HEAD OF 9.6 % and the NATIONAL of 9.7% giving people who want to own their home a job and A BELIEF that they will be employed, (A SIDE NOTE TO YELLOWSTONE COUNTY ACTUAL NUMBER OF WORKING PEOPLE IN JUNE WAS 80,202 PRELIMINARY) along WITH low INTEREST, approximately 5.125% on a 30 year fixed rate, and you have a good case for buying a home if your intention is staying put three plus years.

IF YOU NEED AN ADDITIONAL INFORMATION PLEASE CALL OR E-MAIL

The 10 states with the lowest foreclosure starts are: North Dakota, South Dakota, Wyoming, Vermont, Alaska, Iowa, Montana, Pennsylvania, North Carolina and Kansas.

First payment default rates have declined significantly as a result of the dramatic improvement in the credit quality of borrowers. In early 2006, 40% of loans were going to borrowers with credit scores less than 680, compared to slightly more than 10% of loans today are going to borrowers with credit scores less than 680. Almost no borrowers with credit scores less than 620 are being awarded loans.

Improved credit scores have improved overall loan vintage quality, both for FHA and non-government loan products. Origination quality appears to be the result of more than just FICO and LTV - presumably, more attention is being focused on income and documentation.

Success rates for loss mitigation-related modifications are still hovering in the 30-40% range. Rate/term loan modifications on 90+-days delinquent loans are the most common. Loan modifications involving a reduction in the unpaid principal balance (UPB) experience a higher success rate.

The gap between loans improving and loans deteriorating spread to the widest levels since November 2008, with a deterioration rate (loans deteriorating vs. improving) at 277%.

The national average for total non-current loans, which includes delinquencies and foreclosures, rose 5.5% over last month to 11.27%. The year-over-year increase totaled 58%.

Foreclosure inventories continue to climb to new highs, as reflected in May's foreclosure rate of 2.79%. The month-over-month increase in foreclosure inventories was 6.2%; the year-over-year increase totaled 88.3%.

Total mortgage delinquencies rose slightly in May to 8.49% over April's 8.10%. This represents a month-over-month increase of 5.0%, while the year-over-year increase is 50%. The average increase from April to May for the prior four years was 1.1%.

Howard Sumner

A number of things are true when you look at the permit numbers for the last 50 years. There are always more permits in June than in March and only once, in 1990, were permits substantially less in September than June. So even though the numbers are at historic lows, at least in the last 50 years, permits are following the same pattern sooooooooooo I will go out on limb and predict permits will be higher in September so we can write the headline now!!!

Building permits rise for six straight months. Coming as an government economic "good" news announcement soon

If You fallen 10 stories and hit the ground are you in better shape or worse shape because you have stopped falling and hit the ground?

Howard Sumner

Report: Foreclosure Inventory Hits Record Level in June

By PAUL JACKSON
July 29, 2009 8:45 AM CST

The nation's housing markets are clearly developing a bi-polar disorder all their own: fresh evidence of a possible recovery is consistently tempered with equally fresh evidence of continuing trouble ahead. A new report released Wednesday morning by Jacksonville-based Lender Processing Services, Inc. presents the latest mixed bag of results, with fresh evidence that housing might be turning the corner.

Put the emphasis on might.

In particular, roll rates - which measure the volume of loans moving from good to bad, and from bad to worse - improved during June, with new delinquencies dropping to their second lowest level in the last year, the firm said. The percentage of delinquent loans moving from bad to worse declined across all product types, as well. Which is at least some good news for a market that has been in dire need of something positive for the better part of two years running.

But for the nascent improvements now being seen, there remain numerous hurdles that suggest the nation's housing market isn't really out of the woods just yet. In particular, foreclosures soared to new record highs in June, LPS found: The national foreclosure inventory rate during June was 2.86%, up 2.5% from one month earlier and a huge increase of 86.1% from year ago levels. Total delinquencies rose as well, to 8.58%, up 44% from one year earlier.

