By Jim Puzzanghera and Alejandro Lazo, Los Angeles Times -March 30, 2011
Reporting from Washington and Los Angeles—

Major banks may be forced to let severely delinquent homeowners sell their houses for less than the loan amounts owed as part of a broad settlement of federal and state investigations into botched foreclosure paperwork, according to government officials involved in the negotiations.

The requirement to allow so-called short sales would be in addition to forcing mortgage servicers to reduce the amount some homeowners owe on their loans, said two officials, who spoke on the condition of anonymity because negotiations are ongoing.

The goal of short sales would be twofold: provide a quicker and more economical way for banks to dispose of distressed real estate and to help stabilize the real estate market by clearing out a backlog of defaulted mortgages that are poised for foreclosure.

They would be used in situations in which borrowers were so underwater that the more costly and time-consuming process of foreclosure would seem to be the only option.

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What that means to you is that there are a few changes that really aren’t that favorable to you. One is that the lender is no longer allowed to give you a credit back on any of your “back end fees”, they will no longer be able to pay for appraisals, or credit you for any of your closing costs as they have in the past. Now, most big banks have already set the wheels in motion to cover their bases with these changes; however this really may hurt the smaller lenders, the mortgage brokers, and possibly the credit unions. What this will do is run their profit margin so thin, that they won’t be able to accept loans that are less than $XXX number of dollar, because they simply can’t make any money on your loan.

In addition to that, there will be an increased cost to you in the form of Mortgage Insurance. If you have less that 25% equity in your home the lender will more than likely require that you now have mortgage insurance. This will attribute to a significant increase in your monthly payment with no added benefit to you as the borrower. You may be thinking, that’s ok, I won’t need to have the Mortgage Insurance for very long – I have quite a bit of equity and I will just get rid of it shortly thereafter. In realty, the lenders are making it increasingly difficult for you to remove your PMI once it’s in place.

Bottom line, change is change, and the lenders will adapt. We don’t know how long it will take to work the bugs out and get through the turbulence.

What we do know is now is a great time to get out there and refinance if you haven’t already. Rates as of today are just under 5.000% on a 30 year fixed with loan limits up to $729,750. Check with your lender for specific rates and terms along with the appropriate APR.

If you or someone you know are looking for an introduction to a lender, feel comfortable giving me a call or sending me an email and feel good knowing that you, your family, friends, neighbors and coworkers will the help needed from someone you can trust. I will look forward to hearing from you, and happy refinancing!

As the federal government’s flagship mortgage-modification program comes under scrutiny for failing to meet its goal of helping three to four million troubled homeowners, state-level efforts to boost modifications appear to be picking up momentum.

The Treasury reported Monday that the government’s Home Affordable Modification Program, or HAMP, had provided permanent help to 521,630 homeowners since the program began in spring 2009.

By comparison, over the same period, banks negotiating directly with borrowers have made about two million permanent loan modifications outside the government’s program. These modifications continued to rise in recent months even as the number of HAMP modifications trailed off.

The U.S. housing market may take five or six more years to recover, TrimTabs Investment Research warned recently. Madeline Schnapp, director of macroeconomic research at TrimTabs, talks to MarketWatch’s Alistair Barr about what that means for the world’s largest economy.

Critics of HAMP say the program has made little impact on the housing market and should be ended. Last week, House Republicans introduced a bill to end the effort, calling it a “colossal failure.” The administration defends the program.

“I think we’ve got to remember that HAMP has achieved over a half-million modifications. These are people that make $50,000 a year, so to sort of write it off and say, ‘Well, it’s a failure,’ I think is not really appropriate,” said Tim Massad, an acting assistant Treasury secretary, in a hearing on Capitol Hill last week.

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A home in Atlanta, one of the metropolitan areas where prices fell to new lows in this economic cycle.

A new slide in housing prices has begun in earnest, with averages in major cities across the country falling to their lowest point in many years.
Multimedia

Prices in 20 major metropolitan areas slid 1 percent in November from October, according to the Standard & Poor’s Case-Shiller Home Price Index released Tuesday. The index has fallen 1.6 percent from a year ago.

