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Real Estate

July Pending Sales and Distressed Sales Report

Equity home sales continue sharp upward trend as housing supply remains tight in distressed markets

LOS ANGELES (Aug. 22) – The share of equity home sales continued to grow in July, increasing on a monthly basis for 17 of the last 18 months, while distressed sales plunged by half compared to a year ago, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

“The increase in the share of equity sales reflects a market that is fully transitioning from investor purchases of distressed homes to primary home purchases by households.  The market continues to improve as more previously underwater homes gain equity due to recent upward movement in prices,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “As a result, we’re seeing a significant decline in the supply of short sale and bank-owned properties.”

Distressed housing market data:

• The share of equity sales – or non-distressed property sales – has risen on a month-to- month basis for 17 of the last 18 months and now makes up more than four in five sales, the highest share since December 2007. The share of equity sales in July increased to 82.9 percent, up from 79.9 percent in June.  Equity sales made up three of five  (59.2 percent) sales in July 2012.

• The combined share of all distressed property sales continued to decline in July, dropping to 17.1 percent in July, down from 20.1 percent in June and down from 40.8 percent in July 2012. Twenty-five of the 38 reported counties showed a month-to-month decrease in the share of distressed sales, with San Mateo and Santa Clara each recording the smallest share at 4 percent for each county in July.

• Of the distressed properties, the share of short sales fell to the lowest point since April 2009 at 11.6 percent.  July’s figure was down from 12.9 percent in June and was about half of what it was a year ago, when short sales made up 22.7 percent of all sales.  The continuing decline in short sales indicates more previously underwater homes are moving into positive equity as home prices remain on an upward trend.

• The share of REO sales also continued to fall, dropping to single-digits for the fourth straight month.  REOs made up only 5 percent of all sales in July, down from 6.6 percent in June and from 17.7 percent in July 2012.  The July 2013 figure was the lowest since September 2007.

• The available supply of homes was essentially flat from June but remained tight.  The July Unsold Inventory Index for equity sales edged down from 3.1 months in June to 3 months in July.  The supply of REOs inched up from 1.8 months in June to 2.1 months in July, and the supply of short sales ticked upward from 2.4 months in June to 2.5 months in July.

Pending home sales data:

• California pending home sales were essentially flat in July, with the Pending Home Sales Index (PHSI)* dipping 0.2 percent in July to 114, down from 114.3 in June, based on signed contracts.  Pending sales were down 1.5 percent from the 115.8 index recorded in July 2012.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

Charts:

• Pending sales compared with closed sales.
• Historical trend in the share of equity sales compared with distressed sales.
• Closed housing sales in July by sales type (equity, distressed).
• Housing supply of REOs, short sales, and equity sales in July.
• A historical trend of REO, short sale, and equity sales housing supply.
• Year-to-year change in sales by property typ

For all your real estate needs
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John J. O’Dell Realtor® GRI
Civil Engineer
General Contractor
(530) 263-1091
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DRE# 00669941

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Real Estate

New Short Sale Program Offers Relief For Underwater Homeowners

Photo courtesy: http://weburbanist.com/
Photo courtesy: http://weburbanist.com/


One of the federal government’s most-important financial relief efforts for underwater homeowners started operating Nov. 1.

Making sense of the story

  • Traditionally short sales, where the lender agrees to accept less than the full amount owed and the house is sold to a new purchaser at a discounted price, are associated with extended periods of delinquency by the original owner.  The new Fannie-Freddie program breaks with tradition by allowing short sales for owners who are current on their payments but are encountering a hardship that could force them into default.
  • Eligible hardships under the new program run the gamut: Job loss or reduction in income; divorce or separation; death of a borrower or another wage earner who helps pay the mortgage; serious illness or disability; employment transfer of 50 miles or greater; natural or man-made disaster; a sudden increase in housing expenses beyond the borrower’s control; a business failure; and “other,” meaning a serious financial issue that isn’t one of the above.
  • Homeowners who participate in this new program should be aware that although officials at the Federal Housing Finance Agency – the agency that oversees the program – are working on possible solutions with the credit industry at the moment, it appears that borrowers who use the new program may be hit with significant penalties on their FICO credit scores – 150 points or more.
  • Other factors to consider are promissory notes and other “contributions.”  In the majority of states where lenders can pursue deficiencies, Fannie and Freddie expect borrowers who have assets to either make upfront cash contributions covering some of the loan balance owed or sign a promissory note.  This would be in exchange for an official waiver of the debt for credit reporting purposes, potentially producing a more favorable credit score for the sellers.
  • Finally, participants should be aware of second-lien hurdles.  The program sets a $6,000 limit on what second lien holders – banks that have extended equity lines of credit or second mortgages on underwater properties – can collect out of the new short sales.  Some banks, however, don’t consider this a sufficient amount and may threaten to thwart sales if they cannot somehow extract more.

