Special Message for long time Harris Real Estate University Students:

2010 WILL be the year of the short sale. As many of you know, because you are listing and selling short sale for years now. You are ready for what is coming in 2010.

Now, build your listing inventory. Do this, double, triple…maybe even quadruple the number of listings you have.

Go into spring 2010 will dozens (in not hundreds) of listings. Everything is going to make 2010 the year of the short sale. Did you miss the Emergency Short Sales Secrets event? Listen to this 90 minute Agent Short Sale Secrets teleconference replay now.

Here is an article from Diana Olick on CNBC.

Home prices may be stabilizing in some areas in the nation, but the damage has already been done in the housing markets that saw the biggest boom and in turn the biggest bust.

Home buying in these markets reached a frenzied pace during the middle of this decade, and that means that a good portion of buyers purchased homes at the top of the market. No surprise that they have now sunk deepest underwater on their mortgages.

A new survey from Zillow.com shows that even in those markets where investor competition has returned and prices on the low end are beginning to stabilize, homeowners still owe far more on their mortgages than their homes are currently worth.

What does this mean to agents? Simple…knowing how to list and sell short sales in now a mandatory skill. For years (and years) agents who have become Certified Short Sale Specialists will have an advantage over agents who don’t. Watch the FREE Agent Short Sale Secrets video and then download your FREE Agent Short Sale Secrets book.

Las Vegas leads the way with 81.8 percent of borrowers underwater on their loans in the third quarter of this year, down barely one percent from the second quarter but still up 10 percent from the first quarter.

The bulk of underwater borrowers are in California, Florida, Arizona and Nevada. While home prices nationwide were down 8.5 percent in September from a year ago, prices in these states are still way down — 34 percent in Las Vegas, 26 percent in Orlando, 23 percent in Phoenix and 11 percent in Los Angeles (National Association of Realtors). Again, that’s from a year ago, but many of these cities have seen over 50 percent price declines from the peak of the market.

We have been hearing from our students in these markets that homes less than $200,000 are selling with multiple offers….keep in mind that many of these homes sold at the peek of the bubble at 30-50% HIGHER prices!

Some argue that “underwater” borrowers are no different than any other borrowers, as long as they continue to make their monthly mortgage payments, and as long as they continue to want to live in their homes, knowing they will have to wait out the market for home equity to gradually return.

Not sure about that one….there have been several studies that have suggested that most will abandon their homes (selling via short sale of simply ‘walking away’) once their home is 20% upside down. Look at the stats for Vegas…81% of all borrowers are upside down! As our Vegas students have reported to us, its common for a home owners to sell their current home via short sales and simply (and sometimes literally) move across the street.

But the danger is for those that need to sell, or for those who can no longer afford their monthly payments and don’t qualify for a loan modification.

The government mortgage rescue programs do allow for modifications and refinances on homes with up to 25 percent negative equity, but many homeowners, especially in the hardest hit regions, don’t think they will ever see equity again, and therefore see no reason to continue making payments on their loans, whether they are able to or not.

Many are simply sitting in their homes, rent-free, as banks struggle to catch up and contact them. Others are vacating the homes, mailing in the keys, and choosing a credit hit, rather than be strapped to a home that will only ever be a liability.

Remember, several reports have estimated that the number of bank controlled ‘Shadow Inventory’ homes is….13,000,000.

Home prices are improving, but there is a lot of government stimulus behind that improvement. The extension and expansion of the home buyer tax credit, as well as artificially low mortgage rates backed by the Federal Reserve’s purchase of GSE loans and securities, will all expire by the middle of 2010, so it remains to be seen whether the very tenuous recovery we are now seeing in housing can endure on its own.

As foreclosures and unemployment continue to rise, the potential for a double dip in home prices is very real, and borrowers underwater now will only sink deeper.

Solution, Short Sales! Agents, learn how to become Certified Short Sale Specialists. Watch the FREE Agent Short Sale Secrets video and grab your FREE Short Sale Secrets book!

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FREE Agent REO Secrets Event!

