Bend’s economy is coming back to life, By Ben Jacklet, Oregon Business Magazine


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Shelly Hummel has been selling homes in Bend for more than 20 years, and she’s got the attitude to match: upbeat, confident, a dog-lover who took up skiing at age 4. She labors to keep things positive, but every so often her frustration slips free: “The banks just kept giving the builders money, without even looking at plans or doing drive-bys of the places they were selling. The market just exploded with new construction. Boom! Selling stuff off of floor plans. Unfortunately, selling them to people who had no business buying them. It was a perfect storm of stupidity.”

We are touring the wreckage of that storm in Hummel’s Cadillac Escalade, driving down Brookswood Boulevard into a former pine forest that now hosts a swath of housing developments with names like Copper Canyon and Quail Pine. “This was the boundary line until 2003,” says Hummel. “These roads dead-ended. That home sold for $350,000. Now it’s on the market for $175,000. Short sale.”

Hummel never intended to become a “certified distressed property expert” specializing in selling homes for less than is owed on their mortgages. But in Bend, she didn’t have much of a choice. No city in Oregon — or arguably, the nation — experienced a more dramatic reversal of fortunes during the Great Recession than Bend, the economic engine for Central Oregon. Home values got cut in half. Unemployment soared to over 16%. A once-promising aviation sector imploded. So did an overheated market for destination resorts. Brokers, builders and speculators once flush with cash woke up underwater and flailing. Banks renowned for their no-document, easy-money loans stopped lending. Layoffs led to notices of default; foreclosure brought bankruptcy.

How does a community recover from economic meltdown? That is the central question I am trying to answer about Bend. I start my inquiry at the offices of Economic Development for Central Oregon (EDCO), an organization formed to diversify the economy after the last major recession in the region, in the 1980s. My meeting is with executive director Roger Lee, marketing manager Ruth Lindley and business development manager Eric Strobel. I turn on my digital recorder and say, “I’d like to hear your take on how the recession impacted Bend’s economy.”

Silence. I read their expressions: Not this again.

It takes some time, but over the course of the interview they paint a sharp portrait of what went wrong and why. A local housing boom “fueled by speculation, not solid economics,” in Lee’s words, crashed. The local crash coincided with a national housing slump that devastated Bend’s major traded sector of building supplies. The final blow was the collapse of the local general aviation industry. Cessna shut down its local plant in April 2009. Epic Aircraft, the other major employer at the airport, went bankrupt.

“Aviation was our diversification away from construction and wood products,” says Strobel. “We had thousands of employees out at Bend Airport. It was the largest aviation cluster in the state… It just completely fell apart in six months.”

Read more: Bend’s economy is coming back to life – Oregon Business http://www.oregonbusiness.com/articles/101-july-2011/5460-bends-economy-is-coming-back-to-life#ixzz1QVF66anh

 

Below Market Interest For Some Home Buyers Rate Available , by Brett Reichel, Brettreichel.com


If an interest rate below 4% is appealing to you, you should consider the Oregon State Bond Loan as an option in your next home purchase.

 Yes – it can be used in a “next” situation.  Though the program is a first time home buyer program, there are options for previous home owners to use this program.  The Bond Loan defines a first time home buyer as someone who hasn’t owned a home in the last three years.  So, if you owned a home, but sold it prior to 2007, it’s possible that you could qualify for this loan.

Currently, the State Bond Loan has an interest rate of 3.875%* and an APR of 4.721%*.  These low interest rates might be a once in a lifetime opportunity. 

The program is underwritten to FHA guidelines so it’s a pretty easy program to qualify for.  FHA allows for less than perfect credit, and has flexible debt-to-income guidelines as well. 

 There are income limitations, but they are quite generous.  You should plan on being a long term owner due to the potential “recapture” tax penalty (which isn’t automatic, nor is it as bad as many loan officers make it out to be).

Any “first time” home buyer should be considering this tool to minimize their housing expense!

*Based on a $200,000 sales price and $194,930 loan amount.  Finance Charge $157,406.55, Amount Financed $190,935.08 and Total of Payments $348,341.73.  Credit on approval.  Terms subject to change without notice.  Not a commitment to lend.  Call for details.  Equal Housing Lender.

 

Brett Reichel’s Blog  http://www.brettreichel.com

 

Appraisal Fraud in Clackamas, Oregon? , by Brett Reichel, Brettreichel.com


Wowza…..pretty bold headline, isn’t it?

How can that claim be made or the question raised?

