Foreclosure filings in record jump

NEW YORK (CNNMoney.com) -- Lenders continued to rewrite troubled mortgages at a fast clip during March, but the weakening economy still sent foreclosure starts soaring to a record high.

March mortgage workout results announced on Thursday by Hope Now - a coalition of mortgage lenders, servicers, investors and community groups put together to fight the foreclosure plague - were a decidedly mixed bag.

Approximately 134,000 mortgages were rewritten by Hope Now members, which is nearly 20,000 more than the average since September. Another 115,000 at-risk borrowers were granted repayment plans, for a total of nearly a quarter of million troubled mortgages addressed for the month.

Repayment plans merely postpone payments for delinquent borrowers without making them any more affordable. Mortgage modifications are changes in the terms of loans that reduce or freeze interest rates, extend the life of the loan, reduce loan balances or any combination of those three, to, ideally, lower the amount borrowers pay monthly. Modifications are considered more effective that repayment plans.

"The lending industry is steadily working out solutions for homeowners and keeping as many as possible in their homes," said Faith Schwartz, director of Hope Now. "I expect that these numbers will continue to increase as servicers work with the Obama Administration to implement its Homeowner Affordability and Stability Plan."
Steep spike in starts

Despite the efforts, however, more homeowners fell into default in March. Servicers initiated foreclosure proceedings against 290,000 mortgage borrowers, a jump of nearly 20% from February's 243,000, and the highest monthly total since the coalition began tracking data in mid-2007. Starts have risen by more than a third since January.

On the other hand, completed foreclosure sales, transactions in which lenders have actually taken back homes from defaulting borrowers, dropped by 39% in March. Banks repossessed only 53,000 homes compared with 87,000 taken over during February.

Since the mortgage meltdown hit in July 2007, 1,447,866 homes have been lost to foreclosure.

Michael Bright, a chief statistician with Hope Now, attributed the sharp reduction in completed foreclosures to servicers suspending foreclosures as they geared up to implement the administration's refinance and mortgage-modification program.

"It's too early to say this is a trend," he said in a press release. "But anecdotal reports from servicers do indicate that they are taking this extra step to help homeowners who qualify stay in their homes."

Once the program is fully in place, servicers will have more tools to be able to make successful modifications to unaffordable mortgages. In the meantime, they're allowing a kind of grace period for homeowners until the government program can be applied to individual cases.

"Our counselors have been getting hardly any answers for weeks," said Mark Seifert, director of the East Side Organizing Project in Cleveland, which advocates mortgage workouts for hundreds of delinquent homeowners a month. "The servicers have been sitting on their hands."

But the impact of the Homeowner Affordability and Stability Plan should begin to be felt soon, according to Schwartz, who thinks it going to change - and improve - the mortgage landscape.

"It's one of the most comprehensive programs I've seen," she said. ""Eleven major servicers have formally signed on, and we should start to see data from it over the next few months."

Obama's first 100: Now comes the hard part

(CNN) -- Behind closed doors in recent days, senior White House aides have been saying that measuring President Obama's first 100 days is the journalistic equivalent of a Hallmark holiday.

"They don't mean anything," quipped one aide, "but you have to observe them."

But literally in the next breath the very same aide got pretty bold -- saying anyone doing one of these anniversary stories would be "hard-pressed to find another administration that has done as much" as Obama so early in a presidency, even when compared to the productivity of FDR.

"[Most productive] I think in my lifetime," said the senior aide. "An extraordinary beginning, but just the beginning."

In other words, Obama is just showing up for work on this "Hallmark holiday" with more than just a crummy greeting card to celebrate the occasion.

There will be metaphorical flowers and candy in the form of a White House welcome for the president's new BFF and favorite Democrat, Sen. Arlen Specter, to claim bipartisanship.

That's followed by a quick afternoon jaunt to the Midwest to show off early results at a town hall meeting in Missouri (the Show-Me State, get it?).

All of that capped off by the bright lights of a prime-time news conference in the East Room of the White House.

All this begs the question: Why did Obama's team suddenly embrace all this hoopla for what they claim to be an artificial holiday?

Part of the reason is that the president's advisers privately express some amazement that amid all of the crises facing America, Obama's approval ratings are sky-high.

They know it's probably inevitable that his poll numbers will come down, so they want to keep using what is probably their best asset -- the president himself -- now while they have the public's attention and can take advantage of his appeal.

"The American people are taking a measure of the president," a second top White House aide told me, "and they are saying 'we are happy with the decision we made' " in November.

Another reason for the aggressive sales pitch is even some of the president's fiercest Republican critics have to grudgingly admit the man has been busy charting an ambitious course in tough times.

He's signed 19 executive orders and 12 laws, most notably the $787 billion economic stimulus plan, the largest recovery package ever.

Ever.

Not to mention an expansion of children's health insurance and historic pay equity changes.

On foreign policy, he's largely kept campaign promises to wind down the war in Iraq, increase the U.S. troop presence in Afghanistan, and begin the process of shutting down the U.S. military prison at Guantanamo Bay.

But now comes the really hard part, and there are political land mines all around.

On domestic policy, Obama is facing roadblocks on his grand plans for health care and energy amid Republican charges he will sink the country deeper into debt to pay for it all. Oh, and did I mention there's still great uncertainty about the housing market, stock market, and auto bailouts?

On foreign policy, Iraq and Afghanistan are still huge wild cards. Meanwhile, the administration's diplomatic overtures to Iran, Cuba and Venezuela could produce spectacular results or they could fail dramatically and feed into Republican charges he's weak on national security.

The Specter party switch gives the president a tactical victory in that if his party has a 60-seat, filibuster-proof majority in the Senate, he can potentially muscle through key pieces of his agenda.

But this alone will not solve Obama's problems. There will be days when Specter bucks the president, and days when conservative Democrats like Sen. Ben Nelson jump ship, and suddenly 60 votes evaporate.

That's why the Specter move has to be considered in a much broader context -- this is an opportunity for Obama to deal with a much broader campaign promise that he has not come close to achieving, changing the tone in Washington and figuring out how to get both parties to work together. Can Obama use this moment to develop a genuinely bipartisan governing coalition, or will bitterness over Specter's move just lead both parties to retreat to their respective corners?

Look for the president in tonight's prime-time press conference to try and pivot to the next 100 days by saying the early burst of activity -- in the words of a top aide -- has been "a good down payment on change and he's ready to work to bring both parties together.

"The president has accomplished a lot," asserted this top aide, "but he also laid the foundation for the next 100 days."

The success of those next 100 days and beyond may largely be measured on how well the president can forge consensus with key Republicans on some of these big issues.

Maybe sending a few Hallmark cards to Capitol Hill can help break the ice.

