Archives for April 2012

Lack of Supply Pushes Home Sales Lower

Sales of existing homes continue to drop, and while tough credit and weak consumer confidence are certainly factors, lack of supply appears to be the latest culprit.

Inventories of existing homes historically rise in the spring, as sellers look to take advantage of the busy season; not so this spring.

Inventories fell 1.3 percent to 2.37 million units for sale. That’s down nearly 22 percent from a year ago. Inventory is dropping because the number of distressed properties for sale is dropping.

The data speak volumes: Distressed sales fell to 29 percent of all sales in March, down from 34 percent the previous month. The investor share of sales also fell from 23 percent to 231 percent. That pushed overall home sales down, but most notably out West, where most of the distressed supply exists.

Sales fell 7.4 percent month to month out West in March, as supplies of existing homes fell to 3.1 months from 4.7 months a year ago, according to internal tracking by the National Association of Realtors. That is the lowest supply of any region by far, and half the national average. Compare it to an 11.6 month supply in the Northeast, where there are far fewer foreclosures.

Supply is tight because banks, after the 25 billion dollar mortgage settlement over so-called “robo-signing” have slowed much of the foreclosure process, trying to modify more loans or find foreclosure alternatives.

Less supply usually means rising prices, if you go by the usual supply/demand theory. The trouble is, supply isn’t dropping because of so much demand, it’s dropping because of the distressed market.

Normal sellers still aren’t putting their homes on the market for fear of deep price cuts, or because they are so underwater they can’t afford it. More than 11 million borrowers currently owe more on their mortgages than their homes are currently worth.

On the demand side, credit is still very tight and fees for FHA loans, which had really been fueling much of the market, rose April 1st. We saw a huge drop in mortgage applications last week, driven by a 23 percent drop in FHA applications.

“This drop follows big increases in the demand for FHA loans over several weeks in anticipation of the FHA mortgage insurance premium increases that went into effect last week,” wrote Mortgage Bankers Association chief economist Jay Brinkmann in a release. “This was the largest weekly drop in the government purchase index since the expiration of the first-time homebuyer tax credit in May 2010.”

Without a strong recovery in the job market, which does not appear to be the case, and a big loosening in credit, which also does not appear to be the case, regular demand for home purchases will remain soft.

The potential demand among investors is strong and growing, but they need supply to buy, and they’re just not finding enough.

SOURCE: CNBC

Will short sales save the housing market?

Foreclosures are down and short sales are up, but what does this mean for the real estate market as a whole? The answer depends on who you ask.
Short sales now outpace foreclosures

But first, some background: Short sales occur when a lender agrees to sell a home for less than what is owed on the mortgage. The lender forgives the difference, and the borrower unloads a home they can’t afford.

In an effort to avoid adding to their already large portfolios of bank-owned homes (REOs), lenders are beginning to seriously consider short sales as an alternative to foreclosure. According to a Bloomberg report released Tuesday, banks including Wells Fargo and JPMorgan Chase last year started giving away cash to select homeowners who agreed to do a short sale instead of allowing the house to fall into foreclosure.

Experts at the National Association of Realtors (NAR) hear the short sale process is becoming more streamlined, which is good news for buyers and lenders. This more organized process means short sales can be unloaded quickly [Read more…]

Short Video: What is a “Short Sale”

If you are experiencing financial challenges that have made your mortgage payment unmanageable, you may well be surprised at how much help is available. The kind of help depends on a number of factors depending on your lender, the amount owed on your mortgage, your current payment status, and a range of other factors.

The most important fact for financially distressed homeowners to keep in mind:

the sooner help is sought, the better.

Too often, once homeowners find themselves on what feels like an inevitable path toward foreclosure, they become frozen in action.

The situation is complicated; the stakes are high, and that’s why you need an advocate who is knowledgeable and adept at navigating among solutions that will lead to a fresh start.

Here is a short video explaining the basics of one possible option, the “Short Sale”.

