Monthly Archives: April 2009

Real Estate

Banks Banking Their Foreclosures?

bomb
Are the banks holding off putting some of their foreclosures on the market? It looks like they might be to keep the prices of the real estate market from plunging further. Another reason could be that it helps them appear more solvent then they really are.

According to the San Francisco Chronicle

“Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”

In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity – only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as “shadow inventory.”

“There is a real danger that there is much more (foreclosure) inventory than we are measuring,” said Celia Chen, director of housing economics at Moody’s Economy.com in Pennsylvania. “Eventually those homes will have to be dealt with. If they’re all put on the market, that will add more inventory to an already bloated market and drive down home prices even more.”

In November of last year, Fannie Mae and Freddie Mac ordered their loan servicers and attorneys not to evict about 16,000 troubled borrowers or sell their homes until they implement a streamlined loan modification program. This might prevent some foreclosures, but the numbers of homeowners facing foreclosures have increased since then.

Where’s the bottom? As I posted yesterday, there are some signs of increased sales and improvement in the economy, so maybe we’re there and maybe not.

Real Estate

Signs of Life in the Real Estate Market

signsoflife

I keep track of the number of pending real estate sales in Nevada County daily and have noticed a healthy increase in pending sales lately. Although many of the sales are short sales and foreclosures, other properties are moving as well. With real estate market values depressed to its present level, buyers are coming back to the market. This includes first time home buyers and investors sensing a buying opportunity of a life time.

According to Rismeida:

“A run of encouraging economic reports that have recently been released may mean the worst, panic-inducing stage of the economic downturn is over. Emphasis on the word may. “I think there are signs of economic life,” Mark Zandi, chief economist at Moody’s Economy.com in West Chester, PA, said. “The downturn is no longer intensifying, and the clearest evidence of this can be found in the retail sector as retail sales have turned since the beginning of the year,” Zandi said.

New-home sales in February jumped 4.7% to an annual pace of 337,000 from a record low in January. February marked the first increase in sales since the summer, and the report added to a string of “better-than-expected” housing data, according to Wachovia Bank economist Adam G. York.”

I believe foreclosures will continue into the next year, as the Alt-A loans come due for readjustment. Some figures indicate that there may be as much as $600 billion in foreclosures still to come from the Alt-A mortgage loans made in the 2006-2007 years. Alt-A loans were the love child of lending institutions and Wall Street when subprime loans were getting a bad name. The subprime loans were repackaged as Alt-A mortgage, bundled and sold to investors. A majority of these bundled loans are now toxic and due to fail.

Real Estate

Mortgage Brokers Can Cost You More Money

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Using a reputable mortgage broker can save you time and remove some of the hassle in obtaining a loan.  However according to a study by the Department of Housing and Urban Development published last year, you may wind up paying more for your loan.

According to the study, borrowers paid about $300 to $425 more in fees when they worked with a broker as opposed to working directly with a lender.

If you are a home buyer, you may want to investigate mortgage options as opposed to using a broker by comparison shopping. This can be tricky, but be sure to include at least one credit union, a community bank and multiple national banks. You may have to spend several days doing this before you find just the right loan.

You should compare one type of loan at a time–for instance, a 30-year, fixed rate with no points. Their research should include a request for a guarantee that both the rate and the good-faith estimate will be exactly as initially presented. This standard could be difficult for a buyer to find, but it’s worth trying to find it, experts say.

If you get too confused, you can always go to a mortgage broker, they have access to multiple lenders and can lead you through the lending process rapidly.

 

Real Estate

The Sad Face of a Foreclosure

I was recently asked by an Eastern Bank to do a brokers professional opinion (BPO) as to the listing value of a property. This is not an appraisal, but a value based on six properties that are similar, three recently sold and three that are active that would compete for the property for which the bank wants a listing value.

 We had done an earlier BPO on this property several years ago when the home owners were in the process of building their home.  The bank had given them a loan to build their home and the homeowners wanted additional money to finish their home.

The market at that time was red hot and the value for additional financing was there, based on the value of similar properties in the area.  What a change, going back there now, the owners had left, leaving behind their dreams, broken like the thousands of pieces of garbage they had left behind. Yes, they had left behind a home unfinished, garbage strewn all over the property, vehicles left behind that had been cannibalized. To further complicate matters, it is off the power grid, and the home was provided power by a generator and solar panels, all of that gone, leaving behind only one battery in the living room.

The kitchen was unusable, with the stove inoperable, and in a big mess. I would estimate that before the bank can even put this house on the market, it is going to cost $15,000 to clean up the garbage, haul away the vehicles, (including a trashed RV).  Due to the poor workmanship on the home, the home being off the grid, the cleanup necessary, the bank is going to lose a tremendous amount of money. Of course, this foreclosure will further depress the market in the area, as all foreclosures are doing to all of our property values.

 

Hiking, Lakes in nevada county, Recreation

Rollins Lake in Nevada County

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There are many recreational lakes in Nevada County, one of which is Rollins Lake. The lake is located in an unincorporated area called Chicago Park, so called because the first settlers there were first generation Italian-Americans who settled in the area from Chicago.

