Monthly Archives: March 2012

Slight Optimism: An Economic Turn For the Better


In this week’s news, there is a slightly more optimistic outlook for our economic future. Although we are nowhere near being in the clear of the downward state of our real estate market, there has been one slight improvement.

According to an article in the Los Angeles Times, foreclosure sales were slightly less this past February, when compared to February of 2011. Approximately 3.4% of all homes were in foreclosure last month. Although 3.4% seems low, it does equal 1.4 million properties.

However, the reason this article was slightly optimistic is because in 2011 there were 1.5 million properties foreclosed compared to 1.4 million this year. Obviously this small statistic does not determine that our economy is on the rise to recovery, but if a decreasing trend continues in foreclosures, we can hope that it will lead us there.

In February 2012, banks completed about 65,000 foreclosures with a trend of foreclosing 670,000 homes this year. However, according to Anand Nallathambi, the foreclosed homes are selling faster, and combing that with better employment news and low interest rates, these are all positive signs of an improvement in the housing economy.

Although we wish we could say we were out of the dry spell, we can’t. But we can tell you that the things that are occurring in the market are trending for the better, but it is too soon to tell just when the full recovery will be.

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Home Prices Have Dropped


With home prices dropping to levels that are similar to the year of 2002, there are two ways to look at this situation.

Unfortunately for the current homeowner who purchased back in 2006 or so, they are losing equity in their home and are most likely upside down. Obviously in this situation you are unable to sell your home unless you decide to short sale. There is the HARP 2 program that benefits these situations for homeowners who want to keep their home, and make lower monthly payments. This is a program that benefits loans prior to June 1, 2009. There is more information available at www.Harp2Lender.info.

According to an article from CNN,

“Home prices have fallen a whopping 34.4% from the peak set in July 2006.”

The flip side to this situation, is for potential homebuyers. Some homebuyers lack confidence in purchasing a home right now, when it should really be the opposite. Right now this market has increased the buyer’s power tremendously. The homes that once sold for $400,000 are selling for $200,000. A home buyer is getting way more for their money in this housing market.

Although it is upsetting for the responsible homeowner who has lost equity in their home, it is a positive situation for the potential homebuyers right now.

We encourage homebuyers to purchase now, while their buying power is tremendously strong. The interest rates are still low around 4 percent. With low home prices, and low-interest rates, there could not be a better combination to buy a home right now.

Homes are still a great investment. We will recover from this economic down turn, and values will increase again, it will just be a slow process along the way. Any current home shopper should buckle down and really focus on purchasing before their buyer power lessens.

Upward Trend For Home Resales Last Winter


According to an article printed in the Los Angeles Times newspaper, it seems that this past winter has had the best home resales since the economic crisis began five years ago. The U.S. home sales are on the up rise, which is a great outlook for our future.

During this time, mortgage rates have been at historic lows, around four percent or lower, which has been a great buying power for home buyers.

According to the article, our best winter home resales occurred in these past two months.

The last time we saw sales this high was in May of 2010 when first time homebuyers were receiving the tax credit for purchasing homes.

Overall, the great news is that our market is trending upward according to economists.

However, we are still not where we should be in order to be counted as a healthy market, but hopefully we will reach there soon. Foreclosure levels are still high in areas in the U.S.

In addition to the sales trend moving upwards, the average home price in the U.S. has also increased. The article states, “The median sale price of homes rose for the first time in four months in February, to $156,000. And the supply of homes on the market increased more than 4% in February to 2.43 million, which could signal that more homeowners became confident in the housing market.”

Another trend we may begin seeing is new homes being built. Due to the upward trend in the housing market over the past six months, home builders have begun requesting permits again in order to begin building.

The article closes discussing the downward trend of first time homebuyers. A healthy market consists of 40% of purchases being made by first time homebuyers. We are currently trending around 32%. We are not quite there, but hopefully with interest rates staying low, and the confidence of homebuyers increasing, we can reach that level sooner than later.

HARP Phase 2 Begins


Exciting news has officially been released for the second phase for the Home Affordable Refinance Program (HARP 2.0). Not only is March 17th St. Patrick’s Day, but it is also the day that HARP 2.0 will begin its second phase.  Software changes will be made to update the HARP 2 program on Saturday, March 17, 2012.

Come Monday morning, March 19th, homeowners can begin to refinance their home loans to today’s low interest rates for an unlimited loan-to-value ratio.  Up until then, the loan-to-value ratio has been capped at 125%, but will be removed this coming week. This second phase, that many homeowners have been eagerly waiting to be released, allows homeowners to refinance no matter what is owed on their home.

As a reminder, this program is only eligible for mortgages that were sold prior to June 1, 2009 and are owned by either Fannie Mae or Freddie Mac. There are look up tools available on this website (right hand side).

There are no appraisals required for the refinance program. Instead a property inspection waiver (PIW) may be able to take the place of an appraisal for a much smaller fee in the transaction.

There are several criteria you must meet in order to be approved for this loan which were stated above. In addition to those requirements, you must also be current on your mortgage. For a more detailed list of eligibility, click here.

If you would like to begin the HARP 2.0 refinance process, you can fill out a request at the bottom of this page, or fill out a secure online application with Stateline Funding Corporation.

This HARP program is a great opportunity for homeowners who would like to lower their interest rate, and their overall monthly payment. If you have more questions about the HARP 2.0 program visit www.Harp2Lender.info 

To be contacted about the HARP 2.0 program fill out the form below. **We service California Residents Only**

FHA Streamline Refinance: Changes That Benefit FHA Borrowers


New changes have been made to benefit FHA borrowers who are going to refinance using a FHA Streamline. Only borrowers with a FHA loan can do this, and this refinance does not allow cash to be taken out. However, a FHA Streamline is the fastest, simplest way for borrowers to refinance a FHA mortgage.

