Over the past two years, Wells Fargo Bank and Bank of America have remained the top two mortgage lenders in the Sacramento region but much of the rest of the market has been upended, according to La Jolla-based research firm MDA DataQuick.

Of the rest of the region's top 10 lenders in 2006, only one – JP Morgan Chase – remained on the list in 2008. The information is from data from August, September and October in both periods.

Home lending – including purchases, refinancing and equity loans – dropped 65 percent over the two-year period. From August to October 2006, loans totaled $9.8 billion. That dropped to $5 billion during the same period in 2007 and $3.4 billion in 2008.

Most of the region's big lenders – including Wells Fargo and Bank of America – did far less business in 2008 than in 2006. But a few, including Sacramento-based Vitek Mortgage Group Inc., issued more loans even as the real estate market crashed and home equity dried up.

Vitek increased its lending 84 percent over 2007 by focusing on lending to homebuyers through government-backed programs that have remained solvent, said Harry Duncan, the company's president.

Vitek made $86.4 million in loans in El Dorado, Placer, Sacramento and Yolo counties from August to October of 2008, making it the region's seventh-largest lender.

– Jim Downing

So begins a new year in the Sacramento real estate market, remarkably making its case as the fourth straight year of a downturn.

A slump that began with nervous whispers in the summer of 2005 has escalated into a prolonged economic crisis that promises to define 2009.

Home Front spent time in the electronic library this week, looking at how experts misjudged the extent of this decline as the housing market began to wobble and shift in 2005 and 2006, even 2007.

We aren't trying to pick on analysts who were then swimming in uncharted waters after a long, euphoric boom. The Bee's real estate coverage, too, had its overly sunny moments.

That said, we're now 3 1/2 years into this painful reversal of fortune. From the files, here are memories of what the pros said as the market started – slowly at first, then faster and faster – to fall back to earth.

• October 2005. As housing values had already started to roll back down the hill, a National Association of Realtors report pronounced Sacramento's real estate market in "excellent shape with a potential for significant equity gains."

What happened: In a year, median sales prices fell 8 percent in Sacramento County.

• July 2006: "The evidence of a cool-down is everywhere, but I don't think there's evidence of a collapse. I think barring any major macroeconomic shock, like a real spike in interest rates or unemployment, things are going to remain pretty flat."

– Sean Snaith, then director of the Business Forecasting Center at Stockton's University of the Pacific

What happened: The next year in Sacramento County, home sales fell 23 percent and prices fell 10 percent.

• September 2006: "It's not pleasant, but in proportion of the economy it's one-third as big as the S&L losses in the 1990s."

– Chris Cagan, then director of Research at First American Real Estate Solutions, predicting $110 billion in U.S. foreclosure losses across five years

What happened: The International Monetary Fund pegged U.S. losses at $565 billion earlier this year. Then, taxpayers put up $700 billion in Wall Street bailout funds. The S&L crisis cost taxpayers $124 billion, according to the U.S. General Accounting Office.

• October 2006: "I think by next spring the residential market will reach a plateau. … If my scenario holds up, you may be under water 10 percent for a while. I don't know if you'd call it a soft landing, maybe slightly hard, or hard light or something, but you'll still be fine."

– Richard Kovacevich, then chairman and CEO of Wells Fargo & Co., in a Bee interview

What happened: Sacramento County median sales prices fell another $24,500 by June. In July, year-over-year depreciation went into double-digit percentages and has accelerated ever since.

• November 2006: "It's not like we're seeing a huge erosion in home prices, and really do not expect to see that going forward."

– Robert Kleinhenz, deputy chief economist, California Association of Realtors, giving a 2007 real estate forecast to Sacramento Realtors

What happened: In 2007, Sacramento County sales prices fell 20 percent. In 2008, they've fallen again by a third.

• January 2007: "We don't expect any significant decline unless there's some major economic shock, and we don't anticipate that."

– Alan Nevin, chief economist, California Building Industry Association, unveiling his 2007 forecast

What happened: In 2007, California's new-home sales fell 31 percent. This year, they fell almost twice that much.

• January 2007: "I agree the foreclosures will be a fact of life moving forward and will play some role. But I don't think that, in itself, it can move the (real estate) market as significantly as in the 1990s. The reason is the economy in California is on much firmer ground than we were in the '90s."

