Wednesday, November 24, 2010

The specific damages a foreclosed homeowner might ask to be compensated for by their lender after a rejected short sale

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I am following up on a the previous blog from “Arman”. His loan was owned by Fannie Mae and the company handling the loan for Fannie Mae was rejecting an excellent short sale offer for no reason.

Discover how other sellers successfully did a short sale to avoid foreclosure by clicking here.

So in this scenario, when one finally gets in front of a jury and show how this company’s negligence caused Fannie Mae to lose $15,000 (what the projected lose may be) and that it hurt the borrower as well, the jury may award damages.

Here are some of the damages a foreclosed homeowner might be able to ask for.

Credit Damage. A foreclosure is much more damaging long term to your credit than a short sale. For the next 7 years they will have to answer yes to the standard question that is on most credit applications: "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?"

Harm from a potentially larger amount being owed to the owner of the loan. If the short sale was turned down, and as a result the home sold for less as a foreclosure, the owner of the loan could pursue the homeowner for more money in some US States.

This would be a much easier argument after the foreclosed home sold and you have a copy of the sale prices of the home and the original short sale offer in hand.

These are two things that are the most likely to be approved by a jury. If you can think of additional damages, then please post them in the comments section below.

There is something else very interesting this home seller has said. When he talked to a women at the lender and asked why they were rejecting the short sale offer, she replied "We or some of our investors will buy it.”

That sounds pretty fishy to me. I have seen other people who handle loans for a third party owner profit from the loan owner’s loss.

For example, one company charges the buyer a $1,500 to $5,000 fee for buying the short sale. If the buyer won’t pay, then they won’t approve the short sale. Remember, they are being paid by the owner of the loan.

In fact, they are paid very well. The business is so profitable that IBM Computers recently opened a subsidiary loan servicing company.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Ashish@CalCapHomes.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 818 259 3455.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Ashish Trivedi.

Ashish is a Real Estate Broker - Ashish Trivedi at California Capital.
Phone: 818 259 3455. Ashish@CalCapHomes.com.

Secure Your Future

View My homes for sale at http://www.calcaphomes.com/.
Short Sale Realtor. Short Sales. Realtor.

Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Ashish Trivedi's personal views and do not reflect the views of California Capital. This information on The specific damages a foreclosed homeowner might ask to be compensated for by their lender after a rejected short sale is provided as a courtesy to our viewers to help them make informed decisions.

Tuesday, November 23, 2010

What To Do When An Excellent Short Sale Offer Is Rejected

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Here's a scenario presented from a follow up question from "Arman".  His loan was owned by Fannie Mae and the company handling the loan for Fannie Mae was rejecting an excellent short sale offer for no reason.

Discover how other sellers successfully did a short sale to avoid foreclosure by clicking here.

Here is a quick recap of what Arman may be recommended to do by a legal professional .



Step #1: Call up IBM and demand a written letter explaining why they are declining the short sale offer.

Step #2: Write down what you project your damages are going to be if the property is foreclosed upon instead of sold as a short sale.

Step #3: Call up the company handling the loan for Fannie Mae and tell them if they reject the short sale for no reason and the house is foreclosed, then you will be suing them for those specific damages you drew up in Step #2.

Here is the basis for a lawsuit. Fannie Mae is the owner of his loan. If the short sale offer is rejected, then the property will be foreclosed.

In most cases, foreclosed properties sell for 10-15% less than the short sale offer. I can show you countless examples of this happening.

The company handling his loan is not his “lender.” They were hired by Fannie Mae to collect payments and do what is in Fannie Mae’s best interest.

The basis for the lawsuit against this company is that they are not doing everything they can to help Fannie Mae net the most money from the property sale. As a result of them not doing their job, Arman may have a foreclosure on his record.

We all know that a foreclosure will be much more damaging to his credit history. He will have other damages as well. That may be the basis of his lawsuit.

When Arman get in front of a jury and shows how this company’s negligence caused Fannie Mae to lose $15,000 (what's projected they will lose) and that it hurts him as well, the jury may deam it fit to award damages.

In tomorrow’s blog post will details the specific damages one might be able to ask to be compensated for by the lender.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Ashish@CalCapHomes.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 818 259 3455.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Ashish Trivedi.
Ashish is a Real Estate Broker at California Capital.
Phone: 818 259 3455. Ashish@EastLionRE.com
Secure Your Future
View My homes for sale at http://www.eastlionre.com/.
Short Sale Realtor. Short Sales. Realtor.

Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Ashish Trivedi's personal views and do not reflect the views of California Capital. This information on Short Sales: Are homeowners able to sue their lender for damages after a foreclosure is provided as a courtesy to our viewers to help them make informed decisions.

Monday, November 22, 2010

Question from homeowner: I want to avoid foreclosure, but my lender won’t let me

The Stop Foreclosure Institute recently received a question from Arman. Here is his question.

I am a Seller trying to avoid foreclosure. My agent has a buyer and his offer is with the lender from last seven months. Now the lender told us that Fannie Mae investor refused the short sale offer and the house is going to foreclosure early next week.

Discover how other sellers successfully did a short sale to avoid foreclosure by clicking here.

The lender’s own appraisal shows the house is worth $120K. The offer we have is for $150K. I told the lender that it is unlikely they will receive and offer for 150k after the foreclosure. She replied and said, "We or some of our investors will buy it"!!!

I don't want a foreclose on my record. Is there anything I can do to stop the foreclosure? Thanks a lot for your help. Arman.

Arman gave me a bunch more details. I will relate them here and then tell you what I recommend that he do. He told me the loan is owned by Fannie Mae, and a third party lender is “servicing” the loan for them.

Here was my recommendation to him. I have negotiated lots of short sales. The only reason a lender should turn down a short sale is when their numbers (from an actuarial viewpoint) show that they will reduce their losses with a foreclosure.

That has always been the case on any short sale I have ever negotiated. (Or I should say most of them. Some have been rejected for other reasons, but they are almost always monetary reasons.)

Here is what I would do if I was you.

Step #1: Call up IBM and demand a written letter explaining why they are declining the short sale offer.

Step #2: Write down what you project your damages are going to be if the property is foreclosed upon instead of sold as a short sale.

Step #3: Call up the company handling the loan for Fannie Mae. (Remember, they are not your lender. They are paid by Fannie Mae to do their job in a competent manner.) Tell them if they reject the short sale for no reason and the house is foreclosed, then you will be suing them for those specific damages you drew up in Step #2.

I will go into more details about potential damages and the basis for a lawsuit in my next couple of blog posts.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Ashish@CalCapHomes.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 818 259 3455.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Ashish Trivedi.

Ashish is a Real Estate Broker at California Capital.
Phone: 818 259 3455. Ashish@CalCapHomes.com.

Secure Your Future
View My homes for sale at http://www.calcaphomes.com/.
Short Sale Realtor. Short Sales. Realtor.

Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Ashish Trivedi's personal views and do not reflect the views of California Capital. This information on Question from homeowner: I want to avoid foreclosure, but my lender won’t let me is provided as a courtesy to our viewers to help them make informed decisions.

