The following post has been provided by David Tyson from Sunshine Coast property valuation firm, Platinum Valuations. Dave can be contacted on 0438 721 845

Sunshine Coast Property Market Conditions

Current real estate market characterised by depressed pricing and strong buyers market conditions = good time to buy but not great time to sell. The overall number of sales has dropped dramatically off peaks 2006 -07. Agents report tough negotiations in the last 12 months with vendors often unwilling to meet the market. If property is not priced to sell it will sit on the market with limited interest. First home buyers are also as rare as hens teeth at present.

Influences on the local market

* Increasing pressures on the household budget due to price increases in the cost of living eg: fuel, water, electricity and food
* Increasing local unemployment where the 3 pillars of local employment – Building, Retail and Tourism are under significant strain due to very tough conditions in each sector
* Increasing cost of land supply to developers due in part to planning and approval delays and added environmental requiremental approval costs
* Slowing of net interstate migration
* Increases in interest rates over the past year taking away disposal income and decreasing housing affordability
* Credit squeeze from banks on lending for land subdivisions and unit development making most projects unviable
* (from HIA stats) Decrease in QLD new home building approvals Dec Qtr 2010 down 15.9% and QLD housing starts down 25% in the Dec Qtr 2010
* Lending for renovations down

What does all this mean?

In valuation terms we have seen price levels drop from the peaks of 2007 between 10-30% depending on the location and the type of product. The investment market has fared worse than the owner occupier market with cashed up buyers thin on the ground and being able to command significant discounts on prices from a few years ago. We are seeing more mortgagee in possession sales than we have seen for 15 years locally. The top end of the market has not been spared with percentage price falls often out stripping the lower to middle markets. We are lucky locally to have been spared the impacts of the recent floods and cyclone which impacted areas around the Sunshine Coast region. Affordable areas of the coast have fared somewhat better than middle to upper price locations.

Tough market conditions have claimed the following local developers and projects over the past 18 months:

* $400m Elysium development at Noosa
* Noosa Blue Resort Noosa
* Attunga Heights development Noosa
* $300m Viridian Resort Development
* $210m Noosa Sanctuary Development
* Adenbrook Homes a large volume builder locally
* New Image Homes a smaller builder locally
* S & L Developments- Scott Juniper (son of Graeme Juniper- renowned local developer)

Most developments have been placed in moth balls as projects are deemed financially unfeasible.

As valuers we are seeing significant volumes of our recent work load coming from refinancing and from savvy buyers who will get property valued prior to purchasing. If you are a buyer you are on the right side of the demand supply equation therefore it not all doom and gloom. Remember, if you buy and sell in the same market then the relative loss and gain should be put in perspective.

The US home mortgage trend and the fluctuation of home mortgage rates are important benchmarks of the overall economy. While there are other other economic factors interest rates are largely tied to the decisions made by the Federal Reserve Bank. Interest rates are adjusted by the Fed according to financial matters in the US such as GDP growth, export and import numbers, and the inflation rate.

Mortgage rates are used to help control the economy. If the movement of the economy is considered to be too fast, higher rates are imposed so that individuals and corporations would be less willing to apply for loans. Conversely if the economy seems to be rather slow or stagnant, rates are lowered so that people would be more enticed to engage in additional business transactions. Thus home mortgage trends will generally move up or down as the economy contracts or expands.

Trend in Home Mortgage Rates:

It is interesting to observe that mortgage rates have been lower than 8.5% since the year 1996, with the lowest rates of about 5.5% seen in the middle of 2005. While individuals might see an extremely different mortgage rate at a particular time due to other factors that affect rates (their salaries or credit histories), the lower trend has generally been observed to be generally consistent throughout the US economy.
The fall of interest rates from higher levels prior to 1996 allowed more people to buy their homes, purchase lands, or trade up to larger houses. Perhaps this reflects an effort to speed up the economy from that time until now. However this year, mortgage rates are rising probably because of some unwise lending decisions made during a time of too easy money and rates held at extremely low levels by the Federal Reserve Bank for too long of a time period. A vicious correction is now underway with mortgage markets highly unsettled.

Current Home Mortgage Rates:

Mortgage rates in the year 2008 are generally higher than that of the previous year with rates of about 6.5 percent for 30-year fixed rate mortgages (FRM). The difference between interest rates this year and last year are not really significantly high as it would entail only a few hundred dollars increase in yearly payments. This probably would not stop many people from getting mortgages, however if the rise continues, you would expect that more people would become hesitant to apply for home loans.

