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Real Estate

Bizarre Mortgage Requests Delay Borrowers

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Underwriters are being extra vigilant in verifying every detail of a mortgage application, and some of their requests for information, borrowers say, are downright odd.

For example, one borrower says an underwriter demanded a letter from his doctor that an illness he had would never come back. Another borrower says that an underwriter told her she needed to get verification from her employer on her employment status when she listed “homemaker” as her occupation.

A borrower said an underwriter asked him for a letter of explanation on a $6 deposit he made (the borrower earned $10,000 a month at the time).

“I don’t know whether to laugh or cry,” says Karen Deis, who operates MortgageCurrentcy.com, and who collected dozens of anecdotes on her Facebook page about bizarre underwriting requests. “People are scared. All you hear about are buybacks, audits, and people losing their jobs” because they didn’t verify this or confirm that.

Banks are requiring more documentation when approving a mortgage, and some of the extra requests have caught borrowers off-guard. For example, Deis says one borrower said that an underwriter demanded a letter from her explaining why she changed her name after she got married. A single father who had custody of his child said he was asked for a letter saying he did not have to pay child support. Another borrower who had been out of school for years said he was asked to produce his high school transcript.

Despite some of the extra documentation requests, recent surveys are showing that banks lately are easing up slightly on their underwriting standards.

However, “even though there has been some loosening, what they’re asking of people is not changing,” says Jonathan Corr, Ellie Mae president. “It’s still pretty comprehensive, and we’re going to continue to hear stories like this.”

Source: “Underwriting requests are getting weirder,” The Chicago Tribune (June 21, 2013)

: Daily Real Estate News.
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Real Estate

Housing Inventories Are Falling

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Photo Credit: http://www.shakesville.com/2008/06/my-former-landlord.html
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Home prices are increasing across the country as the number of homes for-sale continues to fall. But at a time when buyer demand is picking up, why is inventory still so low?

Inventories fell to 1.82 million at the end of last year, a 21.6 percent drop from one year earlier, the National Association of REALTORS® reports.

The Wall Street Journal recently highlighted several reasons behind the dropping inventories, including:

  • Sellers hesitant to sell: About 22 percent of home owners with a mortgage are still underwater, owing more than their home is currently worth. Home owners don’t tend to sell unless a life-changing event occurs when they’re underwater because they don’t want to take a loss on the sale of their house. CoreLogic data shows that inventories are the most constrained in areas with the highest number of underwater borrowers.
  • Not enough equity to trade up: Often times, home owners rely on the equity from their home to make a down payment on their next home. With fewer home owners seeing equity in their houses, they may not have enough money to move into a pricier home, which is constraining the would-be “trade up” buyer from moving.
  • Investors continue to snatch up properties: Investors are snapping up properties, but they’ve changed their strategy from past years, which is also constraining inventories. Now they’re holding onto properties and turning them into rentals instead of rehabbing properties and flipping them for profit. This is keeping fewer homes on the market.
  • Banks are slowing down foreclosures: Banks have new rules to meet with the foreclosure process, and it’s causing them to move at a slower pace in foreclosing on homes. Banks also are showing a preference for short sales and loan modifications, which are curbing the number of foreclosed homes on the market.
  • Builders are doing less building: Housing starts were at record lows from 2009 through 2011 so there’s less inventory being added to the market. A rebound in the new-home market has only recently started to occur.

Source: “Six Reasons Housing Inventory Keeps Declining,” The Wall Street Journal (Jan. 22, 2013)

 

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Real Estate

Banks Close To $10B Settlement Over Foreclosure Abuses

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Fourteen banks are reportedly nearing a $10 billion settlement with banking regulators over the banks’ past involvement in foreclosure mishandlings that included faulty paperwork and excessive fees, The New York Times reports.

About $3.75 billion of the reported settlement would go to aid home owners who lost their homes to foreclosure — more than double what was set aside from a $26 billion settlement reached in 2012 among the state attorneys general and five of the nation’s largest banks.

The majority of the money from the latest settlement would go to help home owners struggling to make their payments and remain in their homes, such as with aid like loan modifications or lowering the amount of principal on their mortgages.

Banks have faced several settlements with government officials and home owners in recent months that have aimed to hold them accountable for the 2008 financial crisis and subsequent housing slump. From 2007 to early 2012, four million Americans faced foreclosure.

“It’s certainly a victory for consumers and could help entire neighborhoods,” Lynn Drysdale, a former co-chairwoman of the National Association of Consumer Advocates, told The New York Times about the latest proposed settlement. “But the devil, as they say, is in the details, and for those people who have had to totally uproot their lives because of eviction it may still not be enough.”

The same banks involved in the $26 billion mortgage settlement–JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial — also are included in this recent settlement, The New York Times reports.

Sources: “Settlement Expected on Past Abuses in Home Loans,” The New York Times (Dec. 30, 2012)  Daily Real Estate News

 

 

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Real Estate

$26 Billion Deal Could Offer Relief to Home Owners

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Daily Real Estate News | Thursday, February 09, 2012

After months of tense negotiations, the nation’s five largest banks and state and government officials have agreed to a $26 billion settlement aimed at holding banks accountable for the mishandling of some foreclosures.

