The stock and mortgage bond markets were in turmoil last week as rumors circulated that Fannie Mae and Freddie Mac were on the edge of insolvency. Not just the mortgage market but our entire economy are dependent on the health of these organizations. It’s always been assumed that the government would do whatever was necessary to keep them afloat. The question was more a matter of what they would do to support them, whether the stock would remain solvent and who would foot the cost.

Tonight the Fed stepped in and announced a deal had been put together, just before the Asian markets opened. This was the same way they put together the Bear Stearns buy out in March, and like then it was designed to calm the markets and avoid a sell off that could have gotten out of control. This deal will increase the Treasury credit line for Fannie and Freddie, and  gives the Treasury the authority to buy the companies stocks.

By promising bold action the Fed and the Treasury hope to re-instill confidence, in the hopes that they won’t have to do a full scale bail out down the road. Here’s a Wall Street Journal Article which gives the specifics.

Illinois Mortgage Rates and News

Over the last year mortgage qualification has become increasingly harder. Two new changes go into affect next week which will ratchet loan approvals a little tighter still.

One is a change that only affects mortgages here in Illinois. Senate Bill 1167 will become law as of June 1^st. This law is aimed at predatory lending and the problems caused by sub-prime loans. It restricts the types of loans available, requires home buyers counseling for home buyers in Cook County who are taking out specific types of loans, and it requires more transparency so the consumer knows exactly what they are getting when they enter into any mortgage financing. There are some good features in this bill, but most of what they are legislating against has already gone away due to market forces in the mortgage market. Sub-prime loans have been a big problem and there is no question that they were abused. But there is no such thing as a sub-prime mortgage now, so this bill is coming too late to make any real impact.

The one part of this that is going to hurt some is that stated income loans will no longer be available in Illinois. Stated income loans were loans which didn’t verify the borrower’s income, but took whatever was stated as the Gospel truth. As you can imagine, this was a license for abuse, and there were way too many borrowers who bought homes with no idea how they would pay for them. That said, stated income loans do make sense for well qualified borrowers with complicated tax returns – self employed borrowers. These loans, like so many others, have been disappearing over the last year. The guidelines in the law are somewhat vague as to what is considered stated income, but the lenders who were offering this program are taking the cautious path, and are withdrawing from the market. It looks like this will be the final nail in the coffin for any loans that don’t verify income, which means it will be harder for self employed borrowers to qualify for a mortgage.

The other big change is that Fannie Mae brings out their new version of their automated underwriting system, DU 7.0. Most conventional loans are approved through the automated underwriting system, so this will have a huge impact on how loans are approved. On the good side, this version does away with the declining market policy. Last December, in a reaction to the down turn in the housing market, Fannie Mae came up with a plan to identify markets where the prices were falling, and require a higher down payment in those areas. The plan basically made it harder to get financing in the areas that needed it most, and was not a popular move. So getting rid of this plan is a step in the right direction. It will be looked at as a bigger step if the mortgage insurance companies follow the lead and stop their declining market policies, too. The rest of the changes in version 7.0 are not going to be positives for mortgage borrowers. Some of the changes include:

• Borrowers must wait a longer time after a bankruptcy or foreclosure before they can get a mortgage again, and when they are ready they will need a higher down payment and a better credit score.
• Debt to income ratios, that is how much debt you are carrying, will be much lower.
• Condos will now be considered riskier, and harder to approve.
• Having mortgage insurance on your loan will not reduce the risk of having less than a 20% down payment.
• ARMs will be considered riskier than fixed rate loans.

There’s more, but the bottom line is that this is a way of tightening more, and some borrowers who will qualify for a loan today, may not next week.

Illinois Mortgage Rates and News

Oil prices are up to record highs. Last week the price went as high as $135 per barrel, and I’ve seen predictions that it will be $150 or even $200 per barrel by the end of the year. We’ve all seen how this spike in prices has affected gas prices at the pump. Yesterday I filled up at $4.20 per gallon, about $15 a tank higher than what I’ve gotten used to paying (which already seemed too high). Depending on how much you drive, this extra cost is taking a nice sized bite out of your disposable income. Add that to the effect of higher gas prices on the economy as a whole, everything that needs transportation (both goods and people) now costs more, as does anything which is made with oil (fertilizer, plastics and so on). This means that prices in general are going up. So the question of the day is how does this affect our housing market here in Chicago and throughout the Chicago area?

