Category Archives: 360 REALTY

Bidding Wars Erupt as U.S. Homes for Sale Drops

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Matthew and Carina Hensley offered $10,000 more than the asking price for a three-bedroom house in suburban Seattle, then lost out to one of seven other bidders.

Their $270,000 proposal last month came with a family portrait and a letter introducing the couple, their eight-month- old daughter, Harper, and their desire to build a family in the Renton, Washington, house with a yard backing onto a woody hillside.

Bidding wars, absent from most parts of the U.S. residential market since its peak in 2006, are erupting from Seattle and Silicon Valley to Miami and Washington, D.C. The inventory of homes hovers close to a six-year low, while an increase in jobs and record affordability are tempting more buyers. The number of contracts to buy previously owned homes jumped 14 percent in February from a year earlier, the National Association of Realtors reported yesterday.

“We understand there is going to be fierce competition in the offers made for your house but Carina and I both felt very strong about letting you know what it would mean to us if we were given the opportunity to live in your gorgeous and charming house,” wrote Matthew Hensley, 33, a credit union branch manager whose wife is a dental hygienist. Such letters from eager buyers were common during the housing boom.

While listings will probably rise as banks accelerate foreclosures and sellers gain confidence in the market, the U.S. metropolitan areas with the strongest economies may be ready to absorb the additional inventory, said Mark Zandi, chief economist for Moody’s Analytics Inc. in West Chester, Pennsylvania. Low values and interest rates have made buying a better deal than renting in 98 of the largest 100 metropolitan areas, according to Trulia Inc.

‘Better Times Ahead’

“The housing crash is finally giving way to recovery in an increasing number of markets across the country,” Zandi said in an e-mail. “The decline in unsold listings and vacant homes and the increase in rents presage better times ahead for single- family housing.”

The bidding wars seen in such places as Seattle aren’t found everywhere. In metropolitan areas including Atlanta and California’s Riverside and San Bernardino counties, housing remains weak as high unemployment and falling prices deter first-time and move-up homebuyers.

A contraction in supply hasn’t helped increase property values, which are down by a third from their July 2006 peak. Prices, hurt by discounted foreclosures and other distressed sales, will fall 2 percent more this year before rising 1.4 percent in 2013, according to a Moody’s Analytics projection.

Case-Shiller Index

Home prices dropped 3.8 percent in January from a year earlier, the S&P/Case-Shiller index of property values in 20 U.S. cities showed today. The measure is based on a three-month average, which means the January data were influenced by transactions in November and December.

A residential comeback would provide a boost to the U.S. economy. Housing will “contribute modestly” to the economy this year for the first time since 2005, according to Peter de Bruin, an economist at ABN Amro Group Economics in Amsterdam.

Rising demand for homes has cut into the supply, which is already low because many sellers — especially those with negative equity — are waiting for prices to increase before putting properties on the market.

Supply of Homes

About 2.43 million existing homes were listed for sale in February, the fewest for the month since 2005, the year U.S. home sales reached a record 7.08 million, the National Association of Realtors reported March 21. The number of listings rose by 100,000 from January, a seasonal bump that occurred every February since 2000 except for 2008, according to data collected by the Realtors.

The February supply of unsold homes listed for sale was down almost 50 percent from a year earlier in markets such as Miami, Phoenix and Oakland, California, according to Realtor.com, the National Association of Realtors’ official website.

The U.S. inventory of new homes stood at 150,000, a 5.8- month supply, in February, when new houses sold at an annual pace of 313,000, slower than analysts expected, the Census Bureau reported March 23.

The supply of new houses rose from 5.7 months in January “as builders put inventory in place for the spring selling season,” Stephen East, an analyst with International Strategy & Investment Group LLC in St. Charles, Missouri, wrote in a note to investors. “This is the fourth consecutive month inventory has remained below six months’ supply, which is broadly considered supply/demand equilibrium.”

The new-home supply peaked at 12.1 months in January 2009, forcing builders to book losses as the economy fell into recession. While the inventory has declined from that high, the housing market still has hurdles to overcome.

 

 

 

 

Source:  www.businessweek.com, By Prashant Gopal and John Gittelsohn

Should I Rent a Home Or Should I Buy? General Market Factors

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1. To Buy or Not to Buy?

Unless you’ve spent the past year or so living under a rock with spotty Wi-Fi service, it’s safe to say you’ve been bombarded with the message that “right now is a great time to buy a house!” It’s certainly an appealing notion for these recession-fatigued times, but alas, the truth is not so cut-and-dried. Let’s take a closer look at the pros and cons, shall we?

