The $101,000 Home vs. $176,250 Home

The $101,000 home vs. $176,250 home

A house with three bedrooms and two bathrooms in 1,467 square feet at 1194 Pestana Avenue directly across from Diamond Oaks Park in East Manteca closed escrow last month for $101,000.

The median resale price of a home today in Manteca is $176,250.

The last time the median was that low was in 1999.
Even so, a large chunk of the Manteca the market is acting like it is 1991.

A spot check of closed escrows shows some startling “dips” in terms of what some three bedroom and two bathroom homes are selling for versus the rest of the market. And – surprisingly – it has nothing to do with location.

One of the homes at 310 Charles Avenue in Central Manteca near Doctors Hospital consisting of 1,504 square feet closed escrow for $135,000 on Aug. 4. That is just $900 under what the median price was in 1991 when that style of production home that started rolling out in the 1970s was still popular although most had expanded by 1991 to 1,800 square feet. Just a block away a two bedroom one bathroom custom home built in 1953 sold for $125,000 that year.

A home with six more square feet than the Charles Avenue home that is located at 1490 Junewood Court in North Manteca sold for $169,000 on Aug. 14. Floor plan wise, the biggest difference was the secondary bathroom wasn’t a half bath as it is on Charles Avenue.

If that wasn’t enough to confuse you, consider the 1,467 square foot home at 1194 Pestana Avenue directly across from Diamond Oaks Park that closed escrow on July 31. It was built in the early 1990s when the base model of the same square footage sold for $119,000. The selling price this time around was $101,000.

What gives? Why is the market – which is definitely bottom line driven in most cases – have so many wild variables in what properties finally sell for when escrow closes?

In a world where things like a swimming pool or even a remodeled kitchen adds nothing to value, it’s the basic things that hammer prices assuming everything is in OK shape. If there are two full bathrooms as opposed to two with one being just a toilet and sink you immediately get a lot of interest. If the home is two bedrooms and one bathroom, the problem is the three bedroom and two bathroom homes are so aggressively priced now that even people who don’t need more the two bedrooms and one bathroom are going after the three bedroom and two bathrooms. Before, higher prices prompted them to focus on securing just what they needed not what they wanted.

If someone has ripped out the air conditioning and heating system, the home can’t go FHA unless the bank or whoever got; left holding the bag puts in new units in place.

It explains why many newer homes those are structurally sound and in good locations are fetching as much as $40,000 less than their counterparts in older parts of town.

The reason is simple. Few – if any – commercial lenders will also finance the purchase of such a house. That leaves it to buyers who end up spending $10,000 to $15,000 and then turn around and try to flip the house for what it is worth in today’s market. For less than two weeks work doing things such as painting, replacing cabinets, minor cosmetic repairs, and putting in place a heating and cooling system it isn’t unusual these days for such investors to walk away with $15,000 in a month or so after buying the home. And then, more often than not, the homes are flipped to buyers with either an FHA loan or have a conventional loan.

Depending upon who you talk to, there is a theory that the backlog of foreclosures – and there are a number still in Manteca – that are taking forever to reach the market either has to do with the banks being overwhelmed or a desire not to collapse prices any further by just flooding the market with resale homes.

Foreclosed homes go on the auction block in Stockton

Bidder’s market: Foreclosed homes go on the auction block in Stockton

STOCKTON – Hundreds of bargain hunters filtered into the Stockton Civic Memorial Auditorium on Sunday morning, hoping to scoop up a foreclosed home for thousands below market value.

The crowd was a mix of investors, realtors and couples hoping to score a nice price on a home for themselves.

All had their eyes fixed on 208 San Joaquin County houses up for auction with beginning bids starting as low as $1,000.

“It’s a chance to get into the market,” said Angela Alvarez of Stockton. “There’s one I like. I’ll see how the bidding goes.”

Bidding was fast and furious, with homes that once sold at inflated prices during the region’s housing boom but fell into foreclosure during past year’s subprime lending meltdown.

On Sunday, a four-bedroom Organic Way home in Tracy that once sold for $640,000 went up at a starting bid of $99,000. Auctioneer Jeff Frieden blazed through bids in $10,000 increments, and in a few seconds, the high bid stood at $250,000. “Do I hear $260,000? Come on folks, I assure you, you’re not overpaying,” he said. His reassurance satisfied one bidder who won the opportunity to buy the home for $260,000.

