The 2009 Survey of California Home Buyers was just released from the California Association of REALTORS. Here is an excerpt:
After back-to-back years of steep decreases in sales, annual sales in the California housing market bounced back and increased 27 percent to 439,830 in units in 2008.
The first quarter of 2009 extended the rally in sales and showed a strong performance with a seasonally adjusted annualized sales figure of 590,390, an 83 percent increase from the same quarter of 2008. Annual sales are projected to increase 25 percent to 550,000 in 2009.
The increase in sales was due in large part to the growth in the absorption of distressed properties with huge mark-down in prices. Results from the Home Buyer Survey suggest that distressed sales made up more than half of the sales in California:
• Forty-nine percent of all buyers bought a home through a regular market sale
• Thirty-eight percent bought an REO/bank-owned property
• Thirteen percent bought a short-sale property
Interested in reading more? Click on the links below to download the 2009 and 2008 surveys in PDF format:
2009 Survey of California Home Buyers (26.8 MB)
2008 Survey of California Home Buyers (9.79 MB)
2008 Survey of California Home Sellers (16.2 MB)
Tuesday, July 21, 2009
Monday, July 6, 2009
Brown Sues Foreclosure Consultant and Attorney Who Conned Homeowners into Paying Thousands for Phony Lawsuits
Los Angeles - Attorney General Edmund G. Brown Jr. today sued a foreclosure consultant and an attorney -- Paul Noe Jr. and Mitchell Roth - who conned 2,000 desperate homeowners into paying exorbitant fees for "phony lawsuits" to forestall foreclosure proceedings.
These lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home's value.
"Noe and Roth ripped off homeowners desperate for help by charging unconscionable fees for phony lawsuits," Brown said. "Instead of aggressively pursuing the lawsuits, Noe and Roth strung them along so they could continue to rake in fees."
Beginning in mid-2008, Noe promised homeowners facing foreclosure or default he could help them lower or eliminate their mortgage debt.
He convinced more than 2,000 homeowners to sign "joint venture" agreements with his company, United First, and hire Roth to file suits claiming that the borrower's loan was invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Similar suits in other states have never resulted in the elimination of the borrower's mortgage debt.
After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth's firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.
Under the terms of the agreement, United First charged homeowners approximately $1,800 in upfront fees, plus at least $1,200 per month. If the case was settled, homeowners were required to pay 50 percent of the cash value of the settlement. For example, if United First won a $100,000 reduction of the mortgage debt, the homeowner would have to pay United First a fee of $50,000. If United First completely eliminated the homeowner's debt, the homeowner would be required to pay the company 80 percent of the value of the home.
Brown's lawsuit contends that Noe, Roth and United First:
- Violated California's credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945;
- Inserted unconscionable terms in contracts;
- Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and Noe, who were not lawyers, to generate business for his law firm violating California Business and Professions Code 6150; and
- Violated 17500 of the California Business and Professions Code.
Brown's office is seeking $2 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.
Paul Noe Jr. was convicted of wire fraud in 1989 and the subject of a California Department of Insurance Cease and Desist Order in 2004. Mitchell Roth resigned for the California State Bar in late May 2009, after the State Bar closed his law firm.
VICTIMS
P.J. -- After receiving default notices and conducting unsuccessful negotiations with his lender, P.J. of Panorama City contacted United First and was promised his home could be saved. In November 2008, P.J. signed a contract with United First and hired Roth's law firm, paying nearly $5,000 in upfront and monthly fees. Even as P.J. was paying United First, Roth did nothing to advance his case, and his lender foreclosed on his home earlier this year.
A.S. -- In June 2008, A.S. from La Mesa, Calif. received notices that his mortgage payments were going to increase from $3,700 to over $5,000 per month. A.S. was referred to United First by a member of his church. Representatives of the company assured him that his mortgage debt could be eliminated. A.S. paid over $10,000 to retain Roth's firm. Shortly after signing a contract, A.S. received foreclosure notices from his lender. He called United First about the notices but was told not to worry and that his case was moving along. In January 2009, A.S. received a notice to come to United First's office to pick up his file. Roth had abandoned his cases, and the State Bar had shut down the firm.
Tips for Homeowners
DON'T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.
DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.
DON'T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.
DON'T transfer title or sell your house to a "foreclosure rescuer." Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called "rescuers" use to evict homeowners and steal all or most of the home's equity.
DON'T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.
DON'T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the "rescuer."
DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.
Brown's Actions to Help Homeowners and Stop Loan Modification Fraud
Sued Countrywide For Predatory Lending And Secured $8.6 Billion Settlement. In October 2008, Brown announced an $8.68 billion settlement with Countrywide Home Loans, once the largest lender in the county, after the company deceived borrowers by misrepresenting loan terms, loan payment increases, and borrowers' ability to afford loans.
Obtained Guilty Plea From Woman Who Operated Sophisticated Loan Scam. In May 2009, Brown obtained a guilty plea from Anna Santos, 22, who used forged documents to convince more than 100 desperate homeowners to hand over an average of $3,000 for non-existent loan modification services.
Shut Down "Foreclosure Freedom" And Announced Arrest Of Two Loan Modification Scam Artists. In March 2009, Brown shut down Foreclosure Freedom, a fraudulent loan modification company that continued to collect fees and mortgage payments from dozens of homeowners without ever providing loan modification services. The two scam artists were charged with 24 counts of grand theft and 25 counts of foreclosure consultant statute violations.
Broke Up "First Gov" And Sent Five Members To Prison. In November 2008, Brown shut down First Gov, a company that demanded $1,500 to $5,000 in up-front fees to modify loans it never renegotiated. In March 2009, five members of the ring were sentenced to a total of 18 years in prison.
Ended "Federal Land Grant" Foreclosure Rescue Scam. In May 2008, Brown ended a scam in which hundreds of homeowners were convinced to pay $10,000 to place their property in a land grant, a phony and worthless real estate document, and then convinced to sign over the deed to their home.
Shut Down Six Predatory Lending Companies. In March 2008, Brown shut down Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions for promising homeowners unrealistically low mortgage payments and then switching them to loans that did not match the original agreement, many with hidden fees of up to $20,000. The three scam artists who operated the scheme have been sentenced to three years in prison.
A copy of the complaint is attached.
Source: Office of the Attorney General
These lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home's value.
"Noe and Roth ripped off homeowners desperate for help by charging unconscionable fees for phony lawsuits," Brown said. "Instead of aggressively pursuing the lawsuits, Noe and Roth strung them along so they could continue to rake in fees."
Beginning in mid-2008, Noe promised homeowners facing foreclosure or default he could help them lower or eliminate their mortgage debt.
He convinced more than 2,000 homeowners to sign "joint venture" agreements with his company, United First, and hire Roth to file suits claiming that the borrower's loan was invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Similar suits in other states have never resulted in the elimination of the borrower's mortgage debt.
After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth's firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.
Under the terms of the agreement, United First charged homeowners approximately $1,800 in upfront fees, plus at least $1,200 per month. If the case was settled, homeowners were required to pay 50 percent of the cash value of the settlement. For example, if United First won a $100,000 reduction of the mortgage debt, the homeowner would have to pay United First a fee of $50,000. If United First completely eliminated the homeowner's debt, the homeowner would be required to pay the company 80 percent of the value of the home.
Brown's lawsuit contends that Noe, Roth and United First:
- Violated California's credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945;
- Inserted unconscionable terms in contracts;
- Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and Noe, who were not lawyers, to generate business for his law firm violating California Business and Professions Code 6150; and
- Violated 17500 of the California Business and Professions Code.
Brown's office is seeking $2 million in civil penalties, full restitution for victims, and a permanent injunction to keep the company and the defendants from offering foreclosure consultant services.
Paul Noe Jr. was convicted of wire fraud in 1989 and the subject of a California Department of Insurance Cease and Desist Order in 2004. Mitchell Roth resigned for the California State Bar in late May 2009, after the State Bar closed his law firm.
VICTIMS
P.J. -- After receiving default notices and conducting unsuccessful negotiations with his lender, P.J. of Panorama City contacted United First and was promised his home could be saved. In November 2008, P.J. signed a contract with United First and hired Roth's law firm, paying nearly $5,000 in upfront and monthly fees. Even as P.J. was paying United First, Roth did nothing to advance his case, and his lender foreclosed on his home earlier this year.
A.S. -- In June 2008, A.S. from La Mesa, Calif. received notices that his mortgage payments were going to increase from $3,700 to over $5,000 per month. A.S. was referred to United First by a member of his church. Representatives of the company assured him that his mortgage debt could be eliminated. A.S. paid over $10,000 to retain Roth's firm. Shortly after signing a contract, A.S. received foreclosure notices from his lender. He called United First about the notices but was told not to worry and that his case was moving along. In January 2009, A.S. received a notice to come to United First's office to pick up his file. Roth had abandoned his cases, and the State Bar had shut down the firm.
Tips for Homeowners
DON'T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.
DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.
DON'T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.
DON'T transfer title or sell your house to a "foreclosure rescuer." Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called "rescuers" use to evict homeowners and steal all or most of the home's equity.
DON'T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.
DON'T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the "rescuer."
DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.
Brown's Actions to Help Homeowners and Stop Loan Modification Fraud
Sued Countrywide For Predatory Lending And Secured $8.6 Billion Settlement. In October 2008, Brown announced an $8.68 billion settlement with Countrywide Home Loans, once the largest lender in the county, after the company deceived borrowers by misrepresenting loan terms, loan payment increases, and borrowers' ability to afford loans.
Obtained Guilty Plea From Woman Who Operated Sophisticated Loan Scam. In May 2009, Brown obtained a guilty plea from Anna Santos, 22, who used forged documents to convince more than 100 desperate homeowners to hand over an average of $3,000 for non-existent loan modification services.
Shut Down "Foreclosure Freedom" And Announced Arrest Of Two Loan Modification Scam Artists. In March 2009, Brown shut down Foreclosure Freedom, a fraudulent loan modification company that continued to collect fees and mortgage payments from dozens of homeowners without ever providing loan modification services. The two scam artists were charged with 24 counts of grand theft and 25 counts of foreclosure consultant statute violations.
Broke Up "First Gov" And Sent Five Members To Prison. In November 2008, Brown shut down First Gov, a company that demanded $1,500 to $5,000 in up-front fees to modify loans it never renegotiated. In March 2009, five members of the ring were sentenced to a total of 18 years in prison.
