Mortgage And Real Estate Double Dip

We have seen the fall in real estate prices and activity over the past few years,  there are flattening or dipping for real estate prices in 29 of 44 markets.  Watch this video below for more explanation.

US Economy Crisis Explained

We all know that the US economy is in crisis, but have you really been explained the actual numbers and some of the causes of the crisis?
Check out the video below to see why some say that our current spending habits are unsustainable unless there is major changes in our government.

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Obama Foreclosure Plan: Is It Working?

President Obama’s foreclosure plan was put in place to help first-time homebuyers make that first home purchase, get more people modified in their current loan through their current lender, and make it easier for people that can refinance their mortgage to get that done. The key element of this act which was called helping families save their homes was approved in May of 2009.

The Obama foreclosure plan was put together to help combat the slew of foreclosures that the United States is facing right now. When we do this is to make sure that homes that are currently occupied by their owners, can stay occupied by their owners. So loan modifications is a great way to do that.

Part of the plan was to give bonuses to banks they were able and willing to modify their loans with their current customers. Another part of the plan was to give additional funds to Fannie Mae and Freddie Mac to help stimulate some new loans.

The making homes affordable program has had some effect on the market at this point time but we will have to see what happens when the first-time home buyer tax credit ends in June of 2010. Much of the buying activity has been due to the fact that first-time home buyers can receive up to $8000 as a tax credit when they purchase a home for the first time. They also extended this tax credit to those that have owned a home before and put a limit on that tax credit up to $6500.

Those that criticize the Obama plan to help stimulate housing market have pointed out that only a small percentage of those that really want and need a loan modification have gotten one. Part of the problem is that many of the loans that are at risk of being delinquent are insured through FHA. I think that this makes lenders less likely to work with homeowners who need to modify their loan or do a short sale. Why would they mess with all the issues that go into modifying a loan or the paperwork that goes into doing a short sell on the home when the government is just going to foot the bill in the end anyway with mortgage insurance.

We will just have wait and see what happens as time goes on. One good part of all this is that if you are in a position to purchase a home, you are going to be in a very good position when you go to negotiate on offer and you will have the upper hand as you start your home search. It is definitely a buyers market.

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Pending Home Sales Data

The most recent pending home sales data shows some positive news. With some boost given by the home buyer tax credit, pending home sales look to be more stable in 2010 and higher than 2009.

The pending home sales Index is a indicator of future home sales and takes into account pending homes under contract. December of 2009 showed a 1% increase from November of 2009 with a pending home sales Index of 96.6 versus 95.6 in November. This is a whole 10.9% above the numbers of December of 2008 when the pending home sales Index showed a indicator of 87.1.

The NAR chief economist, Lawrence Yun, explains how it is very important to understand how the home buyer tax credit is skewing some of the numbers to show a more positive light. “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he said. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years.”

Buyers to qualify for the home tax credit must have accepted contract on the property by April 30, 2010 and must close or fund on that property before June 30, 2010. So you can bet that there will be a flurry of activity during that last month to qualify for the first-time home buyer tax credit. The credit allows for up to $8000 for first-time homebuyers and up to $6500 for homebuyers who have previously owned property.

So, if you are looking to purchase a property, it is definitely a buyers market in most areas in the United States so use our home search tool to get started and be on the front lines of knowledge when you’re searching for home.

Tax Payers Foot The Bill For Others Home Upgrades

As part of the economic stimulus package that president Obama access to more money or state agencies to help weatherize homes and help bring energy costs down.

Minnesota is one of the states that is using this money right now to incentivize homeowners to use less energy. When they announced the planned the money went very quickly as contractor for quickly trained and certified to make improvements to over 1400 homes. This left the consumers eligible for rebates. Rebates war awarded to those who did things like replace windows, and also upgrade installation.

This is probably a good thing to bring to some of the older homes that have single pane windows and old insulation. There was no income limits to participating in the programs either. The home had to be built before 2000 and the average size of a home that use the credit was right around 1800 ft.² and 45 years old. Qualify also, the home had to be less than 3000 ft.².

