The major issue appears to be the ownership of the sea floor beneath the Maine State Pier. Olympia all along has said that a 75 year lease was required to make the project viable, but the state, who claims to control the land, will only grant a 30 year lease.

This project has been mishandled from the very beginning and it is a shame that something so important to the long term business and economic interests of Portland cannot be focused without the influence of partisan politics. According to City Councilor Cheryl Leeman, there are several options at the point: a) Seek new proposals for the project; b) go back to Ocean Properties – who initially lost the bidding process to Olympia in 2007; c) it can sign the master development agreement with Olympia, with no work to be done until the title is resolved.

Of course, the city might do nothing at all.

How did it come to this? Who really believed that the state would relinquish it’s rights over the sea floor, even though the city claimed it had title to the land and subsequently obtained title insurance? How could the state not be more supportive of such an important projects – or was this simply the results of politics?

If the state of Maine and the city of Portland cannot get their act together to make a project of this magnitude happen, how can we expect to really be a player on a regional stage – let alone a national one?

Mortgage lending has taken on a different face these days. Stricter credit standards are being adhered to and the sub prime market has pretty much disappeared. And, as we all know there is a very good reason for these changes. This isn’t all bad news. What this does is insure that the loans being made today are not putting families at a high risk of losing there homes. Government agencies like the Federal Housing Administration (FHA) are stepping up their lending and increasing their loan limits. This allows more buyers to take advantage of these programs which require less down than conventional mortgages. Granted, there are still fraudulent schemes out there in the market place and this necessitates even more changes. One in particular we are hearing about today is “buy and bail”. Homeowners are buying a new home and representing to the banks rental income on the current home that will not be realized. Once they have made the purchase, the homeowner is just turning over the keys to the old property having no intention of paying on that mortgage. Rental income will be scrutinized very closely as a result.

On the more positive side, as a Bank of America employee, I have seen our management pushing forward knowing we cannot stop lending. New products and programs are constantly being developed to meet the needs of the consumer. We are busy lending and getting poised for the up turn in the economy and housing market which is being predicted for the second half of 2009. There are still great opportunities for first time homebuyers and conventional rates are still at historic lows. I think what we will see as a result of this “financial crisis” will be stronger more secure lending institutions which can only benefit us all.

Mary Hendrick is a guest contributor with Bank of America Mortgage. She has over 20 years of financial experience and we encourage you visit her personal website at Mary Hendrick - BOA. Or, give her a call at (207) 874-5531.

In its most recent report completed by RealtyTrac, Maine ranked 41st in the country in total foreclosures, with one in every 2,996 homes receiving a foreclosure filing. Filings are down 4.1% for the Q3 vs Q2, but up over 1,000% compared to last year.

Percentage increases can often sound startling, but in reality be somewhat misleading. 102 foreclosures in York County represent 1 in every 1,006 housing units. 42 foreclosures in Cumberland County represent 1 in every 3.137 housing units.

Foreclosre information is based collected by RealtyTrac, which publishes the largest and most comprehensive national database of foreclosure and bank-owned properties, with over 1.5 million properties from over 2,200 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate and The Wall Street Journal’s Real Estate Journal.

Although unit sales for both single-family homes and condos are down in virtually every town, pricing has not experienced the same dramatic decreases, which is encouraging for sellers.

For the month of September the median sales price for a single-family existing home was $177,750, down 6.5% from one year ago. Unit sales were down 9.7% compared to the same period of 2007.

Nationally, some good news was achieved in home sales as unit sales were up 3.8% in September. The National Association of Realtors also reported a national median sales price of $190,600, which represents an 8.6% decline over the past 12 months. Regionally, sales in the Northeast were 7.7% lower than a year ago. The regional median sales price was $246,800—a decrease of 5.4%.

The latest Case Shiller housing numbers are also out, updated through July 2008. The numbers continue to improve slightly, at least the rate of housing price declines is slowing. It’s interesting to see Tampa, one of the hardest hit markets, show no change in prices in the latest report. And you’d never guess from Charlotte’s consistent position as the least effected housing market that it’s a center for banking and finance. The monthly readings provided by Case Shiller are a smoothed three month moving average. For more on what the Case Shiller index is, visit our recent newsletter or the article Case Shiller on our website.

