Real Estate Information

It wasn't long ago that some economic forecasters anticipated a turnaround in the home-sale market by 2012. When the economic recovery stalled and the housing market showed no sign of turning around quickly, projections for a housing recovery were pushed out two, three and even seven years.

Ken Rosen, chairman of the Fisher Center for Real Estate & Urban Economics at the University of California, Berkeley, believes that home prices have bottomed and are increasing in areas powered by strong job growth. However, even in places where prices are rising, they are not rebounding.

Not all economists agree that home prices have hit bottom; many anticipate another 5 percent price decline over the next two years.

Rosen gives a 65 percent probability that the recovery will be choppy. He forecasts a 5 percent chance of a strong recovery and a 30 percent chance of a double-dip recession. Factors holding a recovery back: a general sense of uncertainty that undermines consumer confidence; millions of unsold foreclosure properties; high unemployment; cutbacks in services; and tight credit conditions.

In some urban areas of the country, like Atlanta, Chicago, Miami and Phoenix, it may be more advantageous to buy than to rent. Apartment rents have been rising due to increased demand for rentals from people who have lost their homes in foreclosure, empty nesters trading down, people with jobs who have decided not to buy, and people who would like to buy but who can't qualify.

The same lenders who gave risky mortgages to buyers who couldn't afford them in 2005 and 2006 are now making it difficult for qualified buyers to get financing. It used to take a credit score of 620 or more to qualify for a conventional mortgage. In those days, loans to buyers with 5 to 10 percent cash down were readily available.

Today's buyers need a credit score of 760. Some conventional lenders require a 20 percent cash down payment. If the buyers are self-employed it can be more difficult to qualify. It's a great time to trade up, but most buyers can't qualify to buy the new home without first selling their current home.

One of the best things that could happen to the housing market at this point would be an easing of credit-qualifying standards -- not to the ridiculously low level of several years ago, but to a level that would enable more creditworthy buyers to take advantage of today's low interest rates and relatively low home prices.

Good news lately bodes well for the future, but you should anticipate continued volatility. The jobless rate dropped to 8.6 percent nationally in November, the lowest level in 2 1/2 years. The consumer confidence index rose 15 points in November, to 56. Although encouraging, if the economy were on solid ground we would expect a reading of 90.

HOUSE HUNTING TIP: It's a good time to buy a home in many areas of the country. However, it's only a good time if you buy for the long term and you have realistic expectations about what buying a home will entail. It will require maintenance, which costs money and takes time.

Your home is unlikely to be the cash cow that most buyers expected -- and many achieved -- during the bubble years. According to Robert Shiller, Yale University economist, home prices track, on average, with the inflation rate over long periods.

Renters with good incomes and good credit who are tired of moving could benefit from buying a home now. Just be aware that if we go into a double-dip recession, prices could drop another 10 percent in some areas. That's why you don't want to buy for the short run.

THE CLOSING: Buyers having trouble amassing 20 percent for a down payment should check with independent banks that have more flexibility in their qualifying criteria.

Business Wire reports that the Mortgage Debt Relief Act is scheduled at the end of 2012. This act provided forgiveness on tax "gains" that result from discounts on primary mortgages on primary homes. This does not apply to home equity lines on homes. According to Brian Gubernick of Scottsdale-based Home-helper Consultants, "If you owe a debt to someone and that debt is forgiven, the amount they forgive can be taxed. Right now, many borrowers are able to avoid tax liabilities resulting from the debt cancellation, but when the debt  relief act expires in 2012, many will face a substantial tax burden that could have potentially been avoided."

News Article

New Year's Resolution: Get Out of your Underwater Home

Mortgage Forgiveness Debt Relief Act tax breaks set to end in 2012

SCOTTSDALE, Ariz., Dec 27, 2011 (BUSINESS WIRE) — Each New Year begins with the same resolutions: Spend more time with family, go to the gym and lose weight. In 2012, the resolution for many will be: Get out of debt. For homeowners, it’s time to start thinking about how underwater they may be in their homes.
With surges in home foreclosures and the upcoming expiration of the Mortgage Forgiveness Debt Relief Act, homeowners need to ask themselves: Do I continue to pay my mortgage when I’m so far upside down, or can I even afford to continue paying my mortgage?

A CoreLogic study showed that 49 percent of Arizonans with home loans have negative equity in their homes, making Arizona the second-worst state in the nation. Brian Gubernick of Scottsdale-based Homehelper Consultants has helped hundreds of these underwater homeowners navigate their options and begin the road to recovery.
“Short selling can be a great option to avoid foreclosure and get out from underneath your home,” said Gubernick. “That said, a short sale isn’t always the best solution for everyone. We work with our clients to evaluate their situation, review their options and help them with the solution that best fits their needs.”
One of the greatest assets to underwater homeowners has been the Mortgage Forgiveness Debt Relief Act that allows many to avoid large tax liabilities tied to their short sale and foreclosure transactions.

