Rehab loans- Buy a fixer, get 100% financing for the property and the rehab costs!!

This is a great program for the current state of the market. It is an FHA loan, called the 203k. Bascially it breaks down like this:

You find a 1-4 unit property that needs work and is undervalued. You get a licensed contractor to give a work estimate, you get a loan for either ALL of the costs of buying the property AND ALL of the costs of rehabilitating it OR you get 110% of the as-completed value of the property when you are done with the work. (Lesser of the two) For fix and flippers, a quote comes to mind from a old Cars song "I guess you're just what I needed!". Let's examine a Minor-fied oversimplified example of this loan in action using the details of a real transaction for a four plex property in Los Angeles.

$250000 purchase price
$85000 rehabilitation costs
$335000 total cost for purchase and renovation.

As-completed Value $450000

In this case, we are getting a loan for $335000 which will cover our purchase price and all rehabilitation costs. The loan will automatically convert to a 30 year fixed when the construction is completed. If you are interested in the lurid details of this transaction, this savvy buyer will be putting four section 8 tenants in the building when it is renovated and getting $6400 monthly rent. (The mortgage payment, taxes, insurance and water costs will be $3155 monthly). This is what is called a "Good deal" in Real Estate. The less simplified step by step instruction of this FHA 203k loan are below, taken directly from the HUD website.

This describes a typical step-by-step application/mortgage origination process for a transaction involving the purchase and rehabilitation of a property. It explains the role of HUD, the mortgage lender, the contractor, the borrower, consultant, the plan reviewer, appraiser and the inspector.

A. Homebuyer Locates the Property.

B. Preliminary Feasibility Analysis. After the property is located, the homebuyer and their real estate professional should make a marketability analysis prior to signing the sales contract. The following should be determined:

1) The extent of the rehabilitation work required;

2) Rough cost estimate of the work; and

3) The expected market value of the property after completion of the work. Note: The borrower does not want to spend money for appraisals and repair specifications (plans), then discover that the value of the property will be less than the purchase price (or existing indebtedness), plus the cost of improvements.

C. Sales Contract is Executed. A provision should be included in the sales contract that the buyer has applied for Section 203(k) financing, and that the contract is contingent upon loan approval and buyer's acceptance of additional required improvements as determined by HUD or the lender.

D. Homebuyer Selects Mortgage Lender. Call HUD Field Office for a list of lenders.

E. Homebuyer Prepares Work Write-up and Cost Estimate. A consultant can help the buyer prepare the exhibits to speed up the loan process. If a plan reviewer is the consultant, item G can be skipped and the exhibits can go directly to the appraisal stage.

F. Lender Requests HUD Case Number. Upon acceptance of the architectural exhibits, the lender requests the assignment of a HUD case number, the plan reviewer, appraiser, and the inspector.

G. Plan Reviewer Visits Property. The homebuyer and contractor (where applicable) meet with the plan reviewer to ensure that the architectural exhibits are acceptable and that all program requirements have been properly shown on the exhibits.

H. Appraiser Performs the Appraisal.

I. Lender Reviews the Application The appraisal is reviewed to determine the maximum insurable mortgage amount for the property

J. Issuance of Conditional Commitment/Statement of Appraised Value. This is issued by the lender and establishes the maximum insurable mortgage amount for the property.

K. Lender Prepares Firm Commitment Application. The borrower provides information for the lender to request a credit report, verifications of employment and deposits, and any other source documents needed to establish the ability of the borrower to repay the mortgage.

L. Lender Issues Firm Commitment. If the application is found acceptable, the firm commitment is issued to the borrower. It states the maximum mortgage amount that HUD will insure for the borrower and the property.

M. Mortgage Loan Closing. After issuance of the firm commitment, the lender prepares for the closing of the mortgage. This includes the preparation of the Rehabilitation Loan Agreement. The Agreement is executed by the borrower and the lender in order to establish the conditions under which the lender will release funds from the Rehabilitation Escrow Account. Following closing, the borrower is required to begin making mortgage payments on the entire principal amount for the mortgage, including the amount in the Rehabilitation Escrow Account that has not yet been disbursed.