Winning bidders at the auction were required to pay a 5 percent fee to the host Real Estate Disposition Corporation. A spokeswoman said the company was hosting six different auctions in California on Sunday, the biggest day in the company’s history and its fourth tour in Stockton this year.

A winning bid doesn’t guarantee a sale, however.

Investor Albert Saballa, 63, has been to three of the four REDC auctions in Stockton this year. The first two auction he bid on and won the chance to buy the same Stockton house.

“I won the bid at $130,000 the first time, but couldn’t get it financed,” Saballa said. “The second time, I won at $115,000 and had a cash offer. The bank rejected my offer.”

Javid Iqbal of Stockton hopes his negotiations with bank representatives will go more smoothly. With $75,000, he was the winning bidder of a south Stockton home previously priced at $300,000.

“I’m happy to win,” Iqbal said before he met with bank representatives and lenders. “It’s an average house, but a good price.”

Realtor Mark Stebbins said auctions such as Sundays can be risky for buyers. Many people place bids on the homes seeing only a photo, and he reminds that the bank can reject offers.

“The key for people is to be persistent and patient,” Stebbins said. “Do your research. There are a lot of good deals out there.”

Stebbins advice might be fitting for Alvarez. She said the bidding on the home she hoped to win soared out of her price range.

“I wasn’t going higher than $150,000 and it sold at over $200,000,” she said leaving the auditorium. “The bids get high real fast.”

New Movie Theater in Manteca

 

 

What’s almost as big as Wal-Mart, can seat 1 out of every 20 Manteca residents & is free?

Dennis Wyatt
Managing Editor

You can’t pass this up.

The most cutting edge movie going experience in the entire Northern San Joaquin Valley is yours for free through Thursday.

It would be worth it just to take in the all-digital Kerasotes ShowPlace 16 nestled between two water features that are just as impressive at The Promenade Shops at Orchard Valley located at the Highway 120 Bypass and Union Road.

But toss in a free first run movie, a free small soda, and a free small popcorn and you have the best deal around. A family of four saves $60 on just one outing taking in films such as “Beverly Hills Chihuahua” or “High School Musical: 3.”

Don’t let a fear of crowds scare you off. There’s big interest but this isn’t the pandemonium that accompanied Bass Pro Shops’ first five days of business. The crowds were steady Friday but with 3,186 seats – just over a 20th of Manteca’s population- and no need for anyone to make change, there’s plenty of room and things move quick.

The 16-screen digital projection theater is conducting a soft opening that runs through Thursday, Nov. 6 with 14 first-run movies. Each movie has at least two show times daily with the more popular films – High School Musical 3 and Beverly Hills Chihuahua – being shown on two screens apiece with a minimum of four show times daily. Once the grand opening takes place on Nov. 7, Kerasotes Showplace 16 will run full movie schedules.

The other movies being shown during the week-long sneak preview are Appaloosa, The Secret Life of Bees, Saw V, Zack and Miri Make a Porno, The Haunting of Molly Hartley, Rock n Rolla, Max Payne, Wall•E, Igor, Eagle Eye, The Duchess, and Changeling.

Doors will open 90 minutes before the first matinee performance allowing guests to receive their free tickets. No advance tickets will be available for the special presentations. Exact theater times appear in an ad that is running daily in the Manteca Bulletin and appears on Page B2 of today’s edition.

1 in Every 20 Manteca Homes Sell

1 in every 20 Manteca homes sell 

 

 

Dennis Wyatt
Managing Editor

One in every 20 of all previously owned homes in Manteca have sold since Jan. 1.

It is a torrid sales pace unprecedented in Manteca.

There have been 892 homes that have closed escrow out of the 17,519 single-family homes that existed as of Jan. 1, 2007 in Manteca

The last time 1,000 plus sales were racked up, the Manteca Multiple Listing Service lumped Lathrop, Ripon, Manteca, French Camp, and Escalon sales all into one statistic. Manteca should hit 1,000 sales by itself with ease. There are 233 pending sales that, if all close in the next 30 days, will put the Manteca sales number at 1,135 sales with a month left to go in 2008.

Manteca home sales were at 5 percent of all single-family homes as of Oct. 27. It could hit 6.5 percent by Dec. 1 and establish a record-high 7 percent pace by year’s end.

The five communities previously lumped together – Manteca, Lathrop, Ripon, Escalon, and French Camp – have recorded 1,552 sales so far this year with another 461 deals pending.

Mortgage Financing

Mortgage Financing

5 Things to Keep in Mind

Getting the right mortgage is much More than just getting a loan, because it has an impact on wealth building, retirement and other strategies in personal finance.  Here are five critical things prospective home buyers need to know about getting a mortgage.