Ended "Federal Land Grant" Foreclosure Rescue Scam. In May 2008, Brown ended a scam in which hundreds of homeowners were convinced to pay $10,000 to place their property in a land grant, a phony and worthless real estate document, and then convinced to sign over the deed to their home.
Shut Down Six Predatory Lending Companies. In March 2008, Brown shut down Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions for promising homeowners unrealistically low mortgage payments and then switching them to loans that did not match the original agreement, many with hidden fees of up to $20,000. The three scam artists who operated the scheme have been sentenced to three years in prison.
A copy of the complaint is attached.
Source: Office of the Attorney General
Monday, June 1, 2009
CA Attorney General Directs Foreclosure Consultants to Register and Post Bond
California Attorney General's Office News Release
Attorney General Edmund G. Brown Jr. issued a directive June 1, 2009 forcing foreclosure consultants to register with his office and post a $100,000 bond by July 1, 2009. Those who fail to do so will be in violation of California Civil Code Section 2945.45 (of the Mortgage Foreclosure Consultant Law) that goes into effect July 1, 2009, and be subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation.
However, Section 2945.45 does not apply to real estate licensees provided the licensee complies with Section 2945.1. Real estate licensees are exempt from the Mortgage Foreclosure Consultant Law (including the Section 2945.45 registration and bond requirements) when the licensee:
"makes a direct loan or
when the person
(A) engages in acts whose performance requires licensure under that part,
(B) is entitled to compensation for the acts performed in connection with the sale of a residence in foreclosure or with the arranging of a loan secured by a lien on a residence in foreclosure,
(C) does not claim, demand, charge, collect, or receive any compensation until the acts have been performed or cannot be performed because of an owner's failure to make the disclosures set forth in Section 10243 of the Business and Professions Code or failure to accept an offer from a purchaser or lender ready, willing, and able to purchase a residence in foreclosure or make a loan secured by a lien on a residence in foreclosure on the terms prescribed in a listing or a loan agreement, and
(D) does not acquire any interest in a residence in foreclosure directly from an owner for whom the person agreed to perform the acts other than as a trustee or beneficiary under a deed of trust given to secure the payment of a loan or that compensation.
For the purposes of this paragraph, a “direct loan” means a loan of a real estate broker's own funds secured by a deed of trust on the residence in foreclosure, which loan and deed of trust the broker in good faith attempts to assign to a lender, for an amount at least sufficient to cure all of the defaults on obligations which are then subject to a recorded notice of default, provided that, if a foreclosure sale is conducted with respect to the deed of trust, the person conducting the foreclosure sale has no interest in the residence in foreclosure or in the outcome of the sale and is not owned, controlled, or managed by the lending broker; the lending broker does not acquire any interest in the residence in foreclosure directly from the owner other than as a beneficiary under the deed of trust; and the loan is not made for the purpose or effect of avoiding or evading the provisions of this article." (Cal. Civ. Code 2945.1.)
For a copy of the law modifying the Mortgage Foreclosure Consultants Law, AB 180, click here.
For more information about the AG news release, click here.
Attorney General Edmund G. Brown Jr. issued a directive June 1, 2009 forcing foreclosure consultants to register with his office and post a $100,000 bond by July 1, 2009. Those who fail to do so will be in violation of California Civil Code Section 2945.45 (of the Mortgage Foreclosure Consultant Law) that goes into effect July 1, 2009, and be subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation.
However, Section 2945.45 does not apply to real estate licensees provided the licensee complies with Section 2945.1. Real estate licensees are exempt from the Mortgage Foreclosure Consultant Law (including the Section 2945.45 registration and bond requirements) when the licensee:
"makes a direct loan or
when the person
(A) engages in acts whose performance requires licensure under that part,
(B) is entitled to compensation for the acts performed in connection with the sale of a residence in foreclosure or with the arranging of a loan secured by a lien on a residence in foreclosure,
(C) does not claim, demand, charge, collect, or receive any compensation until the acts have been performed or cannot be performed because of an owner's failure to make the disclosures set forth in Section 10243 of the Business and Professions Code or failure to accept an offer from a purchaser or lender ready, willing, and able to purchase a residence in foreclosure or make a loan secured by a lien on a residence in foreclosure on the terms prescribed in a listing or a loan agreement, and
(D) does not acquire any interest in a residence in foreclosure directly from an owner for whom the person agreed to perform the acts other than as a trustee or beneficiary under a deed of trust given to secure the payment of a loan or that compensation.
For the purposes of this paragraph, a “direct loan” means a loan of a real estate broker's own funds secured by a deed of trust on the residence in foreclosure, which loan and deed of trust the broker in good faith attempts to assign to a lender, for an amount at least sufficient to cure all of the defaults on obligations which are then subject to a recorded notice of default, provided that, if a foreclosure sale is conducted with respect to the deed of trust, the person conducting the foreclosure sale has no interest in the residence in foreclosure or in the outcome of the sale and is not owned, controlled, or managed by the lending broker; the lending broker does not acquire any interest in the residence in foreclosure directly from the owner other than as a beneficiary under the deed of trust; and the loan is not made for the purpose or effect of avoiding or evading the provisions of this article." (Cal. Civ. Code 2945.1.)
For a copy of the law modifying the Mortgage Foreclosure Consultants Law, AB 180, click here.
For more information about the AG news release, click here.
Tuesday, May 5, 2009
Short Sale, Deed-in-Lieu, Foreclosure – How do Each Affect When You can get Your Next Mortgage?
by Drew Sygit
President of The Leading Edge
Too many homeowners act on bad advice, false assumptions or allow themselves to be conned when choosing one of these options.
DETROIT, MI – Over the last couple of weeks, in speaking with numerous homeowners, real estate agents and investors, I’ve noticed that there’s a lot of confusion and misunderstanding about the impact of Short Sales, Deed-in-Lieu’s and Foreclosures on one’s ability to get a new mortgage.
Over and over again, I’ve heard self-proclaimed experts make many incorrect statements. So many, that I felt compelled to do my best to separate reality from myth, fact from fiction.
GETTING A NEW MORTGAGE
It’s actually pretty easy to provide concrete proof of when it’s possible to qualify for a new mortgage after a Short Sale, Deed-in-Lieu or Foreclosure. The mortgage meltdown has reduced the main players in the mortgage industry to FNMA, FHLMC, FHA, VA and RD. Gone are the numerous subprime and Alt-A players that seemed to have a mortgage program for anyone.
FNMA – Federal National Mortgage Association
Guidelines changed regarding these issues on June 25, 2008 with Announcement 08-16.
Short Sale: FNMA refers to these as “Preforeclosure Sales” and requires a 2 year waiting period after the sale, with acceptable re-established credit.
Deed-in-Lieu: minimum waiting period of 4 years, with a minimum of 10% down required for 7 years. There is a 2 year exception for extenuating circumstances.
Foreclosure: standard of 5 years waiting period, with minimum of 10% down & 680 credit score for 7 years. Primary residences only, no second homes or investment property loans for 7 years. There is a 3 year exception for extenuating circumstances.
Bankruptcy: Chapter 7 requires a 4 year waiting period, but there is a 2 year exception for extenuating circumstances.
Chapter 13 is 2 years from discharge date or 4 years if the Chapter 13 is dismissed (not completed).
FHLMC – Federal Home Loan Mortgage Corporation
Guidelines changed regarding these issues with the release of Bulletin October 17, 2008. For some reason FHLMC isn’t as user-friendly with their updates in comparison to FNMA. Instead of listing the specific changes in their Bulletins like FNMA, they force you to refer to their guidelines to find the changes. The ones related to our topic are found in Chapter 37-7. FHLMC could definitely use some PR coaching to be more user-friendly.
Short Sale: FHLMC refers to these as “Short Payoffs” and requires a 4 year waiting period after the sale, with acceptable re-established credit. There is an exception for extenuating circumstances of 2 years.
Deed-in-Lieu: minimum waiting period of 4 years, with a minimum of 10% down required for 7 years.
Foreclosure: standard of 5 years waiting period, with minimum of 10% down for 7 years. Primary residences only, no second homes or investment property loans for 7 years. There is an exception for extenuating circumstances of 3 years.
Bankruptcy: Chapter 7 requires a 4 year waiting period.
Chapter 13 is 2 years from discharge date or 4 years if the Chapter 13 is dismissed (not completed).
FHA – Federal Housing Administration
FHA is a part of HUD and as of this point does not differ in how they address Short Sales, Deed-in-Lieu’s or Foreclosures. They’re all treated the same. Their great source for their guidelines can be found at HUD 204155r-5.
All: standard of 3 years waiting period required. There is an exception for extenuating circumstances.
Bankruptcy: Chapter 7 requires a 2 year waiting period, minimum 12 months with extenuating circumstances.
Chapter 13 requires 12 months of timely payments and must have court’s authorization.
VA – Veterans Administration
The credit requirements are the same as FHA. More information can be found at: VA Loans.
RD – Rural Development
A part of the U.S. Department of Agriculture. The credit requirements are mostly the same as FHA & VA. More information can be found at: GRH Underwriting Guidelines.
Bankruptcy: minimum 3 year waiting period required, no difference between Chapter 7 or 13. Extenuating circumstances may be considered for exceptions.
I highly recommend checking out some of the links I’ve included. Direct anyone giving you contradictory information to them, so they may reference the correct facts.
Source: Drew's Mortgage News
President of The Leading Edge
Too many homeowners act on bad advice, false assumptions or allow themselves to be conned when choosing one of these options.
DETROIT, MI – Over the last couple of weeks, in speaking with numerous homeowners, real estate agents and investors, I’ve noticed that there’s a lot of confusion and misunderstanding about the impact of Short Sales, Deed-in-Lieu’s and Foreclosures on one’s ability to get a new mortgage.
Over and over again, I’ve heard self-proclaimed experts make many incorrect statements. So many, that I felt compelled to do my best to separate reality from myth, fact from fiction.
GETTING A NEW MORTGAGE
It’s actually pretty easy to provide concrete proof of when it’s possible to qualify for a new mortgage after a Short Sale, Deed-in-Lieu or Foreclosure. The mortgage meltdown has reduced the main players in the mortgage industry to FNMA, FHLMC, FHA, VA and RD. Gone are the numerous subprime and Alt-A players that seemed to have a mortgage program for anyone.
FNMA – Federal National Mortgage Association
Guidelines changed regarding these issues on June 25, 2008 with Announcement 08-16.
