As FHA's current overhaul on backing loans for condominiums looms, I'm asking to myself "what next?" and wondering how the overhaul will affect our local Seattle Metro area's condo communities. In a tough market, in a time when we are still seeing values decline, owners slip into short sale, foreclosure and misery, this might be an unwelcome change. Not just for our area but across the nation. As FHA revamps it's lending practices, adds a .5% requirement to buyer's down payments, and is also removing many approved lenders from their roster (a good thing!) things will get much more difficult in the realm of condo sales. Therefore, we need to become "new" experts in condominiums. We need to commit to due diligence, and fully understand the new processes that will soon be implemented so we can smoothly and successfully guide our buyers and sellers down the path of transferring ownership between parties.
I think it is wise to have condo communities "reapply" for approval status, although I worry that the re-approval process that will be happening across the nation will be greater than FHA's resources will be able to bear. And as such, I can only assume that many deals over the next few months... those that are FHA based financing of course will be burdened by much longer, convoluted closings while the kinks get worked out. Not to mention the denials they undoubtedly will be garnering out. It is unfortunate that this is taking place right now but I do appreciate the fact that the spot approvals will be going away and it will be a "this or that", "yes or no" mentality with which condominium communities will qualify. One perplexing thing about it is how rigid they will stick to the requirement for an "updated reserve study" performed within 12 months of application.
I'm hoping that the change also gets rid of innaccurate information posted on the MLS from listing agents being lazy and checking the box stating that a condo is "FHA approved" because they saw it on another agents listing sheet for a current or closed transaction in the community. I don't know how many agents have said that was their verification process when I pressed the issue to find out how they knew it was truly FHA approved. Ummm, that, my friend, IS NOT doing your due diligence... or your job, nor is it properly representing your client!
To make things easier, here's a tip... HUD has a revamped web site. No, really!!... check it out! www.hud.gov that leads you (very easily now) to the page where you can search for the condominium project (go to HUD.gov, click on the Resources Tab, then look for HUD Approved Condominium Projects in that tabs drop down). I will admit that the page it brings you to still sucks and is archaic in usability. Hopefully they will freshen it up and make it more user friendly as they've done with the main screen. None the less, I'm glad to see that we will have more accurate information on our MLS of which properties are HUD/FHA approved, and which are not. I think the new requirements are detailed more on their Mortgagee Letter ML 2009-01
So in a nutshell, I believe two things... change is good, but sometimes change is painful. All we can do is look to the future, educate ourselves, and do our best at navigating the new world of FHA for our clients!
This is one of those posts where I wish I didn't have to write it, but felt it was so important to my readers that I would be remiss not to at least talk about it.
Everyone out there probably knows somebody who is behind on their mortgage payments, looking for alternatives and likely also just finding out that their home's value has dipped below what their loan amount is. I know some within my own personal circles. It's a tough situation for me to advise them as a professional because it's such a personal challenge to their pride and self-worth, not to mention their plans and dreams for the family. The question we're asking is "when is this going to stop and where are we heading?"
I'm going to put up a few graphs that show the trends nationally with regards to mortgage delinquincies:
This chart is by quarter - Single-family mortgages set a new record delinquency rate in the second quarter of 2009, according to a quarterly survey by the Mortgage Bankers Association. Those of us in the real estate business see the foreclosure process (just visit the local Sheriff Sale docket to see the current numbers) but the looming delinqency-to-foreclosure issue is far, far larger.
The Wall Street Journal on 8/3/09 reported the following quote: “While subprime mortgages sparked the first round of housing problems two years ago, now "troubles are lurking further up the food chain," says Joshua Shapiro, chief U.S. economist at MFR Inc. White-collar job losses have accelerated while more adjustable-rate loans to prime borrowers are resetting to higher payments. ‘You put all that together, it leads me to believe that the next leg down on home prices is going to come from the top,’ he says.”