1.Make a down payment -  More favorable loan terms are available to consumers who can put at leas 5% down.

2. Be smart when shopping for interest rates -  A higher interest rate may not include fees, and a lower rate may include fees that elevate the actual financing cost.

3. Consider paying more for your house -  Instead of negotiating a reduction in the sale price, ask the seller to pay for the costs to “buy down” the interest rate on the loan.  This can substantially reduce the monthly payment, saving cash flow in the short run and increasing your principal balance over the long haul.

4. Improve debt-to-income ratio – The higher your total outstanding debt compared to your total income, the less likely you are to be approved for a loan.  For the best loan terms, work to keep your debt low.

5. Improve credit scores – Check your credit report and get errors corrected a, get rid of liens, and resolve any late payment issues for a quick and positive impact on your credit score. 

Good Reason to Buy New Home Over Foreclosure Home

 

 

 

Buying a new home could be an option, that turns out to be a better deal than trying to bid on a foreclosure or short sale home. If you would like to look at new home subdivisions please call or email me. Check my website:

 

www.jlealsellshomes.com

Low new-home prices a good reason to skip bidding wars, repair costs

By Bruce Spence ts

Record Staff Writer

 

Jose A. Nuno and his wife, Gabriela, are first-time home buyers who spent six months working the busy market for a foreclosure house to fit their budget.

They didn’t buy a foreclosure, though.

They ended up buying a new house.

After several months of searching, the Nunos actually had their $250,000 bid accepted in the highly competitive foreclosure marketplace on only their second purchase attempt – generally considered to be a success story.

They also expected to spend as much as $20,000 for repairs and necessary purchases out of pocket, because their bank wasn’t willing to fund those costs.

Just in case, they took a look at some new homes, not expecting to find anything that would change their minds.

“That’s when I started realizing there was not much of a (cost) difference between new and (a foreclosure),” Jose said.

They backed out of the foreclosure purchase and bought a new 3-bedroom, 2.5-bath two-story house in a Manteca subdivision of Florsheim Homes, a Stockton builder that decided early in the housing downturn to downsize its models and prices and market affordable homes for working-class families.

Models start at about $250,000, and the Nunos bought their 1,500-square-foot Florsheim house for $285,000. The monthly payments are higher than those for the foreclosure would have been, but not by much, Jose said, and the couple wouldn’t have to struggle to come up with thousands of dollars to make the foreclosure house livable.

Although foreclosures are touted “as the best price in town – pennies on the dollar – some are gross,” he said, “and you’re going to be in an environment where you have to put a lot of money into it, from new carpeting to painting and appliances.”

Joe Anfuso, president and chief executive officer of Stockton-based Florsheim Homes, called the current home-construction market “certainly difficult.”

The numbers show it.

According to the Construction Industry Research Board, which tracks the building sector in California, there were 535 building permits issued for single-family homes in San Joaquin County during the first seven months of this year. That compares with 3,906 permits issued in the same period of 2005, the final year of the previous building boom.

Anfuso said builders have dealt with the slower market by cutting their organizations by about two-thirds from three years ago and by cutting costs as much as possible.

“It’s a difficult market to maneuver in,” he said. “It’s all about cash management and not profitability.”

Still, the low monthly permit numbers have been slowly climbing from 75 issued in April to 96 last month.

Anfuso said Florsheim has sold houses in the past two months to perhaps four or five buyers who decided to buy new after finding the foreclosure market more difficult than they expected or discovering that the homes were “more challenging” than they expected.

“The competition (for foreclosures) is fierce,” he said. “You have people who have bid five, 10, 15 times and are getting beat out. They start asking, ‘Is it really worth it?’ Our agents are fielding a lot of questions from people who are looking at that market and don’t like that process.”

Greg Paquin, president of the Gregory Group, a real-estate information and consulting service in Folsom, said builders can be competitively priced against foreclosures, but most people don’t seem to realize that yet. That’s especially true in the Central Valley, where foreclosures take up 85 percent of the market, he said.

Los Angeles-based KB Home also is reporting lookers and buyers who are checking out new homes because they were dissatisfied with the foreclosure market.

“There’s no question about it that there is a good portion of our customers who were looking at foreclosure possibilities,” said Marc Burnstein, vice president of sales and marketing for KB Northern California. “We’re seeing that every week.”

