More courts are getting picky about mortgage documents when considering judicial foreclosures and bankruptcies. And it isn’t just state courts either; now at least one federal court is in on the action. More federal judges will have a chance to rule on these issues as a part of bankruptcy proceedings. It will be interesting to see if MERS turns out to be an issue in Nevada’s foreclosure mediation program (few foreclosures in Nevada actually involve the courts). If this trend keeps up, title insurance will be more important than ever when buying and selling real estate!

Remember that MERS is involved in as many as 60,000 mortgages nationally. I personally think that if more than a handful of these mortgages is invalidated, that Congress will be under great pressure from the banking industry to quickly push through legislation that clears MERS’s status and allows “business as usual” to continue.

Until that happens, savvy lawyers will ask for proof that the mortgage holder actually holds the mortgage in judicial foreclosure and bankruptcies.

It’s easy to be enthusiastic about our local market when we’ve had steadily declining availability and steadily rising pending sales for months. The fact that our prices are now stable is even more encouraging, although some sources think that the Feds have effectively raised house prices by about 5%.

I am starting to see signs that things aren’t all good on the horizon.

I work in an office that has about 400 agents*. There’s another Brokerage upstairs that has over 100 agents. There are probably a dozen non-real estate offices in the building as well. It’s a Saturday morning, and I needed to drop by the office. You would expect there to be plenty of buyer’s agents around, meeting clients for tours and frantically getting paperwork together to try and close before the first time homebuyer tax credit runs out**.

There were maybe a half dozen cars in the lot, total. When I got in the office, I saw no signs of other people, save one briefcase sitting by a computer. The office was totally silent. Frankly, the whole thing was spooky. I realize it’s a beautiful Saturday in October, but if the market is really hopping, there should be people who need to get work done today, period.

This observation is very local. Heck, it might be that all the action happens to be on the other end of town today. Possible, but unlikely.

What does this mean to you? If you are a buyer, it means you will have less competition very soon and that’s a good thing. If you are a seller, it means that correct pricing and doing little things to spruce up your property are the key to getting a purchase offer in a timely fashion.

* And growing. If you are a Vegas Realtor and are considering a move, go ahead and hit the “Contact Me!” link so we can talk.

** Theoretically, it should still be possible. Realistically, if the contract isn’t already accepted by the seller, it’s going to be difficult. Don’t count on writing an offer today and closing by the end of November unless it’s a private seller (not a short sale) and you have an absolutely tenacious mortgage broker.

Thank you for dropping by to read Friday Figures! All information from the GLVAR MLS system. Are you are touring, making offers, or listing property this weekend in the Las Vegas Valley? Read this first!

Summary: As much as I hate to repeat myself, available units are down yet again, now under 11,000. Pending sales remain over 15,000, but over half are still short sales subject to lender approval. A research report I read this morning points out that only 12.4% of local closings in the last 3 months were short sales; it seems unlikely that all the contingent short sales will close anytime soon if at all. Closes remain strong, and are likely to be at high levels next week as we head towards the end of the month. Keep in mind that most Nevada banks, state offices, county offices, and city offices will be closed next Friday in celebration of Nevada Day, which actually falls on Saturday, October 31st. That’s right, school kids in Nevada and the 5th largest school district in the country get Halloween off every year! Who says Vegas isn’t family friendly?

Other Information: Home sales are at their highest level in 2 years. However commercial real estate continues to have a disconnect with residential real estate, as many businesses are cutting back on space and few new businesses are getting the funding they need to make a lease commitment (and there’s no tax credit for commercial real estate). Here’s an interesting article on the frustrating world of short sales. And finally, an interesting read on the American dream of home ownership. Remember, Vegas still has an unemployment rate barely under 14%, and this will color our real estate market going forward for at least 6 months and maybe more.

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The Obama Administration is talking about renewing the tax credit for first time home buyers. However, they want to see how much it’s going to cost before getting behind an actual proposal going in Congress. A version of the extension is already circulating as an amendment to other legislation. I can’t blame the President and his people at all for caution.

Most of my colleagues really want that tax credit extended, or even expanded. They see a lot more potential sales. However, I have several concerns.

First, if the Feds keep extending the credit, potential buyers will lose the sense of urgency they have had this year. If the credit is improved, either by making it a bigger credit or my expanding who is eligible, the problem gets worse as potential buyers may hold off waiting for the Feds to offer an even better deal.

Second, all those first time buyers have created an artificial “mini-boom”, accounting for 42% of sales in September. They are particularly snapping up foreclosed homes (adding to the froth, and buying homes that may have serious problems that they don’t even know might be problems). On the surface, this sounds like an argument for extending the credit: can your market afford up to 42% of buyers going away? Surely prices are headed for a slump in December if the tax credit isn’t extended! The flip-side of this argument is this: how many qualified first time buyers are left?

This brings me to the final point. How many qualified buyers are there at all? Here in Nevada, we are dealing with an unemployment rate of 13.3%, and it’s up to 13.9% here in the Las Vegas Valley. The national numbers are only slightly better. People without jobs rarely qualify for mortgages. That means that well over 1 in 8 people in Nevada couldn’t buy a house if they wanted to, regardless of tax incentives. It also means that over 1 in 8 people is at risk of falling behind their current housing payment, regardless of whether it’s a mortgage or a rent payment.