Home prices down, but rate of loss eases

NEW YORK (CNNMoney.com) -- The weak housing market continued to plague home sellers in February as home prices extended their losing streak to 31 consecutive months, according to a report issued Tuesday.

However, the rate of decline slowed, with the S&P/Case-Shiller 20-city home price index not hitting a record low for year-over-year drop for the first time since October 2007.

"We will certainly need a few more months of data before we can determine if home prices are finally turning around," said David Blitzer, chairman of the index committee at Standard and Poor's.

The index fell 18.6% from February 2008, compared with a 19% year-over-year decline in January. The index was also down 2.2% from January. The index has not recorded a price rise since July 2006 and has fallen 30.7% since that peak.

"I don't think it's great news," said real estate analyst Mike Larson of Weiss Research. "It's just a moderation in the monthly declines and it fits in with the pattern we're seeing of things getting less bad."

"But it's still a weak market. The patient has moved out of intensive care unit but it's still in the long-term care ward," he added.

Moderation: This is the second time in the past several months that the decline trend has seemed to moderate, according to Ken Goldstein, an economist with the Conference Board.

"The first occurence proved to be a ledge on the way down to the bottom," he said. "We're probably closer to the bottom now."

The leveling off has had a positive impact on consumer confidence,, which jumped suddenly this month, although still ay historically poor levels.

"Consumers are no longer in despair," said Goldstein. "They're just depressed."

Cities: Of the 20 cities tracked by the index, 16 recorded a slower decline in February than the month before.

No index city has fared as poorly as Phoenix, where prices have fallen 35.2% over the past 12 months and 4.5% in January. Prices are down 51% from their peak.

But Phoenix is hardly unique, according to Larson. He said that if you ask any real estate agent in any of the once overheated markets, he or she will tell you that prices in many neighborhoods are off 40% to 50% from their highs.

Las Vegas, which has recorded more foreclosures than any other city, is close behind Phoenix with a 31.7% year-over-year loss and a drop of 3.6% for the month. Prices there are off 48.4% from their peak.

Other big losers include San Francisco, down 31% over the past 12 months and 3.3% for the month; Miami, down 20.5% year-over-year and 3% month-over-month; and Los Angeles, 24.1% lower on an annual basis and down 2% on a monthly basis.

The housing bust has touched some of the cities on the list less severely. In Dallas, prices were down 4.5% annually and 0.2% monthly. Denver showed a 5.7% annual drop and a 1.7% monthly dip, and Boston was 7.2% lower on a yearly basis and 1.3% monthly.

That price declines did not accelerate in February is certainly a positive change, according to Goldstein, showing that the housing crisis is beginning to let up a little.

"Still, we're in a deep hole, one that will be tough to climb out of," he said.

First time home buying made possible with the help of an $8,000 tax credit

COLUMBIA -- Many Americans are feeling the effects of the current economic crisis. And that, lawmakers say, has kept potential first time home buyers sitting on the fence.

But a tax credit, aimed at jump starting home sales, is helping some in our area buy their first house.

Travis Peterson and his wife just bought their first home in Columbia. It's the American Dream. And theirs was made possible with the help of an $8,000 tax credit.

"It's just been a blessing that credit came along," Peterson said. "And I'm so glad our realtor actually told me about it."

The Peterson's were able to buy their house, in part, because of the stimulus bill signed by President Obama, which includes a tax credit for first time home buyers.

"This is $8,000 that you can get back from the federal government to use to buy a house for the very first time in your life," said Sen. Claire McCaskill (D-Mo.) "To get your piece of the American dream."

The tax credit is designed to boost the economy by encouraging home buying, and so far it seems to be working. So far this year, 388 homes have been sold in Columbia. Of those, 6.5 percent were made possible thanks to the tax credit.

McCaskill says it's somewhat of a Catch-22 for home buyers since the credit can only be claimed after buying a house.

First time buyers, like the Peterson's, can often afford monthly mortgage payments but sometimes need help with up front fees, like down payments and closing costs.

To help, the Missouri Housing Development Commission (MHDC) is fronting the $8,000 tax credit to first time home buyers in an effort to jump-start local sales. So far, Missouri is the only state to offer this type of program.

"Missouri is the envy of the nation," said Carrol Van Gorp, with the Columbia Board of Realtors. "And they just are drooling over the program."

The money will be loaned out interest free and will be repaid back when the homeowner gets their federal tax credit.

"Our clients love it," said Jessica Kempf, a Columbia realtor. "I mean, it's actually making them jump off the fence and purchase something."

Quick Details:

* The federal tax credit is only available for first homes purchased between Jan. 1 and Dec. 1, 2009.

T.G.I.F.

Good Friday Everyone,

This week's T.G.I.F. video is from 47 Year old Susan Boyle wows the judges with her performance in the auditions for Britains Got Talent, singing I dreamed a dream from Les Miserables.

I went to show my mom the Susan Boyle video, she said I already saw that on youtube. Crazy.

Amazing,

Calvin Bui

Hope seen, despite home sales downturn

NEW YORK (CNNMoney.com) -- Sales of existing homes fell in March, according to an industry report released Thursday, but analysts say the housing market is showing signs of stabilization.

The National Association of Realtors said that existing home sales fell last month to a seasonally adjusted annual rate of 4.57 million units, 3% lower than the downwardly revised rate of 4.71 million in February.

March sales were down 7.1% year over year, and came in weaker than the 4.65 million rate forecast by analysts surveyed by Briefing.com.

Despite last month's decline, existing home sales appear to be stabilizing, according to Ian Shepherdson, economist at High Frequency Economics.

"Sales are volatile month-to-month, but the trend appears to be flattening off," Shepherdson said in a research note.

Single family home sales, which are considered the core of the market, fell at a 10% annualized rate in the first quarter of 2009, after a 17.4% drop in the last three months of 2008. At the current sales pace, existing-home sales will be down "only" 2% in the second quarter, according to Shepherdson.

First-time buyers made up 53% of existing home sales in March. Charles McMillan, NAR's president, said first-time buyers are "crucial" to a recovery in the overall housing market.

"The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down," McMillan said in a statement.

Meanwhile, sales of "distressed properties" accounted for over half of all transactions in March. Foreclosed homes typically sell for 20% less than traditional homes, according to NAR.

"Clearly foreclosure activity is driving the marketplace," said Adam York, an economist at Wachovia Economics Group, in a research report. "Buyers are clearly looking for 'bargains,' if they are looking at all."

Existing home sales in the West declined 4.2% in March. Sales in the South and the Northeast also fell, while sales in the Midwest were unchanged.

The national median existing-home price was $175,200 in March, up 4.2% from $168,200 in February. Still, the median existing-home price was down more than 12% since March 2008, when it was $200,100.