Besides facing the prospects of taking over a foreclosure that may have been trashed by the previous owner, many prospective foreclosure buyers are nervous and concerned that the repossessing banks don’t have to disclose faults and defects in the property, he said.

The company has introduced home models as small as 1,300 and 1,400 square feet, with price tags starting at about $222,000 in, say, KB Home’s Riverbend development in Stockton.

Burnstein said home shoppers are admittedly extremely price conscious these days, but the company does a lot of research to determine where to aim for buyers in a residential marketplace dominated by foreclosures.

“We are very competitive on the price side,” he said. “We’ve gone to smaller plans at a tremendous value relative to a foreclosure with no warranty and perhaps huge fix-up costs.”

Picking up new business from the foreclosure market is a glimmer of good news in a time when there hasn’t been much of that for builders.

Standing Water Poses Health Risk in Manteca

Standing water around house is health threat

 

The West Nile Virus poses a serious health issue.So says Larry Lenschmidt of the Manteca Garden Club.

On Monday, he brought in Aaron Devencenzi, spokesman of the San Joaquin Mosquito and Vector Control District, to address that very topic to club members and guests at the Manteca branch library’s McFall Room.

Mosquitos are culprits to passing this disease from mostly birds to people.

“It’s impossible to get rid of every mosquito,” Devencenzi said. “That’s why control is the key to reducing their population.”

In San Joaquin County, he indicated eight reported cases of WNV this year.

“Eighty percent (people in contact with WNV-carrying mosquitoes) might not show any symptoms,” Devencenzi said.

However, those with the symptoms might display a high fever, severe headache, stiff neck or worse.

“We know of three or four cases of (WNV) fatalities,” he said. “There’s no known cure.

“There are vaccines for horses.”

WNV was first detected in 1999 in New York City, and is believed to have migrated to the West Coast via birds. The first such case in California was discovered in 2004.

The SJC Mosquito and Vector Control District rely on chemical control to squash out these flying insects before maturity.

“We like to get the mosquito in the water,” Devencenzi said. “We want to get them before they’re flying.”

Aerial spraying only occurs to areas 5,000 acres or more known for WNV based on the data collected on a weekly basis. The district has 70 such traps throughout the county.

He urged Garden Club members to take action on physical control for mosquito prevention.

Mosquitoes lay their eggs during warm conditions in free-standing water found in neglected swimming pools, ponds and water trough.

In this case, the district offers free mosquitofish to the public.

“Those five gallon buckets around the house are one of our big problems,” Devencenzi added. “Just one of those can produce enough mosquitoes to cover an entire city block.”

He also noted that old tires along with backyard barbecue grills, leaky faucets, bird baths and rain barrels as other potential places for mosquitoes to lay their eggs.

Devencenzi said people, especially those over the age of 50, should limit their outdoor activities between dusk and dawn, where mosquitoes carrying the virus are most active.

“But if you have to go outside during this time please wear something with long sleeves and pants,” he added.

As for insect repellents, Devencenzi said to look for products with DEET, the most effective ingredient thus far against battling disease-carrying mosquitoes.

For more information, contact the SJC Mosquito and Vector Control District at (209) 982-4675, (800) 300-4675, or log on to www.sjmosquito.org.

Those reporting dead birds can call (877) 968-2473.

30 Year Mortgage Dips to Lowest level

30-year mortgages dip to lowest level since April

 

 

By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON – Rates on 30-year mortgages dropped sharply this week, falling to the lowest level in five months, as the government’s dramatic takeover of mortgage giants Fannie Mae and Freddie Mac had the hoped-for impact of lowering mortgage rates.

Freddie Mac reported Thursday that its nationwide survey found that 30-year, fixed-rate mortgages dipped to 5.93 percent this week, down from 6.35 percent last week.

The sharp decline pushed the 30-year rate below 6 percent for the first time since late May and marked the lowest level for this rate since they averaged 5.88 percent the week of April 17.

Private economists had predicted that the government’s move on Sunday to take control of Fannie Mae and Freddie Mac would result in lower mortgage rates for consumers because it removed a huge uncertainty about the future of the two firms, which own or guarantee half of the nation’s mortgages.

Mark Zandi, chief economist at Moody’s Economy.com, said Thursday that he believed rates could keep falling and perhaps drop to around 5.5 percent on the 30-year mortgage, which would give a further boost to the battered housing market.

“This is the most significant positive benefit of the government takeover of Fannie and Freddie,” Zandi said. “I think it is important that rates have fallen below the key 6 percent benchmark and hopefully rates will move lower in coming weeks.”