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Do you follow a schedule?

You know, a written down schedule whereby you are working daily on what you should be doing, when you should be doing it?

HREU Top Producers know that they must follow a schedule designed around doing what matters most every day. The challenge for most of us is knowing exactly what matters most. After all, we must jump whenever our clients tell us to or we may lost their business….right?  Are you controlling your business or is it controlling you?  Remember, if you don’t follow a schedule, someone or something else will always dictate how you spend your time.

Not so fast!  You don’t have to be a ‘pop-tart Realtor’…popping up whenever there’s a fire to put out or if someone calls and has to talk with you right this second!  The simple fact is that your lack of control over your schedule isn’t due to your client’s demands but, your lack of professionalism. Sorry if that offends you. Before you jump off this page allow me to make a point….

Do professionals follow schedules? For example, lets assume you needed an appointment with the best doctor in town. This doctor was well known for being the best of the best. It makes sense because this doctor was so desirable that you would have to make an appointment and wait your turn to see him. You see, we are conditioned to expect service professionals who are the best to be professional and follow a schedule.  You can’t just call that doctor up and let him or her know that you’ll be right over and expect them to wait for you to show up.  Instead, your expectation is that they will let you know when THEY can meet with you, not the opposite.  Imagine how you’d feel about that same doctor if they said, ‘ok, you can come any time…I’m not doing anything else.’  Wouldn’t that make you nervous?

How about you? When a buyer calls you and asks to see a house do you immediately (or almost immediately) pop on over to show the buyer the house?  Seriously, if your phone rang right now…as you are reading this post…asking to see a house….would you rush out the door to show him the property? Before you’d even pre-qualified them by asking simple, scripted questions?

If you are like 99.9% of the agents out there you WOULD pop over to show the buyer the property. What message is this behavior sending to the buyer? Will that buyer see you as a the busy, highly professional and desirable Realtor or some Agent hack who has not control over his time?

Its OK and even smart to tell buyers (and sellers) that you follow a schedule.

Back to ‘what matters most’. I assume that you are not running a real estate non-profit. I would certainly hope that your desire is to make money (and lots of it). Remember, the more people you help at a high level the more money you will make. Always.

Your new schedule puts what matters most first:

1) Lead Generation.

2) Lead Follow-Up.

3) Appointments.

4) Presenting.

5) Pre-qualifying.

6) Negotiating. (once you have contracts)

Tomorrow…we give you the schedule!

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HREU 90 Day Massive Action Plan: Day 3.

(Read the previous posts about this topic first…Day 1, Day 2)

If you have determined that you are BEHIND THE CURVE this is your plan how to catch up:

1.  Don’t panic, don’t throw in the towel, don’t give up, don’t have a breakdown or a meltdown.  You DO have time to turn it around!

2. Make a commitment (a massive commitment) to working intensely for the next 90 days.   If you do that, you’ll have a great 2009, but also a great 2010.  You’ll have momentum.

Here is what you do now. Go through ALL of your leads and sift and sort them out fast.

Step 1- Put all of your leads in ONE place. That means all those millions of pieces of paper with your potential buyers and sellers contact info is organized into ONE list. Matters not what you do for this…yellow tablet, contact manager etc. Just do it.

Step 2- Determine motivation for your seller leads. For the rest of the year the only sellers you should ‘work with’ are the extremely motivated MUST SELL sellers. For example, divorce, relocation, financial issues. As Julie says, a motivation seller is a seller who’s decision to sell is no longer their own. Their situation is mandating that they sell.

Hint: AVOID all those sellers who say things like….” I don’t HAVE to sell”, “If I can get my price…I will sell”. You get the idea. Another great question that HREU Superstar Sandy Raines uses is, “What will you do if this home DOES NOT sell?”. She listens for their response…if they say, “we will just rent it”..Sandy knows to NOT take that listing.