– Keitaro Matsuda, senior economist, Union Bank of California

What happened: Within 21 months of those words, California recorded 274,374 foreclosures, moving the real estate market to one dominated by bank repos. Statewide, median sales prices have plunged 41 percent the past year, according to the California Association of Realtors. Unemployment is the highest since 1994.

• June 2007: "I think right now, we're probably bouncing around the bottom."

– Sid Dunmore, then chief executive officer of Granite Bay-based Dunmore Homes

What happened: Five months later, Dunmore Homes filed for bankruptcy protection.

• March 2008: "I think California has maybe two more quarters of tough sledding and things are going to get better. … It's just a 36-year gut feeling kind of thing."

– John Robbins, a San Diego mortgage banker, and 2007 chairman of the Mortgage Bankers Association

What happened: That was three quarters ago.

So, who wants to predict 2009? Will those Alt-A loans be the next wave of foreclosures? Will the Sacramento County median price touch $165,000? Who's next to go bankrupt? When does it turn?

Such questions come as we continue the fourth year of a once-unthinkable downturn. Here's to new challenges and opportunities, to the 2009 real estate story soon to unfold.

Thirty-year mortgage rates have dipped to their lowest levels in nearly 40 years, falling for a ninth straight week to a base rate of 5.10 percent, federal mortgage giant Freddie Mac said Wednesday.

The firm said this week's average is the lowest since it began keeping track in 1971.

Last week, rates for the 30-year fixed-rate benchmark loan averaged 5.14 percent.

"Since the end of October of this year, these rates have declined by about 1 1/3 percentage points, or payment savings of approximately $173 a month for a $200,000 loan," said Frank Nothaft, chief economist at Freddie Mac, in a statement Wednesday.

The financial Web site, Bankrate.com, reported slightly higher overnight rates Wednesday. It showed average 30-year fixed rates at 5.25 percent in California and 5.30 percent nationally.

– Jim Wasserman

Low-income residents in Placer County and many other parts of California will have new opportunities early next year to buy their first home or rehabilitate their house.

Help will come from more than $50 million in housing grants statewide, officials said Tuesday.

The grants use federal funds dispensed through the state Department of Housing and Community Development's HOME program.

They include $800,000 each for the counties of Placer, El Dorado, Amador, Nevada, Tehama and Glenn.

The cities of Roseville, South Lake Tahoe, Ione, Red Bluff and Live Oak (Sutter County) also received $800,000 each.

Chris Westlake, deputy director of the state housing department, said HOME grants go to smaller cities and counties that don't receive direct allocations from the U.S. Department of Housing and Urban Development.

Because they come from federal funds, Westlake said, the grants are not affected by the recent freeze on California Housing Finance Agency funds that was prompted by the state's budget crisis.

Joanne Auerbach, housing coordinator for the Placer County Redevelopment Agency, said $600,000 of the Placer grant will assist first-time home buyers.

Low-income households are those who earn no more than 80 percent of the area's median income.

For a four-person household in Placer, that limit now is $56,800.

Some homebuyer assistance money also is available now through Placer's current CalHOME program.

Potential buyers can apply immediately or register with the redevelopment agency to be notified when the additional money becomes available in the spring.

To qualify for Placer's home-purchase program, applicants must be first-time buyers.

They also must be preapproved for a first mortgage loan; complete eight hours of homebuyer classes through the local home loan counseling center; and have at least 3 percent of the total purchase price available for the down payment.

Through the program, the county provides a 30-year, second-mortgage loan of up to $36,650 that is not due and payable until a home is sold or transferred, or no longer owner-occupied.

Low-income homeowners in the Colonial Heights neighborhood are eligible for free repairs and home improvements this spring.

Volunteers for the nonprofit Rebuilding Dreams, along with the Sacramento Housing and Redevelopment Agency, will repair and improve 15 eligible houses on "Spring Rebuilding Day" in April.

So far, only 12 homeowners from the neighborhood off Stockton Boulevard have applied, said program manager Cindy Slagter.

Anyone interested in finding out if their home is eligible should call (916) 455-1880 and ask for an application.

Homeowners also can apply online at www.rebuildingtogethersacramento.org and clicking on Rebuild Days. A third option is picking up a "pre-application" at the following locations:

• Colonial Heights Library, 4799 Stockton Blvd.

• La Familia Counseling Center, 5523 34th St.

• Mark Twain Elementary School, 4914 58th Ave.

• Stockton Boulevard Partnership Office, 5625 Stockton Blvd.

• Tahoe Colonial Family Resource Center, 5959 Eighth Ave.

– Cynthia Hubert