The problem with the current trend in home mortgage rates is not so much an increase in rates but an unwillingness of leaders to lend, even to people with good credit histories. The trauma and losses to lenders caused by the ongoing sub prime mortgage debacle starting in 2007 has left many lenders with weak balance sheets and they are operating in a panic mode. A record level of foreclosures in 2008 is causing a sharp contraction in home mortgage lending activity.

With probably a few hundred billions of mortgage and derivative instrument write downs still to take place by mortgage lenders the trend for new home mortgage lending will probably remain down for some time to come. However, that is not all bad news for those looking for a new home. People who have cash to work with and a good relationship with their bank can probably find super deals on homes by working directly with stressed out lenders who have an excessive inventory of foreclosed homes on their books.

In fact, if you have significant cash on deposit with a bank or financial institution you may not even have to use it for your home purchase. Even with the home mortgage trend down lenders that have non performing loans on their books will be eager to work with those who have capital on deposit and may make deals that will require very little if any of the cash rich home buyers cash to be used as an extra inducement to get foreclosed homes off their books.

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Part 5 (Excerpt)

The Loss Mitigation Department at the Bank is not on your side

Welcome back once again my guest Brett Fallon, Brett is a regular guest on the show, he is a registered financial consultant with RG Capitol and AIG Financial Advisors Brett W Fallon welcome back to the show.

It is nice to have the financial advisors perspective on some of these things so many people dont have a financial advisor so for thousands and thousands of people listening right now you are their only option for that, financial advisory services are typically not for the masses but again you are here to help and your services are available to quite a number of people you actually work with fortune 500 companies is that correct?

Yes, I do a number of workshops for fortune 500 companies that are headquartered here around the valley, the idea is to help people create efficiency with all assets, understanding that their home and home mortgage is typically the largest asset that most Americans have and if you are not treating that with efficiency, the retirement accounts and investments accounts, and all the other stuff has to work in concert, so Im happy to weigh in with information and give you my viewpoints and my perspective.

We were talking just a few moments ago about utilizing an expert negotiator when trying to do a loan modification, people are getting mail from bogus service sources, we have already covered that, but from their servicers saying if you need help with your mortgage, help is here, give us a call. Im certainly not going to tell everyone in the world that they cant do their own loan modification because some people are qualified to negotiate on their own behalf, though in my opinion they will still be emotionally attached to it and if they hear something that sounds good, it may be enough for them to essentially bite at the offer which is exactly what the loss mitigation department wants you to do.

It goes back to the disinterested third party, that expert negotiator, negotiator being the key word in that phrase. One of the things we were talking about and I want to make sure that we address this especially in this segment, we are talking about loan modification of mortgages of people that have some financial constraints, some pressure whatever the source of pain is, for them knowing that this option exists to take an existing mortgage loan and modify it to their best or better interest, from what it currently is, so who should and who should not do a loan modification, lets start with that.

Ill tell you and lets start with people who shouldnt do a loan modification. Someone who thinks their interest rate is too high and owes more than the house is worth, feels that they are entitled to a loan modification, is not really a good enough reason or a hard enough hardship for those types of people unfortunately. This is essentially a handout that is being offered because of some of the malpractices, if you will, that were happening within the mortgage industry over the last several years.

With these big huge banks offering these products that were teaser loans, toxic mortgages, as we call them now. We certainly didnt call them that then when the consumer calls me up and says I want that 1% loan thats going to be my ticket. Unfortunately people took theses loans but what they didnt realize is that someday this loan with the ridiculously low interest was going to reset and their payment was going to quadruple and who on earth could have known that the economic times would be as bad as they are and they would have no option to get out of these loans.

So someone who simply finds themselves upside down on their home, owing more on the house than the actual value of the house, does not necessarily need to consider a loan modification. No they may not qualify on those merits alone in most cases.

I just want to make a point, I was reading an article in the wall Street Journal about this stuff and basically the gist of the article was that the average foreclosure on any property in the United States costs the lender $50, 000 from start to finish…

Duration : 0:5:26

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Part 6 (Excerpt)

Using Retirement Funds to pay your Mortgage is just a bad idea Get a Loan Modification

So it doesnt matter if it is a $100,000 property or a $500,000 property the cost to the lender is $50,000 on the average nationally.

So the idea of the upside down scenario, you may see banks more willing to entertain a broader audience of loan modifications or a broader request of loan modifications based on the fact that they know that now, what we are calling toxic assets, not only exist on their balance sheets, but they want to do something to avoid the additional cost of foreclosing on the property, to avoid the additional impact on our economy nationally with all these foreclosures mounting. So a loan modification that may not be the best or most ideal candidate today, dont throw the option completely out of the window.