Short Sale: FNMA refers to these as “Preforeclosure Sales” and requires a 2 year waiting period after the sale, with acceptable re-established credit.
Deed-in-Lieu: minimum waiting period of 4 years, with a minimum of 10% down required for 7 years. There is a 2 year exception for extenuating circumstances.
Foreclosure: standard of 5 years waiting period, with minimum of 10% down & 680 credit score for 7 years. Primary residences only, no second homes or investment property loans for 7 years. There is a 3 year exception for extenuating circumstances.
Bankruptcy: Chapter 7 requires a 4 year waiting period, but there is a 2 year exception for extenuating circumstances.
Chapter 13 is 2 years from discharge date or 4 years if the Chapter 13 is dismissed (not completed).
FHLMC – Federal Home Loan Mortgage Corporation
Guidelines changed regarding these issues with the release of Bulletin October 17, 2008. For some reason FHLMC isn’t as user-friendly with their updates in comparison to FNMA. Instead of listing the specific changes in their Bulletins like FNMA, they force you to refer to their guidelines to find the changes. The ones related to our topic are found in Chapter 37-7. FHLMC could definitely use some PR coaching to be more user-friendly.
Short Sale: FHLMC refers to these as “Short Payoffs” and requires a 4 year waiting period after the sale, with acceptable re-established credit. There is an exception for extenuating circumstances of 2 years.
Deed-in-Lieu: minimum waiting period of 4 years, with a minimum of 10% down required for 7 years.
Foreclosure: standard of 5 years waiting period, with minimum of 10% down for 7 years. Primary residences only, no second homes or investment property loans for 7 years. There is an exception for extenuating circumstances of 3 years.
Bankruptcy: Chapter 7 requires a 4 year waiting period.
Chapter 13 is 2 years from discharge date or 4 years if the Chapter 13 is dismissed (not completed).
FHA – Federal Housing Administration
FHA is a part of HUD and as of this point does not differ in how they address Short Sales, Deed-in-Lieu’s or Foreclosures. They’re all treated the same. Their great source for their guidelines can be found at HUD 204155r-5.
All: standard of 3 years waiting period required. There is an exception for extenuating circumstances.
Bankruptcy: Chapter 7 requires a 2 year waiting period, minimum 12 months with extenuating circumstances.
Chapter 13 requires 12 months of timely payments and must have court’s authorization.
VA – Veterans Administration
The credit requirements are the same as FHA. More information can be found at: VA Loans.
RD – Rural Development
A part of the U.S. Department of Agriculture. The credit requirements are mostly the same as FHA & VA. More information can be found at: GRH Underwriting Guidelines.
Bankruptcy: minimum 3 year waiting period required, no difference between Chapter 7 or 13. Extenuating circumstances may be considered for exceptions.
I highly recommend checking out some of the links I’ve included. Direct anyone giving you contradictory information to them, so they may reference the correct facts.
Source: Drew's Mortgage News
Monday, April 20, 2009
The Crisis of Credit Visualized
This is a great video for a simple explanation on the credit crisis:
Friday, April 17, 2009
Screw the TARP Accepting Banks
Quinn's Daily Dose of Reality
Click here for a list of the TARP Accepting Banks
"This is the list of every bank that has taken $100 million or more TARP funds. There are 8,000 banks that have not taken TARP funds. Let's reward these banks with our deposits. They did not make systematic risk bets. They were prudent in their lending. They should be rewarded for these actions. The list of banks below should be punished for their actions.
If you have money in one of these banks, consider a withdrawal to put in a non-TARP bank."
Source: The Burning Platform
Click here for a list of the TARP Accepting Banks
"This is the list of every bank that has taken $100 million or more TARP funds. There are 8,000 banks that have not taken TARP funds. Let's reward these banks with our deposits. They did not make systematic risk bets. They were prudent in their lending. They should be rewarded for these actions. The list of banks below should be punished for their actions.
If you have money in one of these banks, consider a withdrawal to put in a non-TARP bank."
Source: The Burning Platform
Wednesday, April 15, 2009
Homebuyer Tax Credit Chart
For California homebuyers, tax time is now tax relief time too. Thanks to two recent laws, a California homebuyer may qualify for $18,000 in tax credits for buying his or her piece of the American dream. The two tax credits are a first-time homebuyer credit up to $8,000 under federal law, and a new home credit up to $10,000 under California law.
Click on the image below to see a quick summary of the two tax credit laws:
Source: C.A.R. Legal Department
Click on the image below to see a quick summary of the two tax credit laws:
Source: C.A.R. Legal Department
Wednesday, April 8, 2009
Banks Aren't Reselling Many Foreclosed Homes
by Carolyn Said
Chronicle Staff Writer
A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."
In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory."
"There is a real danger that there is much more (foreclosure) inventory than we are measuring," said Celia Chen, director of housing economics at Moody's Economy.com in Pennsylvania. "Eventually those homes will have to be dealt with. If they're all put on the market, that will add more inventory to an already bloated market and drive down home prices even more."
More than one-third locally
In the Bay Area, a Chronicle analysis of data from San Diego's MDA DataQuick shows that more than one-third of foreclosures are in shadow territory - that is, they are not registering in county records as having been resold.
For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for.
Turnaround usually quick
Realtors say foreclosures generally go on the market a month or two after the bank takes title and then sell fairly quickly, often getting an accepted offer within a week or two of being listed and then closing escrow within 30 days. That means that foreclosures should register as being resold within three months.
But taking the foreclosures in any given month or selection of months and looking at what happened three months later also reveals a big gap between what banks took back and what they resold.
Tom Kelly, a spokesman for banking giant Chase in Chicago, said the bank sells foreclosed homes in a timely fashion.
"We try not to be in the business of owning homes," he said. "Our goal is to get them back on the market as quickly as possible. We want to maximize what we sell them for and yet do it quickly."
Kelly was at a loss to explain the shadow inventory phenomenon other than the quantities involved.
"The inventory might be growing because there is just a lot of volume coming in. That would not surprise me," he said.
Locally, the monthly number of foreclosures has decreased since peaking at 4,321 in August 2007. That has allowed foreclosure resales to start closing the gap.
Most observers say the recent fall-off in foreclosures came because California and many banks implemented foreclosure moratoriums in the fall, not because the problem has diminished.
Only 65.5 percent resold
A second DataQuick study of all Bay Area homes repossessed by banks in the 18 months ending January 2009 tracked how many of those homes had resold by mid-March. It found that 65.5 percent had resold. Discovery Bay's ForeclosureRadar.com compared its database of Bay Area foreclosures to MLS listings for the past 120 days and found that fewer than one-fifth of the foreclosures showed up as for-sale listings.
"Foreclosure numbers are artificially depressed," said CEO Sean O'Toole. He puts California's shadow inventory at about 100,000 homes.
So why aren't banks selling off their foreclosures?
Observers say several factors are at work.
-- The "pig in the python": Digesting all those foreclosures takes awhile. It's time-consuming to get a home vacant, clean and ready for sale. "The system is overwhelmed by the volume," Sharga said. "In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month."
-- Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. "With banks in the stress they're in, I don't think they're anxious to show losses in assets on their balance sheets," O'Toole said.
-- Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don't fall as fast. "They want to be careful about not releasing them too quickly so they don't drive prices down and hurt the values," O'Toole said.
Besides the shadow foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they're negotiating with homeowners about loan modifications or other ways to keep them in the home. But banks also could be deliberately foot-dragging for the same three reasons listed above.
"The problem is that no one knows how extensive (the shadow inventory) is," said Patrick Newport, U.S. economist with the Massachusetts research firm Global Insight. "It's a wild card. If it's a really big number, you'll see prices drop a lot more and deeper problems for the financial system."
Missing foreclosures
Only 65.5 percent of all Bay Area homes repossessed by banks in the 18 months ended January 2009 had been resold by mid-March. This study looked at the same homes over time, not an aggregate of all foreclosures.
County: % foreclosures resold - % foreclosures unsold
Alameda: 58.6% - 41.4%
Contra Costa: 69.8% - 30.2%
Marin: 66.9% - 33.1%
Napa: 66.0% - 34.0%
San Francisco: 49.8% - 50.2%
San Mateo: 61.5% - 38.5%
Santa Clara: 62.0% - 38.0%
Solano: 67.5% - 32.5%
Sonoma: 75.3% - 24.7%
Bay Area: 65.5% - 34.5%
Source: MDA DataQuick, SFGate
Chronicle Staff Writer
A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."
In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory."
"There is a real danger that there is much more (foreclosure) inventory than we are measuring," said Celia Chen, director of housing economics at Moody's Economy.com in Pennsylvania. "Eventually those homes will have to be dealt with. If they're all put on the market, that will add more inventory to an already bloated market and drive down home prices even more."
More than one-third locally
In the Bay Area, a Chronicle analysis of data from San Diego's MDA DataQuick shows that more than one-third of foreclosures are in shadow territory - that is, they are not registering in county records as having been resold.
For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for.
Turnaround usually quick
Realtors say foreclosures generally go on the market a month or two after the bank takes title and then sell fairly quickly, often getting an accepted offer within a week or two of being listed and then closing escrow within 30 days. That means that foreclosures should register as being resold within three months.
But taking the foreclosures in any given month or selection of months and looking at what happened three months later also reveals a big gap between what banks took back and what they resold.
Tom Kelly, a spokesman for banking giant Chase in Chicago, said the bank sells foreclosed homes in a timely fashion.
"We try not to be in the business of owning homes," he said. "Our goal is to get them back on the market as quickly as possible. We want to maximize what we sell them for and yet do it quickly."
Kelly was at a loss to explain the shadow inventory phenomenon other than the quantities involved.
"The inventory might be growing because there is just a lot of volume coming in. That would not surprise me," he said.
Locally, the monthly number of foreclosures has decreased since peaking at 4,321 in August 2007. That has allowed foreclosure resales to start closing the gap.
Most observers say the recent fall-off in foreclosures came because California and many banks implemented foreclosure moratoriums in the fall, not because the problem has diminished.
Only 65.5 percent resold
A second DataQuick study of all Bay Area homes repossessed by banks in the 18 months ending January 2009 tracked how many of those homes had resold by mid-March. It found that 65.5 percent had resold. Discovery Bay's ForeclosureRadar.com compared its database of Bay Area foreclosures to MLS listings for the past 120 days and found that fewer than one-fifth of the foreclosures showed up as for-sale listings.
"Foreclosure numbers are artificially depressed," said CEO Sean O'Toole. He puts California's shadow inventory at about 100,000 homes.