N. Mortgage Insurance Endorsement. Following loan closing, the lender submits copies of the mortgage documents to the HUD office for mortgage insurance endorsement. HUD reviews the submission and, if found acceptable, issues a Mortgage Insurance Certificate to the lender.

O. Rehabilitation Construction Begins. At loan closing, the mortgage proceeds will be disbursed to pay off the seller of the existing property and the Rehabilitation Escrow Account will be established. Construction may begin. The homeowner has up to six (6) months to complete the work depending on the extent of work to be completed. (Lenders may require less than six months.)

P. Releases from Rehabilitation Escrow Account. As construction progresses, funds are released after the work is inspected by a HUD-approved inspector. A maximum of four draw inspections plus a final inspection are allowed. The inspector reviews the Draw Request (form HUD-9746-A) that is prepared by the borrower and contractor. If the cost of rehabilitation exceeds $10,000, additional draw inspections are authorized provided the lender and borrower agree in writing and the number of draw inspections is shown on form HUD-92700, 203(k) Maximum Mortgage Worksheet.

Q. Completion of Work/Final Inspection. When all work is complete according to the approved architectural exhibits and change orders, the borrower provides a letter indicating that all work is satisfactorily complete and ready for final inspection. If the HUD-approved inspector agrees, the final draw may be released, minus the required 10 percent holdback. If there is unused contingency funds or mortgage payment reserves in the Account, the lender must apply the funds to prepay the mortgage principal.

Avoiding foreclosure with a loan modification-Communication is Key!

It's no secret. The U.S. Real Estate market is in the biggest slump since the great depression. When the real estate bubble burst, it sent property values plummeting downward across the nation. The tidal wave of short-term adjustable mortgage loans increasing in payments is upon us and it is causing foreclosures to spread like a dark plague. People cannot refinance because they have no equity in their homes and in many cases owe more than the property is worth, and simultaneously mortgage lenders have tightened up their lending guidelines making a refinance loan all but impossible. Everyone knows someone who is affected by foreclosure. Entire neighborhoods are being compromised by this wretched and hostile process. If just one home goes into foreclosure on an otherwise desirable street, the other properties could see up to a 55% price reductions in their own homes, just from one low-priced sales comp. Foreclosure is devastating to everyone involved, and also negatively affects others peripherally. The saddest part of this is that the large majority of foreclosures are UNNECESSARY.

The LAST thing the lender wants is to own (another) foreclosed home. The lender only wants the income off of their investment and when that income stream stops, in most cases the mortgage lender and servicer will do everything in their power to restart the flow of income even at a reduced rate. This is one of the tragedies of the whole foreclosure epidemic. People are just giving up and walking away from their home without even attempting to do something. There is a dearth of misinformation floating around now and many half-truths about loss mitigation, foreclosure avoidance and loan modifications in general. The bottom line is this - IF A HOMEOWNER BECOMES LATE ON THEIR MORTGAGE PAYMENTS AND THEY CAN SHOW A STEADY SOURCE OF INCOME, THEY STAND AN EXCELLENT CHANCE OF WORKING OUT A SOLUTION WITH THEIR LENDER(S).

There are several solutions to "loss mitigating" (that's bank-speak for avoiding foreclosure). They are-

Loan Modification, whereby the lender agrees to modify the terms of the original loan and in most cases reduce the monthly payments to what the homeowner can afford. Usually this will involve taking the amount of delinquent payments owed and combining them into the existing principal of the mortgage then lowering the interest rate or making the loan otherwise within reach of the homeowners budget. Alot of urban myths are out there about lenders reducing principle balance on mortgages by hundreds of thousands of dollars. This is very rare, most often the balance stays the same or increases by the amount of late payments but the rate will be reduced and will usually become fixed if it is adjustable. Loan Modification is the best option that a financially solvent homeowner who wants to keep their property can hope for.

