October’s Lehigh Valley Real Estate Market Update reports the number of sales remained the same as September, with the average sale price moving up 1%. For all the details, check out the FREE REPORT at http://www.EugeneMills.com/listings.html
History would say, “Yes. I’ve seen this before.”
Since 2008, talk of foreclosure moratoria has emerged in the fourth quarter around the holidays, only to be lifted part-way through the first quarter with record numbers of foreclosures flooding the market. This is then followed by an increase in short sales as banks and homeowners work with educated real estate agents toward better solutions to foreclosure than not doing them at all.
As we’re seeing in the media lately, history is looking to repeat itself.
In a letter to the editor in the Washington Post this morning, Rhode Island Senator Sheldon Whitehouse spoke out about the benefits of a foreclosure moratorium, if for nothing else than to force major banks, servicers and securitized mortgage holders to reevaluate their foreclosure and modification practices.
Eviction and foreclosure are terrifying, emotionally disturbing events for homeowners, especially when compounded by the holiday season. But the question needs to be asked: Will the housing market recover more quickly if the banks are forced to halt their proceedings?
Here, History would say, “No. Not that I’ve seen.”
We’ve seen tremendous short sale success over the past year, as indicated by the Second Quarter Mortgage Metrics Report released by US Treasury. Short sale volume for all mortgages (including both GSE and non-GSE loans) increased 42 percent over the first quarter, and an incredible 126 percent from a year ago.
This great news is attributable to the hard work and perseverance of real estate professionals across the country, especially CDPE-designated agents. More than 96,000 homeowners in the first half of this year were saved from the negative impact of foreclosure—whether you’ve helped just one family or 100, you should be incredibly proud of your part in this accomplishment!
But this work is far from over. Short sales only represent 26 percent of overall distressed property activity. This means that 74 percent of distressed properties are still going to foreclosure.
While there has been tremendous progress, unemployment and mortgage delinquencies remain at or near record levels and many more homeowners nationwide need your assistance.
Keep up your good work … it’s clearly making a difference!
Eugene Mills, CENTURY 21 Pinnacle. Eugene.Mills@CENTURY21.com
Published On: September 11, 2010
GSE Short Sale Volume Up More Than 150 Percent
Posted: 10 Sep 2010 01:54 PM PDT (paraphrased from CDPE Blog)
A few months ago, Freddie Mac reported its short sale volume was up 600%. Today, REOInsider reported that “short sale volume is up more than 150% from volume in 2009, according to the Federal Housing Finance Agency’s second quarter government-sponsored enterprise (GSE) ‘Foreclosure Prevention & Refinance Report.’”
Short sale approvals are on the rise nationwide, which shows us there is a huge movement to provide solutions for homeowners facing foreclosure.
Keep up the good work!
Warning to Servicers: Fannie Mae is Watching for Delays
Posted: 03 Sep 2010 07:07 AM PDT (CDPE Blog)
Fannie Mae has put loan servicers on notice: take too long to complete foreclosures and you could face fines.
Through a recent announcement, the government-sponsored enterprise has created timeframes for completing foreclosure proceedings (see their foreclosure timeframes for more information on a state-by-state basis). For servicers unable to provide a reasonable explanation for delaying proceedings, Fannie Mae may levy what it’s calling “compensatory fees for breach of servicing obligations.” However, delays beyond the control of the servicer will not be held against them.
Regarding these delinquent loans, Fannie Mae stated it would monitor “all whole mortgages, participation pool mortgages, and MBS pool mortgages with a special servicing option referred to an attorney or trustee to initiate foreclosure proceedings on or after July 1, 2010”. In its National Delinquency Survey, the Mortgage Bankers Association reported 13.97 percent of all mortgages were either delinquent or in the foreclosure process in the second quarter of 2010.
Here are some additional highlights from the announcement:
With this Announcement, Fannie Mae:
- has updated the allowable foreclosure time frames for four states;
- is monitoring all delinquent loans in Fannie Mae’s portfolio or MBS pools, and will begin notifying servicers of delays in processing delinquent loans;
- may begin conducting reviews of servicer loan files, processes, or procedures;
- requires accurate and timely reporting on the delinquency status of mortgage loans; and,
- will exercise its remedy to assess compensatory fees as deemed necessary.
The announcement also includes a chart of compensatory fees for specific circumstances.
(Via CDPE Website)
A short sale can be an excellent solution for homeowners who must sell and owe more on their homes than they are worth. Unfortunately, a number of myths about short sales have developed, and it is important to understand the reality of this process should you find it meets your current needs.
This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, investors, and even the federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on their investment through a short sale than a foreclosure.
The qualifications for a short sale include:
While this may have previously been the case, today lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.
If you meet these three requirements and believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until the countdown clock to foreclosure has started and you have even less time left.
This is a myth that probably hurts homeowners the most. Many do not realize that foreclosure is a process, and that there is time to make decisions that may result in better outcomes.
The foreclosing party—in most cases a lender—can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete.
It is understandable to have reservations about letting the world know that you owe more on your home than it is worth. However, according to recent estimates, more than one out of eight homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution.
With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.
This is a complete falsehood. Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not.
For example, agents with the Certified Distressed Property Expert® (CDPE) Designation receive thousands of short sale approvals on a monthly basis. These professionals have undergone extensive training in methods to help homeowners in distress and process short sales. While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process.
You may have heard this, but the reality is that banks (and the U.S. government) are trying to do anything they can, within reason, to avoid foreclosing on properties. It is preposterous to believe they would deny a short sale in hopes that some future legislation would pass and pay them for losses.
