Has Housing Really Bottomed? Oftwominds.com


Massive intervention by Federal agencies and the Federal Reserve have kept the market from discovering price and the risk premium in real estate. That sets up a “catch the falling knife” possibility for impatient real estate investors.

 

A substantial percentage of many households’ net worth is comprised of the equity in their home. With the beating home prices have taken since 2007, existing and soon-to-be homeowners are keen to know: Are prices stabilizing? Will they begin to recover from here? Or is the “knife” still falling?

To understand where housing prices are headed, we need to understand what drives them in the first place: policy, perception, and price discovery.

In my December 2011 look at housing, I examined systemic factors such as employment and demographics that represent ongoing structural impediments to the much-awaited recovery in housing valuations and sales. This time around, we’re going to consider policy factors that influence the housing market.

Yesterday while standing in line at our credit union I overheard another customer at a teller’s window request that her $100,000 Certificate of Deposit (CD) be withdrawn and placed in her checking account because, she said, “I’m not earning anything.” The woman was middle-aged and dressed for work in a professional white- collar environment — a typical member, perhaps, of the vanishing middle class.

Sadly, she is doing exactly what Ben Bernanke’s Federal Reserve policies are intended to push people into doing: abandoning capital accumulation (savings) in favor of consumption or trying for a higher yield in risk assets such as stocks and real estate.

It may strike younger readers as unbelievable that a few decades ago, in the low-inflation 1960s, savings accounts earned a government-stipulated minimum yield of 5.25%, regardless of where the Fed Funds Rate might be. Capital accumulation was widely understood to be the bedrock of household financial security and the source of productive lending, whether for 30-year home mortgages or loans taken on to expand an enterprise.

How times — and the US economy — have changed.

Now the explicit policy of the nation’s private central bank (the Federal Reserve) and the federal government’s myriad housing and mortgage agencies is to punish saving with essentially negative returns in favor of blatant speculation with borrowed money. Official inflation is around 3% and savings accounts earn less than 0.1%, leaving savers with a net loss of about 3% every year.  Even worse — if that is possible — these same agencies have extended housing lenders trillions of dollars in bailouts, backstops and guarantees, creating institutionalized moral hazard on an unprecedented scale.

Recall that moral hazard simply means that the relationship between risk and return and has been severed, so risk can be taken in near-infinite amounts with the assurance that if that risk blows up, the gains remain in the hands of the speculator. Another way of describing this policy of government bailouts is “profits are private but losses are socialized.” That is, any profits earned from risky speculation are the speculator’s to keep, while all the losses are transferred to the public.

While the housing bubble was most certainly based on a credit bubble enabled by lax oversight and fraudulent practices, the aftermath can be fairly summarized as institutionalizing moral hazard.

Policy as Behavior Modification and Perception Management

Quasi-official pronouncements by Fed Board members suggest that the Fed’s stated policy of punishing savers with a zero-interest rate policy (ZIRP) is outwardly designed to lower the cost of refinancing mortgages and buying a house. The first is supposed to free up cash that households can then spend on consumption, thereby boosting the economy. With savings earning a negative yield, consuming more becomes a tangibly attractive alternative. (How keeping the factories in Asia humming will boost the American economy is left unstated.)

This near-complete destruction of investment income from household savings yields a rather poor return. Plausible estimates of the total gain that could be reaped by widespread refinancing hover around $40 billion a year, which is not much in a $15 trillion economy.

There are real-world limits on this policy as well. Since the Fed can’t actually force lenders to refinance underwater mortgages, millions of homeowners are unable to take advantage of lower rates. From the point of view of lenders, declining household incomes and mortgages that exceed the home value (so-called negative equity) have lowered the creditworthiness of many homeowners.

As a result, the stated Fed policy goal of lowering mortgage payments to boost consumer spending has met with limited success. Somewhat ironically, the mortgage industry’s well-known woes — extended time-frames for involuntary foreclosure, lenders’ hesitancy to concede to short sales (where the house is sold for less than the mortgage and the lender absorbs a loss), and strategic/voluntary defaults — may be putting an estimated $80 billion in “free cash” that once went to mortgages into defaulting consumer’s hands.

The failure of the Fed’s policies to increase household’s surplus income via ZIRP leads us to the second implicit goal, lowering the cost of home ownership via super-low mortgage rates, which serves both as behavior modification and perception management. If low-interest rate mortgages and subsidized Federal programs that offer low down payments drop the price of home ownership below that of renting an equivalent house, then there is a substantial financial incentive to buy rather than rent.