Nine of the 20 cities in the index sank in November to new lows for this economic cycle: Chicago; Las Vegas; Detroit; Atlanta; Seattle; Charlotte, N.C.; Miami; Tampa; Fla.; and Portland, Ore. Only a handful of places — essentially, California and the District of Columbia — went counter to the trend and had rising prices over the last year.

Whether the long-predicted double dip is looming or has already arrived is a quibble of semantics.

David M. Blitzer, chairman of S.& P.’s Index Committee, does not count a downturn as a double dip until it exceeds the previous low. The index is still 3.3 percent above the low it reached in April 2009. Mr. Blitzer thinks a double dip could be confirmed before spring.

“We shouldn’t kid ourselves,” he said. “The last few months have been weak.”

Cities that were never mainstays of the boom are suffering unduly in this latest bust. Atlanta, Chicago and Portland have dropped more than 7 percent over the last year, with much of the tumble in October and November.

By this point, the problems in the housing market are well known. Builders built too much, lenders lent too much, and people bought too much. The binge was epic and so is the hangover.

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The Treasury Department has revamped its short sale program by easing income restrictions and documentation requirements for homeowners facing foreclosure. The changes are effective Tuesday, Feb. 1.

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Changes made under Treasury’s Home Affordable Foreclosure Alternative (HAFA) program make incentive payments more attractive for second lien holders and for borrowers completing a short sale, or deed in lieu transaction.

Travis Olsen, chief operating officer at Loan Resolution Corp., expects the changes will lead to a big jump in HAFA enrollment. “A lot more people are going to qualify for the program,” he said. “Elimination of the debt-to-income requirement along with the relaxed non-owner occupancy rule makes it easier for those who do qualify to get their short sale successfully closed.” LRC is a Scottsdale, Ariz., vendor that specializes in short sales.

Delinquent homeowners entering the program only have to prove that they used the house as their primary residence at some point in the last 12 months. Previously, it was the last 90 days. Home owners can qualify for the HAFA short sale program if they have moved across town and the property is vacant or rented to a non-borrower.

Borrowers are entitled to a $3,000 relocation incentive payment when a short sale or DIL is completed. When a deed in lieu transaction is completed, the servicer can make the incentive payment even if the borrower stays as a renter under the HAFA changes.

Servicers will have the option to pay the borrower a relocation incentive either upon a successful surrender of title or when the borrower vacates or re-purchases the property at a future date, according a TARP Inspector General report.

Treasury has retained a $6,000 cap on paying off second lien holders but removed a separate cap on paying more than 6% of the unpaid principal balance.

Olsen noted that second lien holders generally want 10% of the UPB to extinguish a home equity loan. Previously, the HAFA cap limited the payoff to $3,000 on a $50,000 HEL. Now, the servicer can pay the $5,000 to satisfy a 10% demand.

The original article can be found by clicking here…

California home sales rose in December to their highest level since May, according to a report Friday from the California Association of Realtors, as the inventory of unsold homes dwindled.

December’s sales were up 5.9 percent from November’s revised figure of 491,590 but were down 6.8 percent from the revised 558,840 of December 2009.

The unsold inventory index for existing, single-family detached homes was 5 months in December, down from 6.2 months in November but up from 3.8 months in December 2009. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

Read more: California home sales hit 7-month high in December | Los Angeles Business from bizjournals – Full Story – Click Here…

Foreclosures were at a record high in 2010, and more than 1 million people lost their homes, even as notices started leveling off during the end year.

NEW YORK (CNNMoney) — Foreclosures were at a record high in 2010, and more than 1 million people lost their homes, even as notices started leveling off during the end year.

In total, there were nearly 2.9 million foreclosure notices filed during the year, according to report released Thursday by RealtyTrac. That was a record high, but just 1.7% above 2009.

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A few key comments in the article address the temporary hold on foreclosures during the 4th quarter of last year, which will lead to increased foreclosure activity 1st and 2nd quarter this year, along with the challenges the banks are experiencing with squatters moving into the vacant properties. Great information!!!

Foreclosures in the state are still high. Sales of new homes are at historic lows. And millions of homeowners are underwater on their mortgages. So what’s the outlook for 2011 and beyond?

In Mission Crest, 373 homes — nearly 40% of those in the housing development — had been lost at one point to foreclosure, the San Bernardino County assessor's office said. About 100 lots had been left graded and bare. (Katie Falkenberg, For The Times / May 18, 2010)

As housing recoveries go, this one is in need of a cure.