The total number of existing homes on the market at the end of March fell 1.6% to 3.74 million units. At the current sales pace, it would take an estimated 9.8 months to sell that inventory of properties. That's down from 9.7 months in February.

"The inventory overhang has stabilized too," Shepherdson said. But the number of existing homes on the market remains historically high, and prices will continue to fall rapidly "for the foreseeable future," he said.

Las Vegas tops foreclosure list

NEW YORK (CNNMoney.com) -- The 26 cities with the highest foreclosure rate in the nation are all located in four hard-hit states, with Las Vegas topping the list, according to a report released Wednesday.

Metro areas in California, Florida, Nevada and Arizona topped the foreclosure filing list for the first quarter of 2009 in a report from RealtyTrac, an online marketer of foreclosed properties. A foreclosure filing includes default papers, auction sale notices and repossessions.

Las Vegas had the highest rate of foreclosures of any city, with one in every 22 homes subject to a foreclosure filing in the first three months of the year. The rate of foreclosure filings was 4.5%, seven times the national average.

Merced, Calif., had the second highest rate, with Cape Coral-Fort Myers, Fla., Stockton, Calif., and Riverside-San Bernardino-Ontario, Calif., rounding out the top five.

"The metro areas with the highest levels of foreclosure activity in the first quarter of 2009 paint a picture of concentrated problems in a relatively small number of hard-hit areas," said James J. Saccacio, chief executive officer of RealtyTrac, in a written statement.

Foreclosure rates have been very high in the 4 key states throughout the bursting of the housing bubble, and so it was to be expected that cities from those states would pepper the top of the list.

However, it was a surprise to see the list so top heavy, according to Rick Sharga, senior vice president at RealtyTrac.

"The concentration of troubled metro areas within the hardest-hit states, candidly, was even more severe than we expected it to be," Sharga said. "The degree to which those four states dominated the rankings surprised even us."
0:00 /0:48Should I sell my house short?

New problem cities: Meanwhile, some metropolitan areas had a surge in foreclosures. Boise City-Nampa, Idaho, in 27th place, Provo-Orem, Utah, in 37th, and Charleston-North Charleston, S.C., in 51st were examples Sharga gave of areas that had particular strong gains in filings.

Sharga said the rise of foreclosures in additional regions indicates new factors influencing the housing market as the recession drags on.

"What we believe we are seeing is some of the areas with unemployment problems," said Sharga. "These are people living paycheck to paycheck and, when the paycheck is gone, suddenly they can't afford to make their mortgage payments."

The data for RealtyTrak's metro area foreclosure report is collected from 2,200 counties across the nation, and those counties represent more than 90% of the U.S. population. Some 203 areas are covered by the report.

Across the nation, foreclosure activity in the first quarter hit a record high, according to another RealtyTrac report issued last week. Total foreclosure filings reached 803,489 in the first three months of the year, the highest monthly and quarterly totals since RealtyTrac began reporting in January 2005.

The national report also found that the worst of the foreclosures were centralized in a handful of worst-hit states. California, Florida, Arizona, Nevada and Illinois accounted for nearly 60% of the total foreclosure activity in the first quarter, with 479,516 properties received foreclosure filings in those states.

Obama launches mortgage rescue plan

NEW YORK (CNNMoney.com) -- The Obama administration's loan modification program is finally underway.

The Treasury Department announced Wednesday the first six participants to sign up for President Obama's plan. They include three of the nation's largest banks: JPMorgan Chase (JPM, Fortune 500), which will get up to $3.6 billion in subsidy and incentive payments; Wells Fargo (WFC, Fortune 500), $2.9 billion; and Citigroup (C, Fortune 500), $2 billion. The others are GMAC Mortgage, $633 million; Saxon Mortgage Services, $407 million; and Select Portfolio Servicing, $376 million.

Additional loan servicers will be added to the list over time, a Treasury spokesman said.

Several major servicers, including JPMorgan Chase and Wells Fargo, said they began modifying loans under the government initiative earlier this month. CitiMortgage signed up for the program on Monday and will start processing applications soon.

"We view this modification program as yet another incremental opportunity for thousands of homeowners to preserve and maintain the dream of homeownership," Wells Fargo said in a statement.

Distressed homeowners and housing counselors have been eagerly awaiting the program's launch since Obama first announced it on Feb. 18. However, it took weeks for the government to clarify the terms and for the financial institutions to update their systems and start accepting applications, frustrating many of those in trouble.

Billed as helping up to 9 million borrowers stay in their homes, the two-part plan calls for servicers to reduce monthly payments to no more than 31% of eligible borrowers' pre-tax income or to refinance eligible mortgages even if the homeowner has little or no equity. The government is allocating $75 billion to subsidize part of payment reduction, as well as provide thousands of dollars in incentives for servicers and borrowers to participate.

The Treasury Department said Wednesday it is capping the payments to servicers to allow more companies to participate. It is allocating $50 billion to the program, with Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500) and the Department of Housing and Urban Development providing the rest.

The modification plan calls for the servicer to reduce interest rates so that the monthly obligation is no more than 38% of a borrower's pre-tax income, and then the government would kick in money to bring payments down to 31% of income. Servicers can also reduce the loan balance to achieve these affordability levels. The government will share in the cost, up to the amount the servicer would have received if it had reduced the interest rates.

Only loans where the cost of the foreclosure would be higher than the cost of modification would qualify. Also, Treasury will not provide subsidies to reduce rates to levels below 2%.

It was not immediately clear whether the servicers must pay the incentives to homeowners and investors out of their funding share.

In addition to subsidizing the interest rates, servicers will use the Treasury funding to pay for incentives for themselves, homeowners and investors. The program gives servicers $1,000 for each modification and another $1,000 a year for three years if the borrower stays current. It will also give $500 to servicers and $1,500 to mortgage holders if they modify at-risk loans before the borrower falls behind.

Homeowners, meanwhile, will get up to $1,000 a year for five years if they keep up with payments. The funds will be used to reduce their loan principals.

The Treasury Department set the caps based on public data about the mortgages the servicers handle. Though the program mandates that servicers modify all loans that meet the requirements, the department feels the servicers will have sufficient funds to cover all troubled borrowers' applications.

"We're confident we'll have enough money," said Treasury spokesman Andrew Williams.

Separately, major servicers also recently started accepting applications under the refinance portion of the program.

How to nab a low-rate home loan

(Money Magazine) -- On paper it seems like the perfect time to refinance. The average rate on a 30-year fixed mortgage recently hit a 20-year low when it fell below 5% in mid-March. And the Fed has said that it will spend $300 billion to buy back government-backed Treasury bonds; that will probably keep loan rates low for months to come.

