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Going into 2011, I would like to take a snapshot of the real estate market in the Pacific Northwest. We were one of the last in the country to start showing a decline in home values, and we will probably be one of the last to come out of this decline. It looks like nationally, we have hit bottom. Some estimates were that in 2009 and 2010 we would fall back to 2000 numbers. We are now getting close to those figures. 2011 will most likely be the end of the decline. We probably won’t necessarily go up in value anywhere in the near future. As soon as unemployment corrects itself and the economy starts to move somewhat, I feel housing prices will rise after that. My estimate is that we’re in a seven year cycle and we’re about four years into it. We probably have three years before things start to take off again, with a lot depending on how inflation will affect the housing market due to the bubble popping. Will inflation push prices up? No one really knows. There is no time in history that we can reflect on as an example or parallel to what we just went through, so it is tough to say. In my opinion, in the NW, home price recovery will primarily be driven off a correction in the unemployment rate. When we see Unemployment in the 6% or 7% ranges, I think the housing market will soon follow those numbers.

Kerry N. Greenwald

NMLS # 70269

Sr. VA Loan Specialist

Creekside Mortgage Inc.

360-571-LOAN 5626

www.VALoanWA.com

www.OregonVALoan.com

Julie Sandlin, Escrow Officer at First American Title Insurance Company of Oregon, located at 10260 SW Greenburg Rd., Ste 170, Portland, OR, is a pleasure to work with. Her phone is 503-244-8323. You can email her at  JSandlin@FirstAm.com; her website is www.FirstAMPDX.com. Julie Sandlin has been working with us now for four years. We started working with her doing VA streamline refinances in the Portland Metro area and pretty much the whole state of Oregon. Julie is someone who always seems to work late and can get the job done, whatever it takes! We have been very impressed with her over the years, and are excited about how much we have been able to accomplish together.

Kerry N. Greenwald

 

Sr. VA  Loan Specialist

Creekside Mortgage Inc.

509.493.4937/503.445.1038

www.VALoanWA.com

www.OregonVALoan.com

Another great insurance option is American Family Insurance, with Becky Wiley, from Becky Wiley Agency, 11500 NE 76th Street, Suite C1, Vancouver, WA 98662. Her office number is 360-571-8000, and cell phone is 360-608-6880. Her email is:  BWiley@AmFam.com. Becky is also a great option to look at for your insurance needs. For the right person, American Family is definitely the right insurance agency.

Kerry N. Greenwald

 

Sr. VA  Loan Specialist

Creekside Mortgage Inc.

509.493.4937/503.445.1038

www.VALoanWA.com

www.OregonVALoan.com

An escrow officer we use often in Clark County is Tracy Sjothun, Escrow officer LPO. She is located in the Van Mall First American Title Insurance Company at 7710 NE Greenwood Dr., Vancouver, WA 98662. She is prior service, U.S. Army. Her direct phone line is 713-5282. She has done quite a few VA purchases with us over the years, and a large amount of VA streamline refinances here in Clark County.

 

Kerry N. Greenwald

 

Sr. VA  Loan Specialist

Creekside Mortgage Inc.

360.571.LOAN (5626)/503.445.1038

www.VALoanWA.com

www.OregonVALoan.com

The program initiated by the Government HAMP, has failed miserably to address loan modifications, and the short sales have failed to mitigate housing losses.

These two outcomes have played out for the same reason: Four major banks control over 75% of the nations mortgage servicing.  The GSE’s failure too can be linked to Fannie and Freddie controlling over 70% of the nations mortgage-backed securities market during their hay day. Too much control in the hands of the few has ultimately ended in chaos.

The same four major banks have controlled the majority of the mortgage servicing for the past two decades. During that time their primary responsibilities have been the collection of monthly remittances, payments to bond-holders and submission of the accompanying reports. This responsibility was relatively straight-forward and with the ability, in the past decade, to send processes off-shore the profitability grew at an enormous rate.

As annual mortgage volume grew from $500 billion in 1990 to an excess of $3 trillion in 2006 so too did the number of outstanding mortgage accounts that were being serviced by the large financial institutions. As these numbers continued to grow, so too did the number of delinquent files. Unfortunately loan servicers are not properly set up with the experienced personnel or the technology required to effectively managing these delinquent assets. As a result, too many delinquent accounts are being managed by institutions that have not adequately prepared for such an anomaly and we've experienced a massive back-up in the modification/loss mitigation process.

The solution is not simple but it’s doable...

First congress MUST redesign the nation’s Housing finance System to adequately supply the necessary liquidity to meet its future housing needs. This can only be accomplished if congress is willing to address an entire system overhaul and not just Fannie and Freddie.

Congress should also provide the Federal Home Loan Banksthe authority to securitize mortgages. This would serve two purposes. It would first help to deleverage the percentage of the mortgage-backed securities market that the GSEs currently enjoy. After all that is what got them into the situation they find themselves today. Owning 70% of the MBS market was doomed to failure. Allowing the FHLB to securitize would also allow the industry to begin to shift some of the servicing responsibilities from the few to the many. Engaging the community banking system to assist in the deleveraging of the big players should be a goal of the administration.  More importantly, however, moving the servicing back down to these local bankers in local markets makes much more sense and improves the odds of future catastrophic failure of our mortgage system.

If the market ever expects housing to contribute 25% to 30% of GDP again, it will require congress to completely overhaul the housing finance system, deleverage those institutions that have enjoyed the “too big to fail” status and let the private markets control housing rather than the socialized housing system currently in place.

Kevin J. Lawson