Ventura County Loan To Value Chart - January through June 2010

Note: The above chart can be clicked on and enlarged.

I haven't posted the loan to value charts in awhile. This one is for the period between January 2010 and June 2010.

The chart is simply purchase price on the left with loan to value ratio across the bottom. The different color coding indicates the type of loan (Conventional, FHA, Private Party or VA).

You can really see various underwriting guidelines come into play. That arching blue line going from top left sloping down right is the effect of the conforming loan limit on the conventional market. The solid line at 80% LTV is the effect of traditional underwriting guidelines with no Mortgage insurance. At 75% LTV that line usually indicates 2nd home purchases and the like. The blue line at 90% LTV most likely shows conventional loans with mortgage insurance. Then there is of course the absolutely massive wall of FHA financed properties.

I think the high LTV FHA high balance FHA loans are extremely risky. These are people who can't save and have high consumption. Their prospect for higher income is low but lower income is high and it isn't like they have shown a propensity for saving for a rainy day. Also FHA loans are underwritten to extremely high DTI ratios (as high as 47% front and 57% back end).

Ventura County Loan To Value Chart - August 2009

Note: I haven't posted these charts in awhile so I am putting up May through August in four consecutive posts.

If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how (down payments and loan types) people are getting into the market and where (sale price) they are getting into the market.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (which was 37.4% of the So Cal market in August according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Ventura County Loan To Value Chart - July 2009

Note: I haven't posted these charts in awhile so I am putting up May through August in four consecutive posts.

If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how (down payments and loan types) people are getting into the market and where (sale price) they are getting into the market.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (which was 37.2% of the So Cal market in July according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Ventura County Loan To Value Chart - June 2009

Note: I haven't posted these charts in awhile so I am putting up May through August in four consecutive posts.

If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how (down payments and loan types) people are getting into the market and where (sale price) they are getting into the market.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (which was 36.8% of the So Cal market in June according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Ventura County Loan To Value Chart - May 2009

Note: I haven't posted these charts in awhile so I am putting up May through August in four consecutive posts.

If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how (down payments and loan types) people are getting into the market and where (sale price) they are getting into the market.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (which was 38.4% of the So Cal market in May according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Ventura County Loan To Value Chart - April 2009

If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how (down payments and loan types) people are getting into the market and where (sale price) they are getting into the market.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (which was 39.1% of the So Cal market in April according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Ventura County Loan To Value comparison - March 2006 vs March 2009

This is a comparison of loan to value charts for Ventura County of March 2006 vs March 2009. If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how people (down payments, monthly payments and loan type) are getting into the market and where (sale price) they are getting into the market. From my data pull I saw zero FHA loans in 2006.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (which was 39.1% of the So Cal market in April according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Orange County Loan To Value comparison, July 2006 to April 2009

This is a comparison of loan to value charts for Orange County from July 2006 and April 2009. If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how people (down payments, monthly payments and loan type) are getting into the market and where (sale price) they are getting into the market. From my data pull I saw zero FHA loans in 2006.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (which was 39.1% of the So Cal market in April according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Ventura County February 2009 Loan To Value chart

Here is the February 2009 Loan To Value chart for Ventura County. If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how people (down payments, monthly payments and loan type) are getting into the market and where (sale price) they are getting into the market. For jumbo conforming it is getting very difficult to get PMI. So FHA is the only option for loans with less than 20% down.

For conforming loans it is getting difficult to get PMI above 90% LTV and this is where we see the rampant FHA activity. The Jumbo conforming loan limit was about to drop from 729k to 625k and many lenders were phasing it out by November. The jumbo conforming limit is back to 729k this year but its effect was marginal on the market to begin with.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (which was 38% of the So Cal market in February according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Note: I have added a foreclosure research link to the site, see here.

