Are the banks finally really giving back to homeowners? 

In a recent development, it seems that banks are offering substantial incentives to select homeowners in an effort to encourage short sales. 

There is speculation that the reason why banks are now selectively offering these cash incentives is because short sales can allow the banks to recoup larger proceeds by bypassing the costs, length in time and uncertainty of foreclosing on a house.

Nationally, 1.4 million homes were in the foreclosure pipeline in December 2011, and 3.2 million homes have been repossessed by banks since September 2008, according to mortgage information firm CoreLogic.

So of course the next big question is: How are they selecting who will receive the cash incentive?  Well the selection process code has not been cracked yet, however representatives at Chase, Wells Fargo and Bank of America have said that reasons for the cash incentives include: short sales being more efficient for the bank than foreclosure, as well as market conditions and homeowner need.

“When a loan modification isn’t possible, a short sale is often a faster and better solution for the homeowner, investor and neighborhood than a foreclosure,” said Chase spokesman Tom Kelly

“The incentive is based upon the market and individual customer needs, and can range from amounts under $3,000 up to as much as $20,000,” Wells Fargo spokeswoman Holly Rockwood said in a written statement”

 

“The amount of assistance is based on the unpaid balance of the loan – 5 percent of the (unpaid balance) with a $5,000 minimum and $20,000 maximum,” Bank of America spokeswoman Jumana Bowens said in an email.

 With the Mortgage Debt Forgiveness Act expiring this year on December 31st, this cash incentive yet is another reason why homeowners may want to consider short sale if their house is underwater.  With the selection process for the cash bonus not being clear, it would be beneficial for any homeowner who owes more than their house is worth to Schedule a Consultation to see if short sale is the best option for you as you may be one of the “selected” to receive an extra bonus this year.

President Obama Introduces New “HOMEOWNER BILL OF RIGHTS”

One of the biggest issues facing Homeowner’s that have attempted to do a loan modification, short sale, or any other foreclosure prevention program is the lack of standard procedures from one lender to another.  It has been our experience at New Team Realty that each lender varies not only their timelines in approving a loan modification or short sale, but also in their internal communication and tracking system of the process itself.  In addition, this uphill battle becomes even more rigorous when you have a 1st lien holder and 2nd lien holder.  In these instances, there not only may be lack of communication and tracking of the loan within each lender’s internal system, there also may be an even bigger communication gap and agreement between each lender.

For example: A 1st lien holder in a short sale might say they only will allow $6000 as a payoff to a the 2nd lien holder.  However, the 2nd lien holder wants, say $10,000 as payoff.  Neither lender wants to budge on the amount they will offer/accept.  This makes the negotiations sticky, and it takes an Experienced Professional to negotiate with both lenders and convince them both to play nice with each other.

Obama’s Homeowner Bill of Rights would assist these negotiation efforts by  requiring servicers and investors to implement standards that minimize conflicts of interest and facilitate communication between multiple investors and junior lien holders, so that loss mitigation efforts are not hindered.

Other highlights of the New Homeowner Bill of Rights would prevent lenders from enacting foreclosure actions against a homeowner without documented efforts to reach out to the homeowner by offering foreclosure alternatives, and/or a homeowner’s lack of interest in foreclosure alternatives, or failure to successfully complete  foreclosure prevention program such as loan modification or short sale.  The New Bill also will establish protections for homeowners against wrongful foreclosure.

If you are interested in learning more about this New Homeowner Bill of Rights, or you want more information on foreclosure prevention options, click here to schedule a consultation with Rebecca to see how we can help you.

New Underwater Homeowner’s Refinance Program…Is it Right For You?

For homeowner’s who owe more on their loan than their home is currently worth, yet haven’t been able to refinance previously, there may be hope in the horizon.  In an effort to bolster the economy, President Obama is proposing new legislation under the Federal Housing Administration (FHA).  This new refinance program will allow homeowners to refinance at the current interest rates, which are at an all-time historic low.

“… Responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief,” Obama said in his state of the union address. “And that’s why I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low rates. No more red tape. No more runaround from the banks.”

Well that’s a big sigh of relief for nearly 3 million Americans! 

So the next question is: Is this Right Program Right for You?

To qualify under this new proposed program, there are key factors that must be present.

1) If you owe more than your home is worth

2) You are CURRENT on your monthly mortgage payments

3) You have a mortgage held by Fannie Mae, Freddie Mac or a Private Held Institution that previously did not offer refinance options

This is a great opportunity for qualified homeowners to finally get some relief and taxpayer dollars back from the “bank bailouts”.  Click here to find out more information.

