Archive for the 'Real Estate News' Category
Superbowl Friday Update
January 30th, 2009
Categories:Real Estate News
Here is this week’s Friday follow up.
Today weren’t getting away from all the market news and going with some market trends and some useful tools.
Here’s a list of what’s included:
- My Money, My Home, My Future
- Latest Home Buyer Trends
- Home Fads That Are Falling Out of Style
- Goodbye Granite Counters, Hello Cork!
- Using Color Psychology on You Home
My Money, My Home, My Future
This is a great government site, loaded with information to help home buyers in today’s market. The website breaks the information and resources into three categories; saving money for buying a home, establishing financial stability as a homeowner, and achieving financial security for the future. I hope everyone can find something of use on this site. – http://portal.hud.gov/portal/page?_pageid=73,7620944&_dad=portal&_schema=PORTAL 
Latest Homebuyer Trends
Check out what homebuyers are rating the most important features, when it comes to their home purchase. http://styledstagedsold.blogs.realtor.org/?p=268 Home Fads That Are Falling Out of Style Remember walking through new homes and seeing the desks in the kitchen that looked perfect for a laptop, perhaps the digital version of a cookbook? Well it appears, that little nook in the kitchen turned out to be a great spot to pile crap, and homebuyers aren’t as keen on kitchen desks anymore… see what else has changed. http://styledstagedsold.blogs.realtor.org/?p=273
Goodbye Granite Counters, Hello Cork!
Believe it or not, the new countertop trend appears to be cork. If you’re not keen on cork, consider bamboo, concrete, quartz, or even IceStone… just watch out for the price tag on the Ice Stone… check out all the details here. http://www.realtor.org/rmohome_and_design/architecturecoach/articlearchive/0902_architecturecoach_countertops 
Using Color Psychology On Your Home
Who would have thought someone would actually take the time to perform a study, to test if painting a room with “food colors” like celery green or red would increase a person’s appetite? Check out the other useful tips and ideas: http://www.realtor.org/rmohome_and_design/articles/2009/0902_househome_colorpsych
Have a great weekend and Go Cardinals… hey, i’m from AZ, gotta support the home team.
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4.5% Home Loans Help, Hurt or Just Silly?
December 12th, 2008
Categories:Real Estate News
The treasury department announced last week their plan to push 30 year fixed rate loans to 4.5%, which would be the lowest rate for a 30-year fixed-loan in a very long time.
They think it will help stimulate the economy, but will it really boost sales and stop the free fall of home prices?
While home sales are slower than normal, creating initiatives to boost home sales is like putting a bandage on a bullet wound.
We can pile as many snoopy bandages as we want, but the bleeding will continue and eventually the bandages could become the source of an even bigger problem.
4.5% interest rate loans would only go to help home buyers get off the fence and buy in what is a historically strong buyer’s market. A low interest rate means a lower payment, however, as we all know a low interest rate will simply mean the justification of a higher purchase price and a similar payment. So instead of moving inventory and getting more people into homes, a lower interest rate is likely to get more home owners to stretch their limits and buy a home that is bigger than necessary or financially affordable. Again, this is just the snoopy bandage.
What about the bullet wound? The source of this continued housing market crisis is the increasing number of foreclosures. More foreclosures mean more people on the street, with screwed up credit scores, who are now wasting more money on rent and higher interest rate payments, when they could be putting that money back into their homes. Many of these homeowners are willing to pay the outrageous loan balance on their homes, if they could simply refinance to a lower rate and a monthly payment that is affordable. Why aren’t we putting our resources to keep these people in their homes?
The bullet has to be removed and the wound sutured closed before we can start digging through the bandage box to find the best snoopy bandage.
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Current Workout Programs Accepted Most Banks
December 10th, 2008
Categories:Real Estate News
Current options granted by the mitigation departments generally fall into one of three categories, homeownership retention, property disposition options, and adversarial legal options.
