My office at Legacy Escrow closes refinance and purchase transactions and we have seen some very good rates and terms for homeowners refinancing into responsible loans.  Affordability is far improved with year over year median housing prices in Snohomish Co. 10% lower than this time last June of 2009.

Through our sister company (Nationwide Subordinations) we work with companies  located across the country assisting homeowners with negative equity that may qualify for the HARP program (Homeowners Affordable Refinance Program).

A local lending company, Savage Financial, owned and operated by Dan & Linda Savage on Bickford Ave. is a great resource to turn to for questions about financing and the HARP program.  They can be reached at 425-335-1776.

The graphic below shows the enormous backlog of homes in foreclosure working it’s way through the system  and in Washington State the average time from default to the foreclosure sale is nearing 400 days.  That is a long time to live without a housing payment.

While I’m not a fan of Wall Street crooks and bankers in general, I’m finding it very hard to resolve the growing phenomena of walking away from your mortgage because homeowners find themselves not being able to afford their payment.

Somehow they were able to afford the payment when signing loan documents, but today, all of a sudden the payments are no longer palatable.  What happened since then?  I’ll tell you.   Serial refinancing.  Where did the money go?  Trips to Vegas, Cancun, Jamaica, cars, boats, 5th wheels, $250K custom coach motor homes, additional homes purchased as an “investment,” rolling consumer debt (credit cards etc.) into their home and on and on. – Editor, Snohomish Today.

From the article:  More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property — double the rate of a year earlier.

It may be premature to think that a housing recovery will miraculously turn-around from the Fall 2007 peak prices.  To do so would have us witness the most amazing economic rebound in history.   Emotionally, I want it to happen, but when you think through all the structural economic issues that have to mend both in the US and abroad, it may be more realistic to think of our economic wounds taking several years to heal.  And, that excludes all the other problems going on outside and inside our borders.

Anger doesn’t seem adequate enough to describe the bailouts and continued business as usual for Wall Street firms and imbeciles on both sides of the isle in Washington DC.

Part 1:

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Part 2:

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From CNBC:    “Existing-Home Sales Plunged An Unexpected 7.2% in January.”

“Today’s figure is certainly not good news in terms of sales,” said Lawrence Yun, chief economist for the NAR.

Distressed sales accounted for 38 percent of sales, sharply higher than December’s 32 percent.

Yun said all cash deals represented about a quarter of all sales, sharply higher than the normal level of about 10 percent, a signal that investors are a key component of sales and traditional buyers are still skittish.

Further the market has to content with these issues this Spring:

• FHA tightening qualifying standards further this Spring.
• Pullback of Government purchases of mortgage backed securities which has assisted in keeping mortgage rates low.
• Continued pressure from distressed property coming to market.

This “Great Recession” as some have coined it has been exceptionally difficult on people.    The housing and credit bubble crisis caused it and it has led to job loss and has taken a tremendous toll on families in a variety of ways.    For people to presume that the housing market, after taking several years to build to a point where it blew up in our faces locally after peak prices were reached in the late Fall of 2007, will turn around on a dime is, at best, not realistic.

Being in the escrow business has afforded an incredible lens into how irresponsible people were in using their home as a piggy bank to buy cars, boats, 5th-wheels, vacations, “investment properties “  and other luxuries that were obtained not by earned income but by a false illusion that my home would appreciate at 15-20% per annum based upon economic fundamentals.

Heck, even local Bankers thought we were in a new “paradigm” as one of the executives at my bank discussed with me.    Honestly, I couldn’t believe what I heard.   It mystified me how in the world a Banker couldn’t see what mortgages were buying up the inventory of the developers they were lending to.    Everyone had the proverbial Cool-aid stains on their lips.   Today my bank’s stock has wiped out many stockholders and I’m not talking about Frontier Bank which is in a league of their own in having a mother load of local and regional builders and developers that they lent money to and have subsequently lost millions on.  This is not slamming Frontier.  It’s just a fact.

The idea that nobody “could have seen this coming, ” which is a quote I’ve read from prominent Bankers is just flat out false.   I started to get very worried and said so to anyone that would listen back in December of 2006.   I mean seriously.   In 2006, when 71% of all the purchase transactions our office closed were 100% financed, was that not a red flag?  We’re a small fry in the real estate business.  Just think what all the title companies were closing in communities all across the country.  Is anyone understanding how enormous the situation was?  Staggering.

Back to the topic at hand:

A great article today on eliminating consumer debt and it’s affect on FICO scores is at a great blog called “Get Rich Slowly.” It should be a daily read or at least once a week.

From my observations the single most destructive consumer credit purchase on household debt:  buying a car and financing it.

The cash for clunkers program certainly spurred sales but it showed government waste at taxpayers expense at it’s best.  The program was fraught with problems and it put people INTO more debt.   So, you bought that new car and traded in a older but running vehicle that may have been owned outright?   Was that the best financial move?  Now you have a $300 payment or more over probably 5-6 years not including operating costs and insurance.   Good move?   Maybe for a few that paid cash, but I’m seeing more and more cars pop up on Craigslist that are of 2009 vintage.   How many were bought during cash for clunkers?  We’ll never know, but I’m sure there are plenty.

I still drive my paid off 16 year old Villager with 227,000+ miles on it.   Do I wish I could drive something a bit nicer?  Yes.   It’s probably time to retire the old car but by being frugal and socking away savings it’s saved me thousands in interest if I financed a car at today’s prices.   It boggles my mind that I see guys literally trade in a nice truck and drive out with a brand new $45,000 truck.    What are payment on financing $30,000 at 8% ?  I don’t need to know.

Regional Median Prices* (half sold for more half sold for less): Hwy 2 & Hwy 9 Corridor (Snohomish, Monroe, Lake Stevens)

Snohomish Median Prices:

*Median Prices in a volatile market, particularly a falling market, can be heavily influenced by the mix of homes sold. For example, you may have a large number of homes sold in lower price ranges and only a few very expensive homes that can skew the data. However, median prices have been used by most academics, economists and trade organizations as the metric most used to measure price direction.

This is one area where contributors and guest writers would be helpful.  Do you see an area of interest?  If you’d like to contribute, whether a professional in housing, lending or just an enthusiast, please contact us:

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