Reno Sparks Real Estate Today

Update On Home Affordable Modification Program HAMP

Below is an update to the Home Affordable Modification Program, better known as HAMP. One of the interesting additions is the eligibility of investor owned homes.  Also write downs (reductions in loan amounts) are given a bigger priority. 

All of this sounds really good but the problem is this is a volantary program. Lenders don't have to comply. There is a lot of money in servicing loans, processing foreclosures, and related services.  

The Obama administration has announced changes to its flagship foreclosure prevention initiative – the Home Affordable Modification Program (HAMP). Among the changes, borrowers who are struggling because of debt beyond their mortgage will be eligible for a secondary evaluation with more flexible debt-to-income criteria, and eligibility will be extended to investor-owned homes that are used as rental properties. The administration is also giving principal reductions a bigger role within the program, tripling incentives for investors that agree to write down an underwater borrower’s principal balance and offering these same incentives to the nation’s two biggest mortgage investors – Fannie Mae and Freddie Mac.

Stay tuned.........

Relief For Underwater Homeowners Current On Payments

First off the program only applies to borrowers whose loans are held by Fannie Mae and Freddie Mac. The good news is Fannie and Freddie hold a huge number of loans in the Reno Sparks area.  You can look up Fannie Loans here http://www.fanniemae.com/loanlookup/ and Freddie Loans here www.freddiemac.com/mymortgage The loans must have been sold to one of the two corporations prior to April 1, 2009. After that, though, the rules have been relaxed considerably.

The old HARP was limited to borrowers whose homes were worth no less than 125% of what they owe on their mortgages. Now, beginning Dec. 1, that restriction has been removed, so there is no ceiling whatsoever, at least for loans with traditional 30-year fixed-rate mortgages and even less common 15-year fixed loans.

For everyone else, there are still ceilings on the loan-to-value ratio. For fixed-rate loans with a term greater than 30 years, the maximum LTV is 105%. Ditto for adjustable-rate mortgages with initial fixed-rate periods of five or more years or ARMs with terms longer than 30 years.

 

Beyond that, you can’t have been late with your house payment at any time during the previous six months and late no more than once in the previous seven to 12 months. Also, to be eligible, borrowers must benefit in the form of lower monthly mortgage payments or a more “stable” loan product, such as moving from an adjustable-rate mortgage to one with fixed payments. But if your payment increases by more than 20%, you must re-qualify for the new loan under the following rules: You must have a credit score of at least 620 and your debt-to-income ratio cannot exceed 45%. Also, lenders are required to verify your income and assets.

Another important change: The standard waiting period has been removed for borrowers who declared bankruptcy or have a foreclosure blotting their credit records.

Zillow.com has a great HARP eligibility tool you might want to check out. You can try it here http://www.zillow.com/mortgage-calculator/harp-eligibility/

 

 

Reno Sparks Lands On Top 10 List

No it’s not Dave Letterman’s nightly list.  There are some lists you just don’t want to end up on.  The list Reno Sparks finds itself on, falls into that category.  Foreclosure web site RealtyTrac recently published a list of “Top 10 Short Sale Markets” and Reno Sparks landed right in the middle at number 5.

Here’s the write up.

5) RENO-SPARKS,  NV 

About 60 percent of homeowners in Reno owe more on their house than the house is worth; making the short sale market in Reno huge.

Pre-foreclosure sales alone accounted for nearly 30 percent of all sales in the second quarter  of 2011, according to RealtyTrac. Buyers paid only $156,664 on average for a Reno  short sale (less than it costs to build a new house), and the 702 short sales  in Reno during the second quarter represented a 50 percent increase from the previous quarter. 

Full article here

On the upside every short sale means one less foreclosure on the market.  

 

New Freddie Loan Mod Program Coming In Oct.

Financially distressed homeowners with Freddie Mac mortgages will have a new option for loan modifications beginning next month.

