Crystal Ball for 2009- Texas Real Estate Market Predictions

I really wish I had a crystal ball. While many local real estate and title experts try to predict the future, the future is only one thing for sure and that is uncertain. 2009 is definitely uncertain. We do not know how the government bailout will affect the market. We have no idea how the housing crisis will work out or if the stimulus plan will actually help homeowners facing foreclosure. The fact is, we don't have a crystal ball. I have heard some say that 2009 will be great come March while others are predicting this year to be another tough year with the "low point" being 4th quarter. Here is what the Dallas Morning News is reporting:

HOUSING'S PRICE DECLINE PREDICTIONS
DALLAS (Dallas Morning News) – A new report from Moody’s Economy.com and Fiserve Lending Solutions predicts when Texas home price declines will bottom out and what the peak-to-bottom price drop will look like.
Most major Texas cities went into the home market downturn later than many throughout the country and will level off ahead of the U.S. average, according to the report’s analysts.
Houston has one of the smallest expected home price declines in the country at 0.2 percent. Analysts expect the city’s home price decline to bottom out in third quarter 2009.
Austin’s peak to bottom home price is expected to fall by 1.3 percent, hitting bottom in fourth quarter 2009.
Dallas–Fort Worth’s price decline will come to 1.1 percent and bottom out in third quarter 2009.
The report predicts San Antonio will experience the largest decrease in the state with a 1.6 percent decline, but it will bottom out in first quarter 2010.
The overall U.S. market could see a price drop of 36.2 percent and bottom out in the fourth quarter of this year.

Fraud Insights - What is a "Buy and Bail"

What's a Buy and Bail?

By Lisa A. TylerNational Escrow Administrator, Fidelity National Financial

In markets hit hard by plummeting home prices and rising foreclosures, the real estate industry has discovered a phenomenon known as the "buy-and-bail." In a buy-and-bail transaction the borrower is up-to-date on the mortgage, but the value of his or her home has fallen below the amount owed. This is called an "upside down" mortgage. The borrower continues to make payments on the upside down mortgage secured by his or her first home, while applying for a purchase money mortgage on another home, usually at a substantially lower price than the first home. The borrower typically tells his or her new lender that the original property is pending sale, or tells the lender one of the two properties will be rented as an investment property.

The loophole works as follows: The homeowner provides a rental agreement showing he or she will rent out the first home. The lender will allow rental income to cover as much as 75 percent of the mortgage payment on the first home when determining if the borrower can make payments on two homes, enabling homeowners to secure another mortgage they might not otherwise be able to afford. After the new property is secured, the buy-and-bail borrower allows the first home to go into foreclosure. Although the buy-and-bail owner's foreclosure will remain on his or her credit report for at least seven years, it is difficult to detect a buy-and-bail scheme prior to consummation of the new purchase. If the parties to the transaction disclose the scheme to the settlement agent, the new lender should immediately be made aware.

Another change related to today's real estate market is the growing number of real estate professionals who have put their expertise in dealing with lenders to work on helping troubled borrowers avoid foreclosure by negotiating loan modifications. As a result, our operations have been inundated with calls from the negotiators wanting us to act as bill collectors. Read "Loan Modifications" to learn how to avoid opening orders that might never close and do not involve the services of an escrow holder or the issuance of title insurance.

Pat Baldwin, escrow administrator from Fidelity's operation in Maricopa County, Ariz., also shares two stories with "Paying Off a Private Note" and "Indemnity Gone Wrong."

Lastly, on Nov. 17, 2008, the Department of Housing and Urban Development (HUD) published a final rule in its reform of the Real Estate Settlement Procedures Act (RESPA). While some of the more onerous provisions of the earlier proposed rule (including the closing script) have been removed from the final version, several remaining provisions impact the escrow settlement process. The new rule requires a closer working relationship with the lenders who provide residential transaction financing.