The Pending Home Sales Index, a forward-looking indicator, dropped 30%
to 77.6 based on contracts signed in May 2010 from a reading of 110.9 in
April, and is 15.9% below May 2009 when it was 92.3. The falloff comes
on the heels of three strong monthly gains as home buyers rushed to take
advantage of the tax credit.

The data reflects contracts and not closings, which normally occur with
a lag time of one or two months. However, many closings have been
delayed recently from a rush of buyers into the system and slow
processing of short sales, in addition to the heavy volume and a more
thorough loan underwriting process. As many as 180,000 buyers who signed
contracts by April 30 may have missed the June 30 closing deadline for
the tax credit. However, Congress passed legislation recently to extend
the deadline for delayed contracts and President Obama is expected to sign.

NAR chief economist Lawrence Yun said, “Consumers are rational and they
rushed to meet the tax credit eligibility deadline in April. The sharp
decline in contract signings in May is a natural result with similar low
levels of sales activity anticipated in June,” he said. “Surprisingly,
though, some local markets such as Portland, Maine and Jacksonville,
Fla., actually experienced an increase in contract signings from a year
ago without the tax credit. Existing-home sales that close in June will
remain elevated, but we’ll then see a notable decline for July and August.”

Congress also reauthorized the National Flood Insurance Program. Many
lenders were hesitant to approve mortgages on homes needing flood
insurance without congressional action and numerous sales have been on
hold. The action is retroactive to a temporary authorization that
expired May 31, and also is expected to be signed by the president.

Yun noted the tax credit has broadly stabilized home prices. “Without
the tax credit, there will be more aggressive price negotiations between
buyers and sellers. The key test on whether the housing market can stand
on its own without stimulus medicine will depend critically on private
sector job creation in the second half of the year. We’ll also keep a
close eye on market conditions on the Gulf Coast.”

Through May of this year, 495,000 net private sector jobs have been
created; NAR’s forecast for employment growth is about 1 million
additional net new jobs over the balance of the year and another 2
million in 2011.

“If jobs come back as expected, the pace of home sales should pick up
later this year and reach a sustainable level of activity given very
favorable affordability conditions,” Yun said.

“In most areas of the country, there will be no sharp snap back in home
prices in the upcoming years, although some local markets have
experienced double-digit gains this year,” Yun said. NAR forecasts the
national median home price to rise only 4% cumulatively over the next
two years.

“One factor that could lead to price acceleration in upcoming years for
some markets is if the very low levels of new home construction were to
persist for another year or two,” he added.

The PHSI in the Northeast fell 31.6% to 67.0 in May and is 14.8% lower
than May 2009. In the Midwest the index dropped 32.1% to 70.8 and is
20.2% below a year ago. Pending home sales in the South fell 33.3% to an
index of 82.5, and are 14.4% lower than May 2009. In the West the index
declined 20.9% to 85.3 and is 15.1% below a year ago.

For more information, visit www.realtor.org ^[2] .

^[1]
RISMEDIA, June 10, 2010—If you’re like most homeowners, there is never
a shortage of options when it comes to projects around the house. But
studies have shown that some of the highest return on household
improvements can come from those on the outside, not the inside.

A primary reason is that outside investments can produce curb appeal,
which is especially important if you are planning to sell your home.
Those same improvements can enhance the enjoyment factor if you and your
family plan to stay in your home.

For example, one national industry resource—the National Association
of Realtors, reported recently their experience shows a new wood deck
produces the second highest return on home improvement investment of any
common addition, remodel or replacement project.

However projects don’t have to be big to add value or enjoyment,
according to Jimmy Rane, president of Great Southern Wood Preserving, a
leading producer of pressure-treated lumber products and maker of
YellaWood brand products.

*The following popular outside improvement projects will increase the
curb appeal or value of a home:*

*Adirondack chairs*—Uniquely-American classic outdoor furniture is
made entirely of wood and has a straight back and seat, which are set at
a slant to sit comfortably on a hillside or mountain incline, but still
be comfortable at any angle.

*Gazebo*—A gazebo can be freestanding or attached to a garden wall,
roofed and open on all sizes to provide shade or shelter.

*Planters and window boxes*—Planters have become popular because they
are both functional and ornamental. Additionally, some can be moved
frequently to account for seasonal weather or just to create a change in
scenery.

*Picnic table*—Picnic tables go well on a patio or a deck, but equally
as well on the grass or under a tree in the yard. A traditional picnic
table is all in one piece so that it wears well without a lot of
maintenance.

*Trellis*—A trellis can function as a unique sun screen or it can be
the framework for an outdoor hanging garden. Building it with pressure
treated lumber can add life by minimizing rotting and other threats.