The implicit goal is to shape a general perception that the bottom is in, and it’s now safe to buy housing.

First-time home buying programs and FHA (Federal Housing Authority) and VA (Veterans Administration) loans all offer very low down-payment options to qualified buyers. This extends a form of moral hazard to buyers as well as lenders: If a buyer need only scrape up $2,000 to buy a house, their losses are limited should they default to this same modest sum. Meanwhile, lenders working under the guarantee of FHA- and VA-backed loans are also insured against losses.

The Fed’s desire to boost home sales by any means available is transparent. By boosting home sales, it hopes to stem the decline of house valuations and thus stop the hemorrhaging of bank losses from writing down impaired loan portfolios, and also stabilize remaining home equity for households, which has shrunk to a meager 38% of housing value.

As many have noted, given that about 30% of all homes are owned free and clear, the amount of equity residing in the 70% of homes with a mortgage may well be in the single digits. (Data on actual equity remaining in mortgaged homes is not readily available, and would be subject to wide differences of opinion on actual market valuations.)

Broadly speaking, housing as the bedrock of middle class financial security has been either destroyed (no equity) or severely impaired (limited equity).  The oversupply of homes on the market and in the “shadow inventory” of defaulted/foreclosed homes awaiting auction has also impaired the ability of homeowners to sell their property; in this sense, any remaining equity is trapped, as selling is difficult and equity extraction via HELOCs (home equity lines of credit) has, for all intents and purposes, vanished.

The Fed’s strategy, in conjunction with the government-owned and -operated mortgage agencies that own or guarantee the majority of mortgages in the US (Fannie Mae, Freddie Mac, FHA, and the VA), is to stabilize the housing market through subsidizing the cost of mortgage borrowing by shifting hundreds of billions of dollars out of savers’ earnings with ZIRP.

Since roughly 60% of households either already own a home or are ensnared in the default/foreclosure process, then the pool of buyers boils down to two classes: buyers who would be marginal if not for government subsidies and super-low mortgage rates, and investors seeking some sort of return above that of US Treasury bonds. The Fed has handed investors two choices to risk a return above inflation: equities (the stock market) or real estate. Given the uneven track record of stocks since the 2009 meltdown, it is not much of a surprise that investors large and small have been seeking “deals” in real estate as a way to earn a return.

Recent data from the National Association of Realtors concludes that cash buyers (a proxy for investors) accounted for 31% of homes sold in December 2011. Even in the pricey San Francisco Bay Area, where median prices are still in the $350,000 range, investors accounted for 27% of all sales. Absentee buyers (again, a proxy for investors) paid a median price of around $225,000, substantially lower than the general median price.

This data suggests that “bargain” properties are being snapped up for cash, either as rental properties or in hopes of “flipping” for a profit after some modest cleanup and repair.

Price and Risk Premium Discovery

There is one lingering problem with the Fed and the federal housing agencies’ concerted campaigns to punish capital accumulation, push investors into equities or real estate, and subsidize marginal buyers to boost sales at current valuations. The market cannot “discover” price or establish a risk premium when the government and its proxies are, in essence, the market.

By some accounts, literally 99% of all mortgages in the U.S. are government-issued or -guaranteed. If any other sector was so completely owned by the federal government, most people would concede that it was a socialized industry. Yet we in the US maintain the fiction of a “free market” in mortgages and housing.

To establish a truly free and transparent market for mortgages and housing, we would have to end all federal subsidies and guarantees/backstops, and restore the market as sole arbiter of interest rates — i.e., remove that control from the Federal Reserve.

Everyone with a stake in the current market fears such a return to an open market because it is likely that prices would plummet once government subsidies, guarantees, and incentives were removed. Yet without such an open market, buyers can never be certain that price and risk have truly been discovered. Buyers in today’s market may feel that the government has removed all risk from buying, but they might find that they “caught the falling knife;” that is, bought into a false bottom in a market that has yet to reach transparent price discovery.

So, the key question still remains for anyone who owns a home or is looking to soon own one…how close are we to the bottom in housing prices?