Step 3- Determine motivation for your buyer leads. Lets start with a question that I have for you….give me an example of a buyer who HAS TO BUY? Go ahead, think about it….interesting eh?! No such thing. Have to buy..buyers…don’t exist. Why? Because they could ALWAYS rent! The best you can hope for with any buyer is that they are what we call a AAA buyer. Here are the rules for you to follow to determine if they are AAA buyers.

1) Have they been PRE-APPROVED with a lender. Has the lender actually done verifications of income, assets, employment, downpayment? If they buyer has not taken the time to work with a lender to become pre-approved they are NOT a AAA buyer.

2) Will they commit to working with YOU and just you? In other words, will they sign a Buyers Agency Agreement. If they won’t they are NOT a AAA buyer.

3) Do they have another home to sell (or any other real estate that must be sold before they can buy with you)? If they do..they are NOT a AAA buyer.

4) Ask them this question, “Mr/ Mrs. Buyer, if I were to show you the exact house you are looking for, in move-in condition, in the location you want…the perfect yard etc…AND its priced right…Mr. Buyer, is there anything that would prevent you from buying that house TODAY?” If they answer anything other than a resounding YES, you need to find out what their obsticle is. Listen to what they tell you. Because if they aren’t ready to buy their ideal home today (using the scripts that I just gave you) they are NOT a AAA buyer.

Step 4- Lead Follow Up. Here are your new rule:

Rule 1: You will follow up with EVERY AAA Buyer and EVERY HAVE-TO Seller until one of following happens…They buy (or list) with you or someone else OR they file a restraining order against you. Ok, I am joking with the restraining order thing but, you get the idea.

Rule 2: You will call (CALL NOT EMAIL) every new lead back within no more than 5 minutes of the lead contacting you. Don’t wait or procrastinate following up with every lead instantly. If you don’t I assure you that the other agents will and you will lose the sale.

Hint: Here is a secret weapon that Julie and I used that resulted in a massive increase in leads…and sales. Check out 1800homehotline.com
Here is your Day 3 homework:

1) Organize your leads. Go through EVERY lead with a critical eye. For your sellers determine if they are HAVE-TOs or WANT-TOs. Buyers, do they fit the requirements to be considered a AAA Buyer.

2) Watch the FREE Agent REO Secrets Video and Download the FREE How-to list REOs book. Know this, its NOT too late for you to become a REO Listing Agent.

3) Another FREE video for you. Learn NOW how to become the co-author of the National Best Seller, “Should I Shortsale My Home” book. Watch the FREE video now.

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Real Estate Recovery?

We are in a constant ongoing..never ending…search for the latest real estate news. We are on the look-out for anything that will help you to be of service to your real estate clients. There has been much talk about the ‘Green-Shoots’ in the economy. The question is…are those Green Shoots signs of recovery…or really weeds that will need to be pulled.

So, is it time time pop the champaign corks….or get out the Weed-B-Gone?

Read this and share your comments…

In the Sacramento Delta suburbs east of San Francisco — where home prices soared and fell as viciously as anywhere in the country — a housing market rebound is feverishly underway.

A 1,600-square foot rancher listed for $179,000 — after last selling for $425,000 in 2004 — drew multiple offers last month with a high of $210,000 in cash. The topper: The property was a “short sale” whose owner needs lender approval to sell for less than the mortgage owed — and which buyers wouldn’t touch just three months ago.
Housing emerges from the woods

“My phone was ringing off the hook, my voice mail was on overload and people were coming into the office receptionist saying they couldn’t reach me,” said Christy Howard, a Coldwell Banker Coon and McCreary agent who listed the Antioch house. “Everyone was waiting for the bottom, and the problem is they waited to long, because the bottom has already come and gone.”

Spurred by markdowns up to 80% from market highs, first-time buyers and investors both American and foreign descended en masse in the last three months on San Francisco’s hardest-hit hinterlands as Wall Street and the economic climate improved. They’re picking clean the Delta region’s banked-owned inventory as soon as properties hit the market and are engaged in unprecedented bidding wars even on short sales.

We have been reporting on this for months on our main blog. Agent REO Secrets students and Agent Short Sale Secrets students are experiencing multiple offers for their listings…..flash back to 2006!