The people who are feeling this the most are the people who have the longest drives to work. Over the last years the Chicago suburbs have spread out further and further. New roads have opened up and areas that used to be farm land, like Plainfield, Oswego and Huntley, are now booming suburbs. On the good side you can buy a lot more house for your money in these areas. The bad side is long commutes and now, with higher gas prices, much higher transportation costs. The growth in these areas has already slowed down because of the soft housing market. Will the high gas prices slow development in the far suburbs long term? Maybe. But only if gas prices stay high.

Part of the increase in oil prices is speculative. When ever a market starts moving in one direction, speculators jump on for the ride, magnifying the move. High speculation can lead to a bubble, and when the bubble pops prices fall. With the economy slowing down the natural effect of higher prices will lower demand. Also, the high prices will lead to more oil production, maybe in areas which were cost prohibitive before, but will now make sense with the higher price per barrel. So over time the supply will increase. After the Iranian revolution in 79 and through the early 80s the price of oil surged to record highs, and then dropped back down to the same level it was at before. It could be different this time though. India and China are growing and using more oil and some think we are nearing peak oil, which means the oil that is left will be harder to get to and harder to get out of the ground. These trends point to higher prices long term.

So if oil prices do stay high, how will this affect the real estate market? The conventional wisdom says -

• Demand will be higher for houses in the city and close to public transportation.
• Energy efficient housing will go main stream and there will probably be more tax breaks.
• Interest rate may move higher long term, as higher fuel prices feed inflation.
• Suburban sprawl will slow down over the long term.

I think these are all accurate predictions - if oil keeps going higher - but if history is a guide, I think it will be a while before we see any of these predictions come off in a major way. Oil prices were around $90 per barrel at the beginning of the year, so we have had almost a 50% increase since then. The question is whether the prices will continue to climb and, how far will they go. My guess is that we will have higher gas prices long-term, but there are reasons to think that prices will come down some first, and that we will get used to higher prices.

• The economy is slowing down and with consumers having less money in their pockets, or feeling like they have less money in their pockets, demand for energy will naturally slow down.
• People are driving less because of the high cost of gas. Travel was down considerably over the Memorial Day weekend.
• People will not only change their driving habits, they will also change what they drive. SUV sales have been circling the drain all year, and Hybrid sales have gone through the roof.
• Over time people get used to higher prices, and it will take a big increase before people change their habits for good.
• A lot of the increase in oil prices is due to speculation, and what goes up fast will often come down just as fast.

So my opinion is that oil prices will make people feel poorer for a while, but I don’t think they will make a huge difference in their home buying decisions. At least not for a while. I do think the far suburbs are going to take longer to recover, and high gas prices are part of that, but over building and high commuting times are bigger factors.

Illinois Mortgage Rates and News

If you are in the market to buy a home or condo here in the Chicago area, you are probably a little bit nervous. On one hand, the property values are down and you are able to buy a home at a bargain price compared to where homes were selling just a year or two ago. On the other hand, you wonder if we are near the bottom, or if the bargain you buy now will seem over priced a year from now. The truth is that markets (whether stock markets, bond markets or real estate markets) are unpredictable, and we won’t know where the bottom was until we have gone past it. That being said, I’m not sure we are at the bottom yet, but it is still a good time to buy a home here in the Chicago area, as long as you plan to keep it more than a few years.

Markets go up or down based on supply and demand, and these two factors can be broken down into fear and greed. The fear and greed isn’t just with the buyers and sellers of real estate, it extends on to all the players in the real estate market, Realtors, lenders and the financial markets. A few years back when the real estate market was on fire, greed was in the air and all people could see were dollar signs. Sellers saw prices for their homes that they wouldn’t have dreamed of a few years before. Buyers saw an opportunity to buy a home that would do nothing but appreciate, and they were convinced that if they didn’t buy now the price would be higher if they waited. Realtors and lenders saw more opportunities for sales and commissions and the financial markets looked at this as a way to convert cheap, easy money into an endless stream of high return investments. The belief at the time was that real estate in the United States never went down in value. Anyone with a long term memory would know that didn’t make sense. There had been real estate bubbles in California and Florida before, and the Texas market took a long time to recover from the bust after the Oil boom in the 80s. But here in the Chicago area, in the heart of the stable Midwest, it was easier to believe. We didn’t see the extreme highs that other areas saw, so we felt that we would escape a real down turn, too.