“If you owe a debt to someone and that debt is forgiven, the amount they forgive can be taxed,” said Gubernick. “Right now, many borrowers are able to avoid tax liabilities resulting from the debt cancellation, but when the debt relief act expires in 2012, many will face a substantial tax burden that could have potentially been avoided.”
“According to Zillow, home values in the Phoenix area have dropped 53 percent over the past five years,” added Gubernick. “With little hope of rebounding in the near future and the expiration of the debt relief act, the time to act is now. Short sales can take many months to complete, so to beat the deadline, homeowners need to start the process by April, if not sooner.”

News Article

Government Set to Sell Foreclosures in Bulk

By: Diana Olick - CNBC Real Estate Reporter

The Obama administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, is very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, according to administration officials.

There currently are about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), and millions more are coming.
The foreclosure processing delays of last year created a mammoth backlog of properties yet to be processed, which are just now being re-started. One of the initiatives of this program is for the federal government to be in the position to mitigate and manage any new wave of foreclosures, sources say.
Late-stage delinquencies still in the pipeline number close to two million, according to a new report from Lender Processing Services. Foreclosure starts outnumber foreclosure sales by two to one and “the trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted,” according to LPS.
Knowing this all too well, the Treasury Department, Federal Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their conservator, the Federal Housing Finance

Agency (FHFA) at the helm, are engaged in a collaborative effort to face this new wave of foreclosures head on and figure out a way to keep these properties from sitting on the books of the government and sitting empty in the nation’s neighborhoods.
As the Federal Reserve alluded to in its white paper on housing last week, “A government-facilitated REO-to-rental program has the potential to help the housing market and improve loss recoveries on reo portfolios.” REO’s (Real Estate Owned) are bank-owned properties, or, in this case, properties owned by the government-sponsored enterprises and the FHA. Three Fed governors pushed for similar plans in speeches last week, as well.
A pilot sales program will be starting in the very near future, according to administration officials. They are working on what the market potential is, what pricing would be, how government can partner with private investors, and who has the operational experience to manage so many properties.
“I think there is a fair amount of money in the wings waiting to buy, investors doing cash raises to buy properties on a large scale,” says Laurie Goodman of Amherst Securities. “But that means they have to build out a rental organization; it means they build out a management company, because if you’re accumulating a hundred homes in Dallas that’s very different than running a multifamily building.”
A number of institutional investors have shown appetite and interest in bulk REO deals, according to officials, but the plan has to incorporate ways to help facilitate financing. That has been one of the biggest roadblocks to deals already in the works between hedge funds and the major banks. Sources close to these private bank negotiations say there is plenty of cash to buy properties, but building out a management structure for the rentals is pricey, and some investors are finding the math doesn’t add up to make it worth their while.
Larger investors want to be able to get real scale in any government program, in the range of 50, 100, 500 properties per deal, or $1 billion-plus in assets, say officials close to the plan. That’s why the government is looking to test a combination of different approaches. Fannie Mae did a $50 million sale last June, but that was on the small side. Officials are evaluating at what larger asset sales beyond that would look like.
“We expect several pilots that will involve both local investors and institutional investors. The goal here is to reduce supply by converting foreclosed homes into rental units,” says Jaret Seiberg of Guggenheim Securities. “Less supply — even less fear about a flood of foreclosed homes hitting the market — could stabilize [home] prices.”
While much of this program will focus on local areas of distress, officials say they are looking at where the assets are today but are really more focused on where all the foreclosures will be in the future. It’s not about the stock of foreclosures currently, it’s about the flow of them over time and alternative ways to manage that flow.
Officials say they want to bring back private capital and help support rental opportunities for households, particularly when rent rates are up at the same time home prices are down.

We're starting of 2012 with some great news!

There were 2 significant announcements FHA made at the end of 2011:

First, the FHA loan limit for Maricopa County will remain at $346,250 through 2012! We had a brief period of time last fall when we had to implement FHA's lower loan limit of $271,050 and there was no doubt we missed the flexibility of lending up to $346,250. Attention Buyers: The loan limit will be in force throughout 2012 and there is a strong chance the limit will decrease next year.

Second, FHA's 90 day property flipping waiver, which was set to expire December 31, 2011, has been extended through December 31, 2012 unless otherwise extended or withdrawn by FHA. All other terms of the existing waiver remain the same. Here are a few FHA rules on properties flipped and owned less than 90 days:

• All transactions must be arms-length, with no identity interest between the buyer and seller or other parties participating in the sales transaction.
• If the sales price of the property is 20% or more above the seller's acquisition cost, the lender must meet 2 specific conditions:

1. Justify the increase in value by obtaining a second appraisal (the buyer can not pay for the second appraisal)
2. Review the property inspection (underwriting may call for repairs from the property inspection if they pose a health and safety risk or are required to be repaired to comply with FHA guidelines)

• Seller must hold title to the property.
• No previous flipping activity exists for the subject property within the preceding 12 months. 
• Property must have been marketed openly and fairly via MLS, auction, for sale by owner or developer.