The panicked buying — fueled by buyers’ fear they’ll miss out on fire-sale prices — belies the doom-and-gloom evoked by recent reports of rising mortgage delinquency rates and foreclosure activity. It is one of several overlooked signs the U.S. housing-market turnaround has started in the nation’s hardest-hit markets, which is critical to driving an overall recovery:
After spending most of the 1990s in the $250,000 range, the median-priced home that was sold in the seven-county San Francisco area rose to a staggering $850,000 by its May 2007 peak. It since fell to a low of $399,000 in February — a 53% drop in just 21 months — before posting its first monthly gain in March, albeit a 1% uptick. The median is expected to continue rising at a healthy clip in months ahead since it’s now at the level of nine years ago, before the bubble began inflating.

California’s statewide inventory of unsold homes — based on the number on the market divided by the present monthly sales rate — stood at a 15.2 months supply in February, 2008. That figure was down to 5.8 months in March, near the historic average.

At roughly 22,000 units, Las Vegas’ inventory is not far off its recent record high. Yet total sales closed in March showed flourishing demand, the fourth best on record. That monthly record — set during the height of the boom — is expected to be broken this summer.

Looking on Realtor.com confirms a dramatic drop in available homes that are priced within the FHA loan limits. Homes in Vegas uner $200,000 are selling very fast….

“Things have been looking up but it’s going unnoticed,” says Forrest Barbee, a board member with the Greater Las Vegas Association of Realtors and a broker for Prudential American Group Realtors. “It’s just going to take the data a little longer to catch up with reality.” Listen to one analyst’s thoughts about housing having hit bottom.

Adds Rick Sharga, senior vice president of RealtyTrac, which compiles home sales and foreclosure data: “We’ve overshot the market in places like Las Vegas and Arizona in terms of fair value and buyers are bidding prices up again on many properties. The challenge is going to be whether there is enough financing to eat up the inventory that’s yet to come.”

Ok, read that last comment again. What Mr.Sharga is referring to is the massive wave for foreclosures coming and REOs hitting the market now. Read this blog article: The Truth Behind The Shadow Inventory.

Mixed signals

The specter of rising foreclosures — born now of the recession rather than just overleveraged subprime borrowers — is the wild card in future health of the U.S. housing market and the economy by extension. Read about the difficulty borrowers are having with mortgage modifications.

The number of U.S. homeowners behind on payments or in foreclosure shattered the record in the first quarter, the Mortgage Bankers Association reported last week. Nearly one in eight mortgage holders were either delinquent or in the foreclosure process — and prime mortgages in trouble for the first time outnumbered subprime loans on a percentage basis. Read more on the record jump in foreclosures in the first quarter.

Yesterday we had a conference call with a high-up in one of the big 3 banks. He told us that in California alone they have seen 110,000 homeowners fall behind 60 days in the mortgage. Thats counting just 2 lenders. (BOA and Wells). You can assume that the actual number for the entire state is 5-6 times that number. In case you didn’t know it, 95%+ of the time once a homeowner misses 2 payments the house becomes a foreclosure. Bottom line, be ready. You still have time to become a REO Listing Agent. Watch the Free Agent REO Secrete video then download the FREE Agent REO Secrets book…

Yet the number of pending sales of existing U.S. homes took a surprising upswing in April, rising 6.7 percent in the biggest monthly gain in more than seven years, the National Association of Realtors reported Tuesday. That increase lags the 9.2% jump in October 2001, but that spike owed to buyers temporarily putting off home shopping following 9/11. See the latest data on pending home sales.

And in an overlooked report that belies the first-quarter delinquency numbers, defaults on privately insured mortgages — where borrowers are more than 60 days behind — fell 3% in April and were down 24% from a record 106,482 in February, the trade group Mortgage Insurance Companies of America reported Friday.

Most importantly for gauging the strength of the nationwide market is how conditions are improving in the most-depressed regional markets.

With those markets now stabilizing, banks are no longer anxious to dump real-estate owned properties, as houses in their foreclosure portfolios are called, fearing they’ll get appreciably less three months from now for their foreclosed properties.

