Case-Shiller Posts January 2010 Numbers

Standard & Poor’s delayed the release of the January Case-Shiller numbers.

The year-over-year increase of 3.9% might be considered worrisome, as it is a reflection of low inventory vs. demand.  As the”phantom inventory” of foreclosures held by banks is released there may be a reverse.

June 2009  vs. August 2006 (market peak in Los Angeles)                <39.1%>

August 2009 vs. August 2008                                                                         <12.0%>

September 2008 vs. September 2009                                                          <09.0%>

October 2009 vs. October 2008                                                                      <06.3%>

November 2009 vs. November 2008                                                           <03.5%>

December 2009 vs. December 2008                                                               00.0%

January 2010 vs. January 2009                                                                      +03.9%

Monthly rate of change December 2008 through January 2009 (current month vs. prior month)

January                                                                                                <02.8%>

February                                                                                              <02.2%>

March                                                                                                    <01.7%>

April                                                                                                       <01.4%>

May                                                                                                         <00.1%>

June                                                                                                         +01.1%

July                                                                                                          +01.8%

August                                                                                                    +01.6%

September                                                                                            +00.8%

October                                                                                                  +00.3%

November                                                                                             +00.8%

December                                                                                              +01.0%

January 2010 vs. December 2009                                                  +00.9%

The reported month (always two behind the reporting calendar month) will represent only changes from year-prior and month-prior levels.

**Los Angeles Market area-specific Case Schiller Index data of “same house” sale comparisons (vs. the    typical “median price” comparisons) for December ’08.

Don't let your home go into foreclosure when you can do a short sale!

Great article from CNNMoney on the benefits of short sale.

Some of the best benefits to the seller in foreclosure are:

• You still call the shots – you can sell your home in a traditional manner without having to face the embarrassment of foreclosure
• Your credit takes less of a hit than in foreclosure
• You can buy another house sooner
• New government cash incentives to sell
• New government rules that keep the banks from coming after you after the sale

If you are in the southern California area, give me a call to discuss your situation – no pressure, no obligation!

Don’t let your home go into foreclosure when you can do a short sale!

Great article from CNNMoney on the benefits of short sale.

Some of the best benefits to the seller in foreclosure are:

• You still call the shots – you can sell your home in a traditional manner without having to face the embarrassment of foreclosure
• Your credit takes less of a hit than in foreclosure
• You can buy another house sooner
• New government cash incentives to sell
• New government rules that keep the banks from coming after you after the sale

If you are in the southern California area, give me a call to discuss your situation – no pressure, no obligation!

Governor Grants $10,000 Tax Credit To California Home Buyers – AB 183

Great news Southern California home buyers!!!

Governor Schwarzenegger signed Assembly Bill 183, the Homebuyer Tax Credit legislation, into law late this afternoon.

In short, the tax credit will provide up to $10,000 to be taken over a three-year period.  It is applicable to a new home purchase OR an existing home purchase, whereas last year’s legislation only applied to new homes.  The program starts May 1st and ends December 31st this year.

Here’s a LINK to the press release.

So what’s the catch?

You have to live in the home at least two years (sorry…not for investors!) or you have to pay the credit taken back.  Also, if you purchase a home under $200,000, you can only take a maximum credit of 5%.  Further, the incentive only applies to non-dependants and you cannot purchase a home from a relative.

Still a great incentive that is sure to keep buyers on the move!

This is the perfect storm ladies and gents!  Low prices, low interest rates and a great incentive!

Now, let’s go find a house!

Think Twice Before Paying A Second/Junior Lender Outside Of Escrow – Short Sales

The California Association of Realtors just released an advisory concerning short sales.

Some junior lien holders are requesting payment above and beyond the settled amount.  Typically they will ask to be paid outside of escrow an additional amount.  The California Association of Realtors (C.A.R.) states that a typical example looks like this:

“a short sale seller’s senior lender authorizes a payment of $3,000, for example, to extinguish a junior lien, but the junior lender demands that the buyer pays an additional $9,000 outside of escrow.”

RED FLAG!!!

Real estate agents handling short sale transactions should not agree to this and should not ask seller’s to do so either!

Here’s why:

• The agent is putting their license in jeopardy.
• The seller may be accused and convicted of loan fraud.

The article continues by stating that:

“concealing this additional payment from a federally-insured senior lender may constitute loan fraud, which is a crime punishable by 30 years imprisonment plus a $1 million fine (18 U.S.C. section 1014).  Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act (RESPA) (Appendix A to 24 C.F.R. Part 3500).  Depending on the specific circumstances, carrying out these payment requests may also violate other laws and regulations, and an agent’s participation in the scheme may be subject to license revocation by the Department of Real Estate or other disciplinary action.

Buyers should also be aware of a similar type of offer by the seller in their short sale transactions.

We have recently seen listing brokers ask a buyer to take a secret second trust deed loan outside of and after close of escrow to make up the difference between appraised price and the agreed selling price.

RED FLAG!!!

This, too, is inherently problematic on a number of fronts.  Short sale transactions can and should be handled professionally no matter how urgent it is to get the house sold.

C.A.R. encourages Agents and their clients to file any complaints regarding fraudulent activities to the proper authorities, including the following agencies:

• Attorney General’s Office
  California Department of Justice
  800-952-5225 Phone
  http://ag.ca.gov/consumers/mailform.htm
• Department of Housing and Urban Development (HUD)
  HUD Office of Inspector General Hotline (GFI)
  800-347-3735 Phone
  http://www.hud.gov/offices/oig/hotline
• Federal Bureau of Investigation (FBI)
  202-324-3000 Phone
  https://tips.fbi.gov

The information above is offered as a brief explanation of issues a homeowner in foreclosure might face and does not in any way constitute professional legal advice.  Homeowners in foreclosure should consider speaking with their attorney and accountant to review the options they may suggest.

