Reno Sparks Real Estate Today

Underwater Homeowners May Get Relief With New Harp

A little more than a week ago, President Obama announced an expansion of the HARP (Home Affordable Refinance Program) which would eliminate the current maximum LTV of 125%. This means you could be up to 25% upside down on your mortgage.  The program is being looked at as a way to reward those homeowners who have been good payers of their mortgages but, because of declining home values, they could not take advantage of today’s lower interest rates.

While the actual details on the program will not be released until next month, here’s some of the details being talked about.

• It will only pertain to loans currently being serviced by Fannie Mae or Freddie Mac
• Because of the removal of the LTV cap, appraisals may not be required
• With the only qualifying criteria announced being that the last six payments be on time, it is possible that income documentation may be streamlined and credit scores might be more forgiving
• Fees allegedly will be reduced
• Incentives may be offered to people who shorten their repayment time
• It also sounds that the banks may be given some incentive by not holding them liable for the underwater portion of the new loan (a major incentive for sure).

The government is already on the hook for these loans thru Freddie and Fannie. By lowering the payments (by offering lower rates), they will likely help these loans to continue to perform and make it less likely for the underwater homeowner to walk away.

This is great news for the Reno Sparks area where estimated show nearly 60% of mortgage are "under water."

Stay tuned; as soon as more concrete details become available we will pass them on. 

 

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.

 

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.

 

Shadow Inventory Up - Short Sales Increasing

As the approximate 2.5 million homes in foreclosure complete the process, national delinquencies will fall, and REO inventory and short sales are expected to trend upward, according to a report released today by John Burns Real Estate Consulting.  There are currently 562,000 bank-owned homes and 2.5 million mortgages more than 90 days delinquent in the market.  Single-family starts as well as single-family and multi-family permits were down in August, leaving total completions last month 33% lower than July, at 587,000 units.

Foreclosures grew by 4% month-over-month.  Shadow inventory is inevitably growing and affecting the market already hit hard by high levels of distressed mortgages, such as Stockton, Calif. and Orlando, Fla., which have an excess supply of inventory already. According to John Burns' data, the two cities have a 27 shadow months supply of homes, 22,344 and 81,309 homes, respectively.  CoreLogic reported that national home prices in July remained steady, but existing home sales decreased 2.6% in August compared to July, according to the National Association of Realtors. New home sales dropped 12% over the same period.

Shadow inventory in the Reno Sparks area has been an increasing concern over the last year plus. No one knows for sure how many shadow inventory homes are lurking out there but it's safe to say we are looking at least in the hundreds minimally. It wouldn't surprise me if the numbers are in the many thousands neighborhood.  The question is when are banks and mortgage companies going to start releasing these homes to be sold on the open market? Will they all be released at once or a few at a time?  

 

Mortgage Market Changes - What It Means To You

By the time you are reading this, the new 2300 page financial reform bill is likely to be making the headlines. The Senate has already approved the new bill and President Obama is expected to sign it into law this week ..despite the fact that many of the provision related to specific regulations have yet to even be written. If that sounds faintly disturbing, don't worry...your concern is noted and shared by many experts through the nation. However, there are sweeping changes that are already apparent despite the lack of specific details.
Although broad in scope, home buyers and sellers are likely to be among the first impacted by the new provisions. They represent one of the most comprehensive - top to bottom  changes to the finance, valuation, types of mortgage products offered and how lenders are compensated to take place in decades. In fact, there are even new rules for investors that provide capital for the purchase of mortgages.

A few of the most important points likely to make immense impact to buyers, sellers and investors is the language dealing with any type of mortgage outside of the "traditional" or "plain vanilla" category. Unfortunately, regulators have yet to fully define what will constitute a "traditional" mortgage under the new plan but it is clear that the line will be drawn to reduce the number of sub-prime borrowers as well as offerings of owner finance and other alternative forms of finance. Experts predict an immediate severe impact on many minority and low income borrowers; many who have already been impacted by far less severe measures. For example, according to FHA, rejection rates for African American and Latino borrowers have substantially increased among non-FHA loans.

The new FDIC and other regulatory oversight standards contained in the bill are expected to provide safer mortgage(s) instruments but at a higher cost and more stringent requirements for both banks and individuals. It is estimated that only five banks currently control more than 65% of the current mortgage market; the new bill is expected to further consolidate this trend by favoring big banks over small. In part, this is due to the belief that big banks are easier to regulate. However, at the same time, new controls and rules regulating private investors are also expected to take another two to three years to fully define...leading many to believe the bulk of mortgages will still be backed by the United States government for the foreseeable future.

New Resource For Distressed Reno/Sparks Homeowners.

