Timely, Accurate Pre Foreclosure Data

For the millions of homeowners who are essentially ‘underwater,’ owing more on their home than it is worth, the government has devised a new FHA short refinance option. The FHA short refinance program will give lenders the ability to help these homeowners, by allowing for a refinance. The program, which will officially start on September 7, 2010, is being offered through the Federal Housing Administration (FHA).

Because the market values in most places across the country have dropped, significantly in many areas, millions of homeowners have been left owing more on their homes than those homes are now worth. In some areas of the country, home values have dropped 30-40 percent. It is estimated that this program will provide much-needed assistance for 3 to 4 million homeowners through 2012.

Some of the key aspects included in this new opportunity to help homeowners include:

• It is a completely voluntary option in which homeowners can choose to participate.
• All lien holders will need to give their consent to participate, and first lien holders will need to agree to write off a minimum of 10 percent of their unpaid principle.
• Homeowners must owe more on their home than its current valuation, and the refinance is only available on their primary residence.
• The homeowner must be current with all their mortgage payments, and their credit score needs to be at least a 500.
• The loan to be refinanced cannot be an FHA-insured loan to begin with.

Additional rules and regulations are in place with this FHA short refinance option, but the overall goal is to help qualified underwater homeowners. By taking this route to short refinance, homeowners can get the help they need. Additionally, the U.S. Department of Treasury is offering incentives for those lien holders who participate.

While the last couple of years across the country have hit lower to medium valued homes hard in terms of losing value, it hadn’t impacted higher end home sales nearly as much. This is because those who had the lower priced homes were competing with all the foreclosures in the neighborhood in order to sell. But now that’s all changing and the higher end homes are being hit hard as well.

While someone who owns a $250,000 house and saw the value drop over $50,000 in the last couple of years may feel a little sick to their stomach at the thought, it is not nearly as heartbreaking as what some of the higher-end homeowners are going through. Consider, a home valued at $80 million sliding to half that value within a few years. While it’s hard to believe, it is exactly what has been happening.

Some high-end million dollar homes are being hit so hard that the prices have been slashed in half, or even lower. Take, for example, Leona Helmsley’s home in Greenwich, Conn., that was put on the market two years ago for $125 million. Today the 14-bedroom home price has been dropped to the bargain rate of $60 million.

Similar stories are being reported about some of Hollywood’s elite, including Nicolas Cage and Suzanne Somers, both of whom saw their home price go from $35 million to $17.5 million, and $35 million to $12.9 million, respectively.

Many luxury home sellers are also feeling sticker shock when they go to put their house on the market. Typically realtors suggest a selling price to list the house for, which is based on comparables within the market. Often times the potential seller is not prepared to see such a drastic decline in proposed house price, thus prompting many real estate agents to be cautious about presenting the comparable pricing for fear of offending the seller and not getting the listing.

This week it was reported that an Australian commercial property owner will receive nearly a billion dollars in lending from the Challenger Financial Services Group Ltd. The transaction will take place over the next year and comes at a time when many are avoiding the market.

Over the past six months the investment manager has already received half a billion dollars in debt, which has been secured by retail, industrial and commercial buildings. In addition, there were also bonds, backed by mortgages, which were factored into helping companies to refinance.

Australia’s commercial real estate market is reportedly still weak. Since the 2008 peak, the prices have slipped some 40 percent and the banks in the country are planning to force commercial property building sales, which will help to improve their overall financial books.

It is reported that the Challenger group is making this strategic lending move in the Australian commercial real estate market as a result of so many cut backs from foreign lenders. While others have pulled back from investing, they see stepping in as a sound financial move.

Based in Sydney, the Challenger company lent the Goodman Group $250 million in May 2010. The loan was for commercial mortgage-backed securities that were maturing. Further, it is report by Fitch Ratings that $2.4 billion this year of commercial mortgage notes will come due in Australia.

It has also been reported that Challenger Financial Services Group won a mandate from the Australian Super pension fund of $200 million, which was to be used for leveraged buyouts and real estate investments.

While foreclosures remain at high levels, research shows that one out of every five of them are considered to be strategic defaults. Those people who have the means to pay for their mortgage, but choose to stop paying it, for whatever reason, are considered to be strategic defaults. This rate also remains unchanged from the end of 2008, yet it represents a 53 percent increase from the same time frame a year ago.

The recent research shows that those states that are seeing the largest decline in home values are also the ones having the highest rate of strategic defaults. These states include several in the West, as well as Florida.

