This Intero Insider – Video Series brings you Dominic Nicoli, one of our top real estate agents at Intero Real Estate Services from the Los Altos office. He speaks candidly with Intero COO Tom Tognoli and shares his insight and projections on today’s real estate market from luxury real estate to foreclosures – where we have been, where we are now, and where we are headed.
Posts Tagged ‘Foreclosure’
More help is out right now from the federal government for a small portion of the millions of homeowners who have fallen behind on mortgage payments. What is it this time? In a nutshell, free money. But struggling homeowners need to act fast as they’re only accepting applications until July 22.
The Emergency Homeowners Loan program is a $1 billion program that offers loans up to $50,000 to homeowners who have lost their jobs. The kicker? For those who qualify, the loans don’t have to be repaid.
How it works:
The program – operated by the Department of Housing and Urban Development and the nonprofit housing group NeighborWorks America – is making loans with better terms than anything a local bank can offer. The loans are interest-free, and payments go directly to the lender to cover a portion of a borrower’s monthly mortgage.
Borrowers can get assistance for up to two years. Once assistance ends, 20% of the loan is forgiven with each passing year. So qualified borrowers who stay in their homes for at least five years after the assistance period don’t have to pay this money back – as long as they don’t fall behind on their mortgage again.
What’s the big catch? We know there’s always one that seems to derail the intent of these programs to help millions of homeowners out of bad situations.
Well, for one thing, if borrowers decide to sell their home before the entire loan is forgiven, they’ll have to pay the remaining amount back. Some say that this potentially creates an even worse situation for these borrowers as they’re further in debt than they were before taking the loan.
Also, if borrowers fall behind on their mortgage payments and either sell or refinance, they’ll also have to pay back the remainder of the loan. Because of this, some critics have already said that taking these loans may actually put some homeowners more in debt and make their situations worse.
Another catch? HUD says these loans will only be made available to 30,000 people. That’s a pretty small portion of the millions who face foreclosure due to missed mortgage payments. To be eligible, a borrower needs to have experienced income loss from either losing a job, a medical condition or some other economic problem. Details are available at this link: http://ehlp.nw.org/.
If you or someone you know is facing foreclosure, it’s worth checking out whether you can get assistance from this program. But, first make sure you have a long-term plan for staying in your home.
As the market continues to move slowly through this recovery, I like to focus on the positives from time to time as a reminder that we’re not just going to make it out of this mess; we are making it out of this mess.
We’ll call them glimmers of hope. Some of these recent news bits have been:
Foreclosure freeze thaws a bit
Bank of America and GMAC Mortgage each recently said they would resume some foreclosure proceedings that had come under scrutiny for alleged botched paperwork. This is good news because about a quarter of all home sales have been foreclosures. Resuming the process keeps this segment of the recovery moving.
Some movement is better than no movement, which is what was happening when the major banks each put freezes on foreclosures in the midst of investigations around the “robo-signing” mess.
Construction of new homes increased
New home construction slows down significantly when the housing market is slow. That’s because builders don’t want to flood the market with too much supply when there’s an obvious lag in demand. That’s why the latest news that construction of new homes increased a bit in September is a good sign for the overall market.
At the same time residential construction has increased, builder confidence has also inched up, which is another good thing. Despite the overall rise in confidence, though, officials at the National Association of Home Builders are still cautious about future conditions.
We still have a ways to go, for sure. But these two recent news items show that movement is continuing. We knew this half of 2010 would be difficult after the jolt from the home buyer tax credit faded. But no one predicted the foreclosure freeze and robo-signing debacle (which really does have the potential to stall our road to recovery for an unknown length of time). The major banks seem dead set on working through it as quickly as possible so that we can return to a more reasonable pace – and that’s good news for everyone.
It’s official now: we’ve hit another bump in the road to housing recovery. A major one.
News started spreading recently that three major lenders – GMAC Mortgage, JP Morgan Chase, and Bank of America – have halted foreclosure proceedings in 23 states while they review the process being followed for signing affidavits. Basically, there have been allegations that some workers at these banks were signing a lot of documents that they personally had not verified.
This has now dialed up to “scandal” status as attorneys general in several states have ordered widespread investigations.
What’s really going on here? This foreclosure scandal is a big deal, but not for the reasons you may think.