Ventura County January 2009 Loan To Value chart

Here is the January 2009 Loan To Value chart for Ventura County. If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how people (down payments, monthly payments and loan type) are getting into the market and where (sale price) they are getting into the market.
For jumbo conforming it is getting very difficult to get PMI. So FHA is the only option for loans with less than 20% down. For conforming loans it is getting difficult to get PMI above 90% LTV and this is where we see the rampant FHA activity. The Jumbo conforming loan limit was about to drop from 729k to 625k and many lenders were phasing it out by November. The jumbo conforming limit is back to 729k this year but its effect was marginal on the market to begin with.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (currently running 37.8% according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Note: I have added a foreclosure research link to the site, see here.

No you can't use the tax credit as a down payment.

I keep seeing this pop up as a "I just came up with this great idea" post around the internet. Just to be absolutely, 100% clear, You may not file for the tax credit and then use it for a down payment. Don't take my word for it, from the IRS:

Q. I am in the process of buying a home. I expect to close the deal before December 1, 2009. Can I claim the first-time homebuyer credit now? That would allow me to use the refund for a down payment.
A. No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchasers occurs at the time of the closing, you do not qualify for the credit. IRS news release 2009-27, First-Time Homebuyers Have Several Options to Maximize New Tax Credit, contains details for filing options if the home is purchased after April 15, 2009.

Ventura County December 2008 Loan To Value chart

Here is the December 2008 Loan To Value chart for Ventura County. If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how people (down payments, monthly payments and loan type) are getting into the market and where (sale price) they are getting into the market.
The green shaded areas are places where private mortgage insurers are tightening and eliminating coverage. For jumbo conforming it is getting very difficult to get PMI. So FHA is the only option for loans with less than 20% down. For conforming loans it is getting difficult to get PMI above 90% LTV and this is where we see the rampant FHA activity. The Jumbo conforming loan limit was about to drop from 729k to 625k and many lenders were phasing it out by November. The jumbo conforming limit is back to 729k this year but its effect was marginal on the market to begin with.

For people in the market right now if you go to the left hand side and look and find around the price at which you are thinking of buying and then you can go to the right and see what your competition has done as far as down payments and loan types.

The FHA loans at the higher price ranges are, in my opinion, very risky. FHA used to be for low income people and were underwritten with lower DTI ratios. Now they are used somewhat by high income people at higher income ratios, their prospect of higher income is low and lower income is high. I think this will affect the higher end move up markets as the people who rushed to buy have little to no equity for many years. I think this is true of FHA used in massive quantities in the market like we have now (currently running 38% according to Dataquick). With little down it will take that much longer to buildup significant equity and long term move up and relocation transactions in the market should stay low.

Ventura County November 2008 Loan To Value chart

Here is the November 2008 Loan To Value chart for Ventura County. If you click and enlarge the chart it basically shows how much people are putting down at different price points. A dot at 80.0 and $300,000 means that a borrower put 20% down on a $300,000 place. This gives us a feel for how people (down payments, monthly payments and loan type) are getting into the market and where (sale price) they are getting into the market.

The yellow shaded areas are places where private mortgage insurers are tightening and eliminating coverage. For jumbo conforming it is getting very difficult to get PMI. So FHA is the only option for loans with less than 20% down. For conforming loans it is getting difficult to get PMI above 90% LTV and this is where we see the rampant FHA activity. The Jumbo conforming loan limit was about to drop from 729k to 625k and many lenders were phasing it out by November. The jumbo conforming limit is back to 729k but its effect was marginal on the market to begin with.