And to that point I would never tell a home owner to stop making their payments just to get a better loan modification, because as of today, this may not be the case two weeks or two months from now, but as of today, your servicer is not going to entertain a loan modification unless youre late in most cases. Heres the situation, though at first you may get mad at that and they get mad at me for it, but the reality of it is we have a real problem now with lots of people who are two, three, four months behind on their mortgages, this loan modification we are jumping in, we are getting attorneys involved and getting right in front of the asset managers or the attorneys for the servicers to get these foreclosure proceedings stopped.

Im absolutely certain that in the foreseeable future they are going to allow people that are not late yet to do these loan modifications, hold on, I said I would never tell a home owner to not make their mortgage payment to get a loan modification, the other thing I would never tell a homeowner to do, never ever, is to take money out of your 401K to pay their mortgage payment because you cant go forward.

There are other stops in place, if you dont make your mortgage payment because of hard times you are going to get a loan modification. I talked to a guy the other day that had a 23 year, huge 6 figure income, he lost his job, big huge firm here in the valley, he is probably listening to the show right now, this guy drained his entire 401K, I mean a huge one, just to make his mortgage payments.

And the average 401K participant, investor, does not understand the ramification of what that is, just because your company plan allows you to take a loan against your 401K doesnt mean it is the right thing to do. There are ramifications beyond our time and the scope of this discussion regarding that decision. Loan modification first, if you are taking money from a 401K to make a house payment you are not only inefficient in creating the velocity of money but you are costing yourself in penalties, taxes, and that is certainly something we can be forthright about talking with anyone who wants to call.

And in this case the poor guy used up every dime of his 401K because his lender told him NO, NO, NO, three separate times because he was not late, well he wasnt going to allow that to happen. Unfortunately knowing what he knows now he would have looked at it differently.

Loan Modification is not for someone who has no income at all, the investor, the servicer, the bank that holds your mortgagee is not willing to do a loan modification because you dont have the means to pay. Even if it is a modified loan, you still cant make the payment. Right in some cases where you have significant cash reserves, but I have not seen one of those done.

That wouldnt be the ideal candidate, describe a little bit about who should be doing this loan modification and I know we are getting close to a break but people need to know that this option exists. They are hearing all these different concepts in the news and they are hearing in the media the spin about Hank Paulson and what the treasury is doing, and hearing about this bailout package and what that represents, and now they are hearing that the money is not going to be used to buy back bad loans, and mortgages, bad assists. So what does that do to the underlying holder of that mortgage? The owner of that house?

It is pretty scary for the majority of them, the loan modification lenders are getting very aggressive when being approached with a lawsuit or being addressed by an attorney, receiving a subpoena in regard to a specific loan case. They are paying attention to that and those are the people who are going to be getting the best options at this time…

Duration : 0:6:12

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Duration : 0:3:28

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Part 3 (Excerpt)

Beware of phishing schemes and bank scams GMACs clients hit hard

As promised just before the break, I told you to, listen in if you know anyone who has a GMAC Mortgage, this is one of those too good to be true things. Heres the thing, I have no issues what-so-ever with GMAC, thats not what Im saying, what Im saying is there is a scam of sorts that is going around. A client of ours received a letter, we did a second mortgage for this person a few years ago, they received a letter from GMAC, it looked like GMAC, it sounded like GMAC, and it said that we are willing to forgive your second mortgage of 200 and some thousand dollars in lieu of a one time payment, payable within the next 30 days, of say 20 thousand dollars.

I dont recall the exact amount or what it was. There is a phone number on there, it says loss mitigation department on it, a person assigned to this case. They called the phone number, they answered the phone as if you were calling into the loss mitigation department, and verified if you just send us this amount they will release the lien. Well it is completely false. It is absolutely not true.

These people are not going to seek you out on their own, now whether it be GMAC, today we have actually seen that one, there may be other ones out there. Folks, if you are getting stuff like this you need to verify it and you need to verify it by sources other than the information on the letter that you have received. If you get an email that says your bank account has been tapped into you need to check, chances are it is some kind of a phishing scam and this is no different.

We have gone back to identity theft through the mail and if you have been a party to this you need to verify and check into it, and you need to contact the authorities immediately for more information, if you need help with this sort of situation you are welcome to give us a call at 480 Velocity.

It is pretty amazing that that kind of thing still exists, and with the announcement by Paulson today that the fact is they are no longer willing to buy bad mortgages off the books of the banks. When you come across a phishing scam such as this one there is not a bank out there, I dont care what kind of trouble they are in, that is going to take $0.10 on the dollar to forgive a loan.

