The government announced new Short Sales guidelines early in November. After talking to many of my fellow agents it appears that very little has changed in the minds of the borrowers. They still can't talk to their bank, they get different answers to the same question depending on who they are speaking to. Many homeowners have upon learning that their mortgage does not qualify because they took out the loan over a year ago shake their heads and say " I'm upside down and need help just like the fellow who took out his loan a few months later".
It seems funny to me that we have home values that have fallen to 2005 values but only those homes sold in 2009 can do a short sale! What is the logic in this? If you haven't read the new guidelines here they are:
"To qualify under these new guidelines:
The property must be the home owner's principal residence.
The home owner must be delinquent on the mortgage or close to defaulting.
The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
The borrowers' total monthly mortgage payment must exceed 31 percent of their before-tax income.
Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.
Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines."
Source: Associated Press, J.W. Elphinstone (11/01/2009) and The Wall Street Journal, Ruth Simon (11/01/2009)
Mortgage Rates
30-Year Rates Match All Time Low This Week
15-Year FRM Drops to Set Another New Low in Freddie Mac Survey History
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.78 percent with an average 0.7 point for the week ending November 25, 2009, down from last week when it averaged 4.83 percent. Last year at this time, the 30-year FRM averaged 5.97 percent. The 30-year has not been this low since the week ending April 30, 2009, when it averaged 4.78 percent.
The 15-year FRM this week averaged 4.29 percent with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago at this time, the 15-year FRM averaged 5.74 percent. The 15-year FRM has never been this low since Freddie Mac started tracking it in 1991.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.18 percent this week, with an average 0.6 point, down from last week when it averaged 4.25 percent. A year ago, the 5-year ARM averaged 5.86 percent. The 5-year ARM has never been this low since Freddie Mac started tracking it in 2005.
The 1-year Treasury-indexed ARM averaged 4.35 percent this week with an average 0.7 point, unchanged from last week when it averaged 4.35 percent. At this time last year, the 1-year ARM averaged 5.18 percent. The 1-year ARM has not been this low since the week ending July 7, 2005, when it averaged 4.33 percent.
"In 2008 the FED adopted a new rule amending Regulation Z, which becomes effective on October 1, 2009 and protects consumers by prohibiting certain unfair, abusive or deceptive home mortgage lending practices. This new FED Rule applies to all mortgage lenders—not just those supervised by the FED—and creates new protections for both subprime and non-subprime mortgage loans secured by principal residences.
Subprime Loan Protections
The FED Rule adds four key protections for subprime loans secured by a consumer's principal residence:
• A lender is prohibited from making a loan without regard to the borrower's ability to repay it from income and assets other than the home's value. The lender must assess repayment ability based on the highest scheduled payment during the first seven years of the loan.
• A lender must verify the income and assets relied upon when determining a borrower's repayment ability.
• Subject to certain exceptions, a prepayment penalty is generally banned if the payment can change during the first four years of the loan.
• A lender must establish escrow accounts for property taxes and hazard insurance for all first-lien mortgage loans. This requirement, unlike the others, will be phased in during 2010 to allow lenders the necessary time for implementation.
General Protections
In addition to the new requirements governing subprime loans, the FED Rule adopts several protections for all loans secured by a consumer's principal residence:
• A lender is prohibited from coercing a real estate appraiser to misstate a home's value.
• Lenders and servicers must credit a consumer's loan payment as of the date of receipt and must provide a payoff statement within a reasonable time after it's requested."
My thanks to http://www.glrsonline.com/ for the above information and excellent training.
Our California Association of REALTORS alerted us this week that Mortgage loan delinquencies did rise but foreclosure were flat. Might this mean that the banks are beginning to work out some of the short sales that have been on their desks for months? I hope so!
"The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.24 percent of all loans outstanding as of the end of the second quarter of 2009, up 12 basis points from the first quarter of 2009, and up 283 basis points from one year ago, according to the most recent Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 64 basis points from 8.22 percent in the first quarter of 2009 to 8.86 percent this quarter, according to the report. The delinquency rate breaks the record set last quarter, based on MBA data dating back to 1972.
“While the rate of new foreclosures started was essentially unchanged from last quarter’s record high, there was a major drop in foreclosures on subprime ARM loans,” said Jay Brinkmann, MBA’s chief economist. “The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase. As a sign that mortgage performance is once again being driven by unemployment, prime fixed-rate loans now account for one in three foreclosure starts. A year ago they accounted for one in five.
California, Florida, Arizona, and Nevada continue to have a disproportionately high share of foreclosure starts, although the share has fallen slightly from last quarter, according to the report, with 44 percent of all of the nation’s new foreclosures during the second quarter of this year, down from 46 percent in the first quarter."
While on the site you might review the unempoyment rate as well.
Just looking at the U.S. as a whole is interesting and if your are from the middle part of our great county you might be smiling more that us on the coasts.
I am the type of person that believes we should look at the glass half full so I am happy to report that the Corona, CA real estate market is improving. Lets get some good press out to the public and let them know that things will turn around. Here are some facts:
Month# Units Median Price Days on Market
Jul-09
862
329,000
99
Jun-09
1,006
329,850
110
May-09
1,108
325,950
119
Apr-09
1,335
329,000
116
Mar-09
1,570
321,950
115
Feb-09
1,682
324,900
116
Jan-09
1,884
328,900
124
Dec-08
1,970
330,000
129
Nov-08
2,131
330,900
119
Oct-08
2,375
339,000
113
Sep-08
2,473
349,900
113
Aug-08
2,513
354,000
113
Jul-08
2,667
360,000
108
The number of homes for sale are down 68% but the median price is increasing. With less homes on the market surply and demands takes over. Days on the market is decreasing which means the buyers are acting on good buys.