Since the real estate and mortgage market started to dive, people have been pointing fingers at who was to blame. Some said it was the buyers who bought homes they couldn’t afford. Others blamed the lenders for making loans to people who never should have gotten credit in the first place. Some of this blame is well deserved - I know that I shook my head at some of the loans that were offered – but I think the real cause was the big financial players on Wall Street who had too much money to invest, and not enough places to invest it. Money at the time was cheap, and there was no place on a global scale that was able to give the returns that big investors were demanding. The old secure A-Paper mortgages weren’t enough to meet this demand. This was when the creative minds on Wall Street started churning out new mortgage backed securities that would fill the void for their investor clients. Mortgages are underwritten based on risk. When greed is in the air risk doesn’t seem as important, so underwriting guidelines were thrown out the window and mortgages were available for people who never would have considered buying a home before. With so many more buyers able to qualify for financing, this means there was more demand than the supply of homes for sale was able to meet. This meant that property values had to go up, here in the Chicago area and throughout the country.

Now the pendulum has swung and we are on the fear side of the equation. At some point, probably when property values started to move down in the hottest markets, Wall Street saw the risk they were taking. They cut off the money spigot and since then mortgage underwriting has gone through a series of tightening measures so that it is harder to qualify for a loan now than it was before the whole loose money party started. With less people qualified for financing that means less people are able to buy. Lower demand means lower prices. So now fear has taken hold and everyone is looking at all the negatives. Foreclosures are up, the economy is soft and the inventory of homes for sale is the highest in years. Right now we are going through a cycle where the bad news in the market causes the lenders to pull back even more, reinforcing the bad news and making it that much harder for the market to recover. But markets are unpredictable and hard to time right. At some point the bad news will be less important than the opportunities for profit. In the stock market the recovery usually starts when people are the most pessimistic and it could work the same way in our market. By the time good news is out, we will have bounced off the bottom and prices will be heading up again. So the question is, is the time now? Are we close?

We may be closer than we think, or it may take quite a while before the market turns around. But if you have a good reason to buy it really shouldn’t matter. The Chicago area is still a dynamic economy and people still need housing. Home builders are at a standstill and not cranking out new homes, so over time the supply and demand will start to balance out. Prices are low, mortgage rates are low and if you have a long term perspective, chances are that when real estate values recover you will be rewarded, and we won’t know we are there until the train has already left the station.

Illinois Mortgage Rates and News

The Check is in the mail - The first batch of economic stimulus checks are going out this week. Anyone who files a tax return up through October of this year is eligible, and with payouts of up to $600 per individual and $300 for each child under 17, this should cover several tanks of gas. What are you planning to do with your check? The idea behind the checks is the hope that if everyone goes out and buys something, this will kick the economy back in gear. There are of course, a few problems with this theory. First of all, not everyone is going to buy something. If you are feeling the economic pinch, you might rest easier putting this money in your savings account or paying off your credit cards. And those who do their civic duty and go out shopping are likely to buy foreign goods which will give a more limited kick. But if the checks make people feel more confident about their own finances, then the plan will have done its job. I think it will take more than this to prime the pump.

Take a ride on the Foreclosure Bus - I live in Dupage County, in the Western Suburbs of Chicago. The other day I noticed a number of small plastic signs set strategically along the side of the road. You’ve seen these kinds of signs before, they are often an ugly yellow that demands attention, and they usually appeal to some basic need, like sex or money. More specifically they tout themselves as the answer to what you need. Two examples are: Real Estate Investor Needs Apprentice - $40,000 per month, or Downers Grove (or Lisle, Wheaton, Glen Ellyn, insert your town) Singles Wanted, with a web site or phone number underneath. This was a new sign, one I hadn’t seen before. This one read: Tour Foreclosures by Bus. Now this got my curiosity going. I know that Hollywood has a tour of celebrity homes, and Chicago has architectural tours and ghost tours and all sorts of tourism related activities. But taking a tour of foreclosed properties seems a little bizarre. I know there are investors who are looking for ways to take advantage of the real estate slow down, and foreclosed properties sound like a natural. It’s not always easy to find the bargains, though. I have an investor client who put an offer on a pre-foreclosed property (a short sale – this is where the lender would have to agree to let the buyer buy for less than the full amount of the mortgage so they don’t have to go to the expense of foreclosing the property) 3 months ago. He’s still waiting for an answer. I called the number on the sign and was referred to a web site. The web site offers several tours in an “air conditioned bus” stopping at a variety of pre-foreclosed and bank owned properties. A Realtor is giving the tour and you will be able to make offers on the homes if you choose. The bus isn’t free, though. A ticket for one tour cost about $100, another tour of luxury homes was priced at over $300. But lunch is included. It is a sad fact of life that foreclosures are on the rise, even in the nicest areas. But if you are looking to invest, you don’t have to take a bus. If you are looking for investment property and need the name of a Realtor who can help you, let me know and I’ll direct you to an expert who can offer personalized service.