According to Reeves and Longfellow, very changes are anticipated. “The membership structure and operation of the club will remain the same, and the plan is to operate as usual - while making continuous improvements to the course, the facilities and the members social calendar.”

In a golf market that had slowed well before the country’s housing market imploded, Harris Golf has conceived and opened several new projects, including the three-year-old Sunday River Golf Club in Newry, Me., just named to Golf Magazine’s “Top 100 Courses You Can Play” for 2008 (No. 82). This summer, it christened Old Marsh Country Club - the only new course to open in New England this year.

Harris Golf initially purchased the Wayne Stiles public course (only nine holes at the time) in 1994. During the next several years a second nine was added, took the club semiprivate, developed 21 real estate lots, and courted/hosted prestigious tournaments, including the 2005 Maine Amateur. The transformation of Boothbay Country Club reached an effective conclusion in 2007, when the club went fully private and, eight months later, capped its membership rolls at 300.

Financing for the purchase is being provided by Savings Bank of Maine.

For more details on golf in Maine, including a review of the top courses and clubs, download Maine Golf, or visit our website for more details.

In a recent interview Housing and Urban Development Secretary Steve Preston said that FHA, Fannie and Freddie - who account for over 90% of the entire U.S. mortgage market - “have kept liquidity alive” for home buyers - and have virtually unlimited funds for new mortgages. “There is no credit crisis” for individual home buyers who have at least three percent to put down, documentable employment, and at least a moderately good credit record, said Preston.

Business loans and various other types of credit may have been more difficult to obtain in recent weeks, Preston said, but thanks to the government’s backing of the three biggest sources of mortgages, buyers and refinancers of houses have had no unusual problems.

Preston and HUD are playing key roles in the $700 billion financial system bailout plan now getting underway. Preston is one of just five members of the Financial Stability Oversight Board that oversees the entire effort. HUD’s main task in the weeks ahead, he said, will be to either refinance or help work out thousands of delinquent subprime and underwater homes financed by private lenders during the boom years.

The agency’s new “Hope for Homeowners” program, which started October 1, allows it to cut the principal debt, monthly payments and interest rates of delinquent loans through refinancing into fixed-rate FHA mortgages.

Additionally, when looking for funding for a new home in Maine, it is also suggested to consider local banks. Many banks in the area have weathered the current financial crisis better than their national or regional counterparts and have had less bad loans to write off. They are ready to lend to qualified buyers!

In what could only be called a dramatic move, The Los Angeles Times has ceased publication of its weekly real estate section, which it has been printing for more than 100 years. The paper, which has a circulation of more than 1 million, has continued to see advertising revenue decline during recent years and has implemented staff cuts, content reductions and a shift to online media as a way to stay current in today’s environment.

According to sources at the paper the “Home” section will move from Sundays to Saturdays and would combine with “Real Estate.” The “Book Review” will be merged with an “Arts & Books” section to become a more general “Arts and Books” feature. During the week, it is expected that the paper will continue to run real estate classified advertising as part of the “Home” or “Business” sections. Earlier in the year the Times had earlier announced the termination of its weekly magazine, among other reductions in content.

We believe that as the real estate market improves in Maine there will not be a major move back to print media. There has been a fundamental shift occurring and there is no turning back. Online home advertising allows for a broader reach and a more analytical approaches to gauging effectiveness.

First let’s consider at what it means for mortgage rates. I would expect that the government takeover will result in lower mortgage rates, possibly a full point lower. Why? Basically the Fed has been struggling to lower mortgage rates for the last year in an attempt to assist the troubled real estate market. The Fed has lowered prime rates several times in an attempt to pull down mortgage interest rates. In spite of this over the last 8 months mortgage interest rates have mostly risen. Now with full control of Freddie Mac and Fannie Mae (which provides insurance for most mortgages in the US) they will have much more control over the mortgage market and mortgage rates. As long as their objective stays the same, we can expect lower rates.

What does the takeover say about the current situation in the real estate market? This should have been obvious from all the events that preceded this but the takeover shows that the real estate market is in serious trouble across the country. The federal government doesn’t just take over large companies on a whim – and this is not simply a government takeover – it is the largest takeover in US history (prior to today’s loan to AIG). Basically the takeover happened because it was believed if nothing was done we were headed for economic catastrophe.

