Buyers of foreclosure have to be quick these days. Some houses go under contract fewer than 90 minutes after they are put on the market, says Brad Geisen, founder of Foreclosure.com.
"For every listing that comes out, we have 10 buyers," says Cesar Dias, an associate with Approved Real Estate Group in Stockton, Calif.
Dias had 15 minutes of fame after introducing foreclosure sales tours last year. Now the tours are defunct because there are not enough homes to show.
"We had a lot of inventory last summer. Now we're down to 1,500 listings — from more than 5,000," Dias says.
In Florida, real-estate investment companies, buying in bulk and paying cash, face competition.
Even in the hard-hit Detroit area, bargains are disappearing.
"For a good house that's not too beat up, in a good neighborhood, there's no lack of buyers in this market," says Andy Sakmar, founder of Century 21 Sakmar in Rochester, 20 miles north of the city. "There are a lot fewer of these properties than a year ago, and the super buys get multiple offers."
Source: CNNMoney.com, Les Christie (08/06/2009)
Monday, August 10, 2009
Friday, July 31, 2009
Economists Optimistic That Market Is Upward Bound
Economic recovery is still a few months away, say economists surveyed by USA Today, but two-thirds of them think existing-home sales have bottomed out.
Both housing and automotive markets “have the potential to generate some quite large percentage increases,” says Bill Cheney, chief economist at MFC Global Investment.
Overall, economists say unemployment won’t peak until the first half of next year and credit markets will remain tight.
"I think (the recovery) is going to be anemic," says Allen Sinai, chief economist at Decision Economics. "I don't think consumers have the wherewithal to buy a lot of cars and a lot of houses."
Source: USA Today, Paul Davidson; Barbara Hansen (07/27/2009)
Browse all of today's news
Both housing and automotive markets “have the potential to generate some quite large percentage increases,” says Bill Cheney, chief economist at MFC Global Investment.
Overall, economists say unemployment won’t peak until the first half of next year and credit markets will remain tight.
"I think (the recovery) is going to be anemic," says Allen Sinai, chief economist at Decision Economics. "I don't think consumers have the wherewithal to buy a lot of cars and a lot of houses."
Source: USA Today, Paul Davidson; Barbara Hansen (07/27/2009)
Browse all of today's news
Monday, July 27, 2009
Housing Experts: Now Is a Perfect Time to Buy
Don’t forget to remind potential buyers of something that is obvious to real estate professionals: Now is the time to buy, but that opportunity may be slipping away.
For people who have a job and money, a dream house is within reach, writes Marc Roth, founder of Home Warranty of America and a columnist for BusinessWeek.
He points out that mortgage rates remain low, prices are still at historic lows, and the government is offering incentives for first-time homebuyers.
He also adds that the inventory of homes to buy is still large, but it is shrinking. According to the NATIONAL ASSOCIATION OF REALTORS®, the housing inventory peaked in November 2008 at an 11-month supply. At the end of May 2009, it had fallen to a 9.6-month supply.
Roth says anyone who dallies will miss a good opportunity to buy a first home at a terrific price or go shopping for a move-up property that is a great buy.
Source: BusinessWeek.com, Marc Roth (11/17/2009)
For people who have a job and money, a dream house is within reach, writes Marc Roth, founder of Home Warranty of America and a columnist for BusinessWeek.
He points out that mortgage rates remain low, prices are still at historic lows, and the government is offering incentives for first-time homebuyers.
He also adds that the inventory of homes to buy is still large, but it is shrinking. According to the NATIONAL ASSOCIATION OF REALTORS®, the housing inventory peaked in November 2008 at an 11-month supply. At the end of May 2009, it had fallen to a 9.6-month supply.
Roth says anyone who dallies will miss a good opportunity to buy a first home at a terrific price or go shopping for a move-up property that is a great buy.
Source: BusinessWeek.com, Marc Roth (11/17/2009)
Wednesday, July 22, 2009
Rent plan may keep people in homes
TAMPA, Fla. – July 22, 2009 – Losing your home to foreclosure may no longer mean you have to leave.
Congress and the Obama administration are considering a controversial plan that would allow homeowners to rent their foreclosed home for at least five years. The proposal is setting the real estate community abuzz.
“It’s clear that the modification plans have not been as successful as Congress had hoped,” said Dean Baker, co-director of the Center for Economics and Policy Research. “We need something that will make more of an impact.”
The program could reshape Florida’s real estate market and the overall economy. Experts disagree on whether the effects would be positive or negative. One thing everyone agrees on is this: Florida doesn’t need any more vacant homes.
The Sunshine State’s foreclosure rate remains the third highest in the nation. During the first six months of the year, foreclosure filings jumped 50 percent from the same period last year. One in every 33 households received a default notice, auction notice or bank repossession.
Details of the rental plan are sketchy, but the idea is gaining momentum, according to U.S. Treasury Assistant Secretary Herbert Allison. He told the Senate Banking Committee last week that the proposal was being considered for homeowners whose mortgages did not qualify for modification programs to make them affordable.
Some versions of the plan involve lenders selling foreclosed homes to approved professional landlords. In other versions, the lenders would sell to private investors or keep the home and hire a management firm to handle the rental arrangement.