It almost goes without saying that banks should always follow proper procedure when it comes to the devastating act of foreclosing on a property. If workers indeed were “robo-signing” documents without verifying them, then that’s not good.
However, the big picture is this: even if proper procedure were followed, it doesn’t change the situation of the borrower not being able to pay their mortgage. Hence, all this “scandal” is serving to do is to seriously slow down the process of foreclosure. And while foreclosure isn’t pretty, it’s a necessary step in the path to market correction.
It’s important to say here that when borrowers’ attorneys have challenged such procedural issues in the past like this, for the most part they’ve only been able to delay the foreclosure proceeding, not stop it.
Again, I’m not saying that this whole robo-signing ordeal is right; I’m only saying that it’s not going to change the overall state of foreclosures right now. Only positive economic growth and a substantial increase in jobs will do that.
Once again, I find myself saying that we cannot legislate, regulate or buy our way out of the housing lull. We have to work through it like any other challenge we face in life.
I read a lot. Lots of news, mostly. Blogs, real estate-related news items…that sort of thing. I owe it to Intero’s clientele, as well as our team of real estate professionals, to stay abreast of the most current information. Have you looked at the “news” this morning, though? I was pretty disappointed.
Because a search of the top real estate “news” items right now returns a glut of useless stories about Jesse James & Sandra Bullock listing their home for sale. A crush of chatter about the divorce of Al & Tipper Gore and what they plan to do with their real estate holdings during the proceedings. There are even stories about how the characters from Sex & The City have risen to the upper echelons of New York real estate throughout the course of the series.
That’s just embarrassing. There are serious, weighty issues with which our industry should be dealing with and on which it should be reporting. But they’re not getting talked about all that much.
If you’ve been affected, whether by foreclosure, strategic default, or if your credit has taken body blows as a result of this mess, do you really care about Sandra Bullock’s real estate “woes”? Of course not.
You have problems of your own to deal with.
If you’ve gone through a foreclosure and have lost your home, there are several things that you should do. The first thing is to meet with a financial planner to determine a long-range plan to help you recover financially. This plan could include something as simple as setting up a plan with Consumer Credit Counseling, or as complex as declaring bankruptcy. It will certainly involve formulating a workable budget, something to which you can strictly adhere.
The next thing is making certain that you follow that plan to the letter of the law. Missed payments are not an option, as each one will hamper your ability to rebuild your credit. Without that, purchasing another home won’t be an option.
Another thing that’s imperative, especially with ever-tightening lending standards is to save, save, save. 100% financing, especially for those who have damaged credit, is a thing of the past. If you’ve got a credit score that’s less than perfect, it’s very likely that you’ll have to make a down payment of about 20% on your next home purchase, so minding your pennies is of the utmost importance.
It’s important to note that, even if your credit isn’t rock solid, lenders are looking for a consistent track record. If you’ve had problems in the past, but have been consistent in making payments and in making good on your debts, you’ll have a much better shot at securing a new mortgage in the future.
If you are concerned about how you can rebuild your credit and your financial life, talk to your financial advisor, your Intero real estate professional, or your attorney. It’s not an easy process, but it’s one, with a bit of time and effort, that can be done.
As for Sandra Bullock’s beach house? I’ll leave that to the E! News network.
Yesterday, the good folks over at Zillow released the results of its First Quarter 2010 Survey. Was the news good? Sort of. Maybe. A little.
First, the facts:
Home values in California appear to be on the rise. During the First Quarter of 2010, home values in Los Angeles, San Francisco, San Diego, Santa Barbara and Ventura County showed marked increases.
Nationwide, home values continued to decline in the first quarter of 2010. The Zillow Home Value Index showed a 3.8% decline for the same period last year — this makes thirteen consecutive quarters with year-over-year declines. In 106 of the 135 markets tracked, home values fell.
Negative equity is rising steadily. In the Fourth Quarter of 2009, 21.4% of single family homes had mortgages that were “underwater” or “upside-down,” meaning that more was owed on the mortgage than the home was worth. In the First Quarter of 2010, that number rose sharply to 23.3% — nearly ¼ of all mortgages on single-family homes.
Foreclosures reached an all-time high in March 2010. According to Zillow’s survey, more than one out of every 1,000 U.S. Homes — a startlingly high number — went into foreclosure that month.