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For all your real estate needs
Email or call today:

John J. O’Dell Realtor® GRI
Civil Engineer
General Contractor
(530) 263-1091
Email jodell@nevadacounty.com

DRE# 00669941

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Real Estate

Short Sales May Get Shorter

English: The Colonial Revival headquarters of ... The Colonial Revival headquarters of Fannie Mae, designed by architect Leon Chatelain, Jr. in 1956, located at 3900 Wisconsin Avenue, N.W., in the Cathedral Heights neighborhood of Washington, D.C. (Photo credit: Wikipedia)

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning June 15, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, will require both agencies to give short-sale buyers a final decision within 60 days.

  • Under this same guideline, Fannie Mae and Freddie Mac also must respond to initial requests for a short sale within 30 days of receiving the buyer’s submission.
  • According to one analyst, expedited sales as a result of the new directive will benefit the entire housing market.  They could also remove some risks for buyers – many of whom previously had to wait months for a decision and then ended up not getting the house they wanted.
  • Lenders favor short sales because they are less costly and more efficient than foreclosures.  Yet the homeowners, trying to exit as gracefully as possible, never know how long the process will take or how badly their credit will be hurt.
  • Although short sales have a reputation for being easier on credit scores than foreclosures, Experian says that is a “fairly common misperception.” If there is a difference in impact, according to Experian, it is slight.
  • Both short sales and foreclosures remain on the credit report for seven years, but foreclosures don’t appear until the legal paperwork is filed, and that could take months.
  • The effect was measured by an analysis by VantageScore, a provider of credit scores used by lenders.  The higher the credit rating a consumer has, the more points he or she would lose in a short sale.
  • If consumers started with an 830 score, they would most likely lose 100 to 110 points from a short sale, 120 to 130 points from a foreclosure.  But a homeowner with a 625 score, who is behind on his mortgage and some credit card payments, would lose 15 to 25 points from a short sale and 10 to 20 points from a foreclosure.

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For all your real estate needs
Email or call today:

John J. O’Dell Realtor® GRI
Civil Engineer
General Contractor
(530) 263-1091
Email jodell@nevadacounty.com

DRE#00669941

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Real Estate

Pending Home Sales in California Gained in February

 

Pending home sales in California gained ground for the second consecutive month in February, while the share of equity sales posted higher after two months of decline, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

Pending home sales:

C.A.R.’s Pending Home Sales Index (PHSI)* rose from a revised 102.3 in January to 127.8 in February, based on signed contracts.  The index also was up from the 111.8 index recorded in February 2011, marking the tenth consecutive month that pending sales were higher than the previous year.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

Distressed housing market data:

“A lack of inventory in the bank-owned (REO) and short sale market was a contributing factor to the decline in share of distressed sales in February,” said C.A.R. President LeFrancis Arnold.  “In fact, REO inventory declined 24 percent in February from the previous year, while short sale inventory dropped 17 percent during the same period.”

• After declining for two straight months, equity sales increased in February, making up 51.1 percent of home sales in February.  Equity sales made up 49.9 and 44.8 percent of all sales in January 2012 and February 2011, respectively.
• Meanwhile, the total share of all distressed property types sold statewide decreased in February to 48.9 percent, down from January’s 50.1 percent and from 55.2 percent in February 2011.
• The share of short sales dipped slightly in February.  Of the distressed properties sold statewide in January, 23 percent were short sales, down from the previous month’s share of 23.8 percent but up from last February’s share of 22.9 percent.
• The share of REO sales also edged down in February to 25.2 percent, down from January’s 25.9 percent and down from the 31.9 percent recorded in February 2011.
For all your real estate needs:
Call or email today
John J. O’Dell Realtor® GRI
Real Estate Broker
Civil Engineer
General Contractor
(530) 263-1091
Email jodell@nevadacounty.com

DRE #00669941

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Real Estate

Mortage Aid Open To More California Borrowers

 

Image by Casey Serin via Flickr
Image by Casey Serin via Flickr

The state-run program, “Keep Your Home California,” which helps homeowners struggling to pay their mortgages now has broader eligibility guidelines.  Borrowers who did “cash-out” refinances and own multiple properties now are eligible for the program, according to California Housnig Finance Agency officials.