The rent would be determined by the market-rate rent in the area, determined by a professional appraiser.
Jack Rodriguez, president of the Greater Tampa Association of Realtors, said the plan would “tinker with the free-market enterprise.”
“I know where Congress is coming from,” he said. “But my gut tells me investors would shy away from this, and banks will end up stuck in the real estate market.”
Baker, who first proposed the plan two years ago, said it has evolved and continues to be tweaked. Even though people who take advantage of the plan would still lose their homes, Baker said, the plan could keep that from happening to others.
“The lender would have more of an incentive to work something out through a modification because the home would be worth less,” Baker said.
Under the plan, the lender still could sell the home but, Baker said, “The homeowner would come with the home.”
The homeowner, turned renter, would be allowed to stay until the lease runs out, which could last as long as 10 years.
One potential problem, however, is that many homeowners who lose their properties aren’t interested in staying as renters, according to William Apgar, senior mortgage advisor for the Department of Housing an Urban Development.
The program could have an unintended consequence, Rodriguez said. Lenders would feel pressure to shed properties to avoid becoming a landlord. Investors, who would have to give up some property rights, would low-ball lenders. The result could drag down housing prices even more. (The median sales price in the Tampa, St. Petersburg, Clearwater area was $141,100 in May, down 20 percent from $176,100 in May 2008, according to the Florida Association of Realtors.) Others think the plan is a win-win for everyone involved.
Don Burnham, a real estate investor in the Tampa area and co-founder of the Wealth Restoration Institute LLC, said the plan could be a hit.
Investors, he said, would want to buy the homes because they will know they have a long-term tenant and a steady revenue source. Lenders will like the plan, he said, because they’ll be able to find buyers faster. Homeowners would be happy because they’ll have a secure lease and not have to foot the bill to move.
Mike Larson, a real estate analyst with Weiss Research in Jupiter, said the plan is one of several the Obama administration is hoping will keep more homes from becoming vacant.
“We don’t yet know fully how the plan would work,” he said. “But if you have a warm body in the house who will keep it from going into disrepair and keep the lawn mowed, that will be at least somewhat helpful.”
Copyright © 2009 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.
Congress and the Obama administration are considering a controversial plan that would allow homeowners to rent their foreclosed home for at least five years. The proposal is setting the real estate community abuzz.
“It’s clear that the modification plans have not been as successful as Congress had hoped,” said Dean Baker, co-director of the Center for Economics and Policy Research. “We need something that will make more of an impact.”
The program could reshape Florida’s real estate market and the overall economy. Experts disagree on whether the effects would be positive or negative. One thing everyone agrees on is this: Florida doesn’t need any more vacant homes.
The Sunshine State’s foreclosure rate remains the third highest in the nation. During the first six months of the year, foreclosure filings jumped 50 percent from the same period last year. One in every 33 households received a default notice, auction notice or bank repossession.
Details of the rental plan are sketchy, but the idea is gaining momentum, according to U.S. Treasury Assistant Secretary Herbert Allison. He told the Senate Banking Committee last week that the proposal was being considered for homeowners whose mortgages did not qualify for modification programs to make them affordable.
Some versions of the plan involve lenders selling foreclosed homes to approved professional landlords. In other versions, the lenders would sell to private investors or keep the home and hire a management firm to handle the rental arrangement.
The rent would be determined by the market-rate rent in the area, determined by a professional appraiser.
Jack Rodriguez, president of the Greater Tampa Association of Realtors, said the plan would “tinker with the free-market enterprise.”
“I know where Congress is coming from,” he said. “But my gut tells me investors would shy away from this, and banks will end up stuck in the real estate market.”
Baker, who first proposed the plan two years ago, said it has evolved and continues to be tweaked. Even though people who take advantage of the plan would still lose their homes, Baker said, the plan could keep that from happening to others.
“The lender would have more of an incentive to work something out through a modification because the home would be worth less,” Baker said.
Under the plan, the lender still could sell the home but, Baker said, “The homeowner would come with the home.”
The homeowner, turned renter, would be allowed to stay until the lease runs out, which could last as long as 10 years.
One potential problem, however, is that many homeowners who lose their properties aren’t interested in staying as renters, according to William Apgar, senior mortgage advisor for the Department of Housing an Urban Development.
The program could have an unintended consequence, Rodriguez said. Lenders would feel pressure to shed properties to avoid becoming a landlord. Investors, who would have to give up some property rights, would low-ball lenders. The result could drag down housing prices even more. (The median sales price in the Tampa, St. Petersburg, Clearwater area was $141,100 in May, down 20 percent from $176,100 in May 2008, according to the Florida Association of Realtors.) Others think the plan is a win-win for everyone involved.
Don Burnham, a real estate investor in the Tampa area and co-founder of the Wealth Restoration Institute LLC, said the plan could be a hit.
Investors, he said, would want to buy the homes because they will know they have a long-term tenant and a steady revenue source. Lenders will like the plan, he said, because they’ll be able to find buyers faster. Homeowners would be happy because they’ll have a secure lease and not have to foot the bill to move.
Mike Larson, a real estate analyst with Weiss Research in Jupiter, said the plan is one of several the Obama administration is hoping will keep more homes from becoming vacant.