The first objection someone may have would be to say "yes, but historically those who are delinqent usually get their act together and come current on the mortgage after a while". That WAS true, but not anymore! We call that the "Cure Rate", that is the rate of delinquencies that go back to current. The Wall Street Journal reported on 8/24/09 about a Fitch analysis that found that the Cure Rate from 2000-2006 was 45% (which means about half of people fix their delinquency). However, as of July 2009 the rate had dropped to just 6.6%! That means that over 90% of delinquent customers are going to foreclosure. Take a look again at the above chart...
The next thing someone will say is "well, that's the 'sand states' and not my area". Here's the chart for all 50 states showing the same breakdown of delinquencies and foreclosures. Guess what - most states have a significant problem, especially compared to historical figures.
Now the next thing someone may say is "aren't those loans going to get 'fixed' by a loan modification?" I know several people right now who are applying for a Lancaster County loan modification but are waiting and waiting. I hope it works out for them...
In reality, loan modifications are hardly making a dent. To me, that's a burning question. Why arent banks being more aggressive in giving customers the option to extend their loan and/or reset to a lower rate? Why are they being SO difficult? The people I know don't want to be foreclosed. They CAN make payments. They just need the terms redrawn to allow them to catch & keep up. Loan modifications are not helping us get this crisis under control.
What are the causes of all these delinquencies? Here's a chart that is enlightening:
Keep in mind, this post is not intended to give us "good news". You may be experiencing good things in your market and that's great. My intent is to get us thinking about the challenges that aren't going away and how we're going to address them as homeowners, agents and professionals. I'd love to hear your ideas!
Well, after going back and forth with the lender of my seller's home, the house will be going to foreclosure sale next Wednesday, November 5th.
The history of this home goes back over 1 year when it was first put on the market in August of 2007. I came on board as the 3rd Realtor in January of 2008. The sales price started at $749,000. Over the next few months I lowered the price gradually while awaiting my client to complete the bank's requested paperwork. Finally, in August, I had everything I needed from the seller for the bank to consider the short sale. Then, as I brought the price to $599,000, I finally received 2 strong offers from buyers for the full amount. The bank completed their appraisal and they agreed to the short sale, but only at a price of $615,000. Well, both buyers backed out last week and it's now going to foreclosure sale.
One bummer for the lender is that now it's going to sale, the seller is going to take the high end appliances out of the home. He's dismantling the BBQ outside and he's taking the handles out of the kitchen cabinets/drawers. He may even take the spa outside. For pictures of the home go to www.728colman.com
I guess that banks just don't consider these things. I'll be surprised if the bank gets $500,000 for the home after everything is out of there. It's not that pleasing to the eye to begin with. Like any other Realtor in this situation, I'm bummed because this empty home could have had an owner right away, if only the lender wasn't so greedy for $15,000.
It looks like if you want a piece of the Southern California Real Estate Market - but don't have a whole lot of cash - you'll have to "go east young man (or woman)!"
Los Angeles County
Average List Price Median List Price Average Days On Market
Single Family under $600K $357,407 $350,000 104
Single Family over $600K $1,271,195 $899,000 112
Condo/Townhome under $400K $255,224 $250,000 112
Condo/Townhome over $400K $602,774 $525,000 112
Orange County
Single Family under $1M $561,027 $535,000 104
Single Family over $1M $2,724,987 $1,799,000 131
Condo/Townhome under $600K $315,326 $299,900 102
Condo/Townhome over $600K $1,117,344 $895,000 119
Riverside County, CA
Single Family under $700K $270,477 $249,900 118
Single Family over $700K $1,378,965 $999,000 151
Condo/Townhome under $500K $191,459 $170,000 126
Condo/Townhome over $500K N/A N/A N/A
San Bernardino County, CA
Single Family under $700K $280,086 $250,000 110
Single Family over $700K $1,452,017 $1,048,790 128
Join leaders of the Pasadena area environmental groups in an informal setting and learn about their activities and programs. All are welcome!
On Saturday, September 13th prepare to gather at 4:30pm and listen to informal presentations at 5pm. Then at 6pm you can have a potluck picnic under the oak trees south of the Nature Center at Eaton Canyon Park, 1750 N. Altadena Drive in Pasadena. Bring a dish that serves 6 to 8 people. Beverages, plates and utensils will be provided. For information and to RSVP, contact coordinator Ginny Heringer at 626-793-4727 or ginnyh@ix.netcom.com
Directions to Eaton Canyon Park: from the 210 freeway in Pasadena, take Altadena Drive north about 1.5 miles; about 500 feet after crossing New York Drive, turn right into the park.