Homeownership — and the buying and selling of residences — is an economic keystone that carries overwhelming weight in Californians’ personal sense of financial well-being.

But the momentum of the state’s housing rebound has faltered, with sales falling and prices softening despite bargain-basement interest rates. Foreclosures in California are still high. Sales of new homes are at historic lows. The construction sector is in the doldrums. And millions of the state’s homeowners owe more on their mortgages than their properties are worth.

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Real estate historically has helped give a boost to economies exiting a recession, but the severity of this bust is nearly unprecedented: Californians have lost $1.73 trillion worth of equity in their homes since prices peaked in 2007, according to Moody’s Economy.com.

Although California’s housing market free-fall ended in spring 2009, the weakness after the expiration of federal tax credits for buyers last year has called into question the sustainability of the recovery.

The Times asked five California experts for their take on the state of real estate and what they think is needed to get the housing market moving again. They range from the pessimism of a foreclosure specialist to the decidedly more upbeat view of a Realtor association economist.

• Richard Green, director of the USC Lusk Center for Real Estate, predicts home prices will remain flat in 2011.

California’s recovery will hinge on location, said Green, who held professorships at several universities and worked as a principal economist at Freddie Mac before becoming director of the Lusk center.

“Draw a line from El Centro up to Sacramento and think of all the towns up and down that line. Unless we have hyperinflation in general in the economy — prices going up a lot — I would guess that in my lifetime we will not see a return to the prices that we had at the peak,” Green said.

“Now, places like La Jolla, Malibu, Laguna, Huntington Beach, Atherton, Palo Alto, the city of San Francisco, Marin County, those are places where within the next five years I could easily imagine prices returning to their peak.”

“The markets in the Central Valley were much more bubbly than the markets on the coast,” he said. “You have very few people who make a lot of money in these places.”

“Whereas a place like Silicon Valley, or a place like West Los Angeles, there is a critical mass of very high-income people.… That means you have a large number of people who can afford to spend in the neighborhood of $1 million on a house, and these are desirable places.”

“The more a property is a commodity that you can easily substitute for something else, the less the chance it will ever come back to its peak. The rarer a property is, the more likely it’s going to come back quickly.”

• Leslie Appleton-Young, chief economist for the California Assn. of Realtors, predicts home prices will rise 2% in 2011.

There are few professionals who would like more to see the housing market bounce back to the heady days of old than Realtors. Real estate agents made a killing when the housing market soared and then took a pounding when it tanked.

During the boom years, Appleton-Young said, she espoused the theory that rising prices mattered more than making solid loans. That theory appeared correct as long as values kept rising.

“What happened this time was prices plummeted and everyone was in trouble,” she said.

These days, the economist sees little chance of the market returning to its previous heights anytime soon.

“We are in a very slow-moving recovery with prices stabilized at the moderate and low end,” Appleton-Young said. “We are still seeing price attrition and price softening at the upper ends of the market.”

2011 will be lackluster, she said, but that does not mean California is not improving.

“We are almost two years into a price recovery. The problem is not to look at 2007 as the normal market that you are moving back up to, because it wasn’t a normal market. We are back in an underwriting environment that actually makes sense.”

“You are seeing prices recovering throughout the state,” she added. “It is just going to take time.”

• Bruce Norris, president of Norris Group in Riverside, expects home prices to fall 5% in 2011.

The real estate slump has been good to Norris, an investor in foreclosed homes. But he believes the market is being artificially boosted by government programs and is set to fall further this year.

“We are in an artificial recovery,” Norris said. “It’s government controlled and manipulated. We have extremely favorable interest rates that we really should not have, based on our debt. We have supported real estate with tax rebates, and we have prevented inventory from showing up by allowing people to be two and three years behind on their mortgages.”

Foreclosed homes, in particular, are being kept off the market through loan modification attempts and other policies.

“You’ve had a slew of programs trying to prevent inventory from showing up, and that prevents reality from happening,” Norris said. “It’s definitely standing in the way of the natural process.”

What does the housing market need most?

“Demand for houses,” Norris said. “Somebody able to qualify for a loan and actually being able to get it. And that’s why it is not going to happen.”