So why aren't banks selling off their foreclosures?
Observers say several factors are at work.
-- The "pig in the python": Digesting all those foreclosures takes awhile. It's time-consuming to get a home vacant, clean and ready for sale. "The system is overwhelmed by the volume," Sharga said. "In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month."
-- Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. "With banks in the stress they're in, I don't think they're anxious to show losses in assets on their balance sheets," O'Toole said.
-- Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don't fall as fast. "They want to be careful about not releasing them too quickly so they don't drive prices down and hurt the values," O'Toole said.
Besides the shadow foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they're negotiating with homeowners about loan modifications or other ways to keep them in the home. But banks also could be deliberately foot-dragging for the same three reasons listed above.
"The problem is that no one knows how extensive (the shadow inventory) is," said Patrick Newport, U.S. economist with the Massachusetts research firm Global Insight. "It's a wild card. If it's a really big number, you'll see prices drop a lot more and deeper problems for the financial system."
Missing foreclosures
Only 65.5 percent of all Bay Area homes repossessed by banks in the 18 months ended January 2009 had been resold by mid-March. This study looked at the same homes over time, not an aggregate of all foreclosures.
County: % foreclosures resold - % foreclosures unsold
Alameda: 58.6% - 41.4%
Contra Costa: 69.8% - 30.2%
Marin: 66.9% - 33.1%
Napa: 66.0% - 34.0%
San Francisco: 49.8% - 50.2%
San Mateo: 61.5% - 38.5%
Santa Clara: 62.0% - 38.0%
Solano: 67.5% - 32.5%
Sonoma: 75.3% - 24.7%
Bay Area: 65.5% - 34.5%
Source: MDA DataQuick, SFGate
S&P Case-Shiller Home Price Indices Show Continued Declines
Nationwide, prices of existing, single-family homes showed continued declines in January, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10 percent compared with January 2008, according to the S&P Case-Shiller Home Price Index.
“Home prices, which peaked in mid-2006, continued their decline in 2009,” says David M. Blitzer, chairman of the Index committee at Standard & Poor’s. “There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSAs falling more than 20 percent in the last year.”
As of January 2009, average home prices across the United States are at level similar to those in late 2003.
Source: Standard & Poor's Press Release (PDF)
“Home prices, which peaked in mid-2006, continued their decline in 2009,” says David M. Blitzer, chairman of the Index committee at Standard & Poor’s. “There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSAs falling more than 20 percent in the last year.”
As of January 2009, average home prices across the United States are at level similar to those in late 2003.
Source: Standard & Poor's Press Release (PDF)
Sunday, April 5, 2009
Despite downturn, 2008 was record year for sales of high-end homes
by Sue McAllister
Mercury News
Last year was a grim time in the real estate market, wasn't it? Foreclosures, falling values, the credit crunch.
Nonetheless, in Santa Clara County more homes sold for $5 million or more than at any time since the dot-com-nirvana year of 2000. And in San Mateo County — home to luxury-home strongholds like Atherton and Woodside — it was a record-breaking year for sales of super-expensive castles.
Only in the final quarter of 2008 did the recession finally bite into the top end of the market, sending sales plummeting. While the super rich weathered the early days of the credit crisis far better than most, experts say, last fall's stock market crash drastically impaired their ability to snap up multi-million-dollar manses.
At least 31 homes in Santa Clara County and 60 in San Mateo County sold for $5 million or more in 2008, according to MDA DataQuick, which gathered the information from public records. There were probably even more such sales, the company said, because buyers and sellers of very expensive homes often opt to "hide" the price when their deeds are recorded.
"During the first three quarters the affluent were unaffected. In fact, they were feeling pretty good because they were coming off a great year," said Lindy Sherwood-Coombs, senior vice president of Northern Trust N.A., a wealth management and private banking firm.
Corporate bonuses from 2007 and stock wealth helped fuel high-end sales early in 2008, she and other local investment advisers said.
But in the final three months of the year, as the stock market dived, only seven home sales of $5 million or more closed in Santa Clara and San Mateo counties, DataQuick statistics show. The previous three quarters averaged 28 such sales. In the first two months of 2009, there was only one.
Sales of luxury homes "definitely can be tracked to a T with the Nasdaq," said Tracie Southerland of Opes Advisors in Palo Alto.
"The high end has been stressed for a little while. But having said that, there have been some big sales in San Mateo and Santa Clara County" recently, she said.
A few examples:
* Hayfield House, a Saratoga estate on three acres designed by famed architect Julia Morgan and expanded to nearly 12,500 square feet, sold in February for a rumored price of more than $20 million. The home had been listed at $26.5 million, but the sale price does not appear in public documents.
* A 7,600-square-foot, five-bedroom house on Barton Court in Los Altos Hills sold in March for $9.95 million.
* A 6,700-square-foot home on Serrano Drive in Atherton sold last month for just under $6 million.
Agents who work the super-high end of the local real estate market said despite the shaky economy, some affluent buyers are still looking for new chateaux. But they are being cautious. And — just like in the market for your basic three-bedroom suburban ranch home — values have fallen, and there are bargains to be had.
According to estimates from Zillow, the real estate valuation company, home values are down in most of the valley and Peninsula's most expensive communities.
In Saratoga and Monte Sereno, for example, median home values fell about 6 percent from the third to the fourth quarter of 2008. The drop was 5 percent in Hillsborough and 3 percent in Los Altos/Los Altos Hills, the company said.
"There's more of a level playing field, so buyers and sellers are more open to negotiating something," said Jerry Houston, the Coldwell Banker agent who listed the Hayfield House in Saratoga — and signed a contract agreeing to keep the sale price a secret.
He estimates that, from the market peak, values for multimillion-dollar homes have dropped even more steeply than the Zillow figures indicate. Homes that once sold for $1,000 a square foot are selling for more like $850 now, he said, a decline of 15 percent.
Source: MercuryNews.com
Mercury News
Last year was a grim time in the real estate market, wasn't it? Foreclosures, falling values, the credit crunch.
Nonetheless, in Santa Clara County more homes sold for $5 million or more than at any time since the dot-com-nirvana year of 2000. And in San Mateo County — home to luxury-home strongholds like Atherton and Woodside — it was a record-breaking year for sales of super-expensive castles.
Only in the final quarter of 2008 did the recession finally bite into the top end of the market, sending sales plummeting. While the super rich weathered the early days of the credit crisis far better than most, experts say, last fall's stock market crash drastically impaired their ability to snap up multi-million-dollar manses.
At least 31 homes in Santa Clara County and 60 in San Mateo County sold for $5 million or more in 2008, according to MDA DataQuick, which gathered the information from public records. There were probably even more such sales, the company said, because buyers and sellers of very expensive homes often opt to "hide" the price when their deeds are recorded.
"During the first three quarters the affluent were unaffected. In fact, they were feeling pretty good because they were coming off a great year," said Lindy Sherwood-Coombs, senior vice president of Northern Trust N.A., a wealth management and private banking firm.
Corporate bonuses from 2007 and stock wealth helped fuel high-end sales early in 2008, she and other local investment advisers said.
But in the final three months of the year, as the stock market dived, only seven home sales of $5 million or more closed in Santa Clara and San Mateo counties, DataQuick statistics show. The previous three quarters averaged 28 such sales. In the first two months of 2009, there was only one.
Sales of luxury homes "definitely can be tracked to a T with the Nasdaq," said Tracie Southerland of Opes Advisors in Palo Alto.
"The high end has been stressed for a little while. But having said that, there have been some big sales in San Mateo and Santa Clara County" recently, she said.
A few examples:
* Hayfield House, a Saratoga estate on three acres designed by famed architect Julia Morgan and expanded to nearly 12,500 square feet, sold in February for a rumored price of more than $20 million. The home had been listed at $26.5 million, but the sale price does not appear in public documents.
* A 7,600-square-foot, five-bedroom house on Barton Court in Los Altos Hills sold in March for $9.95 million.
* A 6,700-square-foot home on Serrano Drive in Atherton sold last month for just under $6 million.
Agents who work the super-high end of the local real estate market said despite the shaky economy, some affluent buyers are still looking for new chateaux. But they are being cautious. And — just like in the market for your basic three-bedroom suburban ranch home — values have fallen, and there are bargains to be had.
According to estimates from Zillow, the real estate valuation company, home values are down in most of the valley and Peninsula's most expensive communities.
In Saratoga and Monte Sereno, for example, median home values fell about 6 percent from the third to the fourth quarter of 2008. The drop was 5 percent in Hillsborough and 3 percent in Los Altos/Los Altos Hills, the company said.
"There's more of a level playing field, so buyers and sellers are more open to negotiating something," said Jerry Houston, the Coldwell Banker agent who listed the Hayfield House in Saratoga — and signed a contract agreeing to keep the sale price a secret.
He estimates that, from the market peak, values for multimillion-dollar homes have dropped even more steeply than the Zillow figures indicate. Homes that once sold for $1,000 a square foot are selling for more like $850 now, he said, a decline of 15 percent.
Source: MercuryNews.com
Friday, April 3, 2009
Signs of Life in California Real Estate
by Les Christie
CNNMoney.com staff writer
There's is a lot of activity out on the coast that may indicate a reawakening of the housing market there - and across the country.
No state has been harder hit by the housing bust than California.
It has piled up more foreclosures and has endured among the worst home-price declines. The median price of a single-family home sold in February was $247,590, down 41% from 12 months earlier, according to the California Association of Realtors (CAR).
And home construction in the Golden State has nearly vanished: December housing permits shrank to about a quarter of what they were during the boom years, according to the National Association of Homebuilders.
But there are signs that California's housing market may be coming out of this tailspin: Sales volume is increasing, investors are returning and inventory is shrinking.
Bringing back buyers
Low prices have brought out droves of buyers. In February, they purchased more than 600,000 homes, some 80% more than they bought in February 2007, according to CAR. And most of this activity is where prices are off 40% to 60% from their peaks.
In the Sun City area of Riverside County, for example, prices have fallen more than 35% over the past 12 months. Two-thirds of February's sales in the area were of foreclosed properties owned by banks, according to Chuck Whitehead, broker with Coldwell Banker Associated Brokers.
"The sales rebound is largely centered around areas that have experienced the biggest impact from the subprime crisis," said CAR chief economist Leslie Appleton-Young.