It is interesting to me to compare this national level data with what I am seeing here in Silicon Valley at the Street level, which is always, in my opinion, the most useful way to look at the housing market. Here I am seeing lots of signs of market vitality. Recently, a listing in Cupertino received 14 offers. A listing in San Jose received 6 offers just this week. This seems to be going on at both the entry level – where one might expect to see such things – but also towards the higher end.
This is information that, especially if you’re planning on selling a home, is very important for you to understand. You need the big picture, but also the picture in your neighborhood or on your block.
Please talk to your Intero real estate professional. We’ll make sure you have all of the facts, and every tool at our disposal to make sure that you make educated decisions about your home sale. We’ll tell it to you the only way we know how: like it is.
At the beginning of April, the Federal Government introduced new measures aimed at helping Americans avoid foreclosure. Sort of lost in all of the news about how great the real estate market’s been doing, Home Affordable Foreclosure Alternatives (HAFA), are designed to help struggling homeowners who, regardless of effort to keep their homes, simply can’t afford to.
“A short sale would really help … if only the bank would agree.”
Now, maybe it will. Banks already participating in the Government’s HAMP program are required to participate in HAFA, as well. Mortgage holders have been notoriously difficult to deal with when it comes to short sales. One hand doesn’t know what the other is doing, approvals take virtual eternities (if they ever come at all), homeowners who’re feverishly trying to sell their homes or face the spectre of foreclosure are lost in a sea of confusion about how to proceed in the process.
With a glut of foreclosed homes (over a million at last count), banks are having to rethink their options. Each foreclosure costs banks upwards of $100,000 more than a short sale, but until now, they’ve not been enthusiastic about approving them.
The HAFA program should make things a bit easier on everyone. Whether it’ll work is another matter altogether.
The new guidelines institute a timeline, so that all parties involved will know about what they can expect and when. Sellers will be able to get pre-approval and know what the absolute bottom-line acceptable prices will be. Junior lienholders, who typically get left out in the cold and who are, typically, the factors in denying short sales, will be able to recoup some of their losses. Improvements are definitely being made to the system (although “system” is far too precise a word to pin on the old way of doing things).
A major benefit to HAFA is that it will, hopefully, allow homeowners to leave their properties with their heads held high, and with their dignity intact by fully releasing them from the liability of their loan.
In California, which has been one of the 4 states hardest hit by the foreclosure crisis, there’s a bit more to the program.
The recipients of $700 million dollars in additional aid, the State of California has proposed assistance to low-to-moderate income level homeowners through means such as principal write-downs for those who owe more on their home than it is worth (it’ll be interesting to hear reactions from people who are in the same situation but who are still making their payments on time), relocation assistance, subsidized mortgage payments, or temporary aid for the unemployed who are at risk of foreclosure.
They are, sadly, many more homeowners affected by this crisis that won’t be helped, for one reason or another, by this program or any other.
If you’re a homeowner in distress, please contact your lender. Ask your Intero real estate professional. Find out what alternatives you have before it’s too late.
Each day, the news brings us tiny glimmers of hope that the economic woes that have turned the real estate market into a morass of unpalatable realities might just be behind us. Each day, however, there seem to be items served alongside those glimmers that give me pause.
These items, after making me take several deep breaths, have me advising my clients, customers, and Intero agents that patience will be the better part of valor when it comes to economic recovery.
We know that millions of Americans, and lots and lots of Californians among them, have lost their homes to foreclosure. Going through that process is more difficult than most people can possibly imagine. It’s a pride-swallowing siege that affects every aspect of your life. Once it’s done, however, it’s done and, typically, people can begin the process of rebuilding their lives.
Unless they can’t.
What if, after going through a foreclosure and having a mortgage discharged, you also have a second mortgage to pay? What then?
California is a non-recourse state. This means that any loan taken for the purpose of buying a home is discharged once a foreclosure has taken place. Debt collectors cannot pursue borrowers for loans in default that were used to purchase a home.
Loans that were taken for other purposes? Lenders can, and often do, do whatever it takes to collect what is owed.
If a second mortgage was taken and that money was used to help finance the purchase of a home, then it’s non-recourse debt. But often, banks and lenders won’t tell the borrowers that. There’s a loophole in the legal speak that governs such things that says that there’s nothing preventing the borrower from “voluntarily” repaying the debt. So lots of people who’re not under an obligation to repay find themselves on the receiving end of dunning calls and letters and struggling to make payments when and where they can.