*Trash can corral or compost b*in—While many outdoor projects tend to
be cosmetic in nature, here are two ideas that are both practical and
pretty. With a trash can corral, you can hide unsightly trash cans and
with a compost bin, you can reduce your own carbon footprint in a way
that doesn’t take away from the visual appeal of the place.

For more information, visit www.greatsouthernwood.com

More young people are living with their parents instead of moving out,
postponing the creation of their own households. Meanwhile, more
families are combining households for economic reasons, including the
loss of a home due to foreclosure, said Gary Painter, associate
professor in the School of Policy, Planning and Development at USC.
“With such a significant drop in households nationwide, it is clear the
most recent recession impacted individuals’ decisions to move out on
their own and caused many Americans to join already formed households,”
Painter said in a news release.

The decline in the number of households contributed to the excess supply
of apartments and single-family homes on the market. “The housing and
mortgage industries will feel the impact of this reduction in the number
of households for years to come,” Painter said in the report, which was
sponsored by the Mortgage Bankers Association’s Research Institute for
Housing America, a trust fund that aids research on mortgage markets and
real estate finance. Also, the recession caused a fivefold increase in
the rates of overcrowding, he said. A household that has more than one
person per room indicates overcrowding.

While the analysis incorporates data only through 2008, Painter said the
decline in household formation likely continued through 2009. “Clearly,
given the depth of the downturn in 2009, and the ongoing weakness in the
job market through the beginning of this year, this study gives no
reason to expect that household formation has picked up at all,” he said.

There’s a strong tie between unemployment and household formation rates,
Painter said. The national unemployment rate was 9.7% in March 2010, but
the recession hit younger workers much harder. Workers between the ages
of 16 to 24 peaked at a record high of 19.2% in September 2009, up from
11.8% in December 2007, according to a recent report from the Economic
Policy Institute.

Household formation should begin a return to a more normal level by
2012, as unemployment rates decline, Painter said. But he said there
isn’t a “demographic silver bullet” to solve the overhang of housing
supply in many markets.

However, when conditions do improve, there could be more young adults
becoming homeowners instead of moving into a rental unit, he said.
“Young adults need not only a paycheck, but also a sense that they have
sustainable employment before striking out on their own,” Painter said.
“Typically, many new households are renters, but if young adults
postpone moving out, some may have the ability to save for a down
payment, causing them to skip the rental stage and move right to
homeownership.”

The study, which analyzes data from the past 40 years, examines the
historical impact of recessions and elevated unemployment rates on the
formation of households. Findings include:

-The likelihood of a young adult forming an independent household falls
up to 4% in a recession, depending on the person’s age and the severity
of the changes in unemployment rates.

-The national homeownership rate has fallen to just above 67%, from
above 69%. Renter household formation dropped even more than the
formation of homeownership households.

-Native-born Americans showed a larger decline in household formation
and a larger increase in overcrowding rates than immigrants.

-Parents with higher incomes are more likely to have young adults living
with them instead of moving into the rental market. But children with
parents who have higher financial wealth are more likely to form their
own new rental households.

(c) 2010, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

That’s because lenders have been quietly selling second mortgages and
home equity lines left unpaid after foreclosures and short sales. The
buyers: collection agencies, which in some states have years to make a
claim. If they win court judgments, these collectors could have years to
pursue borrowers with repayment plans, and even garnish their wages,
said Scott CoBen, a Sacramento bankruptcy attorney.

“The only relief a consumer will have is entering into a debt
negotiating plan or filing for bankruptcy,” said Sylvia Alayon, a vice
president with the New York-based Consumer Mortgage Audit Center. The
firm provides mortgage analysis to lenders, advocacy groups and attorneys.

The phenomenon suggests an ominous, looming echo of today’s real estate
meltdown. As debt collectors surely seek at least partial repayment of
millions of dollars in unpaid home loans, some say renewed financial
stresses on tens of thousands of local consumers could dampen economic
recovery.

“I think there will be a lot of unhappy people when it hits,” said
CoBen. “We saw this in the ’90s. This is not really new. Just when you
think you’re back on your feet, you’re making money and the economy’s
good, they hit you with this.”

Alayon said most people are so stressed out and exhausted by trying to
save their homes today that they are unaware they could face another hit
later. And many who are losing homes don’t get the advice necessary to
prevent future fallout, say nonprofit loan counselors.

“You’ve got tens of thousands of people in California who have this
hanging over their heads who don’t even know it,” said Scott Thompson,
principal at for-profit Mortgage Resolution Services in Carmichael,
Calif. He fears a new wave of bankruptcies might flatten people just
starting to recover from losing their homes.