In more stable communities, where fewer homes were saddled with toxic mortgages, prices have not crashed as badly and sales are rebounding more slowly. But foreclosures still account for a significant portion of sales, according to Phil Jones, a broker with Coldwell Banker Coastal Alliance in Long Beach.
Most analysts foresee continued price declines in California, according to Nicholas Retsinas, director of Harvard's Joint Center for Housing Studies. "But [there'll be] a slowing of that decline, which portends the end of price drops."
That may already be happening in Long Beach, according to Jones. The measure he uses to judge market trends there, price per square foot, turned up in February, growing 5% to $360.
"Every one of my agents is very busy," Jones said.
Investing 2.0
Another positive sign that markets don't have much further to fall is that investors are returning to some markets.
"I spoke with one investor who is putting together a group of buyers and they're ready to get back into the market," said Jones. "They're planning to buy single-family homes in bulk."
John Dugan is one such investor. The San Francisco-based medical supplies salesman is using a portion of his Entrust Group-managed IRA to buy townhouses in the Sacramento area.
So far he's purchased three 840-square-foot, two-bedroom, one-bath duplexes. He paid just $35,000 to $80,000 a piece - down from their $180,000 to $200,000 selling prices a few years ago.
He paid cash for the first property and rents it out for $750 a month, a profit of $550 after dues and common charges. That's a 19% return on investment, without figuring on appreciation.
"This kind of pricing is something you only think of as Midwestern, not Californian," he said.
Supply dropping
The booming sales have whittled away existing home inventory to just six and a half months - down from 15 months a year ago.
"Typically, I would describe a normal market as having a six to seven month supply of homes," said Appleton-Young. "We have that now."
California's inventory now compares favorably with the rest of the nation, where there's a 9.7 month supply of homes on the market, according to the National Association of Realtors.
One wildcard, however, is that banks have kept many repossessed homes off the market. "Banks are spoon feeding them out very slowly so they don't overload the market," said Whitehead. But, he added, if they release a lot of properties during the heavy spring buying season, they "will be eaten right up by buyers."
Could the end be near?
All of those factors add up to a more optimistic forecast for California, which is seen as a harbinger of things to come for the rest of the country.
Appleton-Young said that while home prices should continue to decline for the rest of 2009, she predicts that the pace of decline will slow. In total, she's predicting a total loss of 19% for the year. But, "I think we could see home price stabilization by early next year," she said.
If that happens in California, it could spread to the rest of the hard-hit Sun Belt markets - and beyond.
"California was the pace setter for lots of the mortgage products that went toxic," said Retsinas. "The sense is if the problems can be addressed there, the rest of the country will follow."
Source: CNNMoney.com
CNNMoney.com staff writer
There's is a lot of activity out on the coast that may indicate a reawakening of the housing market there - and across the country.
No state has been harder hit by the housing bust than California.
It has piled up more foreclosures and has endured among the worst home-price declines. The median price of a single-family home sold in February was $247,590, down 41% from 12 months earlier, according to the California Association of Realtors (CAR).
And home construction in the Golden State has nearly vanished: December housing permits shrank to about a quarter of what they were during the boom years, according to the National Association of Homebuilders.
But there are signs that California's housing market may be coming out of this tailspin: Sales volume is increasing, investors are returning and inventory is shrinking.
Bringing back buyers
Low prices have brought out droves of buyers. In February, they purchased more than 600,000 homes, some 80% more than they bought in February 2007, according to CAR. And most of this activity is where prices are off 40% to 60% from their peaks.
In the Sun City area of Riverside County, for example, prices have fallen more than 35% over the past 12 months. Two-thirds of February's sales in the area were of foreclosed properties owned by banks, according to Chuck Whitehead, broker with Coldwell Banker Associated Brokers.
"The sales rebound is largely centered around areas that have experienced the biggest impact from the subprime crisis," said CAR chief economist Leslie Appleton-Young.
In more stable communities, where fewer homes were saddled with toxic mortgages, prices have not crashed as badly and sales are rebounding more slowly. But foreclosures still account for a significant portion of sales, according to Phil Jones, a broker with Coldwell Banker Coastal Alliance in Long Beach.
Most analysts foresee continued price declines in California, according to Nicholas Retsinas, director of Harvard's Joint Center for Housing Studies. "But [there'll be] a slowing of that decline, which portends the end of price drops."
That may already be happening in Long Beach, according to Jones. The measure he uses to judge market trends there, price per square foot, turned up in February, growing 5% to $360.
"Every one of my agents is very busy," Jones said.
Investing 2.0
Another positive sign that markets don't have much further to fall is that investors are returning to some markets.
"I spoke with one investor who is putting together a group of buyers and they're ready to get back into the market," said Jones. "They're planning to buy single-family homes in bulk."
John Dugan is one such investor. The San Francisco-based medical supplies salesman is using a portion of his Entrust Group-managed IRA to buy townhouses in the Sacramento area.
So far he's purchased three 840-square-foot, two-bedroom, one-bath duplexes. He paid just $35,000 to $80,000 a piece - down from their $180,000 to $200,000 selling prices a few years ago.
He paid cash for the first property and rents it out for $750 a month, a profit of $550 after dues and common charges. That's a 19% return on investment, without figuring on appreciation.
"This kind of pricing is something you only think of as Midwestern, not Californian," he said.
Supply dropping
The booming sales have whittled away existing home inventory to just six and a half months - down from 15 months a year ago.
"Typically, I would describe a normal market as having a six to seven month supply of homes," said Appleton-Young. "We have that now."
California's inventory now compares favorably with the rest of the nation, where there's a 9.7 month supply of homes on the market, according to the National Association of Realtors.
One wildcard, however, is that banks have kept many repossessed homes off the market. "Banks are spoon feeding them out very slowly so they don't overload the market," said Whitehead. But, he added, if they release a lot of properties during the heavy spring buying season, they "will be eaten right up by buyers."
Could the end be near?
All of those factors add up to a more optimistic forecast for California, which is seen as a harbinger of things to come for the rest of the country.
Appleton-Young said that while home prices should continue to decline for the rest of 2009, she predicts that the pace of decline will slow. In total, she's predicting a total loss of 19% for the year. But, "I think we could see home price stabilization by early next year," she said.
If that happens in California, it could spread to the rest of the hard-hit Sun Belt markets - and beyond.
"California was the pace setter for lots of the mortgage products that went toxic," said Retsinas. "The sense is if the problems can be addressed there, the rest of the country will follow."
Source: CNNMoney.com
House of Cards (a CNBC Original)
The Definitive Look At The Origins Of Today's Global Economic Crisis
http://www.hulu.com/watch/59026/cnbc-originals-house-of-cards
http://www.hulu.com/watch/59026/cnbc-originals-house-of-cards
Thursday, April 2, 2009
Mortgage Rates at Record Low for 2nd Week
by Alan Zibel
WASHINGTON (AP) -- Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week, from 4.85 percent last week.
It was the lowest in the history of Freddie Mac's survey, which dates back to 1971. Rates are down by more than a full percentage point from a year ago.
"Mortgage rates followed other interest rates lower this week amid reports of slower economic growth" Frank Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement.
Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Association said Wednesday its weekly application index climbed 3 percent for the week ended March 27, on top of a 30 percent increase a week earlier. Nearly 80 percent of applications came from borrowers seeking to refinance.
Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage dropped to 4.52 percent this week, from 4.58 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages fell to 4.92 percent, compared with 4.96 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.75 percent, from 4.85 percent.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.
Source: PE.com
WASHINGTON (AP) -- Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.
Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week, from 4.85 percent last week.
It was the lowest in the history of Freddie Mac's survey, which dates back to 1971. Rates are down by more than a full percentage point from a year ago.
"Mortgage rates followed other interest rates lower this week amid reports of slower economic growth" Frank Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement.
Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Association said Wednesday its weekly application index climbed 3 percent for the week ended March 27, on top of a 30 percent increase a week earlier. Nearly 80 percent of applications came from borrowers seeking to refinance.
Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.
Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage dropped to 4.52 percent this week, from 4.58 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages fell to 4.92 percent, compared with 4.96 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.75 percent, from 4.85 percent.
The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.
Source: PE.com
Wednesday, April 1, 2009
Property Tax Reassessment Scams are on the Rise
by Bob Hunt
Recently, California Real Estate Commissioner, Jeff Davi, observed that a down market brings out the scammers. He is right. We have already, in the past months, become familiar with "foreclosure rescue" scams, "short sale facilitation" scams, and "loan modification" scams. Now, a recent memo from the California Association of Realtors® alerts us to "property tax reduction" scams. These are private companies -- often posing as governmental agencies -- who will charge property owners for filing a tax assessment appeal. It is enough of a problem that the Los Angeles County Tax Assessor has posted a warning about it on his web site.
The Tax Assessor’s site reads, in part, as follows: "Various private companies are sending mailings to property owners offering their services to pursue a reduction in their property taxes. These companies may charge hundreds of dollars to file for a reduction in value on behalf of the property owner. Some companies are even imposing late fees if the application is received after an arbitrary deadline. Be aware that solicitations from private companies offering to pursue a reduction in property taxes must clearly indicate that they are NOT a government agency and that their services are NOT approved or endorsed by any government agency."
There is nothing illegal about charging for the service of filing an assessment appeal. But it must be made clear that the company offering the service is not a government agency and that their services are not approved by any government agency. Even if proper disclosure is made, though, it is not clear why anyone would pay for such a service.
The Los Angeles County Tax Assessor notes that his agency, like many of his counterparts, initiates review processes on its own. Last year, the Los Angeles County Assessor’s office "initiated a review of single-family residences and condos purchased between July 1, 2004 and June 30, 2007. About 318,000 homes were reviewed, resulting in substantial savings for 128,000 homeowners." In 2009, the review will be expanded to some 500,000 single family homes and condos purchased between July, 2003 and June,.2008. The office notes, "There is no reason to pay for a review that will be done for free."
"All 500,000 owners whose homes are reviewed will receive a letter by the end of June notifying them of the results. Owners who disagree with the results or were not included in the review, may file an application through December 31." There is no charge for this.
Of course, tax assessments and appeal/review procedures differ from state to state. Nonetheless, we suspect that the fee-for-appeal services bear a similarity throughout the country. Certainly, anyone who wants to challenge their tax assessment should become familiar with the local process before shelling out money to some company that wants to charge for making an appeal.
