Improving Foreclosure Prices Drive Recovery

The recent sales of foreclosed properties are fetching higher prices than last year in many parts of the country.  This is beginning to firm up the bottom prices of homes for sale and in some cases, showing an 8% increase in prices from last year.  Here’s an article that goes into detail about this topic.  Once again in the local South Orange County, CA market REO and Short Sale properties are going very quickly.

Improving Foreclosure Prices Drive Recovery

Posted By Susanne On June 6, 2012 @ 3:38 pm In Business Outlook,Consumer News and Advice,Finance and Economy,Home Owner News,Real Estate Information,Real Estate News,Real Estate Trends,Today’s Marketplace,Today’s Top Story |

[1]Significant price increases in bank-owned foreclosures are driving gains at the national, regional and local levels, helping home prices turn the corner with small quarterly and yearly gains.

National average prices for bank-owned foreclosures (REO) were up 8.1 percent over a year ago on a median price-per-square-foot basis, according to May data from Clear Capital, and have outpaced non-REO price declines of -0.7 percent by 8.8 percentage points.

“Strength in REO-only price trends as well as some early indications of price gains spreading from low tier sectors to the mid, and higher-priced homes is helping confirm that the country continues to make progress on its recovery, and we are expecting to see improvements extend over the next several months,” says Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital.

Clear Capital reported today that in May national median home prices grew on both a quarterly and yearly basis for the first time since August 2010. Regional performance improved across the board with the West, South and Northeast also seeing quarterly and yearly gains. However, the Midwest sustained declines, but milder since last.

“National real estate prices in May have finally moved past the continued losses of the last few years. The subsequent stabilization pattern seen in recent months has progressed into the start of moderate growth,” says Villacorta.

Short-term quarterly price trends picked up slightly at the national level, with appreciation of 0.4 percent turning into the first quarterly gain since November of 2011. The positive move at the broader market level is a reflection of the increasing strength at the regional level.

Helping to support growth at the national level, the West saw a notable jump in prices over the quarter, taking the lead over all the regions with growth of 2.7. The South recorded home price appreciation of 1.2 percent quarter-over-quarter, doubling the small gains of 0.6 percent reported on last month. Similarly, the Northeast matched the national level gains of 0.4 percent over the quarter, showing a modest uptick over the gains of 0.2 percent reported last month.

The Midwest continued to absorb price declines. With prices declining only -2.0 percent over the quarter the magnitude of the declines are subsiding, as compared to last month’s quarterly losses of -2.7 percent.

While growth in REO-only prices is driving broader market gains for most of the regions, the impact on overall prices depends on the level of REO market saturation. For example, the Northeast has seen incredible growth in the REO-only sector shown above, yet has only recorded 1.6 percent gains year-over-year in overall prices. Because the Northeast has a mere 10 percent REO saturation, the lowest level across all regions, even substantial growth in the REO-only price segment hasn’t swayed overall prices significantly. Additionally, the Northeast’s REO-only prices are more sensitive to shifting demand, fueling the seemly high annual gains, says Villacorta.

The Midwest is the only region that continues to see REO-only price declines on a year over year basis. While REO-only price growth has led the other regions into broader based growth, the Midwest has yet to receive assistance from this sector on overall progress. It’s worth noting that the Midwest’s REO saturation levels are still the highest of all the regions. As such, price weakness in the REO-only segment has been harder for the market to shake off, resulting in sustained declines at the broader level, as seen in overall yearly declines of -3.1 percent.

However, each of the three regions now seeing gains in REO-only prices first saw long term reductions in REO saturation rates. And while the Midwest continues to face declines, it has achieved a reduction in its REO saturation rate over the last several years, from a high of 45 percent in 2009, down to 37 percent in May.


Article printed from RISMedia: http://rismedia.com

Loan Modification – How Does It Work?

Here is an article that I think explains the process many homeowners are faced with.  I am asked this question weekly as I go about my business as a Realtor and Lender in the Orange County, CA marketplace.

Every person’s situation is unique especially when it comes to the question ” do you really want to stay in your house ?”  Sometimes what’s needed is a fresh start and a modification isn’t the solution.  I hope this information is helpful and if you have any questions just go to my website and send us an email.

Mortgage Modification: Not Right for Everyone

Posted By susanne On May 29, 2012 @ 4:12 pm In Business Development,Consumer News and Advice,Home Owner News,Homeowner’s Toolkit,Real Estate Information,Today’s Top Story – Consumer | Comments Disabled

[1](MCT)—For homeowners struggling to stay in their homes, a mortgage modification may be the way to go.

But before you choose that route, make sure the modification fits your needs and your wallet.

