16th Annual Fisher Center Real Estate Conference

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16th Annual Fisher Center Real Estate Conference

• Financial Markets
• Supply/Demand

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Conforming vs. Jumbo Mortgage Rates
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Conforming/Jumbo Spreads
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What Rates Dont Show

• Much higher pricing for the default option
• 25-35 down-payment requirements (as opposed to
  20 before) to get the best rate.
• No loans with less than 20 down-payment
• No loans without income verification, and ability
  to cover the payments, independent of LTV
• Very hard to get bridge loans when buying and
  selling property simultaneously.

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What Rates Dont Show (continued)

• Securitization market is still dead. The ratings
  agencies are irrelevant, no substitutes yet. The
  substitutes that are coming up are likely to make
  the marketplace even less able to transact
  efficiently.
• The loans are held in banks own portfolio, hence
  there is a great variability in banks appetite
  for the loans the loan marketplace has become
  extremely heterogeneous.

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Existing Homes Sale Rate
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Months of Inventory
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AffordabilitySource LPS Applied Analytics
Source LPS Applied Analytics
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Percentage of people who can afford medium priced
house

•      
• STATE/REGION/COUNTY Q1 2011  Q1
  2010     US 69   66    S.F. Bay
  Area 39   36  
•  Alameda 35   34   Contra-Costa (Central
  County) 30   25  
• Marin 27   24  
• Napa 48   44   San Francisco 25   21  
  San Mateo 28   22   Santa
  Clara 37   34   Solano 74   70   Sonoma
  47   40

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What Housing Inventory and Affordability Dont
Show

• The real affordably is even considerably greater
  than implied since the average price is much
  higher than the medium (the latest is about
  190).
• Increasing REO inventory REO liquidation will
  continue depressing the prices
• 20 of non-agency borrowers cant afford to buy
  because of the increased down-payment
  requirements. It will take time to build up
  savings.

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Five Million Borrowers Are Delinquent
HAMP and other loan mods cause delinquencies to
dip slightly in 2010
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Fewer Current Loans Are Falling Behind
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Significant REO Volume For a Long Time
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Who Originated All These Bad Loans?