Sunday, December 30, 2012

Yun, Chief Economist for N.A.R. Does Not Feel Doom Due to Fiscal Cliff

It was a great article read this morning - Copied and Pasted exactly as written on Housing Wire this morning ----------------------- By Kerri Ann Panchuk
"A failure on the part of the nation's lawmakers to reach a deal on the fiscal cliff does not spell automatic doom for the mortgage industry or for families wanting to take on new mortgages, according to Lawrence Yun, chief economist for the National Association of Realtors.
However, it creates more uncertainty — something the mortgage industry and homeowners have grown weary of.
President Obama and Congress were working Friday on a last-ditch effort to save Americans from tax hikes set to take effect in January, but issues related to housing are most likely postponed at this point.
Two issues tied to fiscal cliff negotiations and deficit reduction talks have a direct impact on the mortgage industry.
First, the Mortgage Forgiveness Debt Relief Act expires at year-end without a move by Congress to extend it.
The act was originally passed in 2007 so struggling homeowners could go through short sales, loan modifications and other resolutions without getting zapped with taxes on forgiven debt.
Second, policymakers have been throwing around the idea of tossing out the mortgage interest tax deduction to help reduce the nation's deficit while protecting most Americans from tax hikes. Such a move would take away a popular tax benefit for homeowners.
Lawrence Yun with NAR told HousingWire "it's very quiet in Washington, D.C., in terms of the key people trying to make compromises."
And while NAR and other housing industry groups lack certainty, Yun says a proposal to eliminate the deduction on mortgage interest is probably far removed from the negotiating table at this time.
He expects Congress and the president to try to come up with a temporary solution in the next few days to spare America from going over the fiscal cliff.
And if they compromise on an initial solution, Yun anticipates a more extensive agreement over how to reduce the nation's deficit next summer. That is when the mortgage interest tax deduction could end up back on the bargaining table.
Even then, Yun sees it as a difficult item for lawmakers to eliminate.
"I believe the mortgage interest tax deduction is one of those issues where it impacts so many people. It is not a special interest. I don't see the deduction being changed in any measurable way in the grand bargain."
As for the Mortgage Forgiveness Debt Relief Act, the expiration is at hand, bringing a bigger sense of urgency.
But Yun says the extension of it has bipartisan support and he anticipates a final compromise although that may come sometime in mid-January with provisions to make it retroactive.
He anticipates a two-year extension will be applied when that measure is finally pushed through. "I am less concerned about that," he said. "There is no hostility to the mortgage forgiveness debt relief bill."
But Yun admits, homeowners worried about losing mortgage interest tax deductions may still view a lack of closure on that issue as too much uncertainty, causing them to hold off on buying a home.
"For some homebuyers they may want to wait it out until they see what is in it (the grand bargain) and what is not." "

Thursday, December 27, 2012

Thoughts For 2013

This is one Toad's Wild Ride we're having in Southern California Real Estate! And, the ride will continue.

This post is my opinion of what to anticipate in our housing market. Here in Santa Clarita Valley and San Fernando Valley.

January 2013 is just a few days away. Inventory is frighteningly low, pushing prices up. Mortgage rates are way lower than any 'historically low' I've seen in a 1/2 century, and expected to stay that way through 2014! The fiscal cliff is now being called the slippery slope and we are still wondering if the Mortgage Debt Relief act will be extended.

So, really, what do we do, where do we go, what's gonna happen? Thoughts and opinions.

I believe we will continue to see more traditional sellers come on the market. Hopefully slowly as the faster they come the slower we will see appreciation. Expect to continue to see an upward trend, here in California, in home prices. With rates staying low, the market will continue to have a bounty of buyers grabbing properties left and right. Multiple offers combined with minimal inventory pushes pricing up.

Building permits have been rising. The Newhall Ranch project along the 126 and 5 freeway corridors is closer to breaking the infamous ground. When new homes are built, homeowners sell the current as they want shiny and new. More homes purchased and sold will, of course, help our economy.

Foreclosures? In the judicial states there was a huge stall, those are starting to catch up, and more homeowners are getting foreclosed upon. In California, a non-judicial state, we had our stall with the Robo-Signing settlement. That's been moving along nicely. The number of REO's has significantly reduced. Short-Sales and Loan Mods have helped ease the distressed property inventory tremendously.

For many, however, the big question is that Debt Relief Act. Will it be extended? When will we know? And, if it doesn't....what's going to happen to all those homeowners trying to Short-Sale, Loan-Mod, or on the Foreclosure freeway?

Opinion: I do think it will get extended. It's been in the president's budget for quite some time. Attorney Generals for 41 states have been urging Congress to sign an extension. Too many homeowners are still in the midst of housing correction to have it not to get extended. I've spoken to, listened to, and read from enough bankers, Realtors, politicians, really would shock the heck out of me (and them) if it did not get extended for at least another couple of years. However, I doubt we will know for sure for several more months. And if ,God Forbid, it doesn't get will cripple many homeowners. Frighteningly so.Emotionally, financially....crippling.