In California, it can be a little tricky to determine whether your tax assessment is too high. People tend to forget that the assessment is based on a value determined at the first of the year; and then the bill can stretch into the following year. For example, Californians have until April, 2009 to pay the second half of their current property tax bill. That’s the second half of a fiscal year that started July 1, 2008. And the bill was based on an assessment of value as of January 1, 2008. So there is, today, more than a year’s lag between the assessed value and today’s market value. Sure, market values have decreased since last January, but that’s not relevant for the current bill.
When an assessment is challenged, it’s all about the "comps" – sales of comparable properties. And the comps in question may be from a number of months ago. This kind of information is often inaccessible, or difficult to come by for an ordinary citizen. But, do you need to pay a company a substantial fee to do the work? Probably not, if you have a local Realtor® who specializes in your neighborhood or area. He or she would probably be happy to help you put together the information. At no charge.
Source: realtytimes.com
Recently, California Real Estate Commissioner, Jeff Davi, observed that a down market brings out the scammers. He is right. We have already, in the past months, become familiar with "foreclosure rescue" scams, "short sale facilitation" scams, and "loan modification" scams. Now, a recent memo from the California Association of Realtors® alerts us to "property tax reduction" scams. These are private companies -- often posing as governmental agencies -- who will charge property owners for filing a tax assessment appeal. It is enough of a problem that the Los Angeles County Tax Assessor has posted a warning about it on his web site.
The Tax Assessor’s site reads, in part, as follows: "Various private companies are sending mailings to property owners offering their services to pursue a reduction in their property taxes. These companies may charge hundreds of dollars to file for a reduction in value on behalf of the property owner. Some companies are even imposing late fees if the application is received after an arbitrary deadline. Be aware that solicitations from private companies offering to pursue a reduction in property taxes must clearly indicate that they are NOT a government agency and that their services are NOT approved or endorsed by any government agency."
There is nothing illegal about charging for the service of filing an assessment appeal. But it must be made clear that the company offering the service is not a government agency and that their services are not approved by any government agency. Even if proper disclosure is made, though, it is not clear why anyone would pay for such a service.
The Los Angeles County Tax Assessor notes that his agency, like many of his counterparts, initiates review processes on its own. Last year, the Los Angeles County Assessor’s office "initiated a review of single-family residences and condos purchased between July 1, 2004 and June 30, 2007. About 318,000 homes were reviewed, resulting in substantial savings for 128,000 homeowners." In 2009, the review will be expanded to some 500,000 single family homes and condos purchased between July, 2003 and June,.2008. The office notes, "There is no reason to pay for a review that will be done for free."
"All 500,000 owners whose homes are reviewed will receive a letter by the end of June notifying them of the results. Owners who disagree with the results or were not included in the review, may file an application through December 31." There is no charge for this.
Of course, tax assessments and appeal/review procedures differ from state to state. Nonetheless, we suspect that the fee-for-appeal services bear a similarity throughout the country. Certainly, anyone who wants to challenge their tax assessment should become familiar with the local process before shelling out money to some company that wants to charge for making an appeal.
In California, it can be a little tricky to determine whether your tax assessment is too high. People tend to forget that the assessment is based on a value determined at the first of the year; and then the bill can stretch into the following year. For example, Californians have until April, 2009 to pay the second half of their current property tax bill. That’s the second half of a fiscal year that started July 1, 2008. And the bill was based on an assessment of value as of January 1, 2008. So there is, today, more than a year’s lag between the assessed value and today’s market value. Sure, market values have decreased since last January, but that’s not relevant for the current bill.
When an assessment is challenged, it’s all about the "comps" – sales of comparable properties. And the comps in question may be from a number of months ago. This kind of information is often inaccessible, or difficult to come by for an ordinary citizen. But, do you need to pay a company a substantial fee to do the work? Probably not, if you have a local Realtor® who specializes in your neighborhood or area. He or she would probably be happy to help you put together the information. At no charge.
Source: realtytimes.com
C.A.R. Launches Mortgage Protection Program
To help provide first-time home buyers with peace of mind when purchasing a home, the C.A.R. Housing Affordability Fund (C.A.R.H.A.F.) is offering a new mortgage protection program to first-time home buyers.
Through the Housing Affordability Fund’s Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program this year, and estimates that up to 3,000 families will benefit from the program throughout 2009.
To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer (someone who has not owned a home in the last three years)
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)
For more information, please visit: car.org
Through the Housing Affordability Fund’s Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program this year, and estimates that up to 3,000 families will benefit from the program throughout 2009.
To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer (someone who has not owned a home in the last three years)
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)
For more information, please visit: car.org
Tuesday, March 31, 2009
Foreclosures Spike - So Do Mortgage-Help Plans
by Les Christie, CNNMoney.com staff writer
Lenders are fixing more loans, but the number needing assistance is soaring.
NEW YORK (CNNMoney.com) -- Lenders have helped an increasing number of mortgage borrowers to get current on payments and stay in their homes, but the tide of foreclosures is still rising.
In February, nearly 250,000 homeowners received either mortgage modifications or repayment plans from their lenders, according to Hope Now, the coalition of lenders, investors and community advocacy groups put together to combat the foreclosure plague.
About 134,000 of the workouts completed were mortgage modifications, which typically lower the interest rate on loans, lengthen mortgage terms or reduce principal owed to make loans more affordable. Modifications are considered more comprehensive and effective than repayment plans, which simply tack the late payments on to the end of the loan but don't reduce payments.
"The mortgage lending industry is responding to the needs of its customers and offering solutions that are appropriate to the current market and economic conditions," said Hope Now's director Faith Schwartz.
But in spite of these efforts, the number of foreclosures started in February rose to 243,000 from 217,000 in January. About 87,000 homes were repossessed by banks during February, a 28% jump from the 68,000 foreclosures completed in January. Since the mortgage meltdown hit in July 2007, 1,395,044 homes have been lost.
February was the second straight month of sharply higher foreclosures; prior to January, the problem appeared to be easing. Foreclosures declined to 69,000 in November from 77,000 in October and then dropped again to 56,000 in December.
But the report could have been much worse, considering the nation's deteriorating economic picture, Schwartz said. "We're shedding 650,000 jobs a month," she said. "But there's more flexibility [by the lenders]. They're offering more forbearance in response to job losses."
The Obama administration's foreclosure prevention initiative could send mortgage modification numbers higher in the coming months, but it will take time. "We won't see a spike right away," said Schwartz. "[Under the program] It takes 90 days to complete a modification. Over the next three months we'll start to see some pull-through."
April will be "the month to get all the implementation details done on the new plan so that everything is crystal clear when they start using it," she added.
Source: CNNMoney.com
Lenders are fixing more loans, but the number needing assistance is soaring.
NEW YORK (CNNMoney.com) -- Lenders have helped an increasing number of mortgage borrowers to get current on payments and stay in their homes, but the tide of foreclosures is still rising.
In February, nearly 250,000 homeowners received either mortgage modifications or repayment plans from their lenders, according to Hope Now, the coalition of lenders, investors and community advocacy groups put together to combat the foreclosure plague.
About 134,000 of the workouts completed were mortgage modifications, which typically lower the interest rate on loans, lengthen mortgage terms or reduce principal owed to make loans more affordable. Modifications are considered more comprehensive and effective than repayment plans, which simply tack the late payments on to the end of the loan but don't reduce payments.
"The mortgage lending industry is responding to the needs of its customers and offering solutions that are appropriate to the current market and economic conditions," said Hope Now's director Faith Schwartz.
But in spite of these efforts, the number of foreclosures started in February rose to 243,000 from 217,000 in January. About 87,000 homes were repossessed by banks during February, a 28% jump from the 68,000 foreclosures completed in January. Since the mortgage meltdown hit in July 2007, 1,395,044 homes have been lost.
February was the second straight month of sharply higher foreclosures; prior to January, the problem appeared to be easing. Foreclosures declined to 69,000 in November from 77,000 in October and then dropped again to 56,000 in December.
But the report could have been much worse, considering the nation's deteriorating economic picture, Schwartz said. "We're shedding 650,000 jobs a month," she said. "But there's more flexibility [by the lenders]. They're offering more forbearance in response to job losses."
The Obama administration's foreclosure prevention initiative could send mortgage modification numbers higher in the coming months, but it will take time. "We won't see a spike right away," said Schwartz. "[Under the program] It takes 90 days to complete a modification. Over the next three months we'll start to see some pull-through."
April will be "the month to get all the implementation details done on the new plan so that everything is crystal clear when they start using it," she added.
Source: CNNMoney.com
Friday, March 27, 2009
HUD Launches Foreclosure Prevention Website
The U.S. Department of Housing and Urban Development has launched a new on-line resource for homeowners who may be at risk of default and foreclosure. The "Making Home Affordable" website is an interactive guide through the Homeowner Affordability Plan and can be used by homeowners to see if they qualify for a loan modification or purchase refinancing. It also provides information about free counseling services.
For more information please visit: MakingHomeAffordable.gov
For more information please visit: MakingHomeAffordable.gov
Wednesday, March 25, 2009
C.A.R. February Home Sales and Price Report
LOS ANGELES – Home sales increased 83 percent in February in California compared with the same period a year ago, while the median price of an existing home declined 40.8 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
“Home sales in California continue to be considerably stronger than the nationwide sales figures,” said C.A.R. President James Liptak. “The market will continue to register large, but diminishing year-to-year percentage gains in the coming months, as current sales are compared against the extremely low numbers that prevailed during the early months of the credit crunch.”
Closed escrow sales of existing, single-family detached homes in California totaled 620,410 in February at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 83 percent from the revised 338,970 sales pace recorded in February 2008. Sales in February 2009 decreased 0.8 percent compared with the previous month.
The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The median price of an existing, single-family detached home in California during February 2009 was $247,590, a 40.8 percent decrease from the revised $418,260 median for February 2008, C.A.R. reported. The February 2009 median price fell 2.3 percent compared with January’s revised $253,330 median price.
“The California median price has declined by a larger margin than the nationwide median price,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “This can be attributed to the under $500,000 portion of the market, which has experienced larger price declines than the other market segments due to the large share of distressed homes for sale. This further contributed to the decline in the statewide median.”
“Home sales in California continue to be considerably stronger than the nationwide sales figures,” said C.A.R. President James Liptak. “The market will continue to register large, but diminishing year-to-year percentage gains in the coming months, as current sales are compared against the extremely low numbers that prevailed during the early months of the credit crunch.”
Closed escrow sales of existing, single-family detached homes in California totaled 620,410 in February at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 83 percent from the revised 338,970 sales pace recorded in February 2008. Sales in February 2009 decreased 0.8 percent compared with the previous month.