The new option, called a Standard Modification, is designed for borrowers who are ineligible for a Home Affordable Modification Program (HAMP) loan modification or have previously defaulted on a HAMP or other loan mod. For those who are approved, the program reduces a borrower's mortgage principle and monthly payment by at least 10 percent each, thereby making the payments more affordable.

To qualify, homeowners must be at least 60 days past due on their mortgage, that is, having missed at least two monthly payments. Those who are not at least 60 days past due can qualify by proving they are in imminent danger of default, through demonstrating an eligible hardship and providing verification of income.

Mortgages that are modified will have their interest rates set to 5 percent and the amortization period (time required to pay off the mortgage) extended to 40 years from the time of the modification. Lenders approving such modification will receive cash incentives of up to $1,600 per homeowner approved.

Borrowers approved for the program must undergo a three-month trial period during which they must keep up with their new payment schedule before the loan modification is finalized and made permanent, similar to HAMP. Lenders will have incentives to encourage them to finalize borrower's status within two months of the end of the trial period.

Lenders may begin trial modifications for approved homeowners under the program as soon as Oct. 1, 2011. As of Jan. 1, 2011, all borrowers seeking a loan modification of any type on a Freddie Mac-supported mortgage must be evaluated for eligibility under the program.

The new Standard Modification replaces an existing type of Freddie Mac loan modification called a Debt Coverage Ratio, which now is being referred to as a Classic Modification. The government's HAMP loan modification will continue to be available as well.

More info. here.

http://community.nasdaq.com/News/2011-09/freddie-offers-new-loan-mod-option.aspx?storyid=94347

 

More Homeowners Choosing Short Sales Over Foreclosure

With the number of foreclosures on the market at record highs, many troubled homeowners are looking for other options to avoid the damage to their credit and to simply get out from underneath their home loan as soon as possible. They often have a better chance of qualifying for a new mortgage soon after completing a short sale than if they were to go through a foreclosure. In most cases a Bank prefers an owner to do a short sale because it saves them from the expensive cost of a foreclosure.

As a result, there are more homeowners who are avoiding foreclosure by going through a short sale. Last year, short sales accounted for about 10% of the number of homes on the market nationwide. That figure has increased by 2% and short sales now account for about 12% of the homes on the market. In some states –such as Georgia, Michigan, Nevada, California and Colorado - short sales have become still more prevalent.

In California, for example, short sales accounted for about 25% of homes sold in the second quarter of 2011, a 7% increase year-over-year. In Colorado, they accounted for 17% of homes sold (also a 7% increase year over year). Bank of America expects to complete at least 100,000 short sales this year, which is twice as many as it completed in 2009. A Well Fargo senior vice president claims that short sales have increased recently because there are notas many bank-owned homes on the market in some areas, leaving eager buyers to actively seek out short sales.

 

Foreclosures Will Clean Up The Mess

It appears people smarter than me are finally figuring out, we need to get foreclosures and short sales done to get the market back on track.

http://money.cnn.com/2011/08/31/real_estate/housing_market_foreclosures/

I’ve long said, the government needs to quit throwing good money after bad and get out of the way.  The biggest problem with the real estate market today is lack of confidence.

Banks, buyers, sellers, real estate agents, loan officers, and other industry professional have no idea what is going to happen next. Is the government going to step in with another plan? Are banks going to get more incentives? Any new programs to help homeowners on the way? Is the fed going to keep interest rates artificially low? If so how long?

So many questions and so few answers.   

Confidence and some level of predictability is key in any market.  You can be confident the market is going down, it’s going to stay about the same, or is going up. If you can feel confident in the market direction you can begin to make important decisions.  

The longer we delay the inevitable, the worse it will get. Prices will continue to fall, more vacant homes will litter neighborhoods, and we will be talking about this a year from now.

The sad part of the story is if the market was left to fall on it’s own, a recovery would most likely already be underway. 

 

What Do Americans Think About Home Ownership?

Fannie Mae publishes their National Housing Survey every quarter. They survey the American public with questions concerning today’s housing market. Here are a few points from thier recent report. 

