Well, as Fed Chairman Ben Bernanke decides on his next move -- will he or won't he ratchet up interest rates another 25 basis points next month as most economists are predicting -- mortgage lenders are also pondering their next moves.

Wells Fargo, for example, just announced that it is joining the growing number of lenders, like Washington Mutual and Bank of America, that are offering 40-year fixed-rate loans. Tauting the lower monthly payments the new product offers will appeal to first-time buyers, consumers in high-cost markets, real estate investors and buyers on a fixed income, the company's press release also warns that equity will build up more slowly as a result of the lower payments and a lot more total interest will be paid over the extra 10 years.

Still, this new loan may be a viable alternative to home buyers who may soon be finding themselves in trouble with the popular interest-only and option adjustable-rate mortgages -- especially if the Fed ups the interest rates more this year due to increased fears of inflation.stemming from higher energy costs and low unemployment. 

There is no doubt that lenders are hurting right now. Even though prices are up, home sales volume is down dramatically -- just ask the National Association of Realtors -- homeowners are not refinancing anywhere near the levels seen even just a year ago, and the number of new homes under construction is declining as is building permits. The net result -- lenders need new methods of generating income and these 40-year loans may be one solution.

Whether 40-year fixed-rate mortgages will help distressed homeowners who can't afford their monthly mortgage payment keep their property out of foreclosure -- it's too early to tell. Maybe, if those owners can qualify, and Wells Fargo and the other lenders allow refinancing using the 40-year product.

For real estate investors it could be a double-edged sword. A blessing by offering a means to lower their monthly payments while they busy themselves fixing up and flipping properties. But it could also be a curse, with less properties ending up in the foreclosure pool.

In that case, as always, investors need to keep thinking about widening their search for viable investment opportunities, and RealtyTrac is here to help in that search in anyway possible.

Money magazine came out last week with another of its Top 10 lists; this one called "America’s Best Places to Live 2006." And the winner is . . .  Fort Collins, Colorado.

Why Fort Collins? The folks at Money say it’s because the city, “combines the vibrancy of a city with the comforts of the suburbs — good jobs and schools, a lively downtown, reasonable cost of living and, up there in the Rockies, an incredible outdoor life — it’s the kind of place people want to live in.”

Money’s writers and editors selected from an initial pool of 745 “livable” cities with populations of more than 50,000 with good jobs, low crime, quality schools, plenty of open space, lots to do, AND rational home prices. They could have added a healthy foreclosure market as well.

According to the latest data on the RealtyTrac website, Fort Collins has only 20 properties in the pre-foreclosure stage, but 226 properties are ready to go to auction and another 156 are bank owned (REO). That’s more than all the for sale by owner, resale and new homes listed on RealtyTrac in Fort Collins

The rest of Money’s Top 10 list includes: 2) Naperville, Ill.; 2) Sugar Land, Texas; 4) Columbia and Endicott City, Md.; 5) Cary, N.C.; 6) Overland Park, Kan.; 7) Scottsdale, Ariz.; 8) Boise, Idaho; 9) Fairfield, Conn.; and 10) Eden Prarie, Minn.. Like Fort Collins, most of them have homes somewhere in the foreclosure pipeline, proving that foreclosures are present even in highly desirable locales.

As always, for investors interested in foreclosure property it’s a matter of doing your homework to get ideas on where to search. This list in Money magazine, supported by data acquired from RealtyTrac, is a prime example of this.

Results of a new study released last week by Attorney's Title Insurance Fund (The Fund) suggests that Florida homeowners are feeling pretty good nowadays about the value of their homes and the potential for those values to rise further in the future.

Their biggest concern: being hit by a hurricane. Their least concern: falling victim to mortgage fraud -- even though the survey says that Florida is the top state in the nation for such fraud (something that is, unfortunately, always associated with real estate investors working in the foreclosure arena). Between those two extremes, other concerns included: a burst of the housing bubble, rising mortgage rates and depreciating home values.

Is this consumer confidence misplaced? It seems to fly in the face of recent market activity statewide reported by the Florida Association of Realtors . That report showed a 24 percent drop in home sales both year-to-date and year-over-year through May 2006. Yet despite lower sales volume, FAR also reported that the state's median home price continues to go up -- 11 percent on a yearly basis from May 2005, and 15 percent year-to-date, giving some credence to the 71 percent of homeowners surveyed by The Fund who believe that affordability is the biggest obstacle to homeownership in the state.

Such consumer confidence does not seem to jive with RealtyTrac's May 2006 data either, where the Sunshine State was ranked as having the second highest number of foreclosures in the country (8,898) behind only Texas. It also ranked 8th among the 50 states in foreclosure rate with one foreclosure filing for every 821 households.

One local expert quoted in press reports last week suggested that increasing foreclosure activity in Florida may become a trend rather than a momentary blip on the housing radar screen. His reasons: the expected resetting of interest rates on adjustable and other creative mortgage products, plus rate hikes on both homeowner's insurance and energy bills.

Who proves to be right - only time will tell. But then, real estate has always been a lagging indicator of the health of a state's economy. We'd like to know what your experience has been in Florida. Do you think this consumer confidence is well-founded? Or is the recent uptick in foreclosure activity a precursor of tough times ahead for homeowners and the start of a upward trend in business for real estate investors looking for opportunities in foreclosures?

Economics 401 – Effects of a housing ‘slump’?

When James L. Doti, president of Chapman University, updated his 2006 economic forecast for the nation, he did have one question that could throw a monkey wrench into the equation, and he called it, 'THE BIG IF.' That question is: “What IF housing prices plummet?”

For subscribers to RealtyTrac the answer to that question is worth considering. If housing prices plummeted like they did back in the early 1990s, the loan-to-value ratio on many mortgages might force homeowners into foreclosure, providing  new opportunities for real estate investors, speculators, real estate agents and anyone looking to buy a home from the foreclosure pipeline.

Results of the most recent member survey conducted by the National Association of Home Builders shows the level of builder confidence in the nation’s housing market at its lowest point since 1995. Declining numbers are being felt across the board in residential building permits, housing starts (projected to be down 10 percent for 2006 and another 6 percent in 2007) and completions, resulting in a total $64 billion drop in residential construction.

This dampening in the new housing sector, combined with a lower volume of home resales, raises concerns about the overall health of the national real estate market. If these concerns fuel a downward spiral, home prices could drop significantly, resulting in a loss of homeowner equity (which in itself could have serious economic repurcussions) and an increase in the inventory of foreclosure properties.

Experts like Doti see this scenario as unlikely. And unless something fairly dramatic happens to cause the housing market to take a dump like it did in the early 1990s, the chances are that folks looking to the foreclosure pipeline for significant deals are going to have to broaden their search for properties.

With coverage from over 2,500 counties across the country, RealtyTrac is a great source of information to expand your search.