Housing will not fully recover until 2012. That is when the glut of backlogged foreclosures is expected to be phased out of the market.
Housing will recover by the end of the year. Now that inventory has contracted to average levels for what constitutes “normal” regional markets in major metropolitan areas where prices have declined as much as 50% in the past three years, and month to month sales have steadily increased over the past six months, demand has realigned with supply to arrest the freefall in values.
The housing recovery began in early 2009. Median price increases in some markets indicate that even while many pundits were openly wondering when the bottom of the market would appear, it was actually several months in the rearview mirror.
Many factors and variables, and just as many divergent opinions to boot. So many, in fact, that you almost have to choose amongst the purported experts to determine whether you fall in the half empty or half full category. Job rates, interest rates, unemployment rates … psychiatric rates, for spending too much time poring over the data and extrapolations will render one in need of a head exam.
Overanalysis 101.
You don’t need flow charts to tell you where things stand at the moment. You won’t need a market report to tell you when things are better.
You’ll know the market has recovered when you no longer dread the trip to the mailbox or evening phone calls.
You’ll know the market has recovered when you can confidently re-enable automatic bill pay from your checking account instead of prioritizing which ones get paid this month by how far past due each is.
You’ll know that the market has recovered when you don’t have to decide whether you or a loved one is really ill enough to warrant the cost of a trip to the doctor.
You’ll know the market has recovered when you no longer have to explain to the kids why you can’t go to the zoo or stop for ice cream today.
You’ll know the market has recovered when sleep comes as readily as worry formerly did.
You can stop looking to someone else to tell you when the market is fully healed as the housing implosion is the root of these greater ails. It’s far easier to take stock of your own life, and those of your friends and family, to see where along its arc the pendulum is currently settled. As the finance/housing sector dragged our economy into the muck, it will again lead us back to dry ground. No need to watch the stars for celestial clues. Just do what no pundit can and watch your own life for improvement. You’ll know housing has recovered when both of your own feet are planted squarely on terra firma.
Most importantly, beware the forecasts that don’t jive with your own internal index. Those who would adamantly assert the rosiest or bleakest prognosis are likely more interested in influencing your behavior than in your well being.
“Buy now before prices shoot back up!”
“Sell now before prices erode further!”
When you stop listening to yourself, you risk placing all of your trust in the megaphones of those who have a vested interest in your fear.
Is the housing market improving? Is now the time to buy? The time to sell? For months, I have been asked to provide the answers to these questions. I have dutifully provided my vague predictions with the obligatory caveat that no one truly knows how a free market will behave from one day to the next. I realize, though, that in supplying answers to those who actually give the market context, that we have all been looking at this thing from the wrong perspective. It makes zero difference where I think the market stands at present, and where it is headed. The very consumers who ask me these questions are the ones who will ultimately provide the truth or fallacy to my various hypotheses. So I turn the tables and ask the consumer, the actual authority, the very same question.
“What is the state of the Real Estate market?”
Feel free to comment here or send me an email with your thoughts. Looking for opinions from consumers and laypersons, not agents or financial wizards (all comments welcome, though). I will post the results in a follow-up piece.
Mr. Homeowner & Mrs. Homebuyer, the floor is now yours.
Housing will not fully recover until 2012. That is when the glut of backlogged foreclosures is expected to be phased out of the market.
Housing will recover by the end of the year. Now that inventory has contracted to average levels for what constitutes “normal” regional markets in major metropolitan areas where prices have declined as much as 50% in the past three years, and month to month sales have steadily increased over the past six months, demand has realigned with supply to arrest the freefall in values.
The housing recovery began in early 2009. Median price increases in some markets indicate that even while many pundits were openly wondering when the bottom of the market would appear, it was actually several months in the rearview mirror.
Many factors and variables, and just as many divergent opinions to boot. So many, in fact, that you almost have to choose amongst the purported experts to determine whether you fall in the half empty or half full category. Job rates, interest rates, unemployment rates … psychiatric rates, for spending too much time poring over the data and extrapolations will render one in need of a head exam.
Overanalysis 101.
You don’t need flow charts to tell you where things stand at the moment. You won’t need a market report to tell you when things are better.
You’ll know the market has recovered when you no longer dread the trip to the mailbox or evening phone calls.