• Emile Haddad, chief executive of FivePoint Communities Inc., expects home prices to “stabilize” in 2011 but declined to make a specific price prediction.

Determining whether the housing market is on steady footing is essential to developers such as Haddad, the former chief investment officer for Lennar Corp. Haddad, along with Lennar, is now part owner of FivePoint, which is managing the development of the Valencia community in Los Angeles County and other high-profile projects. He believes a recovery has yet to take hold in California.

“We are bumping along the bottom,” Haddad said. “And that is a good thing, because that is the first thing that you need in order to start seeing a housing recovery. You need to have a period where values are not going down and the trend is moving in a different direction.”

California’s coastal markets will come back once the job market returns, he said, lifting consumer confidence. But California’s inland areas are more likely to lag behind, and builders will have to reconsider the kind of product they offer in such places.

“In the Central Valley, values have changed a lot,” Haddad said. “You are not going to be able to really have enough depth in the market to sell large, expensive homes, because the ceiling of value is way down.”

“If you pick on a market like Orange County,” he said, “it is still a place that once people feel confident…. I believe people will be out buying homes.”

Affordability is working in the market’s favor.

“We have a mortgage environment that is more favorable — the rates are down — but people are not able to get mortgages, and that is not helping. The most important thing we need is jobs and job creation.”

“Affordability is something I look at, and obviously that is a very attractive metric right now…. There is a value proposition out there right now that is very attractive, that we haven’t seen in four decades.”

• Christopher Thornberg, founding principal of Beacon Economics, predicts home prices will remain flat in 2011.

Once a senior economist for the UCLA Anderson Forecast, Thornberg was one of the first to predict the housing crash, pointing to prices that were way out of line with what people earned.

In that vein, he views the plunge in home values as its own recovery of sorts “because that is when prices went from stupid-high levels to levels that made sense again,” Thornberg said. “Now we are in a post-recovery recovery, if you will.”

“This is not the bust. A bust implies that prices have fallen to levels that are too low. And I would argue that prices today are relatively high. It’s interest rates that have given us this degree of affordability, and from that perspective that is why I don’t expect prices to come down.”

Since helping found Beacon in 2006, Thornberg has become chief economist for state Controller John Chiang and chair of the Controller’s Council of Economic Advisors. He serves on the advisory board of New York hedge fund Paulson & Co. He has been a forceful critic of the Obama administration’s policy attempts to right the market.

“The administration has tried, through a variety of policy methods, to try and spike the market,” he said.

alejandro.lazo@latimes.com
Copyright © 2011, Los Angeles Times

Bank of America said earlier last month that it was ending its hiatus on foreclosure sales, and promised to get its act together after a series of sloppy home seizures prompted the bank to back off and re-examine its process.

“We have identified areas of our process that can be improved and while we make these improvements, it’s important that we move ahead with efforts to reduce the number of abandoned properties across the country,” said Barbara Desoer, president of Bank of America (BAC, Fortune 500) Home Loans, in a statement. “The properties can drag home values in neighborhoods and slow the eventual recovery of the housing market.”

The bank said it plans to proceed with 16,000 foreclosures this month, though it will observe a “holiday suspension” of sales and evictions from Dec. 20 to Jan. 2. Freddie Mac (FMCC) and Fannie Mae (FNMA) have announced a similar holiday freeze.

The Bank of America action ends the “voluntary freeze” that the bank initiated in October, after a series of messy real estate mistakes. They included the foreclosure of a house that was owned outright by someone who had paid cash, without any mortgage at all, as reported by the Sun Sentinel of Florida.

In another case, the bank shut off the utilities of a Pittsburgh homeowner and seized her pet parrot, despite the fact that she was current on her payments.

“We continue to be committed to ensuring that no property is taken to foreclosure sale until our Bank of America customer is given an opportunity to be evaluated for a modification or, if ineligible for a modification, a short sale or deed in lieu solution,” said Desoer. “Foreclosure is the option of last resort.”

The bank reiterated that “more than 86% of the bank’s home loans are current on their mortgage,” which means that less than 14% of home owners are not current.

The bank also reiterated that “at the point of foreclosure sale, one-third (of the) properties it services are vacant.”