Repayment Plan, whereby no change is made to the terms, rate or payment of the loan but the amount of late payments is paid back with some kind of agreed-upon plan and when that plan is completed, the loan resumes where it initially was before the delinquency occurred. This can be beneficial for the homeowner if the reason for the delinquency was short-lived and the original loan is on good terms (fixed rate, less than 7%).

Forbearance agreement, whereby the lender agrees to reduce or suspend payments for a certain period of time and then resume the normal billing cycle of the loan. This is most appropriate for short term reductions in income, i.e. loss of a job with the ability to get another job with some certainty.

Deed-in-Lieu of Foreclosure, whereby the borrower had made good faith efforts to sell the property on their own (and in many cases, short sale) but have not gotten any acceptable offers and agrees to deed the property back to the lender and leave. This saves the foreclosure black mark on the homeowners credit report and saves the lender the time and financial expense of going through the full foreclosure process.

Short Sale, whereby the homeowner lists the property for sale at an amount lower than the balance owed on the mortgage(s) on the property. Again, this saves the credit from receiving a foreclosure blemish and saves the lender's time and money in going through with the entire foreclosure process. Many myths are heard about short sales and "great deals" to be had from buyers picking them up for a fraction of their value. The truth is that lenders are very unwilling to short sale without getting something from the homeowner. We have seen lenders demanding that borrowers use other properties as collateral, sign a note guaranteeing the payment of the amount the lender lost, sending six-figure 1099's to the borrower at the end of the tax year and several other dirty tricks to try and recoup their short sale losses. Also worthy of mentioning, short sales usually don't go through in time because the lender has already started the ball rolling on the foreclosure process and their loss mitigator finds an unrealistically priced comparable sale to gauge the properties value and will hold out until they receive that dollar amount, regardless of the realities of the real estate market.

With foreclosure, time is of the essence. The longer the homeowner waits to speak with the lender, the less options are available to them. If you are even one payment behind on your mortgage, you must take action to prevent foreclosure.

Many people ask if they can negotiate a modification/repayment plan/short sale with their lender themselves. The answer is yes, of course someone could do it for themselves. It is not advisable however, unless the person has extensive experience in Real Estate, Mortgage Banking and Servicing and Law. It is much like representing yourself in court without an attorney- totally possible but not a good idea by any one's account. Retaining us to obtain a foreclosure solution is the best choice for anyone in default. Please call us toll free at Operation HOPE 888-388-4673.

All about Loan Modifications.

It's no secret. The U.S. Real Estate market is in the biggest slump since the great depression. When the real estate bubble burst, it sent property values plummeting downward across the nation. The tidal wave of short-term adjustable mortgage loans increasing in payments is upon us and it is causing foreclosures to spread like a dark plague. People cannot refinance because they have no equity in their homes and in many cases owe more than the property is worth, and simultaneously mortgage lenders have tightened up their lending guidelines making a refinance loan all but impossible. Everyone knows someone who is affected by foreclosure. Entire neighborhoods are being compromised by this wretched and hostile process. If just one home goes into foreclosure on an otherwise desirable street, the other properties could see up to a 55% price reductions in their own homes, just from one low-priced sales comp. Foreclosure is devastating to everyone involved, and also negatively affects others peripherally. The saddest part of this is that the large majority of foreclosures are UNNECESSARY.

The LAST thing the lender wants is to own (another) foreclosed home. The lender only wants the income off of their investment and when that income stream stops, in most cases the mortgage lender and servicer will do everything in their power to restart the flow of income even at a reduced rate. This is one of the tragedies of the whole foreclosure epidemic. People are just giving up and walking away from their home without even attempting to do something. There is a dearth of misinformation floating around now and many half-truths about loss mitigation, foreclosure avoidance and loan modifications in general. The bottom line is this - IF A HOMEOWNER BECOMES LATE ON THEIR MORTGAGE PAYMENTS AND THEY CAN SHOW A STEADY SOURCE OF INCOME, THEY STAND AN EXCELLENT CHANCE OF WORKING OUT A SOLUTION WITH THEIR LENDER(S).