 

 

 

For those that homeowners who are currently unemployed and have a Freddie Mac loan, there may be some relief in sight.

Freddie Mac announced Friday an extension in forbearance for unemployed borrowers. Some unemployed homeowners may now receive up to 12 months forbearance.

According to Freddie Mac, almost 10 percent of delinquencies in the GSE’s portfolio are linked to unemployment. With a new directive from the GSE, loan servicers may evaluate and offer up to 6 months of forbearance in payments to unemployed homeowners. Once the 6 months is up, servicers may also be able to offer an additional 6 months of forbearance in certain circumstances, totaling a possible 12 months of forbearance.

“These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies.,” said Tracy Mooney, SVP of single-family servicing and REO at Freddie Mac.

“We believe this will put more families back on track to successful long-term homeownership,” Mooney said.

Servicers may also evaluate borrowers already in an active forbearance plan to consider extending the terms according to the new directive from Freddie Mac.

Schedule a Consultation now to find out if your Mortgage is a Freddie Mac Loan, and to see if you qualify.

Michael Williams has decided to step down from his position as CEO and president of Fannie Mae, the GSE announced Tuesday.

In 2009, after the company was placed in conservatorship with the Federal Government, Williams was appointed as CEO of Fannie Mae. Since then, he has made notable strides in rebuilding a stronger book of business for the GSE.

Under Williams’ leadership, Fannie Mae has enabled six million households to refinance into a lower cost mortgage, 1.7 million homeowners to purchase a home, and provided financing for nearly one million units of affordable rental housing.

In addition, the company has built a stronger new book of business. This new book, which consists of loans purchased or guaranteed since January 2009, is nearly 50 percent of the company’s overall book of business.

Through its loss mitigation efforts, nearly one million homeowners have avoided foreclosure, while Fannie Mae has helped to stabilize neighborhoods and reduce credit losses on its legacy (pre-2009) book of business.

Williams joined Fannie Mae in 1991 after tenures with KPMG Peat Marwick and Dupont. He led the company’s eCommerce and eBusiness divisions, including the development of the Desktop Underwriter product, which became a standard for the housing finance industry.

In 2005, prior to the Government taking the GSE into conservatorship, Williams was appointed COO, and was responsible for overseeing the company’s accounting and control reforms and financial restatement.

Williams will remain on board until a successor is appointed, according to a statement made by the GSE.

 

The Fed Identifies Key Markets That Could Benefit From A Large Scale REO-To-Rental Program

 

“The decline in house prices and the rise in rents suggest that it might be appropriate in some cases to redeploy foreclosed homes as rental properties,” according to the Federal Reserve.

The housing crisis has created an increased demand in rentals, as many Americans faced with foreclosure have lost their homes.  In the past few years, we have seen the market for rental housing significantly strengthen, as opposed to the market for Owner-Occupied homes.  In order to address this ongoing trend, the Fed is supporting the idea of a large-scale REO-to-Rental for the over-supply of inventory of Fannie Mae, Freddie Mac and FHA foreclosed homes to help prevent property values from falling further.

With Fannie, Freddie and FHA holding close to half of the outstanding inventory of foreclosed homes currently for sale, it has also identified key city markets that have high concentrations of foreclosures owned by the agencies.  60 Metropolitan cities have been identified as having more than 250 REO’s for sale by the GSE’s and FHA.  In addition, the numbers are bound to increase, as it is being reported that the number of homes currently going through the foreclosure process are 4 times the amount that are currently for sale.  San Diego has been listed as one of the 60 markets with a significant amount of Government-owned REO’s currently listed for sale.

For San Diego Investors, this could be a great opportunity for purchasing bulk REO’s that will employ a hold-cash flow strategy, if the program is implemented.

Could This Double Dip Turn Into A Triple?

Barclays Expects a 7% Drop In Home Prices

   

Research firms Barclays Capital and Clear Capital say a “triple dip” in home prices is eminent.  They are estimating a 6-7% drop in prices over the coming months followed by a gradual rise.

How much fact is behind this prediction and is an accurate one for San Diego?  To figure this out we need to look at REO and Distressed Inventory.  The banks will need to be removed from the Real Estate Market before we see normalization.  In San Diego, there are approximately 73,000 homes and condos that are either in shadow inventory or in a state of eminent foreclosure.  These homes will need to cycle through the market as Bank Owned sales or as Short Sales.  At our current sales pace (about 12,000 distressed sales closed in 2011) we are looking at a 5-6 year cycle before we are through this bank mess.