Let’s work towards the long term health of the real estate market, not a short term fix.

Considering buying your first home? You wouldn’t be the only one.

Before you get too engrossed by those listings over at Realtor.com, go ahead and look at this Business Week piece on figuring how much house you can afford. Remember, those methods will only give you a rough calculation. To really get an exact figure, contact a mortgage broker and let him/her prepare a pre-qualification for you (I can put you in touch with some reliable people on request).

You will also want to look at this item on owning vs renting and the NYT article referenced in the first paragraph. When you own a home, you are in charge of all the things your landlord takes care of now. Don’t forget to figure that into your calculations.

Don’t forget that just because it’s cheap doesn’t mean you can afford it! This Business Week item talks about super-cheap homes, and showcases homes priced at $8000 and below, pointing out that the tax credit pays for the whole house. (Follow up: CNN also noticed super-cheap houses in Detroit aren’t necessarily bargains). That’s good, because you won’t be able to mortgage it. They do at least mention that “Such properties will likely need work.” No, they will absolutely need work. Just looking at the one in the picture, I can tell you it needs all new windows, trim paint, probably spray for carpenter ants, probably needs lead paint and/or asbestos remediation, may need roof and/or foundation work, and almost certainly needs all new floor coverings. And we haven’t even discussed location, or the fact that it’s in a city which requires all repairs be done before you can get a certificate of occupancy.

Also, remember that everyone else is rushing to get in on the tax credit too. That’s resulting in a frenzy, with multiple offers being the norm and cash offers taking precedence over all others — because there’s fewer things to go wrong. If you don’t need the tax credit, it might be worth your while to wait. And frankly, if you need the tax credit, maybe you should reconsider whether you can afford to buy right now.

I will leave you with one last unrelated item, America’s strangest listings. See everyone at Friday Figures!

Thanks for taking the time for Friday Figures! All information from the GLVAR MLS system. If you are touring, making offers, or listing property this weekend in the Las Vegas Valley, read this first.

Summary: Amazingly enough, available units dropped further to 11192. While prices of single family homes are stable (and homes in all price ranges are moving), prices of available condos are plummeting, partly due to financing difficulties and partly due to endemic HOA problems caused by the huge number of foreclosures. distressed properties continue to move quickly, pursued by bargain hunters and investors. Pending and contingent listings are on the rise again, which is no surprise, and are poised to surge over 15,000 in trends continue.

Other Information: Nationwide, both apartment and strip mall vacancies are at highs not seen in years. In good news, there are a half-million mortgage modifications underway. However, there are those who find fault with the mortgage modification program. Speaking of mortgages, I was talking to an expert this morning who tells me that minimum FICO scores are set to rise from the current low of 620. Some lenders are already demanding scores of over 686, and he fully expects to see minimum requirements of 640-660 from almost every lender. If you are considering buying real estate and you suspect your credit score is in that range, don’t delay.

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The San Francisco Chronicle is noticing what I told you some time ago: some banks are insisting on an additional credit check or an additional mortgage pre-qualification if you want to buy their foreclosed homes. In an environment where multiple offers are the norm, a buyer might end up needing 3 or 4 pre-qualifications, often paying a fee and always getting putting another inquiry on the credit report. But buyers are tired of strong arm tactics from banks:

The Hayeses found the requirements sufficiently infuriating that they decided not to submit offers on some properties they had been considering, and are now in contract to buy a nonforeclosed home from a traditional seller. Real estate agents say both practices – requiring fresh credit checks and steering potential buyers toward specific mortgage lenders – are increasingly common with many foreclosure sales.

In selling foreclosures, “we require either a credit pre-approval from another lender, other proof of funds, or a pre-qualification from Wells Fargo,” said spokesman Jason Menke. “We do not require that a borrower cross-qualify when they are considering a purchase of a short sale or REO property.”

Over the last couple of weeks, a huge mortgage and foreclosure story has been slowly developing. You’ve probably already heard about judges throwing out foreclosure cases because the banks didn’t have their documents in order. One judge in Kansas made a ruling that could — if upheld on the Federal level — invalidate the mortgages on 60 million homes. Judges in other states have already made similar rulings.

It goes back to the way mortgage companies have sliced, diced, and sold off mortgages into mortgage backed securities. This often involved a private company, a clearinghouse called MERS. Well, because it would be difficult for a consortium of 10 companies to file foreclosure, MERS did it for them. And this judge says MERS doesn’t actually have the legal standing to do that. In short, they can’t prove they own the mortgage because they don’t.

How do you find out if MERS is involved in your mortgage? That’s hard without getting lawyers involved. The best (only) advice on that I’ve heard is to call your mortgage servicer. The phone number should be on your statement. Ask the nice person at customer service. The problem is they may not know, and even if they do they may not be allowed to tell you. I know it seems like you should have a right to know, but that nice person in customer service doesn’t want to lose his or her job by telling you.

It is pretty easy, however, to tell if Fannie Mae or Freddie Mac holds your mortgage, and Forbes tells you how.