  • To date, Keep Your Home California has helped approximately 8,000 low- and moderate-income households that are behind on loan payments or close to default.
  • There are four parts to the program: Mortgage help for the unemployed, mortgage aid for homeowners with documented financial hardship, relocation help for those in the midst of a short sale or deed-in-lieu of foreclosure, and reduction of principal.
  • Homeowners who completed “cash-out” mortgage refinancing now are allowed to take part in the four programs outlined above, and borrowers who own more than one property also can apply for the program.  Previously, these two groups of borrowers were excluded from participation.
  • Mortgage aid to unemployed borrowers also has been extended to nine months, instead of six.  Such homeowners can receive up to $3,000 a month.  To qualify, borrowers must be receiving unemployment benefits.
  • Additionally, the program has reinstated up to $20,000 in past-due mortgage payments instead of the previous $15,000 cap.
  • To review qualification guidelines, visit www.KeepYourHomeCalifornia.org or www.ConservaTuCasaCalifornia.org.

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For all your real estate needs:
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John J. O’Dell Realtor® GRI
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Email jodell@nevadacounty.com

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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.

Interested in a short sale?
Call or write:
John J. O’Dell ® GRI
O’Dell Realty
(530) 263-1091
jodell@nevadacounty.com

Real Estate

Short Sale Fraud Rampant, Investigators Say

Caution protect yourself against mortgage relief scams
Picture courtesy of Utah Home Group

 

Lenders are losing out on thousands of dollars–sometimes within just mere hours–due to short sale fraud, which is skyrocketing and plaguing the housing market, investigators say.

In one of the most common short sale scams, an investor submits a low offer on a home that is underwater, in which the borrower owes more on the mortgage than the home is currently worth. Scam artists, working with the investor, present the lowball offer to the lender, asking for a short sale to be completed. Appraisals or broker price opinions may be manipulated to help persuade lenders to do the short sale (one common method: Misstating the home’s location so that the home is compared to lower cost homes).

The lender agrees to the short sale, but is unaware that there is really a higher bid on the home from a legitimate buyer. Once the lender approves the short sale, the scammer then resells the home to the higher, legitimate bidder–often on the same day.

“These same-day resales are on average nearly $50,000 greater than the lender agreed upon short-sale price,” said Tim Grace, senior vice president of product management and analytics at CoreLogic. Short sale fraud is expected to cost lenders more than $375 million this year, which is an increase of more than 20 percent from last year, according to CoreLogic.

Last year, fraud associated with short sales comprised half of all fraud investigations for mortgage companies like Freddie Mac, said Robert Hagberg, an investigator for Freddie Mac.

Source: “Short Sale Fraud Plagues the Housing Market,” CNNMoney (July 14, 2011) 

 

Thinking of buying or selling?
For all your real estate needs, call or email:

John J. O’Dell Realtor®
Real Estate Broker
O’Dell Realty
9530) 263-1091
jodell@nevadacounty.com

Real Estate

Banks Continue Their Tight Lending Practice, Shutting Out Home Buyers

Photo courtesy of Empirestatefx.com
Photo courtesy of Empirestatefx.com

We all know that this recession we are in now is all due to our banks and Wall Street. With their haste to make as much money as possible, by reducing lending requirements, they created a housing market that had only one direction to go., down. They created a wave of foreclosures, Wall Street firms going out of business, along with some of the banks which created this mess. (An excellent analysis of what happened is in the book “Inside the Big Short, The Doomsday Machine” by Micheal Lewis)

Now, to compound this mess, banks have tighten credit requirements for home mortgages to the other extreme.  What this means of course, is that it is not helping the housing market to recover.

Here’s a portion of an article appearing in the Wall Street Journal giving an example of the “new lending practices.”

“With the tightening of credit over the last few years by banks, more potential buyers find they are being shut out of home ownership, unable to obtain financing for their home purchase. And it’s not just buyers with poor credit histories being rejected for home loans–some buyers are even coming with stellar credit scores and big down payments, experts say.

For example, Amy Menell told The Wall Street Journal how a bank denied her for a home loan, despite her credit score being above 800, no debt, and having a down payment of more than 50 percent of the cost of the $400,000 home. However, Menell, who was in the process of finalizing a divorce, works as a real estate agent and didn’t have much income in 2009. While her business has picked up since then, she did not have the two years of documented income the banks wanted to process her loan application.

Other qualified buyers coming with good credit scores and credit histories are also finding themselves unable to get a home loan. Those who are having the toughest time are those who have seen their incomes drop or interrupted by a time of unemployment and self-employed applicants.

The percentage of mortgage applications rejected by the nation’s largest lenders increased last year: The country’s 10 largest mortgage lenders denied 26.8 percent of loan applications in 2010, which is up from 23.5 percent in 2009, according to an analysis by The Wall Street Journal.

