An Eastside treasure - gracious residence in triple A location, exuding charm, grace and a legacy of historic prominence dating back to an earlier era when it was part of the Fremont Ellis estate. This warm and gracious residence is nestled in a lushly landscaped garden setting walking distance to Canyon Road, The Plaza and a host of Santa Fe attractions including world renowned galleries and gourmet restaurants.

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Enjoy sweeping, spectacular views over the Rio Grande Valley to the Jemez mountains with fabulous sunsets from this two-year-old wonderful home in Tesuque’s prestigious Bishop’s Lodge Hills. An open floor-plan with high ceilings and open trusses reminiscent of a contemporary farmhouse provide gracious living areas for formal and informal living. The home has three bedrooms and three and a half baths as well as a separate den. The kitchen has 6-burnerplus grill Wolf range, sub-zero, granite.

22 Lodge Trail

MLS: 800672

City: Santa Fe

Area: Tesuque Village Area

SqFt: 3470

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Price: $1,455,000

Beds: 3

Baths: 4

Inman News

A new plan to streamline loan modifications for homeowners who have fallen behind on their mortgage payments could help “hundreds of thousands” of borrowers avoid foreclosure.

But the plan is far less ambitious than a competing proposal for the government to guarantee payments on as many 3 million loan modifications.

With Fannie Mae, Freddie Mac and the HOPE NOW alliance of 27 loan servicers standing behind it, the new streamlined modification program rolled out today by the Bush administration is expected to provide thousands of delinquent borrowers another alternative to foreclosure. In the past, much of the administration’s efforts have centered around loan refinancing programs guaranteed by the Federal Housing Administration.

The new loan modification program is targeted at high-risk borrowers who have missed three or more mortgage payments on their primary residence but who have not filed for bankruptcy. The program is designed to get them current on their loans again by reducing their payments to 38 percent of gross monthly income.

To get monthly payments down to that level, lenders and loan servicers may agree to extend the term of the loan to up to 40 years, lower the interest rate on the loan, or reduce principal and add it to the back of the loan.

Lenders who decide they cannot create an affordable payment using the streamlined program will further evaluate the borrower’s situation under a standard modification process, which requires an analysis of the borrower’s personal cash flow.

By reducing documentation requirements and simplifying the analysis, “potentially hundreds of thousands of delinquent borrowers” will receive modification offers in the mail, said FHA Commissioner Brian Montgomery at a press conference announcing the program.

Federal Housing Finance Agency Director James Lockhart said Fannie Mae and Freddie Mac will issue guidance to their loan servicers and require them to implement the streamlined loan modifications by Dec. 15.

Fannie Mae and Freddie Mac — which were placed in conservatorship by the government on Sept. 6 — own or guarantee about 58 percent of all single-family mortgages. But those mortgages represent only 20 percent of serious delinquencies, Lockhart said.

Some 60 percent of seriously delinquent mortgages have been “sliced and diced and sold to investors” in private-label mortgage-backed securities, Lockhart said.

Those investors may be more reluctant than Fannie and Freddie to implement the streamlined modification program. Although the HOPE NOW alliance of loan servicers has endorsed the measures, participation is voluntary.

Lockhart said that Fannie Mae and Freddie Mac leadership and the endorsement by HOPE NOW members, “should spread this approach throughout the whole mortgage loan servicing business.”

Lockhart told Senate lawmakers at a hearing last month that Fannie and Freddie had engaged in 130,971 workouts from January to August of this year, including 36,847 loan modifications.

The HOPE NOW alliance said today that its members have helped nearly 2.5 million borrowers through means including workouts, loan modifications, short sales and refinancings.

One reason lenders might be reluctant to modify the terms of many loans is that, with the economy slowing and home prices in many markets continuing to fall, there is no guarantee that borrowers they help will stay current on their newly modified loans.

FDIC Chairwoman Sheila Bair maintains that the $700 billion troubled asset repurchase program (TARP) approved by Congress gives the Treasury the authority to use loan guarantees and credit enhancements to facilitate loan modifications in order to prevent foreclosures.

The FDIC had reportedly proposed a $500 billion government loan guarantee program intended to give lenders with the incentive to modify up to 3 million troubled mortgages, at a potential taxpayer cost of $50 billion (see story).

But the Bush administration did not embrace the proposal, and the streamlined modification program announced today appears to be an alternative plan.

Initiatives by lenders

In recent weeks, several major lenders including Citigroup, JP Morgan Chase and Bank of America have announced their own major initiatives to engage in workouts and loan modifications with troubled borrowers.

