According to this Reuters Article the Treasury Department is working on a plan to reduce mortgage rates to 4.5% on 30 year mortgages. Keeping in mind that home prices are a function of income and loan terms it is a proposal that has interesting implications.

Median household income in CA was $64,086 as of Q2 2008. Assuming a maximum of 35% of gross income towards a mortgage payment, and current interest rates of about 6% on a 30 year fixed rate loan, that would suggest median home prices should be around $311,000. Interestingly, after months of decline the Calfornia Association of Realtors tells us that October's median home price was $311,060.

Coincidence? I don't think so.

There is a common misperception that foreclosures are pushing home prices down. I see this all the time in quotes like "Stemming the number of foreclosures will go a long way to stabilizing the market" which was part of an otherwise solid article at Inman.com. I actually made this mistake myself for quite a while until I watched home sales pick up as REO inventories increased - a feat which flys in the face of basic laws of supply and demand. Then it hit me:

People simply don't buy homes based on price, they buy based on payment.

Although it is now 1am, I am very pleased and excited to announce that ForeclosureRadar 2.0 is now live. Work on this release began as a brainstorming session between myself and the engineering team almost one year ago. It is in many ways a complete replacement of the prior version which better represents my original vision for the service and which incorporates most of the feedback we have received over the last year, as well as great input from our team. Most importantly it puts in place a platform upon which we can more easily grow.

Some of the highlights of the new release include:

• Faster search performance..
• Twice the search options to find exactly what you're looking for.
• Map and list views that are viewable at the same time.
• Enhanced printing now includes maps, and a new Foreclosure Comps report.
• New email tools for getting information to partners, clients and leads quickly.
• Optimized driving directions allow you to efficiently visit many foreclosures.
• Customizable displays let you see the information you want, where you want it.
• And much more.

Version 2.0 is available now, and can be found by simply clicking the Log In tab on the ForeclosureRadar home page.

More to follow, but for now let me just say thank you to our customers for their fantastic feedback and suggestions, our engineers for putting in many long hours to get this done, my wife and son for putting up with the long hours I've spent, and my office manager for keeping me and everything else running smoothly.

Please take the new version for a spin and let us know what you think

Best regards,
Sean

I've been pushing really hard to get the next release of our software out the door, and have not been posting here as often as I'd like lately. The release is close, so expect to hear more from me soon. On to my post...

I have gotten a number of calls asking if the homeownership retention program announced by Bank of America is likely to have an impact on foreclosures in CA. This program is a settlement with the CA Attorney General, Jerry Brown, and other state attorney generals that were suing Countrywide / Bank of America for predatory lending practices. It is expected to provide up to $8.4 Billion to 400,000 borrowers nationwide, with $3.5 Billion to 125,000 borrowers in CA.

While $8.4 Billion is a huge number - roughly 7.75% of BAC's market cap today - it is literally a laughable amount. Problem is that it equals only $28,000 per loan in California. I compared that number to the average amount a California homeonwer is upside down at the time of foreclosure - the average total debt is $26,200 more than they originally borrowed. So in the best case scenario this puts borrowers back where they started, in loans they fundamentally can't afford.

My friend Dave Savage at The Mortgage Coach asked me to share the following interview he did with Bill Dallas of Dallas Capital on the Freddie / Fannie takeover. Bill's background includes being a co-founder of First Franklin, and Chairman & CEO of Ownit Mortgage. His experience and industry ties give him a unique perspective that will be particularly interesting to mortgage brokers and Realtors(R).

View the interview here: http://www.themortgagecoach.com/billdallas