“Evaluating a mod (modification) offer is pretty straightforward,” says Keith Gumbinger, vice president at HSH.com, which publishes mortgage information. “Keeping in mind that a homeowner under duress may have little choice but to accept what is offered, there may not be a whole lot to evaluate.”

Under a loan modification, the lender changes the terms of your existing loan so that you can — hopefully — afford your mortgage payment.

Faith Schwartz, spokeswoman for Hope Now, an alliance of mortgage servicers, investors, mortgage insurers and housing counselors that helps struggling homeowners stay in their homes, said loan modifications are accomplished by either:

• Lowering your interest rate.
• Extending the term of your mortgage.
• Reducing the principal.
• Temporarily suspending — or forbearing — your regular monthly mortgage payment.

If you’re unemployed, it’s difficult to qualify for a mortgage modification and your best bet may be to seek forbearance, Schwartz said. But you could still qualify for a loan modification if your spouse is employed.

“You need some cash flow,” she says.

Depending on your situation, you may be eligible for help from the federal government’s Home Affordable Unemployment Program. Under this program, your mortgage payments may be reduced to 31 percent of your income or suspended altogether for 12 months or more.

Recent announcements regarding mortgage modifications highlight their importance as an option for struggling homeowners.

Bank of America said this month it has begun mailing letters to customers who may qualify to have their home loans reduced as part of a multistate settlement over alleged foreclosure abuses.

The bank estimates that more than 200,000 of its customers could potentially be in line for a reduction in the principal balance on their mortgage.

Bank of America estimates average monthly savings of 30 percent on mortgage payments of customers who qualify for this program.

Among the criteria to qualify: Borrowers must owe more on their mortgage than the property is worth and be at least 60 days behind on payments as of Jan. 31.

Also, the Consumer Financial Protection Bureau and the Treasury Department announced changes in the government’s Home Affordable Modification Program, or HAMP.

Starting June 1, military homeowners and other families who are displaced by a job-related move may still qualify as owner-occupants, which means they may still qualify for a HAMP mortgage modification.

A borrower may qualify if he or she:
• Is displaced because of an out-of-area job transfer and was occupying the home as a principal residence immediately before the displacement.
• Intends to return to the home at some point in the future.
• Doesn’t own any other single-family real estate.

If you’re considering a loan modification, there are questions you need to answer, starting with: What’s your goal?

“Is the goal to cover the short term, sell the home and move on, or to tide over a bad fiscal patch (such as a job loss), or has the problem become more intractable?” Gumbinger says.

Here are more questions to answer:

Can you afford it? This is the most important question.

Your modified payments need to be low enough “to be sustainable to get you over the hump until you can get back on your feet,” said Craig Jarrell, president of the Dallas region at Iberiabank Mortgage Co.

“You should not be paying more than 31 percent of your monthly income on a mortgage,” says Todd Mark, vice president of education at Consumer Credit Counseling Service of Greater Dallas. “If the answer is ‘I’m still short,’ then that’s a modification somebody shouldn’t get into.”

In fact, the federal programs aimed at keeping consumers in their homes have a goal of setting mortgage payments at 31 percent of a homeowner’s gross income, said Geoff Walsh, staff attorney at the National Consumer Law Center.

“Payments for principal, interest, taxes and insurance have to be set at that level, and that’s generally considered to be an affordable income-to-payment ratio for homeowners,” he said.

How long? This is really a two-parter. First, you need to know how long the lower payment will remain in effect.

“Many so-called permanent modifications offer lower payments that begin to step up after five years,” says Greg McBride, senior financial analyst at Bankrate.com. “What assurance do you have that you’ll be able to afford a higher payment five years from now?”

Secondly, you need to be clear on how long you plan to stay in the house.

“There’s no sense in trying to get a loan modification if they’re not committed to staying in it,’ Mark says.

Effect on credit? “Modifications in general have a relatively small impact to even a slightly positive impact,” says Sarah Davies, senior vice president of analytics, project management and research at VantageScore, the credit score developed by the three national credit bureaus.

“If you think about a principal reduction where you actually owe less money and therefore you have less exposure, it’s a little bit of a positive result,” she says.

Davies says homeowners with a modified mortgage will take a hit to their credit score of “zero to 20-30 points, depending on where you are on the starting score.”

That isn’t as severe as a short sale, which could lop off 110-120 points, or foreclosure, which could slash 115 to 140 points off your credit score, she said.

Bottom line, if you’re struggling to stay in your home, a mortgage modification may be just the ticket. But do your research before you sign anything.

Pamela Yip is a personal finance columnist for the Dallas Morning News.