The Fiscal Cliff, hmmm, I like that it is now called the Slippery Slope and I only comment on it regarding housing. And, the bottom line is this ~ Housing helps economy. No if's and's or butt's about it. With the housing market, I expect not to be 'normal' again for 5 more years. Of course, we never really seem to have been normal in the past 20 years but we do strive for normalcy in the housing market. Why? Because, housing stimulates the economy. More money moving around, more being bought, stimulates our economy.

Bottom line.....we've got a little ways to go. A lot say we are 1/2 way there. I do feel that we've got 3-5 more years of struggling sales, challenged homeowners, difficult buyer conditions.

Remember, these are just thoughts from a 10 year veteran Realtor that has been working with hundreds of homeowners over the years. We'll get through this, we always do. Some pain along the way, many challenges too, but we will overcome.

We have no other choice but to move forward.

Saturday, December 22, 2012

Service Release Dates on Short-Sales

It seems to be the new thing to add to Short-Sale problems. Just when we are getting them a bit easier to manage the newest dilemma is if the bank sends the homeowner a letter stating they have a Service Release Date on their loan.

A what? A Service Release Date. The loan, that delinquent loan, the one I've been working on getting Short-Sale approval for you on? It's being transferred to a new Servicer....a new bank, a new lender....a new set of problems to get your short-sale approved.

It's hit me twice in the last two months. One with Bank of America. Fortunately my SS contact kept pushing to get approval for us even though the release date was looming. Then, the homeowner gets a letter stating they are not going to do the release. Borrower calls me and we both agree...."It's a miracle" So onward and forward, we get our approval letter and open escrow.

Another I just got with CITI. No letter to the homeowner....well, not yet. I just called to check status, I'm a total nag on Short-Sales, and the rep says "Oh, by the way....there's a Service Release Date of 1/15/2013" I pause....put the phone closer to my ear....and ask her to repeat herself. Ugh. This one is particularly challenging and the last thing my clients need to hear is this news.

But, I don't just lay back. Nope. I get out my little list from my CDPE (Certified Distressed Property Expert) website, of which I am a member, and call the escalation number. Calmly, softly, patiently...I explain the situation. 45 minutes later with Diana, I speak with Greg, and then lovely Diana calls me back again. Total time with CITI, maybe about 1 1/2 hours on the phone. At this point, they are sending messages to the team lead to try and keep pushing our approval forward so that hopefully we have a written approval before it gets released to OCWEN.

CITI swears all our documents will go to Ocwen so we don't have to resubmit. And, they state that we will continue where we left off without losing time...once it transfers. But, right now, my negotiator says he doesn't have the time to bother to look at our file since the release date is looming. But, my lovely Diana is pushing her team lead to get us another one assigned and keep working on it til it drops out of their CITI system. We'll be in a much better position to move forward if the approval letter has been issued prior to the transfer......supposedly....that's what I'm hoping for.....

Or maybe, just maybe, we'll have another miracle. The 2013 miracle. Cross your fingers, say your prayers, this family could really use a miracle just about now.....

Monday, December 17, 2012

Ask for HIN's and HAFA Updates

Certified Distressed Property Expert, this designation keeps me informed of almost everything related to Short-Sales. And, trust me, changes almost daily.

New items to share:

HAFA Update is allowing many cooperating banks to make a 'Pre-Determined Hardship" As long as the borrower (home owner) is more than 90 days delinquent and their FICO is below 620, they almost consider it an automatic approval. Decision is to be made in 30 days tops.

And, one, not to forget:

HIN. ~ Homeowner Incentives. When people got foreclosed on they were frequently offered 'Cash for Keys' to vacate. Banks have been offering for a while these HIN.'s to complete the sale of homes via Short-Sale instead of letting them get foreclosed upon. Not to everyone, they have to approach you. But, doesn't hurt to ask. Just reminding you that if you get something from your lender that says they will pay you to do a Short-Sale, it may not really be a scam.

Amount of HIN's these bank reps have said they are offering:

Bank of America ~ 3k to 30k
Citi Mtg ~ 3k to 45k
Wells Fargo ~ 3k to 20k
Chase ~ up to 35k

The 3k is the HAFA relocation. Anything above that is when a proprietary Short-Sale is completed. Not a HAFA short-sale. Not everyone will be eligible, again, the numbers have to work right. But, never hesitate to ask.

Wednesday, December 12, 2012

An Appraisal Story

One of my listings in Santa Clarita is a little different from most. Santa Clarita is the town of mostly track housing, cookie-cutter, fairly easy to find 'comps' for.