The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The median price of an existing, single-family detached home in California during February 2009 was $247,590, a 40.8 percent decrease from the revised $418,260 median for February 2008, C.A.R. reported. The February 2009 median price fell 2.3 percent compared with January’s revised $253,330 median price.
“The California median price has declined by a larger margin than the nationwide median price,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “This can be attributed to the under $500,000 portion of the market, which has experienced larger price declines than the other market segments due to the large share of distressed homes for sale. This further contributed to the decline in the statewide median.”
Saturday, March 21, 2009
C.A.R. Releases Guide to Stimulus Packages
The California Association of REALTORS® has created an easy to use guide to the various federal and state economic stimulus packages. The guide is based on a "Frequently Asked Questions" format and covers the following topics:
American Recovery and Reinvestment Act
•First-Time Homebuyer Tax Credit
•FHA, Fannie Mae, and Freddie Mac Loan Limits
•Other Provisions of the Recovery Act
Making Home Affordable Program
•Home Affordable Refinance
•Home Affordable Modification
•Keeping Mortgage Rates Low
California's 2009-2010 State Budget
•New Home Tax Credit
•90-Day Extension to Foreclosure Process
To read the complete guide in PDF format, please click here.
American Recovery and Reinvestment Act
•First-Time Homebuyer Tax Credit
•FHA, Fannie Mae, and Freddie Mac Loan Limits
•Other Provisions of the Recovery Act
Making Home Affordable Program
•Home Affordable Refinance
•Home Affordable Modification
•Keeping Mortgage Rates Low
California's 2009-2010 State Budget
•New Home Tax Credit
•90-Day Extension to Foreclosure Process
To read the complete guide in PDF format, please click here.
Thursday, March 19, 2009
Foreclosure Rescue Scams
Red Flags for Foreclosure Rescue Scams
If you are at risk of or in foreclosure, you should be on the lookout for foreclosure scams. Here are some of the red flags to
watch out for:
• Asks for money upfront before providing any service
• Instructs you not to contact your lender, lawyer, housing
counselor, family, friends, or others
• Asks for mortgage payments to be made directly to his or her
company or a bank account set up by that person, rather than
your lender.
• Requires payment only in the form of cash, cashier’s check,
or wire transfer
• Promises to stop the foreclosure process, no matter the
circumstances
• Advises you to transfer your property deed or title to his or
her company
• Offers to fill out paperwork for you
• Asks for something to be done immediately and without delay.
This includes pressuring you into signing paperwork that you
have not had the chance to read thoroughly or do not fully
understand
• Encourages you to lease your house and buy it back
over time
• Offers to buy your house for a fixed price that is not set by the
housing market at the time of sale
• Asks for you to give a power of attorney
• Asks for signatures on a grant deed or deed of trust
• Asks for signatures on a document that has lines left blank
• Fails to provide copies of signed documents
• Refuses or fails to put an oral promise in writing
Source: California Association of REALTORS
If you are at risk of or in foreclosure, you should be on the lookout for foreclosure scams. Here are some of the red flags to
watch out for:
• Asks for money upfront before providing any service
• Instructs you not to contact your lender, lawyer, housing
counselor, family, friends, or others
• Asks for mortgage payments to be made directly to his or her
company or a bank account set up by that person, rather than
your lender.
• Requires payment only in the form of cash, cashier’s check,
or wire transfer
• Promises to stop the foreclosure process, no matter the
circumstances
• Advises you to transfer your property deed or title to his or
her company
• Offers to fill out paperwork for you
• Asks for something to be done immediately and without delay.
This includes pressuring you into signing paperwork that you
have not had the chance to read thoroughly or do not fully
understand
• Encourages you to lease your house and buy it back
over time
• Offers to buy your house for a fixed price that is not set by the
housing market at the time of sale
• Asks for you to give a power of attorney
• Asks for signatures on a grant deed or deed of trust
• Asks for signatures on a document that has lines left blank
• Fails to provide copies of signed documents
• Refuses or fails to put an oral promise in writing
Source: California Association of REALTORS
Bay Area home median falls below $300,000
James Temple, Chronicle Staff Writer
SAN FRANCISCO -- Bay Area median home prices crossed below the $300,000 threshold for the first time this century, as the one-two punch of foreclosures and tight credit continue to batter the market, according to a February housing report released Thursday.
The regionwide figure, however, is becoming less representative of individual markets, as Bay Area real estate trends increasingly diverge and weigh down the statistics with cheap homes.
Heavily discounted foreclosed properties, and regular sellers dropping asking prices to compete with banks, are drawing buyers to inland areas in droves, according to MDA DataQuick. On the other hand, the tightness in the credit markets has made it difficult for borrowers to secure the so-called jumbo loans necessary to purchase homes in high-priced markets, where there are also fewer repossessions forcing property onto the market, the San Diego research firm said.
"These are atypical buying patterns that frankly skew the statistics," said Andrew LePage, a DataQuick analyst. "It's just not normal to have so much of the activity concentrated in inland areas or neighborhoods rife with foreclosures."
What it all means for home buyers, sellers and owners depends on where they buy, sell or own.
The real statistical story only begins to emerge in the county by county figures. Transactions tumbled in the coastal markets of Marin and San Francisco - 26.9 percent and 13.5 percent, respectively - while they soared in Solano and Contra Costa - 121.7 percent and 106.4 percent, respectively, DataQuick reported. Median prices for existing, single-family homes - while down across the region - roughly correlated to the sales trends, falling between 21 percent and 23 percent in the former two counties, and 40 percent and 51 percent in the latter two.
County medians - which mean that half the homes sold for more than that amount and half for less - ranged from $200,000 in Solano to $640,000 in Marin.
Sales fell to or near record lows in expensive communities around the Bay Area, including Orinda, Walnut Creek and San Rafael, and rose to record highs in cheaper areas such as Vallejo, Brentwood, Antioch and Pittsburg, DataQuick reported.
Realtors in the outer East Bay say the inventory of unsold homes and average days on market are both steadily declining, factors that could eventually put a floor under falling prices.
In addition to the bargains, they attribute the surge in activity to interest rates driven steadily lower by a series of Federal Reserve efforts and new government incentive programs, including the federal stimulus package's $8,000 tax credit for first-time home purchases.
"We've just seen this huge upswing," said Kevin Kieffer, a Realtor with Keller Williams in Danville.
"This month alone I've had three new buyers who came in asking about the (tax credits). One of them went into contract within three days."
Mortgage giant Freddie Mac said that average rates on 30-year fixed-rate mortgages dropped to 4.98 percent this week, the lowest level since January, after the Fed said it would pump an additional $1.2 trillion into the economy.
There was wide speculation on Thursday that the effort, which includes hundreds of billions more for mortgage-backed securities, could ease credit markets and buttress the housing sector. Whether it will translate into the jumbo loan market, where secondary buyers all but vanished during the initial credit crunch of August 2007, remains to be seen, said Keith Gumbinger, vice president with Pompton Plains, N.J., research firm HSH Associates.
"Does it spark new demand? That's an unknown question," he said. "Just because financing is available doesn't make the product more attractive. But then some support may be all this market needs to get itself moving forward again."
What $300,000 will buy
For the first time since 1999, the Bay Area median home price fell below $300,000. Here's what that amount will get you in three cities:
San Francisco
1430 Thomas Ave.
A three-bedroom, one-bathroom "fixer-upper" in the Bayview neighborhood, built in 1910.
Represented by Prudential California Realty.
List Price: $299,950
East Palo Alto
2321 Poplar Ave.
A two-bedroom, one-bathroom bungalow built in 1940. It includes a one-car garage on a 6,500-square-foot lot.
Represented by Coldwell Banker.
List Price: $299,000
Brentwood
2467 Marshall Drive
This home includes five bedrooms, three bathrooms, a two-car garage and a swimming pool. The 2,121-square-foot structure was built in 2001.
Represented by Prudential California Realty.
List Price: $299,000
Source: SFGate.com
SAN FRANCISCO -- Bay Area median home prices crossed below the $300,000 threshold for the first time this century, as the one-two punch of foreclosures and tight credit continue to batter the market, according to a February housing report released Thursday.
The regionwide figure, however, is becoming less representative of individual markets, as Bay Area real estate trends increasingly diverge and weigh down the statistics with cheap homes.
Heavily discounted foreclosed properties, and regular sellers dropping asking prices to compete with banks, are drawing buyers to inland areas in droves, according to MDA DataQuick. On the other hand, the tightness in the credit markets has made it difficult for borrowers to secure the so-called jumbo loans necessary to purchase homes in high-priced markets, where there are also fewer repossessions forcing property onto the market, the San Diego research firm said.
"These are atypical buying patterns that frankly skew the statistics," said Andrew LePage, a DataQuick analyst. "It's just not normal to have so much of the activity concentrated in inland areas or neighborhoods rife with foreclosures."
What it all means for home buyers, sellers and owners depends on where they buy, sell or own.
The real statistical story only begins to emerge in the county by county figures. Transactions tumbled in the coastal markets of Marin and San Francisco - 26.9 percent and 13.5 percent, respectively - while they soared in Solano and Contra Costa - 121.7 percent and 106.4 percent, respectively, DataQuick reported. Median prices for existing, single-family homes - while down across the region - roughly correlated to the sales trends, falling between 21 percent and 23 percent in the former two counties, and 40 percent and 51 percent in the latter two.
County medians - which mean that half the homes sold for more than that amount and half for less - ranged from $200,000 in Solano to $640,000 in Marin.
Sales fell to or near record lows in expensive communities around the Bay Area, including Orinda, Walnut Creek and San Rafael, and rose to record highs in cheaper areas such as Vallejo, Brentwood, Antioch and Pittsburg, DataQuick reported.
Realtors in the outer East Bay say the inventory of unsold homes and average days on market are both steadily declining, factors that could eventually put a floor under falling prices.
In addition to the bargains, they attribute the surge in activity to interest rates driven steadily lower by a series of Federal Reserve efforts and new government incentive programs, including the federal stimulus package's $8,000 tax credit for first-time home purchases.
"We've just seen this huge upswing," said Kevin Kieffer, a Realtor with Keller Williams in Danville.
"This month alone I've had three new buyers who came in asking about the (tax credits). One of them went into contract within three days."
Mortgage giant Freddie Mac said that average rates on 30-year fixed-rate mortgages dropped to 4.98 percent this week, the lowest level since January, after the Fed said it would pump an additional $1.2 trillion into the economy.