Citgroup Inc. today said that over the next six months, it plans to contact about 500,000 homeowners who still are current on their mortgage payments, but may require help in the future.

The Citi Homeowner Assistance program will be concentrated in areas that are facing “extreme economic distress,” such as Arizona, California, Florida, Indiana, Michigan and Ohio, and is expected to lead to workouts on $20 billion in mortgages. Citi said that since early last year, its loss mitigation efforts have prevented about 370,000 foreclosures on $35 billion in loans.

JP Morgan Chase, which saw its loss mitigation workload grow when it acquired Washington Mutual Bank in September, announced last month that it would open regional counseling centers and offer borrowers pre-qualified loan modifications in the hope of preventing 400,000 foreclosures on $70 billion in loans in the next two years.

Chase said it would not take steps to put additional loans into the foreclosure process while it implemented the changes over about 90 days. The initiative and foreclosure moratorium apply only to owner-occupied homes with mortgages owned by Chase, WaMu and another subsidiary EMC Mortgage Corp. But Chase said it would “work diligently with investors” for approval to apply the program to loans it services on their behalf.

Chase said that since early 2007, the bank and its subsidiaries have prevented foreclosures on about 250,000 loans totalling $40 billion, primarily through modifying loan terms or payments.

Bank of America has also become more active in conducting loan workouts and modifications since acquiring troubled lender Countrywide Financial Corp. In April, Bank of America said it planned to modify $40 billion in troubled mortgages, or 265,000 loans, over the next two years.

Last month Bank of America reached a settlement with about a dozen states that sued Countywide over alleged unfair and deceptive lending practices. BofA agreed to systematically modify nearly 400,000 troubled Countrywide mortgages with up to $8.4 billion in interest rate and principal reductions (see story).

Thursday, September 18, 2008

Albuquerque home prices above average

By Avi Shama
For the Journal
Home sales in the Albuquerque Metropolitan Area are ready to take off, and their prices may be ready to stop sliding, if the recent declines in mortgage rates, brought about by the Treasury Department’s takeover of Fannie Mae and Freddie Mac, continue to hold. However, compared with their affordability before the real estate bubble, Albuquerque home prices are still higher by about 15%, relative to average levels of income and rent.
Compared with the rest of the country, these findings reflect a healthier and more stable Albuquerque real estate market, supported by a healthier economy, thanks to the city and state’s economic development efforts.
This conclusion is based on my use of several research approaches to assess home prices in Albuquerque, similar to the approaches used by Columbia University’s Business School and by Moody’s Economy.com, and on my analysis of the impact on mortgage rates of the Sept. 7 takeover of Fan and Fred by the Treasury Department.
Mortgage Rates Approach:
Historically, the interest rate for a 30-year first mortgage loan has been 1.6 percent above the prevailing rate of the 10-year Treasury note. However, because of the uncertainty induced by the financial crisis, mortgage lenders increased the interest rates on mortgages that they issue by 0.9 percent, or by 16 percent relative to rates before the financial crisis. This situation has changed dramatically after the recent takeover of Fan and Fred, because, as part of the takeover, the Treasury Department guarantees all mortgages backed by Fan and Fred. Should this trend continue, potential home buyers will find it easier to get mortgage loans at lower interest rates, and they will qualify for larger mortgages. This will increase home sales, reduce inventory, slowly stop the small price decline of the past year, and, later, begin to firm up prices.
Ratio of Home Prices to Per Capita Income Approach:
This ratio results in the average number of years of work that it takes to earn the cost of an average home in Albuquerque. In the prebubble years of 2000-2003, this ratio was 5.42. During the bubble years of 2004-2007, this ratio averaged 6.36. The difference between the two ratios means that the average Albuquerque home now costs 17% more than it did before the bubble.
Ratio of Home Prices to Rent Approach:
Owner-occupied homes and comparable rented homes are close substitutes. As a result, this ratio shows the number of years of rent money that it takes to recoup the price paid for a home, and it is similar to the price-earnings ratio used by stock market investors to evaluate different stocks. Using data from Realty Trac.net, this ratio in Albuquerque averaged 12.5 in 2000-2003. It went up to an average of 14.2 in 2004-2007. The difference between the ratios means that home prices in Albuquerque in 2004-2007 were higher by about 14% than prices in 2000-2003.
A small decline in home prices in the first two quarters of 2008 did not change this picture, because the ratio was coming down from a high of 15.7 in 2007.
Supply-Demand Ratio Approach:
This ratio is an indicator of the balance between sellers and buyers. A ratio of six, or six months’ supply, reflects a balance between supply and demand. Anything higher than 6 suggests oversupply, which may drive prices down. According to the Albuquerque Association of Realtors, in July 2007, this supply-demand ratio was 5.36 months, compared with 7.38 months in July 2008. The difference between the ratios means that in 2008, sellers have to wait an additional 2.02 months, or 38% longer to sell their homes. To move inventories faster, sellers reduced their prices a little, and the result was a small decline in the average price of homes sold in Albuquerque in the past year. If the recent declines in mortgage rates continue to hold, inventory levels will decline and the need to lower prices will not be as strong. By comparison, nationwide the supply-demand ratio is 11 months, suggesting more price declines.
The meaning of these findings to buyers is that, above all, buyers should work exclusively with buyers agents who, by law, must represent them and only them. Any other contractual relation with real estate agents (such as dual-agency relations) is less than ideal for the buyers. In addition, because the Albuquerque market is presently a moderate buyer’s market, buyers can negotiate for somewhat lower prices, take little time to make offers, and prequalify for a mortgage so that they can move fast once they make a purchase decision. Of course, if they intend to pay cash, they should negotiate for lower prices, because cash offers provide peace of mind to the seller.
Likewise, sellers should work with exclusive seller agents who have fiduciary responsibility to the sellers, and who follow the rapidly changing market conditions, Of course, sellers could insist to price their homes at the levels of the bubble period, but this could be a losing strategy