If you or someone you know is having trouble making their mortgage payments, or owes more on their mortgage than their home is worth, check out Hope4Homeowners.

Hope4Homeowners is a new program/website launched by Assist-2-Sell in Reno. The website (www.Hope4Homeowners.com/Reno) is great resource for information about how to avoid foreclosure and learning about the various programs that are available to you.   

 

Get information about:

• Short Sales
• Loan Modification
• Deed-in-lieu of foreclosure
• Home Affordable Modification Program (HAMP)
• Home Affordable Foreclosure Alternatives (HAFA)
• Home Affordability and Stability Program (HASP)

And much more.

You can download a report outlining many of your options and the qualifications for the various programs.

Letting your home go into foreclosure is the worst thing you can do and should be a last resort. There are so many better alternatives available today.

 

Reno Sparks Real Estate Market Report April 10

For all you numbers, charts, and graphs people out there the Reno Sparks Association of Realtors released a market report today.

You can download the report here. Download AprilMarketReport2010

Most of the info. was not surprising. There are a couple of figures that stand out to me.

#1 Page 12- 1417 Units available against 492 units sold. This is only a 2.8 months supply of homes.  This number is way down from the 14-18 month supply a few years back. With all the news we see in the newspapers and on TV about all the foreclosures, has to make you wonder where all the inventory is?  There is evidence that there is “shadow inventory” out there. (shadow inventory is homes owned by banks that have not been put on the market.) The question is when is this inventory going to hit the market?

#2 Page 11 - While the percentage of distress listings has gone down, the number is still high at nearly 60%. This means almost 6 out of 10 homes you see on the market are distressed.

The stats indicate the market is stabilizing, for now. With that said,  we are monitoring several factors very closely. The expiring tax credit, economic recovery(or lack there of), shadow inventory, and rising interest rates.

Stay Tuned. 

Download AprilMarketReport2010

Countrywide Picks Up Pace Resolving Troubled Loans

Barclays-- 
Liquidation and modification rates on Countrywide-serviced residential loans have edged higher in the past few months, with a larger percentage of mortgage restructurings encompassing principal forgiveness, according to a study just released by Barclays Capital. The research firm examined loans within residential mortgage-backed securities (RMBS) serviced by Countrywide, now Bank of America Home Loans, and found that while historically, Countrywide-serviced deals have claimed lower-than-average mod rates and long liquidation timelines, that has begun to turn around in the past few months. Barclays reports that constant default rates (CDRs) on pools of mortgages serviced by the once-subprime leader have improved, primarily due to faster roll rates, as well as rejections from Home Affordable Modification Program (HAMP) trials, which allow the loan to proceed to foreclosure.

Analysts at Barclays expect Countrywide’s liquidation rates to continue to increase as more HAMP trials are resolved in the coming months. Many of these resolutions, though, do include transitions to permanent loan restructurings. Barclays says HAMP conversions have also boosted modification rates for Countrywide, and the research firm found that debt forgiveness mods now make up 10 percent of the servicer’s modified loans, up from 0 percent in January. The research firm says it as seen “continuous improvement” in current to delinquent rolls and falling 60-plus day delinquencies. Barclays says there have been important changes in servicer behavior in the Countrywide camp.  HAMP rejection rates for Countrywide loans have shot up in the past few months and now constitute 36 percent of all resolved trial mods.  According to the Treasury’s latest HAMP progress report, Countrywide/Bank of America is servicing approximately 215,000 active trial mods and has finalized near
 ly 57,000 permanent loan restructurings.

How — and why — should I take a home inventory?

Would you be able to list all the possessions you've accumulated over the years if they were destroyed
 by a fire or other disaster? If your answer is no, you may want to consider doing a home inventory. It may help you get your insurance claim processed faster and make it easier to verify losses for your income tax return.

• Make a list. Go room by room, starting with newer possessions. If you're just moving into your home, you could do a home inventory while you're unpacking.

	Use a personal computer. Many financial software programs include a home inventory program that allows you to do a room-by-room accounting of your belongings. Or print out and completeFarmers Home Inventory Checklist and keep it in a safe, accessible place in the event you need to file a claim.
	Take a picture or use a video camera. Save time: Take pictures or videotape the items in your home and make copies of the tape or DVD.
	Whatever process you use, you'll probably want to keep at least one copy in a safe place away from your home and you should update it whenever you make a significant purchase.

You may want to consider purchasing a Personal Articles Floater to provide additional coverage for your valuables, such as jewelry, furs or fine arts, when their value is higher than the limits stated in your homeowners policy.

Call me: I can provide information that may help you decide whether your coverage is sufficient.