Friday, November 19, 2010

Short Sales: High property taxes are forcing some people into foreclosure

- I just saw the second of two articles about homeowners losing their home or property because of high property taxes. Most of the stories were based in the Northeast, where the property taxes are much more expensive.

I one story, http://www.wbaltv.com/r/25677444/detail.html, a Maryland Woman is going on a hunger strike to bring attention to the situation.

The story makes it sound like high property taxes caused her mortgage payment to go up by 40%. That is a huge jump in property taxes. I have seen some people’s property taxes jump by $200 to $400 myself.

In another story, a lady in Connecticut lost some property next to her house after a drawn out tax dispute. Here is the link to the news report: http://www.youtube.com/watch?v=hFQzxY2Mlxo. The new owner of the land put up a chain blocking the driveway that she uses to access her property.

You would think that in a time of economic trouble, the cities and counties would be lowering our property taxes not raising them!

Most American’s income has gone down, not up. But, that doesn’t stop the cities and counties from raising property tax rates.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Ashish@CalCapHomes.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 818 259 3455.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Ashish Trivedi.

Ashish is a Real Estate Broker - Ashish Trivedi at California Capital.

Phone: 818 259 3455. Ashish@CalCapHomes.com.

Secure Your Future

View My homes for sale at http://www.calcaphomes.com/.
Short Sale Realtor. Short Sales. Realtor.

pyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Ashish Trivedi's personal views and do not reflect the views of California Capital. This information on Short Sales: High property taxes are forcing some people into foreclosure is provided as a courtesy to our viewers to help them make informed decisions.

Question from homeowner: My homeowner’s insurance won’t renew my policy because my loan is in foreclosure

The Stop Foreclosure Institute recently received a question from Tim. Here is Tim’s Question.

“I have an elderly friend who recently finalized a loan modification through her lender. The mortgage company shows on their website that the mod has been processed and the new terms are in effect.

However, since foreclosure proceedings were begun before the mod was approved, her homeowner’s insurance holder will not renew her coverage policy, since the local Clerk of Courts records show that the loan is in a foreclosure process.

The mortgage company has not sent the Clerk of Courts notice that the foreclosure case is closed. What can she do to avoid losing her insurance coverage?”

Discover how other sellers successfully did a short sale and request a free consultation by clicking here.

An elderly person almost loses their home to foreclosure and manages to save it at the last minute, only to find out her insurance company wants to kick her to the curb?

Give me a break! That’s pathetic. If I had my insurance with that company, I would fire them immediately!

Here is my suggestion. The first thing your friend should do is to contact the State Insurance Commissioner and the State Attorney General.

Insurance is highly regulated. There are things that insurance companies are allowed to charge more money for and things that they are not allowed to charge more.

I doubt that paying your mortgage late is one of them. More than likely, the insurance company is breaking the insurance regulations of the state.

(This is one of the things we use when negotiating short sales. We have studied to learn all the rules and guidelines. When a lender doesn’t follow a short sale guideline, we will report them to the appropriate agency.)

If that doesn’t work, then I would recommend your friend contact the local media. That is a dastardly thing for the insurance company to do. I’m sure that the general public would agree as well. I think the media would like the story.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Ashish@CalCapHomes.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 818 259 3455.
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Ashish Trivedi.

Ashish is a Real Estate Broker at California Capital.
Phone: 818 259 3455. Ashish@CalCapHomes.com.

Secure Your Future
View My homes for sale at http://www.calcaphomes.com/.
Short Sale Realtor. Short Sales. Realtor.

Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Ashish Trivedi's personal views and do not reflect the views of California Capital. This information on Short Sales:Question from homeowner: My homeowner’s insurance won’t renew my policy because my loan is in foreclosure is provided as a courtesy to our viewers to help them make informed decisions.

Question from homeowner: My lender just sold my loan. Is that a good thing?

- The Stop Foreclosure Institute recently received a question from James. “My loan was just sold. I was making payments to CitiFinancial and they sold it to Nationstar. Is that good or bad?” James asked.

Discover how other sellers successfully did a short sale and request a free consultation by clicking here.

Here is the answer. It’s neither good nor bad. In fact, I don’t think your loan was sold. You see, most loans were packaged up and sold to Fannie Mae, Freddie Mac, or Wall Street.

James’s loan was more than likely packaged up and sold off. I asked him who his original lender was. He said it was a company called First Magnus. (First Magnus declared bankruptcy in 2007 and was afterwards closed.)

The Stop Foreclosure Institute has negotiated short sales on loans that were originally with First Magnus. The last one was sold to a large Wall Street Firm and securitized.

That means James’s loan could be owned by anyone. More than likely it is owned by Fannie Mae or Freddie Mac. If not, then it was probably sold to a Wall Street Firm.

The owner of the loan hired CitiFinancial to act as their front man. That means Citi collected the payments, handled escrows and accounting, and manages debt collections and foreclosures.

More than likely Nationstar did not buy the loan. Instead whoever owns the loan hired them to act as the front man instead of Citi.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Ashish@CalCapHomes.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 818 259 3455.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Ashish Trivedi.

Ashish is a Real Estate Broker Ashish Trivedi at California Capital.
Phone: 818 259 3455. Ashish@CalCapHomes.com.

Secure Your Future
View My homes for sale at http://www.calcaphomes.com/.
Short Sale Realtor. Short Sales. Realtor.



Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Ashish Trivedi's personal views and do not reflect the views of California Capital. This information on Question from homeowner: My lender just sold my loan. Is that a good thing is provided as a courtesy to our viewers to help them make informed decisions.

Tuesday, November 16, 2010

Short Sales: I Thought It Would Work, But It Didn't!

- I'm sure you have heard about forensic loan audits. I've heard people say how wonderful they are. "Your lender will approve your short sale right away", claims one.

Discover how other sellers successfully did a short sale and request a free consultation by clicking here.

An agent told me a story about forensic loan audits. He worked with a woman who was trying to short sales 3 houses. He knew they were short sales and was glad to list them for sale.

There was a guy involved who was supposed to be doing all the "negotiating" with the lender. Little did this agent know this guy was trying to flip the houses. This guy had a forensic loan audit done.

He claims he paid foreclosure defense lawyers out of his own pocket. He did all this stuff in an attempt to force the lender to approve the short sale.

The only problem was the lender didn't care. The short sale negotiators at the lender were not going to approve the short sale offers so this guy could resell the home for a profit.

"We know this guy is trying to flip the house. We won't approve the short sale as long as he is doing that", they said.

This was despite the claims that some have made that a forensic loan audit will have lenders trip over themselves to approve the short sale.

Please consider this story before you spend $800 to $1,000 on a “Forensic Loan Audit.” I am in the business and talk to homeowners facing foreclosure every day.

I have only heard a few stories where a “forensic loan audit” made a difference to the lender. I’m not saying that they don’t work. I just want to warn you to check them out before spending big bucks for one.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Ashish@CalCapHomes.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 818 259 3455.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Ashish Trivedi.

Ashish is a Real Estate Ashish Trivedi at California Capital.
Phone: 818 259 3455. Ashish@CalCapHomes.com.
Secure Your Future
View My homes for sale at http://www.calcaphomes.com/.
Short Sale Realtor. Short Sales. Realtor.

Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Ashish Trivedi's personal views and do not reflect the views of California Capital. This information on Short Sales: I thought it would work, but it didn't is provided as a courtesy to our viewers to help them make informed decisions.

Monday, November 15, 2010

Short Sales: How to Know When The Short Sale Negotiator Is Lying To You

- Negotiating short sales is tough. In my opinion, some of the banks are not making good financial decisions. "We won't approve the file without the financials completely filled out," they say.


Or, they tell you the numbers won't work when the investor guidelines actually say to approve the short sale. If the agent doesn't know who owns the loan (or their short sale guidelines), then the bank negotiators can lie to them. They don't know any better. Let me give you an example.

Discover how other sellers successfully did a short sale and request a free consultation by clicking here.

The Stop Foreclosure Institute recently closed a short sale that where the owner of the loan was the Federal National Mortgage Association, also called Fannie Mae.

The bank's appraiser said the home was worth 220k. Because of prior experience with Fannie Mae Short Sales, I knew what they would accept as a percentage of the value. The short sale offer being presented would net them $6,000 more than that number.

The negotiator countered. She said the buyers needed to pay even more for the house. We asked the buyers if they would raise their offer.

They told us that it was their highest offer. They had looked at a bunch of other homes for sale. If their offer wasn't accepted they already had another home in mind that they would purchase.

Most agents don't know the guidelines for short sales. They would have taken the short sale negotiator at face value. As a result, the short sale would have been rejected.

The buyer would have bought the other house and the seller would be at risk of losing the home to foreclosure.

Fortunately, we knew the short sale guidelines. Because we knew the numbers and the guidelines, we were able to push the negotiator for an approval. The file was approved and the sale closed a little while later.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Ashish@CalCapHomes.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 818 259 3455.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Ashish Trivedi.
Ashish is a Real Estate Ashish Trivedi at California Capital.
Phone: 818 259 3455. Ashish@CalCapHomes.com.

Secure Your Future

View My homes for sale at http://www.calcaphomes.com/.

Short Sale Realtor. Short Sales. Realtor.

Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Ashish Trivedi's personal views and do not reflect the views of California Capital. This information on Short Sales: How to know when the short sale negotiator is lying to you is provided as a courtesy to our viewers to help them make informed decisions.

Friday, November 12, 2010

What To Do When They Won't Allow You To "Escalate" The Short Sale File

- Yesterday I gave you a good example of why you should "escalate" a short sale file. The Stop Foreclosure Institute took a short sale that wasn't going to be approved, pushed for an approval, and received it.

As a result a homeowner avoided foreclosure, a buyer was able to buy the home they wanted, the bank reduced their losses, and we made a little money.

There are a few problems you may run into when you attempt to escalate a file. Sometimes the negotiator won't give you their supervisor's info. They won't order a new appraisal or help you out.

Most people would be at a dead end. Here is how to get their supervisor's contact info.

Discover how other sellers successfully did a short sale and request a free consultation by clicking here.

Call the lender's short sale 800 number. Tell the person answering that you are working on a file with the short sale negotiator and you need to talk to their supervisor.

Say something like, "We've talked to the buyers. They will not raise their offer. We've had this house listed for 94 days and this is the best offer we have received. The buyers asked me to call and plead their case."

Most of the time, they will give you the supervisor's name and e-mail address. Always ask for the fax and phone number as well. Most of the time you won't get that, but sometimes you can.

Before we escalated a file, we were scared to do it. What if the negotiator got mad? This held us back, and honestly it hurt everyone

The reality is that the negotiators don't get mad at all. When we are at a logjam with a file, and we have a good case on why they should accept the offer, then we do the logical thing and escalate the file.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at Ashish@CalCapHomes.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 818 259 3455.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this, Ashish Trivedi.

Ashish is a Real Estate Ashish Trivedi at California Capital.

Phone: 818 259 3455. Ashish@CalCapHomes.com.

Secure Your Future
View My homes for sale at http://www.calcaphomes.com/.

Short Sale Realtor. Short Sales. Realtor.

Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Ashish Trivedi's personal views and do not reflect the views of California Capital. This information on Short Sales: What to do when they won't allow you to "escalate" the short sale file is provided as a courtesy to our viewers to help them make informed decisions.

Thursday, August 12, 2010

Borrowers Flunking Out of Loan Modification Programs

Attention delinquent borrowers: If you want to get into the Obama administration's mortgage modification program, you'd better have your paperwork ready
New Treasury Department guidelines go into effect on June 1 that will require loan servicers to verify applicants' income and financial hardship before placing them into trial modifications.

This will make it much tougher to get temporary relief from unaffordable mortgage payments. But if you make it into a trial modification, you're more likely to get long-term assistance, providing you send in your check on time.

"This will allow people to have more certainty that the modification they want will materialize," said Suzanne Boas, president of CredAbility, formerly the Consumer Credit Counseling Service of Greater Atlanta.

However, before getting too optimistic, of the 1.2 million people who've started trial modifications, fewer than 300,000 have received permanent assistance. Another 278,000 have washed out of the program either because they didn't send in timely payments, hand in the required documents or meet the eligibility criteria.

Paperwork has caused all sorts of problems for the president's signature foreclosure rescue program- “HOPE Loan Modification”. In order to get the effort off the ground quickly, administration officials allowed servicers to place people in trial modifications before verifying that they were indeed eligible for the program.

Originally intended to last three months, the trial period was meant to give troubled borrowers a chance to prove they could make the modified payments and qualify for a so-called permanent modification, which lasts five years.

Instead, many homeowners have been stuck in trial modifications for months and months while they wrestle with servicers over the documentation requirements. The financial institutions say that borrowers aren't sending in the needed forms; homeowners contend the servicers are losing them.

Source: NEW YORK (CNNMoney.com)

Wednesday, July 14, 2010

Global Interest in U.S. Homeownership Gains


International home buyers are increasingly attracted to property in the U.S., according to the National Association of REALTORS®’ 2010 Profile of International Home Buying Activity. Several factors, including the foreign trade currency rate of the dollar, the value and desirability of U.S. real estate, and the emerging economic recovery, continue to drive international interest in owning a home.
A survey which covered the period between April 1, 2009, and March 31, 2010, revealed that during that time foreign buyers, including those with residency outside the U.S. as well as recent immigrants and temporary visa holders, are estimated to have purchased $66 billion of U.S. residential property, or 7 percent of the residential market.

International buyers came from 53 different countries around the world. The top four countries were Canada, Mexico, the U.K. and China/Hong Kong. With 23 percent of international buyers coming from Canada, the country has remained the largest buying group in the past three years. Foreign buyers from Mexico have been steadily increasing. In 2010 Mexico replaced the U.K. as the second largest buying group with 10 percent of buyers. Buyers from the U.K. buyers decreased from 10.5 percent in 2009 to nine percent in 2010. Eight percent of recent buyers came from China/Hong Kong.

Two factors important to international clients when purchasing property in the U.S. are proximity to their home country and the convenience of air transportation. Florida typically attracts European, Canadian and South American buyers while the East Coast draws Europeans. The West Coast brings Asian buyers and the Southwest attracts Mexicans.