BUY!
*Historically Low Interest Rates

The strongest argument in favor of buying would have to be the current extremely favorable mortgage rates. Hovering at around 4% for 30-year loans, they’re the lowest they’ve been in six decades, but are expected to creep back up before the end of the year.

According to Lary Cowart, PhD, assistant professor of Real Estate and Finance at the University of Alabama, one of the biggest mistakes rookie homebuyers make is not grasping the importance of locking in a favorable interest rate. “If rates go up 1 percent, say from 4 to 5 percent, that is a 25 percent increase in the interest rate; so the mortgage payment goes up by more than 10 percent and the amount of house that can be purchased goes down by more than 10 percent,” Coward explains. “People fail to realize that and it is another little thing that will cost them big over the 30-year life of their loan.”

BUY!
*Home Prices Aren’t Likely to Get Much Lower
In its most recent newsletter, Redfin predicted that “home prices won’t fall or rise much in 2012. Prices can’t rise far before banks and regular home-owners put more properties on the market. And they can’t fall far because of increasing rents and — for now — declining foreclosures.” Find more on the affordability of buying over renting here.

 

 

Source: www.la.curbed.com

 

Important HAFA Program Changes

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The federal government’s flagship HAFA short sale program continues to evolve in hopes of more effectively addressing the needs of distressed homeowners for whom continued ownership is not longer a realistic option.  The most recent Supplemental Directive 12-02 was released on March 9, 2012; loan servicers are instructed to implement program changes effective immediately.  They include:

  •  There are no longer any occupancy requirements for HAFA eligibility.
    Previously, HAFA required that the property be occupied as the borrower’s primary residence at some point within the prior 12 months.
  • The amount a servicer may authorize the settlement agent to pay from gross proceeds to subordinate mortgage holder(s) in exchange for a lien release and full release of borrower liability is increased from $6,000 to $8,500.
  • Borrower relocation incentives will be limited to HAFA short sales or Deed-in-Lieu transactions where the property is occupied by a borrower or a tenant at the time of the Short Sale Agreement or DIL Agreement and who will be required to vacate the property as a condition of the sale or DIL.
  • Borrowers may now elect to remain current on the loan during the term of the Short Sale Agreement or DIL Agreement.
  • Credit bureau reporting of HAFA transactions are amended as follows:
    • If the real estate is sold for less than the full balance owed and the deficiency balance is forgiven, report the following Base Segment fields as specified:  Account Status Code = 13 (Paid or closed account/zero balance) or 65 (Account paid in full/a foreclosure was started), as applicable.
  • The deadline for HAFA has been extended. A borrower now has until December 31, 2013 to submit a Short Sale Agreement or a written request for a consideration for a Short Sale Agreement to be eligible for HAFA.

The stated intention of the program updates is to expand the availability of HAFA’s benefits to more struggling homeowners.  Certainly, the increase in the amount of gross proceeds available to settle junior liens should help.  This has been an area of particular concern, most especially in California where the implementation in 2011 of SB 457 barred
lien holders from reserving collection rights following short sales or, alternatively, from conditioning short sale approval from additional seller contributions.  Of course, as with all previous program changes, the proof will be in the pudding.  Stay tuned….

 

 

 

 

Source: http://www.brianaripley.com/2012/03/26/important-hafa-program-changes-announced/

 

Becoming a Homeowner Still Goal For Many

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A recent report from the National Foundation for Credit Counseling (NFCC) reveals that owning a home is still a large part of the American Dream, while low home prices and record-low mortgage rates continue to make the investment of purchasing a home affordable.

Upon being asked what they were most anxious to do with an improved financial situation, 51 percent of respondents said they would like to buy home. While many potential buyers have been waiting to see if prices and rates would drop lower, recent reports show that both financial factors remain stable and will continue to offer high affordability for those looking at homes for sale in Los Angeles and other areas in Southern California.

While many respondents reported becoming a homeowner was at the top of their goals, NFCC says another 23 percent said they would take advantage of having an improved financial situation by making home repairs and improvements.

“Homeownership has traditionally been a part of sound financial planning,” said Gail Cunningham, spokesperson for the NFCC. “With a combined total of 74 percent of respondents selecting a home-oriented option, the poll results strongly suggests that people continue to place value in owning a home, and are anxious to buy a house or improve their existing one.”

In the most recent Freddie Mac Primary Mortgage Market Survey, long-term mortgage rates fell from the previous week, urging buyers to take advantage of current lows.

