Back to the Future

Getting mortgage money has become much harder. That statement is true -- but only to a certain extent. What has really happened is that we have gone back to the type of lending practices that were the norm prior to the sub-prime debacle.

• Seller-assisted programs that allow the seller to provide the down-payment for the buyer will be phased out on October 1st.
• The number of investment properties a person may own and still get a conventional loan will be limited in the future.
• A good credit score and documentation are now the norm.

Of course, other programs aimed primarily at first-time borrowers are not changing too much.

• FHA will still allow gifts from the family to help a buyer with down payments and closing costs. The downpayment, however, will increase to 3.5% from 3%. And, the monthly MIP payment will depend on the borrower's credit score among other criteria.
  
• NM-MFA (New Mexico Mortgage Finance Authority) remains largely unchanged. A buyer whose income is within the guidelines will find this type of loan very attractive.
  

Staying Out of the Deep End

Economically, Albuquerque (and New Mexico) continue to do far better than the nation as a whole.

• June's national unemployment rate was 5.5%
• New Mexico's rate was 3.9%
• Albuquerque's rate was 4.0%

Housing, of course, remains a huge problem around the country and foreclosures are a big part of the reason. Here again, we are in far better shape than most. I don't have a break out specifically for Albuquerque, but New Mexico continues to rank near the bottom.

• In the second quarter, U.S. filings were up almost 121% over the second quarter of 2007 with 739,714 filings.
• In contrast, New Mexico had 1,150 filings state wide. That is a 60% increase over the same quarter in 2007 -- but a 2.7% decrease from the first quarter of this year.
• The states with the highest foreclosure rates: Nevada, California and Arizona all showed increases over the first quarter of this year.
  

Shadows and Substance

For the past decade, New Mexico has made a concerted effort to attract films and production facilities. In the last three to five years, that effort has started to pay off. The latest 'maybe-perhaps-sounds-good-if real' is the announcement that Masque Entertainment will built a studio with eight sound stages and post-production facilities in Rio Rancho. The film business is notorious for brave announcements that quickly dissolve but if this one proves to have some substance it will be a big additional step in making New Mexico a serious option for West Coast productions.

And, speaking of substance, New Mexico continues to rank close to the bottom in foreclosures. The latest RealtyTrac has us ranking 37th among the states. Nevada, California and Arizona continue to lead the pack with West Virginia, South and North Dakota happy to be at the bottom of this particular list.

Credit Market Still Suffering

Lots of not-so-good news on the mortgage front. Thornburg Mortgage, of course, has been the poster child for a well-run company that was caught in the credit fallout. Now, IndyMac has joined the list. On Monday, regulators concluded it was no longer 'well capitalized' but the company does not anticipate raising any capital in the current credit climate. Instead, it will cut about 53% of its work force and simply focus on servicing the loans it has already made.
Also yesterday, shares of Fannie Mae and Freddie Mac tumbled more than 18%. Lack of capital is again the culprit.