The analysis showed denial rates for loans were highest in Miami, Detroit, and New Orleans. In Miami, for example, nearly 44 percent of home loan applications were denied last year (home prices in Miami have dropped by 50 percent since their 2006 peak), according to The Wall Street Journal. Lenders denied the fewest loans in Raleigh, N.C.; Bethesda, Md.; and San Jose, Calif.

An Ease in Sight?

Banks continue to be under pressure to avoid heavy losses, which fueled the tightened standards in the first place.

“Clearly we got too loose. This is a return to historical standards,” says Doug Duncan, Fannie’s chief economist.

Lenders don’t appear to have plans to ease credit soon either. Nearly four in 10 banks reported even tighter mortgage lending standards for the 12-month period ended in February, according to a survey by the Office of the Comptroller of the Currency. Only 8 percent of the banks surveyed said they had eased their credit standards”

Source: “Tighter Lending Crimps Housing,” The Wall Street Journal (June 25, 2011)

So let me know what you think.

Need help with a short sale?
Call or email:

John J. O’Dell Realtor® GRI
Real Estate Broker
O’Dell Realty
9530) 263-1091
jodell@nevadacounty.com

Real Estate

Miss a Mortgage Payment, Your Credit Score is Drastically Affected

 

Missed mortgage payments, short sales, and foreclosures can all drastically bring down a credit score.

Lenders use credit scores to measure how well a person handles debt. Credit scores range from 300 to 850, with 650 and below considered poor credit. A mortgage makes up a big part of a person’s credit score and often is the most important part of a person’s credit profile.

And just missing a single mortgage payment by 30 days can ruin a credit score, say FICO and VantageScore, which have studied the impact mortgages can have on credit scores. For borrowers, that can be nearly as destructive as a foreclosure to a credit score, according to the companies.

On the other hand, loan modifications, which is when lenders approve new loan terms, have a “very, very minimal” impact to credit scores, possibly dropping the borrower’s score by 10 or 15 points, Sarah Davies, the senior vice president for analytics at VantageScore, told The New York Times.

A good credit score is important not just for financing home purchases, but employers increasingly check credit as well as landlords when seeking rentals. Also, poor credit scores can also mean higher costs on car loans and credit cards.

How a Credit Score Is Affected

FICO evaluated three various scenarios of mortgage holders — a borrower with a great credit score (780), a borrower with good credit (720), and a poor credit borrower (680) — in a study it conducted last month. Here’s the impact FICO found:

? 30 days late on a mortgage payment: The 780 credit score borrower has her credit score fall to 670-690. The 720 credit score borrower has his fall to 630-650. The 680 credit score borrower falls to 600-620.
? Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The 780 credit score borrower falls to 655-675; the 720 credit score falls to 605-625; and the 680 credit score drops to 610-630.
? Foreclosure, or short sale with a deficiency balance owed: The 780 credit score drops to 620-640; the 720 credit score falls to 570-590; and the 680 credit score decreases to 575-595.

Source: “Fallout From a Poor Credit Score,” The New York Times (April 24, 2011)

 

For all your real estate needs, call or email

John J. O’Dell
Real Estate Broker
O’Dell Realty
(530) 263-1091

Real Estate

Why Do Banks Call Them Short Sales? They Should Be Called Long Sales!

By John J. O’Dell

I wonder why banks call short sales, short sales?  Of course, what they mean by a short sale is that they are agreeing to sell a house for less than the mortgage they hold on the property. After that, short sale means you will complete a sale within a period of three months to one year, maybe.

I’ve had two short sales going since November 2010.  Last week, one of them gave the go ahead to proceed. Now remember, my buyer has been waiting about five months. So they can wait as long as they want, but they want the buyer to close the deal within 30 days.  Of course, they don’t sign the purchase contract, they just tell you go for it! They send you a one sided contract with their very own terms. You ever notice banks make their own rules?

My other “short sale”, started at the same time. Well, seems like the bank lost all the paper work. So they said they were not going to go ahead with the sale.

It’s a good thing my client has a very lady like scream. So the short sale is back on again.

The process is simple, (not) you submit tons of paper work.  Then they assign a negotiator who emails you and tells you to upload all the documents you have already uploaded for the second time. (like I said, that’s the same  documents that I uploaded in November and they lost)

So I don’t know how long I will have to wait for this second short sale, but I’ll let you know, in the meantime don’t hold your breath. I want you around to read my blogs.

 

John is a real estate broker
General Contractor and civil engineer
You may reach John at Email jodell@nevadacounty.com