International buyers were reported in 39 states in 2010, but a slight majority of the total buyers are concentrated in Florida, California, Arizona and Texas. These four states account for 53 percent of purchases and have remained the top destinations for the past three years, with Florida and California remaining the top two destinations.

The median price paid by international buyers for a home in the U.S. was $219,400, a decrease from 2009’s median price of $247,100. However, the median price paid by foreign buyers was significantly higher than the overall median market price, which was $172,500 in 2009. On average, foreign buyers tend to purchase closer to the upper end of the market; 16 percent of the total international purchases were for homes priced at more than $500,000. According to REALTORS®, this was because international buyers are typically looking for a second home.

A majority of international buyers, 66 percent, purchased single-family detached homes. However, more international buyers purchased a condo than did their U.S. counterparts, at 23 percent and 7 percent, respectively. Only 44 percent of international buyers used a mortgage to pay for their home, compared to 92 percent of domestic buyers. Fifty-five percent of foreign buyers paid all cash. REALTORS® reported that a majority of international buyers use all cash because of the difficulty in establishing international credit in the U.S. Over one-third, 34 percent, of potential foreign buyers was unable to complete transactions because of financing problems in the U.S.

NAR President Vicki Cox Golder,says “The U.S. continues to be a top destination for international buyers from all over the world. Foreign buyers understand the value of owning a home in this country and can rely on REALTORS® to help guide them through the complex process of buying property in the U.S. With expertise, knowledge and experience, REALTORS® have a global perspective.”

Source: NAR

Number of the Week: 103 Months to Clear Housing Inventory


103: That’s the number of months it would take to sell off all the foreclosed homes in banks’ possession, plus all the homes likely to end up there over the next couple years, at the current rate of sales.
How much should we worry about a new leg down in the housing market? If the number of foreclosed homes piling up at banks is any indication, there’s ample reason for concern.

As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.

Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices — and thus boost their losses.

The government is understandably worried about the situation, and its Home Affordable Modification Program has made an impact by helping people stay in their homes and avoid foreclosure. As people who enter the program catch up on their payments, the number of homeowners 60 or more days delinquent has fallen 9% over the past two months.

Now, though, the effect of modifications could be on the wane. According to Goldman Sachs, HAMP started less than 80,000 trial modifications in March, less than half the number in the peak month of October 2009. At the same time, a growing number of modifications are being canceled as borrowers prove unable to pay. By Goldman’s count, about 68,000 were canceled in March.

All this means that little can stop banks’ inventory of distressed homes from growing. Too many people owe too much more on their homes than they can afford. For the housing market, that could mean a long-lasting hangover.
 

Monday, June 7, 2010

Mortgage Delinquencies Hit 10%

The delinquency rate hit a record of 10.06% in the first quarter of 2010, according to the Mortgage Bankers Association. The seasonally adjusted rate accounts for all mortgages on properties that have up to four units and that are at least one payment behind.

Housing market diagnosis: Bipolar

The foreclosure inventory rate, which represents the percentage of mortgaged homes repossessed by lenders, was fairly flat quarter-over-quarter, inching up to 4.63% from 4.58%. But it jumped a lot from 12 months earlier, when the rate stood at 3.85%.

Nearly all varieties of loans suffered increased delinquencies compared with 12 months earlier. Prime fixed-rate loans hit 6.17%; prime adjustable-rate mortgages (ARMs) tipped 13.52%. Subprime fixed-rates jumped to 25.69%; and subprime ARMs are a whopping 29.09%.

The one bright spot was that delinquencies for FHA loans, the mortgages guaranteed by the Federal Housing Authority, dropped slightly to 13.15%, which is likely due to tighter FHA underwriting standards, which it adjusted after loans issued in 2007 and 2008 started souring.

Most of the overall rate increases are attributable to the seriously delinquent loans which are 90 days or more late, are going all the way through to foreclosure, but are not being foreclosed, keeping people in the system longer.

In the pre-housing-bust world, many borrowers would have already lost their homes and their delinquencies would no longer be counted in the survey.

Shift in problem-loan types

Lenders have slowed repossessions from foreclosing for various reasons: They may not have enough staff yet to handle the volume; the foreclosure prevention initiatives, such as the Home Affordable Modification Program, is postponing many foreclosures; and the banks themselves are trying to prevent defaults by approving more short sales.
The biggest fundamental change in the nature of the loans causing the most default problems could be the high unemployment rate, and driven by driven by the recession than by any one loan type now.

Some of the prime loan defaults stem from an increase in people deliberately "walking away" from mortgages. These are homeowners who can pay their loans but choose not to because their homes have dropped so much in value. This is also known as Strategic Defaulters.

According to a recent report, as much as 31% of all defaults in March were strategic, and many of these "strategic defaulters" may be underestimating the impact of walking away. It may take them much longer to repair their credit histories than they realize as lenders assess more than their credit ratings to determine whether to finance future home purchases. However, they may be able to repair their credit scores, and remaining “cash-heavy” will improve their ability to buy a home in the future

Source: CNNMoney.com- By Les Christie, staff writer May 20, 2010: 1:22 PM ET

Tuesday, May 4, 2010

Strategic Mortgage Abandon

31% of foreclosures appear to be strategic, even though homeowners can pay the mortgage, sometimes they choose to leave the house and rent another house for fewer prices than staying and continue making payments.

More than 11 Million homeowners agree that is a better value for them to abandon their houses and rent another one and that’s one quarter of all borrowers, this borrowers have in common that they were underwater on their mortgages by the end of 2009.

Also these strategic defaulters seem to have a better credit score than those who stayed paying their underwater mortgage.

Other borrowers that are up to date with their payments also walk away on their mortgage after seeing bank policies and government programs that gives them little assistance. Studies had discover than a big part of the strategic default is when the up to day payers walk away from their mortgage when they find out that other borrowers who have negative equity receive a partial loan for forgiveness.

However, the majority of  foreclosures are not stratigic, and the Florida Association of Realtors started an analysis that cross referenced three years of foreclosures with demographic data. The idea is to find out what kind of people is falling into foreclosure, ignoring speculators and investors, just considering people that bought the house to live in.

This is what they found:
           1. Income > $100,000 =20%
           2. 8% School graduated
           3. 15% College degrees
           4. 92% Married
           5. 65% Had children
           6. 35% is the percentage of people that lived more than 10 years in their house.
A large part of them is people that lose their job and cannot afford payments.

 
Source:  By David Garay, May 3, 2010 8:00 AM ET

More Single Buyers Opt for Suburbs



More singles are buying homes in suburbia, reports in independent report by a popular real estate franchinse which conducted a nationwide survey of single home owners on the factors that motivated them to buy.

Here are some figures that reflect the reasoning behind their choices:
• 52 percent chose the suburbs over urban or rural areas.
• 53 percent of single home owners said they purchased a home because it was a better deal than renting.
• 68 percent chose a home priced lower than they could afford.
• Of the 13 percent who own their home jointly with another person, 49 percent made the purchase with their parents.
• 55 percent have less than a 30-minute commute to work.
• 40 percent live within 30 minutes of their parents or extended family.
• 27 percent of women thought the number of bedrooms were important, while only 18 percent of men felt the same way.
• 38 percent of men would consider buying a foreclosure, while only 29 percent of women would consider one.