You’ll know the market has recovered when you can confidently re-enable automatic bill pay from your checking account instead of prioritizing which ones get paid this month by how far past due each is.
You’ll know that the market has recovered when you don’t have to decide whether you or a loved one is really ill enough to warrant the cost of a trip to the doctor.
You’ll know the market has recovered when you no longer have to explain to the kids why you can’t go to the zoo or stop for ice cream today.
You’ll know the market has recovered when sleep comes as readily as worry formerly did.
You can stop looking to someone else to tell you when the market is fully healed as the housing implosion is the root of these greater ails. It’s far easier to take stock of your own life, and those of your friends and family, to see where along its arc the pendulum is currently settled. As the finance/housing sector dragged our economy into the muck, it will again lead us back to dry ground. No need to watch the stars for celestial clues. Just do what no pundit can and watch your own life for improvement. You’ll know housing has recovered when both of your own feet are planted squarely on terra firma.
Most importantly, beware the forecasts that don’t jive with your own internal index. Those who would adamantly assert the rosiest or bleakest prognosis are likely more interested in influencing your behavior than in your well being.
“Buy now before prices shoot back up!”
“Sell now before prices erode further!”
When you stop listening to yourself, you risk placing all of your trust in the megaphones of those who have a vested interest in your fear.
Is the housing market improving? Is now the time to buy? The time to sell? For months, I have been asked to provide the answers to these questions. I have dutifully provided my vague predictions with the obligatory caveat that no one truly knows how a free market will behave from one day to the next. I realize, though, that in supplying answers to those who actually give the market context, that we have all been looking at this thing from the wrong perspective. It makes zero difference where I think the market stands at present, and where it is headed. The very consumers who ask me these questions are the ones who will ultimately provide the truth or fallacy to my various hypotheses. So I turn the tables and ask the consumer, the actual authority, the very same question.
“What is the state of the Real Estate market?”
Feel free to comment here or send me an email with your thoughts. Looking for opinions from consumers and laypersons, not agents or financial wizards (all comments welcome, though). I will post the results in a follow-up piece.
Mr. Homeowner & Mrs. Homebuyer, the floor is now yours.
Lenders make more money on foreclosures than from short sales or loan modifications. That's what Steve Harney conveyed in a seminar. He caused an earthquakein San Francisco
When loan modifications are turned down, the next thing we attempt is a short sale. And we know that lenders turn over the short sale accounts to loan servicing companies who make our lives hell getting short sales approved. As such, we should know that these loan servicing companies make MORE money by letting the properties foreclose than to approve the short sales OR the loan modification.
RUMBLE...GRUMBLE...CRIES OF DISMAY!
Did he just confirm what we were afraid of?
So I researched this topic and found a few articles worth reviewing. How did I miss these? Was I under a rock in a desert?
These 10 Commandments home buyers must follow may seem like common sense to many. Buyers, however, can sometimes forget with all the excitement surrounding the buying of their new home. In the past couple of weeks, I have heard of two separate buyers who saw their home loan turned down, and their dream shattered, a few days before closing because they had bought furniture for their new home before it actually became their home. Both of them now have beautiful furniture with no home to put them in.
These two buyers were not my clients but it always hurts when I hear of transactions falling apart for reasons that could have been avoided. These 10 commandments (from KWU) are part of the buyer packet I give all my clients when we first meet and I always stress that once they get pre-approved and the process is started, they can't do anything that might affect their credit.
1. Thou shalt not change jobs, become self-employed or quit your job.
2. Thou shalt not buy a car, truck or van (or you may be living in it)!
3. Thou shalt not use credit cards excessively or let your accounts fall behind.
4. Thou shalt not spend money you have set aside for closing.
5. Thou shalt not omit debts or liabilities from your loan application.
6. Thou shalt not buy furniture.
7. Thou shalt not originate any inquiries into your credit.
8. Thou shalt not make large deposits without first checking with your loan officer.
9. Thou shalt not change bank accounts.
10. Thou shalt not co-sign a loan for anyone.
If you are in the process of buying a home, remember that your credit must not change or be affected in any way until you actually sign the paperwork and get possession of your new home. Lenders will not only look into your credit when you first get pre-approved, they will check it again (and sometimes again and again) before they let you sign the mortgage. If you want to buy new furniture for your home or change jobs, just be patient. There will always be time to do it after the closing.