The Most Important Reasons to Buy a Home

1. It means having a good place to raise children and provide them with a good education
2. You have a physical structure where you and your family feel safe
3. It allows you to have more space for your family
4. It gives you control of what you do with your living space (renovations and updates)

The Home as an Investment

• 66% of the general population (and 71% of homeowners) believe that home ownership is a ‘safe’ investment. This is the first time since the studies inception in 2003 that this number increased.
• 57% believe that home ownership has more potential as an investment than any other traditional asset class.
• 67% think that now is a good time to buy a home

Owning vs. Renting

• 65% of renters have aspirations to someday own their own home
• 74% of renters think that owning is superior to renting (up 6% since the last survey)
• 96% of homeowners see home ownership as a positive experience (3% see it as a negative experience) while 82% of renters see renting as a positive experience (16% see it as a negative experience)
• 92% of homeowners live in a single family residence while 48% of renters live in a multi-unit building

 One thing is clear, home ownership is still very important to most Americans. 

 

Home Ownership Down - Lowest Since 1998

Many in Washington are debating whether government programs designed to promote homeownership are worth the risk and costs. Many have suggested pulling the plug on Fannie Mae and Freddie Mac, and seriously reforming FHA.   

I believe the government has no place in homeownership. Despite all the programs and efforts to make homes affordable and give everyone a chance at the “American Dream,” homeownership rates are at their lowest level since 1998 and are expected to go lower.

According to the census bureau homeownership rates were 66.4% at the end of the first quarter. This rate is well below the pre-boom level.

So let me get this straight, after all the real estate hell most of us have faced the last decade plus, fewer people own homes today than they did in 98?

We can end the debate right there. If homeownership was the goal, the government programs failed miserably. Not the mention the hundreds of billions of dollars tax payers (the American people) are on the hook for. Fannie, Freddie, banks, AIG, etc..  We would have been better off just buying subprime borrowers homes for cash. At least they wouldn’t be getting foreclosed on, and driving the market down.

You may be saying, “wait a minute, aren’t you a real estate agent?”  “Don’t you want as many homeowners as possible?” 

I want a solid and stable real estate market. One that is made up of homeowners and investors that have some “skin in the game” and have demonstrated the ability to save money, manage their credit, and make good financial decisions. I want a market where owning a home is an earned privilege and not an American right.  A solid real estate market will benefit everyone.  Buyers, sellers, banks, title companies, insurance agents, construction people, cities (property taxes), and yes real estate agents.

 

New Reno Sparks Foreclosure List Posted

A new customized list of foreclosure deals in the Reno Sparks area is now posted over atwww.4renohomes.com

Some great deals. Over 250 homes and condos. Starting at $14,900 up $688,800.

This Foreclosure List gives you access to inside information normally available only to real estate agents and industry insiders. Our list contains homes that are on the market now, homes you can look at today, and purchase today.

You can get the list here Reno Sparks Foreclosure List

 

Is The Worst Behind Us?

A question I'm sure many would like answered, myself included.  I posted some positive news on a possible new hotel casino in Sparks that would bring thousands of new jobs. Just today I received some interesting news and stats from the Secretary of state, an excerpt below. 

A Special Business Report from the Nevada Secretary of State

While anecdotal reports and selected economic indicators suggest economic conditions may be improving, the latest data sourced to the Nevada Secretary of State's office confirms the worst of the declines are in the rear view mirror and potential for future expansion may be on the horizon.

A new study conducted by Applied Analysis, a Nevada-based research and analysis firm, identified new business entity filings as a leading indicator of future economic activity. With all new businesses to the state required to register, entity filings with the Secretary of State's office tend to indicate the level of investment taking place in the community. During historical economic cycles, an improving number of new business entities ultimately led to job creation. The reverse was also true as the economy turned toward recession. 

You can read the full report here. 

 Not sure if this should be categorized as "less bad" news or good news. Either way it's a step in the right direction.