“We don’t yet know fully how the plan would work,” he said. “But if you have a warm body in the house who will keep it from going into disrepair and keep the lawn mowed, that will be at least somewhat helpful.”
Copyright © 2009 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.
Monday, June 15, 2009
Renegotiating home loan requires patience, prep work
FORT LAUDERDALE, Fla. – June 15, 2009 – If you know you’re headed for trouble with your mortgage or you already are there, brace yourself.
It’s a mess for borrowers trying to renegotiate the terms of their mortgages right now. That’s despite a highly publicized, $75 billion, Obama administration program that pays lenders to modify loans.
If you need to get a new deal on your mortgage – as millions of people do – the best thing you can do is to arm yourself with information, about the problems you’ll face and what you can do to get around them.
“People are confused,” said Kevin Walker, president and chief executive of MortgageReport.com, a new website that helps borrowers learn whether they are eligible for loan modifications. “Frankly, lenders are still trying to figure out the procedures they’re supposed to follow to implement these programs.”
Not many loans are being modified under the Making Home Affordable program, which was announced in February.
By mid-May, the Treasury Department reported the program had resulted in 55,000 loan modifications so far.
Lenders can modify loans on their own, not using the program. Hope Now, an industry coalition trying to combat the flood of foreclosures nationwide, said its members had independently modified 127,000 loans in April and made 143,000 new repayment plans, a record number.
But even those figures combined are a drop in the bucket against the Obama program’s stated goal of helping as many as 9 million homeowners refinance or modify their loans.
Nothing has turned back the tidal wave of foreclosures. About 1 million new foreclosures were filed in the nation between January and the end of May, the Center for Responsible Lending estimated. Moody’s Economy.com expects 1.54 million new foreclosures this year, after 1.44 million foreclosures last year.
In South Florida, Allen Robinson, managing partner of First Trust Mortgage Corp., said lenders don’t seem interested in drastically altering mortgages. They aren’t reducing the principal owed, he said, but are cutting rates or extending terms.
And there’s the problem of loan servicers handling a flood of applications. Jessica Cecere of the Consumer Credit Counseling Service of Palm Beach said she thinks fewer than 2 percent of loans are being modified.
Lenders say they’re trying to keep up with the demand, but the number of troubled borrowers is huge and still growing. In April, almost 3 million home loans nationwide were 60 days or more delinquent, according to the Hope Now alliance.
“The pipeline of people requesting loan modifications has grown tremendously since March,” said JP Morgan Chase spokeswoman Nancy Norris.
Chase has opened five offices in Florida, including one in Aventura and one in Miami, devoted only to loan modifications. Norris said Chase can modify loans from Chase, Washington Mutual and a small lender named EMC. Those loan offices are open evenings and weekends.
Wells Fargo, which owns Wachovia, has put details of the program on a website, www.wellsfargo.com/homeassist.
What can you do if you need to rework your loan? Here’s some advice:
Get informed
This is easier than you think. Start at makinghomeaffordable.gov, the official Treasury Department website for the program.
You can refinance your loan using the program if you are current on your payments, but if you have fallen behind, you will need to seek a loan modification.
The site notes that loans that are “under water” – where the value of the home is less than the current mortgage – can qualify, for loans that are as much as 105 percent of the home’s current value. Moody’s Economy.com estimates that as many as 15.9 percent of all home loans are “under water” to some degree this year.
Get help
Some websites will show you the terms of the loan modification program and figure out whether you qualify.
One is MortgageReport.com, which comes from the same firm that created SimpleTuition.com, a student loan comparison tool. MortgageReport.com gives borrowers a “diagnosis” for their loans. There is no charge to borrowers, who input their loan amounts and other debts.
Users who qualify for a modification will be provided with a list of lenders. Borrowers can then decide whether to send on their own information.
Another site gives borrowers a free credit score. Fair Isaac, the company that produces the FICO credit score that is commonly used for mortgages, started MortgageReliefOnline.com in April. The site, also free to users, allows you to see whether you qualify and then refers you to mortgage counselors
You also can get help the old-fashioned way, by talking to someone.
You can find thousands of counselors trained by the U.S. Department of Housing and Urban Development by calling the local consumer credit counseling service or through the federal Hope Now program, 888-995- Hope (4673).
Get organized
“Be prepared,” said Dale Vermillion, a mortgage industry consultant and author of Navigating the Mortgage Maze. “Have your credit report available and know your credit score.”
Expect to be asked for copies of recent tax returns or pay stubs, information on your loan and any other loans, including a car loan, student loans and personal debts.
Don’t give up
“The first three or four people [you speak to] don’t have any power at all,” said Ryan Smart, vice president of RightTrack Financial Services, a Delray Beach firm that negotiates loan modifications. “The whole system exists to keep people away. They give you ‘negotiators’ who have no power to negotiate the loans.”
Keep going until you get to someone who does have the authority to change your loan.
Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla., Harriet Johnson Brackey. Distributed by McClatchy-Tribune Information Services.
It’s a mess for borrowers trying to renegotiate the terms of their mortgages right now. That’s despite a highly publicized, $75 billion, Obama administration program that pays lenders to modify loans.