But wade into the mortgage market, and you may quickly feel as if you're trying to grab a dollar in a game-show booth where the money is blowing around: Those ultralow rates are right in front of you, yet maddeningly elusive.

Lenders, grappling with deadbeat homeowners and shifting regulations, have pared back on mortgage products and upped credit requirements. Still, you have a good incentive to try: If you took out a mortgage two years ago, when rates were in the mid-sixes, you stand to drop your rate nearly two percentage points, saving almost $300 a month on a $300,000 loan. Here's how to navigate the roadblocks.

Figure out if you qualify. Nowadays, credit score and equity are king. To land the best rates, you'll probably need a credit score of at least 740, and 20% equity. "Banks are looking for reasons not to lend you money," says Mark Miskiel of Lighthouse Mortgage in Sedona, Ariz.

If you don't have 20% equity, a refi isn't out of the question - President Obama's housing package allows homeowners who owe as much as 105% to receive government-backed loans. To qualify for that program, however, your original mortgage must be held by one of the government-sponsored entities, Freddie Mac or Fannie Mae; you must prove that you can keep up with payments; and you'll get stuck with fees that tack 0.25% to 3% onto your rate.

Get rid of the HELOC. Home-equity loans and lines have become the enemy of would-be refinancers. Before you can close on a new loan, your home-equity lender must agree to "subordinate" the secondary loan (meaning that your primary lender will get repaid first in the event you run into financial trouble). That can take at least a month, says Bob Moulton of the Americana Mortgage Group in Manhasset, N.Y.

One way to speed up the process is to do a consolidation refi through your home-equity lender. If that's not possible, aim to submit the subordination paperwork as you start shopping for a primary mortgage. And know that other lenders may add up to 0.25% to your rate to cash out the secondary loan.

Know where to look. No matter how stellar your credit, you won't get a great rate without doing some serious shopping. That's because every bank is using different standards for underwriting loans, so while you may look like a risky borrower to one, another may welcome you with open arms. In general, says Keith Gumbinger of mortgage data firm HSH Associates, you're likely to get the best rates from small local banks and credit unions.

Unfortunately, if you need a jumbo loan (typically $417,000, but it can go up to $729,750 in high-cost areas), you can kiss those super-low rates goodbye. While jumbos normally run about half a percentage point higher than smaller ones, today the spread is a point and a half.

Pay a point upfront. A point, which equals 1% of your mortgage amount, typically buys you an eighth to a quarter of a percentage point drop in your rate. Today some overloaded lenders are knocking half a percentage point off for those who pay a point, hoping this extra initial cost will deter serial refinancers.

If you're planning to stay put for about five years, it may be worth it. Conversely, consider adding an eighth of a percentage point to your rate to lock it in for 45 days. Banks and lenders are putting a lot more effort into vetting applications, so it can take up to two months to close a loan, vs. about 30 days in the past; you don't want to risk rates' moving against you while you wait. The payoff for patience: a loan you can live with, for a very long time.

Not so long ago, having a pulse qualified you to take out a mortgage. These days lenders are vetting applicants with the ardor of a Senate committee grilling an AIG executive. Here's a summary of what's changed.

T.G.I.F.

Happy Friday Everyone,

As I sit here and write this morning's blog entry, I'm constantly reminded about the Long Beach Grand Prix...So, this week's T.G.I.F video is dedicated to just that. This one is for you Mayor Foster, I know you read my blog religiously!!!

Enjoy the weekend and thank you for making my blog the #1 real estate blog in Long Beach!!!

Foreclosure filings jump 24%

NEW YORK (CNNMoney.com) -- Foreclosure activity skyrocketed in March and the first quarter of 2009 to their highest levels on record as banks lifted moratoria on filings.

Total foreclosure filings - which include default papers, auction sale notices and repossessions - reached 803,489 in the first quarter, according to a report released Thursday by RealtyTrac, on online marketer of foreclosed properties. That is a 24% jump over a year earlier and a 9% increase compared to the previous quarter.

Of those filings, 341,180 happened in March - a 17% increase from February and a 46% jump from March 2008.

The March and first quarter numbers were the highest monthly and quarterly totals since RealtyTrac began reporting in January 2005.

"In the month of March we saw a record level of foreclosure activity - the number of households that received a foreclosure filing was more than 12% higher than the next highest month on record," said James J. Saccacio, chief executive officer of RealtyTrac, in a statement.

"Since much of this activity was in new foreclosure actions, it suggests that many lenders and servicers were holding off on executing foreclosures due to industry moratoria and legislative delays," he added.

The one bright spot in the report was that fewer homes were lost to bank repossessions in March and the first quarter, falling 3% from February and 13% from the previous quarter, the report said.

Foreclosures have hit the economy hard. Housing prices have plummeted and some homeowners are severely underwater - meaning they owe more than their homes are worth. That can remove the incentive to keep up with mortgage payments.

Amid mass layoffs and pay cuts, soaring unemployment is a bigger reason for missed mortgage payments than high interest rates, according to a study from the Federal Reserve Bank of Boston.

Still, the housing market may be picking up. Builder confidence in April made its most dramatic increase in almost seven years.
Worst-hit states

Five states accounted for nearly 60% of the total foreclosure activity in the first quarter: In California, Florida, Arizona, Nevada and Illinois, 479,516 properties received foreclosure filings.

California alone, with 230,915 filings in the first quarter, accounted for nearly 29% of the total. The number of foreclosure filings in the state increased 35% from the fourth quarter and 36% from the year-ago period.

In March, California had 107,785 total filings - a jump of 33% from February and almost 67% from a year ago.

The state is tied with Rhode Island for the fourth-highest unemployment rate, at 10.5%. Jobs are disappearing as the housing crisis drags down California's economy.

Florida's total filings in the first quarter fell 12% from the fourth quarter, but the state's 119,220 were still the second-highest in the country.

Third was Arizona, with one filing for every 54 households, up almost 80% year-over-year and 6.2% from the fourth quarter.

Nevada was fourth in total filings, and first in completed foreclosures. Its foreclosure rate was more than five times the national average, and one in 27 houses received a filing.

Like California, Nevada employment has suffered as a result of the housing crisis. Nevada had a total of 41,296 filings, almost 111% over last March and 19% over the fourth quarter.

Bank repossessions in Nevada were down 3% from the fourth quarter, but defaults increased 27% and auction sale notices rose 35%.

Banks aren't reselling many foreclosed homes

A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."

In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory."

"There is a real danger that there is much more (foreclosure) inventory than we are measuring," said Celia Chen, director of housing economics at Moody's Economy.com in Pennsylvania. "Eventually those homes will have to be dealt with. If they're all put on the market, that will add more inventory to an already bloated market and drive down home prices even more."
More than one-third locally

In the Bay Area, a Chronicle analysis of data from San Diego's MDA DataQuick shows that more than one-third of foreclosures are in shadow territory - that is, they are not registering in county records as having been resold.