Lets HOPE that is true. Lets hope (and pray) that he lenders are smart enough NOT to flood the market. Here is a great article on our blog that you will want to read NOW.

As a result, they’ll be more judicious about the pace at which they release foreclosures onto the market. The new goal: To maximize the value of supplies in hand rather than unload it helter-skelter and torpedo the housing market like they did while they were shell-shocked by the devastation they’d wrought.

With the banks themselves now somewhat more stable, they’ll also be less likely to want to part with their “toxic assets” knowing the most-scorched, still-serviceable mortgages will be the most valuable on a credit-risk markup once the economy recovers. In fact, the price stabilization in the most-depressed U.S. markets will allow a clearer valuation of the toxic assets we now all hold by virtue of bank bailouts — a modicum of certainty that will hasten the overall recovery.
Key markets

Homeowners in most of America know by their own property’s value that the spike in U.S. median home values was driven in considerable measure by soaring prices and volume in major markets, especially in California, Florida, Nevada and Arizona. By virtue of their climates and economic-growth rates, those four states have been on the extremes of the U.S. boom-and-bust housing cycle since the 1950s.

You can’t discount how critical an upturn in those states will be, considering they account for 46% of foreclosures nationwide. If foreclosures there are more quickly consumed as they’re starting to be now — fueled in part by foreign buyers who recognize their value — we’ll all reap a return on our bailout money a lot faster.

“The banks are getting smarter and realizing that if they don’t sell it in a short sale, they lose more money going the foreclosure route,” Barbee said.

Realtors, if you have been ignoring our pleas for you to learn short sales for the past few years……when would NOW be a good time to finally learn the correct way to list and sell short sales? Watch the FREE Agent Short Sale Secrets video and then download the FREE Agent Short Sale Secrets book.

Adds Sharga: “The banks will be very particular and thoughtful about how they’ll release new foreclosures, because they know now how flooding the market will have a disastrous effect.”

That, and if the chastened lenders would just swallow crow and pony up for rights to an encouraging Beatles song to play on their delinquent-payers’ hold line: “We can work it out.”

Article Source: MarketWatch.

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Foreclosure Firestorm Ahead.

Just in case any of you were actually believing the housing markets where anywhere near bottom……..

NEW YORK (Reuters) – U.S. foreclosure activity for May ebbed from April’s record, but mortgages still failed at a staggering pace as President Barack Obama’s rescue programs had not had time to fully take root, RealtyTrac said on Thursday.

Foreclosure filings dipped 6 percent in the month but increased 18 percent from May 2008, marking the third highest month on record.

“There were almost one million foreclosure filings in a three-month period, and that’s simply unprecedented,” Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.

Temporary freezes on foreclosure activity ended in March. Failures of many seriously delinquent loans that were put on hold during those moratoria have been thrust back into the foreclosure cycle.

Realtors, there are 2 kinds of agents…those who know how to easily list and sell short sales (and are making a fortune)  and those who refuse to learn anything new…struggle to stay afloat…and will probably not be in real estate for much longer. What kind of agent are YOU? Watch the FREE Agent Short Sale Secrets video then download the FREE Agent Short Sale Secrets book. Don’t wait, don’t procrastinate….FINALLY take action and learn how to become one of the agents who is THRIVING in this market.

One in every 398 households with loans got a foreclosure filing in May. Filings, which include notices of default and auctions, were reported on 321,480 properties last month.

Stemming foreclosures is seen critical to bolstering home prices, consumer confidence and the recessionary U.S. economy.

Bank repossessions, known as real-estate owned or REOs, rose in May and should spike in coming months because the moratoria ended, RealtyTrac said.

OBAMA PLAN NEEDS TIME

The administration’s plans to ease loan modifications and refinancing were detailed in early March and haven’t been implemented long enough to derail foreclosures.

The hurdles are high. Unemployment reached a nearly 26-year peak in May and mortgage rates have leaped a percentage point from their spring lows to more than 5-1/2 percent.