If you need to get a new deal on your mortgage – as millions of people do – the best thing you can do is to arm yourself with information, about the problems you’ll face and what you can do to get around them.
“People are confused,” said Kevin Walker, president and chief executive of MortgageReport.com, a new website that helps borrowers learn whether they are eligible for loan modifications. “Frankly, lenders are still trying to figure out the procedures they’re supposed to follow to implement these programs.”
Not many loans are being modified under the Making Home Affordable program, which was announced in February.
By mid-May, the Treasury Department reported the program had resulted in 55,000 loan modifications so far.
Lenders can modify loans on their own, not using the program. Hope Now, an industry coalition trying to combat the flood of foreclosures nationwide, said its members had independently modified 127,000 loans in April and made 143,000 new repayment plans, a record number.
But even those figures combined are a drop in the bucket against the Obama program’s stated goal of helping as many as 9 million homeowners refinance or modify their loans.
Nothing has turned back the tidal wave of foreclosures. About 1 million new foreclosures were filed in the nation between January and the end of May, the Center for Responsible Lending estimated. Moody’s Economy.com expects 1.54 million new foreclosures this year, after 1.44 million foreclosures last year.
In South Florida, Allen Robinson, managing partner of First Trust Mortgage Corp., said lenders don’t seem interested in drastically altering mortgages. They aren’t reducing the principal owed, he said, but are cutting rates or extending terms.
And there’s the problem of loan servicers handling a flood of applications. Jessica Cecere of the Consumer Credit Counseling Service of Palm Beach said she thinks fewer than 2 percent of loans are being modified.
Lenders say they’re trying to keep up with the demand, but the number of troubled borrowers is huge and still growing. In April, almost 3 million home loans nationwide were 60 days or more delinquent, according to the Hope Now alliance.
“The pipeline of people requesting loan modifications has grown tremendously since March,” said JP Morgan Chase spokeswoman Nancy Norris.
Chase has opened five offices in Florida, including one in Aventura and one in Miami, devoted only to loan modifications. Norris said Chase can modify loans from Chase, Washington Mutual and a small lender named EMC. Those loan offices are open evenings and weekends.
Wells Fargo, which owns Wachovia, has put details of the program on a website, www.wellsfargo.com/homeassist.
What can you do if you need to rework your loan? Here’s some advice:
Get informed
This is easier than you think. Start at makinghomeaffordable.gov, the official Treasury Department website for the program.
You can refinance your loan using the program if you are current on your payments, but if you have fallen behind, you will need to seek a loan modification.
The site notes that loans that are “under water” – where the value of the home is less than the current mortgage – can qualify, for loans that are as much as 105 percent of the home’s current value. Moody’s Economy.com estimates that as many as 15.9 percent of all home loans are “under water” to some degree this year.
Get help
Some websites will show you the terms of the loan modification program and figure out whether you qualify.
One is MortgageReport.com, which comes from the same firm that created SimpleTuition.com, a student loan comparison tool. MortgageReport.com gives borrowers a “diagnosis” for their loans. There is no charge to borrowers, who input their loan amounts and other debts.
Users who qualify for a modification will be provided with a list of lenders. Borrowers can then decide whether to send on their own information.
Another site gives borrowers a free credit score. Fair Isaac, the company that produces the FICO credit score that is commonly used for mortgages, started MortgageReliefOnline.com in April. The site, also free to users, allows you to see whether you qualify and then refers you to mortgage counselors
You also can get help the old-fashioned way, by talking to someone.
You can find thousands of counselors trained by the U.S. Department of Housing and Urban Development by calling the local consumer credit counseling service or through the federal Hope Now program, 888-995- Hope (4673).
Get organized
“Be prepared,” said Dale Vermillion, a mortgage industry consultant and author of Navigating the Mortgage Maze. “Have your credit report available and know your credit score.”
Expect to be asked for copies of recent tax returns or pay stubs, information on your loan and any other loans, including a car loan, student loans and personal debts.
Don’t give up
“The first three or four people [you speak to] don’t have any power at all,” said Ryan Smart, vice president of RightTrack Financial Services, a Delray Beach firm that negotiates loan modifications. “The whole system exists to keep people away. They give you ‘negotiators’ who have no power to negotiate the loans.”
Keep going until you get to someone who does have the authority to change your loan.
Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla., Harriet Johnson Brackey. Distributed by McClatchy-Tribune Information Services.
Saturday, June 6, 2009
The Two Latest Signs Housing Is Recovering
Here’s more evidence that the housing market is recovering.
Two major home builders, Toll Brothers Inc. and Hovnanian Enterprises Inc., say their losses were shrinking compared to last year because buyers are coming back to the market.
Other encouraging news came from HIS Global Insight, a research firm, which said home prices fell on average at an annual rate of 2.2 percent in the first quarter in 199 of 330 metropolitan areas. That compares with a 12.5 percent decline in the fourth quarter of 2008 in 312 metropolitan areas.
"While it's too early to see a bottom of this housing downturn," the report said, the latest data "may signal that the market is beginning to stabilize."