No one will argue that the Internet has changed the way that consumers do business. The free flow of information has dramatically affected the way that properties are exposed to the buying public, as well as a plethora of advice about the nuts and bolts of a real estate transaction.
Anyone can sell their own property. They always could, there's nothing new about that. But there is one reality that will never change and that is this:
People often pay to have something done that they could do themselves.
There are many times when it is more efficient, convenient, or even cost-effective to hire someone else to do a task or perform a function that an individual is perfectly capable of doing. We all do this every day. For example:
I know their way around the kitchen. Most would say that I'm an above average cook. But I still go to a restaurant often and have someone else do the work for me. It's very convenient.
I did my own bookkeeping and income tax returns for over thirty years. Now I use the services of a CPA. In addition to being convenient and more efficient, it's also cost-effective because he saves me money by doing the job correctly every time.
I am perfectly capable of mowing my own lawn. I have all of the tools of the trade. But my time is better spent doing the things that I do best, which are marketing and real estate sales. So I hired a lawn service.
I once had an HVAC license and pretty much know everything about how furnaces and air conditioners operate. Yet I have a processional service mine because regular maintenance will improve the life of the units and save energy costs in the long run and I know that I'll put off doing it myself until something bad happens.
I can build a house. As a matter of fact, I have built over forty of them, two with my own hands from start to finish. But the last three houses that I bought were already constructed, because the time and headaches required to build my own home were not cost-effective for me. The loss of income during the construction period would offset any savings realized by doing it myself.
My point is this: people will always be willing to pay to have someone else to perform a task for them as long as it is more convenient, more efficient, or more cost-effective for them.
And as long as a real estate agent demonstrates the value proposition of professional service to the consumer, brokerage will always exist in some form.
Because the consumer is willing to pay the service!
This is a very good article by Rick Misitano, a paralegal with the Law Offices of James M. Bosco & Associates, on foreclosure and how to help you if you find yourself in that situation. Specifically, it is on the "Produce the Note" defense of foreclosure.
It's very good information, but always check with a local attorney that will know the specifics of your state's laws concerning foreclosure.
A growing number of homeowners around the country are using a foreclosure defense that may help them retain their homes. It’s called “Produce the Note” and we want you to know this is not a mere technicality that should be treated lightly by the lender or by the Court.
Everyone needs to understand the importance of this issue. When a lender can’t produce the original note, allowing a foreclosure to proceed puts the homeowner at risk of owing that debt again to another party in the future. Therefore, great caution must be taken before a judge can allow someone who can’t produce the original note to cash in on your home.
What if Your Lender CAN’T Produce the Note?
So, what happens when the lender tells the Court it can’t produce the original note, because it is lost? Let’s start with the basics. If a lender wants to foreclose on a property, it has to be able to show that it is, in fact, the appropriate person to whom the money is owed. That right to foreclose belongs ONLY to the person who has legitimate POSSESSION OF THE ORIGINAL NOTE - not a copy, not an electronic entry, but the original note itself with the original signature of the person(s) who allegedly owes the money along with appropriate raised notary seal and signature. So, if you are faced with a foreclosure, you have every right to demand that the person or entity trying to take your property, first prove to the Court that they have the legal right do to so in the first place by proving they have legal possession of the original promissory note.
In my opinion, an original mortgage note is much like legal tender and should be guarded and protected as such by the person holding such an asset. Loosing an original mortgage note is like loosing a $100 bill or a gift card or a lottery ticket. What if I scratched that million dollar ticket and just stuck it somewhere and misplaced it? Do you think I could just show up at lottery headquarters and claim my prize without having the winning ticket? The same principle applies to the person or entity claiming to be the legal holder of an original mortgage note. He who holds the note holds the key.
What the Lender Must Do
What often happens, however, is that the lender claims it doesn’t have the original note, because that note has been lost or destroyed. If the lender is making such a claim, the law requires the lender to prove all of the following under the “Uniform Commercial Code”, which is a set of laws governing commercial transactions that many states have adopted. It contains a specific provision on this subject (Section 3-309) which states that a person can enforce a promissory note without having the original, BUT only under certain limited circumstances.