“So many of these are people with 750 or 800 credit scores who made a
bad decision,” said Thompson. “Or they’re people who suffered income
cuts. These are people, in terms of the economy, whom we need to
participate.”

But an entire industry is gearing up to buy their debt at deep discounts
and collect what they can, Alayon said. “It’s a big business and
investors are coming out of the woodwork. It’s a very lucrative
business,” she said. Real estate insiders and financial players know it
as “scratch and dent.”

Regionally, no one knows for sure how much unpaid debt is on the line.
CoBen said people who used their borrowings for a traditional loan on a
house in which they lived generally have little to worry about. But
borrowers may be vulnerable in years ahead—generally, those who
defaulted not only on their first mortgage but also on a home equity
loan or second mortgage.

In California, banks can’t collect from borrowers for primary, so-called
“first-lien,” loans that go unpaid. When a house is foreclosed or sold
through a short sale, the lender of the first loan gets the house back
or the proceeds from another buyer.

But banks also made thousands of “second-lien” loans, including those
used to finance 20% down payments during the housing boom. A separate
category of “seconds” includes home equity loans and home equity lines
of credit. Nationally, about 3.4% of those loans are currently
delinquent, according to Foresight.

Owners are generally, but not always, on the hook for the second loans
left over from a foreclosure or short sale. Most investor mortgages,
too, leave the borrower liable for potential unpaid debt. In many short
sales, experienced real estate agents or attorneys can negotiate away
debt obligations for the second-lien loan. But many inexperienced
borrowers don’t know that, and sign final-hour agreements giving lenders
the right to pursue them later.

“Seek advice,” counseled Doug Robinson, spokesman for national nonprofit
mortgage counselor NeighborWorks America. He said nonprofit counselors
can help. “Often when you work with a real estate agent, they’re not
really equipped to handle the repercussions. They’re set up to make the
sale,” he said.

Government forces are already moving to limit potential damage to
millions now struggling with home loans. A new Obama administration
short sale program aims to prevent banks that hold second-lien loans
from pursuing collections from homeowners after the short sale. It goes
into effect April 5, 2010 and works this way: Sellers will receive
notice that their servicer has steered part of the sales proceeds to
secondary lien holders “in exchange for release and full satisfaction of
their liens.” This release would apply only to short sales done through
the administration’s Home Affordable Foreclosure Alternatives program.

In California, Democratic state Sen. Ellen Corbett recently introduced
SB 1178, which would expand California’s protections for some people who
refinance and take on a second mortgage.

People who refinance, but use the funds to improve their homes or to
stay in their homes with a better interest rate, would be protected.
Lenders could not seek court judgments to collect from these borrowers
in the event of foreclosure or short sales.

“If you refinance a property and aren’t using the money for personal
reasons, you shouldn’t lose your personal protections,” said California
Association of Realtors lobbyist Alex Creel. He said the idea has been
around for years but has become more urgent as thousands lose income and
fall into mortgage trouble. The bill would apply to all foreclosures or
short sales that occur after it becomes law. It doesn’t matter when the
loan was made, Creel said. SB 1178 is still in the early stages of
consideration. It must clear both houses of the Legislature and be
signed by Gov. Arnold Schwarzenegger by Sept. 30 in order to take effect.

(c) 2010, The Sacramento Bee (Sacramento, Calif.).

Distributed by McClatchy-Tribune Information Services.

In a housing market where tighter lending requirements have made FHA financing the only option for some buyers, this 90-day policy has (1) kept some homebuyers from being able to purchase affordable homes and (2) prevented the quick resale of foreclosed properties, which affects the ability of communities to stabilize and rebuild.

Research has shown that the buying, fixing, and reselling of foreclosed properties is often achieved in less than three months time.

The temporary waiver, which will expand access to FHA mortgage insurance to many, will be in effect for a period of one year, unless extended or withdrawn by the FHA. With this in mind, now may be an excellent time to contact clients who have recently purchased a foreclosed property and those who may be on the fence about purchasing a foreclosure as a short-term investment.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

To ensure FHA borrowers are protected from inflated prices, the policy has certain restrictions, including:

• All transactions must be arms-length and there can be no identity of interest between the buyer and seller.
• If the sales price of the property is 20 percent or more above the seller’s acquisition cost, the lender must meet specific conditions for the waiver to apply.
• The waiver is limited to forward mortgages, and cannot be used under the Home Equity Conversion Mortgage (HECM) purchase program.

You can read the full text of the waiver on HUD.gov.

Sincerely,

Michelle Wickett
Evergreen Home Loans
(360) 791 – 0513
mwickett@evergreenhomeloans.com