LOCAL FORECLOSURE SEMINAR

Here is a greet opportunity to get loan modification counseling at the upcoming Foreclosure Seminar.  There is a local meeting with Freddie Mac’s representative. Check below for more information.

Foreclosure help coming Feb. 27
Freddie Mac outreach specialist holding seminar

 

By Rose Albano-Risso
Manteca Bulletin City Editor

 

LATHROP – A representative of Freddie Mac will be at the University of Phoenix in Lathrop Friday, Feb. 27, to give financially distressed South County homeowners advice on how to avoid foreclosure.

Jacqui Cosgrove, consumer outreach specialist with Freddie Mac which is the nickname for the Federal Home Loan Mortgage Corporation, will be available to personally meet with the property owners and answer their questions from 2 to 7 p.m. that day, said Freddie Mac public relations director Patti Boerger.

“This seminar will combine hourly sessions to address the process of loss mitigation from a homeowner’s best-practices perspective. It will also give borrowers the opportunity to meet with their lenders, face to face, in order to work toward a solution to avoid foreclosure,” Cosgrove said.

There will be nonprofit counseling available as well at this event “for those who have other debts or obligations to address in order to prioritize the home,” added Cosgrove.

One advantage of this seminar over just doing research on the Internet or elsewhere is that at this event, representatives of various organizations who can help individuals with hardships will be there in person to help you, she said.

“They can help you determine your options and get the process started. In certain situations, borrowers have been able to exit an event with their workout option approved that day,” Cosgrove explained.

To get approved that same day, one will need to bring the following requirements ready for the processing: proof of financial hardships which could be loss of employment or reduction of work hours, major illness or injury, divorce or separation, and death of a spouse; and statements showing income and expenses.

Cosgrove said loan modifications and other relief options are available to those who are honest and demonstrate a hardship. She defined hardship as “an involuntary inability to make your mortgage payment.”

Not being realistic is one of the mistakes commonly made by homeowners when it comes to seeking help from their mortgage companies.

“Adjustments to the original loan terms will not be made for homeowners just because they don’t want to give up their lavish lifestyle and expensive car payment, or are renting an investment property to family members for below market rent,” Cosgrove said.

Ironically, there are always those who take advantage of a sad situation to make a buck out of unsuspecting people who are already having difficulties making ends meet. Advertisements are everywhere – on television, radio and the printed media – offering services and promising results and relief from mortgage debts to vulnerable and unsuspecting consumers but at  a cost. This is a case of caveat emptor or buyer beware, Cosgrove warns consumers.

“Don’t pay organizations to help you. There are thousands of companies that are charging borrowers and telling them ‘we’ll work with your lender.’ Steer clear of anyone who charges. Instead, call one of the federally approved nonprofit counseling agencies whose services are free,” she said.

Advice for frustrated homeowners

Cosgrove’s advice to homeowners who are getting increasingly frustrated because they can’t get the attention or any answer or cooperation from their mortgage companies:

• Keep calling and make sure you’re talking to the right person.

• Demand to talk with loss mitigation area, not collections. As a consumer, you have the right to request to speak with a supervisor.

• Be sure to keep a log of each person you speak with and contact as you make an effort to work with your servicer. Oftentimes, if a borrower establishes a relationship with a HUD-certified counselor, the counselor will have access to specialized phone portals in order to help facilitate the collection of your financial data and completion of your loss mitigation request.

Added Cosgrove, “Borrowers with loans owned by Freddie Mac and others may qualify for special loan modification programs, including permanent rate reductions, mortgage term extensions or forbearance. Just remember these three rules: be prepared, be honest, and be realistic about possible outcomes.”

Freddie Mac does not have a disclosable breakout of foreclosure figures by state, said Cosgrove. However, she said that nationally, about 200,000 of Freddie Mac’s 12 million loans are either 90 days late or in some stage of foreclosure.

“We’re also approving an estimated 14,000 workouts a month through our mortgage services, which means about 3 out of 5 seriously delinquent borrowers with Freddie Mac loans avoid foreclosures. Our REO (Real Estate Owned-homes we own due to foreclosures, etc.) inventory is about 29,000 homes nationwide. In context, Freddie Mac loans account for just 7 percent of the nation’s seriously delinquent mortgages, Cosgrove said.