First – a quick note on technicalities on appraisals – Comparable Sales are compared to the Subject property to try to lead the appraiser to a supportable “opinion of value”.   Differences in properties are accounted for by “adjustments” to the comparable sale, which then leads to an “adjusted value” of the comparable.  The adjustments are supposed to equalize differences in properties.  Adjustments are supposed to be supported through market analysis, specifically “matched pair analysis“.

A simplified example of a “matched pair analysis” would be two houses that are identical in every way, with the exception of one of them having a fireplace.  House A, without the fireplace sells for $100,000, and House B, with the fireplace sells for $101,000.  What’s the value of the fireplace?  Since the houses are identical in every way, the value of the fireplace is clearly $1,000.  In that market area, in that price range, fireplaces are worth $1,000 and until proven differently, the appraiser is justified in adjusting comparable sales $1,000 for fireplaces (having them or not having them).

One of the things we’ve seen adjustments for lately, is the adjustment in “time”.  This adjustment is made for changes in the market between when a comparable sale is sold and when your subject sold.  If the market is dropping, then the adjustment to the comparable would be downward, and in a rising market, upward.

As you might suspect, appraisers have been making this adjustment…..a lot….lately.  The problem is, they have been skipping the “matched pair analysis” process and just using median prices to justify the adjustment.  This is NOT acceptable appraisal practice.  But, if it’s become the norm, if it’s become acceptable, it should apply when median prices escalate.

Thus the headline.  A recent market report indicates that median prices have been on a 90 day upswing in Clackamas, Oregon.  Have the appraisers reversed their course and adjusted upward for time?  No they haven’t.  Why?

Lender pressure is why.  The whole point of industry reform (HVCC and/or Dodd-Frank) was to eliminate lender pressure, but now the lenders have even greater methods of applying pressure with the new rules.  Really, the problem starts in two places, regulation and the GSE‘s.   The GSE’s are Fannie Mae & Freddie Mac.  Their forms require the use of Median Prices.  Fannie/Freddie, Barney and Chris (a criminal “friend of Angelo”) are behind this lender fraud.  The rest of the market is captive and held to their criminal standards, including the poor appraiser.

Frankly, this only helps the banks, and it doesn’t do anything for the borrower, the seller.  It doesn’t help stabilize our markets or improve our economy.

What to do?  Well, don’t shoot the appraiser – he/she can’t do anything about what the lenders force them to do.  Complain to the lender, complain to your legislators, complain to regulators, call Elizabeth Warren, complain long, hard and loud….maybe if enough voices are heard we can get out from under the tyranny of the banks and Fannie Mae and Freddie Mac.

Home equity picture improves, a little, by Wendy Culverwell, Portland Business Journal


The number of homes worth less than their outstanding mortgages fell slightly in the first three months, according to figures released Tuesday by CoreLogic Inc. (NYSE: CLGX), a Santa Ana, Calif.-based real estate data firm.

According to CoreLogic, 27.2 percent — or 13.5 million homes — had negative or near-negative equity in the first quarter. That compares to 27.7 percent in the fourth quarter of 2010.

In Oregon, 17.2 percent of homes are worth less than their mortgages and another 5.8 percent had near-negative equity. Collectively, Oregonians owe $121.9 billion on 696,142 mortgages on properties worth a total of $175 billion.

“The current economic indicators point to slow yet positive economic growth, which will slowly reduce the risk of borrowers experiencing income shocks,” said Mark Fleming, chief economist with CoreLogic. “Yet the existence of negative equity for the foreseeable future will weigh on the housing market recovery by holding back sale and refinance activity.”

Negative equity occurs when a borrower owes more than the home is worth. “Near-negative” refers to homes with less than 5 percent equity, a figure that would be wiped out by transaction costs if the property were sold.

In Washington state, 16.9 percent of homes had negative equity and 5.8 percent had near-negative equity. Collectively, Washingtonians owe $291.7 billion on 1,412,110 mortgages on properties worth a total of $429.1 billion.

Nevada, where 63 percent of all mortgaged homes are worth less than the outstanding loan balance, led the nation for negative equity. The other top five states were Arizona, 50 percent, Florida, 46 percent, Michigan, 36 percent and California, 31 percent. Nevada, Arizona and Florida showed improvement from the prior quarter.

The average “underwater” home is worth $65,000 less than the outstanding mortgage balance.

Read more: Home equity picture improves, a little | Portland Business Journal

Use Caution When Selling REO Properties, by Phil Querin, PMAR Legal Counsel, Querin Law, LLC Q-Law.com


Foreclosure Sign, Mortgage Crisis

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By now, most Realtors® have heard the rumblings about defective bank foreclosures in Oregon and elsewhere. What you may not have heard is that these flawed foreclosures can result in potential title problems down the road. 

