This is the second installment of my article looking back over the past five years at Portland housing statistics.  Part One examined the real reason for the housing crisis which officially commenced in 3Q 2007, and looked at the historic numbers for average and median (i.e. “mean”) sale prices according to the RMLS™. The link to Part One is here

 The Rest of the Story. Besides pricing over the past five years, what about time on the market?  Available inventory?  Number of listings? Closed sales? Let’s look at each one:

1.     Time on the MarketUntil 3Q 2007, an overheated real estate market was still burning through inventory.  In August 2007, the average time on the market was 56 days less than two months from listing to “pending sale.”[1]  The following month, September, 2007, banks began realizing that the drumbeat of subprime defaults was not going away.  They tightened their underwriting requirements almost immediately.  Over time, they began to even restrict borrowers from tapping their HELOCs based upon ZIP code.  As short sales and REOs began to fill the real estate marketplace, buyers and appraisers began viewing the sales figures as legitimate comps by which to gauge present value.  All the while, many potential buyers remained on the sidelines, waiting for prices to hit bottom.[2]  Many sellers who were fortunate enough to have equity during the following five years had to decide whether to wait until the market turned, or sell their home and recover far less equity than they had earlier.[3] Continue reading “Portland Metro Housing Prices – The Last Five Years [Part Two]”

Having counseled approximately two hundred Oregon homeowners drowning in negative equity, I have discovered that many, if not most, believe that somehow their lenders can literally swoop down and take not only their home, but all of their bank accounts, savings, retirement funds, and/or daily wages.  In truth, the only real power most banks have over a borrower, is the ability to negatively impact their credit, and by extension, their future ability to borrow.  On the other hand, one’s credit is a composite of many different data points, not simply a single “black mark” from one distressed property event.  To that extent, a credit rating can be strengthened over time, and like a muscle, it builds up through consistent and prudent use over time.  In today’s rental marketplace (which is populated by many former homeowners coming out of a distressed property transaction), a credit score impacted by a single distressed housing event has little or no bearing on whether a landlord will rent a home or apartment to them.  In an effort to provide some peace of mind, listed below are certain “rights” that all home owners have under Oregon law. These rights cannot be taken away – they can only be voluntarily given away.

The following Bill of Rights assumes the following facts: (a) The home was used and occupied as a principal residence.  A “principal residence” or “primary residence” in my vernacular, is the residence you occupy most of the time, and hold out to the city, state and federal governments (e.g. the post office, DMV, utility companies, etc.) as your “home.”  A second home is not, by definition, a “primary residence.”  (b) There is only one loan on the property and all of the borrowed funds were used to acquire the home.  Second trust deeds can sometimes be problematic.  If you have a second trust deed as well as a first, all is not lost – it just requires a little more planning, and some smart negotiations with the bank.

Caveat: This summary is not meant to be legal advice, as each person’s factual situation is different. No attorney-client relationship is sought or created by this post.– PCQ

Continue reading “Distressed Homeowners’ Bill of Rights”

The risk of ***strategic default is rising among loans that have “always performed,” according to the credit analysts at Moody’s Analytics.  They say as home prices have fallen over the past year, the loan-to-value ratios (LTVs) of so-called always-performing loans – or those that have remained current – have begun to approach, and in many cases surpass, average LTVs for loans that have defaulted. This dynamic, Moody’s says, raises the likelihood of a renewed increase in strategic defaults.  [, July 18, 2011]

I bristle every time I hear some so-called “authority” comment on the increase in “strategic defaults.”  This pejorative term is a creation of the lending industry to place certain borrowers in a special “Rogues Gallery” category all their own.  Depending upon the expert, a “strategic defaulter” is one who is in arrears on their mortgage for X or more months, although they ostensibly have the financial capability of making their payments.  The press picks up these reports and dutifully circulates them as news.

What is remarkable is that not one of these so-called “authorities” has ever asked “Why do homeowners who might otherwise be able to pay their mortgage  stop doing so?”  Since no one has sought to explain this phenomenon, I will do so.  What follows is not an epiphany. The answer requires no special insight.  It has been in plain view for years.  But the lending and credit industries have never chosen to address it – or more correctly, to admit it. Continue reading ““Strategically Default” – What Lenders Tell Borrowers To Do”