Five tips to make the most of your call to your mortgage servicer from Freddie Mac:

• Open your mail. Notices are sent before foreclosure proceedings begin so be sure to open your mail for loan modification offers and advice from your mortgage services. Freddie Mac advises distressed borrowers not to stand by and wait.

• Be prepared before you call. Ask to speak to someone in the loss mitigation area (not the collection area) and make sure you can quickly and concisely state your financial hardship. Workout programs are only available for borrowers with true financial hardships. Harships include: loss of employment or reduction of hours, major illness or injury, divorce or separation, and death of a spouse.

• Be able to document your income and provide details about your mortgage loan and other financial obligations so have the following documents on hand:

a. Your mortgage loan number, name of mortgage services and recent mortgage statement,

b. Your most current pay stubs,

c. Your bank statements, with account balances and account numbers, and

d. Information on other expenses and debts, such as student loans, car leases, and credit card debt.

• Be honest about your income, expenses and debt. A credit report will be pulled and income such as child support and other debts will show up.

• Be realistic. Loan modifications won’t be made for homeowners just because they don’t want to give up their lavish lifestyle and expensive car payment or are renting an investment property to family members for below market rent. If that’s the case, start reducing expenses and saving money by paring down to bare necessities.

The University of Phoenix in Lathrop is located in the Lathrop Business Park on South Harlan Road east of Interstate 5,  just south of Louise Avenue.

Thanks,
CAROL PERDEW
(209) 239-7979
wwwCentralValleyHomes.com     

 

Homeowners Are Getting Help By HOPE NOW Program

Despite difficulties, homeowners finding relief with HOPE NOW program

By Jack Guttentag,
Inman News|

Editor’s note: A previous version of this story erroneously stated that the HOPE NOW Alliance of loan servicers charges borrowers for consultations. The consultations are free.

Q: “I have been giving my clients an article you wrote about a year ago advising borrowers having payment problems how to request a modification in their loan contract … Could you bring it up to date?”

A: A lot has happened since that article was written. Very shortly thereafter, the HOPE NOW program promoted by Treasury Secretary Henry Paulson began as an effort by housing counseling agencies and mortgage servicers to modify loans on a strictly voluntary basis. Since then, the first recourse of borrowers in trouble has been to call them at 1-888-995-HOPE. I have sent many people to HOPE NOW, with mixed feedback.

House prices have declined further in the last year, turning more borrowers “upside down” where they owe more on their mortgage than their house is worth. This induces some borrowers to stop making payments, which increases foreclosures. But price declines also reduce the amounts that investors recover from sale of the house following a foreclosure, which should increase the attractiveness of loan modifications as an alternative.

In addition, a full-fledged financial crisis has erupted, forcing the Federal Reserve to act as the lender of last resort to a series of weakened financial firms unable to meet their cash needs. The coverage of deposit insurance has been broadened and money market funds are now insured. In the works, furthermore, are plans to purchase mortgage assets from investors, to make direct equity investments in banks, and even to insure payment of principal and interest on mortgages and other assets.

An excellent study by Alan M. White provides some indications of what has happened to modifications during this tumultuous period. In a sample of subprime loans he examined, the mortgage payment was reduced in only about half the modifications, and the balance was reduced in very few cases. In many cases, the modification consisted of adding the amounts past due (“arrearages”) to the balance, which raises the payment. It is no wonder that during the annual period he examined, the number of foreclosures swamped the number of modifications.

Borrowers having payment trouble have choices. The rational choices are either to seek help immediately, or to take immediate action themselves. Those who put their heads in the sand will lose their home in a foreclosure.

I suggest that those who elect to seek help go to HOPE NOW first, and if that does not work out, to try a HUD-approved counselor. Before seeing a counselor, prepare yourself by pulling together all the data that the counselor will need; the form at Genworth Financial can be used for this purpose.

Responding to a solicitation from one of the many modification consultants who have emerged over the last year is extremely risky. They charge $1,000 and up, usually payable in advance. Some may do a good job, but many are hustlers looking to garner upfront fees.

If you elect to handle the matter yourself, you must get to the servicer’s loss mitigation department, which may take some persistence. The burden of proof is on you to demonstrate and document that, for the reasons you lay out, you can no longer make the required payment. You must also demonstrate and document that you can make a smaller payment that you specify.