Ventura County October 2008 Loan to Value chart

(click to enlarge)

This is the October 2008 Loan to Value chart for Ventura County. Here is a summary of what the chart is telling us from last months post on the topic:

The left axis represents the purchase price of a home and the bottom axis represents the LTV of the loans on the homes at purchase. So a dot at $300,000 and 80 LTV would mean that a borrower put $60,000 dollars down on a $300,000 home and the loans on the home total $240,000. The higher the LTV the more aggressive the loan is considered to be. By click on the graphic you will notice the almost solid red line at around 97% LTV. This represents FHA singular dominance in the aggressive lending arena. The shaded blue area represents where private mortgage insurance is bring eliminated for conforming loans (Loans under $417,000). The shaded green area represents where private mortgage insurance is being eliminated for "Jumbo conforming" loans (those under the jumbo conforming limit which was $729k and is being lowered to $598k January 1st, 2009). In these two shaded areas the blue dots (conventional) should disappear by early 2009 and only red dots (FHA) should remain. The pink line represents the old jumbo conforming limit and the green line represents the new jumbo conforming limit. The loans in between these two lines will most likely not be made after January 1st. Or if they are made they will be made at much higher rates than those under the limits shown.

I should also note that October 1st 2008 was the deadline for locking Seller Funded Down Payment Assistance loans for FHA. This was the last major easily available source of 100% financing. While I think FHA will continue its significant presence for a long time the requirement of even a mere 3.5% down coming from the borrower will have a dampening effect on the market. Lower prices and lowered expectations (buying less house) by borrowers with little down payment will be the result of this change. With the jumbo conforming limit dropping, slow economy and lack of move up buyers being generated in this market means that it is the higher end turn to experience the brunt of the depreciation in 2009. The low end will still fall of course but we could see the bottom end dropping 15% while the top end drops 25% as an example of what I think could go on this year. The desire to purchase high end properties is always there, what isn't there right now is the ability to do so.

FHA gaining in latest September 2008 Ventura County LTV chart

(click to enlarge)

This is the Loan to Value chart for Ventura County September 2008. The left axis represents the purchase price of a home and the bottom axis represents the LTV of the loans on the homes at purchase. So a dot at $300,000 and 80 LTV would mean that a borrower put $60,000 dollars down on a $300,000 home and the loans on the home total $240,000. The higher the LTV the more aggressive the loan is considered to be. By click on the graphic you will notice the almost solid red line at around 97% LTV. This represents FHA singular dominance in the aggressive lending arena. The shaded blue area represents where private mortgage insurance is bring eliminated for conforming loans (Loans under $417,000). The shaded green area represents where private mortgage insurance is being eliminated for "Jumbo conforming" loans (those under the jumbo conforming limit which was $729k and is being lowered to $598k January 1st, 2009). In these two shaded areas the blue dots (conventional) should disappear by early 2009 and only red dots (FHA) should remain. The pink line represents the old jumbo conforming limit and the green line represents the new jumbo conforming limit. The loans in between these two lines will most likely not be made after January 1st. Or if they are made they will be made at much higher rates than those under the limits shown.

The WSJ had an article on the FHA tonight that ties with what the chart is telling us is happening in the marketplace (emphasis added) :

The FHA, which insures lenders against defaults on home mortgages that meet the agency's standards, saw its share of new mortgages increase to 26% in this year's third quarter, up from 3% for all of 2007, according to Inside Mortgage Finance.
Some worry that the growth has come too fast, especially as the FHA expands rapidly into the most risky markets and insures bigger loans.
...
Still, some housing experts worry that an outsized share of the FHA's new business is coming in these high-cost housing markets. "It's getting into markets that are a lot riskier than it has in the past," says Ann Schnare, a housing consultant.
...
Private mortgage insurers are more restrictive. For instance, Genworth Mortgage Insurance Corp. requires down payments of at least 10% in areas with falling home prices and 15% if the loan is larger than $417,000.
...
As the private market imposes much tougher standards, the danger is that the riskiest loans will flow to the FHA, says Joe Rogers, an executive vice president in the home mortgage business of Wells Fargo & Co.