How is this going to affect the real estate market? Although the takeover is a bad sign about our current situation it should have a positive effect on the real estate markets moving forward. First lowering mortgage interest rates should be quite a boon for the real estate market. Lowering rates lowers the effective cost of a house. And historically lowering rates has a positive effect on real estate values.

Additionally, if the Fed is smart they will reduce some of the mortgage restrictions Freddie Mac and Fannie Mae have created in the last year. Although it would not be prudent to see a return to the free-wheeling lending of a few years ago, some of the current rules are bizarrely restrictive. The lending environment typically works like a pendulum moving from one extreme to another. Currently lending restrictions are not just stricter than what we saw during the real estate boom a few years ago but they are more restrictive than anything we have seen in the last 15 - 20 years. Hopefully a federally controlled Fannie Mae and Freddie Mac can help return us to normal as far as lending restrictions.

Lastly the government takeover could put taxpayers in the lurch for billions in loan losses. In the short term the government is going to have to infuse money into Freddie Mac and Fannie Mae. They have been losing money for quite some time and that is not going to change overnight. The government will have to around 20 to 30 billion into Fannie Mae and Freddie Mac to get them back to financial solvency.

One’s personal view of this action by the government depends upon on how you look at the issue. While taking over Fannie Mae and Freddie Mac will be very costly for the government and taxpayers, allowing them to fail could have led the US economy into a severe depression. In a depression those that keep their jobs have to make up for all the lost tax revenues for the large number of people that lose their jobs. So taxpayers could have been in a lurch if the Feds had decided to stay on the sidelines.

So in summary the federal government found itself in a tight spot and decided to bet that they can fix the real estate market. We will find out if they were correct over the next several months.

Let’s take a closer look at the ten primary changes to the FHA guidelines:

Borrowers with either no score or at least 500 may get an LTV >90%.
Borrowers with a score less than 500 get a maximum LTV of 90%.
Borrowers without scores will require manual underwriting.
Upfront Mortgage Insurance Premiums will range from 1.25% to 2.25%, depending on score.
The Monthly Mortgage Insurance will range from .50% to .55% depending on score.
The premium is based on the borrower with the lowest score.
If one of the borrowers has no score, then the Non-Traditional credit grade is used.
Credit rescoring is allowed to improve a borrower’s credit grade.
All FHA Secure refinances >95% LTV with delinquencies have a 2.25% UFMIP and .55% MMI.
These changes apply to cash-out, rate & term, and non-delinquent FHA Secure refinances.

The credit scoring model seeks to quantify the likelihood of a consumer to pay off debt without being more than 90 days late at any time in the future. Credit scores can range between a low score of 300 and a high score of 850. The higher the score, the better it is for the consumer, because a high credit score translates into a low interest rate. This can save literally thousands of dollars in financing fees over the life of the loan.

Only one out of 1,300 people in the United States have a credit score above 800. These are people with a stellar credit rating that get the best interest rates. On the other hand, one out of every eight prospective home buyers is faced with the possibility that they may not qualify for the home loan they want because they have a score falling between 500 and 600.

Critics of the plan focused specifically on the $18 million loan granted Olympia from the Finance Authority of Maine to fund repairs to the aging pier. According to the agreement Olympia will not be required to pay rent for the first 20 years of its 75-year lease.

Although a claim was made that Olympia received no tax breaks in the deal, it is hard to understand how a 20-year rent abatement is not considered a public subsidy. This entire project has been decided along political lines, with little regard for what is best for the city and decisions such as this, and the ensuing criticism from all sides, should not be a surprise.

The negotiating team also drew fire for its decision to remove the construction of a deep-water berth from the project. The mega berth was added on to the state pier plan at the 11th hour, only weeks before it was approved in the fall.

The negotiating team considered granting the developer access to additional city-owned land east of the pier – land not included in the original request for bid proposals – as a way to make the deep-water berth work with the state pier project. The team, however, determined that this was outside the scope of original bid request.

As we move forward, it will be interesting to see if this important project gets started, let along completed.