Market and Mortgage News today - An Idea to Help Buy REO Property

Good afternoon and welcome to the second half of 2009.

The news is mixed today, and rates are again somewhat volatile ahead of the holiday weekend, and the beginning of second quarter earnings reports.

Treasury bond yields are rising again today as investors again become nervous about the bond auction coming up next week. While the auction is not record setting in size, it is still a big auction. Also trading on Wall Street is very light today, because of the short week, and because investors are awaiting the June employment numbers that will be reported tomorrow.

The ADP numbers were released this morning for June. (ADP reports only on the private sector employment data and are not deemed to be truly accurate). Employers announced the fewest job cuts for June that we have seen in over a year. Some analysts are taking this as a sign that perhaps more employers have finally reached a "stabilization" point where they feel they are now staffed at the numbers required to make it through the rest of the recession. Planned firings dropped 9% for the month of June. This brings the total number of people who have lost employment, since this recession began in late 2007, to more than six million people! The ADP report is considered a somewhat unreliable report because it excludes government employees, and we know that many states are also laying off employees.

California just announced that state workers will be required to take an additional 1/3 day off without pay, and some people will be paid with State of California IOUs!! Wow - that will pay the bills. Can they use those IOUs to make their mortgage payments? Other states around the country are also scrambling to pass their state budgets to see how they will manage their economies, since June 30 marks the end of the fiscal year for many states.

Mortgage applications dropped the most last week, since February, due to higher rates. Refinance applications, which had been sustaining the mortgage industry declined 30% and accounted for less than 50% of all mortgage transactions for the month. It is feared that if rates continue to rise, and foreclosures continue to rise, this housing crisis could extend well into the latter part of 2010. But, those buyers who can still qualify for credit are out buying up the bargains. The NRA (National Realtors Assocation) is reporting that, for the most part, most sales are "distress sales (properties priced below fair market value).

The good news this morning is:

1. the Obama administration plan to jump start the economy with public sector jobs, is scheduled to begin hiring and breaking ground in the coming months this year.

2. pending sales of existing homes increased in May by 0.1%. May marks the 4th consecutive month that an increase in sales has occured. Pending sales is a statistic that is considered a "leading indicator."

3. Oil prices are again below $70/barrel today.

Are you shopping for a home now? Are you thinking of utilizing FHA financing, AND buying a bank owned (foreclosed) property? Here's a strategy that some realtors across the country are utilizing to get those offers accepted more quickly. Offer the bank as much or more than they are asking, with the knowledge that the property will NOT appraise for as much as the offer. The bank is pretty certain to accept your offer, but will HAVE to renegotiate with you for the appraised value. I'm not going to go into all the intricacies of why this works, but the bank is "stuck" with the appraised value for 6 months from the date of the appraisal, so they will either have to renegotiate with you, or sell that property to someone else at the appraised value. The one caveat here is that this will only work if you can qualify for the higher loan amount (based on your offer price) AND you are really certain that the offer price is higher than where the property will appraise.
Interesting strategy. Please contact me if you or anyone you know has utilized this strategy successfully.

Enjoy the rest of your day today.

Best regards,

Shelby Bateson

Town & Country Mortgage

503-819-6545 phone

Lic # ML-3604

www.shelbytncmortgage.com

* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.