In Part II: Determining the Housing Bottom for Your Local Market, we tackle that question head-on. Because local dynamics inevitably play such a large role in determining fair pricing for any given market, instead of giving a simple forecast, we instead offer a portfolio of tools and other resources for analyzing home values on a local basis. Our goal is to empower readers to calculate an informed estimate of “fair value” for their own markets — and then see how closely current local real estate prices fit (or deviate) from it.

Click here to access Part II of this report (free executive summary, enrollment required for full access).

This article was originally published on chrismartenson.com.

The Home Loan Application, by Jason Hillard , Homeloanninjas.com


Applying for a home loan is quite a process. A good place to get familiar with the process is the home loan application. I made a video awhile back showing the different sections of the loan application:

Some things to know when you apply for a home loan:

  • Detailed residence history for the last 2 years
  • Detailed employment history for the last 2 years
  • Knowledge of your various bank accounts, retirement accounts, and other liquid assets
  • Social Security number
  • A good idea of your credit history – dates of bankruptcy discharge, etc

Obviously, there’s more to it than that. But those items might be things you wouldn’t usually think about. It helps to have the following put together when you fill out the loan application:

  • Most recent 30 days of paystubs for all borrowers
  • Most recent bank statements; all pages, all accounts
  • Most recent retirement or 401k statements
  • Last 2 years Federal tax returns; all pages, with w2s
  • Business tax returns if applicable
  • Divorce decree/child support paperwork if applicable
  • Award letters for Social Security/VA/Disability if applicable
  • Pension letters/Annuity statements if applicable
  • Bankruptcy Discharge paperwork if applicable

That sounds like a lot of stuff to put together, but the truth is it will help your Mortgage Professional put your application together, and the underwriter will need to document and verify all of those items anyway.

You might as well begin prepared.

For more information about the home loan application, and a copy you can download and get familiar with, check out my website. I try to provide valuable information about home loans in Oregon and Washington, rather than empty sales pitches. Thanks!

Picture: Jason Hillard

Jason Hillard – homeloanninjas.com

Mortgage Advisor in Oregon and Washington MLO#119032

Pinnacle Mortgage Bankers

a div of Pinnacle Capital Mortgage Corp

503.799.4112

jason@mypmb.us

1706 D St Vancouver, WA 98663

NMLS 81395 WA CL-81395

Equal Housing Lender

RATES WAY DOWN, APPS WAY UP… THAT’S GOOD, RIGHT?, by Diane Mesgleski, Mi–Explode.com


Last week mortgage applications rose a whopping 21.7% from the previous week according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey.  Great news for the industry to be sure.  Great news for the housing market?  Not so much, when you consider that the bulk of the applications are refinances, not purchases.  Refis rose 31% from the previous week, while purchases remain low. Actually they dropped a skooch.  Low purchase numbers mean continued stagnation in the housing market and continued increase in inventory as foreclosures continue to be added to the count.  Which means lower values. Kind of a vicious cycle.  Those of us in the mortgage biz were not surprised by last week’s numbers, since low rates spur refis and rising interest rates signal a purchase market.  You don’t even need to understand the reason why, you just know that is how it works. It is comforting to know that something is working the way it always has.

What is not comforting is the bewildered Fed chairman, and many baffled economists who don’t understand why the present policies are not working.  Even if rates could go lower it would not have an impact on the housing market.  There is no lack of money to lend, there is a lack of qualified borrowers.  And that situation is not improving with time, it is getting worse.   At the same time Washington is tightening their stranglehold on lenders with ever increasing regulation, then wondering why banks are not lending.  No matter what you believe should be the course, whether more regulation or less, you have to agree that government intervention has not and is not helping.

Has anybody else noticed, the only winner in this current climate are the Too Big To Fail banks?   They have plenty of cash, since they cannot lend it.  One article I read put it this way, their balance sheets are “healing”.   Sounds so soothing you almost forget to be angry.

There is one other factor in the current housing crisis worth mentioning: the lack of consumer confidence.  Nobody is going to buy a house when the prices are continuing to fall.  And even in areas where the prices are stable, people have no confidence in the economy or in Washington’s ability or willingness to fix it. They are simply afraid to make the biggest investment of their lives in this climate.   If our leaders would actually lead rather than play political games we might actually start seeing change.

But only if we give them another four years.   No wonder Ben does not think that anything will get better until 2013….now I get it.

Shadow Inventory Raises 10 Percent, Thetruthaboutmortgage.com


The so-called shadow inventory of residential property increased 10 percent year-over-year, according to a report released today by CoreLogic.