Source: The Wall Street Journal, James R. Hagerty and John Spence (06/04/2009)
Two major home builders, Toll Brothers Inc. and Hovnanian Enterprises Inc., say their losses were shrinking compared to last year because buyers are coming back to the market.
Other encouraging news came from HIS Global Insight, a research firm, which said home prices fell on average at an annual rate of 2.2 percent in the first quarter in 199 of 330 metropolitan areas. That compares with a 12.5 percent decline in the fourth quarter of 2008 in 312 metropolitan areas.
"While it's too early to see a bottom of this housing downturn," the report said, the latest data "may signal that the market is beginning to stabilize."
Source: The Wall Street Journal, James R. Hagerty and John Spence (06/04/2009)
Wednesday, May 20, 2009
Uniform process for short sales will help struggling homeowners, say Realtors
WASHINGTON – May 20, 2009 – Help is on the way for many homeowners facing foreclosure, thanks to new details under the Making Home Affordable Program announced by the U.S. Treasury and the U.S. Department of Housing and Urban Development (HUD).
The Making Home Affordable Program is designed to help homeowners modify their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage the “quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future,” according to U.S. Treasury Secretary Timothy Geithner. The National Association of Realtors® (NAR) believes that a uniform process for handling short sales will facilitate the process.
“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” says NAR President Charles McMillan. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s homeowners in a challenging economy.”
Short sales occur when a bank agrees to let homeowners who have fallen behind on their mortgage to sell their home for less than they owe on the mortgage. Go to www.treasury.gov for detailed information on the program changes.
“Many families are finding themselves with a mortgage that is higher than their current home value, and they are struggling,” says McMillan. “As Secretary Geithner noted, and as NAR has been advocating for many months, stemming the foreclosure crisis and stabilizing the housing market are critical to our economic recovery.”
“We have heard from Realtors that the extensive delay in the short sale process caused many buyers to go elsewhere and left many would-be sellers with no option but foreclosure. We are all pleased that the government has stepped in to help homeowners and those wishing to buy a home,” McMillan says.
© FLORIDA ASSOCIATION OF REALTORS
The Making Home Affordable Program is designed to help homeowners modify their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage the “quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future,” according to U.S. Treasury Secretary Timothy Geithner. The National Association of Realtors® (NAR) believes that a uniform process for handling short sales will facilitate the process.
“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” says NAR President Charles McMillan. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s homeowners in a challenging economy.”
Short sales occur when a bank agrees to let homeowners who have fallen behind on their mortgage to sell their home for less than they owe on the mortgage. Go to www.treasury.gov for detailed information on the program changes.
“Many families are finding themselves with a mortgage that is higher than their current home value, and they are struggling,” says McMillan. “As Secretary Geithner noted, and as NAR has been advocating for many months, stemming the foreclosure crisis and stabilizing the housing market are critical to our economic recovery.”
“We have heard from Realtors that the extensive delay in the short sale process caused many buyers to go elsewhere and left many would-be sellers with no option but foreclosure. We are all pleased that the government has stepped in to help homeowners and those wishing to buy a home,” McMillan says.
© FLORIDA ASSOCIATION OF REALTORS
Friday, May 15, 2009
Obama administration expands housing plan
WASHINGTON – May 15, 2009 – The Obama administration expanded its $50 billion mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a foreclosure if they don’t qualify for other assistance.
The initiatives are intended to streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner’s credit score, but less than a foreclosure.
Since the program, called Making Home Affordable, was launched in March, Mortgage companies have made more than 55,000 offers to modify borrowers’ loans.
“We’re seeing a lot of progress in a very short period of time,” Treasury Secretary Timothy Geithner said.
Officials estimate up to 4 million borrowers will get their loans modified, but housing experts like Mark Zandi of Moody’s Economy.com expect the number will be less than half of that.
And while the number of success stories is growing, it pales compared with the rate of new foreclosures, and many housing counselors across the country are complaining that the program has been slow getting off the ground.
“Our experience at the ground level has been, so far, frustrating,” said Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group. Entry-level employees at mortgage companies, he said, are either steering borrowers away from the plan or are entirely unaware of it.
There are, of course, lucky homeowners like Daniel Iturriaga, 45, a warehouse worker from Compton, Calif. Working with a counselor from Springboard, a nonprofit counseling group, Iturriaga was able to get JPMorgan Chase & Co. and mortgage finance company Fannie Mae to modify his home loan.
He’s going from a monthly payment of about $2,300 to about $1,275. After a three-month trial period, it should be final in mid-June.
“It’s a long process, but I still have a little hope to stay in my home,” said Iturriaga, who bought his home for about $400,000 in 2005 and has seen houses on the same block sell for about half as much. “I’m pretty happy.”
Nevertheless, Guy Cecala, publisher of trade publication Inside Mortgage Finance, doesn’t expect to see large volumes of loan modifications before July or August. “The basic problem is that the program is very complicated and involved to set up,” Cecala said.
The government program requires numerous changes to how the mortgage industry does business. To get a loan modification, borrowers must provide proof of their income and send in a letter stating why they need help.
Since the program involves taxpayer dollars, the lending industry needs to make sure it sets up the program correctly, said Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis. “This is a very well-thought out plan,” she said. “People have to be a little bit patient.”