There are several solutions to "loss mitigating" (that's bank-speak for avoiding foreclosure). They are-

Loan Modification, whereby the lender agrees to modify the terms of the original loan and in most cases reduce the monthly payments to what the homeowner can afford. Usually this will involve taking the amount of delinquent payments owed and combining them into the existing principal of the mortgage then lowering the interest rate or making the loan otherwise within reach of the homeowners budget. Alot of urban myths are out there about lenders reducing principle balance on mortgages by hundreds of thousands of dollars. This is very rare, most often the balance stays the same or increases by the amount of late payments but the rate will be reduced and will usually become fixed if it is adjustable. Loan Modification is the best option that a financially solvent homeowner who wants to keep their property can hope for.

Repayment Plan, whereby no change is made to the terms, rate or payment of the loan but the amount of late payments is paid back with some kind of agreed-upon plan and when that plan is completed, the loan resumes where it initially was before the delinquency occurred. This can be beneficial for the homeowner if the reason for the delinquency was short-lived and the original loan is on good terms (fixed rate, less than 7%).

Forbearance agreement, whereby the lender agrees to reduce or suspend payments for a certain period of time and then resume the normal billing cycle of the loan. This is most appropriate for short term reductions in income, i.e. loss of a job with the ability to get another job with some certainty.

Deed-in-Lieu of Foreclosure, whereby the borrower had made good faith efforts to sell the property on their own (and in many cases, short sale) but have not gotten any acceptable offers and agrees to deed the property back to the lender and leave. This saves the foreclosure black mark on the homeowners credit report and saves the lender the time and financial expense of going through the full foreclosure process.

Short Sale, whereby the homeowner lists the property for sale at an amount lower than the balance owed on the mortgage(s) on the property. Again, this saves the credit from receiving a foreclosure blemish and saves the lender's time and money in going through with the entire foreclosure process. Many myths are heard about short sales and "great deals" to be had from buyers picking them up for a fraction of their value. The truth is that lenders are very unwilling to short sale without getting something from the homeowner. We have seen lenders demanding that borrowers use other properties as collateral, sign a note guaranteeing the payment of the amount the lender lost, sending six-figure 1099's to the borrower at the end of the tax year and several other dirty tricks to try and recoup their short sale losses. Also worthy of mentioning, short sales usually don't go through in time because the lender has already started the ball rolling on the foreclosure process and their loss mitigator finds an unrealistically priced comparable sale to gauge the properties value and will hold out until they receive that dollar amount, regardless of the realities of the real estate market.

With foreclosure, time is of the essence. The longer the homeowner waits to speak with the lender, the less options are available to them. If you are even one payment behind on your mortgage, you must take action to prevent foreclosure.

Many people ask if they can negotiate a modification/repayment plan/short sale with their lender themselves. The answer is yes, of course someone could do it for themselves. It is not advisable however, unless the person has extensive experience in Real Estate, Mortgage Banking and Servicing and Law. It is much like representing yourself in court without an attorney- totally possible but not a good idea by any one's account. Retaining us to obtain a foreclosure solution is the best choice for anyone in default.

Trust Deed investing-anyone looking for a conservative 13% interest?

Lending on Real Estate has always been a steady source of income for the wealthy since medieval England when the gold peddlers began lending to their lords to finance war expenses and collateralized their investment with liens on royal land. The practice of lending money that is secured by property has been in practice for thousands of years, nothing nonfunctional lasts that long. With the current mortgage/real estate market crash many are fearful of lending against Real Estate because of concerns about plummeting value and the dreaded "F" word coming up in everyday conversation. This widespread fearful mindset presents a dearth of opportunities for the sharp and contrarian-minded investor. Hard money trust deeds (a.k.a. mortgage for you non-Californians) are typically lent at 60% or less of a properties' fair market value- That's usually less than Zillow, people. Often times hard money lending will also factor in the income of the property and therefore the ability to make loan payments. If both of these factors are carefully assessed before making an investment in a trust deed, the investor will almost always make a giant yield and have a low risk return on monies invested. Consider the first investment listing below on a commercial property in Orange County. The property appraises at $2,600,000. The 1st trust deed is for $975,000 making it 39% loan-to-value.