Under the new FHA program called H4H (“Hope for Homeowners”), FHA will refinance loans of borrowers having payment problems if the existing investor will write down the loan balance to 90 percent of current market value. HUD publishes a list of lenders participating in this program. I am not sure whether there is any benefit to a borrower contacting one of them before the firm servicing their existing loan has agreed to pay down the balance. But it can’t hurt to get that lender on your side.

Aside from the possible increased risk exposure under FHA, the federal government has not channeled any crisis money directly to borrowers. The new programs referred to earlier will direct $700 billion or more to financial institutions, but none to households. A strong case can be made that this is unbalanced.

The root cause of the crisis is the decline in home prices, which will continue so long as the foreclosure problem isn’t solved. Arguably, dealing directly with this problem is more effective than dealing with it indirectly. The Treasury recently put out a request for proposals on a mortgage payment insurance plan, which could be the perfect vehicle for providing direct assistance to borrowers. Stay tuned.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

Presented by
CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com

FORECLOSURE FILINGS DOWN IN SEPTEMBER

Foreclosure filings down 12% in September

New state laws slowing foreclosure process

By Inman News

New state laws that require loan servicers to give advance notice before filing a notice of default helped push down foreclosure-related filings by 12 percent nationwide in September, data aggregator RealtyTrac.

California, which accounts for nearly one-third of foreclosure activity, passed legislation that took effect in September requiring lenders to make contact with borrowers 30 days before filing a notice of default. Notices of default in California dropped 51 percent in September, with a corresponding “significant impact” on national numbers, RealtyTrac said.

RealtyTrac said notices of default fell 66 percent in North Carolina, a state that now requires lenders to provide homeowners and the state commissioner of banks 45 days’ advance warning of plans to file a notice of default.

Lenders file notices of default as the first step in the foreclosure process, in most cases after borrowers fail to make two or more payments. A notice of default starts the clock ticking on a forced auction sale or bank repossession of a delinquent borrower’s home.

Foreclosure-related filings include default notices, auction sale notices and bank repossessions. Because many borrowers refinance, get current again on their loans, or negotiate a short sale or loan modification with their lender, not all properties subjected to filings are actually repossessed or sold by lenders.

But in many instances, the new laws governing notice of default filings may only delay lenders from initiating the foreclosure process.

After a new Massachusetts law took effect in May requiring that lenders give homeowners a 90-day right-to-cure notice, initial foreclosure filings were lower than normal for the following three months. But initial foreclosure filings were up 465 percent from August to September, RealtyTrac said, as the first loans subject to the new rule emerged from the 90-day window.

Nationwide, RealtyTrac counted foreclosure related-filings on 265,968 properties in September, down 12 percent from August but up 21 percent from a year ago.

At the state level, Nevada saw foreclosure-related filings jump 11 percent in September. The rate of foreclosure-related filings in Nevada — one for every 82 homes — was the highest in the nation, and more than five times the U.S. average of one filing per 475 homes.

With one filing for every 178 homes, Florida moved from fourth place to second on the list of states with the highest foreclosre rates.

In California, the dramatic decline in notices of default contributed to a 32 percent decrease in foreclosure-related filings. Still, one in 189 homes was subjected to a filing, the third-highest rate in the nation.

Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado rounded out the list of the 10 states with the highest foreclosure rates.

For the third quarter, RealtyTrac counted foreclosure filings on 765,558 homes, up about 3 percent from the second quarter and 71 percent from a year ago.

Six states — California, Florida, Arizona, Ohio, Michigan and Nevada — accounted for more than 60 percent of foreclosure-related filings.

The 10 cities with the highest foreclosure rates among the nation’s 100 largest metropolitan areas in the third quarter were located in California, Florida, Arizona and Nevada.

They were Stockton, Calif.; Las Vegas, Nev.; Riverside-San Bernardino, Calif.; Bakersfield, Calif.; Fort Lauderdale, Fla.; Phoeniz, Ariz.; Sacramento, Calif.; Orlando, Fla.; Fresno, Calif.; and Oakland, Calif.

Search Bank Owned Homes at CentralValleyHomes.com

CAROL PERDEW
Prudential California Realty
(209) 239-7979

 

Homeowners May Be Locked In Homes With Negative Equity

Upside-down borrowers locked into homes
Study find More May Be Stuck Than Displaced

By Matt Carter, Inman News

A new study suggests buyer psychology and tighter credit aren’t the only factors keeping would-be home buyers on the fence — homeowners with negative equity are often “locked in” to their existing homes and are nearly 50 percent less likely to move in order to take a new job, cut their commute time or move to a neighborhood with better schools.