Rollins Lake is at an elevation of 2,100 feet, surrounded by a forest of pines, oaks and many other species of trees. It has a surface area of 900 acres with 26 miles of shoreline. You can sail or water ski on this lake which has many coves and long stretches of open water. Fishing is allowed, with many species of fish available which include brown trout, catfish, largemouth bass, crappie and bluegill. There is also swimming, picnicking, hiking and riding stables with horseback riding trails.

The boating which allowed on this lake include: power, row, Jet Ski, windsurf, canoe, sail, water ski and inflatable’s. You can also rent fishing boats with motors, canoes and paddle boats. There are four launch ramps, houseboat mooring and a floating gas dock.

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There are 250 developed camping sites for tents and RV’s. There are also full hookups for RV’s and trailer storage along with disposal station and flush toilets.

For further information contact:

Rollins Lake Resort Campground (530) 272-6100
Orchard Springs Campground      (530) 346-2212
Peninsula Campground                  (530) 477-9413
Long Ravine Campground             (530) 346-6166
View Larger Map

Real Estate

Foreclosure Crooks Close To Home

 theives

In the continuing fight against scam artists, the Better Business Bureau of Northern California is warning consumers about bogus loan modification companies that make promises about helping borrowers modify their mortgage loans.

You don’t have to look far from home to find one such company, which according to BBB is ShortRefiNow.com located in Roseville, CA. According to BBB, fourteen people have filed complaints with them. The complaints allege that the people paid between $2,600 and $5,300 up front to ShortRefiNow.com to get their loan modified, but the company did not perform or refund their money.

One woman said she gave ShortRefNow.com $3,000 up front to modify her loan based on a recommendation from a friend. She stated that “I kept getting the runaround. They said “I’m not sure who’s taking care of it. The person taking care of it had emergency surgery,” At that point she said “you know when someone is lying.”

After checking with her lender, she found out they had made one call to the lender and asked how do you do a refinance?

According to KCRA 3:

“Another homeowner told KCRA 3 she paid $5,370 to ShortRefiNow.com to modify her loan. She said the company told her not to talk with her lender directly.

She said the company did not secure a loan modification and did not refund her money.
The Department of Real Estate said consumers need to be very careful when deciding to use a loan modification company.

Companies must be licensed with the DRE. Furthermore, in order to collect advance money, brokers must have a specific agreement called an Advance Fee Agreement, approved by the DRE. Brokers may not collect advance fees if a notice of default has been recorded against a property.”

The DRE issued a Desist and Refrain order against ShortRefiNow.com in February, telling them to stop performing any and all acts for which a real estate license is required until such time as they obtain the required license.

The DRE said borrowers should contact their lender directly to try to work out an agreement or work with a nonprofit housing counselor.”

Real Estate

Nevada County Residential Sales First Quarter 2009 Vs First Quarter 2008

This has nothing to do with real estate sales, just to remember the beauty that is around us. Picture courtesy of my next door neighbor Jocelyne Pietto
This has nothing to do with real estate sales, just to remember the beauty that is around us. Picture courtesy of my next door neighbor Jocelyne Pietto
Nevada County residential property values continued to drop, although not as much as other areas. The drop in prices for the first three months of this year compared to the first three months of 2008 is eleven percent.

The medium price in the first quarter of this year for residential property is $302,000 compared to last year’s first quarter of $345,000. The number of residential properties sold in the first quarter was 124 units compared to 141 units in the first quarter of last year or a fourteen percent drop in sales.

However, I notice that pending sales is up in the first quarter of this year  compared to the first quarter of last year. In the first quarter of this year, there are 192 units under contract compared to 171 units under contract last year.  This may indicate that there is a twelve percent increase in sales, although some may fall out of contract. There also may be a long time lag on sales because some of the sales may be with lending institutions that historically seem to take more time in completing their transactions.

Sales figures quoted above are for single family residences and do not include multi-family residences.

I keep track of the daily Nevada County MLS transactions on this web site through Twitter, listing the number of new properties on the market, the number of price changes, completed sales for the day and pending sales.  These figures are for all types of property

You may find that information on the right side of this page or you can follow me on Twitter, I’m odelljohn.

 

 

Real Estate

California Association of Realtors® Launches Mortgage Protection Program

houseonhand

The California Association of Realtors has created the Housing Affordability Fund which offers a new mortgage protection program to first-time home buyers.Through the Housing Affordability Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments.

A Qualified co-buyer can also participate in this program, for a reduced monthly benefit of $750 per month for up to six months in the event of a job loss. Program benefits also include coverage for accidental disability and a $10,000 death benefit.  C.A.R.’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program, and estimates that up to 3,000 families will benefit from the program this year.    

To qualify for the Mortgage Protection Program, applicants must: 

        Be a first-time home buyer – someone who has not owned a home in
        the last three years 

·       Open escrow April 2, 2009, or later, and close on or
        before Dec. 31, 2009 

·       Use a California REALTOR® in the transaction 

·       Purchase the property in California 

·       Be a W-2 employee, cannot be self-employed or military personnelHome buyers must request an application for the H.A.F. Mortgage Protection Program from their Realtor®. More information on this new initiative will be forthcoming. Check for updates  By the way, a Realtor® is a real estate agent who is a member of the National Association of Realtors or N.A.R. Realtors® are pledged to a strict Code of Ethics and Standards of Practice.