As all of you have heard the real estate markets are struggling in many areas of San Diego. This is due primarily to the other hot topic in the news: Sub-Prime Lending. Unfortunately many homeowners in the last few years have fallen victim to the frenzy in the lending market that encouraged homeowners to buy or refi using a loan that starts with a low rate and then, at the end of its initial two year period, begins adjusting. During the first five years of this frenzy rates were low and it didn’t matter when the loan reached that first adjustment. Today we are in a different Interest Rate market and many borrowers are finding that first adjustment is causing their payments to be out of their reach. This in turn is the reason why we are hearing so much about Foreclosures. It is unfortunate for many that are losing their homes, however the reality is that this also creates opportunity for many investors.

As many of you know I have spent years managing and disposing of foreclosed properties for banks and lenders. The number of available foreclosed homes is growing and the prices are dropping. During the last 7 years, many of you would call me and ask about buying a foreclosure and I would tell you that it was very rare to find a foreclosure in this market because there were so many buyers for every home that came on the market. This has changed and we now have growing lists of condos and single family homes.

Remember, as with any investment, the time to buy is when the market is Down and Sell when the market is up. You may remember the early 90’s when we saw a record decline in real estate prices in San Diego. Many of you also took advantage of that market and purchased property that we sold 5 years later at double and even triple what you paid for. While no one can predict the future, we can make decisions based on what we have seen in previous markets. We are heading into another similar market as the 90’s and if you have an interest in investing in this market this is the time to do it!

Real Estate California

A Short Sale can help you avoid foreclosure.

Question: We are in financial trouble. Our house will not sell for enough money to pay off the mortgage, let alone a real estate commission. What is a short sale and how can this help us in our situation?

A: A short sale is when the lender allows you to sell the home for less then what you owe.

Why would a lender permit this? The decision depends on a number of factors: Where is your house? How much loss will the lender suffer? What is the possibility that an investor would buy the property at a foreclosure sale? Each lender has its own requirements, so I can provide only general information.

Why would a lender permit this? First, you should understand that not all lenders do. The decision depends on a number of factors: Where is your house? How much loss will the lender suffer? What is the possibility that an investor would buy the property at a foreclosure sale? Each lender has its own requirements, so I can provide only general information. You will have to consult your lender to determine what it needs to move forward with a short sale.

The short-sale process works but is complicated, time-consuming and uncertain. If you can start now, before you are in default, you will be ahead of the game.

Fannie Mae and Freddie Mac should be allowed to play a greater role in easing the mortgage lending credit crunch, and alllow them to raise the conforming loan limit.

A bill passed by the House this spring overhauling oversight of the government-sponsored entities, or GSEs, should have gone farther in raising the conforming loan limit — the maximum-size loan Fannie and Freddie normally purchase or guarantee.

A bill the House sent to the Senate in May, HR 1427, would leave the conforming loan limit at $417,000, but allow Fannie and Freddie to securitize and sell loans up to 150 percent over the limit in areas where the median home price exceeds the limit.

We cannot afford a ‘wait and see’ approach when it comes to a credit crisis that threatens to derail our economy. The Bush administration continues to ignore one tell-tale sign after another that the subprime woes are threatening the broader mortgage markets. Fannie and Freddie are uniquely positioned to inject badly needed liquidity into the economy, but President Bush won’t let them do their job.

Bush, when asked about a larger role for Fannie and Freddie at an Aug. 9 press conference, said he would only consider such moves after Congress passes a GSE reform bill.