The number of homes listed for sale declined in many metropolitan markets last month.

The supply of homes available for sale in 29 major metropolitan areas in August was down 2.6% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The ZipRealty data cover all listings of single-family homes, condominiums and town houses on local multiple-listing services in metro areas where the firm operates.

 
Ivy Zelman, chief executive of Zelman & Associates, a housing research firm, says inventory is falling largely because a large number of foreclosed homes are being sold at “distressed prices,” which are dragging down prices for all types of homes.

On a national basis, home inventories typically grow modestly in August from July. Over the past 25 years, the average increase during August has been 2.2%, according to Zelman & Associates.

Although the supply is no longer growing quickly, it remains abundant. One reason for the recent declines in many cities is that potential sellers have withdrawn from the market because they don’t want to compete with builders and banks that have been slashing prices in an effort to clear out their inventories of new or foreclosed homes.

Nationwide, 4.67 million previously occupied homes were listed for sale at the end of July, according to the National Association of Realtors. At the current sales rate, that’s enough to last about 11 months, the trade group says. The housing market is considered roughly in balance between supply and demand when the inventory is enough to last around six months.

The August inventory was down about 8% from a year earlier in the 18 metro markets for which comparable year-earlier data are available, ZipRealty said.

The ZipRealty data don’t include New York. But Miller Samuel Inc., an appraisal firm based there, says there were 6,094 cooperative apartments and condominiums available for sale in Manhattan at the end of August. That was down 5.3% from July but up 31% from August 2007. Losses of jobs on Wall Street are expected to weigh on the Manhattan market. Jonathan J. Miller, chief executive of Miller Samuel, sees the price trend as “flat to weakening.”

While it has been reported that the potential rate drop is “one point”, that actually translates into a rate drop of about .25%.  Consequently, the 30-Year Fixed rate today is around 5.875%.  To put this into perspective, the last time we saw this rate was March, 2008.

It is more difficult to qualify borrowers today; there is less competition because almost 80% of the lenders doing business in New Mexico have gone out of business in the last year.  Nevertheless, the large national lenders are still aggressively pursuing new loans and there is money for purchases and refinancing for those who qualify.  Primarily, lenders are looking for good credit and full documentation; however, in certain situations, there are still loans which will allow stated income. 

Jumbo loans (in New Mexico, over $417,000) still area struggle, with rates easily 2% above conforming.

According to a recent New York Times article, “Amenities like 600-thread-count sheets, Bosch applicances and radiant-heated tiles are now standard in most high-end rentals. Owners and property management companies are now looking to redesign to draw vacationers.”

Christine Karpinski, the author of “How to Rent Vacation Properties by Owner” , said design has become more important since more rentals have become available. Ten years ago, a mountain cabin could be decorated with utilitarian log furntiure, and “it would rent anyways because there was less to choose from…but now there are so many more choices, and travelers will gravitate to what appeals to them.”

Specifically addressing New Mexico, it was stated that traditional adboe-style details like kiva fireplaces, mud plaster and Ponderosa beams as well as a Southwestern pallette of burnt yellows and rich reds and reds and blues were appealing.