In a situation where things are going well, you are right in a situation where things are going well, and the status quo, they are going to be pursued by an attorney, that is entirely different, they are not just going to volunteer up and give you the money, its not going to happen.

Absolutely not and thats where we get back into what a loan modification is, who it benefits, and how it works and so forth, you are starting to see these wheels in motion amongst all of these banks. One of those wheels is certainly not well forgive $200,000 in debt if you write us a check for $20, 000.

And when we have talked about this Brett you and I have had many conversations in regard to what does it take? Can a person do this on their own, we will get to that a little later, but the answer is Yes. A consumer can actually do it on their own, up until very recently with the new announcements made from some of these major servicers and investors, up until then, a person trying to do it on their own would take days upon days and hours and hours on the phone not getting calls back trying to find time during the day while working to get this done and in many cases they are going to get a temporary fix.

The loss mitigation department for the bank that you have your mortgage with, their job is not to mitigate your loss its to mitigate their loss. They are out to protect the bank, thats why we use the national network of attorneys that we do, that are specialists, that have done thousands of these loan modifications, that go to bat for you. By the way folks, they are not going through the loss mitigation door that you would have to go through they are going right to the legal department, they are going to threaten suit if necessary, they are going to do discovery work, they are going to find out if there was anything that was misrepresented either by the bank or the broker and take that angle…

Duration : 0:5:36

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Part 4 (Excerpt)

Home Owner Negotiated Loan Modifications may have too many pitfalls

Yes, I think that makes perfect sense, the only analogy that I can come up with is I could probably figure out how to change the oil in my car, but its not my expertise. Im certainly not going to take the time away from what I have expertise in in order to figure out how to do that, Im going to have a professional do that, and it is the same idea with when someone is considering a loan modification.

You can probably call up that loss mitigation department of that lending institution versus going through the legal department and try to work through that scenario. But you dont know what you dont know, and if you take that approach and make that attempt it could cost you money, it could cost you a higher interest rate, it could cost you something that you are not even aware of. Thats where your team and the loan modification professionals and this attorney network that you exclusively work with come into play.

Again you talk about choosing to not change your own oil, of course you could figure it out, you wouldnt operate on yourself, if you got yourself into some legal trouble and you were an attorney you wouldnt represent yourself. Even though you may know what to do and how to do it, you are just not going to do it because you need an unbiased, 3rd party that is truly going to fight for your rights.

And who has expertise in this particular area, specifically focused on working on the mortgage holders, the consumers best possible outcome.

Thats right and that is a great point, we have example after example of people who have tried to do the loan modification on their own and most of the time what we see is a situation that is best for the bank, a temporary fix, well people dont need a temporary fix.

Temporary being the key word there, well make it better for one year, three years, five years,
whatever it is, but we will tack it onto the life of the loan. One of our strategic partners was just sharing a story on the break about someone he knows personally that did this, they did this themselves without the benefit of an attorney and the end result was a temporary, short term fix today, all of the back interest, costs etc. were tacked on to the other side of the loan, of this mortgage. That is not what you are after, with a loan modification.

And when you think about it a temporary fix is what put most of these people in the situation to begin with it, were a temporary fix. Remember the billboards that said if your mortgage payment is only $500 a month you are payment too much, call us for a 1% interest rate. Give me a break, people fell for it, everybody fell for it, it was a disaster. You dont need a temporary fix you need a real fix.

A real fix that is going to meet your needs as a consumer, that is going to meet the needs of your family so you can stay within the home and thats going to meet the needs of your cash flow monthly, to get a reduced payment, whatever it is going to be for you and your family, that is the whole idea behind modifying your existing loan.

Another important item we hammer down on so many of these issues, a loan modification is not for somebody who doesnt care. This is if you care and it appears that you will be faced with foreclosure, if you are late on your mortgage, if it is getting ready to go up, any number of genuine true hardships financially that happen to you. Your main goal has to be that you want to stay in your house, keep your family in that house, you need to call, we are here to help, we are not salesmen.

If you are able to find another solution, you know what we are happy for you, the more people in my opinion that are affiliates of my firm that are out there to help us through this process the better off we all are, the sooner we get through this loan modification, these toxic mortgages, the sooner all things economic will recover. The housing market is the basis for this economic crisis and everybody knows that.

There is no question and a number of experts that have weighed in and who have credibility that I receive advice from in terms of helping my own clients, they talk about the stock market in terms of when does it improve and when do stocks get a foothold and go forward and the economy starts to rise and recession come to an end and all those things.

Duration : 0:6:24

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