There are quite a few people waiting for this type of program to get to work in their states. Most homeowners are not willing to make the upgrades without the tax credit, and understand that a potential credit may be on the way. So, they will probably wait until they can grab that tax credit as well.

What do you think? Should the government pay homeowners to upgrade their homes using taxpayer money?

China Real Estate Market Moving Bubble

We all know that China’s economy is moving quick. Take a look at China’s real estate market and see if this looks familiar. There has to be a top and bottom to every real estate market. The US market busted, Dubai busted, and now China will probably have a big bust.

Millionaires Default On Their Mortgages More

Even millionaires these days are having a hard time getting their hands on money.

Even if those millionaires want to refinance their home to put their money elsewhere they are having a hard time finding a lender that will loan out that money even if they have some equity.  Even if they have six-figure incomes, exceptional credit scores, and tons of assets, they are still getting turned down for loans.

“It’s amazing really,” said Susan Bruno, a financial planner with Beacon Wealth Consulting in Rowayton, Conn., “but it makes sense when you think about it.”

One reason is that many people considered “rich” have fallen behind on their loans. Over 12% of mortgages in the United States over the $1 million loan amount were actually late during this past fall. This 12% is twice the rate of loans that are under $250,000 and almost triple the number of mortgages in the million-dollar range from only 12 months ago. So, even the rich are having a hard time making their mortgage payments.

I think we are running into one of those scenarios where homes over $1 million have depreciated at a much higher percentage rate than starter homes. How would you like it if your home was once worth $2 million, and now is worth $1 million? That’s a big chunk of change that most likely makes people in that scenario not want to make their mortgage payments even though they may have enough money to make the payments.

Not to mention, that jumbo loans are harder to qualify for and obtain financing for than traditional conventional or FHA loans. When you throw the default rates into the mix, you can see why lenders are a little bit apprehensive about making these large loans.

Banks Break RESPA Laws During Short Sale Process

Citi Mortgage, Chase, and Bank of America have been found recently to be violating RESPA laws by demanding payment of a portion of their loan payoffs be made outside of closing statements. When you close a home, every part and payment being made or distributed to any party in the transaction must be disclosed.

These banks, along with others have been noted to requesting outside payment from either the buyer, or even the real estate agent to satisfy the lein that they hold.  This is in clear violation of RESPA laws. Short sales are hard enough to deal with for sellers, buyers, and real estate agents without banks trying to make it even more difficult.

Watch this video to see what has been happening and why many real estate agents, and buyers are just fed up with the short sell process altogether.

Comment and let me know what you think.

FHA Suspends 90 Day Rule For Flippers

FHA has a long-standing rule that after you purchase the property using an FHA loan, you must wait 90 days to resell or “flip” a property. This is been a long-standing rules since being implemented in 2003 and was designed to protect the FHA’s mortgage insurance program from any over purchasing during the times when people were purchasing and flipping homes.

Starting February 1, 2010, the FHA regulators will suspend that 90 day waiting period for the next year. In 2008, FHA did change the 90 day regulation on all bank owned properties that were being sold. Now they are suspending the entire program for one year.

Because home flippers are trending towards getting their homes back on the market in their new state in less than 90 days, the Department of housing and urban development or HUD made the case to change the rule. They wanted to help homes sell as quickly as possible and help stabilize the housing market even more.

FHA is becoming more and more popular as that income ratios change, the amount of money people can put down change, and credit scores change. FHA is the most popular loan type in a most banks and brokerages across the US.

We need anything and everything that can help stabilize the market at this point.

Foreclosure Stats in 2010

New numbers.  13.2% of homeowners in the US are either behind in their payments or in foreclosure.  That is one 1 out of every 7.5 homeowners.  This is according to Lender Processing Services or LPS.  Total mortgage delinquencies that exclude forclosures  rose to 9.97% which shows a month per month increase of just about 5.46%.