But Rose Inman is out of patience and out of time. Aurora Loan Services is set to foreclose on her home overlooking Seattle’s Puget Sound on Friday.
Inman, 58, has lost two jobs, one with a manufacturing company, the other with the City of Seattle. Since then, she’s been working as a human resources consultant, but making much less money.
Despite numerous calls, e-mails and letters, she says she’s only been able to have one phone conversation with a company representative.
“It’s like this huge, concrete thick wall that you cannot get through,” she said.
Last week, Aurora joined the Obama administration’s loan modification program. The Colorado-based company is in line for nearly $800 million in government incentives to modify borrowers’ home loans.
“We offer a wide range of foreclosure prevention options to our customers,” Deborah Munies, an Aurora spokesman, said in an e-mail, while declining to comment on Inman’s case. “In cases where the customer has the ability and willingness to make a reasonable monthly payment, we make every effort to avoid foreclosure. Foreclosure is pursued only when a variety of other workout options have not been successful.”
So far, 14 companies that serve about three quarters of the mortgage market have signed up and will be paid for each loan they modify.
The initiatives announced Thursday are aimed at ineligible homeowners. For borrowers who are unemployed or owe significantly more than their homes are worth, there are generally two options to avoid foreclosure.
The homeowner can sign the property title over to the lender in what is known as a deed in lieu of foreclosure. Or, with the lender’s permission, the homeowner can sell the property for less than the value of the loan a so-called “short sale.”
Mortgage companies would get up to $1,000 and borrowers would get up to $1,500 in relocation costs.
For months, real estate agents have complained that it’s difficult to get lenders to agree to a short sale, and the process takes so long that many deals fall apart.
“They do not have their institutions staffed properly, that’s the problem, “said Lisa Gregory, a real estate agent with Prudential California Realty in Del Mar, Calif. “I don’t think encouraging these processors with an extra $1,000 will help because they aren’t motivated,” she said, but added that “this certainly sounds better than nothing.”
Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP Real Estate Reporter J.W. Elphinstone contributed to this report from New York.
The initiatives are intended to streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner’s credit score, but less than a foreclosure.
Since the program, called Making Home Affordable, was launched in March, Mortgage companies have made more than 55,000 offers to modify borrowers’ loans.
“We’re seeing a lot of progress in a very short period of time,” Treasury Secretary Timothy Geithner said.
Officials estimate up to 4 million borrowers will get their loans modified, but housing experts like Mark Zandi of Moody’s Economy.com expect the number will be less than half of that.
And while the number of success stories is growing, it pales compared with the rate of new foreclosures, and many housing counselors across the country are complaining that the program has been slow getting off the ground.
“Our experience at the ground level has been, so far, frustrating,” said Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group. Entry-level employees at mortgage companies, he said, are either steering borrowers away from the plan or are entirely unaware of it.
There are, of course, lucky homeowners like Daniel Iturriaga, 45, a warehouse worker from Compton, Calif. Working with a counselor from Springboard, a nonprofit counseling group, Iturriaga was able to get JPMorgan Chase & Co. and mortgage finance company Fannie Mae to modify his home loan.
He’s going from a monthly payment of about $2,300 to about $1,275. After a three-month trial period, it should be final in mid-June.
“It’s a long process, but I still have a little hope to stay in my home,” said Iturriaga, who bought his home for about $400,000 in 2005 and has seen houses on the same block sell for about half as much. “I’m pretty happy.”
Nevertheless, Guy Cecala, publisher of trade publication Inside Mortgage Finance, doesn’t expect to see large volumes of loan modifications before July or August. “The basic problem is that the program is very complicated and involved to set up,” Cecala said.
The government program requires numerous changes to how the mortgage industry does business. To get a loan modification, borrowers must provide proof of their income and send in a letter stating why they need help.
Since the program involves taxpayer dollars, the lending industry needs to make sure it sets up the program correctly, said Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis. “This is a very well-thought out plan,” she said. “People have to be a little bit patient.”
But Rose Inman is out of patience and out of time. Aurora Loan Services is set to foreclose on her home overlooking Seattle’s Puget Sound on Friday.
Inman, 58, has lost two jobs, one with a manufacturing company, the other with the City of Seattle. Since then, she’s been working as a human resources consultant, but making much less money.
Despite numerous calls, e-mails and letters, she says she’s only been able to have one phone conversation with a company representative.
“It’s like this huge, concrete thick wall that you cannot get through,” she said.
Last week, Aurora joined the Obama administration’s loan modification program. The Colorado-based company is in line for nearly $800 million in government incentives to modify borrowers’ home loans.
“We offer a wide range of foreclosure prevention options to our customers,” Deborah Munies, an Aurora spokesman, said in an e-mail, while declining to comment on Inman’s case. “In cases where the customer has the ability and willingness to make a reasonable monthly payment, we make every effort to avoid foreclosure. Foreclosure is pursued only when a variety of other workout options have not been successful.”
So far, 14 companies that serve about three quarters of the mortgage market have signed up and will be paid for each loan they modify.
The initiatives announced Thursday are aimed at ineligible homeowners. For borrowers who are unemployed or owe significantly more than their homes are worth, there are generally two options to avoid foreclosure.
