Here comes the inventory and there goes the values

Hello,

Rates are creeping up…..

But the real news for the day and to end the week is that I hope you are ready for another MAJOR dump of property the next couple m

onths!!! You all recall my last blog (5 lashings if you didn’t read it!) Where I spoke about the foreclosure moratorium being lifted… Be prepared and line the buyers up for the next flood of inventory and this time they know what they are doing when foreclosing, liquidating and moving property. Asset managers have already been given the green light to “SALE SALE SALE ” and stop the bleeding and get it over with once and for all.  

We are planning a special bus for buyers and investors in May called the www.homepathbus.com which will be for all the Fannie Mae owned homes that offer special financing for all the bank owned properties- they waive appraisals, remove mortgage insurance and go up to 90% for investors and 97% for owner occupied homes!!!! You can find these specific types of homes including Arizona second homes at www.homepath.com

This was in the Wall Street Journal yesterday-

Some of the nation's largest mortgage companies are stepping up foreclosures on delinquent homeowners. That will likely lead to more Americans losing their homes just as the Obama administration's housing-rescue plan gets into gear.

J.P. Morgan Chase & Co., Wells Fargo & Co., Fannie Mae and Freddie Mac all say they have increased foreclosure activity in recent weeks. Those companies say they have lifted internal moratoriums which temporarily halted foreclosures.

Some mortgage companies had stopped foreclosing on borrowers as they waited for details of the Obama administration's housing-rescue plan, announced in February, which provides incentives for mortgage companies and investors ...

If you read my last daily email or blog post this is exactly what I was talking about as the next flood of inventory. I shared this with a recent client that was in Arizona buying a 2^nd home this week and he commented “that must be the reason every home they looked at had the notorious “Chirp Chirp” going on”…dead batteries in the smoke detector since all those houses have been empty for a long time…. Stale inventory finally dropping price to move before the next flood comes in….

This is also the reason behind the false first quarter bank earnings reports since very few homes were foreclosed on the last 5 months so as numbers may look good today I have a feeling 2^nd and 3^rd quarter are going to be ugly again.  

Now that the meat & potatoes have been laid on the table from the Obama plan it is time to start the default house cleaning process. Banks and servicers are putting systems in place to take what incentive and earnings are available from the bailout and liquidate what they can to stop the bleeding.

Currently servicers and lenders have been hiring Realtors to go out an investigate a home, try to collect information with pictures of the houses condition and report back to lender so they have an idea what phase this house will be heading. They are also encouraged and rewarded to go to the door and try to get the homeowner to call the lender and if they are a renter to gather that information as well.  

The phases will look something like this-

Phase 1- Foreclose on all non-owner properties where original borrowers are earning an income and not passing it on to the creditors. The plan is to notify the renters that they are encouraged to stay in the home and will lower rent collected as well as offer an incentive if they keep the place in good shape during the listing process and if left in good once it sells will offer a “reward or incentive”. This will keep the place in presentable condition and save Fannie and Freddie thousands of dollars in damages and cleanup coasts.

Phase 2- Second homes and abandoned homes- Most likely to never receive another payment and as long as they are not kicking people to the streets then they will speed up the process of getting these houses off the books.

Phase 3- Owner occupied where the homeowner will not communicate with the banks.

Phase 4- Owner Occupied that have tried to submit a loan modification and no possible way ever have a chance in being able to afford the home

Phase 5- Loan modification to all homeowners that currently live in home and can fall under the Obama guidelines of lowering payment to 31% of their debt to income by lowering rate to 3%, then extending loan term to 40 years then reducing principal.     

Hope is that this will all happen in the year 2009 and we will be able to start 2010 fresh… That’s my story and I am sticking to it!