This one is a tad different. And, for me, determining a list price I had to get creative. Pull from out of the 'track', add in for extra items, take away for less, adjust for this and that. Lots of adjusting for this and that!

Fortunately for my sellers it is a standard sale and it is a sellers market with the lack of inventory. We did have multiple offers on the home and selected one that appeared would work best to close escrow.

Then, the appraiser schedule their appointment to view the property. Grumpy right from the start. 'I'm too busy to come out until next week'.....'It's a duplex? Oh, ugh, no one told me that on my sheet.' 'There are no recent comps?' 'Oh, Ugh again!' So, needless to say, I am really dreading the meet with this one.

I get my documentation together since the assessors records are all crazy. Two story noted on a one story unit. Square footage about 400 short. But, my seller overnights me the plans, sends me the inspection sign off sheets for the remodel, I pull more comps than I could possibly need....I'm Ready!

With a smile on my face, standing on a gravel road in my tennies, paperwork in hand....I meet the lovely little appraiser in her flashy red car and high-heels. 'This is a gravel road?' 'Ugh, no one told me that' I smile and tell her I wondered if she would see that in the MLS and wear flats....big smile here. Laughing inside.

So, she then tells me what I already know. 'This is going to be a really hard appraisal. I really wish I never took the assignment.' But, I see she has done a lot of her homework, she has gone out of the normal boundaries, and she really is ready to do the best job she can do.

She turned out to be a rather nice, funny lady. I enjoyed her chatter, and she said the property was definitely nicer than she had expected.

I came back to my office and pulled even more comps, older ones that she would need to adjust for age. But, I doubt we'll have any problem.

And, if we do, I'm armed with more info.....and, 
with two additional back-ups 'chomping at the bit',

 there's no reason to make any price adjustments if the appraiser won't make any value adjustments either.

Friday, December 7, 2012

Freddie Mac's Buyback Strategy & Fraud Rising

Freddie Mac says they are going to be ramping up their re-purchase demands going back to 2004-2005, that's before the housing crisis.

The GSE informed large servicers that they may require them to buy back defaulted loans originated in years prior than what they originally had said as 2006 forward.

This was unexpected, but Freddie has always had the authority to review files when loans stop performing. Doesn't matter when they were originated.

They, the GSE, say that how and why the files are reviewed is adjusted occasionally to make sure they have the the data needed to insure QC and reduce taxpayer exposure to any risk.

Of course, this makes bankers concerned. A quote from one : "That's the reason the mortgage business gets harder to love, because you don't know whether or not you're done with it." Seems to me if it's done right from the start, you'd never have to look back at it and see if the love is still there.

And, on the 2nd note of my title ~ go figure....Mortgage fraud is already on the rise and Short-Sale fraud is expected to increase!

What with unemployment at this rate and mortgage rates so low, of course the mortgage fraud would be on the rise. Don't work there anymore but have a friend that can say you do? Sure, put on your ap you still are employed. Anything to get today's low rates!

Short-Sale fraud. I can see it, well I sure think I can. As an example: A 'flip' property. We check to see the last sale date, notice it was a SS, see that it went for way under enhancements to property, not taking FHA loans, same agent that had the listing before, brought the buyer and has the new listing?

 I'm thinking there was something a little shady going on.

Tuesday, December 4, 2012

FHA Anti-Flip Waived for Another Two Years

The anti-flip waiver for FHA buyers was extended last week through 2014.

What does that mean to you, you ask?

Back in 2003 FHA put a policy in place making a standard 90-day Anti-Flipping rule. You just couldn't purchase a home that had been bought less than 90 days ago if you were using FHA financing for your loan.

With the housing crisis, FHA made it's first waiver of the rule, with a few stipulations still in place of course, in 2010. Since that time they have insured eleven billion worth of mortgages on over sixty-two thousand homes.

Requirements that continue:

1) All purchases must be 'Arms-Length' with no one person involved having a relationship with another in the purchase. Lenders have to insure that the seller actually does hold title (I know seems like a no-brainer, but remember, double escrows have occurred). And, the property in question should not have been 'flipped' in the prior 12 months.

2) There should not be more than a 20% increase in the sale price than what the seller paid for it unless there is documentation showing the work done to reflect that larger price difference.

3) An inspection must be completed and if there are any structural or healthy & safety defects, those repairs must be completed prior to close of escrow.

So, again, what does this mean to you?

Extending the anti-flipping waiver for a full two years allows investors and buyers the opportunity of knowing they have some definite time to complete sales and re-purchases. Since so many buyers are utilizing FHA financing, the waiver opens up more home possibilities to them in a time when inventory is so low. It also keeps the investors buying these homes, doing work that an FHA buyer would likely not be financially able to do, and therefor again allows more homeowners a purchase plan. Investors that buy homes are sometimes paying significantly higher, short-term, interest rates. So, the faster they know they can re-sell, the more likely they are to buy, re-hab, and re-sell.