Buyers rush to meet tax credit deadline

According to Campbell/Inside Mortgage Finance, nearly half the homes sold in March were to 1st time homebuyers (defined as a buyer who has not had an ownership interest in a home in the last 3 years).  The benefits to them were up to $8000 tax credit on the purchase, which really helped drive sales in the last few months.  What we are seeing is the normal spring into summer increase in sales, coupled with this tax credit, which is really heating up the market, especially in certain price ranges (those that are considered 1st time homebuyer neighborhoods). 

While this is all great news, and we are seeing the stock market start to come back up too, one of the things that I worry about as a Realtor is the after - effects of this.  What happens come April 30th, when the tax credit expires?  I know for a fact that a lot of the buyers in the market are going to get back on the fence and wait around again, I just have this feeling.  I hope it is not like Cash for Clunkers...which totally tanked the car market once it expired.  Only time will tell.

Until then, best regards--

Ben Blonder
Broker/Owner, Kapital Real Estate LLC
Cell 970 420 6166
ben_blonder@yahoo.com

Program Will Pay Homeowners to Sell at a Loss

Summary of an article that was just published in the New York Times:

Program will pay people and lenders to short sale.
More than 5 million households are behind on their mortgages.
Millions of potential foreclosures will totally ruin any hope of this economy turning around.
Treasury department wants to streamline and standardize the short sale process.
Servicing bank will receive $1000.  Another $1000 to a second lienholder if applicable.
Homeowners will receive $1500 in relocation expenses.
Will be much less harmful to the credit rating of the borrower than a foreclosure would be.
Lenders will use real estate agents to determine valuation of properties, which gives them a minimum amount that they would accept to sell short.
That figure would not be shared with the owner, but if the bank gets an offer that is at least that minimum amount, they would have to accept it. 

Pretty interesting stuff here, now we will just have to wait and see if the banks actually start agreeing to and using this program. 

Citigroup to help troubled homeowners

Citigroup just announced a plan that will let homeowners that cannot pay their mortgages (and don't qualify for any federal relief funds) to stay in their homes for up to 6 months before foreclosure, providing that at the end of the time period, the homeowners turn over the keys to the bank and leave the home in good condition without damage.  What banks see a lot with foreclosures (and I have seen this WAY too many times myself, especially in places like Greeley) is this: the homeowner knows they are going to lose their home on a certain day.  A couple days before the eviction, that homeowner takes all the appliances and sells them.  Sometimes they will break into the walls and grab all the copper pipe too, basically anything that has any value whatsoever.  This alone will reduce the value of the bank's asset certainly. 

What REALLY does the damage for banks is the truly vindictive people.  Sometimes what they will do is stuff all the drains and toilets with towels or what have you, grab their things, let the water run, and leave.  Most times the banks won't know this has happened for a few days at the earliest, at which point the damage is unfixable.  A lot of times these types of homes have to be stripped to the studs, and have a full mold remediation (generally by a company that specializes in such things, sometimes known environmental hygenists).  This is the last thing that any bank wants to deal with.  I saw just this situation in my neighborhood...if the home had not had mold, it would have sold for around $150k.  But since it did have mold, and the bank sold it as is, it went for $108k!   See what I am saying? 

Fannie Mae offering subsidy to buy their foreclosures

This is really exciting.  My wife and I are actually in the market for a new home right now, and we are really looking hard at Fannie Mae Homepath properties.  Fannie is offering up to 3.5% for closing costs or new appliances (partnered with Whirlpool) or a combination of the two.  This is a great incentive, especially because we all know most foreclosures need a LOT of work, so we need to save our cash for that.  Although we are also looking at Homepath Renovation Mortgage financing too, which would allow us to finance our fix-up costs and just get it all done upfront.

We put our house on the market just last week, had our first two open houses Sat and Sun, they went GREAT!  Wish us luck as we try to get this place under contract and move into something else!

Ben

Freddie Mac CEO says housing market is near bottom...what do you think?

Foreclosures are still dampening this market and will continue to do so for the near forseeable future, but overall our national housing economy is at or very near the bottom, this from Freddie Mac CEO Charles Haldeman. He also predicts that mortgage interest rates for a 30 year fixed rate will remain between 5 and 6% through the end of 2010. Our biggest concern is the glut of foreclosed properties that are hitting the market at extremely low prices. This is going to hurt values in the short run, but once these clear the market we should start to see appreciation again (but nowhere near the double digit increases we saw during the housing bubble, and that is good, because obviously those gains were smoke and mirrors, and totally unsustainable). Let’s hope for the best!!

Record number of foreclosures in 2009

Quick little informative article here.  Looks like 2010 is going to be a banner year for foreclosures as well, unfortunately.

After doing a short sale, when can you buy again??

First of all let me start by saying I AM NOT AN ATTORNEY OR TAX PROFESSIONAL, and do not mistake this article as legal and/or tax advice!


Ok, disclaimer done.

I sell a LOT of short sales. Approximately 70% of my business in the past 2 years was either short sales or foreclosure. Over these past few years, I have learned a lot about the ins and outs of short sales.

One question I get a lot is: “how will completing a short sale affect my credit?” I can answer confidently that a short sale is MUCH better on your credit than a deed in lieu of foreclosure (4-7 years before a borrower can be considered for another loan) or an actual foreclosure (at least 5-7 years, sometimes up to 10 years before a borrower can qualify for another loan). Now put those two options up against a short sale: borrowers who complete a short sale can be considered for any type of loan as soon as 2 years after a short sale!

Fannie Mae wants short sellers to buy again in the future. Short sales are encouraged by the government. Obama’s Making Home Affordable plan incentivizes lenders, servicers, and borrowers to complete a short sale rather than go deed in lieu or actual foreclosure. However, unfortunately, short sales have NOT been streamlined yet. Every bank seems to treat them differently. For instance, with Bank of America, I had a short sale under contract for over 12 months. It did eventually close somehow, but imagine the frusteration.

One thing I can say is: our industry is extremely dynamic, and constantly changing. This is even more true with the short sale industry. I feel like a lot of the banks are getting their acts together. I even had a short sale that was less than a month from contract to close!

What I hope to see is more “pre-negotiated” short sales. In other words, a lender knows that the borrower will not be able to continue making payments and will want to do a short sale. Well, that lender can get the valuation of the property and give the homeowner or their realtor a “strike-off” price to short sell the property at. This would really alleviate the main objection most buyers avoid short sales for: that is the sheer amount of time it takes to get these deals approved and accepted by the lender. I have been starting to see this happen more, and I am guessing that is a trend that will continue.



Ben Blonder, Broker/Owner Kapital Real Estate LLC

Co-borrowers qualify for the $8000 tax credit too!

This VERY short article clears up this issue.  Take a look, it is from the Colorado Assoc of Realtors.

FORECLOSURES (and short sales) are hurting appraised values

Take a quick read of this article from National Assoc of Realtors.  This has been an ongoing problem, especially in such areas as Weld County where there are tons of foreclosures/short sales.  The problem is this:  appraisors are using foreclosures and REOs as comps to non-distressed properties, which just serves to bring the whole value of the neighborhood down and further our bad situation with property values.

Right now, the government is reviewing appraisal standards, and it is likely that there will be sweeping change in that industry, and soon.