Home Ownership Retention Options:
- Loan Modification:
This option changes the terms of your loan without refinancing and may include adding delinquent payments to the balance of your loan, which would be repaid over the remaining term. - Repayments/Special Forbearance Plan:
In this situation your lender may agree to delay any foreclosure or other legal action fi you promise to repay the delinquent amount over a specified period of time. - Partial Claim (FHA Customers Only):
Here, you may be able to receive funds from HUD to bring your loan current. Once all of the required documents are gathered a request is submitted to HUD to advance the funds necessary to bring the loan current.
Property Disposition Options:
- Short Sale:
You may be able to sell your property at its fair market value even if the sales proceeds are less than what is owed on your plan. At the time of this article, a short sale seems like the most logical of solutions for banks, however many banks are painfully slow to respond to contracts and often the time involved with closing a deal is the reason why most deals fall apart on the table. - Deed-in-Lieu of Foreclosure:
The property deed is essentially given to the lender to avoid the foreclosure process and theoretically avoid credit ramifications. Check with your tax adviser before handing the deed back.
Adversarial Legal Options:
The options listed above are “voluntary” and the options following are considered “adversarial”
- Involuntary Deed-Back:
The borrower simply send the deed back to the lender and does not wait for approval. - Action on Loan irregularities:
Many borrowers are in their present adverse positions because they were victim of wrongful bank, real estate, appraisal practices and are entitled to legal claims. In this situation, they can threaten to take legal action and the bank may negotiate a new loan. - Bankruptcy:
Bankruptcy can “cram down” values to “actual values” or discharge debt enterely, possibly even saving a homestead exemption. When “crammed down” the mortgage is reduced to the value of the property and the balance becomes an unsecured debt. The borrower then pays on the new home value/loan amount.
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Government Workout Programs
December 9th, 2008
Categories:Real Estate News
Here is a list of the current workout programs offered by the Government. At this point all programs are on the federal level as states have not been given monies for programs. Cities have received some monies to help improve the market, but are under tight time lines to spend the monies.
Hope for Homeowners (H4H):
Program Begins: October 1st, 2008 and will end Sept 30, 2011
This program provides a “last hope” for homeowners by bringing in the federal government who voluntarily allow borrower to refinance under H4H. It reduces the mortgage amount to 90% of the appraised value of the home. Additionally the new loan has to be a 30-year fixed loan. FHA will insure up to $300 Billion of these new loans. The catch is that if you take this loan, you have to split the intial equity created by the write down of the mortgage with FHA. The government also gets 50% of any appreciated value for as long as you own the home, even after you pay off the mortgage. H4H participants are not allowed to take second mortgages out on their home unless it is being used to maintain the property. Other costs include a 3% upfront mortgage insurance premium and a 1.5% annual premium based on the mortgage amount.
The big issue with this program lies with what it will take to get the loan amount down to 90% of the appraised value of the home. Right now that means the banks will need to agree to write off the difference from the original loan to the new FHA insured loan. This is where most banks at this time are unwilling to cooperate with the program.
Streamlined Modification Program (Fannie Mae and Freddie Mac):
Program Begins: December 15th, 2008
This program only applies to mortgages owned or guaranteed by Fannie Maw and Freddie Mac. With this program, a borrower who is 90 days delinquent will be eligible for a new loan with a payment that does not exceed 38% of his gross monthly income. Proof that “hardship” has occurred is needed to qualify.
Federal Bailout Money:
For the most part the monies from ERA and TARP have been given to the big five banks, also known as the fortress lenders. Of the $700 billion authorized for various bail0out programs, about $350 billion will be spent in this manner. The Secretary of Treasury has indicated in late November 2008, (a reversal of his former statements), that the other $350 Billion will not be used to buy assets from the “bottom up”. The FDIC has taken the contrary position and believes the workouts should be funded by the government buying assets from the lenders and having it conduct the workouts, which would likely then be far more liberal (better), for the borrower than the current Treasury plans
President Elect Barak Obama:
The incoming president has taken the position that he is going to change the direction taken by the Treasury. He has talked about “national foreclosure moratoriums” and the kind of asset purchase program the FDIC wants. It is likely he will replace the current Secretary of the Treasury who has failed under heavy criticism for using bailout monies to bail out the banks instead of the borrowers on the bottom. The current system is being referred to as the “trickle down” system and is strongly criticized for not working. Obama has been outspoken about a “trickle up”system that will help strapped homeowners.