The 30-year mortgage hit a high for this year at 6.63 percent on July 24 and had been above 6 percent since late May.

The Freddie Mac survey showed that other mortgage rates declined this week although one-year rates bucked the downward trend.

Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, fell to 5.54 percent, down from 5.90 percent last week.

Rates on five-year, adjustable-rate mortgages averaged 5.87 percent this week, down from 5.97 percent last week.

One-year, adjustable-rate mortgages edged up to 5.21 percent, compared to 5.15 percent last week.

The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year and five-year mortgages averaged 0.7 point last week. The nationwide fee for one-year mortgages averaged 0.6 point this week.

A year ago, rates on 30-year mortgages stood at 6.31 percent, 15-year mortgage rates averaged 5.97 percent, five-year adjustable-rate mortgages were at 6.17 percent and one-year adjustable-rate mortgages stood at 5.66 percent.

 

 

Interest Rates May Hinder Affordabilty Among Home Buyers

Interest rates may soon start chipping into record affordability among home buyers

By Dennis Wyatt, Manteca Bulletin

 

When experts try to do a post-mortem on the torturous housing collapse caused by liar loans and super unconventional lending practices that triggered massive amounts of foreclosures, last month in all likelihood will be when the bottom was hit for the lower end of the market.

Mind you, that’s not the overall bottom whether you determine it by median or average selling price but the bottom of the lower tier of housing which is the most affordable.

It is when the 85 percent of Manteca’s median closing price of resale homes sold for $219,310. It is a price point that – depending on which measure you use – is close to 50 percent of Manteca’s households that would constitute the first-time buyer pool can now afford to buy a home in Manteca based on gross income alone. (Obviously debt load and such can reduce the ability of a first-time buyer to qualify.) That is significantly higher than just four years ago when the percentage of Manteca residents who were first-time buyers that could quality for a home without resorting to liar loans and artificially low introductory rates was in the single digits.

It is also a price that made even homes needing $20,000 worth of work on the lower end of the spectrum appealing to investors. Even after buying the home and making repairs, market rents give them a positive cash flow from the first time a tenant moves in.

And if you think everyone out there is putting cash down, consider this: There are a number of savvy investors who bought homes for cash in previous months who are getting virtually 100 percent loans from banks they do business with to buy another rental while using the fact they outright own 100 percent of another home free and clear. There are a number of people doing just that – even small-time investors – who have shifted big bucks sitting in savings accounts where they were earning minimal return into the biggest real estate bargains of the 21st century in a housing market earmarked to go places.

How long will it last? Good question.

There’s almost universal agreement that the big slide in prices is over due to how the investors are reacting. That doesn’tmean prices won’t still drop some on the bottom end or that there isn’t a significant amount of air to still go out of prices in other segments of the market.

Now the burning issue is how much will waiting cost you.

A $150,000 home dropping another $7,500 can reduce the monthly payment another $45. But it rates go up a half percent from today’s 6.25 percent without a drop in price it will cost $40 a month to buy the same home.

As it stands now, a rise in interest rates will start eliminating people once again from home buying.

And if you don’t think higher interest rates aren’t in the works, then you are a lot more confident that most about this country’s ability to control the rate of inflation and get its trade deficit off of a $2 billion daily bleed.

Liar Loans

 

 

This article is from the Mercury News. For more information go to my website at:

 

www.jlealsellshomes.com

 

wire

Article Launched: 08/18/2008 02:25:01 PM PDT

In the mortgage industry, they are called “liar loans” — mortgages approved without requiring proof of the borrower’s income or assets. The worst of them earn the nickname “ninja loans,” short for “no income, no job, and (no) assets.”

The nation’s struggling housing market, already awash in subprime foreclosures, is now getting hit with a second wave of losses as homeowners with liar loans default in record numbers. In some parts of the country, the loans are threatening to drag out the mortgage crisis for another two years.

“Those loans are going to perform very badly,” said Thomas Lawler, a Virginia housing economist. “They’re heavily concentrated in states where home prices are plummeting” such as California, Florida, Nevada and Arizona.

Many homeowners with liar loans are stuck. They can’t refinance because housing prices in those markets have nose-dived, and lenders are now demanding full documentation of income and assets.

Losses on liar loans could total $100 billion, according to Moody’s Economy.com. That’s on top of the $400 billion in expected losses from subprime loans.