For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for.
Turnaround usually quick

Realtors say foreclosures generally go on the market a month or two after the bank takes title and then sell fairly quickly, often getting an accepted offer within a week or two of being listed and then closing escrow within 30 days. That means that foreclosures should register as being resold within three months.

But taking the foreclosures in any given month or selection of months and looking at what happened three months later also reveals a big gap between what banks took back and what they resold.

Tom Kelly, a spokesman for banking giant Chase in Chicago, said the bank sells foreclosed homes in a timely fashion.

"We try not to be in the business of owning homes," he said. "Our goal is to get them back on the market as quickly as possible. We want to maximize what we sell them for and yet do it quickly."

Kelly was at a loss to explain the shadow inventory phenomenon other than the quantities involved.

"The inventory might be growing because there is just a lot of volume coming in. That would not surprise me," he said.

Locally, the monthly number of foreclosures has decreased since peaking at 4,321 in August 2007. That has allowed foreclosure resales to start closing the gap.

Most observers say the recent fall-off in foreclosures came because California and many banks implemented foreclosure moratoriums in the fall, not because the problem has diminished.
Only 65.5 percent resold

A second DataQuick study of all Bay Area homes repossessed by banks in the 18 months ending January 2009 tracked how many of those homes had resold by mid-March. It found that 65.5 percent had resold. Discovery Bay's ForeclosureRadar.com compared its database of Bay Area foreclosures to MLS listings for the past 120 days and found that fewer than one-fifth of the foreclosures showed up as for-sale listings.

"Foreclosure numbers are artificially depressed," said CEO Sean O'Toole. He puts California's shadow inventory at about 100,000 homes.

So why aren't banks selling off their foreclosures?

Observers say several factors are at work.

-- The "pig in the python": Digesting all those foreclosures takes awhile. It's time-consuming to get a home vacant, clean and ready for sale. "The system is overwhelmed by the volume," Sharga said. "In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month."

-- Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. "With banks in the stress they're in, I don't think they're anxious to show losses in assets on their balance sheets," O'Toole said.

-- Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don't fall as fast. "They want to be careful about not releasing them too quickly so they don't drive prices down and hurt the values," O'Toole said.

Besides the shadow foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they're negotiating with homeowners about loan modifications or other ways to keep them in the home. But banks also could be deliberately foot-dragging for the same three reasons listed above.

"The problem is that no one knows how extensive (the shadow inventory) is," said Patrick Newport, U.S. economist with the Massachusetts research firm Global Insight. "It's a wild card. If it's a really big number, you'll see prices drop a lot more and deeper problems for the financial system."

Unemployment: Big factor in home defaults

NEW YORK (Reuters) -- Unemployment is a bigger reason for missed mortgage payments than high interest rates, according to a study from the Boston Federal Reserve that raises questions about President Obama's plan to stem foreclosures by modifying loans.

Borrowers are more likely to default on their payments because they have lost their jobs or because the price of their homes has plummeted than because of tough terms on their mortgages, the study found.

Loan modifications are not necessarily a better deal for investors either, wrote Boston Fed economists Christopher Foote and Paul Willen, Atlanta Fed economist Kristopher Gerardi and Lorenz Goette, a professor at the University of Geneva.

Their research found that policies that directly help homeowners overcome setbacks such as losing their jobs may be more effective in combating foreclosures.

"Foreclosure-prevention policy should focus on the most important source of defaults," the economists wrote in a study released on the Boston Fed's Web site late last week.

The findings challenge the thinking behind a White House plan announced in February that would give up to 9 million families the chance to refinance their mortgages. President Obama's administration has made loan modifications a central plank of its efforts to tackle the housing crisis.

"One of the most influential strands of thought contends that the crisis can be attenuated by changing the terms of 'unaffordable' mortgages," the economists wrote. But policies that focus on loan modification "face important hurdles in addressing the current foreclosure crisis," they wrote.

The economists suggest that the government could instead replace part of an individual homeowner's lost income from a job loss through loans and grants and help those whose predicament is more permanent become renters.

In addition, investors do not necessarily stand to gain if foreclosure is avoided, they said, and that could help explain the relatively small number of loan modifications to date. Estimates that total gains for investors from modifying rather than foreclosing can run to $180 billion may not take into account a number of key factors.

Investors can lose money when they modify mortgages for borrowers who would have repaid anyway. Borrowers with modified loans may default again later, especially if the reason they were driven to default remains, the economists said.

Obama urges mortgage refinancing

WASHINGTON (Reuters) -- President Barack Obama encouraged Americans Thursday to take advantage of historically low mortgage rates and said his administration was rolling out further phases of its plan to address the housing crisis.

Turning his attention to the U.S. economy after finishing his first trip as president to Europe and Iraq, Obama said more people across the United States could save money by refinancing their loans.

"The main message that we want to send today is, there are 7 to 9 million people across the country who right now could be taking advantage of lower mortgage rates," he told reporters during a meeting with advisers and a group of people who had taken advantage of the lower rates.

"We estimate that the average family can get anywhere from $1,600 to $2,000 a year in savings by taking advantage of these various mortgage programs that have been put in place."

Obama said citizens could check a Web site, MakingHomeAffordable.gov, to see if they were eligible for mortgage refinancing.

"We are in the process of rolling out additional phases to the program," he said, referring to the administration's housing measures.

"We are putting in place a loan modification program, working with banks, working with services that will allow other folks who are closer to losing their home (be) in a stronger position in the future.
Interest rates to go lower?

Meanwhile, the top U.S. housing official said interest rates on typical home loans will continue to fall from their current, record lows.

"I think you will see them continue to come down, based on everything that we're doing, but recognize that they've already started to make a big difference," Housing and Urban Development Secretary Shawn Donovan said on CNBC.

Obama, who spent part of his trip to Europe working on solutions to the global economic crisis, emphasized that the U.S. problems stemmed from the housing sector.

"Obviously one of the triggers of the financial crisis and now the economic crisis that we've suffered is that because in some areas ... housing values got way overheated, in some cases you had a lack of regulation that allowed all sorts of complex financial instruments take advantage of home owners," he said.

"We have seen a collapse in the housing market, a precipitous drop in values, and that led to our problems in the financial markets."

Making Home Affordable program may enable millions to refinance mortgages

So you want to refinance your house, but it's not worth enough for you to get a good loan in the current market? A new Obama administration program is designed to fix that problem for millions of homeowners.

Here's how it works. In the past, the federal Fannie Mae and Freddie Mac mortgage programs would only handle loans of up to 80% of your home's value, unless you bought mortgage insurance. And if you owed more than your home was worth, you were flat out of luck.