“One of the cures to this problem is enough buying activity to eat up the inventory of distressed properties,” Sharga said. “If mortgage rates go up to where people decide to wait out the market again, that’s just going to add to the inventory numbers and put more downward pricing pressure on all homes.”

RealtyTrac forecasts about 4 million foreclosure filings will be made this year on about 3.1 million households with loans. Last year, there was a record 3.1 million filings on about 2.4 million households.

In a more typical year, Sharga said there would be around 800,000 filings on 550,000 households.

“When you have a glut of inventory and downward pricing pressure that does tend to push properties into foreclosure,” said Sharga.

States where sales and prices soared most in the five-year housing boom earlier this decade remained the hardest hit.

Nevada stayed at the top of the foreclosure rate rankings by state, with one in every 64 housing units getting a foreclosure filing. California, Florida and Arizona, Michigan, Georgia, Colorado, Idaho and Ohio were the other states with the highest foreclosure rates.

Realtors, learn the skills that this market requires and you will have nothing to fear. Learn how to easily list and sell short sales. Watch the FREE Agent Short Sale Secrets video now…next, download the FREE Agent Short Sale Secrets book.

Ten states, led by California, accounted for almost 77 percent of total number of foreclosure actions in May.

“We need to give the administration’s programs a little bit of time to gain traction,” Sharga said. “If unemployment continues to worsen, all bets are off on foreclosure rates.”

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Luxury, Highend Foreclosures

We have been warning all of you that the no price segment or region of the country would go unaffected by this housing correction/ recession/ depression….whatever you want to call it. Now, the high end homes are experiencing the harsh realities of this market….

With the U.S. economy and financial markets showing signs of life, optimistic analysts are looking for a recovery in the all-important housing sector. They got some ammunition on June 2 from the National Association of Realtors, which said that its Pending Home Sales Index jumped in April by the most in more than seven years.

But housing can’t revive as long as the market is being flooded with homes that are falling into foreclosure. And far from going away, the problem is broadening. It’s not just about subprime anymore. Now, people with excellent credit who never dreamed of getting in financial trouble are being dragged down by a dangerous cycle of rising unemployment and falling home prices. That is going to prolong the foreclosure crisis and, inevitably, inhibit the recovery of the rest of the economy.

Any illusion that prime loans would emerge unscathed was shattered by a May 28 report from the Mortgage Bankers Assn. “For the first time since the rapid growth of subprime lending, prime fixed-rate loans now represent the largest share of new foreclosures,” the bankers said. The grime in prime was responsible for the worst performance on record for the U.S. mortgage sector in the first quarter: Nearly 13% of loans were delinquent or in foreclosure, the most since the bankers started keeping tabs in 1972. The problems were worst in the bubble states of California, Florida, Arizona, and Nevada.

The biggest factor in this second wave of foreclosures is the inability of distressed homeowners to sell in order to pay off their debts. Prices in bubble cities such as Los Angeles, Phoenix, and Miami are down less at the high end of the market than at the bottom, according to data from Standard & Poor’s/Case-Shiller home price indexes. But that’s cold comfort to people who haven’t managed to sell at all. According to research by the National Association of Realtors, there are enough $750,000-plus homes on the market to cover more than 40 months’ worth of demand at the current rate of sales. That’s four times the rate of oversupply in the housing market as a whole.

Realtors, learn how to become a REO Listing Agent. BE the agent with all the buyer baited REO Listings. Watch the FREE Agent REO Secrets video and download the FREE Agent REO Secrets book now!

Unemployment is exacerbating the problems at the top of the market. The jobless rate for adults with a bachelor’s degree or more may not sound too high at 4.4% in April given the overall April jobless rate of 8.9%. But it’s more than double the rate of 2% a year earlier. And many families in that segment of the population built their finances on the assumption of continuous full employment, so they can’t cover the mortgage when even one spouse is out of work.