1. The person or entity has to swear and attest that it no longer has the original note; 2. The person or entity has to prove that it was properly in possession of the note and was entitled to enforce it WHEN it lost possession of the note; 3. The person or entity has to prove it didn’t “lose” possession simply because it transferred the note to someone else (i.e., it’s not really lost); and 4. The person or entity has to prove that it cannot produce the original note because the instrument was destroyed or its whereabouts cannot be determined or it was stolen by someone who had no right to it.
All of these matters have to be definitively proven by the person or entity trying to foreclose on the property. It is not the obligation of the borrower to prove or disprove any of this. The borrower can challenge the right of the person or entity trying to foreclose and demand proof.
The Court’s Important Role
It is up to the Court to determine whether the lender has satisfactorily proven why it no longer can produce the original note. The Court also has to be satisfied that when the original note was lost, the person trying to foreclose on the property had possession of the note at the time it was lost. Until the Court has been satisfied of all of this, the foreclosure cannot proceed.
It is also important for the Court itself to understand that this issue is not merely a “technicality” and the judge should not be satisfied with anything less than full proof of this issue. The Court itself needs to appreciate the fact that if it should agree that an original note has been legitimately lost (and allows the foreclosure to proceed) it is the borrower who is still at risk.
Why? Because incredibly, even if a Court has found that the original note is lost and the foreclosure sale is finalized, if someone later turns up with the original note and proves that it is the proper holder of the note, and not the person who foreclosed on the property, the original borrower is STILL LIABLE.
That’s right. Someone took your home and the Court allowed it because it believed that the lender proved that the note was lost and it was the proper party. Then someone legitimate shows up in the future with the actual note and you still owe that person the money even though your property was taken with the blessing of the Court. Trust me, this is a very serious issue regarding post foreclosures and post pre-foreclosure short-sales. It has happened to three of our own clients! These homeowners had the need to sell their property by means of a negotiated short-sale (so they could avoid a foreclosure) only to find out that the entity claiming to have the legal right and authority to enter into such negotiations and accept such settlements sold their note to another entity and weren’t even aware of it. Several months later, the newly assigned lenders (now claiming to be the rightful owners of our client’s original notes) have since come forward and have also filed suite seeking to recover their entire outstanding principle balances owed to them (prior to the homeowners closing their short-sale transactions with the wrong note holders).
How fair is that?!?! It’s not! And that’s why homeowners need to start fighting back when someone is trying to take their home by foreclosure, especially since an overwhelming percentage of mortgages granted over the last 3 to 5 years have been packaged into securities and re-sold and re-assigned numerous times since the inception of the borrower's original note and mortgage. In some states, homeowners have better than a 50/50 chance of being successful in defending themselves against a completed foreclosure. Why wouldn’t anyone who owns a home do everything in their power to protect and defend it?
All the Best,
Rick D. Misitano, Senior Paralegal Law Offices of James M. Bosco & Associates Methuen Executive Park 240 Pleasant Street Methuen, Massachusetts 01844 Phone: (978) 687-8804 Fax: (978) 687-8872 boscolaw@comcast.net
Article by Glenn Leach of the Legacy Group (Puyallup, WA).
This is a good article to read if you're considering trying to pay off your mortgage early through some type of "extra payment" plan. That may not be the best financial move for you. Read on...
Is It A SMART Financial Move to Prepay Your Mortgage?
I often find myself in long conversations with my borrowers over the best way to pay off mortgages early. Do I recommend the "Bi-Weekly Payment" plan, the "Extra Payment Each Year" plan, or the "Pay A Little Extra Each Month" plan? Since it is assumed that paying off a mortgage early is a smart financial strategy, people are often surprised when I don't have a favorite strategy to recommend.
When I get this question, I try to shift the conversation away from "Which strategy is best?" and towards "Are you sure you want to pay off your mortgage early at all?" While I think it's admirable to get out of debt and stay out of debt, I don't believe "paying off your mortgage early" should be your number one financial priority.
"Paying off your mortgage early should NOT be your number one financial priority"
Instead, I believe you should use your financial resources to prepare for the future and all those mean, nasty twists and turns that life can throw at you. I'm not suggesting a gloom-n-doom approach to the future, but we just don't know what will happen, and paying off your mortgage early may NOT be the smartest financial strategy for you.