Eight-seven percent of first-time home buyers changed their lifestyles because of unexpected expenditures related to buying a home, according to a new survey by BBVA Compass, the nation’s 15th largest commercial bank.

• 51 percent said that the monthly expense of owning a home was more than they calculated.
• 70 percent said that the unexpected expenditures leveled out over time.
• 33 percent said they paid for these unexpected expenditures with a mixture of cash and credit.
• 92 percent say having additional time before their first payment due date would have been helpful

Source: NAR - Realtor News

Single-Women Home Buyers: A Growing Segment

In the summer of 2009, NAR Research surveyed recent home buyers about their experience with the home search process, and the use of real estate professionals in purchasing a home. The results of the survey were published in the 2009 NAR Profile of Home Buyers and Sellers.

 
Results of that survey show that a significant share of home buyers are single women. Indeed, the percentage of single-women buyers has increased from 14 percent in 1995 to 21 percent in 2009. These home purchasers account for the second largest share of adult households who purchase homes. Single females make up one-quarter of the first-time buyer population and 17 percent of the repeat buyer population. We look at some results below from the most recent Profile to get a better description of who single women buyers are.

Single Female Home Buyers
The median age of all home buyers was 39 years old, compared to 41 for single female buyers. Among single-female buyers, 58 percent were first-time home buyers in 2009, compared to 47 percent of all home buyers. The median household income for single-women home buyers was lower than that of all other homebuyer household types. Single females reported a median household income of $47,900 in 2008 compared to $73,100 among all home buying households. This difference in household income should not be completely surprising as 68 percent of home buying households are couples – and so perhaps likely to have two income earners. The difference in median income for single women households compared to those for single men is less striking—single men typically made $53,700 in 2008. Additionally, single women households are less likely to have children living at home than couples. Results from the survey show that 22 percent of single women home buyers have children at home, while 38 percent of all home buyers have children at home.

What They Buy
While the majority of single female buyers purchase a single-family home, single female households are more likely than other household types to purchase an apartment/condominium or a townhouse/rowhouse. One in four single female buyers purchase a house in an urban area/central city, which is a higher percentage compared to all other household compositions except single males. Still, the majority of single female home buyers purchase a home in the suburbs, similar to all buyers. Single female buyers are more likely to purchase an existing home than are other buyers. This makes the role of a real estate professional even more important to single female buyers. Only 14 percent of single female buyers purchased a new home compared to 18 percent of all buyers. Single female buyers also tend to purchase smaller homes, typically buying homes that are 1,480 square feet in size compared to the median size of 1,800 square feet purchased among all buyers. Once single females found the home they purchased, they expect to live there for 10 years.

Why They Buy
More than one-third of all home buyers buy a home for the desire to own. This has been the most cited reason consistently for the last several years, but it is even more true of single female buyers. Nearly half of single female buyers purchase a home because they have a desire to own a home. The second most cited reason for single female buyers in choosing to purchase a home is a change in family situation—13 percent of single female buyers purchase for this reason, compared to 9 percent of all buyers.

In comparison to other household types, single female buyers are more likely to have lived with parents, relatives or friends before buying their own residence, 20 percent compared to 12 percent of all buyers. Single female buyers are also more likely to rent an apartment or house before buying their own place compared to all buyers. Both previous living situations are related to the large share of single female buyers being first-time buyers.

Real Estate Professionals and the Home Search
When single female buyers first start to look for a home they contacted a real estate agent, contacted a mortgage broker or talked with a friend or relative more frequently than did other buyers. While 87 percent of single females use the Internet in their home search, a slightly larger percentage – 89 percent -- use a real estate agent. Real estate agents are a trusted resource that single female buyers turn to during their home search. A larger share of single female home buyers first find the home they purchased from their agent compared to all buyers – 40 percent vs. 36 percent, respectively. Underscoring the importance of the real estate agent to single women buyers is the fact that a higher share of single females purchased their home through a real estate agent than through any other source: 79 percent compared to 77 percent of all buyers.

Single women buyers, like all other buyers, most want their agent to help them find the right home to purchase, but they place more importance than other buyers on their agent helping them negotiate the terms of sale. Similar to all buyers, single women place a high importance on honesty and integrity in their agent and knowledge of the purchase process.

Home Financing
Single female buyers are similar to all buyers when it comes to financing their home purchase. However, there are some differences. Similar to all buyers, about nine in ten finance their home purchase through a mortgage, and the majority use savings as the source of their down payment. A higher share of single female buyers receive a gift from a friend or relative as a down payment source compared to other buyers, and a smaller share use proceeds from the sale of their primary residence.

Despite record high housing affordability conditions, buyers are still making sacrifices to purchase homes and this is also the case for female home buyers. Single females are more likely than other buyers to have cut spending on luxury items, entertainment, and clothes in order to be able to purchase a home. Nearly nine in ten single females believe their home was a good financial investment.

 
Source: By Jessica Lautz, Research Economist - NAR

Friday, April 16, 2010

CALIFORNIA'S TAX CREDIT MONIES MAY GO FAST

The $100 million allocated for California's first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.'s Economics team. California's Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.

C.A.R.'s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.

Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its WEBSITE when the 2010 application form and other information become available.

REALTORS® are reminded not to give their clients any tax or legal advice, such as the availability of funds under the California tax credit program. Agents should encourage their clients to seek specific advice from an accountant, attorney, or other professional as they deem appropriate.

For more information, please refer to C.A.R.'s Homebuyer Tax Credit Chart 2010.

Wednesday, March 31, 2010

How Californians Can Get $18,000 In Housing Tax Credit

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.


Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.

Click below for more information, C.A.R. offers a Homebuyer Tax Credit Chart with a side-by-side summary of the federal and California law

http://www.federalhousingtaxcredit.com/ 
http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml 

Sunday, February 7, 2010

Top 10 Home Features New Buyers Want

Here is a quick list of the top 10 homes features buyers look for when walking scoping out a new home!


1. Large Kitchens, With an Island
Granite countertops are a must for move-up buyers and buyers of custom homes, as this area becomes the new-grounds for entertaining and spending time with family.


2. Energy-Efficient Appliances, High-Efficiency Insulation and High Window Efficiency
Among the "green" features touted in homes, these are the ones buyers value most, he said.

3. Home Office/Study
People would much rather have an extra room utilized for this space rather than, say, a formal dining room.

4. Main-Floor Master Suite
Gaining quickly in popularity for 2-story homes, this is a must feature for empty-nesters and certain other buyers who expect to have an “extended-family” situation.

5. Outdoor Living Room
The popularity of outdoor spaces continues to grow, and is even more popular than an outdoor cooking area, meaning people are willing to spend more time outside.

6. Ceiling Fans
Buyers look for upgraded high quality ceilings fans, as they try and save costs on air-conditioning and electricity.

7. Master Suite Soaker Tubs
Whirlpools are still desirable for many home buyers, but if the spa-tub is not in the budget, and oversize shower with seating areas are also moving up in popularity.