California has been experiencing an exceptionally high rate of strategic defaults on foreclosures. In fact, during the first half of 2009 there were 80 times more strategic defaults in the state, as compared to the same period in 2005.

While there have been many homeowners opting for strategic defaults because their home value has plummeted, leaving them unable to sell it, it is believed that many others who follow this route are investors. Many people have chosen strategic default, feeling that they have no other choice in being able to get out from under their mortgage.

In light of the increase in homeowners strategically defaulting on their mortgage, many lenders are firing back and planning legal action. Recently, Fannie Mae even began spreading the word about how they will seek legal recourse against those people who strategically default on their mortgages. In addition, the mortgage defaulters can now expect to go seven years before being able to obtain another mortgage loan, unless they can prove that the foreclosure came as a result of financial difficulty.

Open houses are one of those things in the real estate world that people usually either love or hate. They have either had good experiences with them, or they have avoided them as much as possible. While there may not be one clear cut answer to whether or not people should hold an open house, it always helps to look at the benefits and drawbacks involved.

Benefits of Open Houses

When it comes to the benefits of having an open house, the agent and sellers can stand to gain if things go well. During an open house the real estate agent may end up picking up new clients to represent, as there are often people who visit open houses that have not yet connected with an agent. This is a good opportunity, because they are interested enough in purchasing, as they are at the stage of viewing homes.

Buyers often like open houses because they are not on a tight schedule to see the home and feel as though they have more time to spend viewing it. Additionally, one of the major benefits of having an open house is that it simply increases the exposure that the home will receive. However, this happens more so if the open house is advertised, through a variety of methods, in order to reach people that wouldn’t have already found the house and set an appointment to view it.

The Drawbacks of Open Houses

Not many things come without some drawbacks and open houses are no different. There is a downside to having an open house, especially where the seller is concerned. Many sellers outright want to avoid open houses because they don’t like the idea of having their home open to the public and allowing a lot of people to come in and walk around. While some may feel as though it could lead to theft, others may just prefer to have more privacy and feel more comfortable arranging appointments for showing the house.

Another drawback to having an open house would depend upon the location of the property. If it is in a high traffic area this is not a concern, but those homes that are rural or a bit more off the beaten path may not see the type of traffic that is desired, thus making it a wasted effort.

Bottom Line

The bottom line is that this is a decision that the agent should largely leave up to the seller. It is a service that should be offered, but not pressured for. Instead, put the idea out there and then listen to and respect the sellers concerns and wishes.

According to the National Association of Realtors there was a drop in existing home sales during the month of May. The rate of sales of previously owned homes fell 2.2 percent during the month. This comes as a surprise to many analysts who had expected the rate to increase five percent.

During the month of May there were 5.66 million sales, which include townhomes, single-family homes, co-ops and condominiums. This follows a surge in existing home sales during the month of April.

There are several different aspects that are being cited as possible reasons for the decline, including that those who received the $8,000 tax credit had to have had their contracts signed by the end of April. Additionally, the high number of people who are unemployed throughout the country continues to be a factor, as fewer people have the financial means to purchase a home or qualify for a mortgage.

Other factors at play in the decline of existing home sales is that new homebuilders are offering deeply discounted rates and incentives to purchase new, and for many people, they are holding off on making a home purchase because of the uncertain economic times.

Despite the decline in home sales for the month, sales were still 19.2 percent above the same period in 2009. The May 2010 median home price for existing purchases was $179,600, which is up 2.7 percent from May 2009.

In addition to the many reasons that buyers may be holding back on making purchases at this time, there are also delays that cannot be avoided. For example, with it being hurricane season, some home buyers in the state of Florida will experience set backs in getting their flood insurance coverage, which will delay home purchase closings.

With the economy in its current condition many people are having difficulty paying their mortgage, as well as their other bills. Whether one is seeing a reduction in their salary or their monthly mortgage payments have increased, it just may be a good time to consider refinancing.

With interest rates currently running 4.72% for a 30-year mortgage and 4.14% for a 15 year mortgage, the rates at are a low that hasn’t been offered in decades. If you have thought about refinancing, now would be the time to do so. Interest rates are at a point that mortgages will be much more affordable for those who do go the route of refinancing.

For those trying to determine if now the right time to refinance is, there are a few things to consider, including:

• What your reasons for refinancing right now are. Do you need to obtain a more affordable monthly payment, for example?
• What is the interest rate of your current mortgage, versus what the new one will be, as well as what the difference in your monthly mortgage payment will be?
• Whether or not your credit is in good shape, because it will be a determining factor in the final interest rate that you will qualify for.
• If you have equity in your home that you may be able to convert to cash. While most people have seen reductions in the value of their home, there may still be some people that can take advantage of this.
• The costs associated with refinancing. While there will be fees involved, such as closing costs, for refinancing, many people will find that refinancing is still a solid choice.