As of August, there were 2.1 million units, representing eights month of supply, of shadow inventory, up from 1.9 million units, or five months of a supply, a year ago.

“With visible inventory remaining flat at 4.2 million units, the change in shadow inventory increased the total supply of unsold inventory by 3 percent,” the company said in a release.

CoreLogic estimates its shadow inventory, sometimes referred to as pending supply, by adding up properties that are seriously delinquent (90 days or more behind in mortgage payments), inforeclosure, or owned by mortgage lenders but not currently listed on multiple listing services (MLSs).

These properties typically don’t show up in official numbers released by the Census Bureau and other outlets, meaning housing supply is worse than it looks.

And the visible months’ supply increased to 15 months in August, up from 11 months a year earlier due to the decline in sales volume during the past few months (expiration of homebuyer tax credit).

Now the total visible and shadow inventory stands at 6.3 million units, up from 6.1 million a year ago.

As a result, the total months’ supply of unsold homes was 23 months in August, up from 17 months a year ago.

Typically, a reading of six to seven months supply is considered normal, meaning current inventory is roughly three times the norm.

Translation: Continued downward pressure on home prices.

 

 

Wintrust Mortgage Corp – Wholesale – Wholesale – Agency, FHA/VA


Brokers today received an announcement via email that Schaumburg, IL based Wintrust Mortgage Corporation would be closing its Wholesale Lending Division effective immediately:

“Effective today, October 15, 2010, Wintrust Mortgage Corporation is exiting the Wholesale business after many years of service to the mortgage brokerage community. This is a business decision based on our need to better focus our assets and attention to the continued growth of our Retail and Correspondent Channels.”

One insider we spoke with told us all of the Wholesale Account Executives were let go earlier today. That amounted to 6 people aligned with the Schaumburg, IL corporate office and another 7 people out of the Overland Park, KS wholesale office (based on the contact lists posted on their web site). We’re told underwriters and an untold number of support staff will remain until sometime in December to close out the pipeline. Our source didn’t have details on the wholesale division’s production, but the company overall averaged more than $302 million per month in 2009.

 

Mortgage investor group wants loans ensnared in robo-signing snafu repurchased, by JASON PHILYAW, Housingwire.com


The Association of Mortgage Investors wants trustees of residential mortgage-backed securities “to hold servicers accountable for negligence in maintaining the assets of trusts.”

The Washington firm, which advocates on behalf of institutional and private MBS investors, said in a press release that the recently uncovered robo-signing debacle – first reported by HousingWire two weeks ago – “undermines the integrity and the operational framework of the housing finance and mortgage system as it exists today.”

Most of the nation’s largest mortgage lenders, includingBank of America, Ally Financial, formerly GMAC Mortgage, and JPMorgan Chase, have suspended foreclosures to amend faulty affidavits that may have been signed without looking at the documents or a notary present.

The AMI wants bond trustees to investigate the process and assure investors that mortgages bundled and sold into MBS are repurchased by the loan originators, who failed in their “fiduciary responsibilities [to] protect millions of American pensioners and retirees.”

“The capacity constraints at our nation’s largest servicers continue to be an issue of great concern to investors,” said Chris Katopis, executive director of the AMI. “We urgeAllyJPMorgan Chase, and all other servicers to invest the time and resources necessary to improve their operational infrastructure and to avoid situations where efficient mortgage servicing and collection practices are compromised.”

He said the may snafus may cause inaccurate legal filings for the mortgages and underlying properties in the MBS pools.

“The unfortunate and little-known consequence of these operational breakdowns is the destruction of capital needed to sustain fixed-income investors reliant upon cash flow from pensions and retirement accounts,” Katopis said.

Write to Jason Philyaw.

Chase Halts Foreclosures In Process, by Thetruthaboutmortgage.com


JP Morgan Chase has halted foreclosures until a review of its document-filing process is completed, according to the WSJ.

The New York City-based bank said the move affects roughly 56,000 home loans in some stage of the foreclosure process.

Chase spokesman Tom Kelly announced that there were cases where employees may have signed affidavits about loan documents on the basis of file reviews done by other personnel.

As a result, the bank and mortgage lender must now re-examine documents tied to loans already in foreclosure to verify if they “meet the standard of personal knowledge or review” where required.