The homeowner can sign the property title over to the lender in what is known as a deed in lieu of foreclosure. Or, with the lender’s permission, the homeowner can sell the property for less than the value of the loan a so-called “short sale.”
Mortgage companies would get up to $1,000 and borrowers would get up to $1,500 in relocation costs.
For months, real estate agents have complained that it’s difficult to get lenders to agree to a short sale, and the process takes so long that many deals fall apart.
“They do not have their institutions staffed properly, that’s the problem, “said Lisa Gregory, a real estate agent with Prudential California Realty in Del Mar, Calif. “I don’t think encouraging these processors with an extra $1,000 will help because they aren’t motivated,” she said, but added that “this certainly sounds better than nothing.”
Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP Real Estate Reporter J.W. Elphinstone contributed to this report from New York.
Wednesday, April 29, 2009
Short Sale vs. Deed-in-Lieu: Best Choice?
Homeowners facing foreclosure often have the option of selecting a short sale or a deed-in-lieu of foreclosure as a possible solution to their financial difficulties. But are they? Which is the best choice? Like most alternatives, both have their upsides and their downsides. Understanding these options is the only way to make a truly informed decision.
In a short sale, your lender takes the loss
When you decide to use a short sale to prevent foreclosure, you should understand that the sale must have the lender’s approval and that lenders don’t always agree. What the lender is doing when he accepts, is permitting you to sell your home for less than you owe him and taking the loss himself. If he does go along with the short sale, it will relieve you of the burden (arrearages) as well as the cost, emotional strain and embarrassment of a messy foreclosure procedure. On the upside, a short sale is far less destructive to your credit rating than a foreclosure, as it is supposed to be listed as a “settled debt” on your credit report. However, it is still harmful to your credit score and can reduce it by 200 points or more.
On the downside, the lender could always go after you to collect the difference between the short sale price and what you owed him by getting a deficiency judgment against you. However, more often than not, this doesn’t happen simply because he knows that there is no money to recover and that he will have to pay all the costs of the legal action.
deed-in-lieu may be your fastest way out
A deed-in-lieu of foreclosure is when you give your home back to your lender, take your losses and thereby prevent the foreclosure. Lenders will frequently accept this because it is a less expensive and time consuming process for him than a full foreclosure action. The upside is that a deed-in- lieu is a faster solution than a short sale and that it is more likely to be acceptable to the lender. The ramifications to your credit score are about the same as the short sale.
On the downside, if the lender eventually sells the home for a price that doesn’t pay off the original mortgage amount, he can get a deficiency judgment and try to collect it from you. Once again, however, he knows that you can’t get blood out of a stone and probably won’t proceed if there doesn’t appear to be any money to recover.
Select either Short Sale or Deed-in-Lieu as early on as possible
The sooner you act on either a short sale or a deed-in-lieu the better. Once the foreclosure process is activated, you will not be in a strong position to negotiate with your lender because payment arrearages, interest and penalties have piled up. He can hold you financially responsible for his losses and seek a deficiency judgment that will appear on your credit report even if you don’t have the money to pay it. In either case, however, avoiding foreclosure is always a better choice in terms of the effect on your credit.
In a short sale, your lender takes the loss
When you decide to use a short sale to prevent foreclosure, you should understand that the sale must have the lender’s approval and that lenders don’t always agree. What the lender is doing when he accepts, is permitting you to sell your home for less than you owe him and taking the loss himself. If he does go along with the short sale, it will relieve you of the burden (arrearages) as well as the cost, emotional strain and embarrassment of a messy foreclosure procedure. On the upside, a short sale is far less destructive to your credit rating than a foreclosure, as it is supposed to be listed as a “settled debt” on your credit report. However, it is still harmful to your credit score and can reduce it by 200 points or more.
On the downside, the lender could always go after you to collect the difference between the short sale price and what you owed him by getting a deficiency judgment against you. However, more often than not, this doesn’t happen simply because he knows that there is no money to recover and that he will have to pay all the costs of the legal action.
deed-in-lieu may be your fastest way out
A deed-in-lieu of foreclosure is when you give your home back to your lender, take your losses and thereby prevent the foreclosure. Lenders will frequently accept this because it is a less expensive and time consuming process for him than a full foreclosure action. The upside is that a deed-in- lieu is a faster solution than a short sale and that it is more likely to be acceptable to the lender. The ramifications to your credit score are about the same as the short sale.
On the downside, if the lender eventually sells the home for a price that doesn’t pay off the original mortgage amount, he can get a deficiency judgment and try to collect it from you. Once again, however, he knows that you can’t get blood out of a stone and probably won’t proceed if there doesn’t appear to be any money to recover.
Select either Short Sale or Deed-in-Lieu as early on as possible
The sooner you act on either a short sale or a deed-in-lieu the better. Once the foreclosure process is activated, you will not be in a strong position to negotiate with your lender because payment arrearages, interest and penalties have piled up. He can hold you financially responsible for his losses and seek a deficiency judgment that will appear on your credit report even if you don’t have the money to pay it. In either case, however, avoiding foreclosure is always a better choice in terms of the effect on your credit.