FHA/HUD Changes:
The current FHA/HUD loan maximum for Maricopa County, Arizona is $346,250. Effectively in 2009, it will DROP to $271,050. Thereafter it will go by zip code and change radically from one community to another.
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What Banks Have Loan Workout Programs?
December 9th, 2008
Categories:Real Estate News
The nine largest banks, Countrywide, Bank of America, M&I, JP Morgan Chase / Wamu / EMC, Wells Fargo Home Mortgage, Citigroup / Wachovia, GMAC Mortgage, Downey Savings and Loan, and IndyMac have all been under a great deal of pressure to work with homeowners to help them through a tough economy. Infact, many see these banks as being capable of producing the biggest and fastest changes for this economy.
However, many to this day continue to fail in staffing their departments with enough help and fail to develop programs to help homeowners.
Here is a quick look at each company’s current situation.
Countrywide:
As many know Countrywide was purchased recently by Bank of America (B of A) when they realized the large sum of money they loaned to Countrywide would likely never be paid back. At this time Countrywide is slow to make approvals and put the systems in place to help homeowners. However, B of A has created a comprehensive application and alternative plan that will hopefully be implemented and used effectively by Countrywide in the near future.
Bank of America:
Bank of America reports to have a system in place, however they are also very slow to respond and act on the system. At this point B of A has not made their program available to the public, which makes some believe the program does not exist. B of A is also the contact point for Countrywide’s workouts.
M&I Bank:
M&I also does not appear to have a program in place. However depending on who you get a hold of will greatly affect the outcome as some individuals appear to be knowledgeable with the workout process.
JP Morgan Chase, WAMU, EMC:
JP Morgan/Chase appears more organized and has announced a plan to offer $100 Billion to loan modifications or mortgages with place to expand the program in the next 90 days. The expansion will come around in February and is projected to help 400,000 homeowners avoid foreclosure. The loan modification program is also extended to customers of WAMU, which was purchased by JP Morgan in November and it will be available to EMC customers.
Loan modifications may include principle or interest-rate reduction on owner-occupied mortgages for homeowners who show a willingness to pay. Chase plans to establish 24 regional mortgage counseling centers in areas with high foreclosures rates. Chase will also start a new process to evaluate each loan individually before moving it into the foreclosure process. As a result they will temporarily suspend foreclosures while the changes are being implemented.
Wells Fargo Home Mortgage:
Wells Fargo is one of the few banks that are well staffed and have a program in place they are willing to publish. They have made it clear, they are willing to deal and they are dealing. They are currently most receptive to homeowners who are 80 days or more delinquent to qualify for their “Project Life Line”. This program offer customers a fresh start. However it is expected that program will likely change as it was stated by Blair, chair of FDIC who recently stated that “waiting until default makes it tougher to rehabilitate”.
Citigroup and Wachovia:
Being referred to as one of the big five banks also known as a “fortress bank”, Citigroup appears to have a policy in place and established criterion. They recently received a huge bailout package from the feds. On November 24th, 2008 the Feds signed off on a bailout for Citigroup and was one of the first bailouts to have strings attached. The Feds agreed to infuse the company with capital to “back up” failed assets. The Feds announced two days later the affected assets would be subject to the same write down program handed to IndyMac. The formula in brief means the mortgage payments can be lowered to 38% of less of a homeowners monthly income for qualified applicants. To reach the target payment the lending rate may drop to as low as 3% and stay there for five years with payment re amortized accordingly.