Back in May, law firm Ice Legal LP dropped Chase document-signer Beth Ann Cottrell after it became known that she signed off on roughly 18,000 foreclosure affidavits and other documents each month without actually reviewing the files.

And last week, GMAC Mortgage told brokers and agents to immediately stop evictions, cash-for-keys transactions, and lockouts in 23 states after the company warned it could need to take corrective action in connection with some foreclosures.

Sign of the times…a year ago it was all about foreclosure moratoriums to help borrowers in need, and now it’s all about lenders making sure they don’t get into hot water over their suspect loss mitigation activities.

Loan Modifications Are Getting Better, thetruthaboutmortgage.com


It appears as if more recently completed loan modifications are performing better than their predecessors, according to the latest Mortgage Metrics Report from the OCC.

More than 90 percent of loan modifications implemented during the second quarter of 2010 reduced borrowers’ monthly principal and interest payments, while 56 percent reduced payments by more than 20 percent.

And that focus on sustainable and affordable monthly mortgage payments resulted in lower post-modification delinquency rates (much lower than that 75 percent re-default rate we we’re worried about).

Six months after modification, roughly 32 percent of the modifications made in 2009 were seriously delinquent or in somewhere in the foreclosure process, compared with more than 45 percent of loan mods made in 2008.

And the performance of modifications made this year suggests the trend is continuing.

At three months after modification, just 11 percent of the 2010 modifications were seriously delinquent, compared with 20 percent of modifications made last year and 32 percent of 2008 modifications.

HAMP Modifications Outperforming Other Loan Mods

Nearly all modifications made under the Making Home Affordable program (HAMP) reduced borrower principal and interest payments, and 78.9 percent reduced monthly payments by 20 percent or more

HAMP modifications made during the quarter reduced monthly mortgage payments by an average of $608, while other loan mods reduced payments by just $307 on average.

As a result, HAMP modifications implemented through the first quarter of 2010 had fewer re-default rates than other modifications implemented during the same period.

At six months after modification, 10.8 percent of HAMP modifications made in the fourth quarter of 2009 were 60 or more days delinquent, compared with 22.4 percent of other modifications made during that quarter.

Similarly, 10.5 percent of HAMP modifications made in the first quarter of 2010 were 60 or more days delinquent three months after modification, compared with 11.6 percent of other modifications.

So perhaps HAMP ain’t so bad after all…and maybe loan modifications actually do work.

Fannie mae to provide mortgage payment forbearance for certain military homeowners, Thetruthaboutmortgage.com


Government mortgage financier Fannie Mae announced today new measures to help those serving in the military avoid foreclosure.

The company said it will provide mortgage payment forbearance for up to six months where the death or injury of a service member on active duty leads to a hardship for military families with a mortgage obligation.

Fannie has also created a hotline, 877-MIL-4566, available to all service members looking to receive guidance about their mortgage options and subsequent assistance.

“The men and women of our Armed Forces have shown extraordinary commitment to our country while facing unique challenges as a result of their service,” said Jeff Hayward, Senior Vice President of Fannie Mae’s National Servicing Organization, in a release.

“No family impacted by a death or injury in the line of duty should have to face the additional burden of foreclosure as a result of the hardship. We want to do all that we can to provide support to these families at a time of need as we honor their sacrifices and service to our country.”

Service members or surviving spouses who may be eligible for the special forbearance should contact their bank or mortgage lender.

Any forbearance will be granted under Fannie Mae’s “Unique Hardships” guidelines with Fannie Mae’s approval.

Under forbearance, the bank or lender may reduce or suspend the borrower’s monthly mortgage payments for the specified period.

Credit bureau reporting will also be suspended during the forbearance period to minimize any negative credit scoring impact.

Low FICOs Bar One-Third of Prospective Borrowers , Nationalmortgagenews.com


Approximately one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, an analysis of 25,000 loan quotes during the first half of September on Zillow Mortgage Marketplace found.

The lead generation website found that those consumers with a credit score under 620 who entered data on the site were unlikely to have even one quote returned, even if they were willing to make a down payment in the 15% to 25% range.

Zillow cited statistics from MyFICO.com that found over 29% of Americans have a score under 620.

The study also found that for every 20-point increase in one’s credit score, the average low annual percentage rate offered to these consumers fell by 0.12%.

Those consumers who had a credit score over 720 had an average low APR of 4.3% on a conventional 30-year fixed-rate mortgage. For borrowers whose score was between 620 and 639, the average low APR was 4.9%.