Saturday, April 25, 2009
First-time homebuyers must close by Nov. 30 – contract not enough
WASHINGTON – April 24, 2009 – If first-time homebuyers wait until November to sign a sales contract, it’s probably too late to get the $8,000 tax credit. To qualify, buyers must close before Dec. 1 – a signed contract is not enough. New construction should be started by mid-summer to qualify.
According to the National Association of Realtors, a “home is considered as ‘purchased’ when all events have occurred that transfer the title from the seller to the new purchaser. Thus, closings must occur before December 1, 2009 for purchases to be eligible for the credit.”
Noting that deadline, the National Association of Builders kicked off a campaign notifying buyers that if they want the tax credit, they should plan to sign a construction contact soon.
Mike Dishberger of Sandcastle Homes Inc. in Houston, Texas, says that building a home from scratch can take anywhere from four to six months depending on the floor plan and location. Assuming it takes the full six months, first-time homebuyers should sign a new-home construction contract no later than May 31, 2009.
While it’s possible to rush an existing-home sale and go from contract to closing in only a few weeks, that schedule could cause a problem for last-minute buyers who wait until November. If an onslaught of buyers hope to beat the clock, title agencies and others involved in the closing process could get backlogged during November, and the IRS does not consider “planned closing dates” for the tax credit – only actual closing dates.
To qualify for the tax credit, home buyers must have not owned a home for three years prior to the purchase and have a modified adjusted gross income (MAGI) less than $95,000 for single tax payers and $170,000.
According to the National Association of Realtors, a “home is considered as ‘purchased’ when all events have occurred that transfer the title from the seller to the new purchaser. Thus, closings must occur before December 1, 2009 for purchases to be eligible for the credit.”
Noting that deadline, the National Association of Builders kicked off a campaign notifying buyers that if they want the tax credit, they should plan to sign a construction contact soon.
Mike Dishberger of Sandcastle Homes Inc. in Houston, Texas, says that building a home from scratch can take anywhere from four to six months depending on the floor plan and location. Assuming it takes the full six months, first-time homebuyers should sign a new-home construction contract no later than May 31, 2009.
While it’s possible to rush an existing-home sale and go from contract to closing in only a few weeks, that schedule could cause a problem for last-minute buyers who wait until November. If an onslaught of buyers hope to beat the clock, title agencies and others involved in the closing process could get backlogged during November, and the IRS does not consider “planned closing dates” for the tax credit – only actual closing dates.
To qualify for the tax credit, home buyers must have not owned a home for three years prior to the purchase and have a modified adjusted gross income (MAGI) less than $95,000 for single tax payers and $170,000.
Tuesday, January 6, 2009
Dont' Be Afraid of the Short Sale
Here is some great news for people you are looking to purchase a short sale property.
MFRMLS has joined forces with Fannie Mae to launch a Pre-Approval Pilot, beginning in mid-December 2008. All MFRMLS members are invited to participate in the pilot, which is intended to help streamline the pre-foreclosure process – and facilitate quicker closings. It’s a Win/Win for both members and consumers!
Preserving homeownership is our number one priority. When homeowners become distressed and have exhausted all means to preserve homeownership, they will look to you for assistance with a short sale. For many, this may be the most graceful exit to help prevent foreclosure.
This pre-approval pilot can offer a more transparent, streamlined short sale process by:
Taking the guesswork out of price negotiations, thereby minimizing the timeframes for approval and closings!
Under this pilot, if a buyer makes a full-price offer on a pre-approved property, the lender will accept the offer if the transaction meets other standard requirements (e.g., asset check, fraud detection, no second liens, etc.). The pilot will test a new process by which Fannie Mae pre-approves the list price for a property that is secured by a Fannie Mae loan.
For the purposes of the pilot, Fannie Mae has validated a specific list of properties that have already met the following criteria:
The property must be secured by a Fannie Mae mortgage.
The mortgage must be serviced by Countrywide Home Loans.
The property must be a potential short-sale (i.e., the list price is less than the unpaid balance on the mortgage).
MFRMLS has joined forces with Fannie Mae to launch a Pre-Approval Pilot, beginning in mid-December 2008. All MFRMLS members are invited to participate in the pilot, which is intended to help streamline the pre-foreclosure process – and facilitate quicker closings. It’s a Win/Win for both members and consumers!
Preserving homeownership is our number one priority. When homeowners become distressed and have exhausted all means to preserve homeownership, they will look to you for assistance with a short sale. For many, this may be the most graceful exit to help prevent foreclosure.
This pre-approval pilot can offer a more transparent, streamlined short sale process by:
Taking the guesswork out of price negotiations, thereby minimizing the timeframes for approval and closings!
Under this pilot, if a buyer makes a full-price offer on a pre-approved property, the lender will accept the offer if the transaction meets other standard requirements (e.g., asset check, fraud detection, no second liens, etc.). The pilot will test a new process by which Fannie Mae pre-approves the list price for a property that is secured by a Fannie Mae loan.
For the purposes of the pilot, Fannie Mae has validated a specific list of properties that have already met the following criteria:
The property must be secured by a Fannie Mae mortgage.
The mortgage must be serviced by Countrywide Home Loans.
The property must be a potential short-sale (i.e., the list price is less than the unpaid balance on the mortgage).
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