Mark Phillips

Economists call rising delinquencies and foreclosures among prime borrowers the third wave foreclosures. The first two waves were do to housing speculation and subprime borrowers -- borrowers that had taken out some sort of short term, stated income, or adjustable rate mortgage with lower credit scores.

In the housing market, a lot of prime mortgages are becoming subprime as a new wave of foreclosures begins to hit. Mainstream homeowners -- those previously "safe" borrowers with sound credit who have conservative, fixed rate mortgages are getting into trouble at an alarming rate.

In the first quarter, the percentage of these borrowers who were behind on their mortgages or in foreclosure had doubled from a year earlier, to nearly 6%. For the first time in the housing crisis, these homeowners accounted for the largest share of new foreclosures.

With the current unemployment rates nationwide rising and California leading the way, it only stands to reason that we better know how to surf or swim, the wave is coming.

I know many people are confused about the new Fannie Mae and Freddie Mac Home Valuation Code of Conduct. This is the worst measure that I have seen since I have been in the industry. This is not a regulator measure it is only the Fannie and Freddie's response to a legal threat from Mario Cuomo in response to unethical business dealings on the part of big banks (WAMU). The effect of this measure will be the rising cost of lending for borrowers and longer turn times.

The code only applies to Fannie and Freddie loans. FHA loans do not apply to the code, though some of the lenders I have talked with are going to apply the code to all loans. Only a few lenders have their policies in place. Some lenders are requiring that all appraisals are ordered thru their website. While others don't know what to do about this.

The code basically says that anyone involved in the transaction can not directly order or have contact with the appraiser. This will cause many unforeseen problems in all of our future deals.

I believe we will see many changes in the code once Fannie and Freddie realize what a mess they have created. There will be lot of problems after implementation (May 1st, 2009) and it will undoubtedly increases overall costs of borrowing.

Stay tuned I am sure there will be more changes in the future.

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Sacramento police are looking for leads in a high-profile caper: The case of Lance Armstrong's missing $10,000-plus time trial bike.

Early in the morning of Sunday Feb. 15th, officials from Armstrong's Team Astana and Armstrong himself reported on their twitter feeds that the one-of-a-kind black and gold bike that he used Saturday in the Sacramento prologue and three other teammates' bikes were stolen from a team truck.

"Bad way to start the morning ... Bikes stolen from the truck last night," reads the Team Astana feed.

As the police began their investigation, the race rolled on. It started at noon in Davis, and was to end 108 miles later in Santa Rosa. The race has most of the greatest riders in the world, but Armstrong, a seven time Tour de France winner just returning to competitive cycling, is the largest star that people braved the weather to see.

The bikes were stolen from an unmarked moving truck parked behind the Residence Inn on L Street in Sacramento between 10 p.m. Saturday and 6:45 a.m. Sunday morning when the theft was discovered.

Armstrong, posted a picture of the bike on his twitter feed writing: "There is only one like it in the world therefore hard to pawn it off."

The police were contacting local pawn shops just in case.

Welcome to Northern California Mr. Armstrong, unfortunately for you and the reputation of our region you will be leaving a little lighter.

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I recently emailed Congressman George Miller 7th District to voice my opinion on bringing back seller paid down payment assistance programs. This was his response on Feb. 3rd, 2009

Dear Mr. Phillips:

Thank you for contacting me regarding the recent changes to the Federal Housing Authority's (FHA) Downpayment Assistance Programs.

Downpayment Assistance Programs are intended to assist families who are unable to make a downpayment obligation themselves when purchasing a home. These programs have helped many people start on the path to homeownership and have helped millions of families over the years.

As you probably understand, Downpayment Assistance Programs (DPA) have not been eliminated by Congress. However, some changes were made to the Downpayment assistance rules when Congress passed the Housing and Economic Recovery Act of 2008. DPA programs work in conjunction with the Federal Housing Authority (FHA) insured home loans. If you are using an FHA insured home loan as a buyer, you are required to contribute a small amount of the downpayment amount - 3.5% of the total purchase price. Contributions from sellers can still help buyers with their down payment, just not that first 3.5%.

I understand that you have concerns about some of these recent changes to the DPA program. HR 6694, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008, would make some exceptions to the rules above, including allowing some buyers to accept downpayment contributions from the seller. This legislation recently was considered, and passed, by the Financial Services Committee and is now awaiting consideration by the full House of Representatives. It is unlikely, however, that there will be sufficient time to consider this bill before the end of the current legislative session.

Although the current legislative session will soon come to an end, it is possible the new Congress will look at this issue again next year. I will certainly consider your views should the issue come before the full House for consideration.

Sincerely,

GEORGE MILLER

Member Of Congress, 7^th District

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announces changes of multiple mortgages to the same borrower.

Calling all investors. For loans delivered after March 1, 2009 FNMA is relaxing the 4 properties maximum rule, to a total for ten properties.

The guidelines will be that a 720 fico score is required and the combined loan to value will be 70 to 75 percent, depending on the type of property. They are also changing the total house costs from principal, interest, taxes and insurance (PITI) to principal, interest, taxes, insurance, plus home owners association dues, special assessments, ect. (PITIA)

Is this the thing that the market has been waiting for? Increasing the number of properties for qualified investors is a big step in the right direction. Fannie Mae has finally recognized the realities of the market place. By allowing qualified investors to take advantage of the low interest rates, it can only help to locate a bottom of the market. This is a bold move by FNMA to open up the restrictive lending practices we have seen over the last couple of years. Lets hope this will lead to a few more changes in the future.

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