Today, more banks are aggressively pursuing short sales and working with agents who understand how to process them. Freddie Mac recently hosted a national training Webinar for real estate agents where they expressly stated the organizational goal of “eliminating distressed assets through modification or short sale.”
This is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who say they only want to look at foreclosure and short sales.
For buyers, short sales and foreclosures have become synonymous with “good deals.” More specifically, international buyers are targeting these properties. Listing with an experienced agent who is educated in the short sale process will provide you with a great chance of quickly seeing a contract on your property.
In conclusion, Agents with the CDPE Designation have been trained in all aspects of the short sale process, and know how to deal with the parties involved in foreclosures. Finding a CDPE can explain what options you have, and get you on the path to recovery.
Posted: 27 Aug 2010 06:34 AM PDT (CDPE Blog)
Some of the most valuable assets for agents assisting distressed homeowners are statistics … and industry players have released a ton of them lately. Following is a breakdown of some of the major, recent reports on the real estate industry:
CoreLogic’s August 2010 Short Sale Research Study:
■Short sales have more than tripled since 2008, and multiple indications point to short sales continuing as a significant factor in the industry.
■Investors involved in short sales are good! They provide the industry with necessary liquidity.
■1.9% of short sales studied were part of an egregious flip.
The National Association of REALTORS® (NAR) existing home sales data though July 2010:
■Existing-home sales (single-family, townhomes, condominiums and co-ops) dropped 27.2 percent.
■Seasonally adjusted annualized rate of existing-home sales dropped to 3.83 million (down from 5.26 million) – the weakest showing in 15 years.
■Single-family sales are at their lowest levels since May 1995.
The Mortgage Bankers Association’s Second Quarter 2010 National Delinquency Survey:
■13.97% of loans are in foreclosure or at least one payment past due (or more than 1 in 7 mortgages).
■Foreclosure starts for prime fixed loans – previously the safest loan product (based on historic default rates) – increased to 0.71 percent, tying the survey’s record high.
■Year over year, the non-seasonally adjusted delinquency rate increased for: prime fixed loans, prime ARM loans, subprime fixed loans, and subprime ARM loans.
Downward pressure on the real estate market primarily comes from high unemployment and slow economic/business growth, and this is now more apparent with the release of these reports. Real estate agents, armed with this information, have an unprecedented opportunity to help struggling homeowners avoid foreclosure.
REO inventory nears 200,000
By Inman News, Monday, August 9, 2010.
Inman News
Fannie Mae and Freddie Mac were more willing to sign off on short sales during the second quarter but continued to repossess homes faster than they could sell them, according to the companies’ latest regulatory filings.
Fannie and Freddie finished the second quarter with a combined inventory of bank-owned (REO) homes of 191,500 properties, with both companies posting double-digit growth.
Fannie Mae, which reported a $1.2 billion net loss for the second quarter, said REO inventory was up nearly 18 percent compared to the first quarter of 2009, rising to 129,310 homes as of June 30.
The increase in REO inventory would have been steeper without the 21,515 short sales and deeds-in-lieu of foreclosure completed during the second quarter, a 24 percent increase from the first quarter of 2009.
But Fannie Mae said the percentage of REO inventory that it could actually put on the market declined from a year ago, in most cases because homes are still within legal redemption periods, are still occupied, or are being repaired.
Freddie Mac, in reporting a $4.7 billion second-quarter net loss, said its REO inventory hit 62,190 properties at the end of June, up 79 percent from a year ago.
Freddie Mac reported signing off on 12,498 short sales during the quarter, a 30 percent increase from the previous quarter and four times as many short sales as the 3,093 approved during the first quarter of 2009.
The mortgage guarantor still acquired more properties during the second quarter (34,667) than its servicers disposed of (26,316), with the number of properties acquired rising 18 percent from the previous quarter and 58 percent from a year ago.
Our Lehigh Valley Real Estate Market Update shows us the number of sales are down 48% from June (yikes!), with the average sale price dipping 1.4%. Instantly access the full report for FREE at http://www.EugeneMills.com/listings.html
Credit Suisse shows us 27 billion in high risk loans are resetting in June 2011. Think about that number – that’s in (only) 1 month next year. Option ARMS are the majority of that 27, at 18 billion resetting in June 2011. These are the “smart pay” / “pick a pay” loans that had us scratching our heads at the settlement table wondering why anyone thought this was a good idea. The answer was simple… Values would continue to increase, so it makes sense to take a ridiculously low minimum monthly payment now. Worst case scenario is you have to sell in a few years before the balloon is due and you’ll pocket a nice chunk of change for your efforts. Understandable, savvy, and responsible, right?
We know what happened though. It went the other way. Values are down, so in most cases, refinancing is out. If a mortgage payment or two are a little late, the damage to a homeowner’s credit score also negates refinancing as an option.
Loan modification is the next logical step. After all, the Government is offering all types of programs right now to help homeowners, like “HAFA” (Home Affordable Foreclosure Alternatives), and HR 3648, the “Mortgage Forgiveness Debt Relief Act of 2007”. A statistic homeowners should know is that about 1 in 10 homeowners will fit into the perfect loan modification model that the banks are currently approving. Out of that 1 in 10? 55% will be back in default within 6 months.
A point I’d like to stress to any homeowner experiencing financial hardship is that there is help available, for free. CENTURY 21 Pinnacle helps homeowners understand thier rights and options, for free. We never charge a homeowner any fee for this service.
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Eugene Mills, CENTURY 21 Pinnacle 