The study, Housing Busts and Household Mobility, found that while becoming “upside down” forces many homeowners to move from their homes because of foreclosure, an even greater number have historically ended up stuck in their homes.

That’s because until housing prices rebound, a sale of their existing home won’t pay off their existing mortgage — let alone generate the proceeds needed for a down payment on their next home.

The study’s authors — housing experts at the University of Pennsylvania Wharton School of Business and the Federal Reserve Bank of New York — warned that the repercussions of “lock in” include less efficient job markets and reduced incentives for homeowners to keep up and make improvements to their homes.

Some families will not be able to move to access better jobs in alternative labor markets, the study concluded, while others who would like to move to access better schools or a different-size home will be unable to do so, the study said.

The study looked at two decades of housing data, covering the period from 1985 to 2005, and found that negative equity reduces homeowner mobility more than previously believed. All in all, having negative equity reduced the percentage of homeowners moving within a two-year period by 5.6 percentage points, a reduction of 47 percent from the baseline mobility rate of 12 percent.

“That the net impact of negative equity … has been to reduce, not raise, mobility may surprise some given the high number of defaults and foreclosures in the current environment,” the study noted.

The study looked at a period when subprime lending was not nearly as prevalent, and included only owner-occupied homes — not those purchased as investments or second homes. Only time will tell whether the number of people locked into their homes during the current downturn outnumbers those forced to move because of foreclosure, the authors concede.

Even if the study’s analysis of the past can’t simply be extrapolated into the future, “policymakers should begin to consider the consequences of lock-in and reduced household mobility because they are quite different from those associated with default and higher mobility,” the authors said.

More research is “urgently needed” on issues surrounding the “financial frictions” associated with potential mortgage lock-in, the study said.

According to Worldwide ERC — formerly the Employee Relocation Council — about 794,000 households relocate a year because they are transferred to a new job within the U.S. About 54 percent are homeowners, while the rest are renters.

Worldwide ERC reports that most companies offer to purchase at least some employees’ homes if they can’t sell, while 20 percent reimburse employees’ selling expenses. The group, which represents organizations that manage relocation programs, estimates $32 billion a year is spent on U.S. corporate relocations.

The new study provided an overview of past research demonstrating that falling home prices or rising interest rates can lock borrowers into their homes. Households without access to enough cash or credit may find their options constrained even if home equity does not turn negative.

Another factor that can trigger the “lock-in effect” is the original loan-to-value (LTV) ratio. The smaller the down payment provided by the home purchaser, the more quickly they end up “upside down” in the event of price declines.

The study noted that in the San Francisco Bay Area, LTV ratios were typically around 80 percent until the end of 2002, and then increased sharply to 90 percent in 2004.

“Essentially, the typical new home buyer in the Bay Area bought a house for $800,000 in 2006 using a $720,000 mortgage,” the study concluded. “If prices really do decline by 25 percent from their peak, the underlying house value will be around $600,000, which is much lower than the typical mortgage balance taken out that year.”

In the late 1990s, barely 10 percent of Bay Area borrowers had LTVs above 95 percent. By 2006, about 35 percent of buyers had LTVs exceeding 95 percent, and more than half exceeded 85 percent.

The study’s authors — Fernando Ferreira, Joseph Gyourko and Joseph Tracy — also shed light on how demographics affect mobility. While being married does not affect mobility, divorce does make homeowners more likely to move.

So does race, sex and education. Households headed by a person with some college have two-year mobility rates that are 4.2 percentage points higher than those without a high school degree. Whites are more likely to move than non-whites, and female-headed households are more likely to move than those headed by males, the study found.

CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com

Experts Disappointed with Local Homeowner Tax Assistance

Did area get shortchanged by HUD?
Leaders, real estate experts not happy with share of foreclosure pie help

Dennis Wyatt

Managing Editor
Manteca Bulletin

Stockton-Manteca has been at the epicenter of the foreclosure meltdown during 2008.