The new benefit for the FHA Streamline is the decrease in the upfront mortgage insurance premium, as well as the annual mortgage insurance premium. The FHA upfront MIP is decreasing to .01 percent. The annual mortgage insurance premium is decreasing to .55 percent. These changes will begin June 11, 2012. Any FHA case number that is assigned on or after June 11, 2012 will be given these lowered MIP’s.

Requirements:

In order to qualify for a FHA Streamline Refinance, your loan must have been taken out prior to June 1, 2009 (similar to the HARP program). You must also currently have a FHA mortgage in order to refinance using the FHA Streamline Refinance.

1. There will be no appraisal required for the FHA Streamline Refinance.

No equity required. You can use your original purchase price for your home’s current value.

2. There will be no employment verification for the FHA Streamline Refinance.

You will not be required to be employed.

3. There will be no income verification for the FHA Streamline Refinance.

You will not be required to have set income.

This change will benefit borrowers by lowering their interest rate and reducing the mortgage insurance premiums, both upfront and annual. The FHA Streamline Refinance offers huge savings for current FHA borrowers and will hopefully result in fewer loan defaults in the market.

 Get a Free FHA Streamline Refinance Quote

“Homeowner Bill of Rights” Proposal…what do they mean?


Recent news of  new bills to be passed in order to provide more protection for homeowners who are facing foreclosures.  

However, our question is more concerned with whether these bills are actually going to be good for our industry or end up causing more trouble. Having over 30 years of experience in this industry, we have never experienced such a terrible economic time in our industry. When this happened a previous time, the market recovered in about 18 months with no government involvement. However, this time the process has been extremely lengthy.

According to the Los Angeles Times, a few of the new legislations would do the following:

1. “End so-called dual track foreclosures that allow mortgage holders to simultaneously negotiate loan modifications to lower homeowners’ interest payments while taking legal steps to foreclose on the same properties”

What is the problem with this ? Realistically, loan modifications should not even be offered. Granted, homeowners should not be taken advantage of, and homeowners should be fully informed of the financial decision that they are making. However, most homeowners who seek a loan modification are incapable of making their current mortgage payment either due to loss of job, injury or some other financial hardship.  A loan modification is changing their loan agreements that were legally agreed to at the purchase of the home. They are contacting a bank to lower their interest rate, or principal balance to make their monthly payments more affordable.

However, realistically, homeowners who are facing hardships and seeking a loan modification, end up not being able to make their new lower mortgage payment months down the road and end up foreclosing anyways. This option to modify a home loan lengthens the foreclosure process. Also, what most homeowners experience is being advised to miss a few months’ payments in order to begin the modification process, but in the meantime will then be foreclosed due to a lack of payments. A loan modification should not be offered in order to prolong homeowners keeping a home that they cannot afford.

In the eyes of FICO, a foreclosure, short sale, and loan modification all equally negatively affect your credit report. Not one is better than the other.  If any of those are reflected on your credit, it shows that you defaulted on a mortgage. There is a lie that a short sale is better for you versus a foreclosure and that is not true when related to a FICO score.

2. “Allow renters more time to stay in a foreclosed residence”

Who are renters paying rent to in a foreclosed residence? No body. A legislationwould be passed to allow renters to live rent free in a foreclosed property for a lengthened time.

3. “Collect fees from banks to pay for enhanced law enforcement actions to defend homeowners.”

4. “Provide a single point of contact for homeowners with their loan servicers and impose a $10,000 civil penalty for “robo-signed” mortgage documents containing unverified information.”

 5. “Give local governments tools to force banks and property owners to maintain blighted, foreclosed homes and to give new homeowners incentives to improve their properties.”

More specific details would be needed to fully understand what this legislation would cost dollar wise for the “tools” and “incentives” for the property maintenance. It is definitely a positive thing for banks to maintain foreclosed homes for the neighborhood appeal, as well as decreasing crimes in areas with vacant homes. Areas with HOA’s tend to have banks maintain the properties that have been foreclosed.

6. “Create a statewide grand jury to investigate alleged financial and real estate foreclosure crimes”

These are the 6 legislations that are wanting to be passed in order to protect homeowners. There are pros and cons to all of the above bills. There is false information posted all over the internet and media that is providing homeowners with poor advice. Ultimately, homeowners need to be given wise counsel and speak to mortgage professionals with years of experience before making any financial decisions related to their mortgage.

Fannie Mae Requesting $4.6 Billion Aid From U.S.


Just published today in the Los Angeles Times, Fannie Mae is seeking $4.6 billion from the U.S. in order to cover its deficit in the 4th quarter.

Fannie Mae relates one of the reasons for the deficit being a result of homeowners refinancing home loans to historically lower interest rates. Another reason that contributed to the loss in the 4th quarter was due to homeowners defaulting on their mortgages.

In 2008, Fannie Mae and Freddie Mac received the biggest bailout in history of more than $150 billion. To date, Fannie Mae has received $116 billion as a bailout, which has been the most expensive bailout for one single company.

According to the Los Angeles Times, it is estimated that it could potentially cost $259 billion to financially aid Fannie Mae and Freddie Mac through the year 2014.

It is true, right now in the housing industry, we are experiencing historically low interest rates. We have had interest rates around a 4% for a steady 3 months or so.  You can already see the effects on these huge companies who previously thrived on rates that were higher.

Homeowners are paying significantly less in interest. We continually are helping homeowners refinance to lower rates saving some up to $300 a payment. There are also new home buyers that are taking advantage of these low rates and purchasing homes with a 30 year fixed mortgage.

This is a huge deficit to the company Fannie Mae. On a side note, these low interest rates are for once in favor of the consumers purchasing and refinancing homes.

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