If a second mortgage was taken and it was not used as part of a home purchase? Well, those monies are due and payable, regardless.
Whether lenders will try and collect is another matter altogether.
In California alone, almost $500 billion in home equity lines of credit (or other such loans) were taken out by homeowners. Banks are going to collect when and where they can. Sadly, a borrower’s personal net worth may be the deciding factor in their decision to pursue or not to pursue.
So, what are the options?
Well, one is to pay the debt if you’re able. If you can’t, my best advice would be to consult with an attorney to discuss your options. You may find your attorney will tell you that a short sale would allow you to negotiate part or all of your deficiency away. If this is the case, find a certified short sale agent within any of our offices to help guide you through the process.
There are options, but it’s best to explore them sooner, rather than later. If you have concerns relating to foreclosure or your ability to borrow money to purchase a home, please consult your Intero agent. The road to recovery is a tough one, but it can be ridden. We all just have to be patient.
A collective sigh of relief is being issued by taxpayers who’d not only lost their homes, their dreams, and large chunks of their pride, but who were staring down tax bills that they couldn’t fathom how to pay.
It might not soothe all their wounds, but a measure passed last week by the California State Legislature will, when signed by Governor Schwarzenegger, give some much-needed breathing room to the thousands of Californians who lost their homes to foreclosure or who had to sell them in a short sale.
You see, mortgage debt that is forgiven, which happens when your mortgagor allows you to sell your home short or after a foreclosure, is taxable, both federally and at the state level. A moratorium was placed on the federal tax, but in California, a state riddled with crushing debt, there were serious questions about whether the tax would be levied.
Others affected by this measure are those who got loan modifications that lessened the amount that was owed to the mortgagor.
Assuming that the governor signs the bill, which he has said he will do, it will provide relief to upwards of 100,000 Californians through 2012, when the measure is set to expire.
Our state is certainly one that needs income, and it’s estimated that California will collect about $34 million less in taxes as a result of this bill. No matter how badly the money is needed, however, generating that income at the cost of rendering our taxpayers, quite literally, penniless is too much of a price to pay.
If you’ve been involved in a foreclosure, short sale, or have had mortgage debt forgiven, you may be eligible to claim the relief on your 2009 State and federal income tax returns.
As always, whenever you have questions relating to taxes, be sure to contact your accountant or financial planner; they’ll have the best advice and will give you the proper guidance.
Each time a glimmer of positive news about the real estate market shows its face, economists, real estate professionals, and politicians alike begin to shout, “We’re on our way back up! Nothing but blue skies ahead!”
While I remain hopeful, I think assertions like this are foolhardy and irresponsible.
Anyone who lives in the State of California, or who’s considered moving here, knows that the real estate market for the past several years has been pretty grim. As quickly as California’s home values increased through 2005, they have since fallen considerably due to the economic downturn, and foreclosures have run rampant.
Recently, some improvements have been noted. In the last S&P/Case-Shiller home price index, for example, home prices in California were shown to have strong gains. In Los Angeles, prices rose 1.8% in January. There were gains in San Diego of 0.9% and in San Francisco, the gain was 0.6%.
This is terrific news, make no mistake, but I suggest that a more cautious view be taken.
Historically, spring home sales (and the spring market doesn’t wait til March to begin, I assure you) are the strongest of any throughout the year. Weather improves, making it more pleasant to look at homes, and people want to be able to buy a new home, so that they can move at the end of the school year, or what-have-you.
This year, we also have the Homebuyer’s Tax Credit driving more buyers into the marketplace. Add to this the fact that mortgage rates are still at rock-bottom levels, which have been made possible, in large part due to the Federal Government’s sizable activity in mortgage-backed securities, and the market for buyers is very, very attractive.
Here’s where things get sticky.
The tax credit is set to expire in just a couple of weeks. The pressure to buy before it expires will be gone. Strike one. The Federal government is about to remove itself from the mortgage-backed securities game. Mortgage rates are going to rise. Strike two. There’s wide speculation that foreclosures are going to get worse before they get better (unfortunately). Strike three.
At Intero, we choose to stay level-headed. We choose to stay in the game that’s currently being played, not the one that may or may not come in the near future. We are hopeful that things will improve, but until they do, you need agents who are dealing with reality. You need agents who will tell you like it is. Agents who know the markets in which they work and live. Intero are those agents.