Don't Qualify For A Loan Modification? Short Sale May Be An Answer…

Next month, a new government program will launch that is intended to incentivize the short sale process.

It is called the Home Affordable Foreclosure Alternative Program – or HAFA.  Read more about it here and here.

Yes, the government now wants to make it easier for sellers in trouble to sell their house.

Why?

Quite simply because selling the house is better than foreclosing on the borrower.

Why?

Because it is less of a loss to the bank and it doesn’t harm the market as bad as a foreclosure.

This is not only good news for the bank and the economy.  It is often good news for the seller!  In fact, it can be great news for some sellers depending on which bank (or banks) hold your note.  Some are even encouraging sellers to short sale their home!

So if you have tried to modify your loan to avoid foreclosure, but did not qualify, or if your lender has told you that you might want to consider a short sale, give me a call to discuss your options.  There’s no obligation, no fees, no pressure, and the ultimate decision is always yours.

While there are many options to consider (and consulting a tax advisor and attorney is strongly suggested), you may find that selling is far better than foreclosure!

Let me help you find out!

John Contabile, SFR – Realtor®

Don’t Qualify For A Loan Modification? Short Sale May Be An Answer…

Next month, a new government program will launch that is intended to incentivize the short sale process.

It is called the Home Affordable Foreclosure Alternative Program – or HAFA.  Read more about it here and here.

Yes, the government now wants to make it easier for sellers in trouble to sell their house.

Why?

Quite simply because selling the house is better than foreclosing on the borrower.

Why?

Because it is less of a loss to the bank and it doesn’t harm the market as bad as a foreclosure.

This is not only good news for the bank and the economy.  It is often good news for the seller!  In fact, it can be great news for some sellers depending on which bank (or banks) hold your note.  Some are even encouraging sellers to short sale their home!

So if you have tried to modify your loan to avoid foreclosure, but did not qualify, or if your lender has told you that you might want to consider a short sale, give me a call to discuss your options.  There’s no obligation, no fees, no pressure, and the ultimate decision is always yours.

While there are many options to consider (and consulting a tax advisor and attorney is strongly suggested), you may find that selling is far better than foreclosure!

Let me help you find out!

John Contabile, SFR – Realtor®

Selling Your House – Marketing Trends

NAR just put out a recent study that 90 % of homes are marketed on the internet.

At this point, I am surprised it isn’t at 100%!

When I list a home, I not only market it on the internet, I blast it onto the web in several very effective ways that attract attention.  Active marketing, as opposed to passive marketing is what gets people’s attention, and that is what sellers need these days.  Of course, the usual yard sign and flyers still work, but most buyers are looking daily on the internet and expect to find most of their information there.

Click on the image below to open it up…

90 Day Flipping Rule Waived – Has It Helped Heal The Market?

The infamous “90 Day Rule,” keeping buyers from placing offers on and purchasing homes until 90 days after the initial transfer was waived as of February 1, 2010.  Has it helped to heal the market?

So far, it has been beneficial to the market, as new buyers have more inventory as options.  Additionally, we are finding that most of these properties are in much better shape compared to bank owned or short sale homes.  Investors typically make necessary repairs bringing the property up to standards that most first time buyers are looking for.  It is not uncommon to even see bath and kitchen remodels done in addition to new pain and carpet.

Waiving the 90 Day Rule will help heal the market, but it is only one needed prescription for complete recovery, and we won’t see the hard numbers for months to come.  But buyers, in general, are quite happy to have the scales tipped in their favor just a bit more.

More info on this can be found here on HUD’s site.

FHA Considers Tightening the Belt

Looks like the Federal Housing Administration (FHA) is proposing raising minimum credit scores for borrowers who receive FHA-backed mortgages, increasing down payment requirements, and limiting the amount of money sellers can provide toward closing costs. The proposed changes are part of an effort to shore up the agency’s finances, which have been hit with rising defaults to its mortgage insurance program.

Read the full Washington Post article here.

Here are the highlights:

• Historically, the FHA has played a critical role in propping up the housing market by insuring lenders against default after the mortgage market failed. Currently, the agency guarantees approximately 30 percent of all home loans and 20 percent of refinancings. In the past, the FHA has resisted raising down payments or insurance premiums, fearing it would be shutting out qualified borrowers and stunting the housing market’s recovery.
• The FHA is hoping that the proposed changes, including requiring that borrowers bring more cash to the closing table, will ensure that borrowers are less likely to default on their loans. Officials at FHA have yet to determine how much cash will be required.
• Up-front cash can include down payments as well as other payments. Currently, FHA borrowers can put down as little as 3.5 percent. One lawmaker has introduced legislation that would require FHA borrowers to put down a minimum of 5 percent.
• The agency also currently allows sellers to provide up to 6 percent of the home’s value toward closing costs or down payments. Secretary of Housing and Urban Development (HUD) Shaun Donovan has said he wants the maximum permissible level to be lowered to 3 percent, in line with industry norms.
• The FHA has decided “for the time being” to raise its minimum credit score requirements for new borrowers. The new requirements have yet to be determined. Presently, borrowers with credit scores as low as 500 may qualify for an FHA loan.