There was wide speculation on Thursday that the effort, which includes hundreds of billions more for mortgage-backed securities, could ease credit markets and buttress the housing sector. Whether it will translate into the jumbo loan market, where secondary buyers all but vanished during the initial credit crunch of August 2007, remains to be seen, said Keith Gumbinger, vice president with Pompton Plains, N.J., research firm HSH Associates.
"Does it spark new demand? That's an unknown question," he said. "Just because financing is available doesn't make the product more attractive. But then some support may be all this market needs to get itself moving forward again."
What $300,000 will buy
For the first time since 1999, the Bay Area median home price fell below $300,000. Here's what that amount will get you in three cities:
San Francisco
1430 Thomas Ave.
A three-bedroom, one-bathroom "fixer-upper" in the Bayview neighborhood, built in 1910.
Represented by Prudential California Realty.
List Price: $299,950
East Palo Alto
2321 Poplar Ave.
A two-bedroom, one-bathroom bungalow built in 1940. It includes a one-car garage on a 6,500-square-foot lot.
Represented by Coldwell Banker.
List Price: $299,000
Brentwood
2467 Marshall Drive
This home includes five bedrooms, three bathrooms, a two-car garage and a swimming pool. The 2,121-square-foot structure was built in 2001.
Represented by Prudential California Realty.
List Price: $299,000
Source: SFGate.com
Wednesday, March 18, 2009
First-Time Homebuyers Have Several Options to Maximize New Tax Credit
WASHINGTON — As part of the Treasury Department’s consumer outreach effort and with the April 15 individual tax filing deadline approaching, the Internal Revenue Service today began a concerted effort to educate taxpayers about additional options at their disposal to claim the new $8,000 first-time homebuyer credit for 2009 home purchases. For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.
The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible.
“The new credit can get money in the pockets of first-time homebuyers quickly,” said IRS Commissioner Doug Shulman. “For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.”
First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before Dec. 1 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
The filing options to consider are:
*File an extension. Taxpayers who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This step would be faster than waiting until next year to claim it on the 2009 tax return. Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.
*File now, amend later. Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later. Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit.
*Amend the 2008 tax return. Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.
*Claim the credit in 2009 rather than 2008. For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.
The IRS reminds taxpayers the amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000, or $150,000 for joint filers. Taxpayers can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
Source: www.irs.gov
The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible.
“The new credit can get money in the pockets of first-time homebuyers quickly,” said IRS Commissioner Doug Shulman. “For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.”
First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before Dec. 1 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
The filing options to consider are:
*File an extension. Taxpayers who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This step would be faster than waiting until next year to claim it on the 2009 tax return. Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.
*File now, amend later. Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later. Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit.
*Amend the 2008 tax return. Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.
*Claim the credit in 2009 rather than 2008. For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.
The IRS reminds taxpayers the amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000, or $150,000 for joint filers. Taxpayers can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
Source: www.irs.gov
FTC Warns Consumers About Economic Stimulus Scams
The Federal Trade Commission (FTC) is warning consumers that they could get stung by economic stimulus scams, perpetrated on the Web and through e-mail, by enticing consumers to provide personal information or a small payment.
E-mail messages and Web sites may ask for bank account information and use it to drain consumers' accounts of money or commit identity theft. Web sites also may persuade consumers to clink on links that will download malicious software or spyware that can be used to make them a victim of identity theft, or entice consumers to pay a small fee in order to capture their credit card information.
"Web sites may advertise that they can help you get money from the stimulus fund," said Eileen Harrington, acting director of the FTC's Bureau of Consumer Protection. "Many use deceptive names or images of President Obama and Vice President Biden to suggest they are legitimate. They're not."
To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant at ftccomplaintassistant.gov or call (877) 382-4357.
E-mail messages and Web sites may ask for bank account information and use it to drain consumers' accounts of money or commit identity theft. Web sites also may persuade consumers to clink on links that will download malicious software or spyware that can be used to make them a victim of identity theft, or entice consumers to pay a small fee in order to capture their credit card information.
"Web sites may advertise that they can help you get money from the stimulus fund," said Eileen Harrington, acting director of the FTC's Bureau of Consumer Protection. "Many use deceptive names or images of President Obama and Vice President Biden to suggest they are legitimate. They're not."
To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant at ftccomplaintassistant.gov or call (877) 382-4357.
New Home Sales in California Decline 64 Percent
Sales in new-home communities of 10 units or more were 64 percent below the January 2008 rate, and down from the 59 percent year-over-year decline reported in December, according to the monthly CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report.
"January figures were about what we expected, which is a continuation of a very weak sales pace," said Jonathan Dienhart, Director of Published Research for HWMI. "Conditions remain poor, but the sales trends suggest we may be closer to finding a floor in this market."
Source: California Association of REALTORS
"January figures were about what we expected, which is a continuation of a very weak sales pace," said Jonathan Dienhart, Director of Published Research for HWMI. "Conditions remain poor, but the sales trends suggest we may be closer to finding a floor in this market."
Source: California Association of REALTORS
Scam Artists Using Forged Letterhead to Con Californians
California Attorney General Edmund G. Brown Jr. is warning consumers that scam artists are using the forged letterhead of major lenders to con worried Californians into paying thousands of dollars for non-existent loan modification services.
"Californians should be deeply skeptical of anyone who demands money up front and makes extravagant promises that they can save their home," Brown said. Steps consumers can take to protect themselves from loan modification fraud are available at ag.ca.gov.
Complaints may be filed with the Attorney General's Office at: Office of the Attorney General - Public Inquiry Unit, P.O. Box 944255, Sacramento, CA 94244, or online at ag.ca.gov.
"Californians should be deeply skeptical of anyone who demands money up front and makes extravagant promises that they can save their home," Brown said. Steps consumers can take to protect themselves from loan modification fraud are available at ag.ca.gov.
Complaints may be filed with the Attorney General's Office at: Office of the Attorney General - Public Inquiry Unit, P.O. Box 944255, Sacramento, CA 94244, or online at ag.ca.gov.
Consumer Alert - Advance Fees and Loan Modification Services
If you are behind in your mortgage payments, you may be contacted by individuals or companies that will offer to help you work out a loan modification with your lender or provide other services to you in order to help you prevent a foreclosure on your home.
You must be very careful if you are asked to pay for any of these services in advance, whether in cash, check or by charging your credit card. First, California Civil Code Section 2945, which regulates "foreclosure consultants", forbids anyone who falls under the definition of a “foreclosure consultant”, as well as a real estate licensee, from collecting any advance fees for these types of services if a Notice of Default has been recorded against your property. If your lender has recorded a notice of default, do not pay an advance fee to a real estate licensee, or to any person or entity. California licensed lawyers when rendering services in the course of their legal practice(s) are exempt from this prohibition. There are non-profit agencies that can assist you without charging you a fee and real estate licensees who can represent you for a fee to be paid after they have completed their work.
If a Notice of Default has not been recorded against your property, it may be permissible for a real estate broker to assist you in working out a loan modification or otherwise negotiate a possible resolution to your problem with your lender or loan servicer and ask you for payment in advance for their services. However, the broker must have you sign an agreement that tells you what services will be performed, when they will be performed and how much you must pay. The broker cannot have you sign an agreement until it has been submitted to the Department of Real Estate for review and the broker has received permission to use it and collect the advance fee.
The following individual and corporate real estate brokers have submitted advance fee agreements for loan modification and/or similar services to the Department of Real Estate for review, and have received “no objection” letters regarding their use. You can obtain information on brokers and their locations by clicking on the “License Number” on the listing below or call (916) 227-0770.
The Department of Real Estate does not approve, endorse, recommend or make any representations about any of the agreements or their terms, or any aspect of a licensee’s business activities. Consumers wishing to contract with a real estate broker for loan modification or any other similar or related services should carefully review the agreement(s) and consider obtaining independent advice before signing an agreement(s) or advancing any fees. Consumers should also consider comparing the services and fees offered by other licensed brokers on the list.
Note: Licensed real estate brokers who provide loan modification or similar services without collecting fees in advance are not required to receive the Department of Real Estate’s permission as long as their services are fully completed before you pay them.
Source: dre.ca.gov
For a list of real estate brokers who have have submitted Advance Fee Agreements for Loan Modification and/or similar services to the Department of Real Estate for review and have received "no objection" letters regarding their use: dre.ca.gov
You must be very careful if you are asked to pay for any of these services in advance, whether in cash, check or by charging your credit card. First, California Civil Code Section 2945, which regulates "foreclosure consultants", forbids anyone who falls under the definition of a “foreclosure consultant”, as well as a real estate licensee, from collecting any advance fees for these types of services if a Notice of Default has been recorded against your property. If your lender has recorded a notice of default, do not pay an advance fee to a real estate licensee, or to any person or entity. California licensed lawyers when rendering services in the course of their legal practice(s) are exempt from this prohibition. There are non-profit agencies that can assist you without charging you a fee and real estate licensees who can represent you for a fee to be paid after they have completed their work.
If a Notice of Default has not been recorded against your property, it may be permissible for a real estate broker to assist you in working out a loan modification or otherwise negotiate a possible resolution to your problem with your lender or loan servicer and ask you for payment in advance for their services. However, the broker must have you sign an agreement that tells you what services will be performed, when they will be performed and how much you must pay. The broker cannot have you sign an agreement until it has been submitted to the Department of Real Estate for review and the broker has received permission to use it and collect the advance fee.
The following individual and corporate real estate brokers have submitted advance fee agreements for loan modification and/or similar services to the Department of Real Estate for review, and have received “no objection” letters regarding their use. You can obtain information on brokers and their locations by clicking on the “License Number” on the listing below or call (916) 227-0770.
The Department of Real Estate does not approve, endorse, recommend or make any representations about any of the agreements or their terms, or any aspect of a licensee’s business activities. Consumers wishing to contract with a real estate broker for loan modification or any other similar or related services should carefully review the agreement(s) and consider obtaining independent advice before signing an agreement(s) or advancing any fees. Consumers should also consider comparing the services and fees offered by other licensed brokers on the list.
Note: Licensed real estate brokers who provide loan modification or similar services without collecting fees in advance are not required to receive the Department of Real Estate’s permission as long as their services are fully completed before you pay them.
Source: dre.ca.gov
For a list of real estate brokers who have have submitted Advance Fee Agreements for Loan Modification and/or similar services to the Department of Real Estate for review and have received "no objection" letters regarding their use: dre.ca.gov
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