So, foreclosures are still on the rise.  What does that mean for the real estate market?  Well, take a look at your particular numbers in your local area.  These numbers we are looking at are national numbers but they do show a trend that everyone should be watching.  Rising foreclosures typically mean that prices should continue to fall ab bit.  How much they fall, we won’t be able to tell for a while.  But I don’t think we have quite hit bottom yet.

Does this mean that I shouldn’t buy a house yet?

If you plan on buying a house and see yourself  living in that house or keeping that house for 7 years or more, then I think that buying should be a fairly safe bet.   Those that wait and wait for the absolute bottom of the housing prices tend to wait to long and miss out.   You won’t ever know if you purchased at the bottom of the market until 3-6 months later when you can look back at the real estate market numbers, both locally and nationally.

Here are some more numbers that matter for the foreclosure and real estate market in 2010.

Other key results from LPS’ December Mortgage Monitor include:

• 5.01 % of Loans Rolled to More Delinquent Status vs.1.52 Percent That Improved

• Total U.S. loan delinquency rate is 10.0%

• Total U.S. foreclosure inventory rate is 3.2%

• Total U.S. non-current* loan rate is 13.2%

• States with most non-current* loans are Florida, Nevada, Mississippi, Arizona, Georgia, California, Michigan, Indiana, Ohio and Illinois

States with fewest non-current* loans are North Dakota, South Dakota, Alaska, Wyoming, Montana, Nebraska, Vermont, Colorado, Oregon and Iowa

NAR Pending Home Numbers Down 16%

It was actually expected that the pending home numbers would be down in November of 2009, but the actual numbers exceeded the predictions. It was predicted that pending home numbers would be down 14%, but actually declined 16%. This is according to the NAR pending home sales index.

This is attributed to the fact that the numbers usually fall in the winter time with the holidays like Thanksgiving, Christmas, and New Years taking people’s time. Also, it can be linked to the the fact that the First Time Home Buyer Tax Credit was originally slated to end December 1st, 2009 but was extended into 2010. This most likely made some buyers wait until they were ready to make the move instead of rushing to hit ahead of the deadline.

We’ll have to wait and see what the numbers look like for January 2010.

Most Affordable Homes In The US

Median home price: $105,000
Median income: $68,100
Affordability score: 94.5%

America’s most affordable housing market is the 33rd largest metro area in the United States, with 1.7 million people.

The median family income is fairly high — $68,100 — and home prices are a very reasonable median $107,000, according to the National Association of Homebuilders and Wells Fargo Housing Opportunity Index.

Helping keep home prices depressed is a fairly virulent foreclosure plague: There were more than 16,000 properties with foreclosure filings during the first nine months of the year.

The turmoil in the auto industry, which Indianapolis had been closely associated with, has hurt the city. But increased diversification, which has made pharmaceutical companies, banks government agencies and insurers all important employers, has helped keep job losses in check. The unemployment rate was just 7.7% in September, according to the Bureau of Labor Statistics, well below the national rate of 9.8% that month.

See CNN.com For The Whole Story.

Homeowner Confidence Skewed

Every quarter in the United States as a tracking measure in place to measure what people think their home is worth compared to what it actually would be worth on the open market. Over the past two years crept closer and closer to reality, and people are really starting to understand how far their home values have actually fallen.

During the third quarter of 2009, there’s been a big shift on what people think about their home and their equity. With a nationwide survey, homeowners were asked what they thought of their current appraised value. 25% thought that their home had actually increased in over the past year. 26% thought their homes stayed the same value as it was last year. And a whopping 49% of national homeowners realize the truth when stating that their home had decreased in die you over the past year. This is one of the issues that Realtors must overcome when they talk to homeowners looking to sell the properties.

Will the truth of the matter is that actually 72% of US homes have decreased in value over the past year. The good news is that 22% of homes actually increased in value. In most areas across the nation the 22% of homes that increase is probably a hard stat to believe because most areas have been hit so hard.