On Tuesday, September 2nd at 7pm, the Land Use Committee (a sub-committee of the Altadena Town Council) will meet at the Community Center on Altadena Drive.
One of the items of particular interest that will be on the agenda include the Monte Cedro retirement development that is under construction on the site of the former Scripps Home on El Molino/Calaveras/Alameda.
If you can't make the meeting and would like to find out more about the development (that should be completed in 2012) you can call 626-300-6214 or 866-603-8881 to reserve seating at one of two future events planned on September 9th at 10am at the Women's Cith Club of Pasadena or on September 10th at 10:3am at the University Club of Pasadena. www.montecedro.org
Just FYI...at the September 2nd meeting at the Community Center, also up for discussion is a proposal for the refurbishment and joint use of the tennis courts at Eliot Middle School. The courts have been un-usable for several years.
A FREE program will be held at the South Pasadena Public Library on Monday night at 1115 El Centro in South Pasadena, CA.
The show will open with a jazz performance by vocalist Liela Avila and pianist Dennis Hamm from the Pasadena Jazz Institute.
Then, Academy Award winning actor, Ernest Borgnine, will be speaking about his new book entitled, Ernie: the Autobiography. It would be interesting reading to find out about an actor who has survived in Hollywood for over 50 years. You remember him, don't you? McHale's Navy, the original Poseidon Adventure movie, The Dirty Dozen, The Wild Bunch, etc.
Summer's winding down...I just can't believe how fast this year is going by. Must be because I'm working harder than I've ever worked before!!!!
So...what better way to enjoy a summer evening than going to a concert. Especially, when it's free!!!!
On Saturday, August 23, 2008, you can experience the powerful brassy sounds of Tower of Power (www.towerofpower.com). Remember their hits? You're Still A Young Man, What Is Hip?, So Very Hard to Go, and You've Got To Be Having Fun.
They will be performing in Alhambra, California at the Summer Jubilee on 2nd and Main Streets. http://www.cityofalhambra.org/government/parks_recreation/Jubilee08.html I don't know if Lenny Williams is still around, but, he was THE voice of Tower of Power way back in the 70's. The concert is supposed to start around 6:00, but, I'd get there at 4:00 or so just to get a seat in the bleachers. Otherwise, you'll be pushing bodies around in front of the stage and standing all night!!
For some people, National Night Out is tonight, August 4th, but, Tuesday, August 5th is National Night Out - at least in Pasadena it is and at http://www.nationaltownwatch.org/nno/ . It's a night when people all over America will be turning off their televisions and getting outside to mingle with their neighbors. Local Police Departments urge residents to take part in this unique drug-and crime prevention event sponsored annually by the National Association of Town Watch and local Target Stores. The whole premise is meant to strengthen neighborhood spirit and police and community partnerships while helping to raise awareness of local anti-crime and anti-drug programs and let those criminals know that "our neighborhoods won't tolerate crime".
In my neighborhood there will be a big gathering at Loma Alta Park. The Sheriff's Department will be on hand for demonstrations and to answer questions about how neighbors can become involved with keeping their homes and neighborhood safe.
I'll be having some BBQ Turkey Burgers served up for my neighbors on the "Alameda Freeway", but it will be in my long driveway and front yards. I hope people can be swayed away from the television for only a couple of hours to meet and greet one another!
So...how will YOU be joining in on the National Night Out?
One of the number one comments I receive from people relocating from other states to California is that they are afraid of the traffic and how long it may take them to get to work.
Well, now you can see for yourself how the traffic is at any time of the day any day of the week. Caltrans has installed over a thousand cameras on the freeways. When you go to this website http://video.dot.ca.gov/ you can go to whatever areas you're interested in seeing. You can even see what the current temperature is.
I think it's a pretty awesome site. And if I have to travel on the freeways, I always go to www.sigalert.com and I can see what areas are moving - or not!
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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