©2012 The Dallas Morning News
Distributed by MCT Information Services [2]

How The Entrepreneur Affects California Home Prices

There is a debate I find myself in when I discuss the future of Orange County Real Estate and it is this: who is going to buy the homes that come into the marketplace either for sale or by foreclosure, especially the higher priced ones when unemployment is high and folks are going broke?

First of all, in spite of our tough economy over 30% of current purchases are for cash, so someone is doing OK but who are the other 70% that will make those purchases and how.  Here is part of the answer as to the who, it may not be all of the 70% but they have a great influence on our local economy.

This last weekend I read an interesting article which I already understood intuitively because of the nature of the creative entrepreneur and their never ending quest for success, but this article points out an important natural resource we have in that entrepreneural spirit here in California and in specific, Orange County.  These are some of the same people I have financed for years who take an idea and build a family owned business so they can afford that dream home.  I hope you enjoy this article as much as I did.

Analyst: Entrepreneurism will save housing

April 6th, 2012, 11:14 am · · posted by Jon Lansner

Veteran Southern California real estate analyst G.U. Krueger adds his commentary on the housing market to this blog in a spot we call “Thursday Morning Quarterback.” Here’s his latest installment, albiet a tad tardy …

New business formations and entrepreneurial activity are one key to housing’s recovery.
The Kauffman Index of Entrepreneurial Activity, which measures business start-ups mostly of smaller firms. Here, California ranked second among states after Arizona in 2011, and on par with Texas. The Los Angeles-Orange County metro was No. 1, regionally.  In addition, a measure reflecting money flows into more sophisticated new business activity, mostly of future growth industries, is venture capital spending, which is in search for the new Google’s and Facebook’s.

As far as venture capital spending in 2011 is concerned, California scooped all other states, according to the latest report by Price Waterhouse and the National Venture Capital Association. Overall ventures in the Golden State received $14.5 billion, up 24% from 2010.

Regionally, the Silicon Valley received the lion’s share of venture capital spending in the US in 2011 – and at the highest level since 2001, the tail end of the dot-com boom (or bubble). Ventures in the Los Angeles-Orange County metro were funded, too, at the highest since 2001, and putting it in 4th place after New England and the New York Metro — and ahead of Texas!

California tops venture capital spending because it is well positioned to benefit from future growth industries, which are of course, the main focus of venture capitalists. What does all of this strong entrepreneurial activity tell us about the California future?

1. New, small entrepreneurial firms are obviously propelled by people who lost their jobs during the Great Recession. One could belittle that. But this would miss the “cunning of capitalism” and “creative destruction” that makes for a stronger economy.

2. Venture capitalists and the entrepreneurs benefiting from their capital flows have a pretty high confidence level in the future of California. This is particularly meaningful, because they have “skin in the game”.

3. Money flowing into Silicon Valley and Los Angeles-Orange County will create jobs. Not just any jobs, but high paying jobs.

4. This inevitably results in higher housing demand: first for rentals, then for ownership homes. That’s what starts a new housing cycle.

5. A sea change is under way in urban California housing markets. Rents are going through the roof in the Silicon Valley. In Orange County, resale inventories dropped sharply.

Entrepreneurial California and the “cunning of capitalism” is creating conditions for a housing recovery here.

Home Owners to Spend More Money on Remodeling Projects

Here is an article that reveals that 70% of homeowners surveyed plan to do some remodeling this year.  That’s good for the economy and the home. 

The Top home project in this survey was Painting!  If that is what you plan to do check out my blog for a painter I highly recommend.  Happy remodeling.

Home Owners Planning Remodeling Projects This Year

Daily Real Estate News | Friday, March 30, 2012

 

Many home owners who have no plans to move this year are opting to tackle improvement projects around the house, according to a new survey of 1,500 adults by American Express Spending and Saving Tracker. Seventy percent of home owners surveyed say they intend to take on a home improvement project this year, and they plan to spend about $3,500 on sprucing up their home, according to the survey. That’s an increase of about $100 compared to last year.

The projects will primarily concentrate on the indoors, according to the survey. More than one-third of those polled say they are devoting some of that budget to home accessories, such as throw pillows, or on appliances and new furniture.

The top home project they have lined up? Painting, which 37 percent of those surveyed say they plan to do this year. Twenty-four percent said they will do landscaping projects. 

Also, more home owners this year compared to last year say they’re going the do-it-yourself route, with plans to refurbish their houses themselves rather than hiring a professional to do it. In the survey, 43 percent of owners say they’ve been inspired to tackle home projects themselves by watching design shows on television, followed by seeing in-store displays or from viewing online design and do-it-yourself Web sites. 

Source: “Home Decision 2012: Improving or Moving?” American Express (March 2012)