Fannie Mae and Freddie Mac, the nation’s largest buyers and backers of mortgages, lost a combined $3.1 billion between April and June. Half of their credit losses came from sour liar loans, which are officially called Alternative-A loans (Alt-A for short) because they are seen as a step below A-credit, or prime, borrowers.

Many of the lenders that specialized in such loans are now defunct — banks such as American Home Mortgage, Bear Stearns and IndyMac Bank. More lenders may follow.

The mortgage bankers and brokers who survived were more cautious, but acknowledge they too were swept up in the housing hysteria to some extent.

“Everybody drank the Kool-Aid” said David Zugheri, co-founder of Texas-based lender First Houston Mortgage. They knew if they didn’t give the borrower the loan they wanted, the borrower “could go down the street and get that loan somewhere else.”

The loans were also immensely profitable for the mortgage industry because they carried higher fees and higher interest rates. A broker who signed up a borrower for a liar loan could reap as much as $15,000 in fees for a $300,000 loan. Traditional lending is far less lucrative, netting brokers around $2,000 to $4,000 in fees for a fixed-rate loan.

During the housing boom, liar loans were especially popular among investors seeking to flip properties quickly. They were also commonly paired with “interest only” features that allowed borrowers to pay just the interest on the debt and none of the principal for the first several years.

Even riskier were “pick-a-payment” or option ARM loans — adjustable-rate mortgages that gave borrowers the choice to defer some of their interest payments and add them to the principal.

While some borrowers were aware of their risky features and used them to gamble on their home’s value or pull out money for vacations, others like Salvatore Fucile insist they were victims of predatory lending.

Fucile, who is 82, and his wife, Clara, wound up in an option ARM from IndyMac after consolidating two mortgages on their suburban Philadelphia home. Fucile was attracted by the low monthly payments, but says the mortgage broker who signed him up for the loan didn’t tell him the principal balance could increase. It has risen about $24,000 to $276,000.

“He put me in a bad position,” said Fucile, who fears he will be forced into foreclosure. “He misled me.”

IndyMac was taken over by the Federal Deposit Insurance Corp. last month.

FDIC spokesman David Barr declined to discuss the Fuciles’ case, but said the agency has temporarily frozen all IndyMac foreclosures and is working on a broad plan to modify mortgages held by the Pasadena, Calif-based bank.

The low monthly payments of liar loans helped many home buyers afford to purchase in areas of the country where prices were skyrocketing. But they also helped drive up prices by allowing people to buy more than they could truly afford. Case in point: about 40 percent of loans made in California and Nevada in 2005 and 2006 were either interest-only or option ARMs, according to First American CoreLogic.

“It was pretty evident that the only thing that was supporting these loans was higher home prices” said Tom LaMalfa, managing director at Wholesale Access, a Columbia, Md.-based mortgage research firm.

Now that prices have fallen, almost 13 percent of borrowers with liar loans were at least two months behind on their payments in May, nearly four times higher than a year earlier, according to First American CoreLogic.

Countrywide Financial Corp., now part of Bank of America Corp., was one of the top providers of liar loans. The company is now is paying the price. More than 12 percent of Countrywide’s $25.4 billion in pick-a-payment loans are in default, and 83 percent had little or no documentation, according to a Securities and Exchange Commission filing last week.

Critics say Fannie Mae and Freddie Mac, which bought or guaranteed liar loans from lenders including Countrywide and IndyMac, should have stuck with traditional 30-year, fixed-rate mortgages.

“I personally think that they ventured beyond their mission,” said Richard Smith, a mortgage broker in Chattanooga, Tenn. Because of their decision to back shakier loans, he said, “the home-buying public is going to have to pay.”

Fannie and Freddie entered the market for risky loans just as they emerged from accounting scandals. At the time, Wall Street giants such as Bear Stearns and Lehman Brothers Holdings Inc. were backing a growing share of ever-riskier loans, and both government-sponsored companies felt pressure to compete.

Freddie Mac wanted “to stay competitive in the market and take steps to preserve market share,” spokesman Michael Cosgrove said.

Fannie Mae increased its purchases of liar mortgages “at the requests of many of our customers,” according to spokesman Brian Faith.

Both companies also were able to use subprime and liar-loan investments to meet government-set affordable housing goals.

Now Fannie, Freddie and other mortgage investors are reviewing defaulted loans to see if lenders committed fraud. If they find enough evidence, they could force lenders to assume responsibility for losses.

But it’s unclear how much money they might recover, especially from lenders that have gone under or been seized by the government.