Foreclosure Moratorium

Bank of America, GMAC and JP Morgan Chase have halted foreclosures in several states. Only BofA has stopped foreclosures in Arizona.

Banks have illegally used a system called MERS (explained in this blog on October 1) to transfer bundles of mortgages between investors. Deeds weren't recorded as required by law, and no one is sure who actually has the right to foreclose on some of these properties.

People who knew nothing about mortgages were hired by the banks to "review" foreclosure documents. These "robo-signers" sign thousands of foreclosure authorizations per month. Obviously, signing is all they are doing.

While a moratorium on foreclosures may be welcome news to homeowners facing foreclosure, it will prolong the housing market recovery. All the homeowners who can not pay their mortgages will eventually have to lose their homes. Only after the glut of foreclosures and short sales work their way through the system will we see the housing market turn the corner toward normalcy.

The following is from The Wall Street Journal, Dawn Wotapka (10/12/2010):

Best-Case Scenario for Foreclosure Freeze
Gregor Watson, a principal with McKinley Partners, a development company that buys foreclosed homes, told listeners on a Citi home-builder conference call that there were three potential outcomes from the foreclosure fiasco:

· Best case: These are technical issues that can be resolved quickly so the foreclosure process can continue and the glut of foreclosed homes is cleared from the market.

· Medium case: There is significant litigation that takes years to sort out and this slows the troubled housing market even further.

· Worst case: The market grinds to a halt and title insurers refuse to insure mortgages involving foreclosed homes. “It would be devastating for the resale market if this robo-signer issue spiraled out of control,” Watson says.

Tarantula

We can now add tarantula to the wildlife we have seen at Desert's Edge. Fortunately, this stunning creature was outside, unlike the pack rats who took over the attic. I think I have won the battle with the pack rats, thanks in part to Desert Wildlife.

This tarantula was especially impressive because instead of the usual black back, this one was honey-colored.

After the paparazzi harassment ceased, the tarantula continued its fascinating eight-legged march into the desert behind our house.

September Residential Sales Statistics

The Tucson Association of Realtors has published the Residential Sales Statistics for September.

Average sale price was $181,612, down 7.7% since September 2009. Median price was down 10.5% over the past twelve months to $145,855.

With 7,217 active listings and 873 sales in September, we have a 8.27 month supply of listings. In September 2009, we had a 6.36 month supply.

Changes to FHA financing have made housing less affordable to first time buyers. Effective October 4, an FHA mortgage on the average priced house ($181,612) will cost $46.98 more per month than it did in September. See my August 7 post for details on the changes to FHA financing. The monthly mortgage insurance payment is now 0.9%/12 of the loan amount, compared to 0.5%/12 in September.

One bright spot is that interest rates are around 4.5%, which is a huge benefit to buyers with good credit, employment and a 3.5% down payment, which can be a gift from relatives.