J.P. Getty said when asked about evaluating business decisions "I always ask myself what is the worst thing that could happen in this situation. When I've determined what the worst possible outcome could be and consider that outcome acceptable I will commit to the venture and make darn sure that outcome doesn't happen."

Let us consider this properties' worst case scenario. If the borrower defaults on this loan, the lender would foreclose on the property and have plenty of padding between the sales price and the amount of money invested. Let's say the lender decides to sell the building for 70% of it's appraised value. That is a sales price of $1,820,000. Paying $20000 in seller's closing costs will net the lender $1,800,000. Now in California law, the lender is not allowed to keep all the proceeds of the sale in a foreclosure. The lender is entitled to the full repayment of their investment plus all expenses, carrying costs until the sale and pre-agreed interest, if applicable. The remainder is refunded to the borrower. Typically the lender will collect expenses from 5% to 11% of the loan amount on a commercial loan. With such a large cushion of equity, trust deed investments can be very secure and conservative investments. (Considering the state of the banking industry, some might argue that they are more secure than money in the bank!!.)

In keeping with the spirit of Getty, let us make certain that the worst case scenario doesn't happen. We will ensure that by looking at the income of the property and the ability of the property to pay the note. The note will be $10875 per month. Property taxes are another $2705 per month and insurance will be at most $500 per month. With the existing income of $16000, and total monthly payments of $14080 the income from the property alone can easily service the monthly obligations on the proposed trust deed and thus old J.P. is satisfied.

To invest in trust deeds in California, contact us at 310-709-8283 or my mortgage website. The listings below are a smattering of what comes across our desks weekly.




Available Trust Deed Investments
October 13, 2008

Trust Deed Investors,

Below is a list of all Trust Deed Investments currently available. Some TD's are completed and available for immediate investment purchase and others are still in process and have not yet been funded.

*Loans that are not yet completed may be negotiable (ie: loan amount, interest rate and other terms).

To connect with these investments contact me at 310-709-8283.


____________________________________________________________
1st T.D. -$975,000 (Santa Ana, CA)
santa ana ca Term: 5 years
Rate: 12%
LTV: 39%
Appraised Value: $2,500,000
Address: 1535 East 17th Street
Santa Ana, CA 92705
Comments:
Low LTV loan. Property generates approximately $16,000 monthly gross income. Purpose of loan is to pay off existing 1st mortgage that is due. Loan amount may be lowered to $775k and a $200k 2nd may also be arranged to go behind this loan.

1st T.D. - $55,000 (Oakland, CA)
davis oakland Term: 36 months
Rate: 13.99%
LTV: 39%
Prepayment Penalty: 1 year
Formal Opinion of Value: $140,000
Address: 426 Gramercy
Oakland, CA 94603

Description:
SFR Rental property that generates $950 monthly. Borrower has great credit and has owned the home for 8 years. LTV is very low at 39%. Purpose of loan was to do improvements to property. Loan was funded and ready for immediate purchase.

1st T.D. - $50,000 (Lakewood, WA)
lakewood WA Term: 36 months
Rate: 11.99%
Formal BPO Value: 160,000
LTV: 31%
Prepay: 2 years * Investor to receive 1 year perpaid interest in advance!
Address: 14503 Washington Ave., Lakewood, WA
Description:
Rental property that generates approximatley $600 monthly. Purpose of loan is for improvements and pay a few consumer debts.
1st T.D. - $67,000 (Roswell, NM)
clark NM Term: 36 months
Rate: 13.5%
Formal BPO Value: $175,000
Prepay: 2 years. 6 months prepaid interest to investor.
Address: 413 Tierra Berrenda, Roswell, New Mexico
Comments:
Purpose of loan was to pay off consumer debts.

