Melissa Bayles

Mortgage lending appears to be loosening. At least for now.

In its quarterly survey of member banks, the Federal Reserve asks senior loan officers around the country whether their "prime" residential mortgage guidelines had tightened within the last 3 months.

A prime borrower is one with a well-documented credit history, high credit scores, and a low debt-to-income ratio.

Of the 54 responding banks, just 2 said its guidelines had tightened during the period October-December 2010. That's less than 4 percent. And, by comparison, 95 percent of banks said guidelines remained "basically unchanged".

The remaining banks reported a loosening.

It's a positive sign for the housing market, and for home buyers nationwide. If banks have stopped raising the hurdles of home loan approval, in theory, more would-be buyers will be approved.

It's much tougher to get a home loan versus 5 years ago. Delinquencies and defaults have changed how banks review loan applications. Today's underwriters are more conservative with respect to household income, total assets and overall credit scores.

Even as compared to January 2010, approval standards are higher :

• Minimum credit score requirements are higher
• Downpayment/equity requirements are larger
• Maximum allowable debt-to-income ratios have been lowered

Although mortgage rates remain low, qualification standards do not. Based on last quarter's banking survey, however, mortgage applicants in California may find approvals easier to come by soon. Low rates don't matter, after all, if you're not eligible to get them.

The housing market is strong and lending looks to be loosening. It should help fuel the demand for homes in 2011, which will push supplies down and lead prices up. For homeowners that qualify, therefore, the best time to purchase a home may be sometime this spring.

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Take Care, Melissa Bayles (714) 720-2555 & "Chip" Richard Esajian (714) 272-5369 The Real Estate Geeks

Foreclosure filings rose 4 percent nationwide last month versus June, according to foreclosure-tracking firm RealtyTrac.com. For the 17th straight month, total filings topped 300,000.

A foreclosure filing is defined as default notice, scheduled auction, or bank repossession.

As with most months, just a handful of states dominated foreclosure activity nationwide.

• California : 14.9 percent of all activity
• Florida : 11.6 percent of all activity
• Arizona : 6.4 percent of all activity
• Michigan : 6.2 percent of all activity
• Georgia : 6.1 percent of all activity
• Texas : 4.9 percent of all activity

Together, these 6 states represent just 30 percent of the overall U.S. population.

The other 44 states (and Washington D.C.) were home to the remaining 49.0%.

Despite this imbalance, though, in all markets, foreclosures and REO are making a profound impact on pricing and product. "Distressed" homes now represent 32 percent of the overall resale market nationwide, according to the National Association of Realtors®.

Buying a foreclosed home can make for a terrific "deal", but buying in the REO market is decidedly different from buying a non-foreclosed property.

As 3 examples:

1. Buying bank-owned homes can take 120 days to close.
2. Foreclosures aren't always listed for sale publicly. Some inventory is privately-held.
3. Bank-owned homes are often sold "as is". There may be defects that render the homes mortgage-ineligible.

If you have an interest in buying REO, consider talking with a real estate agent first. Even the negotiation process is different as compared to a non-distressed sale. It helps to have an experienced professional representing your interests.

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Take Care, Melissa Bayles (714) 720-2555 & "Chip" Richard Esajian (714) 272-5369 The Real Estate Geeks

All day, every day, conforming and FHA mortgage rates in California are in flux. Rates move in response to hundreds of factors which exact varying levels of influence.

Among the biggest influences on mortgage rates is inflation. When inflation is unexpectedly high, mortgage rates tend to rise quickly. Conversely, when inflation is unexpectedly low, rates tend to fall quickly.

But what is inflation?

By definition, inflation is when a currency loses its value; when what used to cost $1.00 now costs $1.10.

As consumers, we recognize inflation by the items we buy on a daily basis becoming more expensive. However, it's not that goods are more expensive -- it's that the dollars we're using to buy them have become worth less.

With respect to mortgage rates, this is a big deal because mortgage rates are directly related to the price of a special type of bond called a mortgage-backed bond.

On Wall Street, mortgage-backed bonds are priced, bought, and sold in U.S. dollars so as inflation renders those dollars less valuable, so it does to mortgage-backed bonds as well. It's a chain reaction by which mortgage bonds lose value, leading investors sell them, causing bond prices to fall on the excess supply.

And, because mortgage rates move opposite of bond prices, as inflation takes hold, mortgage rates rise.

Lately, inflation has been exceptionally low. The Federal Reserve acknowledged as much in its last statement to the markets, and available data backs that position. This, after predictions that inflation would be "runaway" in 2010.

The Cost of Living is up just modestly this year and it's helping mortgage rates stay low. And, so long as it lasts, the cost of owning a home will remain relatively inexpensive.

Thanks for reading our blog - Don't forget to subscribe to our site its super easy to do and it's FREE! Just visit our site at http:www.TheRealEstateGeeksTv.com and fill in your email address in the empty subscribe box found at the top right hand side of your screen then just click subscribe. Till Next Time

Take Care, Melissa Bayles (714) 720-2555 & "Chip" Richard Esajian (714) 272-5369 The Real Estate Geeks

The economy's improving but lending standards are not. Nationally, banks are making mortgage approvals harder to come by.

Underwriting guidelines are tightening.

The data comes from the Federal Reserve's quarterly survey to its member banks. The Fed asks senior bank loan officers around the country to report on "prime" residential mortgage guidelines over the most recent 3 months and whether they've tightened.

For the period October-December 2009:

• Roughly 1 in 4 banks said guidelines tightened
• Roughly 3 in 4 banks said guidelines were "basically unchanged"

Just 2 of 53 banks said its guidelines had loosened.

Combine the Fed's survey with recent underwriting updates from the FHA and generally tougher standards for conventional loans and it's clear that lenders are much more cautious about their loans than they were, say, in 2007.

Today's home buyers and would-be refinancers face a bevy of new borrowing hurdles including:

• Higher minimum FICO scores
• Larger downpayment requirements for purchases
• Larger equity positions for refinances
• Lower debt-to-income ratios

So, if you're on the fence about whether now is a good time to buy a home, or make that refi, consider acting sooner rather than later. It doesn't necessarily matter that mortgage rates are low, or that there's an up-to-$8,000 home purchase tax credit for households that qualify. With each passing quarter, fewer and fewer applicants are eligible to take advantage.