My advice is to focus first on building liquid assets (resources you could access with little difficulty to pay for stuff) vs. paper wealth (resources that cannot be accessed easily). Equity in your home falls under the "paper wealth" category because it is difficult to access in an emergency and you may not be able to access it at all when you really need it.
An example of what I'm talking about came across my desk recently. The applicant wanted to refinance his home to access some of his paper wealth. For several years, he had been paying extra on his mortgage and only owed about $70,000 on a home worth around $400,000. On paper, things looked good, but...
I'll leave the gory details of his set-backs out of my story, but when he came to me, his wife had left him and the divorce had drained his bank accounts, he had lost his ability to work due to an injury and lost his business, he was 6 months behind on his mortgage payments, and he was facing total financial collapse. He needed me to help him access some of his $330,000 in equity (paper wealth) to live on.
But because his credit scores were bad and his income was gone, he didn't qualify for a new loan. The bank who owned his mortgage - that same bank he had been paying extra to all those years - wouldn't help him. I'm sure the bank saw his home as a great foreclosure opportunity - all that "paper wealth" made his home an enticing target.
His only solution was to try to sell the home before it was foreclosed on in order to keep some of his "paper wealth", but since he had been so determined to keep his home - not wanting to uproot his children who's mother had just abandoned them - he failed to act quickly enough and now it was too late.
I wish I could tell you his story had a happy ending, but it didn't. What I can tell you is that if this man had had $330,000 of "liquid assets" instead of $330,000 of "paper wealth" - his story would have turned out much differently.
So if you are prepaying your mortgage now, but don't have enough liquid assets available to handle life's emergencies, please remember: You cannot go grocery shopping and tell the cashier,
"I don't have any money, but my mortgage is paid off."
Even on double coupon day, that won't buy you any fruits or veggies.
In a Washington Post article, Renae Merle said, "Government initiatives to stem the country's mounting foreclosures are hampered because banks and other lenders in many cases have more financial incentive to let borrowers lose their homes than to work out settlements."
The summary of the article is that loan modifications are only profitable to lenders for one type of borrowers, but there are actually three types. The profitable borrower is one who cannot make the current payments, but can prove to be able to easily make payments on a new, modestly modified note.
The second borrower is one that is likely to fall behind on the mortgage again, even with a modified loan. Banks figure that it's less costly to foreclose now rather than later.
The final borrower is the one that manages to somehow make the payments that they clearly can no longer afford, without any loan modification. These borrowers are willing to do whatever it takes to keep up or catch up, often times selling everything they can do without (even down to the furniture) or (as I've personally witnessed) eat only one small meal a day, in order to make enough each month to cover the mortgage payment. For these borrowers, the lenders see no benefit of doing a loan modification because the lender is getting paid.
So, now we know why it's so dang hard to get a loan modification done or even a short sale, don't we? Banks seem to prefer to just foreclose because it's more profitable.
Well, it May be the in the Borrower's best interest, too.
If (IF) you happen to be that special borrower that fits into the small mold that the banks feel are acceptable to do loan modifications for, then getting one is probably your best solution. Go for it! But what if you're in one of the other two brackets? What then?
If you're in the third bracket, the one that someone manages to pay, how long can you keep it up? Is there some light at the end of the tunnel for you? Is there a higher income coming in soon, or are you to the point where another little hiccup and you'll be in bracket number two?
And particularly for bracket two, the "re-defaults," how does a loan modification actually help those borrowers? All it does is help the bank suck a little more money out of these folks before the final curtain call of foreclosure comes down. Hmmm, hope the bank managers don't read this or this may well be their new strategy to make more money.
Matthew Padilla of the Mortgage Insider, in his article, Economists disparage foreclosure relief, notes that one of the main arguments for loan modifications are good for everyone because banks will better bear the cost of repairing broken loans, which will bolster their balance sheets, spur them to more lending, and thus boost the economy.
But in his interview of Christopher Thornberg, a principal with Beacon Economics (Los Angeles, CA), Thornberg replied, "I argue the opposite, that foreclosures are good for the economy. If someone stops paying their over-sized mortgage on a deeply underwater house they have a lot more money to spend on things like IPods and clothes. So in a sense all these foreclosures are probably one of the things stabilizing consumer spending. That’s far more important to the economy than whether people pay off their mortgages."