1st T.D. - $175,000 (Roswell, GA)
kidd GA Term: 36 mos
Rate: 12.50%
Prepay: 1 year
BPO Value: 360,000
LTV: 49%
Address: 4147 Edinbergh Trail NE, Roswell, GA
Comments:
Rental property. Borrower as excellent credit. Rental property. Purpose of funds to purchase other investment properties.

1st T.D. - $50,000 (Honolulu, HI)

Comments:

Information will soon be available!

Thank you.
1st T.D. - $240,000 (Alta Dena, CA)
tilman BPO Estimated Appraised Value: $480,000
Term: 24 months (negotiable)
Rate: 12% (negotiable)
LTV: 50%

Address: 2261 Lincoln Ave.
Alta Dena, CA 90278

Comments:
Two structures, one home and a small market in rear on a large lot. Lot is C-3 zoned. Purpose of loan is to repair both structures so they can be rented out. New loan will also pay off existing $165k 1st TD. Projected rents: $2000-front home, $800 rear structure. *Value should be confirmed. A new appraisal can be ordered.

2nd T.D. - $175,000 (Bell Gardens, CA)
bell gardens industrial Term: 24 months
Rate: 12-14% (negotiable)
Existing 1st TD: $1.1MM Lehman Bros - good terms.
Recent Appraisal: $2,040,000
9 units Industrial Suites
CLTV: 61%

Address: 6750 Foster Bridge Blvd.
Bell Garden, CA 90201
Comments:
Owner had high 600 (good) credit. Purpose of loan is for another business endeavor. He generates over $12k in monthly gross income. Looking to net $150k. He has about $150k in the bank.

1st T.D. - $50,000 (Milwaukee, WI)
WI Term: 36 months
Rate: 12.99%
BPO Value: $125,000
LTV: 40%
Prepay: 2 years

Address: 6630 N. 84th St.
Milwaukee, Wisconsin
Comments:
Over 700 credit score. Rental property.

2nd T.D. - $350,000 (Rancho Palos Verdes, CA)
fernwood palos verdesRate: Negotiable (14%)
Existing 1st TD: $1.3MM Citimortgage - favorable terms
Terms of Loan: Negotiable
Completed Opinion of Value: $3.4MM-$3.5MM
CLTV: 49%
Address: 6061 Woodfern Drive, Rancho Palos Verdes, CA
Comments:
Property is a non-owner occupied SFR with panorama ocean views. Purpose of loan is to finish major remodel. Borrower has $500k of hi own money tied up in deal, needs appro. $300k to finish job, some interest carry and staging while property is listed for sale. Borrower says he has an offer on the table for $2.8mm, but wants to make as much as possible. He spent 9 months trying to purchase this proeprty that was previously in foreclosure.

1st T.D. - $435,000 (Los Angeles, CA)
Free and Clear Industrial Property(ies)!!!

Rate: 12% (negotiable)
Term: 24 months (negotiable)
Prepayment Penalty: (negotiable)


Property Description: Approximately 5800 square foot building built in 1971. Property is located adjacent to 4 or 5 other buildings that are nearly the same size. Borrower owns all buildings and lots.

Appraised Value: $675,000 of only single building, see below address. (Recently completeed Oct. 2008)

LTV: 65% - May be less if loan amount is lowered or loan is cross-colateralized by other adjacent buildings. This would significantly lower the LTV!

Address: 322 W. 131st Street, Los Angeles, CA 90061-1104

Comments:
Borrower has mid 600 credit scores. He has owned all of the buildings since 1959. He operates a plating company out of all buildings. Purpose of loan is to purchase a unique piece of equipoment that will allow him increase his business production and revenues.


1st T.D. - $90,000 (San Bernardino, CA)
Purchase Price: $71,000
Terms: Borrower would like 3-4 years
Rate: 12% (negotiable)
Value is $160,000 ( close comp at $180k)
LTV: 56%

Address: 773 Spruce Street, San Bernardino, CA

Description: 3 units



Comments:
Borrower is experienced buyer and investor. He has 700+FICO scores. Borrower has near $200k in bank. Property needs $20k to repair property. Ideally borrower would like to obtain $90k-$95 to cover purchase price and improvements. He can put money down and pay improvements, but the more he can finance the better. Borrower's opinion of value is at $160k, there is a close comp at $180k. Plans are to purchase, rehab, rent out hold. Anticipated rents $700-$800 per unit.