The settlement is expected to help 1 million home owners, by having lenders reduce their mortgage debt or refinance into lower mortgage rates to reduce costs of their monthly payments. Also, about 750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 are expected to receive checks for about $2,000. The aid from the settlement will be distributed over the next three years, The New York Times reports.

“I wouldn’t say it’s a panacea for the housing industry but it is good for the banks to get this behind them,” Jason Goldberg, an analyst with Barclays, told The New York Times about the settlement.

Details of the settlement still need to be finalized, including how many states will participate. Also, federal officials say the final figure could move upwards to $39 billion. Mortgages owned by Fannie Mae and Freddie Mac will not be part of the deal.

The banks involved in the settlement are Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial.

Source: “States Negotiate $26 Billion Deal for Home Owners,” The New York Times (Feb. 8, 2012)

 

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Real Estate

Five Things To Look For In Housing In 2012


Just as in 2011, in 2012 many will be trying to figure out where housing is headed.  While the housing market didn’t worsen in 2011, it also didn’t stabilize either.  This year, the story will be about local markets.  While many housing markets rose and fell together, they’re recovering at difference paces so talking about housing on a national level is not beneficia

  • Confidence and jobs: Housing is more affordable than it has been in decades, but many would-be buyers are worried about buying today if prices are going to be lower tomorrow.  Still, others don’t want to buy a house until they have more evidence that they’re not going to get laid off or see their hours cut back.

  • Foreclosures: Banks and other mortgage investors own around 440,000 foreclosed properties, but there’s another 3.4 million loans in foreclosure or serious delinquency, according to estimates by Barclays Capital.  Because banks are faster to cut prices to unload inventory than are traditional sellers, home values can fall further as the share of distressed sales rises.

  • Rents: If low mortgage rates aren’t enough to give urgency to would-be buyers, rent hikes could accelerate buyers’ decisions to take the plunge.

  • Mortgage credit and rates: It’s still hard for many buyers to get approved for a mortgage because banks are demanding lots of documentation of borrowers’ incomes.

  • Regulation: Many analysts don’t expect Congress to make major changes to Fannie Mae and Freddie Mac during the election year, but several major regulatory changes could significantly reshape the future of the lending landscape in 2012.

  • Meanwhile, the regulator that oversees Fannie and Freddie is revamping the way that mortgage companies are paid for collecting loan payments.  This could lead to a broader shakeup in the mortgage industry that ultimately influences how much borrowers are charged for mortgages and how banks handle loans that fall into delinquency.

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Real Estate

Residential Real Estate Prices in Nevada County 2010 – 2011

By John O’Dell

How’s Nevada County’s residential sales going?  Let’s take look at the years 2010 and 2011 from January to October of each year and compare the two.

The Year 2010 from January to the end of October.  There were a total of 1,619 listings. Total sales in that period were 750. Average list price of unsold properties was $453,771 and the average price of the properties that sold was $310,793.  Average days on the market of sold properties were 97 days.

For the year 2011 from January to the end of October. There were a total of 1,446 listings. Total sales in that period were 859 which is an  increase in sales of 14.5%. Average list price of unsold properties was $395,080. The average price of properties that sold was $260,463 a decrease in sales price of 34.1% Average days on the market were 144 about 48% longer to sell a listing.

So how does future look? Foreclosures were up 7% in October but down 31% for the same period last year. Until the foreclosures are cleared by the mess Wall Street and the banks created by their greed, I think we will see a further decrease in sales price going well into the end of next year.

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Real Estate

Foreclosure Notices Soar 33%, Biggest Monthly Gain In 4 Years

A new wave of foreclosures hit in August, as banks picked up the pace in taking action against home owners who have fallen behind on their mortgage payments, RealtyTrac Inc. reported Thursday.

The number of U.S. homes that receiving an initial default notice rose 33 percent in August from July. That increase represents the biggest monthly gain in four years, according to RealtyTrac.

“This is really the first time we’ve seen a significant increase in the number of new foreclosure actions,” says Rick Sharga, a senior vice president at RealtyTrac. “It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend here.”

The uptick in foreclosure activity follows after months of a slowdown in foreclosures, which started last fall, with banks reviewing foreclosure policies and paperwork after facing lawsuits and criticism over how they processed foreclosures. Some banks even temporarily halted their foreclosures as they more carefully reviewed pending cases. The slowdown was also blamed on court delays in some states.

But some housing experts say the increase in foreclosure activity actually could be good for the housing market. A faster turnaround in foreclosures could help clear the glut of shadow inventory hovering over the market, which many say has caused home values to plummet.

The “bloated foreclosure pipeline now presents the greatest obstacle to a housing market recovery,” said Josh Levin, a Citi analyst. About 3.7 million more homes are in some stage of foreclosure than in a normal housing market, Levin said.

Banks are on track to repossess about 800,000 homes this year — down from more than 1 million last year, Sharga said.

Overall, 228,098 U.S. homes — or one in every 570 U.S. households — received a foreclosure-related notice in August, a 7 percent increase from July. However, that represents a 33 percent decline from August 2010.