 

 

 

Source: www.themls.com

A 340 Ton Boulder Brought LA Together

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One of the big narratives about Los Angeles is that it’s the disconnected city, where locals only ever meet accidentally when something goes wrong on the roads. Last Friday night, Michael Heizer’s“Levitated Mass” sculpture, which will float a 340 ton boulder over a 456 foot long walk-through trench on LACMA’s north lawn, brought Angelenos out onto the closed streets and it got them talking to each other (about how awesome it was to see one of the heaviest things ever moved being moved or about how stupid and expensive the whole thing was), true to our rep. After 10 nights on the road from Riverside, the boulder made its final ascent from Exposition Park up to the Miracle Mile.

 

We started our night of rock chasing at Adams and Budlong around 11:30 pm, chatting with a Time Warner crew about raising the utility lines (there was enough slack that they just went up in a cherry picker and lifted them up as the caravan rolled through) and about whether we have Time Warner cable (we don’t). At every stop we made, all the way up Western, to Wilshire (where the caravan had to wait for a car to be towed), and then to the top of the Ahmanson Building at LACMA, there were people talking about the rock. When it rolled to a stop in front of “Urban Lights” at 4:30 in the morning, a waiting crowd rushed into the street to meet it. Even Jesus was there. The boulder’s 10-day move from a Riverside quarry to Sixth Street and Fairfax matched up the high profile of Carmageddon (guy somewhere on Western Friday night: “Is this that rock I heard about on the news?”) with the block party feel of CicLAvia, and the “Levitated Mass” journey joins that mismatched pair of road closures as one of LA’s biggest (and funnest) moments of the last few years.

 

 

 

Source: http://la.curbed.com by Adrian Glick Kudler

Underwater Sellers, What are your Options? Cash to Short Sell? Cash for Keys? Foreclosure?

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We get these questions and would like to share our thoughts about this dilemma.  Some home owners who are underwater may not know their alternatives.

The “Cash for Keys” is a program that banks do for some home owners. The “new twist” you’ll be hearing more about is “Cash to Short Sale”. Lenders are figuring out that if there is anything they can do to make a deal happen, they need to do it. This apparently is what is starting to take place with people that are trying to “short sale” their homes. Instead of “Cash for Keys” to homeowners that lose their homes to foreclosure. This was not offered to home owners who were trying to short sale their home. Often the banks would basically give them a certain time to complete the short sale until they foreclosed.

Now because of tight lending practices, new buyers would take so long to qualify, it is often “too little, too late” to close escrow before foreclosure.  When that happens it seems everybody loses. The lenders lost a willing & able buyer and the seller because, now, not only did they lose their home to a foreclosure, but also because a foreclosure was now on their credit report instead of a short sale. (It may be better to have a short sale than a foreclosure on a credit report?) Plus, the buyer may or may not wait until the home came back on the market at a later date.

 

 

Source:  http://realtyworld-sierraproperties.com

What is a Deed in Lieu?

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A Deed in Lieu of foreclosure (DIL) is an option in which a mortgagor (or a home owner) voluntarily deeds the subject property to the lender in exchange for a release from all obligations under the mortgage. A DIL of foreclosure might not be accepted from mortgagors who can financially make their mortgage payments. Often times, this can be as damaging to your credit as a foreclosure and should be considered a last resort (in most cases)

“there are several disadvantages to a deed in lieu, most importantly, it is almost as bad on your credit as a foreclosure or bankruptcy, a short sale can be viewed as a much better option in terms of your credit

“it is considerably more difficult to qualify for a deed in lieu if you have a 2nd, 3rd..mortgage

What are the benefits of a deed in lieu?

Many believe that a deed in lieu of foreclosure looks better on your credit report than does a foreclosure or bankruptcy. In addition, unlike in the short sale situation, you do not necessarily have to take responsibility for selling your house (you may end up simply handing over title and then letting the lender sell the house).

Are there disadvantages to a deed in lieu?

There are several disadvantages to a deed in lieu. If you have second or third mortgages, home equity loans, or tax liens against your property, you probably cannot qualify for a deed in lieu.

In addition, getting a lender to accept a deed in lieu of foreclosure is difficult in the current market. Banks are not in the real estate business, most lenders want cash, not real estate — especially if they own hundreds of other foreclosed properties which is a likely scenario these days. On the other hand, the bank might think it better to accept a deed in lieu rather than drag out the lengthy foreclosure process and incur more expenses. Beware of tax consequences; a deed in lieu may generate unwelcome taxable income based on the amount of your “forgiven debt.”

 

 

 

Source: http://www.sandiegohopenow.com

What is a Loan Modification?