As of this month, that has changed. Through June 2010, borrowers whose loans are owned or guaranteed by Fannie or Freddie may be able to get quick refinances for up to 105% of a home's value. They must be current on their mortgage payments, but administration officials estimate that as many as 5 million homeowners qualify. And refis are available for borrowers with credit scores as low as 620.

"This is going to create a real opportunity for millions of people to save money on their mortgages -- or replace an adjustable-rate mortgage with a fixed rate," Freddie Mac spokesman Brad German said.

First, the rationale for the program.

As federal interventions go, encouraging refinancings may not compare with the $182.5 billion bailout of American International Group Inc. But a homeowner with a $500,000 loan can save $476 a month by cutting a 6.5% interest rate on a 30-year mortgage to 5% -- savings that can be plowed back into the economy or can reduce the odds of foreclosure should the downturn deal the borrower a financial blow.

The historically low rates also make this a perfect time to replace a bubble-era adjustable-rate or interest-only loan with a traditional 30-year or 15-year fixed mortgage.

Switching to a fixed rate might mean higher payments initially, because of an artificially low payment on the adjustable mortgage, but guards against even higher payments in the future should rates skyrocket during an inflationary period, German pointed out.

Now, some caveats about the new refi program:

For starters, it's only for folks with solid payment histories. You're allowed to have been 30 days late on a single monthly mortgage payment once during the past year, but no more than one, and no 60- or 90-day late payments.

What's more, the refinancings only work for mortgages owned or guaranteed by Fannie Mae or Freddie Mac. Still, about 40% of all U.S. home loans are Fannie or Freddie loans, Faith said, so millions will be covered.

Borrowers who owe less than 80% of their homes' values are not eligible. They have the opportunity to turn to standard refinancings, a currently white-hot market that, as Kathy M. Kristof reports in an accompanying story, can require jumping through a host of financial hoops these days.

There are financial limits to the largesse, though. The maximum Fannie or Freddie loan is $729,750 in Los Angeles, Orange, Ventura and Santa Barbara counties, $697,500 in San Diego County, and $500,000 in Riverside and San Bernardino counties. Larger "jumbo" mortgages carry a heavy premium.

The erosion of home prices in former boom regions such as California is also a factor because a lot of people owe more than 105% of what their home is worth.

Finally, although the government-sponsored Fannie and Freddie refinancings are designed to encourage lenders to make new loans, the program is entirely voluntary. On its informational website, the government tells borrowers to exercise patience because lenders and servicers are just starting to implement the program, "and there may be a slight delay before they are prepared to process all applications."

If you think you're eligible and want to check, an initial screening test is available at the government website, including directions on how borrowers can determine if their loan is owned or guaranteed by Fannie or Freddie.

Mortgage applications rise

NEW YORK (Reuters) -- U.S. mortgage applications rose last week, as demand for home purchase loans jumped even as interest rates edged up from record lows, data from an industry group showed on Wednesday.

Demand for home purchase loans, an indicator of home sales, far outweighed demand for refinancing. The increase may help gauge what is in store for the hard-hit U.S. housing market this spring, the peak home buying season.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended April 3 increased 4.7% to 1,250.6.

Cameron Findlay, chief economist at LendingTree.com, based in Charlotte, North Carolina, said home loan demand at his company has remained strong and steady over the last several weeks.

"In addition, the quality of the borrowers coming to us has remained high with high FICO scores and low loan-to-value ratios," he said on Tuesday. "This is an encouraging sign as responsible borrowers looking to purchase or refinance their homes are getting the help they need with low rate, high-quality loans."

FICO scores refer to borrowers' credit ratings.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.73%, up 0.12 percentage points from the a record low reached the previous week. The survey has been conducted weekly since 1990.

Interest rates were well below year-ago levels of 5.78%.

"As rates remain at historic lows, we anticipate this trend will continue as more borrowers take the time to shop around for competitive rates on home loans," he said.

The U.S. housing market is in the worst downturn since the Great Depression and its impact has rippled through the recession-hit economy, as well as the rest of the world. Economists contend that the economy may not emerge from its slump unless the housing market stabilizes.

Low mortgage rates have generated demand for home refinancing loans and should continue to do so. Lower monthly payments provide a bit of relief to strapped consumers amid rising unemployment and a shrinking economy.

Until last week, the low rates had only a moderate impact on demand for loans to buy homes.

The MBA's seasonally adjusted purchase index rose 11.1% to 297.7.

The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 13.3%.
Weekly refinancing activity rises

The Mortgage Bankers seasonally adjusted index of refinancing applications increased 3.2% to 6,813.5.

The refinance share of applications decreased to 77.9% from 79.1% the previous week. The adjustable-rate mortgage share of activity was unchanged at 1.5%.

Fixed 15-year mortgage rates averaged 4.49%, up from 4.45% the previous week. Rates on one-year ARMs increased to 6.23% from 6.20%.

Signs of life in California real estate

NEW YORK (CNNMoney.com) -- No state has been harder hit by the housing bust than California.

It has piled up more foreclosures and has endured among the worst home-price declines. The median price of a single-family home sold in February was $247,590, down 41% from 12 months earlier, according to the California Association of Realtors (CAR).

And home construction in the Golden State has nearly vanished: December housing permits shrank to about a quarter of what they were during the boom years, according to the National Association of Homebuilders.

Housing on the rebound?

But there are signs that California's housing market may be coming out of this tailspin: Sales volume is increasing, investors are returning and inventory is shrinking.

Bringing back buyers

Low prices have brought out droves of buyers. In February, they purchased more than 600,000 homes, some 80% more than they bought in February 2007, according to CAR. And most of this activity is where prices are off 40% to 60% from their peaks.

In the Sun City area of Riverside County, for example, prices have fallen more than 35% over the past 12 months. Two-thirds of February's sales in the area were of foreclosed properties owned by banks, according to Chuck Whitehead, broker with Coldwell Banker Associated Brokers.

"The sales rebound is largely centered around areas that have experienced the biggest impact from the subprime crisis," said CAR chief economist Leslie Appleton-Young.

How low can home prices go in your city?

In more stable communities, where fewer homes were saddled with toxic mortgages, prices have not crashed as badly and sales are rebounding more slowly. But foreclosures still account for a significant portion of sales, according to Phil Jones, a broker with Coldwell Banker Coastal Alliance in Long Beach.

Most analysts foresee continued price declines in California, according to Nicholas Retsinas, director of Harvard's Joint Center for Housing Studies. "But [there'll be] a slowing of that decline, which portends the end of price drops."

That may already be happening in Long Beach, according to Jones. The measure he uses to judge market trends there, price per square foot, turned up in February, growing 5% to $360.