In a short sale, sellers who owe more on their home than its current market value, work with a real estate agent who finds a buyer and then negotiates with the lender to accept a loan payoff that is less than the amount owed.

A short sale is one of many options available for financially distressed homeowners.

We at Hallmark Idaho Properties are totally  committed to rolling up our sleeves and working closely with financially stressed homeowners to find the solution that best meets their needs.

Now is not the time to go it alone or to allow present circumstances to undermine future prospects. Give us a call today.

Foreclosure Frenzy: Bank Of America Sues Bank Of America

Here’s a sign of just how big and messy the foreclosure problem is:

BofA has sued itself at least nine times in the month of April

That’s what lawyer and fraud expert Lynn Szymoniak discovered recently during a search for foreclosure filings in Palm Beach county Florida.”There are likely at least 100 examples of the same thing happening across the state,” Szymoniak says.

The Huffington Post, which reported this story earlier today, cites one example in which the bank “is seeking to foreclose on a condominium and names the condo owner and Bank of America as defendants in the suit. The company is literally seeking damages from itself in order to foreclose on the condo owner.”

An email to a BofA spokesperson has yet to be answered. But the bank said this to HuffPost: “We are servicing the first mortgage on behalf of an investor and we own the second mortgage,” Bank of America spokeswoman Jumana Bauwens told HuffPost. “Naming the second-lien holder in the suit is necessary to eliminate the junior interest,” Bauwens said.

But Szymoniak says it sounds like “poor lawyering” on the part of BofA. She adds, “Someone was  likely looking at the records to find anyone who could possibly have interest in the foreclosure suits. Bank of America probably owned the second mortgage and because they were using people who were simply filling out forms rather than using brain matter they just listed everyone including the bank itself.”

There’s a legal problem with suing yourself however. Szymoniak explains the so-called lack of adversary concept where a case cannot proceed if the parties are not truly adverse. “They can’t be collusive or share the same interest,” she adds. But if BofA is truly suing on behalf of investors then the concept may not apply.

As HuffPo points out, it’s not the first time a big bank has gone after itself. Wells Fargo sued itself in a foreclosure suit in Florida’s Hillsborough County. The bank “owned both the first and second liens on the property and ended up hiring two separate attorneys to deal with the snafu — one to bring the lawsuit and another to defend itself.”

Here’s one example of BofA suing itself:

SOURCE: Forbes

Mortgage Regulator Is Considering Plan for Principal Reduction

The director of the government’s housing finance agency said on Tuesday that it might now make more sense for Fannie Mae and Freddie Mac to reduce the amount of money homeowners owe on loans held by the agencies.

Because of new incentives put in place by the Obama administration, the ailing agencies might cut their losses from bad loans by easing up on the borrowers, he said.

Edward J. DeMarco, who as acting head of the Federal Housing Finance Agency has long opposed this type of relief for people whose homes are worth less than their mortgage debts, said that a new analysis showed that Fannie and Freddie could end up losing less money by forgiving some of the principal than by facing more widespread losses on loans that are under water. The new analysis was conducted to estimate the effects of an Obama administration program that increased incentives for investors to cut the principal owed by borrowers.

But he warned that the idea has its limits and would affect fewer than one in 10 of the 11 million troubled borrowers in the country.

The preliminary analysis announced Tuesday involved nearly 700,000 borrowers and assumed that each would receive an average of $51,000 in loan forgiveness. FHFA found that Fannie and Freddie would save an estimated $9.9 billion by using principal reductions, compared with $8.2 billion if those same borrowers received loan modifications under the administration’s current program. The Treasury incentive payments needed to subsidize those modifications would cost taxpayers $3.8 billion, the analysis showed.

“This is not about some huge difference-making program that will rescue the housing market,” he said in a speech to the Brookings Institution in Washington.

Many experts on housing and the economy consider loan forgiveness to be one of the most promising but [Read more…]

Foreclosures returning to market may find value eroded

As many as 1.25 million of America’s least-cared-for homes are headed for auction after a year-long probe into foreclosure practices kept them off the market.

Sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, according to Moody’s Analytics. But prices for the homes could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac. That month, 43 percent of foreclosures were delinquent for two or more years, from a 21 percent share in 2010, according to Lender Processing Services in Jacksonville, Fla.

“The longer a foreclosed home is in the mill, the bigger the losses,” said Todd Sherer, who manages distressed mortgage investments for Dalton Investments, a hedge fund in Los Angeles that oversees $1.5 billion. “We have a bulge of these properties coming through the system.”

Any homeowner knows that housing depreciates pretty rapidly if you don’t take care of it

Homes stockpiled less than a year sell for about 35 percent below the value set by lenders, according to a March 15 report by the Federal Reserve Bank of Cleveland. At two years, the loss is close to 60 percent. A surge of cheap foreclosures may erode prices in the broader real estate market, even as the economy expands and residential building increases, said Karl Case, one of the creators of the S&P/Case-Shiller home-price index.

“The question on these aging foreclosures is how many are going to be sold and affect prices and how many will be complete losses,” said Case, professor emeritus at Wellesley College in Wellesley, Mass. “Depending on their condition, they could have a big impact on home prices.”

The best measure of the influence foreclosures have on the [Read more…]

Rents Continue to Climb, Make Buying Even Better

As demand increases, rents continue to rise, increasing 5 percent over the past 12 months. Meanwhile, the asking prices for homes fell 0.7 percent in that time, according to a new report released Thursday by Trulia Inc.

Buying a home is more affordable than renting now in almost every part of the United States,  . . . Jed Kolko, Trulia’s chief economist

The national vacancy rate for apartments during the first quarter fell to its lowest point since late 2001, according to a report by Reis Inc. Cities that have the lowest number of available rental units are seeing some of the largest increases in rents.

“A lot of people who were owners lost their homes in the bust in these places,” Kolko says. As such, many of these former home owners have turned to renting, which has been ramping up demand and driving up rents across the country.

Nationally, the median rent was $1,350 a month in March — up from $1,285 a year ago, according to Trulia.

Rents have risen the most the last year in markets such as Sarasota, Fla. (12.9 percent); Miami (12.1 percent), San Francisco (11.1 percent), Middlesex County, Mass. (10.6 percent), and Edison, N.J. (10.5 percent), according to Trulia.

SOURCE: CNNMoney

PRICE REDUCED: 3 Beds, 2 bath, Garage + Detached Studio $97,300

The bank has given it’s approval to sell at this price. 3 bedrooms, 2 baths, 2 car garage, huge 2 story window wall, fenced rear yard, detached studio/workshop, sprinkler system, gas heat, close to bike trail, schools and more.

SUN VALLEY BOARD OF REALTORS MLS # 12-311963

ASSESSOR’S PARCEL #  RPH07140000030

TAXES – 2011:  $ 618.40

GARAGE: 2 Car Attached 426 Sq. Ft.

MLS LISTING DETAIL:  Click here to see complete  MLS Listing Detail

OTHER MLS LISTINGS IN IMMEDIATE AREA: Click here to see other  MLS Listings

CO-BROKER DIRECT MLS LINK:  Confidential MLS Listing Information

Risk Changes in Emerging Foreclosure Tide

Banks are expected to pick up the pace of foreclosures, which will send a new wave of these properties on the market soon, housing experts say. This anticipated “wave” will occur at a time when the housing market has been showing signs of strengthening in pockets across the country, they also note.

But this time around, the increase in foreclosures is expected to come from a different source — everyday home owners with low interest-rate mortgages, housing experts say.

Borrowers “with ordinary mortgages whose ability to meet payment have been hit by the hard economic times” will be the ones dominating the foreclosures in the next round, CNNMoney reports in a recent article.

The last time that foreclosures dramatically increased nationwide, they were dominated by borrowers who had subprime loans with high interest rates and loans in which banks often had asked for no money down or even proof of income. Since then, underwriting standards by lenders has gotten a lot stricter.

“The subprime stuff is long [Read more…]