But when it came to the Housing and Urban Development divvying up $3.92 billion this past week of the federal taxpayer funded Neighborhood Stabilization Program, a number of people ranging from both U.S, Senators Dianne Feinstein and Barbara Boxer down to Manteca Mayor Willie Weatherford and real estate professionals such as Tom Wilson believe the region got the short end of the stick.

Weatherford said it reflected Congress’ pervasive ABC – “Anyplace But California” -attitude when it comes to distributing tax assistance.

“It doesn’t say much about our Congressional influence,” added Wilson.

Boxer and Feinstein issued a joint statement that noted, “Frankly, it is beyond us how California – which has nearly twice the amount of foreclosure filings than Florida (561,223 compared to 287,210) – could receive less assistance. This makes no sense, and is totally unacceptable.”

California overall is receiving $529 million, less than the $541 million that Florida is receiving. The money is being made available to allow jurisdictions to buy foreclosed homes and turn it into affordable housing stock.

Northern San Joaquin County – which spent much of the year on top of the list of hardest hit areas by foreclosures in the nation – received the following amounts:

• Stockton, $12,146,038.

• San Joaquin County, $9,030,385.

• Modesto, $8,109.274.

• Stanislaus County, $9,744,482.

Cities such as Manteca and Tracy were either unable to apply or chose not to apply due to the complexity and short time frame. Merced, though, did, and got nothing.

Stockton still rates high on the national foreclosure list with one in every 15 homes in distress.

Manteca, a month ago, had 1,200 homes in various forms of distress whether it was an actual foreclosure or a homeowner in danger of defaulting on their loans. Home sales, though, have been picking off foreclosures at a rate somewhat faster than new foreclosures have come on the market.

That is where the rub comes in according to information released by the HUD in the methodology they used to determine what cities and states got assistance with foreclosures.

The Housing and Economic Recovery Act of 2008 calls for allocating funds to states and local governments with the greatest need as determined by the number and percentage of homes:

• in foreclosure in each jurisdiction.

• financed by subprime mortgages in each jurisdiction.

• in default or delinquency in each jurisdiction.

HUD used U.S. Postal Service data to determine areas where abandonment of homes were more likely, unemployment rates, relative home price declines, and other data to determine how likely it is that foreclosed homes will remain for extended periods of time unsold and uninhabited. 

 

View Homes for Sale at  CentralValleyHomes.com

 

CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com

 

UPCOMING FORECLOSURES MAY BE ON THE RISE

Housing Lenders Fear Bigger Wave of

Loan Defaults

by Vikas Bajaj
provided by The New York Times

The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.

Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.

The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most
of the $12 trillion market, doubled to 2.7 percent in that time.

The mortgage troubles have been exacerbated by an economy that is still struggling. Reports last week showed another drop in home prices, slower-than-expected economic growth and a huge loss at General Motors. On Friday, the Labor Department reported that the unemployment rate in July climbed to a four-year high.

While it is difficult to draw precise parallels among various segments of the mortgage market, the arc of the crisis in subprime loans suggests that the problems in the broader market may not peak for another year or two, analysts said.

Defaults are likely to accelerate because many homeowners’ monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks tighten their lending standards, making it harder for people to refinance loans or sell their homes. Of particular concern are “alt-A” loans, many of which were made to people with good credit scores without proof of their income or assets.

“Subprime was the tip of the iceberg,” said Thomas H. Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. “Prime will be far bigger in its impact.”

In a conference call with analysts last month, James Dimon, the chairman and chief executive of JPMorgan Chase, said he expected losses on prime loans at his bank to triple in the coming months and described the outlook for them as “terrible.”

Delinquencies on mortgages tend to peak three to five years after loans are made, said Mark Fleming, the chief economist at First American CoreLogic, a research firm. Not surprisingly, subprime loans from 2005 appear closer to the end of defaults than those made in 2007, for which default rates continue to rise steeply.

“We will hit those points in a few years, and that will help in many ways,” Mr. Fleming said, referring to the loans made later in the housing boom. “We just have to survive through this part of the cycle.”

Data on securities backed by subprime mortgages show that 8.41 percent of loans from 2005 were delinquent by 90 days or more or in foreclosure in June, up from 8.35 percent in May, according to CreditSights, a research firm with offices in New York and London. By contrast, 16.6 percent of 2007 loans were troubled in June, up from 15.8 percent.