Consider the plight of Stephanie and Bob Walker, who bought a $799,000, three-bedroom home in Los Angeles with a view of the Hollywood sign in 2006 but are losing it because last year Bob stopped getting computer consulting work that used to pull in about $240,000 a year. Bob eventually landed a job paying $60,000, and Stephanie found work as a $13-an-hour temp, but it wasn’t enough to cover their mortgage and credit-card debt, which was swelled by about $130,000 worth of home renovations. They listed the house last year for an “optimistic” $875,000 but didn’t get any takers. After months of price cuts and threats of foreclosure from the bank, they’re days from closing on a sale at $700,000 that will assuage their primary mortgage lender—but leave them under pressure from other creditors. “We had no expectation things would come crashing down as fast as they did,” says Stephanie. “We had no one to blame but ourselves. We didn’t have a backup plan if he lost his job.”

The economics at the top of the market aren’t as advantageous as they are at the bottom, where first-time home buyers are flocking to lower-priced homes, spurred by low interest rates, temporary tax credits, and a drop in prices that has made owning cheaper than renting in many cities. At the high end, homes are too expensive for most first-time buyers, and move-up buyers can’t purchase a home without selling property they already own. What’s more, financing is far costlier, if it’s available at all, because private investors have lost their appetite for big mortgages. Rates on “jumbo” loans—that is, those too big to be purchased by Fannie Mae (FNM) or Freddie Mac (FRE)—are roughly a percentage point higher than those for loans that conform to Fannie and Freddie’s purchase limits. (Those limits range from $417,000 to $730,000, depending on local housing costs.)

An inflation panic in the fixed-income market is the latest blow to homeowners who are trying to sell to avoid foreclosure, because it’s pushing up mortgage rates and pushing potential buyers out of the market. Rates on 30-year fixed, conforming mortgage loans jumped nearly half a percentage point, to 5.25%, in the week ended May 29 from a week earlier, according to the Mortgage Bankers Assn. Meanwhile, the market is unlikely to get much help from the Obama Administration’s foreclosure-prevention program. Although it’s somewhat more ambitious than the Bush Administration’s program, it is voluntary for lenders and is off to a slow start since its March inception.

Why are some agents struggling in this market while others are making a fortune? 2 words: Short Sales. Learn NOW how to easily list and sell short sales. Watch the FREE Agent Short Sale Secrets video and download the FREE Agent Short Sale Secrets book.

When will this second wave of foreclosures crest? David Crowe, chief economist of the National Association of Home Builders, doesn’t see the peak coming until 2011, later than most other experts predict. Foreclosures typically top out after unemployment does, and Crowe doesn’t expect that to occur until late this year. After that, Crowe says, more people will lose their homes because of upward resets on adjustable-rate mortgages. Credit Suisse says mid-2010 is the peak for scheduled resets, and resets will stay high well into 2012. While most of the subprime loans issued during the boom years have been washed out by now, there are still about half a trillion dollars’ worth of option ARMs, which allow borrowers to add unpaid interest to the principal they owe. There’s an even more alarming $2.5 trillion in “alt-A” loans, which are between prime and subprime and include a big chunk of the mortgages that required little or no proof of income or assets. Most of these loans were issued to people with relatively good credit who were buying more expensive homes.

A key unknown is how many middle- and upper-income homeowners will simply walk away from homes that are worth less than the mortgages on them. So far few have. Whitney R. Tilson, managing partner of New York investment firm T2 Partners and co-author of the book More Mortgage Meltdown, expects the ranks of walk-aways to increase, exacerbating foreclosures. But Rick Sharga, senior vice-president of RealtyTrac, a foreclosure data specialist, disagrees. “To sign a contract for a house and then walk away from it runs counter to everything we were taught,” says Sharga, who predicts foreclosures will dip slightly in 2010.

Even if foreclosures don’t rise, the rate is already so high that it will put considerable pressure on the national housing market for at least two more years, says Mark Hanson, managing director of Field Check Group, a Menlo Park (Calif.) research firm.

While forecasts differ in detail, the clear message is that foreclosure is going upscale. And that means the housing bust won’t end anytime soon.

Source: BusinessWeek.

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