With so many people currently struggling with their mortgage payments, right now is a good time to consider refinancing. Historically low interest rates, for both a 30-year and 15-year mortgage, will help homeowners to keep monthly expenses down while freeing up funds for other important financial commitments.

With so many people experiencing difficulties paying their mortgage, President Obama’s Making Home Affordable program is bringing much-needed relief to homeowners around the country. The program offers options to help those who cannot afford to pay their mortgage, as well as those who would like to take an alternative route to selling, such as conducting a short sale.

The Making Home Affordable program that President Obama has put into action offers a variety of solutions and tools that people can choose from, depending on their needs. Homeowners can consider the following options in this program:

Home Affordable Refinancing – This helps the homeowner to refinance their mortgage, so that they will get a more affordable rate and be able to keep their home. This is especially helpful for those who pay their mortgage on time, but have been unable to refinance because of the decrease in the value of their home.

Home Affordable Modification – This is an option for those who may be struggling to pay their mortgage due to a loss of income or an increase in their mortgage payment. This is even open to those who are current on their mortgage, but are struggling financially.

Second Lien Modification Program – This is a helpful route for those who are struggling to pay their mortgage because of a second lien they have on the home. This program will help lower the payment rate on the second lien, making it easier for people to pay on the first mortgage.

Home Affordable Foreclosures Alternatives – This is a program that is designed to help people transition to more affordable housing. The program provides them with $3,000 to assist in the transition and is open to those who complete a short sales or deed-in-lieu of foreclosure.

In addition to the Making Homes Affordable Program, there are many banks that are working with homeowners to help find solutions. While some may help with refinancing, others are allowing the homeowners to live in the house until a set time, when the home deed must be turned over.

With the market the way it is there is no way to avoid seeing all the foreclosures popping up in just about every neighborhood. And while you may know that it means you will get a discount on the price of the home, you may not be so clear about what the different stages of foreclosure are and in which stage is the best time to make the purchase.

There are three main stages of foreclosure, which include pre-foreclosure, auction and real estate owned (REO). Here are a few things to keep in mind when it comes to buying a house in each stage of foreclosure:

Pre-foreclosure. This is the stage where the homeowner may be falling behind on their mortgage payments and are unable to sell the home because they simply owe more on it than it is now valued in the market. The homes are in the foreclosure process at this point and you will save money on the price. While they may be a good buy, there is a chance that they are not always the best route, because each party involved will be trying to get the highest price they can. It can also be a time consuming route to buying a home, with negotiations dragging on for months.

Public auction. This is the period where the house is being placed up for auction because it did not sell during the pre-foreclosure stage. While you can often get a good purchase with this type of property, it also comes with a list of difficulties. There are often problems with the auctions and homes are usually sold “as is” and without inspections, so you don’t know what you are getting. You may think you are getting a great deal, only to find out that the home is riddled with expensive repair issues.

REOs. This is generally considered the best time to buy within the three stages of foreclosure. In this stage, the home did not sell during the other two stages and is now in the possession of the bank. Typically banks will want to unload the property quickly and will be interested in selling fast and at a good rate, which may be at or below market value.

Regardless of whether a home is a foreclosure or not, you will always want to keep the location in mind. If the neighborhood has a lot of crime and foreclosures you may want to consider a different area to help protect your investment.

The Commerce Department revealed this week that new homes built this month have risen 1.6 percent, more than was expected, during the month of March. This is the highest level of housing starts since November 2008 and it can mean great things for the Default Research clients.

First, it indicates a growth in the economy, and such an indicator can only be a positive! For each new home built, the economy sees three new jobs for a year, according to the National Association of Home Builders. Not to mention a nice increase of local taxes paid. Although it seems simple, it is worth repeating. According to FX-Words, “A sharp drop in new home construction is a warning signal of economic slowdown. Conversely, a rebound in the Housing Starts paves the way for economic recovery.” As ground breaking for new homes increases, the purchases of foreclosure properties will follow suit and money more readily passes from pocket to pocket.

Although the glut of foreclosures across the nation has been cited as one reason for the lack of housing starts in the recent past, this increase will not have a backwash negative effect on the foreclosure industry as that is not forecasted to slow down any time soon.