8. Stone and Brick Exteriors
Get rid of the stucco and vinyl don't make the cut. However, keep in mind, “hardscaping” can be one of the most expense upgrades. To save costs focus on a section of the exterior, rather than the complete remodel.

9. Community Landscaping, With Walking Paths and Playgrounds
The golf courses, swimming pools and clubhouses are great amenities for the neighborhood, but Buyers in large planned developments prefer walking trails and lush greenery.

10. Two-Car Garages A MUST
First time buyers want this space, and recognize the value of storage and inside-parking after years of apartment style living. Direct access has greater appeal. Move up buyers will prefer to the three-car garages, in which the third bay is more often used for additional storage and not automobiles.

4 Demographic Trends That Will Affect Housing In New Decade

The Urban Land Institute cites four major U.S. demographic trends that will have a major impact on housing as we enter into 2010 and begin a new decade.

1. Aging baby boomers (ages 55 to 64 years old):
They will keep working, and many will be forced to stay in their suburban homes until values recover. Those who are able to move will choose mixed-age living environments that cater to active lifestyles. Walkable suburban town centers also will appeal to this group.
Younger baby boomers (46 to 54 years old):
They are now entering their prime earning years but they will lack home equity and unlike the older members of their generation, they won’t be able to purchase second homes. This will likely curb the prospects for the second-home market.

2. Gen X (age 30-45):
Fueling the first-time buyer and move-up market, Gen Xers love social spaces. Most are willing to give up square footage for location. This generation has also waited longer to have children, and once they do have a family, the emphasis is being on “super-parent.” A neighborhood’s walkability is huge for Gen Xers, as is community, outdoor space, sustainable elements, and kids’ spaces.
3. Generation Y:
They are larger than the baby boom generation (with a population of about 86 million). As they enter the housing market, they are less interested in homeownership than their parents were when they were young adults. “They will be renters by necessity or choice for years ahead,” says John K. McIlwain, author of the report.

4. Immigrants
Both legal and illegal: They are nearly 40 million strong. They often prefer multi-generational households and if they can afford them, larger homes in neighborhoods with a strong sense of community.



Source: The Urban Land Institute (01/27/2010)

FHA Contributing To New Wave of Foreclosures?

For the past year, The FHA tried to prop up the housing market by backing home loans the most banking institutions would not lend too, but it might have caused more foreclosures in the process.

The FHA has helped people get loans who otherwise would not qualify as credit markets have dried up. But at the same time, the FHA has insured loans for people who couldn't afford them and has artificially propped up the housing market.

However, now, FHA's is joining the bad-loans club, as 9% of FHA borrowers have missed at least three payments (up from 6.5% a year ago), and experts say that means a new wave of home foreclosures is coming, according to The Washington Post.

The problem lies in the low down payment program offered by FHA for there borrowers, asking as little as a 3.5% down payment for a home purchase (lenders like JPMorgan Chase, for example, turned their nose at anything less than 20%).  Additonally, FHA allowed sellers to pay for some of the down payment as well, meaning buyers had no "skin in the game,".  Hence leaving FHA borrowers an easy exit and allowing them to walk away from the debt.

Bottom line? In its efforts to keep the housing market going, the FHA might have inadvertently caused a new crush of foreclosures.

The FHA is not a lender, but it insures lenders when mortgages go sour. And it's had to pay out so much that its cash reserves are dangerously low -- far lower than the mandated minimum.

Things have become so bad that the FHA is expecting to pay out on one out of every four loans made in 2007, the Post reports. That's the worst rate in decades.


Source: Washington Post  and NAR news
Kim Peterson on Tuesday, February 2, 2010 12:14 PM

January Real Estate Recap!

Here are some of the headlines that made real estate news in January 2010 -

Housing Gets Little Mention in Obama Speech
Some listeners criticized President Obama for failing to pay more attention to the housing crisis in Wednesday night’s State of the Union message. Obama promised to “step up refinancing so that home owners can move into more affordable mortgages,” but he didn’t offer any details. There was no mention at all of addressing falling home values, restoring the mortgage-backed securities markets or shoring up FHA, critics said. Nor did he mention expiring housing tax credits.

Existing-Home Sales Down, but Prices Rise
Sales of existing homes fell from November to December due to the rush to meet the tax-credit deadline. However, annual sales improved in 2009. Read more from NAR's latest housing report.

FHA 90-Day Anti-Flipping Rule Waived
The Dept. of Housing and Urban Development (HUD) announced recently that it will eliminate for one year the Federal Housing Administration (FHA) 90-day anti-flipping rule.

Report: Record Year for Foreclosures Predicted
The highest 2009 foreclosure rates were in Las Vegas, followed by Florida and California, according to the RealtyTrac report. Analysts predict another 3 million foreclosures nationwide in 2010.

White House Lost Value in 2009
Even the home of America's First Family isn't immune to the economic downturn. The price of the property has decreased 5.1 percent, according to the online housing site Zillow.

Big Test Ahead for Mortgage Market
When the Federal Reserve stops buying mortgage backs in a couple of months, buyers, sellers, and owners will soon find out if the market has legs or not.

Timeshare Industry Hit Hard by Recession
Experts predict that sales will remain flat in 2010 for the timeshare industry.

China Slaps Buyers With Hefty Downpayment
The Chinese government wants to put a cap on the country's rising real estate prices so it's now requiring buyers of second homes to put down 40 percent of the purchase price.

Mortgage Cancellation Relief Still in Effect
In recent weeks, calls to NAR have shown some confusion as to whether the tax relief for cancellation of mortgage debt rules remain in effect. The short answer: YES – Through Dec 31, 2012

Foreign Buyers Taking Advantage of Slashed Prices
International investors bought 154,000 homes and condos in the 12-month period ending in May, and are continuing to take advantage of the weak dollar.

Monday, January 25, 2010

Re-Election of Federal Chairman Ben Bernanke



This week the Senate will vote on the re-election of Fed Chairman Ben Bernanke, and will most likely be confirmed to a second term, as the Chairman will need 60 Senate votes to break a procedural delay, and 51 to be confirmed.

More importantly, the Chairman’s reelection is needed to help continue our current mortgage and housing recovery, with two major issues at hand, which will be addressed in this week’s meeting.

The first issue is the Fed's line that has appeared within all Policy Statements during 2009, saying that present economic conditions should "warrant exceptionally low levels of the Federal Funds Rate for an extended period." This has helped to fuel the carry trade, where institutions can buy securities including Mortgage Bonds by borrowing at exceptionally low rates, with little money down to make the purchase, and financing the rest. This allows for enormous gains, but should the Fed signal that they may be thinking about a change to their accommodative policy, this carry trade will begin to unwind and Mortgage Bonds will sell off causing home interest rates to increase.

The second issue deals with the upcoming expiration of the Mortgage Backed Security purchase program. The Fed has been telling us, and signaling to the markets, that this program will end as planned on March 31st. But there has been speculation that the Fed may add to their purchases and extend the deadline. With the expiration close by, the Fed's guidance on this topic will be very important to the direction of Mortgage Bond prices.