The Waiting Game - Tomorrow is a big day for those who are watching interest rates. The Federal Open Market Committee (the Fed) is expected to lower short term rates again by an anticipated .25 point. This cut is already built into the pricing, but the real interest is in what the Fed will say when they announce the cut. The last 2 meetings have ended up with major rate cuts, but some dissent from inside, as some Fed members worry that the rapid cuts in rate will go too far and fuel inflation. The conventional wisdom now is that the Fed is nearing the end of their series of cuts (for now, at least). If they say this in their announcement, look for mortgage bonds to surge and mortgage rates to fall. The Chicago PMI and the GDP (both show signs of strength or weakness in the economy) will also be released, so this should be a wild day for interest rates. I’ve been looking for rates to go lower, and I stand by that prediction.

Illinois Mortgage Rates and New

Not so long ago the mortgage market was a lot like Baskin Robins 31 Flavors Ice Cream - a flavor for every need or taste. You wanted Rocky Road or Lemon Custard? No problem. A 5 year fixed payment Jumbo option ARM or a 30 year fixed rate with interest only payments for the first 10 years? Those were on the menu, too. Now that the credit crunch has hit the mortgage market full force, the mortgage options have shrunk. Borrowers can still get their ice cream, but they better like Vanilla.

The mortgage market has been dysfunctional ever since the Sub Prime melt-down last summer. Price swings, both up and down, have been exaggerated. Mortgage options have disappeared and credit and appraisal guidelines have tightened. Some of the biggest mortgage lenders in the country have been on the ropes, unsure if they will stay in the business. Throughout all this turmoil, the core market for conventional loans has chugged along. Conventional loans are those loans eligible for sale to Fannie Mae or Freddie Mac, the two 600 pound gorillas who buy up most of the mortgages in the mortgage aftermarket. These two companies are backed by the U.S. Government, and though their loans are not insured by the government, it has always been assumed these loans are completely safe. Over the last week that assumption went out the window. Mortgage rates spiked upward last week when investors seemed to lose confidence in mortgage backed securities. Rates have recovered a good deal over the past few days, but confidence is still a big problem. This week the market for conventional adjustable rate mortgages has virtually dried up.

While the Fed has continued to cut short term rates over the last months, long term mortgage rates have moved higher. In times where there is a big spread between long term and short term rates, it usually makes sense to consider adjustable rate mortgages. Last week, before panic hit the market, the spread between a 30 year fixed rate and a 7-1 ARM (the rate is fixed for the first 7 years before it becomes an adjustable) was nearly a full percent. By the end of the week the rates were the same. This week because there is no liquidity in the market, ARM loans are not selling at all, which means that most of the big wholesale lenders are not even offering adjustable rate mortgages at any price.

I’m hoping that this is a temporary problem. Yesterday the Fed stepped in with a program to inject $200 billion dollars into the system for banks to borrow against, and they can use mortgages as collateral. This should help restore confidence. The mortgage bond market is on a tear today, which means investors are starting to look more kindly on mortgages, at least for today. But with the volatility in the market there is no guarantee that this trend will continue and we will get back to a normal market any time soon. If the Fed can continue to calm investor’s fears, and confidence improves, adjustable rate loans should find favor again and the rates should be much lower than where the fixed rate loans now are.

In the meantime, there are still some lenders (we have some regional and local banks who keep their loans for their own portfolios and don’t sell them in the mortgage aftermarket) who still have attractive rates on ARMs. So, if you are shopping for a loan now there are some options. But until the market gets straightened out, the options are fewer than before and the mortgage market has shrunk.

Illinois Mortgage Rates and News

Conventional wisdom says that this is an awful time to buy a new home. The housing market is in a funk. Mortgage companies have tightened their guidelines and homes are sitting on the market for months without selling. If you listen to the news it’s all doom and gloom with talk of recession and inflation, and questions of how long it will be before we see a recovery. So who would be crazy enough to buy a home now?