Some of that reflects basic math. Over the years, some loans will be paid off as homeowners sell or refinance, and some homes will be foreclosed upon and sold. That reduces the number of loans from those earlier years that could default. Also, since the credit market seized up last year, lenders have become much more conservative and have stopped making most subprime loans and cut back on many other popular mortgages.

The resetting of rates on adjustable mortgages, which was a big fear of many analysts in 2006 and 2007, has become less problematic because the short-term interest rates to which many of those loans are tied have fallen significantly as the Federal Reserve has lowered rates. The recent federal tax rebates and efforts to modify more loans have also helped somewhat, analysts say.

What will sting borrowers more than rising interest rates, analysts say, is having to pay interest and principal every month after spending several years paying only interest or sometimes even less than that. Such loan terms were popular during the boom with alt-A and prime borrowers and appeared appealing while home prices were rising and interest rates were low.

But now, some borrowers could see their payments jump 50 percent or more, and they may not be able to sell their properties for as much as they owe.

Prime and alt-A borrowers typically had a five- or seven-year grace period before payments toward principal were required. By contrast, subprime loans had a two-to-three-year introductory period. That difference partly explains the lag in delinquencies between the two types of loans, said David Watts, an analyst with CreditSights.

“More delinquencies look like they are on the horizon because so few of them have reset,” Mr. Watts said about alt-A mortgages.

The wave of foreclosures is still rising in states like California, where many homeowners turned to creative mortgages during the boom. From April to June, mortgage companies filed 121,000 notices of default in California, up nearly 7 percent from the first quarter and more than twice as many as in the second quarter of 2007, according to DataQuick, a real estate data firm based in La Jolla, Calif. The firm said the median age of the loans increased to 26 months from 16 months a year earlier.

The mortgage giants Freddie Mac and Fannie Mae, which own or guarantee nearly half of all mortgages, are trying to stem that tide. Last week, they said they would pay more to the mortgage servicing companies that they hire to modify delinquent loans and avoid foreclosures.

Delinquencies in prime and alt-A loans are particularly challenging for banks because they hold more such loans on their books than they do subprime mortgages. Downey Financial, which owns a savings bank that operates in California and Arizona, recently reported that 11.2 percent of its loans were delinquent at the end of June, a big increase from the 6.1 percent that were past due at the end of last year.

The bank’s troubles stem from its $6.2 billion portfolio of so-called option adjustable-rate mortgages, which allow borrowers to pay less than the interest owed on their mortgage in the early years. The unpaid interest is added to the principal due on the loan, so over time borrowers can owe more than the initial loan amount. Eventually, when loans grow by 10 percent or 15 percent, the borrowers are required to start paying both the interest and principal due.

Many borrowers who got these loans during the boom had good credit scores, but many of them owe more than their homes are worth. Analysts believe that many will not be able to or want to make higher payments.

“The wave on the prime side has lagged the wave on the subprime side,” said Rod Dubitsky, head of asset-backed research at Credit Suisse. “The reset of option ARM loans is a big event that will drive the timing of delinquencies.”

 SEARCH FOR BANK OWNED HOMES AT: WWWCENTRALVALLLEY HOMES.COM

CAROL PERDEW
Prudential California Realty
(209) 239-7979
www.CentralValleyHomes.com

How to Turn the Housing Downturn to your Advantage

Take a look at this informative article on buying a home. These are some great tips for taking advantage of our downturn housing market.  Sellers are negotiable, prices are affordable and interest rates are low are just a few of the benefits of buying in today’s market. View homes at www.CentralValleyHomes.com

4 Smart Moves for Getting a Great Deal on a House

By Alex Markels, U.S News

The summer home-buying season is in full swing—except things are quite different from years past. While many economists believe house prices still have further to fall, there’s little doubt it’s become a buyer’s market, with buyers gaining leverage that was unthinkable during the boom and the long run-up in prices. For once, qualified buyers have the upper hand not only with sellers but also with real estate agents, mortgage lenders, and even contractors who can bring a house up to snuff.