Here’s the “Readers Digest” version of the issue: Several recent federal court cases in Oregon  have chastised lenders for failing to follow the trust deed foreclosure law. This law, found inORS 86.735(1), essentially says that before a lender may foreclose, it must record all assignments of the underlying trust deed. This requirement assures that the lender purporting to currently hold the note and trust deed can show the trail of assignments back to the original  bank that first made the loan.

Due to poor record keeping, many banks cannot easily locate the several assignments that  occurred over the life of the trust deed. Since Oregon’s law only requires assignment as a condition to foreclosing, the reality of the requirement didn’t hit home until the foreclosure crisis was in full swing, i.e. 2008 and after.

Being unable to now comply with the successive recording requirement, the statute was frequently ignored. The result was that most foreclosures in Oregon were potentially based upon a flawed process. One recent federal case held that the failure to record intervening assignments resulted in the foreclosure being “void.” In short, a complete nullity – as if it never occurred.

Aware of this law, the Oregon title industry is considering inserting a limitation on the scope of its policy coverage in certain REO sales. The limitation would apply where the underlying foreclosure did not comply with the assignment recording requirement of ORS 86.735(1). This means that the purchaser of certain bank-owned homes may not get complete coverage under their owner’s title policy. Since many banks have not generally given any warranties in their

REO deeds, there is a risk that a buyer will have no recourse (i.e. under their deed or their title insurance policy) should someone later attack the legality of the underlying foreclosure.

Realtors® representing buyers of REO properties should keep this issue in mind. While this is  not to suggest that brokers become “title sleuths,” it is to suggest that they be generally aware of the issue, and mention it to their clients, when appropriate. If necessary, clients should be told to consult their own attorney. This is the “value proposition” that a well-informed Realtor®  brings to the table in all REO transactions.

©2011 Phillip C. Querin, QUERIN LAW, LLC

Visit Phil Querin’s web site for more information about Oregon Real Estate Law http://www.q-law.com

A New Twist on the Old Contractor Lockbox


Asset managers REO brokers and affiliates, what we show you may scare you.

Although contractor lockboxes are a necessity in the REO world unfortunately they are also great for inviting unwanted attention to your vacant asset. We try to hide the lockbox on the gas meter or the water spigot, but many times they end up living on the front door knob. Nosey neighbors and bored kids love to try to get into your vacant homes to take a look, sometimes wary travelers or homeless people seek homage in your place. Much of this can be avoided simply by not drawing attention to the fact that the home is vacant.

Obviously better than leaving the key on top of the outdoor sconce, the contractor lockbox does provide a more difficult way for someone to access the key. However, as you just witnessed in the video above, a handheld hammer and 5 whacks cracks it wide open. Even scarier is how easy it is to pick a push style model. Without force or any damage, the code of a push style contractor lockbox can be easily determined by pressing the clear key and running through the numbers. Within 30 seconds most people can gain access using this method.

 

The Bottom of the St. Helens RocLok Lock Box model.

Unfortunately with all of the trade’s people needing access to the place, keeping a key hidden at the property is a must. Electronic Realtor lockboxes offer better security however the electronic key to open them is not available to subs and contractors for the trash out or repairs. So what is the answer? After 7 years as an REO broker, Ryan Belshee came up with a solution to this problem, The RocLok Hide a Key.

Combining the security of the contractor lockbox and a faux rock that looks, weighs and adapts just like natural stone; the RocLok provides the much needed disguise other key hiding safes lack.

Just like any other lockbox, the RocLok has a 3 digit, re-adjustable code that safeguards spare keys. The code is set by you and changed as frequently as needed when in the unlocked state. However, the most notable improvement is that instead of screaming, “I’m hiding a key, come and get it,” the RocLok hides in plain sight. Nothing like the little pebble sized plastic rocks that have been around for decades, the RocLok is a 12 pound concrete based rock. It is weather and impact resistant, ages naturally and doesn’t depend on batteries or power to operate.

The use of the RocLok in your field services will reduce break-ins and reduce the cost of servicing the

The St. Helens RocLok Lock Box Hides Keys Disguised as a Natural Rock

asset. As an additional safety precaution the RocLok is now available with the new LokDown System allowing the agent to secure it to the ground, tree or pole meaning no one is going to walk off with your keys without a lot of work. The LokDown was designed to withstand over 250 lbs of lifting force when installed into the ground and much more if attached to a pole or other solid object.

For more information about the RocLok Hide a Key or to purchase one please visit: www.RocLok.com – Bulk orders are available and can be shipped to multiple locations for easier disbursement. Contact us at: info@roclok.com to obtain accurate pricing.