Financing and the home loan market are a slow moving train, the fate of whether or not some of these decisions made to be aggressive in the face of a falling market won't be decided for some time now. But if the FHA is wrong it is the taxpayer that will be bailing them out. Business Week had an article on FHA and how some of the brokers were gaming the system just like during the subprime boom. If enforcement isn't stepped up to police the originators this issue could blow up even bigger than expected. Putting a large number of people who clearly have an unreasonable expectation for price appreciation for homes into instantly underwater homes during a downward economy sure doesn't seem like a good idea. Defaults on these originations should reach very high levels and I can imagine a congressional hearing sometime in the future when the taxpayers will be asked to pay for this when some FHA official will be saying, "Nobody could have possibly seen this coming".

August 2008 Ventura County Loan to Value Chart

Here is the Loan to Value scatter chart for Ventura County for homes and condos sold in August 2008. The upper pink line represents the current conforming jumbo limit and the lower pink line represents the new conforming jumbo limit starting January 1st. The loans in between these two lines won't be closed without either a higher down payment or seller price concessions. The yellow shaded area represents the area in which mortgage insurance is tightening that I detailed in my previous post. FHA or banks taking seconds will be the only option available to borrowers in this area. You can see that FHA is definitely gaining in popularity with fewer blue dots (representing conventional loans) populating this area compared to previous months. Credit is still tightening and only price concessions are keeping sales volumes up. If those price concessions slow due to things like foreclosure moratoriums or loan modifications sales volumes should drop considerably in response.

Ventura County June & July 2008 down payment size

Here is the scatter charts for Ventura County for June and July. Clearly FHA is gaining in popularity and taking over market share. The loans "at risk" for tightening are the blue dots between 80% and 100% LTV these are the ones affected by mortgage insurers guideline changes. The one issue affecting FHA is seller funded down payment assistance went away October 1st and was very popular. The mortgage insurers are still tightening especially in the main bubble markets like Florida and California.

Down payment assistance gone for FHA with new housing bill

From the Sacramento Bee:

A signature Sacramento program that has helped almost 300,000 lower-income people nationally buy homes in the past decade – while stirring controversy for years – is likely to be shut down this week, Nehemiah Corp. of America officials acknowledged Monday.

The nonprofit giant believes Congress and President Bush will ban its decade-old down-payment assistance "gift" program within days as part of a larger housing bill, Nehemiah President and Chief Executive Officer Scott Syphax said Monday.

The DPA programs were a source of high defaults for the FHA and represented one of the few paths to 100% LTV financing left in the marketplace. This represents another incremental tightening of credit guidelines that will certainly slow sales at the bottom end of the market but these sales shouldn't have been made to begin with.

Ventura County May 2008 down payment size

Here is another scatter chart showing what type of loans and down payments were necessary to close a home in Ventura County in May 2008. I broke out the different classes of loans in different colors to help differentiate who was making the higher LTV loans. FHA (which is fighting the down payment assistance loophole) and VA are where it is at in terms of low to no down payment loans. Both are Full doc however so these borrowers do have the cash flow to get qualified.

Most conventional loans about the conforming limit of $417,000 that are in "Conforming Jumbo" territory mostly start at 10% down and more. There are some FHA high LTV loans above the conforming limit as well but these are borrowers with proven income and paying mortgage insurance. By comparing this chart with the earlier September 2006 chart you can see both the depreciation and lack of high LTV high value loans (the nearly solid line of blue at 100% LTV).

Ventura County April 2008 to September 2006 downpayment size

Just a quick scatter chart to compare September 2006 with April 2008 to see how the down payment aspect of financing has changed.

April 2008:


September 2006:

(Click to enlarge)
Tremendous high-LTV & high-priced demand displayed during Ventura September 2006. For Ventura April 2008 you can really see the conforming limit putting a cap on prices. At 80% LTV most of the activity is at or below ~520k price (so under conforming limit loan) and you see the same effect at 90% (most sales under ~460k) and 95% LTV (most sales under ~440k). You see a lot of the April 2008 demand clustered under 500k and at or above 80% LTV. In September 2006 the demand is really concentrated on 100%, 90% and 80% LTVs and pretty well distributed across sales prices.