"Every one of my agents is very busy," Jones said.

Investing 2.0

Another positive sign that markets don't have much further to fall is that investors are returning to some markets.

"I spoke with one investor who is putting together a group of buyers and they're ready to get back into the market," said Jones. "They're planning to buy single-family homes in bulk."

John Dugan is one such investor. The San Francisco-based medical supplies salesman is using a portion of his Entrust Group-managed IRA to buy townhouses in the Sacramento area.

So far he's purchased three 840-square-foot, two-bedroom, one-bath duplexes. He paid just $35,000 to $80,000 a piece - down from their $180,000 to $200,000 selling prices a few years ago.

He paid cash for the first property and rents it out for $750 a month, a profit of $550 after dues and common charges. That's a 19% return on investment, without figuring on appreciation.

"This kind of pricing is something you only think of as Midwestern, not Californian," he said.

Supply dropping

The booming sales have whittled away existing home inventory to just six and a half months - down from 15 months a year ago.

"Typically, I would describe a normal market as having a six to seven month supply of homes," said Appleton-Young. "We have that now."

California's inventory now compares favorably with the rest of the nation, where there's a 9.7 month supply of homes on the market, according to the National Association of Realtors.

One wildcard, however, is that banks have kept many repossessed homes off the market. "Banks are spoon feeding them out very slowly so they don't overload the market," said Whitehead. But, he added, if they release a lot of properties during the heavy spring buying season, they "will be eaten right up by buyers."

Could the end be near?

All of those factors add up to a more optimistic forecast for California, which is seen as a harbinger of things to come for the rest of the country.

Appleton-Young said that while home prices should continue to decline for the rest of 2009, she predicts that the pace of decline will slow. In total, she's predicting a total loss of 19% for the year. But, "I think we could see home price stabilization by early next year," she said.

If that happens in California, it could spread to the rest of the hard-hit Sun Belt markets - and beyond.

"California was the pace setter for lots of the mortgage products that went toxic," said Retsinas. "The sense is if the problems can be addressed there, the rest of the country will follow."

Qualifying for a low-down FHA loan

NEW YORK (CNNMoney.com) -- Mortgages insured by the Federal Housing Administration can be a lifeline for low-income or high-risk borrowers. These loans have tiny down-payment requirements, competitive rates and easy credit-score hurdles.

In fact, terms are so attractive that some may ask why all home buyers don't use FHA mortgages.

Well, a lot more of them do. Since the housing bust began, FHA lending has soared to account for 20% of the total dollar volume in home loans - up from just 3% in 2006. The number of authorized FHA lenders skyrocketed 500% over the past two years.

"FHA stays active in volatile and declining markets, continuing to make mortgage credit available to borrowers, even when private mortgage providers are withdrawing," said the Secretary of Housing and Urban Development, Shaun Donovan, in Senate Appropriations Committee testimony on Thursday. "During difficult times, it is critically important to have an entity like FHA play this role - offering families access to near-prime rate financing."

FHA loans are especially attractive for homebuyers with steady incomes who cannot scrape together a 20% down payment because FHA lenders will finance up to 96.5% of the home price.

According to Maryland-based mortgage consultant Allen Hardester, the other attractions of FHA loans include:

* A better loan modification program. The agency has a long history of helping borrowers who fall behind on payments. In two-thirds of default cases the agency figured out a plan to keep borrowers in their homes. And 90% of those mitigations were still working after two years.
* They're cheap to refinance. FHA loans can be easily - and often cheaply - converted to similar FHA mortgages if interest rates drop.
* Borrowers with weak or limited credit histories may still qualify. Mortgage applicants can have very short credit histories or a late payment or two on their records and still get approved with low interest rates. There is also no mandated minimum credit score; individuals are judged case-by-case.
* Low rates. For months, interest rates on FHA loans have been lower than conventional loans. Plus, rates don't vary with credit score; you pay the same whether you're a 620 or a 700.

Although these loans target low- and moderate-income Americans, there are no income restrictions. However, FHA does limit the amount that can be borrowed, based on area home values. For example, the most that can be borrowed in a high-cost area such as New York City is $729,750; meanwhile, in Buffalo, N.Y., a purchaser can borrow no more than $276,250. Check the cap limits in your home town.

In addition, borrowers must pay an up-front insurance premium totaling 1.75% of the loan, which goes into FHA's fund for repaying lenders if borrowers default. So if you take out a $200,000 loan, you would need $3,500 at closing, in additional to normal costs.

Otherwise, there are few restrictions to getting an FHA loan. However, there is a perception that they are difficult to obtain. And they once were.

Few lenders would originate FHA loans during the housing boom because the underwriting and appraisal process was so strenuous. "If there was a crack in the sidewalk, they wouldn't approve the loan," said George Hanzimanolis, a mortgage broker in Pennsylvania and past president of the National Association of Mortgage Brokers..

That all changed a few years ago when HUD rethought its guidelines. Now, the process can be nearly as fast and painless as conventional loans.

The one class of borrowers who may be slightly better off with conventional mortgages are ones with very high credit scores who make substantial downpayments. Keith Gumbinger, of HSH Associates, a publisher of mortgage information, said they may save an eighth of a point on their rates.

T.G.I.F.

Good morning everyone,

This week's video is from Jimmy Kimmel Live. It's a hilarious look at the video of Nadya Suleman giving birth...As always, thanks for making my blog the #1 real estate blog in all of Long Beach...

Enjoy!!!

When home prices hit bottom

(Money Magazine) -- Call it the Great Housing Paralysis of 2009. If you're hoping to buy your first home or invest in a second one, you're probably sidelined, unsure when to jump in. If you want to sell, you're thinking it may be better to wait. And even if you don't plan to either buy or sell anytime soon, watching one of your biggest assets tank is about as much fun as being chased by hornets. When will the pain stop?

Nationwide, home prices will bottom out at the end of this year, according to the forecasters at Moody's Economy.com. Median prices will probably fall another 10% on top of the 27% they've plummeted since their 2006 peak. That prediction assumes that President Obama's various recovery efforts - including billions to slow foreclosures and goose bank lending, plus a tax credit to most 2009 buyers who haven't owned in the past three years - will have some effect. If they don't, says Economy.com's Mark Zandi, the bottom could come as late as 2011.

And then? "The recovery will look more like a U than a V," predicts Mike Larson, a real estate analyst at Weiss Research. Translation: After home prices hit their lows, they'll probably stay there for a few years as the economy slowly struggles back to its feet. Prices aren't expected to reach their 2006 levels again for another decade.