1st T.D. - $60,000 (Red Wing, MN)
mn Rate: 13.50%
Terms: 36 months
Recent BPO Value: $150,000
LTV: 40%

Address: 1230 Foursome St.
Red Wing, Minnesota 55066

Commments:
Rental property. More details available.

1st T.D - $85,000 (Palmyra, NJ)
nj deal Rate: 12.99%
Term: 36 months
BPO Value: $205,000
LTV: 41%
Prepayment Penalty: 2 year


Address: 514 Morgan Ave.
Palmyra, New Jewelry 08065

Comments:
Rental property. More details available.

_______________________

Ode to the fun and free things.

With the deluge of financial bad news permeating all of the orifices of the nation, I thought I would make an attempt to steer the conversation to the positive side and recite a few things that I love about life right here, right now.

I love sleeping in.

I love jogging instead of driving, even miles away. So what if you're glistening and smelly when you get to TJ's and then you have to shlep your wine bottles in a backpack clinking all the way up back up the hill? Urban jogging is the new black.

I love making unecessary abrviatns.

I love sunsets in California.

I love the beach.

I love eating fruit off trees in the street.

I love meeting new people in most cases.

I love yoga.

I love freshly ironed shirts.

I love the blogosphere and having unlimited information at my fingertips.

I love street musicians.

That's it for now. In keeping with the economic climate of our current times, you will note that all of these are free. Let us not think that we can not have fun and love without spending money! Onward mine broke comrades!

More price cooling in the sunbelt

LOOK OUT BELOW: Two years from now, house prices are almost certain to be lower in Florida, California, Phoenix and Las Vegas. Tell me something I didn't know!

Not exactly the most surprising news, but now we have numbers to support this forecast. The PMI Mortgage Insurance Co. has released its quarterly U.S. Market Risk Index, which gives the odds of price declines in the nation's 50 biggest metro areas. And the news is sobering if you plan to sell a house in Florida or California in the next two years.

According to PMI's risk index, there's a 99.5 percent chance that houses will lose value over the next two years in the Fort Lauderdale metro area in Florida and in the Riverside-San Bernardino metro in California. Other metro areas where the odds are 99 percent or greater: Orlando, Miami and Tampa-St. Pete, Fla.

Florida is the leader in sunshine and in burst bubbles. I can hear someone composing a blues tune about it now. I affectionatly refer to Florida as "God's Waiting Room".

Here in Southern California we have a 95.9 percent chance, or greater, of seeing price declines. In Vegas, the odds are 98.5 percent; in Phoenix, 96.3 percent. Sacramento and the Bay Area and Silicon Valley all are in the riskiest rank.

The metro areas with the least risk of a price decline over the next two years? My place of birth Dallas, TX. That is followed by Houston; San Antonio; Pittsburgh; Memphis, Tenn.; Indianapolis; Kansas City, Mo./Kan.; Austin, Texas; Columbus, Ohio; Denver; Cincinnati; Charlotte, N.C. -- they all have a less than 1 percent chance of house prices being lower two years from now, according to PMI's risk index.

RATES: Today is Wednesday, when Bankrate conducts its weekly rate survey. Last week, the 30-year fixed averaged 6.32 percent. It's hard to predict what the average will be today, because rates have been volatile lately. Safe to say that the average rate will be higher this week than last week.

Predicting the size of the increase is difficult, because bond yields have been swinging wildly -- rising a quarter of a percentage point one day and plunging nearly the same amount the next day. This is happening because of political turmoil. The mortgage industry is like a 6-year-old at Christmastime, the Senate is like a mom who promises lots of presents, and the House is like a dad who's threatening to give the kid a lump of coal. The poor kid is jubilant one day, despondent the next. Your mortgage industry in microcosm.