Here are four tips for turning the housing downturn to your advantage: 

Know the market

The best way to snag a great deal on a house is to come armed with a boatload of data showing that you’ve done your homework and know what the place is worth. Thankfully, information on everything—from what comparable houses have sold for to what exactly has been remodeled, and when—is pretty much at your fingertips, through commercial sites like zillow.com and trulia.com as well as via government databases, such as your local county assessor’s, planning department’s, and clerk and recorder’s websites. Such data are especially useful when making an offer on a foreclosed home that’s been repossessed by a bank, where you won’t have to deal with touchy issues like a seller’s sentimental attachments to his home. “All banks want is to get a fair price and get out,” says Pat Lashinsky, chief executive of real estate brokerage ZipRealty, which lists many bank-owned foreclosures on its website. “Don’t try to low-ball the bank. But if you come in with all the statistics and can make your case that yours is a fair price, they’re more likely to take it.”   

Negotiate…with everyone

If you’re working with a real estate broker, start there. Traditionally, the agent representing the buyer splits the commission—from 4 to 6 percent—with the agent representing the seller. Buyer’s agents are fond of telling their clients that their services are “free” because the seller is the one paying the commission. But what seller wouldn’t be willing to lower his price by, say, 1 percent, if the agent was willing to lower his commission by an equal amount? The truth is, with serious buyers few and far between these days, agents may be willing to take a commission cut, especially with motivated buyers. Of course, the same goes for everyone from the seller’s agent to the contractor you want to add the deck you plan to put out back.   

Don’t expect “found money”

With sellers increasingly desperate and the number of “distress” sales and auctions skyrocketing, there are certainly plenty of deals around. But experts say the number of situations in which you can literally buy a house one day and sell it for more the next are exceedingly rare. “Most sellers that resort to the auction block have already exhausted every other avenue,” says real estate broker Ralph Roberts, author of Foreclosure Investing for Dummies. With such houses already picked over by other investors, anyone who buys one—even at a discount—has to see substantial value in the house that others buyers can’t. For example, will a well-placed $10,000 in improvements yield twice the value? Or is that new company moving 5,000 people into the area next year likely to increase demand for houses in the neighborhood? The bottom line: While it’s always worthwhile to keep your eyes out for that needle-in-a-haystack deal, better to focus your efforts on a house that stands a good chance of building equity over time.   

Location, lo…well, you know this one

The old mantra is as true as ever: No matter how inexpensive a property might seem, it’s no deal if it’s down the street from an oil refinery or in a city suffering from chronic unemployment. While houses near great schools or within a few blocks of public transportation almost always sell at a premium to the overall market, they tend to hold their value in down markets and rise more quickly in good ones. Indeed, while it may seem that it’s the house you’re investing in, it’s actually the land underneath it that appreciates. That’s why some of the best deals to be had may be the worst houses on the best blocks, especially in areas where demographic trends remain strong, such as in Washington, D.C., and the San Francisco Bay Area.

 

Carol Perdew
(209) 239-7979
www.PerdewHomes.com

 

 

President Sign Housing Bill to Help Struggling Homeowners

President Bush Signed an enormous housing bill intended to provide mortgage relief for struggling homeowners. The measure includes $15 billion in tax cuts and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.

The Housing bill lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes. This is an important legislation that can reduce mortgage defaults and help boast the housing market.

Bush Signs Housing Bill to Provide Mortgage Relief

By JENNIFER LOVEN, Associated Press Writer

WASHINGTON – President Bush on Wednesday signed a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilize financial markets.

Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto, in the Oval Office in the early morning hours. He was surrounded by top administration officials, including Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.

“We look forward to put in place new authorities to improve confidence and stability in markets,” White House spokesman Tony Fratto said. He said that the Federal Housing Administration would begin right away to implement new policies “intended to keep more deserving American families in their homes.”

The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.

It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses.

The House passed the bill a week ago; the Senate voted Saturday to send it to the president.

Bush didn’t like the version emerging from Congress, and initially said he would veto it, particularly over a provision containing $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.

But he withdrew that threat early last week, saying hurting homeowners could not wait — and even blaming the Democratic Congress’ delays in action for forcing an imperfect solution.

Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests. Paulson’s request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.

Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.

The bill takes several approaches to curing the ailing housing market.

It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.

The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.

The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.

It goes far beyond addressing the current crisis, however.

The legislation overhauls the Depression-era FHA. It requires lenders to show how high a borrower’s payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure counseling for struggling homeowners.

The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new “consultative” role overseeing the companies.

The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.

Democratic leaders, recognizing that the measure could be one of the last items to become law during what’s left of their abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.

Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.

Thanks,
Carol Perdew
Prudential California Realty
(209) 239-7979
www.CarolPerdew.com