Sunday, January 10, 2010

A Decade of Dramatic Developments

At the beginning of the 21st century, most home buyers had never viewed a home online; the three top home sale marketing methods were yard signs, newspaper ads, and open houses; and nearly nine out of 10 buyers financed their purchase with a fixed-rate, 30-year mortgage.



What a difference a decade makes

“The real estate industry has seen tremendous change and evolution over the past decade,” said NATIONAL ASSOCIATION OF REALTORS® President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “As the first, best source for real estate information, REALTORS® have not only anticipated and adapted to the evolving needs of their clients and customers, but also have influenced industry trends and innovations that will carry us into the future.”

In 1999, buyers who went online in search for a home were in the minority – only 37 percent of buyers used the Internet in their home search, according to data from the NAR Profile of Home Buyers and Sellers. Today, 90 percent of buyers are searching online, and the real estate industry has responded. Sites like REALTOR.com, which attracts nearly 12 million total visits every month, have evolved to gives today’s buyers what they want – not just property listings, but multiple photos, online videos, mapping features, and comprehensive neighborhood information, as well.

Median home values over the past decade have increased more than 25 percent, from $137,600 in November 1999 to $172,600 in November 2009 (the most recent existing-home data available). Fewer people are buying detached, single family homes – 82 percent in 1999 compared to 78 percent in 2009 – but more people are buying homes in suburban neighborhoods – 46 percent in 1999 compared to 54 percent today.

Buyers themselves have also changed. A smaller proportion of married couples are buying homes these days; while married couples comprised 68 percent of all home purchases at the beginning of this century, they represent 60 percent of all buyers today. Single men and women have made up the difference – single men purchased 10 percent of all homes last year, compared to only 7 percent 10 years ago. Single women now represent more than one-fifth of all home buyers – 21 percent, up from 15 percent in 1999.

Other things haven’t changed. The median age for home buyers last year was 39, just as it was in 1999. Neighborhood quality, affordability, and convenience to work and school have consistently been top priorities for both past and present buyers. And eight out of 10 recently surveyed consumers believe that owning a home is an investment in their future.

“REALTORS® have been around for more than 100 years, but one constant during that time has been the persistence of homeownership as the American Dream,” said Golder. “As the first decade of this century comes to a close, NAR stands ready to meet the many challenges and opportunities that lie ahead by helping our REALTORS® members better serve their clients and communities and ensuring that those dreams of homeownership remain possible for all who want to achieve it.”

Source: National Association of Realtors

10 Strategies For Significant Savings For 2010

1) Pick a friendlier credit card
“Being on the wrong card can cost people thousands more a year in interest rates and fees,” says Schwark Satyavolu, a co-founder of comparison tool BillShrink.com. “Even if you pay off the balance in full each month, you could be leaving hundreds of dollars on the table in rewards.” Terms and conditions are changing rapidly as banks add fees and jack up interest rates in preparation for the new federal regulations that go into effect on Feb. 22. After that date, compare your options using a site like BillShrink.com or CardRatings.com to make sure you have the best card for your financial situation and spending habits.

2) Track your cash
Shoppers can’t account for an average $21 spent each week, according to a September survey by Visa (V). Tallied up, that’s $1,092 per year in mystery purchases. Sign up for a free financial management site like Mint.com or Wesabe.com, which sync with your bank accounts to automatically sort and track purchases. You can also set budgets for individual categories, and receive email or text alerts when your spending nears that pre-set limit.

3) Join loyalty clubs
Retailers offer benefits in loyalty programs, knowing that most customers are apt to forget their cards or otherwise miss out on perks, says Larry Chiagouris, a marketing professor at Pace University in New York City. Don’t make that mistake: Keep cards in your wallet or on a key-ring, or add the account numbers to your smartphone. Loyalty programs can cover varied purchases, including books, movie theater excursions, restaurant meals and even flu shots.

4) Hunt for coupon codes
The marketing strategy of offering coupon codes to cement customer loyalty is increasingly popular with retailers. Take advantage. Step 1: Type a retailer’s name and “code” into Google. Step 2: Use the results to save significantly on your in-store and online purchases.

5) Shop the grocery sales circular
Though many products on circulars only come up on sale once every 10 to 12 weeks, by shopping smart, you can still cut your bill by more than 50% with a combination of coupons, weekly grocery store sales and store rebates. “They’ll practically pay you to take that bag of potato chips out of the store,” says Cindy Chapman, a spokeswoman for social networking site MomsLikeMe.com.

6) Pay cash
Buy-now-pay-later of credit cards sound friendly, but are designed to entice you to spend more. A 2008 study by researchers at the University of Toronto and the Federal Reserve Bank of Kansas City found that the opportunity to earn rewards led more consumers to pay by credit, even if they were already carrying a balance. Instead, flash bills. It will keep you in check and might also lead to discounts on everything from health care to jewelry to gasoline.

7) Reassess your phone plan
Carriers constantly offer new plans and promotions -- which may mean a better deal than your current selection. Use tools at LetsTalk.com and BillShrink.com to compare available options against your current plan. Infrequent talkers (fewer than 200 minutes a month) may save more in the long run by paying an early-termination fee and switching to prepaid service.

8) Cut spending on pets
The fuzziest members of your family need to adhere to the household budget, too. In 2008, pet owners spent an average $670 per dog and $447 per cat on vet care, food, grooming, treats and toys, according to the American Pet Products Association. Pay less by shopping around. Petco offers its signature plush dog toy for $5.97, while Wal-Mart has a three-pack of a similar toy for $7 -- roughly $2.33 apiece.

9) Haggle
“When times get tough, consumers have to get aggressive,” says Scott Testa, an assistant professor of business administration at Cabrini College in Radnor, Pa. “On a high-priced item, you’re crazy if you don’t haggle.” It doesn’t take a hard-line negotiation in most cases, either – you just have to ask if there’s any chance for a better price, he says. For example, 68% of landlords said they would lower rents or give a month or more free to retain tenants, according to a recent Rent.com survey. Collective buying groups like Groupon.com serve as haggling on training wheels, offering prenegotiated discounts if a certain number of shoppers buy in.

10) Seal up your home
Don't let the air you're paying to warm in the winter and cool in the summer escape through cracks around windows, doors, electrical outlets and other places. Enough sealing products like caulk and weather-stripping to block drafts would set you back just $25 to $50. In return, you’ll see your home’s energy efficiency improve by up to 20%, according to the Environmental Protection Agency. For the average household, that could amount to more than $400 annually.

Trouble for Commerial Loans in 2010

Banks holding commercial real estate loans will feel more pain in 2010, with real estate values having plunged.

 Industry observers say a majority of loans due through 2014 may be underwater, meaning more banks will be forced to restructure loans to avoid costly foreclosures. U.S. banks had a historic $1.3 trillion of commercial mortgages outstanding as of Sept. 30, with about $60.5 billion of them delinquent.

Approximately $650 billion in banks' boom-time CRE loans are coming due over the next four years, with more than $150 billion maturing in 2010. "Everyone's view is pretty much consistent on this: there are significant numbers of commercial mortgage loans that are underwater because real estate property values have dropped significantly," says Robert Gordon, a partner at the law firm Mayer Brown LLP. "Even for loans that are performing on a cash-flow basis, when they hit maturity, it is going to be difficult to refinance them without additional equity."