GMAC Mortgage:
GMAC appears to have a plan and stated options firmly in place. Their plan is available online.
Downey Savings and Loan:
Downey Savings and Loan were taken over by regulators just before Thanksgiving, 2008. It is unclear what will happen, or what regulators will require, however it is expected they will immolate the plan given to IndyMac.
IndyMac:
IndyMac was the first big take over that occurred in early 2008. Lenders are typically more motivated when they are under regulation and so what happens with IndyMac is significant. The programs put in place with IndyMac will likely suggest what will happen with other banks taken over. At this point, the IndyMac program is well-spelled out and actually appears to be a program that could give a lot of borrowers some real relief. The modification plan tries to “back down” the mortgage terms, amounts, interest-rates to equal not more than 38% of the borrowers household income. Which works out pretty good for a borrower who has income, but not so great for a borrower without an income.
Most banks offer some program information and contact points for workout programs, although some can be harder to find than others. As time progresses more programs will be made public, the best solution is to good the bank of interest for workout programs.
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New Housing Bill
December 7th, 2008
Categories:Real Estate News
The government has been standing toe to toe with the Mortgage Industry for years now waiting to see who will back down first and start the recovery process for the housing industry… And it looks like the Mortgage industry won the first battle.
With the government bailing out one major lending institution after another, they have now decided to throw billions of dollars at the foreclosure industry. But the government isn’t going down without throwing a few punches…
The new housing bill will allow homeowners to refinance with a fixed rate FHA loan for 90% of the home value. But the lender has to agree to write down the value of the home to the market level. Which in some cases means writing off 20% of the value of the home. and what does that mean??? drum roll please…. it means the lenders aren’t going to agree to writing down the loans because it means they have to “accept” a loss. They would rather throw their hands in the air and tell their shareholders “we were forced to foreclose and lose all that money”.
Its been an unbelievable sight watching lenders refuse to work with home owners (and builders) for years. It is without a doubt, that allowing a homeowner to do a short sale or refinance would save the bank thousands and thousands of dollars on every upside down mortgage they have. But instead of working with the home owners, the banks choose to ignore their calls, wait for them to default on their loan and then foreclose on them two years later… back to the new bill…
ok, so this new bill that Congress passed and our President signed off on… here are some more tidbits on it
- It only applies to those who got closed on their loan from Jan ’05 to Jun of ’07… i don’t understand this logic… ’05 was the last of the high prices and crazy rates… ’06 and ’07 prices were much lower than ’03, ’04 and ’05. Right there, i’m concerned we hit the wrong target market for this bill
- While this bill says it will help 400,000 borrowers…. that is only 15% of the homeowners out there facing foreclosure… and it is up to the banks if they will help any of those homeowners out.
- If you’ve lost your job and your payments are unrealistic, but you have retirement savings, the banks will require you to burn through your savings before they consider you a candidate. While I don’t think we should be throwing money at everything, it seems kind of counter productive to help out the poor, and let the people who have savings but made the same bad move as the poor get penalized.
We’ll keep you updated as this bill is put to use in October.
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Banks Get Wise?
November 3rd, 2008
Categories:Real Estate News
Believe it or not, it appears the banks are starting to sit up straight and take note of the foreclosure problem.
Studies have shown banks loose between $80,000 and $100,000 per property when they foreclose on a home due to the costs involved with processing the foreclosure and the reduction in sales price. The question home owners and Realtors have been asking is, “why not find a way to keep willing homeowners in their homes and and save all that money?”
The New York Times reported Chase Bank will be holding off on foreclosing on homes for at least 90 days to help homeowners refinance and renegotiate their loans to allow them to stay in their home.
The Arizona Republic has also reported Bank of America is doing the same, and they are urging other banks to hold off on foreclosures as well. Currently Bank of America has held off on foreclosing on 2,000 homes in the Arizona market.
This might be the action the real estate market needs to quickly turn around.
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