Before you reach for the Xanax, think about a few things. First, the nation was in a housing bubble, remember? What's happening now is both inevitable and necessary. Second, if you haven't yet bought your first home, you should be happier than Kate Winslet on Oscar night. Third - and most important - the outlook varies dramatically depending on where you live. If you're in Memphis or Greenville, S.C., for example, the bleeding is almost over. Find projections for when the nation's 100 largest metro areas will hit bottom - and how prices are likely to change in the next 12 months in our Real Estate 2009 list.

As you've heard countless times, you should think of your home primarily as a place to live, not as an investment. And it's nearly impossible to time the bottom perfectly. That said, getting a sense of the price trends in your area can give you the confidence to make decisions that can save you a whole lot of money. For the latest advice on buying, investing, and selling - no matter where you live - read on.
Buyers

Factor in future drops. Buying in one of the areas that is expected to keep falling significantly for another year or more is - how shall we put it? - probably not the greatest idea. If you don't currently own a home, keep renting until your market is closer to its trough (you can find that information on the Real Estate 2009 list).

But if you really want to buy now - for example, you're moving to a city where the available rental housing isn't appropriate for your family - aim to negotiate a deal that factors in this year's expected price drop. For example, if your market is forecast to fall 10%, bid at least 10% less than the home's current value. If the seller refuses, find another house (there are plenty).

Even if you can't score a deal like that, you can console yourself that you'll have a decent shot at making up future price declines (and the thousands you spent in closing costs) as long as you stay put for at least five to seven years.

Consider foreclosures and short sales. If getting a great deal is your main goal, look for foreclosures, which typically sell for at least 20% to 30% less than market value, according to foreclosure-listing website RealtyTrac. Because these homes are sometimes abandoned and stripped, get a contractor to make a free estimate of the time and cost of repairs, and make sure they won't wipe out the amount you'd save.

Another economical option: short sales, in which bankers allow homeowners to sell for less than they owe. They can save you 10% or more. The seller typically still lives in the home, so it's usually in decent shape. One big drawback: The process can take up to six months and can fall apart at the last minute. "If foreclosure is 30 to 40 days away, it's very unlikely that the short sale will happen first," says Glenn Kelman, CEO of Redfin, an online real estate broker. For more see "Snag a Great Deal on a Short Sale."

Be smart about mortgages. Today's rates - averaging 5.2% for a 30-year fixed loan - are steals. They'll probably hover in the 4.75% to 5.5% range all year, says Larson, so there's no need to rush to lock in. (Jumbo loans - those larger than $417,000, or up to $729,750 in certain high-cost areas - average 6.8% and are unlikely to close in on traditional rates this year.) However, because some lenders are requiring more information today, it's taking longer (about 45 to 60 days) for banks to approve loans. To land the best rates with no extra costs, you'll usually need at least 20% down and a credit score of 720 or better. And to qualify for any mortgage, your monthly payments toward debt should eat up no more than 43% of your pretax income; your monthly mortgage, insurance, and taxes should total 31% or less.
Investors

Think tortoise, not hare. Because prices have further to fall in most areas, forget about flipping. You're better off investing in, say, a vacation home, a future retirement home, or a rental property that you're planning to hold for a minimum of five to seven years. Otherwise you run a significant risk of losing money from future price declines, plus closing costs.

Focus on location, location, location. If you plan to rent out your purchase at some point, look beyond the deal. "Many investors are simply looking for where prices have fallen the most, but they also need to look for areas where the economy is still strong and people can find jobs," says Amy Bohutinsky, a vice president at Zillow.com. Many cities with large price drops have high unemployment. Look for areas close to public transportation, a university, or shops and nightlife. "Those neighborhoods will appeal to people in their twenties and thirties who have been waiting and renting," says Bohutinsky.

Get pre-approved. Many lenders still want nothing to do with investors, so you'll face tougher loan requirements than you would have a few years ago. Banks may also limit you to perhaps four outstanding mortgages if you don't have tons of cash on hand. Before you start scouting neighborhoods, get pre-approved for a loan so that you're sure you will qualify.
Sellers

Stop deluding yourself. Ignore list prices and base your asking price on what similar homes in your area have actually sold for in the past three months. "Even six months ago the market was totally different," says Ellen Klein, a realtor in Rockaway, N.J.

No nibbles after 30 days? Drop the price. An even better strategy, says Klein: Right out of the gate, price your home at 10% below what comparable ones have gone for. That may attract more than one bidder, pushing up the final price. If your area is on Real Estate 2009 list and is forecast to fall by double digits in the next 12 months, do whatever it takes to unload now. The longer you hold on, the more the value will erode. The alternative: Stay put.

Spiff up the joint. If your area has lots of foreclosures, it'll be hard to compete on price. But it won't be hard to compete on condition. So make repairs now, then heavily market the fact that your house is move-in ready. Throw in a bigger commission to buyer agents so that they'll show it more often. Also advertise that you have a flexible closing date - even if it means you must rent until your next home is ready. That way buyers who must move in 30 days will know yours is an option.

Get creative. If you absolutely must move out soon and your home isn't selling, consider offering a rent-to-own option, sugests Eric Mangan of ForSaleByOwner.com. A potential buyer pays you a monthly sum to live there. After a set number of months - say, six to 18 - he either has the option to buy or is required to buy. You'll need to pay an attorney about $300 to draft the contract. But at least you'll have money coming in each month to cover some or all of your mortgage payment.

No matter where you live, remember that a year can make a huge difference. If the forecasts prove true, by this time in 2010 about half the metro areas mapped on these pages will have stopped falling. The housing market - slowly, gingerly - will start reviving. At last!

Pending home sales off lows

NEW YORK (CNNMoney.com) -- The number of existing homes put under contract ticked up in February after hitting historic lows the previous month.

The National Association of Realtors reported that its monthly Pending Home Sales Index rose 2.1% to 82.1 from 80.4 in January.

The Midwest saw the largest gain of any regions, with pending home sales jumping 14.5%. The Northeast also recorded double-digit growth at 10.6%. The South inched up 4.4%, and the West dropped 13.5%.

"Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we'll see additional sales gains," said NAR's chief economist, Lawrence Yun.

Housing affordability hit a record high in February. NAR's Housing Affordability Index jumped 0.9 percentage points to 173.5 in February, which is up 36.3 percentage points from a year ago. To determine affordability, the HAI incorporates the relationship between home prices, mortgage interest rates and family income.

According to the NAR report, a family earning the national median of $59,700 could afford a $285,600 home in February, presuming they devote no more than 25% of gross income to mortgage principal and interest. The national median price for existing single-family homes is $164,600.

Yun expects inventories of homes on the market to swell during the coming months if sellers follow the normal pattern of increased selling during the spring.

"But with the positive housing stimulus incentives now in place, we expect home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory," he said.

That should lead to more stable housing market conditions by the end of the year, NAR predicts.