The average months supply of inventory is down 78.3%.
It's time for buyers to start realizing that unless things change soon they should be in the market now!
In a desire to curb abuses in home loan appraisals our government passed a law that became active on May 1st of this year. The desire of this law was to curb the bad appraisals that occurred during the housing boom. The new law prevented appraisers from having contact with the lender or REALTOR involved in the transaction. This would prevent undo pressure to be brought on the appraiser to "come in at a certain price". It also prevents the real estate agent from telling the appraiser special features the home my have or the reason why the house down the street with no drywall was sold so low. Yes, you might say the appraiser will find that out when he visits the home but with this new process many appraisers are using pictures in the MLS as their home investigation and doing a drive by only. This lack of effort is partly caused by the low compensation the appraisers are receiving since the Management company is now taking part of their income. They need to do twice as many appraisals to earn the same amount of money they once did.
To protect themselves from liability, most lenders are ordering appraisals from appraisal management companies (AMCs), which intermediate between the lender and the appraiser. The AMC selects and pays the appraiser, receives and evaluates the appraisal, and passes it to the lender, which has no direct contact with the appraiser.
What could be wrong with this plan? Well after just a few weeks we now have a major problem. The AMCs don't have companies in every area so we now have appraisers from one county trying to do appraisals in another county. Their bias for certain areas is showing up with lower appraisals in many areas because they don't know the area or the different complex array of site issues. Many deals are being cancelled because of low value in the appraisals. Recently the National Association of REALTORS worked to get local appraisers doing local appraisals. Although this is suppose to be implemented immediately I don't see it happening.
The new rules is adding time to the mortgage process and preventing anyone from talking to the appraisal to remedy the situation. If a borrower has to change lenders in the middle of a transaction we can no longer use the first appraisal which adds cost to the borrower.
We need to get the housing market back on track and this new law isn't going to do it! Call your representatives today and demand they scrap this law and let the marketplace get back to creating value.
Money is tight for us all but the consumer better keep a keen eye on the government in the coming weeks. More laws are being prepared to raise money for the county, city and federal government. Do you think they don't concern you! Think again. Many areas are trying to pass point of sale laws that will have a homeowner replacing wood-burning devices, windows, air conditioners and plumbing before closing can take place. The REALTOR® Action Fund is fighting to protect homeowners but we need everyone to get involved.
If you think I am calling wolf then let me point out two laws that affect millions of sales in the coming years.
New laws have taken effect in San Luis Obispo County requiring residents in Los Osos to retrofit plumbing fixtures at point of sale because of the town's dwindling water supply. Specifically, toilets are to be replaced with toilets rated at no more than 1.28 gallons per flush (gpf).
Contra Costa County in the San Francisco Bay Area adopted an ordinance which requires gas shut-off valves be installed downstream of the meter and at the point of appliance on all buildings sold within unincorporated areas of the county prior to entering into an agreement for sale or prior to close of escrow.
The California Energy Commission currently has a state-wide point of sale ordinance for energy conservation in their strategic plan and the California Public Utilities Commission has a recommendation for local point of sale ordinances in their recently released draft California Energy Efficiency Strategic Plan. Therefore, in the future all local governments may be required to adopt more stringent standards.
Since we are seeing very few sales with homeowners walking away from the closing table with equity many transactions are going to fall out of escrow if homeowners don't have money to pay for these requirements and the buyer will not pay for them.
It's time to tell our legislators that point of sale is not the time to demand these repairs.
To say we are excited in Corona, CA about our new Farmers' Market is an understatement. After a lot of hard work by a lot of local people our dream of a Farmers' Market will be coming true. Beginning on July 11, 2009, Farmers' Market Management Company, Inc., established over 30 years ago and known for its success in farming and managing certified farmers' markets, will be bringing its farmers to Corona. It will be held on Saturdays, 8:30 am to 12:30 pm (rain or shine) Main Street Market Place (Main and Rincon). Mayor Steve Nolan said, "Our heritage is based on farming; it is a natural that we would finally have a certified farmers' market to call our own."
All produce available is locally grown by the farmers selling it and none is brokered. Some farmers will offer organic or certified organic fruits and vegetables.
In addition to the naturally ripened produce, fresh cut flowers and some simple food items such as kettle corn or BBQ beef will also be available. Local artisans will be selling handmade crafts.
Come join the fun and support this new effort. A big thank you for all who worked so hard to achieve this great market for Corona.
Home sales are increasing in Riverside County and although the sale prices are down I believe that supply and demand will correct this shortly. Many investors that I work with say they are buying homes in many cities and that they still are finding renters.
Single Family Residence Time Period Number of Sales Median Sale Price Apr 2009 3,363 $197,000 Apr 2008 3,020 $293,250 Mar 2009 3,407 $205,000 Mar 2008 2,555 $305,000 Information gathered from the Multi Regional MLS.
The First Time homebuyer programs are still a wonderful opportunity for people to get into their first homes. The $8,000 credit from the Federal Government doesn't have to be paid back like the earlier programs so don’t miss this opportunity! California also has a program that will give you an additional 5% of purchase price, not to exceed $10,000.
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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