There is a famous quote by noted investor Baron Von Rothschild – the time to buy is when there is blood in the streets. Here in Illinois the market isn’t as bad as it is in other parts of the country, but if you are a seller sitting in a home that won’t sell, the situation is grim. But the bad news for the seller is great news if you are looking to buy a home. Here are some reasons to buy a home here in the Chicago area, now:

Selection – There are homes in the market in all areas and all price ranges. With more houses on the market you can pick and choose and find the home you want. It wasn’t so long ago that buyers were jumping on new listings as they came onto the market, even if the home wasn’t exactly what they were looking for. You can pick and choose, now.

It’s a buyer’s market – Again, the best time to buy is when most people want to sell. If you buy now you can get a lot more house for your money, and you have a lot more negotiating power.

Interest rates are low – Mortgage interest rates are at their lowest point in the last several years. This means your mortgage payment takes you a lot farther than it did before. We’re not that far off of the all time lows we hit several years back. It is smart to take advantage of the low mortgage rates while they are still available.

Great financing is available – There’s a lot of talk about how the problems in the mortgage market have made it harder for borrowers to get financing. Some programs have been cut out, and guidelines are tougher than they were before. But there is still a lot of mortgage money available, including options for low or no money down, and some great programs for first time home buyers. If you are a first time home buyer in Chicago, you may qualify for the City of Chicago Bond Program which offers a below market interest rate and a grant to cover your down payment and closing costs. There are other programs for home buyers in other areas of Illinois with great rates and low fees.

Tax savings – Buying a home is one of the best ways to save money on taxes. Your mortgage interest, real estate taxes and in many cases mortgage insurance are all tax deductible. If you are a first time home buyer this means that after-tax, you can pay a lot more for a mortgage payment than you pay for rent.

Appreciation – This might not seem like the best reason to buy, with prices stagnating and falling in some areas, but in the long run, home prices always move up. There is a lot of pessimism in the real estate market today, but even the most pessimistic are bullish in the long run.

Equity build up – As you pay down your mortgage you build up equity in your home. Most people don’t even think of this because it is so gradual, but every mortgage payment (as long as it is an amortizing loan) pays a little less interest and a little more principal. In a way owning a home is a form of forced savings.

Tax refunds are coming out – If you wanted to buy but were short of cash, your tax refund could be just what you need for the down payment and closing costs.

Rents are rising – Buying a home means you can fix your mortgage payment, at least the principal and interest portion. Rents are projected to rise this year and over time.

Those are the hard financial reasons for buying a home now, but there are other good reasons to buy now:

You need more room – Has your family has grown, and you are bursting at the seams? You need a new place to put all your stuff? If you have needs that you’ve been putting off, this could be the right time to buy and take advantage of the buyers market.

Control – If you own your home, you can do what you want to with it. Have a dog? Not a problem. Want to plant a garden? Go for it. Want to paint stripes on the walls? Paint your heart out, it’s your home and you are in control.

Pride of ownership – There is a big difference between renting a place and having a home of your own.

It’s the American Dream – Not only that, but buying a new home gives you a reason to throw a house warming party.

These are some reasons for buying now, but buying isn’t the right course for everyone. Buying a home is a long-term investment. If you can’t afford to hold on for the long run, you might be better off renting.

Illinois Mortgage Rates and News

Tonight is the night of the Iowa caucuses, the first event of this Presidential election year. It Looks like Obama is the winner on the Democratic side, and Huckabee for the Republicans. Up until now the primary election has been in the background, white noise for all but the true political junkies. That changes tonight. Starting tomorrow, the news will be filled with results and conjecture, pundits telling us what has happened, why it happened and how this will all play out over the next eleven months. As time goes on more people will start paying attention, and within the next month or so we will know who the nominees are from both parties.

Right now all the candidates are talking about health care, immigration, the war in Iraq and other issues. Little is being said about the state of the economy, and the housing slump. But one of the oldest truisms in politics is that people vote by their wallets. If the economy is slowing and homeowners are feeling squeezed, you can bet that this won’t be good news for the party in power.

As the year goes on I expect that the problems in the housing and mortgage markets will become a big issue on the campaign trail. Maybe the dominant issue. My question is, how will this play out and what will the proposed solutions be? Campaigns are always good with promises, real solutions are harder to come by. The popular remedies aren’t always the best. I hope the campaigns work toward realistic programs that take account of how complex the market is and don’t just rely on easy answers that help some people in the short run but make the problem worse.