Thornberg opinion of the banks? "I fail to see how trying to keep people mired in debt as a way to help banks is good social policy.”
I think that Christopher Thornberg just may have a very good point.
_______________________
Roger Johnson is a Realtor with CENTURY 21 American Homes in Hickory NC .
This is a very good article by Carla Muss-Jacobs, Broker/Owner of EBA Portland, LLC in Beaverton, OR, explaining what PITI is when discussing a mortgage payment. You may have heard this term before, but not fully understood what it meant. Read this and you will. Thanks, Carla
For those of us in the real estate / mortgage business, we're very familiar with the acronym: P.I.T.I.
NO! It's not a healthy pocket bread.
A first-time buyer should know about this, and it's a handy, simple group of letters -- that could save you money and help with your monthly budget planning!
P.I.T.I = Principal, Interest, Taxes and Insurance.
Let's examine it all separately.
Principal: This is the total amount of money you will owe the bank for your loan. The "principal balance" of your loan is divided over the life of your loan AND there will be a monthly amount of principal that you will be obligated to pay back.
Interest: This is the "fee" . . . the interest amount that you agreed to pay the bank for the loan. If you have a 4.75% interest rate, you will have this amount calcuated as a per monthly amount.
NOTE: I might as well add that the bank 'amortizes' your loan. The principal balance is not really being reduced the first seven, or so, years of the life of your loan (if you have a 30 year fixed). You are paying the mortgage per month and the majority of that amount will be INTEREST. The banks have set this system up by design. There has been study after study done that buyers live in a home, on average, 7 years. So . . . the banks make their money with the interest on the loan.
Taxes: If we learned anything from the '70's and Superfly, there will be: taxes, death and trouble. Taxes are your propety taxes. These property taxes can be set up to be paid with your mortgage, and the yearly amount is divided by 12 months and can be added to your monthly mortgage payment. For me, I like having my taxes INCLUDED in the mortgage payment. I don't get a property tax bill around Thanksgiving!
Insurance: The property you are buying will need to be 'insured' for hazards. Do NOT confuse this "insurance" as Mortgage Insurance (that's something else). The lender will require that their investment be insured against hazards, such as: fire, wind, and what might be typical for your local area.
The TOTAL will be your P.I.T.I. monthly payment.
Be sure to ask your loan rep / banker / mortgage professional if the monthly payment they're quoting you is the P.I.T.I . . . the total amount of what you will be obligated to pay per month.
Some lenders / loan reps / bankers MAY just quote the P&I (Principal and Interest) and NOT include the Taxes and Insurance. These amounts WILL be due . . . and should be considered when you are establishing your MONTHLY BUDGET!
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.
Lenders make more money on foreclosures than from short sales or loan modifications. That's what 
CONSUMERLAW.ORG REPORt ON "
These 10 Commandments home buyers must follow may seem like common sense to many. Buyers, however, can sometimes forget with all the excitement surrounding the buying of their new home. In the past couple of weeks, I have heard of two separate buyers who saw their home loan turned down, and their dream shattered, a few days before closing because they had bought furniture for their new home before it actually became their home. Both of them now have beautiful furniture with no home to put them in.
No one will argue that the Internet has changed the way that consumers do business. The free flow of information has dramatically affected the way that properties are exposed to the buying public, as well as a plethora of advice about the nuts and bolts of a real estate transaction.
I often find myself in long conversations with my borrowers over the best way to pay off mortgages early. Do I recommend the "Bi-Weekly Payment" plan, the "Extra Payment Each Year" plan, or the "Pay A Little Extra Each Month" plan? Since it is assumed that paying off a mortgage early is a smart financial strategy, people are often surprised when I don't have a favorite strategy to recommend. 
But because his credit scores were bad and his income was gone, he didn't qualify for a new loan. The bank who owned his mortgage - that same bank he had been paying extra to all those years - wouldn't help him. I'm sure the bank saw his home as a great foreclosure opportunity - all that "paper wealth" made his home an enticing target.
their homes than to work out settlements."
For those of us in the real estate / mortgage business, we're very familiar with the acronym: P.I.T.I.
;)
;)