However, some industry watchers say concerns of a credit meltdown may be overblown. "Everything is dependent on the economy and how quickly do we see a recovery taking place," says Keith Leggett, the senior economist at the American Bankers Association. "That will be a key factor affecting the commercial real estate market. Because [when] you have high levels of unemployment, you're probably also going to see higher vacancy rates. This is going to put pressure on rents.

"Source: American Banker, Matthew Monks (12/29/09)
REALTOR® Magazine-Daily News-Trouble for Commerial Loans in 2010 

New RESPA Laws Go Into Effect - Mortgage Disclosure Improvement Act

On July 30th, 2009 the Mortgage Disclosure Improvement Act was passed into law in order to provide a greater level of protection and disclosure for potential mortgage borrowers. This act has been implemented in stages, with the final sections taking effect on January, 1st 2010.

How will this affect you as a home buyer besides meaning you have even more paperwork to sign at closing? Well the answer is mainly it can change the entire time line of the closing. One of the main changes is that when a lender has to make changes to the terms of the loan such as rate, or closing costs, etc they have to reissue the good faith estimate (GFE) and the buyer must take 3 business days to review the new GFE. So if for some reason there was a change at the closing table, the closing would be automatically pushed back 3 days. You can see how this could potentially cause big problems at closing.

The main point to remember for Buyers as well as Agents is the 3/7/3 rule
1. "You are not required to complete this agreement merely because you have received thse disclosures or signed a loan application" Must be stated clearly on the Truth In Lending (TIL)

2. The buyer must wait 7 business days after receiving the initial disclosures to close on the loan. So the buyer must receive the GFE and the TIL which must disclose the final Annual Percentage Rate (APR) at least 7 days prior to closing.

3. Lenders can collect no fee's other than the credit report fee (loan App fee's, Appraisals, ETC) until the TIL has been delivered, and if it has been delivered by mail, they must wait 3 business days to do so.

4. If the final APR deviates from the initial GFE by more than .125% the TIL must be re-disclosed and the 3 business day waiting period starts over.

These new regulations make it more important than ever that you have a Realtor who is a full time professional agent who is able to understand and guide you through the entire home buying process. If you can find one who also used to be a very successful loan officer that would be even better (hint, hint). Having the right agent can mean the difference between moving into your new home or having all your furniture stuck in the back of a moving truck for 3 days in the hotel parking lot.

Straight from HUD
HUD Government News Release

Loan Modifications Hit Credit Scores

Applying for a mortgage modification and being in a months-long trial period can devastate a home owner’s credit score.

Under the government plan, troubled borrowers can have their mortgage payments reduced to 31 percent of their pre-tax income. They are first put in a trial modification for several months to test whether they can meet the requirements of the new mortgage.

Borrowers who were previously current on their mortgages will see their FICO scores fall about 100 points while they are in the trial period, according to the Treasury Department. Borrowers who were previously late or missed payments will see their scores fall more, the government says.

The longer a borrower is in the trial period, the greater the impact on their credit scores, Once the modification is approved, the borrowers’ mortgage credit status will be listed as current and that should improve their scores, the Mortgage Bankers Association explains.

Even so, the delinquency remains on credit reports for up to seven years and can make getting credit for something else like a car difficult and expensive, borrowers report.

Source: CNNMoney.com, Tami Luhby (12/28/2009)

U.S. home prices are flat, with Bay Area Showing Most Improvement

Prices overall see a tiny gain in October, a closely watched report says.
  • San Francisco rises 1.7%,
  • L.A. is up 0.7%.
  • Tampa, Fla., has the worst showing.
  • Las Vegas is still on the losing side.
San Francisco and Tampa, Fla., sit at opposite corners of the country and at opposite ends of the housing recovery.

As home prices are picking up nationally, the San Francisco Bay Area has shown improvement for seven consecutive months and posted the strongest gains in home prices in October out of 20 metropolitan regions, according to the Standard & Poor's/Case-Shiller index, a closely watched national measure of home prices, which was released Tuesday.


A moderate building pace and less aggressive lending during the boom years have helped the Bay Area gain ground, experts said, and some developers are buying up land and preparing building plans there.

At the other end of the spectrum lies Tampa, where home prices in October showed the steepest drop. The decline reflects a metropolitan area ravaged by the fallout of overbuilding and an economy that was heavily reliant on the building industry.

The stark differences between the two areas reflect the progression of the housing recovery: Clear winners and losers are emerging, even as concerns are growing that all regions could stumble anew next year as government support expires and foreclosures put pressure on prices.

The index of home prices in 20 metropolitan areas inched up 0.4% in October, but the relatively flat performance indicated that the housing recovery is faced with a chilly winter slowdown. Eleven cities posted gains on a month-over-month basis, eight cities recorded declines, and one was unchanged.

All 20 cities continued to show improvement on a year-over-year basis, with annual price declines moderating. The index was down 7.3% in October compared with October 2008 and was off 29% from its July 2006 peak.

San Francisco posted the strongest October price increase: 1.7%. UC Berkeley economist Kenneth Rosen said the Bay Area numbers have improved as bank-owned properties have increasingly made up a smaller percentage of housing stock for sale.

"We had a lower percentage of foreclosures," Rosen said. "We didn't have as much building, first of all, and we didn't have as much of the aggressive lending."

Unemployment in the Bay Area remains high, with San Francisco's jobless rate hitting 9.7% in November, but the dearth of housing stock has helped prices regain momentum, said Richard Gollis, principal at real estate consulting firm Concord Group.

As a result, developers are buying land for future opportunities, Gollis said."You are starting to see developer and capital-market interest in the Bay Area," he said.

Home prices in the Southland, which sustained one of the nation's biggest declines, have also risen, propelled by buyers eager to snatch up deals on deeply discounted foreclosure properties. Los Angeles was up 0.7% and San Diego, 1.1%.

"You might have thought that California would be one of the worst-performing states," said Robert J. Shiller, a Yale University economist and co-creator of the index. "But on the other hand, Californians have learned to think like real speculators over the years, and speculators know you buy when the news is still bad and market timing means you don't wait until the market starts going up."

Gus Faucher, director of macroeconomics at Moody's Economy.com, cautioned that though California's bigger metropolitan areas have improved, places such as the Inland Empire and the Central Valley are likely to continue to see trouble.

"It is the outlying areas that remain a problem," Faucher said.
On the other side of the country, Tampa-area home prices dropped 1.2% in October.

Similar to Tampa, Las Vegas is paying the price for its affair with overbuilding during the boom years. Las Vegas remains the one major metropolitan area in the country that has shown no sign of improvement this year, the index showed.

On a macro level, many experts worry that once certain policies and programs wind down -- among them low interest rates, tax incentives for buyers and an increased accessibility of mortgages backed by the Federal Housing Administration -- the housing market could again falter next year.

"All in all, this report should be described as flat," said David M. Blitzer, chairman of the index committee at Standard & Poor's. "Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip."

Source:  Los Angeles Times, December 30th Article:  Alejandro Lazo