Illinois Mortgage Rates and News

2007 is almost over. Good riddance. It’s been a turbulent, crazy, chaotic year in the real estate and mortgage industry. This was the year when it all hit the fan.

• The real estate market slowed down and home prices stagnated or fell.
• The sub prime mortgage sector imploded and hundreds of wholesale lenders went out of business.
• The sub prime virus became a credit crunch, infecting the biggest conforming mortgage lenders. One top 10 mortgage lender bit the dust, and some of the biggest names hung on by the skin of their teeth.
• The costs of getting a mortgage went up, especially for those with good, but not great credit .
• The cost of a Jumbo loan moved up sharply and still hasn’t recovered .
• We saw a return to more traditional underwriting. Income verification is now the norm. Good credit  and down payments are now expected, too.
• Foreclosures and loan defaults spiked, especially in the areas which saw the highest home price increases.

I’ve been an Illinois mortgage lender for 16 years now, and I’ve never seen a year like this. Historically the closest comparison was back in the 80s when the Savings and Loans crisis shook up the mortgage industry, led to a regional recession, a spike in foreclosures and opened the door for mortgage brokers to expand their business. We still don’t know what the long term affects of this melt down will be, but we know the fallout will continue through the new year.

Our economy is a lot like a big Rube Goldberg Machine. One action impacts on another and sets off a chain reaction which leads in a very complicated, round-about way to the end result. You take away one element and the machine won’t work. Consumer spending has long been the driving engine of our economy. What will happen if the housing crunch causes consumers to slow spending down by a lot? How will the rest of our economy react?

There are a lot of unknowns as we go into the new year, and the future is far from clear. I expect that this will be a slower year as the housing problems continue to unwind. But I do see some bright spots and reasons for optimism, too. Putting on my fortune teller hat, here are a few things that I expect to happen over the course of 2008.

1. People will continue to buy homes. Here in Illinois, especially in the Chicago area, the economy is diverse and there is pent up demand for homes. This year, even with all the problems, was the fifth highest year on record for home sales. The market will continue to be soft, but many home buyers will get off the fence and take advantage of bargains.
2. Interest rates will drop. The Fed is in a tough situation. They are walking a wire with inflation on one side and a recession on the other. As the overall economy softens the greater risk will be on the recession side. I expect that we will see lower mortgage interest rates over the course of this year.
3. Conventional mortgage guidelines will continue to tighten. All the major parties in the real estate market are under pressure from mistakes they made during the boom years. Fannie Mae and Freddie Mac have already tightened considerably over the last months, but they will go further, shutting credit off to many borrowers who used to be looked at as great risks. They were looking at opportunity then, they are looking at risk now. Chances are they will go to far in their tightening, making conventional mortgages tougher to qualify for.
4. FHA and Government Bond programs will take up some of the slack. The Senate passed the FHA modernization bill this month which will lower the down payment required from 3% to 0 down in some cases, and raise the loan limits up to the conventional limit ($417,000). This bill passed the House earlier, and it is expected that a reconciled bill will become law sometime after the first of the year. First time home buyer bond programs like the City of Chicago Bond Program and the State of Illinois Mortgage Bond Program will also fill a niche and help keep homes affordable for first time home buyers.
5. Option A.R.M.s will be the next problem area. About 20% of mortgages originated last year were option arms, which start at an artificially low payment rate but the true rate accrues on the back end, increasing the mortgage balance. Many borrowers took on these loans with out understanding how they work. With their minimum payments low they haven’t caused the payment shock that has been such a problem with sub prime loans, but in areas where home values are deteriorating this will become a real problem.
6. The Government will legislate cures that won’t help and may make things worse. We’ve already seen this in Illinois and there are proposed bills in congress. Predatory lending is a problem, but many of the proposed bills would make it harder for people to qualify, making the problem worse.
7. Real estate will continue to be a local phenomenon. Some markets will continue to decline, others will muddle through without much pain. The recent Case Schiller housing report showed many areas with double digit declines in home prices, but other areas where prices were flat. Chicago, and much of the Midwest, didn’t have the wild upward swings in pricing that some areas saw, and it is likely that it won’t see the sharp declines.

This year has been a time of big changes and we it’s guaranteed we will see more changes as we go forward. In hindsight the problems in the real estate market were glaring and we should have seen them coming. I know myself that a lot of the loans we were doing didn’t make sense in a traditional sense, but I never expected the year to turn out like it did. We will see what the coming year brings. Any opinions on what to expect?

Illinois Mortgage Rates and News