Reflecting the mortgage crisis' evolution away from all things subprime, prime jumbo mortgages continue to fare the worst, comparatively: foreclosures among good-credit borrowers with high loan balances are up a whopping 580% since Jan. 2008, LPS said.

And it's not just the overall inventory of foreclosures that is increasing, either: New foreclosures are on the rise, as well. "Foreclosure starts in June increased 1.6 percent to the second highest level on record, while reinstatement and recidivism rates are not yet showing signs of improvement," LPS said in a statement. Backing this sort of logic up, July ABX remittance data released Tuesday found that modification rates had actually declined slightly during the month among most of the tradeable indexes. (The ABX is a synthetic tradeable index referencing a basket of 20 subprime mortgage-backed securities.)

In other words: fewer borrowers appear to be getting in trouble with their mortgages, and those that are in trouble are moving into foreclosure at a decreased rate. Nonetheless, the number of foreclosures is still growing as servicers begin to work through a backlog of troubled borrowers-which shouldn't surprise, as HousingWire's key sources have long suggested such a ramp-up in foreclosure activity would be the outcome of various moratoria put into place earlier this year.

So, is housing in for a recovery in the months ahead? These days, the answer depends upon where you look.

Paul Jackson is the editor-in-chief of the HousingWire.com news service and HousingWire Magazine

As an important reminder, the new Regulation Z rules take places starting today. 7/30/2009

Regulation Z requires creditors to give consumers transaction-specific cost disclosures shortly after application for closed-end loans secured by a consumer's principal dwelling. The disclosures must be provided before the consumer pays any fee, other than a fee for obtaining the consumer's credit history.

Summary of new rules and changes:

1. The lender must give the early Truth in Lending Disclosure by delivering or placing it in the mail not later than the third business day after the Bank receives the consumer's written application.
2. The bank may not charge a fee, other than a fee for obtaining the consumer's credit history, before the consumer has received the Truth in Lending.
3. The Bank must deliver or place the Truth in Lending in the mail not later than the seventh business day before consummation (closing) of the transaction.
4. If the annual percentage rate in the Truth in Lending becomes inaccurate, the Bank must provide corrected disclosure of the affected terms on an updated Truth in Lending.
5. The consumer must received the corrected TIL no later than three business days before consummation.
6. Now applies to Second Homes, Investment Properties also, not just Principal Dwelling.

The changes to Regulation Z represent a substantial departure from the current requirements. Previously, the lender provided the initial disclosures to the borrower at application and provided updated disclosures at closing. Now, the lender is required to deliver the disclosures and wait until the borrowers have time to review and understand the information contained in them.

Definition and rules of Business Day

For purposes of delivering the early Truth in Lending, it means a day on which the Bank's offices are open to the public for carrying on substantially all of it's business functions. A business day means all calendar days except Sundays and the legal public holidays, such as New Year's Day, the Birthday of Martin Luther King Jr., Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day. I am trying to get clarification on how US Bank will be classifying Saturday's? Each institution may be having different interpretations on this rule due to the fact that most of them are open only for deposit functions only?

Tip: When one of the holidays falls on a Saturday (July 4, for example), federal offices and other entities might observe the holiday on the preceding Friday (July 3) or the following Monday (July 6). In those cases the observed holiday (either July 3 or July 6) is a business day and July 4 is the holiday. If we received an application on Friday July 3, and mail the Truth in Lending that same day, we cannot collect an appraisal fee or conduct a loan closing on or before Monday July 13. If consumer was with lender and handed the TIL or emailed and had certification the consumer received it and reviewed it, then the earliest day would be July 9.

If the annual percentage rate varies from the initial disclosure by more than 1/8 of 1 percentage point, the new disclosure rules take place.

What can change TIL's?

• Change in closing dates, the amount of interest collected from date of closing to first of the month.
• Inspection fees that where incurred from appraisal repairs.
• Cost of appraisals, in town vs. out of town.
• Lender giving borrower a "Lender Credit", break on origination fee, waive appraisal fee, etc. to help with cost of loan to close.
• Expired locks and repricing of rate.