The biggest factors involving our prices within the market itself will be the pace at which this inventory is introduced into our market.  The government/banks have been somewhat strategic in their release of their inventory and it’s nice to think that they are doing this to control the inventory.  (We won’t go into how it affects their books and their ability to appear more or less profitable to suit their needs).   Peripheral factors are of course lending rates and the ability for buyers to qualify, employment and the overall health and confidence of our economy.

Home Owners considering selling to “test the waters”now is the time to prepare to list.  However, listing in June may net you a higher windfall.  Current inventory is up and you’d be jumping in the cage with some serious competition.

Home Owners who are stretched financially and underwater,there is no better time than right now to consult and plan for the next 10 years.  This is not going to fix itself and, to add to the urgency, The Mortgage Debt Forgiveness Act that allows you to cancel the debt, is up at the end of the year.

Buyers/InvestorsIf you can buy, these are the times when the new money emerges.  If you can buy, you are amongst the minority who can take advantage of what will most likely be the greatest Real Estate opportunity of our lifetime.  We will all look back at this Depression and say, “I wish I bought 10 houses in 2012”.

Freddie Mac’s recent survey has some great news for buyers looking to get a great deal in today’s market.  It has found that the average 30-year fixed-rate mortgage fell to 3.91% this week — this sets a new record for being the lowest in over 4 decades. Interest rates on adjustable-rate mortgages (ARMs) also set a new record:  The 5-year ARM fell to a record-low 2.85% and the 1-year ARM fell to a record-low 2.77%. The 15-year fixed was the remained the same from last week’s record low of 3.21%.

Rates on 30-year fixed mortgages been at or below 4% for the past two months, Freddie Mac reported.  This equates to payments on a $200,000 loan now being at least $100 a month lower than at the start of the year.

With declining housing prices , combined with interest rates  being at an all-time low, this is a great time for those looking to buy– whether it be first-time buyers, investment property, or those looking to upgrade to a better home.

San Diego’s Real Estate Market is always a topic of discussion.  After all, America’s finest city is the destination most aspire to live and visit.  With its great diversity in product, price, and lifestyle there are always opportunities to buy up and invest.

SO, THE BURNING QUESTION IS: IS IT THE RIGHT TIME TO BUY, SELL OR INVEST???

 

 What we hear from Fed Chairman Ben Bernanke on the topic of Real Estate:

“The housing market, which has been in decline for three years, has also shown some signs of bottoming.”

 What we Know:

 A home sold as a Short Sale or REO is typically sold slightly below market values thus decreasing the overall values.

•  There are 15 million homeowners in America who are in a negative equity position

• In San Diego, there are 550,000 homes and condo’s that are owned
• Just over 1/3 of San Diegans are underwater.  That’s about 182,000 homes and condo’s
• Of these 182,000 it is estimated that 60% will wait it out. That’s 109,000.
• That leaves us with 73,000 homes that will be either going into foreclosure or sold by short sale.
• As of now, there are 11831 homes in San Diego in some form of foreclosure.

 

Which means that there are over 60,000 still to cycle through the system assuming we remain stable and don’t see a drop in the market or 1 in 10 homes.

Perspective

Based on what we know, if you look to your neighbor on the left, then the neighbor on your right, odds are that one of you are underwater.  If you live in a community of 100 homes, 10 will be sold as distressed sales before the banks are removed from our Real Estate market.  So, if you are a home owner who purchased after 2005 and have had a financial setback since, selling now vs later is sometimes the best plan.  There are many who have done this and have already repurchased nicer homes for hundreds of thousands less and are happy they did.  If you are renting, needing a larger home, needing to downsize, or are interested in investment property for flips or cash flow, there are awesome opportunities to buy below market prices and all time low rates.

 

Homework For Home Owners

Regardless of your equity position you need to have a solid understanding of your current Real Estate position and the most educated estimate on where you are headed.  The first step is to truly understand your home’s current value.  From there, you can plan your future.  The days of lucking our way to six figure equity gains annually are long gone.  We are shifting from a culture of over borrowing to a more comfortable and meaningful life.  And part of this shift involves making wise choices based on our individual research.

 

Homework For Home Buyers

First step is to develop of strategy based on your goals.  Values have dropped in San Diego to a point where many first time home buyers and people from other states and countries can afford a comfortable lifestyle with lots left over for fun, for giving, and for saving.  Once you have a solid strategy you can begin to look at what type of homes and communities you can comfortable afford by looking at homes that are recently sold.  Once you find the homes and locations you like, its time to begin searching for homes for sale that match your criteria.  Today, there are opportunities to buy a home at prices below market values that will provide you with a much improved quality of life.