Paul Bozek

I was curious to see what people have out there when it comes to hard money. I am interested to see what LTV private money lenders will finance using After Repair Value. I heard that there are lenders out there that will actually let you do 100% purchase off sales price based on the ARV. The #s have to work of course. I am interested to see what you guys have out there! Please Post!

I think these numbers were expected. On a positive side, we should continue to see activity from first time home buyers and investors trying to take advantage of the more affordable market.

Loans in foreclosure have doubled over the past year, while delinquency rates continue to soar.

A record 1.249 million homes were in foreclosure during the second quarter of 2008, according to a report released Friday by the Mortgage Bankers Association.

And new foreclosure proceedings were started on about 490,000 of the 45 million home mortgages serviced by MBA members. That's up 9% from the 448,000 starts recorded in the previous quarter.

Mortgage delinquencies continued their grim rise during the three months ended June 30, with 2.9 million homeowners falling behind on their loan payments, apart from those already in foreclosure. Compared with a year ago, delinquencies are up more than 25%, while loans in foreclosure have nearly doubled. Both levels were the highest ever recorded by the survey.

"The national foreclosure numbers continue to be driven by the hardest hit states continuing to get much worse," said Jay Brinkmann, MBA's Chief Economist. "The increases in foreclosures in California and Florida overwhelmed improvements in states like Texas, Massachusetts and Maryland."

California and Florida accounted for 39% of all foreclosures started during the quarter. Those two states as well as six others - Nevada, Arizona, Michigan, Rhode Island, Indiana, and Ohio - all had foreclosure start rates higher than the national average.

Subprime still sinking

Once again, subprime adjustable rate mortgages (ARMs) weighed heavily on the down side. Subprime ARMs, which represent only 6% of all loans outstanding, accounted for 36% of all foreclosures started during the quarter. In other words, 6.63% of all subprime ARMs went into foreclosure during the period - nearly 20 times the rate for fixed rate prime mortgages.

"Even if subprime stabilizes," said Mike Larson, a real estate analyst with Weiss Research, "I would anticipate that prime loans would start to play catch-up. We're not just confronting a credit crisis any more, we're dealing with broad economic problems that are contributing to delinquency rates."

On the bright side, Larson says the deterioration in home prices has slowed in the last couple of months, which could help delinquencies level off as well.

"They'll continue to worsen," he said, "but not at the pace of the last year."

Nevertheless, Jay Brinkmann warned that it would be fruitless to try an call a bottom in this market any time soon.

The trend has been steadily pointing towards mortgage brokers being fazed out. I think many major companies will follow suit and reduce retail and completely shut down wholesale divisions. Hopefully in the process we don't hit more of a slump due to transition in lending practices.

The lender says it plans to shrink its mortgage lending business because of the weak housing market.

Lender GMAC Financial Services said Wednesday it will close all of its 200 retail offices and lay off about 5,000 employees as part of plan to reduce its mortgage lending and servicing because of the housing market downturn.

The majority of the layoffs are slated for GMAC's mortgage lending division, Residential Capital LLC, known as ResCap, and will reduce work force at the unit by 60%, the company said.

In the first half of the year, ResCap's U.S. mortgage loan production was valued at about $35.7 billion, down nearly 39% from the same period in 2007.

"While these actions are extremely difficult, they are necessary to position ResCap to withstand this challenging environment," Tom Marano, ResCap's chairman and CEO, said in a statement. "Conditions in the mortgage and credit markets have not abated and, therefore, we need to respond aggressively by further reducing both operating costs and business risk."

Some 3,000 employees may get their pink slips this month. The rest are expected to lose their jobs by the end of the year, the company said.

ResCap is also the latest in a long list of lenders that have stopped using external, wholesale brokers to originate loans. Wachovia Corp. (WB, Fortune 500) exited the wholesale mortgage lending business in July, for example, while rival Bank of America Corp. (BAC, Fortune 500) got out of the business several months ago.

Richfield, Minn.-based ResCap will continue lending through brands such as Ditech or GMAC Mortgage Direct, which customers can reach online or through call centers, said spokeswoman Jeannine Bruin.

"We're not going to have a retail presence where customers walk in the door," Bruin said. (But) "we are very much still originating loans and servicing the customer."

To cover severance costs, ResCap will take a charge of $90 million to $120 million against earnings.

In July, GMAC said ResCap's second-quarter losses widened to $1.86 billion from $254 million in the prior-year period. To try to reverse the trend, ResCap took steps to cut back the size and risk of its balance sheet, and boosted loan loss provisions.

Like many lenders have done since the credit market dried up, ResCap has focused on originating home loans that it can resell to government-sponsored mortgage companies Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).

ResCap has also virtually abandoned the market for subprime loans. In the first half of this year, ResCap made just 13 subprime loans, compared with nearly 26,000 in the same period a year earlier.

At the end of June, 14.6% of ResCap's U.S. home loans were at least 60 days past due. That's up slightly from the close of the first quarter, but down from 15.5% on June 30, 2007.

New York-based GMAC is controlled by Cerberus Capital Management, but automaker General Motors Corp (GM, Fortune 500). still holds a 49% stake in the business.

I wanted to followup on my last post about CalHFA. I have attached a link to the lending matrix for secondary financing.

http://www.calhfa.ca.gov/homeownership/insurance/ug-sub_matrix.pdf

Program Eligibility Information

Borrower Requirements

In order to qualify for a CalHFA loan, certain eligibility requirements must be met. They are: Be a first-time homebuyer, which is defined as a person(s) who has not had an ownership interest in their primary residence during the previous three years. (Requirement is waived if property is located in a Federally designated "Targeted Area*". To find the boundaries of an eligible Targeted Area go to http://nkca.ucla.edu/Master.cfm?Content=Map&ZoomTo=tract. Select County, then enter the six-digit census tract number. A map outlining the boundary streets will appear. (Note: do not enter the decimal point and use leading zeroes, e.g. Alameda- 407500; Los Angeles- 570603 San Diego- 010012; Tulare 002202)) Have an annual household/family income that does not exceed income limits for the family size and county in which the home is located. Have enough money to cover the required down payment (usually 3% to 5%) plus closing costs. Some restrictions apply to gifts. To help with this requirement, CalHFA offers down payment assistance programs and programs to help with closing costs. Plus, these programs can be combined with the first mortgage programs. A list of these and other programs can be found at www.calhfa.ca.gov/homeownership/programs. Property must be owner-occupied for the term of the loan or until sold. Meet credit, income and loan requirements of the CalHFA lender and the mortgage insurer. Be a citizen or other national of the United States or a qualified alien as defined by the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) *Targeted Areas: Census tracts in which 70% or more of the families have income, which is 80% or less of the statewide median family income.

I don't know how many of you noticed the changes to CalHFA lately but since the dissolution of Nehemiah and other seller sponsored DAPs, CalHFA tightened their guidelines a bit. It seems now if you have ltv of less then 95% to put down, you will need a 620. If your LTV is going to be higher than 95%, then you will need a 680 credit score.

Also, if you have DU approval, your max DTI is 55% regardless if you have an approval at higher ratio. Manual underwrites limit you to a max DTI of 45%.

I would recommend checking out the pricing matrix yoruself to make sure your borrower qualifies. Also, from my understanding the amount of available funds is NOT unlimited.

Good luck!