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A loan modification restructures the terms of a loan without actually refinancing the property it secures. Modification of a loan applies to the terms governing the interest rate, the amount of the monthly payment, the term of the loan, but very rarely the principle balance.

Are you a good candidate for Loan Modification?

All of the following are great candidates for modification:

  • Any homeowner currently stuck with an adjustable rate mortgage
  • Any homeowner with a “PayOption ARM”
  • Any homeowner behind on Payments
  • Any homeowner with a “hardship” or inability to pay what is currently owed
  • Any homeowner that has little to negative equity
  • Any homeowner that cannot refinance

Are there any NECESSARY requirements to be considered for a loan modification?

  • Your monthly mortgage must be affected by a verifiable reduction in income or an increase in expenses.
  • It is required that you have a source of a stable and predictable monthly income.

How long is the Loan Modification process?

This depends on the lender, but typical turn times can range from 4-6 weeks up to over a year.

What happens during a Loan Modification?

During a loan modification the terms of your mortgage are renegotiated to bring the interest rate down to a percentage that fits into your budget and the monthly payment no longer presents a severe strain on your ability to meet your other financial obligations.

Loan Modification – Pros

1. Lenders are making a big push for loan modifications. Based on our recent experience it has proven difficult for a truly lasting and helpful modification to be completed.

2. Many lenders seem to be able complete Loan Modifications in the same time it takes to complete short sales.

3. In the future you might get your entire investment back. (It is theoretically possible, though no one can say for sure if it will happen)

4. You may minimize damage to your credit.

5. You may be able to do a loan mod and not waive your anti – deficiency protections.

Loan Modification – Cons

1. Without leverage it is unlikely you will negotiate a principle reduction. We are not seeing these happen.

2. In a typical loan modification – you may just be buying time. You make payments until you decide to sell or your payments go back up. Will it be better to attempt a short sale in a few years? I doubt it. But, you never know.

3. If you are not careful you may lose of waive important anti -deficiency protections. If you have assets or a salary to protect or you expect to have those things, this will need to be negotiated.

4. Your mod may not be successful enough to eliminate the full financial problem.

 

 

 

Source:  http://www.sandiegohopenow.com

4 Myths About Short Sales

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I don’t have a serious enough hardship to qualify for a short sale.

Today, it’s harder to “Not” qualify, than it is to Qualify. There are numerous ways to qualify for a short sale and a borrower does not have to be behind on payments. If a borrower can show that they are struggling to make payments or are facing some other type of hardship such as a divorce, tenant moving, job transfer, medical emergency, decrease in pay, etc., then a bank will seriously consider approving a short sale.

I’ll be responsible for the difference between what I owe and what my home sells for.

CA Senate Bill 458 (Now CA Civil Code 580e) No-Recourse Short Sale Bill was passed on July 15th, 2011. It specifically requires all lenders, including Junior Liens and HELOC’s, to forgive the remaining balance after a short sale is completed. This is a major victory for upside down homeowners in CA and can allow short sellers to breathe a sigh of relief by not having to worry about their lender pursuing them for money after a short sale. There are a few exceptions and some other minor details. Contact us TODAY find out more about the new Senate Bill 458 and how it will affect you after a short sale. 800-399-9659

My credit will be ruined if I do a short sale.

A short sale can actually save your credit. It is treated by your lender as a “settlement of debt”, and as opposed to a foreclosure, it is infinitely easier on credit and for a much shorter period of time.

I will owe taxes on the amount of loss that the bank takes on my short sale.

This can be avoided most of the time. As an example, if your lender accepts $100,000 less than what you owe them they may report this amount to the IRS, and you will be taxed on that $100,000 as ‘ordinary income’ at the end of the year. Good news is there are many ways to avoid this tax, including recent legislation. You can research the Mortgage Forgiveness Debt Relief Act of 2007 or see if you qualify for “Insolvency”. Contact your tax advisor.

Short Sales – Pros

1. CA Senate Bill 458 No-Recourse Short Sale Bill was passed on July 15th, 2011. It requires and guarantees you will be forgiven on all debt after a short sale in CA

2. If your property is 100,000 dollars upside down, you get rid of the liability now. If you do a loan mod and then have to sell your house in two years, you may still be 100,000 dollars upside down or worse.

3. Within a few years your credit rating may recover and you may be in a position to purchase property in a down market.

6. You may get to live rent free for a while.

Short Sales – Cons

1. You may not be able to buy a house for a little while. (Average 1 to 2 years)

2. You will have to move eventually.

3. You may damage your credit (Though much less than a foreclosure)

4. You have to deal with the hassle of the selling process.

 

 

 

Source: http://www.sandiegohopenow.com