Looking into the future there’s another poll showing the homeowners think their valuable do in the next year. 41% of homeowners think that their home value will actually increase the next six months.  43% of homeowners think that their values will remain the same over the next six months. Only 17% of homeowners surveyed thought that their home value would decrease over the next year. I think a lot of these numbers are fairly optimistic even. Even though I think for very close to bottom, it’s hard to believe that were to see much of an increase in the next year just to shoot the sheer volume of foreclosures on the market.

If you are a homeowner, what do you think?

Home Buyer Tax Credit Extended Details

There has been a vote on the Unemployment Extension Bill which is set to extend the first time home buyer tax credit that was supposed to end December 1st, 2009.   The vote by the house was 403-12 and President Obama is slated to sign the bill tomorrow.  Here are some of the questions we have gotten about the bill.

This will run from December 1st, 2009 to April 30th, 2010.

You are eligible if you have not had any interest in a principle residence during the past three years.  This includes your spouse.  You are eligible for 4,000 if you are single and $8,000 if you are filing jointly.

There is a new credit for current homeowners too that is really looking like it will stimulate the real estate market.  Here is an example of that scenario.

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

There are some new income limits to pay attention to.  Before it was $75,000 if single and $150,000 jointly.  Now that has expanded to $125,000 for single and $250,000 for joint filings.

There was a not a purchase purchase price limit before, now there is a cap purchase price of $800,000 to qualify.  Here is a question that addresses this issue.

Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I
have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.

Here is a question from those that have owned a home previously, but have had a stint of time of no ownership.

Question: I owned my home for 10 years, but sold it two years ago year and have been renting
since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000
and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive.” As long as he lived in that house for 5 years straight what he did since 3 years doesn’t impact eligibility.

Here is in reference to contracts that might be already written and in escrow.

Question: I am an eligible first time home buyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date ffect me?
Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

To download a copy of the changes, click here.

Luxury Homes Take A Big Hit

During this real estate recession, just about every market has gone down in value across the nation.  If you know about supply and demand and how it affects price, you will understand why the luxury real estate market has been hit the hardest.

The luxury market in Greenwich, Connecticut has a luxury market with homes in the 4million to 8 million range.  Although the other areas near the luxury homes have seen a 14% decrease in value, the luxury market has seen a 20% or more decrease in accepted sold values.  Because there are less buyers that can afford to purchase homes in the upper end market,  luxury home sellers have had to drop their prices even more to get their homes sold.

Some other areas across the nation have seen a 30%-40% drop in values while their “luxury” markets have had to come down by 50% or more to get their homes sold.

The one thing that is keeping the very upper end home values is the fact that there is a lot less chance of finding a luxury home that is being foreclosed on or being sold as a short sale.  There is a much higher foreclosure rate percentage wise in the “regular” middle class market.

Construction Spending Up

September of 2009 had an increase in spending at a larger pace than expected.   It was only expected to be at a .3% decrease and ended up being a great .8% increase.  That is good news for anyone that owns a home.  It is a sign of some sort of stabilization in the real estate market which equals some stabilization in the economy as well.

There was a 3.9% increase in overall residential construction.  That is a great thing because that shows the largest jump in that number since the summer of 2003.

Some of these number may reflect some of the activity of builders rushing to get jobs going and done for buyers to qualify for the first-time home buyer tax credit.  It was set to expire on December 1st, 2009 but has been extended to April of 2010.  Much of the stabilization and numbers we are seeing are being helped tremendously by the tax credit.  Now that it has been extended, we hope to see even more of a stable market moving forward.  Don’t expect and large increases in values anytime soon, but it sure does give you a bit more of a feeling of security.

Mortgage Assistance Program – Does It Work

Pres. Obama’s plan called Making Homes Affordable was designed to help homeowners that have been greatly affected by the recession. When the recession hit, many Americans incomes reduced dramatically, which made it very hard for a lot of people to afford their current home that they were in. For many Americans, the foreclosure process is just around the corner.