Source: “Report: Mortgage Default Warnings Spiked in August, Signaling Potential New Foreclosure Wave,” Associated Press (Sept. 15, 2011)

 

 

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Real Estate

Foreclosed Home Owners Take Out Revenge on Properties

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Some foreclosed home owners are taking out their anger on the homes they are forced to leave behind, smashing holes in the walls, scribbling graffiti everywhere, leaving piles of trash, and ripping out appliances.

More banks — facing a growing problem from trashed foreclosures — are opting to offer homes at big discounts rather than fix the repairs, which can send surrounding home values in the neighborhood spiraling down, experts say.

Real estate pro Nick Davis with RE/MAX Premier Group told the Tampa Tribune that he has seen some home values greatly diminish from foreclosed home owners who have trashed it. For example, he recalls one home that would have fetched $250,000 back in 2006 during the housing boom that would now sell for about $75,000 because it was trashed by the former owners.

“It looks like someone took revenge,” Davis says about the home, which had holes in the wall, appliances ripped out, and piles of trash. “Unfortunately, we’re seeing more of this. We’ve seen cement in the plumbing systems, the air conditioners ripped out from the outside, wiring being removed.”

Some real estate professionals and lenders are even blaming the high number of real estate deals falling apart due to more homes being left in poor condition by the original owners.

Buyers “look at these homes and say, ‘If this is the damage I can see, what else did the home owner do to this place that I can’t see?’ ” Davis says.

Some home owners facing foreclosure place the blame on banks for their woes so they leave behind a mess for the bank. But trashing a home can backfire. Some banks are saying they may even start taking steps to sue home owners for the cost of repairs, and law enforcement officials say home owners can be charged with vandalism as well as theft if they remove items that don’t belong to them from the home.

“Anything that came with the house needs to stay with the house,” says Larry McKinnon, spokesman for the Hillsborough County Sheriff’s Office in Florida. “You may think you’re getting back at the bank. But the bank may have the last laugh.”

Source: “Trashing Foreclosure Homes May be on the Rise,” Tampa Tribune (Aug. 30, 2011)

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Real Estate

Working With Short Sales, They Are Worth The Trouble

Short sales – a real estate transaction in which the homeowner needs to sell the property, but owes more on the mortgage than the home currently is worth – continue to dominate the housing market, but these real estate transactions aren’t for everyone.

  • Typically with a short sale, the homeowner is underwater and has experienced a financial hardship such as a job loss.  To limit the damage to his credit rating, a homeowner may attempt to work with his lender to negotiate a short sale.  Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.
  • Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant – and sometimes vandalized – property, a short sale isn’t a distressed home that will sell at an extremely low price.  According to data from RealtyTrac, short sales typically sold for nearly 10 percent less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35 percent.
  • Home buyers wanting to purchase a short sale must have patience.  In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours.  With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases.  It may take 30 days or longer for a buyer to receive a response from the bank.
  • In a traditional real estate transaction, it is common for a home buyer who currently owns his home to make his offer contingent on selling his current home.  In short sales, most banks will not approve an offer that is contingent on the buyer selling his current home, as too many things can go wrong.
  • Banks also typically won’t consider short-sale offers that have inspection contingencies in them, so buyers can either do an inspection prior to making an offer or forgo an inspection altogether.
  • Even with the challenges associated with short sales, buyers should not avoid these transactions.  Being prepared ahead of the time and working with an experienced REALTOR® can help buyers avoid frustration and surprises down the line.

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Real Estate

Mortgage Rates Are Great, If You Can Qualify!

Interest rates are near historic lows and home prices are affordable; however, many borrowers are finding they must have nearly pristine credit records and hefty down payments to get the best rates.

  • Since 2009, credit standards have become much tighter.  For borrowers, this emphasizes the importance of paying close attention to credit scores.
  • New rules unveiled last week, the result of last year’s Dodd-Frank financial-services legislation, require banks and other lenders to disclose to consumers the scores used to determine interest rates charged borrowers, or to deny credit, making it easier for borrowers to see how their credit scores affect the interest rates they pay.
  • The FICO credit scores on loans that banks are giving out and that are backed by government agencies Fannie Mae and Freddie Mac show the new reality.  Currently, the two agencies essentially finance 75 percent of all mortgages by purchasing the loans from banks, thus shaping how much it costs to borrow.
  • FICO scores range from 300 to 850.  Prior to the decline in home prices, a score of 700 to 725 was considered solid and, a borrower could expect to be approved for a “conventional” mortgage at the lowest rates.
  • From 2003 to 2006, 82 percent of Fannie Mae mortgages were for borrowers with a score between 700 and 750, but so far in 2011, only 13 percent of Fannie Mae mortgages carry that score, and just 1.7 percent have a score of 700 to 725.  This year, 75 percent of Fannie Mae mortgages are for FICO scores of 750 to 755, up from less than 5 percent before 2005.
  • These trends demonstrate the importance of understanding credit scores and ensuring credit reports are accurate.  Consumers can check their credit report at AnnualCreditReport.com.

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