Zillow chief economist Stan Humphries said homes are more affordable than in years, plus mortgage interest rates are at record lows. “But the irony here is that so many Americans can’t qualify for these low rates, or can’t qualify for a mortgage at all.”

Wealthbridge Mortgage Corp. – Retail – Agency, FHA/VA


The Portland Business Journalyesterday reported thatWealthbridge Mortgage Corp.(view snapshot) had let go of 16 workers and would “lay off the remainder of its 109-member staff” as of 2010-10-15 based on a recent filing with Oregon under the Worker Adjustment and Retraining Notification Act.

“Wealthbridge Mortgage Corp. intends to close its business and permanently lay off employees due to unforeseen circumstances outside of the company’s control and its inability to obtain the necessary capital to remain in business,” President Scott Everett said in a letter to local and state officials.

Based in Beaverton, OR, the company had changed its name to Wealthbridge Mortgage from Gateway Financial Services at the beginning of 2008. Information given to us at the time implied the company had been hit with a lot of repurchases due to first payment defaults, although we did not see any evidence to support the allegation. An inside source reported a large number of LO’s and telemarketing staff were let go in the early months of 2008 as a result of the alleged buybacks, along with a handful of managers.

The company originated an average of $16.62 million per month in residential mortgage loans during 2008, down from the previous year’s average volume of nearly $20 million per month.

Cited most recently as the reason for the company’s “collapse” was the failure by Delaware investment firm Venn Capital Group Holdings LLC to close a deal to purchase the company on 2010-09-20. Branch offices in MN and NV will also be closed.

If you have additional information to add, please post your comments below or send us an email.

http://www.bizjournals.com/portland/stories/2010/09/20/daily45.html

Reverse Mortgage Applications Rise to Highest Level Since September 2009, Reversemortgagedaily.com


The number of reverse mortgage applications increased 8.1% to 9,686 in August according to the latest report from the Federal Housing Administration.

While down 12.4% from the same period last year, the application totals for August are the highest since September 2009.
The run up in applications before the end of FHA’s fiscal year is normal and is likely to increase as reverse mortgage borrowers rush to complete the process before the Department of Housing and Urban Development lowers the principal limit factors in October.

The total amount of FHA applications for the month was 200,907 with a significant rise in prior FHA refinance cases. This included 86,569 purchase transactions, 104,652 refinance cases and 9,686 reverse mortgage cases. Included in the refinance count were 55,103 prior FHA’s (46.9% over last month), and 49,549 conventional conversions. In addition, 39 H4H cases were included in the refinance total.

There were also 6,645 HECM’s insured in August and 6,175 were the traditional reverse mortgage type.

As of the end of August, FHA has 558,316 mortgages in a serious delinquency category, yielding a seriously default rate of 8.5 percent. This includes all mortgages in bankruptcy, in foreclosure and 90 days or more delinquencies.

So far this fiscal year 270,964 claims have been paid. The bulk of these were for loss mitigation retention (164,744) and property conveyance (87,807).

Land Sales Contract Solution: Down Payment Installment


SG_Logo_150x150

 

What is most attractive about Land Sales Contracts or seller financing in general is the buyer and the seller can develop agreements that will fit each others needs. Recently a buyer and seller came to an agreement on the selling price of a home. The buyer had very little for a down payment. The seller proposed that the buyer make down payment installments during the term of the agreement. In this case the buyer and seller had to agree on a couple things. First they had to agree how much the down payment would be. Second they had to agree on how many installment payments the buyer could make. In this case, the contract for for 60 months and the seller and buyer agreed on a 48 month down payment installment plan.

The Deal:

Sales Price………$250,000
Down Payment…….10% ($25,000)
Buyer will pay 50% ($12,500) at closing and will pay the rest of down payment over 48 months at $260.42 per month.
Interest Rate…….7%
Payment………….$1496.93
Payments Amortised over 30 years
Buyer to pay Property Taxes ($1953 per year) and Insurance ($258) during term of contract.
Contract Term…….60 Months (Balloon payment of balance due month 61)

Monthly Payment Break Down

Contract……….$1468
Down Payment..$260.42
Taxes…………..$162.75
Insurance………$21.50
Total……………$1912.92

If the seller and buyer had agreed that the buyer was to make interest only payments instead of a 30 year amortization then the payment would be a little smaller.