Making Homes Affordable was put in place to help reduce some of the current payments on loans for people that were in risk of defaulting on their home. In theory, the program sounds great, and could be a great stabilizer for the economy. But, if the plan working?  The answer in most cases is, no.

What is happening all across America is banks giving homeowners the runaround when it comes to modifying their homeland. And in some cases, the banks are trying to force homeowners into other loans that they can’t afford either. They’re even asking homeowners to waive their legal rights.

The most common complaint from people trying to get modifications on their home loan from their bank is: banks are losing the paperwork required, dropping the calls, or claiming they did not receive the paperwork via fax so the homeowner has three fax the document several times. All of this when time is of the essence for the homeowner has foreclosure looms near.  It just goes to show, that when you get the government involved in fixing the private sector, you’re going to run into a lot of problems, inconsistencies, and programs that just don’t work like they’re supposed to.

5 Mortgage Shopping Tips

This presentation is from one of the lenders that I have referred business to. I have referred Affinity Mortgage to my clients because they are very knowledgeable about the subject of financing and understand how the mortgage market works so that they can get the best rates and provide the best service to my real estate clients. If you have any further mortgage questions or get a free quote, call Affinity Mortgage at 208-465-6666.

Press the play button below:

What Is A Short Sale

Here’s the question that started coming in to us about two years ago as short so properties started to become more more prevalent. Their are a lot of common misconceptions about what a short sell it and how they occur.

First, let’s talk about what a short sale is not. A short sale is not a home that night needs to be sold in a short amount of time. It is not a home with a small amount of square footage, or a home that is short in stature. A short sale is when the owner of the property essentially owes more than what the property is worth and they are trying to get the bank take less than what is over the property when they sell it. This typically happens during these foreclosure process.

So in a short sell property negotiation, you are working with a buyer, seller, and a bank. Once an offer is accepted between a buyer and seller, it then has to be fully approved by the bank before the transaction can occur. Depending on the bank, this can be a very frustrating process. I have worked several short cells that take months to even hear back from the bank on whether they will approve the price or not. The seller also needs to prove that they are not able pay off the remaining balance because of market conditions or their financial stability.

With that being said, buyers of short sale properties can get a very good deal when they purchase one of these properties because the banks definitely do not want to take properties back through foreclosure. The foreclosure process just cost the banks too much to do. But, if they don’t get an acceptable offers through the short so process they will foreclose on the property and then try to re-list the house as a REO property. Also known as bank owned.

If you’re looking to purchase property and looking at short sales or foreclosures, make sure that you work with an agent that knows that market. Otherwise, you might be in for a long frustrating process.

FHA Streamline Refinance Facts

FHA has allowed streamline refinances on insured home mortgages since the early 1980’s. The “streamline” pertains only to the total of certification and underwriting that asks to be performed by the loaner, and does not mean that there are no tolls required in the dealing. The standard necessities of a streamline refi are:

The home mortgage to be refi must already be Federal Housing insured.

The home mortgage to be refinanced should be current (not delinquent).

The refi is to solution in a taking down of the borrower’s annual principal and interest payments.

No cash may be taken out on house loan refinanced using the streamline refinance process.

Lenders may extend streamline refi in some ways. Some loaners offer “no cost” refi (actually, no out-of-pocket expenses to the borrower) by billing a higher rate of interest on the new loan than if the borrower financed or given the closing costs in hard currency. From this premium, the lender pays any closing costs that are incurred on the refi.

Lenders may extend streamline home refinances and take on the closing costs into the new mortgage quantity. This can simply be complete if there is sufficient equity in the property, as seen by an appraisal. Streamline refinances can also be done without estimates, but the new loan amount cannot surpass the primary loan quantity. Investment holdings (properties in which the borrower does not occupy in as his or her main residence) may only be home refinance without an assessment.

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