NEW PAYROLL TAX EXTENSION AFFECTS MORTGAGE COST

Friday, December 23rd, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act. This Act uses increased guarantee fees (aka G-fee) on new mortgages to pay for reduced payroll taxes. The amount of the G-fee increases will be included in future mortgage costs.

Effective with loan deliveries on or after April 1st all G-fees charged by Fannie Mae and Freddie Mac will be increased. It will take mortgage lenders 2+ months to close loans AND then deliver them to Fannie Mae and Freddie Mac prior to the April 1st deadline. Therefore, mortgage lenders will factor in these higher costs within the next couple of weeks.

USDA Rural loans have been a great tool for many cash strapped buyers offering 100% financing with no monthly mortgage insurance. As of October 1st, however, Rural is requiring a 0.3% annual mortgage insurance fee for both purchase and refinance transactions. The fee is based on the average annual scheduled unpaid principal balance for the life of the loan. The fee will be calculated on a monthly basis with the borrower's mortgage payment.

While the monthly payment will be a bit higher for those using the USDA home loan there is some GOOD NEWS!

On October 1st, USDA lowered the up-front financed Guarantee Fee from 3.50% to 2% on purchase transactions. The guarantee fee is similar to FHA's up front mortgage insurance premium which is financed into the loan. See below for further highlights and a few contract writing tips for USDA home loan buyers.

USDA Rural loans require a 2.0% guarantee fee which is financed into the loan, the loan amount exceeds the purchase price. Example:

• Purchase Price: $100,000
• Down Payment: $0
• Base Loan Amount: $100,000
• Guarantee Fee (2.0): $2,000
• Total Loan Amount: $102,000 (Amount reflected on LSU & Pre-qual Form)

Wondering what a homeowner should expect when payments are missed? The most important thing to know is that no matter what stage of default a homeowner is in, there is almost always a way to avoid foreclosure. That being said, the quicker a homeowner does something about the situation, the less challenging it will be to resolve.

First, here's what a distressed homeowner should expect to happen when payments are missed:

• 30 Days Late: The lender will attempt phone contact or send a notice in the mail.
• 60 Days Late: The lender will attempt to make contact by phone and follow up with another letter in the mail.
• 90 Days Late: The lender will send a letter demanding all past due amounts within 30 days and start the foreclosure process.
• 120 Days or More Late: The lender's attorneys will take over and the homeowner will be responsible for their fees in addition to missed mortgage payments and the loan amount due.

Not late yet, but about to be?

Homeowners that are not late but foresee missing payments should communicate this to their lenders as soon as possible. In the past, many banks wouldn't work with homeowners unless they were one or more payments behind. In the light of the mortgage crisis, most lenders would rather take a proactive stance and decrease their losses. They are more willing than ever to work with homeowners to avoid being late.

If you are visiting my web site and you or someone you care about may miss mortgage payments in the near future, I can help navigate the process and put you back on the path to financial stability. Contact me today and alleviate the stress that comes with unaffordable mortgage payments.

Not if I have anything to say about it!

The FBI reported a jump of 71% in mortgage relief fraud investigations from 2008-2009, and expect this number to have grown in 2010. That's why it's my duty to educate homeowners in my community on the cautions they need to take, and what the government has recently done to protect you from unscrupulous individuals and companies who want to take advantage of their desperate situations.

What you need to watch out for if you are looking for mortgage relief assistance:

1. Up-front fees - just don't pay them! In face, they are now illegal!
2. A request to sign over your deed (this only spells trouble)
3. Lots of paperwork without the opportunity to review
4. The claim of government affiliation

These are just a few red flags you need to be wary of.

If you are struggling with an unaffordable mortgage and are looking for help, educate yourself. These scammers can be very shrewd and will say almost anything to steal your money.

The Federal Trade Commission has required disclosures of anyone offering mortgage relief services. If a company you are dealing with has not provided these disclosures, please ask why they are not compliant, and proceed with caution!

As a CDPE, you can trust that I have the tools to be in full compliance of FTC regulations, and will always work with your best interests at heart.

If you want viable alternatives to foreclosure, give me a call today. I'm always here to help!

When faced with unaffordable mortgage payments, your house can feel more like a cage than a home. You may feel trapped because it's hard to know what to do to improve your situation, and you may just want to give up.

DON'T GIVE UP!

The reality is you don't have to be a prisoner to a mortgage you can no longer afford. You have options and you're not alone. I can help you find the key to financial stability through education and a greater understanding of your alternatives.

Click here to view other options available to you.

Now that you know there are alternatives to foreclosure, you have the power to act! Whether you're struggling with the mortgage today or are months behind on payments, it's important to choose an option that best suits your needs and get to work. The fact that you are reading this report is a great start!

Be Proactive

The following are steps you can take if you are delinquent, or on the verge of missing on a mortgage payment.

Your first 3 steps in the right direction:

1. Gather financial information (bank statements and pay stubs from the last 3 months)
2. Communicate with your lender that you will be seeking foreclosure avoidance counseling
3. Contact an educated real estate professional like me to learn more about foreclosure avoidance.