Take some time to click on the link below download the latest release and see if any of the declining areas are in an area you are considering purchsing. If there are any make sure you inform the appraiser to comment on it and justify and sales or significant amounts of foreclosures in the area. Expect a 5% reduced LTV, and possibly a second appraisal and an AVM.
The deals can still be done, they just require a much more thorough appraisal and are a little more time consuming.
"The subject property has been identified as being located in either an area of declining home prices or in an area where it may be difficult to assess home values. The lender should carefully review the appraisal to ensure that the appraiser has appropriately analyzed property value trends and overall market conditions to arrive at the value provided. The lender should request additional support from the appraiser if it determines that the appraisal does not accurately reflect current market conditions, (e.g. the declining property values field is not checked when market conditions suggest otherwise). Please refer to our Property and Appraisal Guideling in Part XI of the Selling Guide."
The OFHEO website was used to determine the following list of declining or moderately declining states. Subject properties in the following states require a full appraisal: Arizona, California, Colorado, Connecticut, Florida, Illinois, Indiana, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, Ohio, Rhode Island, Vermont, West Virginia, and Wisconsin.
http://www.ofheo.gov/hpi.aspx?Nav=275
If you go to the OFHEO website at: http://www.ofheo.gov/
Click on House Price Index, Click on Latest HPI Report
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