Shirley Kistler's Real Estate Blog: Serving your Real Estate Needs in Sacramento, Placer and El Dorado Counties

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The Sacramento Beepublished an article September 26, 2011 with the following statistics compiled by RealtyTrac and Foreclosure-Response.org.  They placed our region’s shadow inventory at 53,256 homes in the four surrounding areas of Sacramento, Yolo, Placerand El Dorado counties.

They included in this number three categories of distressed properties:

• 12,285 houses already owned by banks but not sold
• 19,367 units whose owners have received an initial foreclosure notice, or notice of default, but have not been foreclosed on
• 21,604 homeowners who are 90 days or more delinquent on their payments but have not received a notice of default

Lenderare starting to pick up the pace on repossessions once again.  The figures provided by RealtyTrac show foreclosures in the area soared 76% from July to August, the highest number in 11 months.

Based on this “shadow inventory” it would take a year and a half to sell these distressed homes.

To read the complete article by Rick Daysog of the Sacramento Bee click here

A recent survey conducted by FindLaw.com a legal information website found that 60% of Americans believe that it is “never OK” for homeowners to simply stop making payments on their mortgages.  34% say it’s OK for homeowners to walk away from mortgages, but only if they aren’t able to make the monthly payments.  Only 3% believe that homeowners should be able to walk away from their mortgage anytime they want. 

Before making any major decisions, homeowners should consult with financial and legal professionals, including accountants, real estate attorneys and financial advisors.  Any major change to a mortgage situation could lead to serious and unanticipated consequences involving taxes, contract law, credit scores, ability to borrow in the future, potential for lawsuits and much more.

Related articles

• Is Walking Away From Your Mortgage OK? (creditloan.com)
• How Will a Strategic Default Impact My Credit Score? (askthemoneycoach.com)

Despite the rising number of renters in the U.S., it is cheaper to buy a home rather than rent one in 72% of the 50 largest cities according to an index released by Trulia.com. 

Trulia’s rent vs. buy index compares the median list price with the median rent on two bedroom apartments, town homes & condominiums listed on Trulia.com as of 1/10/11. 

In 36 out of 50 of the country’s most populous cities, buying a two-bedroom home is less expensive than renting one.  These cities also include many areas that have been hit hard by foreclosures, such as Sacramento.

A price-to-rent ratio of 1 to 15 means that it’s much cheaper to buy than to rent in a particular city.  A ratio between 16 and 20 means that it’s more expenseive to rent than to buy, but depending on the family’s situation, buying could “make financial sense” the side siad.  Any ratio above 20 indicates that owning is much more costly than renting in a city.

Top 10 cities to buy vs. rent:

Source: Trulia

In 10 cities, renting is cheaper, but buying might make more financial sense, according to Trulia. These cities include Los Angeles, Boston, and Fort Worth, Texas.

The index considers the total cost of homeownership compared to the total cost of renting. Calculations for the total cost of homeownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase, homeowners association dues, and private mortgage insurance. The homeownership cost calculation also includes tax advantages from mortgage interest, property tax and closing-cost deductions.

Calculations for total rental cost include rent and renters insurance.

The total cost of homeownership was highest, compared to the cost to rent, in New York; Seattle; Kansas City, Mo.; and San Francisco.

Top 10 cities to rent vs. buy:

Source: Trulia

Related articles

• Trulia.com Rent vs. Buy Housing Ratios: First Quarter 2011 (mymoneyblog.com)

Effective January 1, 2011, California first trust deed mortgage holders who consent to a short sale of residential property (up to 4 units) are prohibited from seeking a deficiency judgment for the difference between the mortgage balance and proceeds realized through the sale. 

Senate Bill931 was passed by legistature in August and approved by the Governor on 9/30/10 to help strapped homeowners.

See the complete article at Realty Times 

There is a new bill introduced in the U.S. House which would give lenders a 45 day deadline to respond to short sale requests to the borrower. 

This is a bipartisan bill (H.R. 6133) – Prompt Decision for Qualification of Short Sale Act of 2010 which is sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida).

The length of time it has been taking lenders to process the short sales has caused buyer’s to walk away.  Many lenders are taking from 90 days to several months without a decision made on the short sale.    The following states have the highest number of short sales:  California – 28%, Nevada 32%, Arizona 24%, and Florida 27%. 

Realtors across the country strongly support this bill and are urging Congress to pass the legislation quickly.  The National Association “NAR” of Realtor President Vicki Cox believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy.

Nearly 31,000 borrowers with Fannie Mae (FNMA) and Freddie Mac (FMCC) loans forfeited their homes through a short sale or deed-in-lieu of foreclosure during the 2^nd quarter of 2010.  This is a 27% increase over the 24,000 transactions completed during the 1^st quarter of 2010.

During the same period last year there were 11,700 transactions up from 3,000 the year before.

 Federal Housing Finance Agency (FHFA) also reported that loan modification and refinancing by FNMA and FMCC were up in the second quarter.  The Home Affordable Modification Program (HAMP) increased 65% while refinancing under the Home Affordable Refinance Program (HARP) increased by 30%.  Loan servicers completed 171,200 permanent loan modifications on these types of loans thru HAMP and nearly 88,600 borrowers in HAMP trials transitioned to permanent modifications bringing the two companies HAMP numbers to nearly 225,000.  FHFA’s report also stated that approximately 202,000 of the borrowers were in a HAMP trial period at the end of the 2^nd quarter, compared to nearly 448,100 at the end of the first quarter.  That means minus the 88,600 permanent modifications 157,500 homeowners’ HAMP trials were cancelled as a result of missed payments or inadequate documentation. 

FHFA also noted that more than ½ of the modifications completed in the 2^nd quarter lowered borrowers’ monthly payments by more then 30%.  During this same period the two companies initiated 275,100 new foreclosures, an increase of 12%.  Completed foreclosure sales and 3^rd party sales totaled 112,400, up 15% from the previous quarter.

If you have found yourself falling behind in your mortgage and debt obligations, you aren’t alone.   With the loss of jobs and declining home values and the current economy, homeowners like you are forced to consider options that were unthinkable a few years ago.

The US Department of Housing and Urban Development (HUD) has established a hotline to assist homeowners who are facing a hardship.  You can contact HUD at their toll free number 1-877-483-1515 to find out what options are available to you:

1)      Loan Modification

2)      Short Sale

3)      Foreclosure

To learn more about the tax consequences of a short sale versus a foreclosure, you can visit the IRS web site at www.irs.gov.  Before executing any of these options, consult with a certified public accountant or tax attorney.

Governor Schwarzenegger has instituted a statewide, 90-day halt on foreclosure proceedings for each owner-occupied home subject to a first mortgage on which a Notice of Default has already been file.

The U.S. Treasury released statistics the end of July, 2010 for the Home Affordable Modification Program (HAMP) program.  The statistics showed that loans that have been permanently modified had a re-default rate to be around 2% – 5.9% 60 or more days past due after modification and 1.7% 90 or more days delinquent.  When those statistics came out, they received a huge outcry from analysts questioning the validity of these statistics. 

The Treasury pulled the numbers and re-evaluated the statistics after retaining a third-party consultant to provide independent validation.  A few weeks later, they corrected the re-default assessments as follows:  10% of six month old permanent modifications are 60+ days delinquent and 6% are 90+ days delinquent. 

Analysts say that’s still too low and the rates will surely go higher the longer the program is in place.  Up until six months ago, permanent modifications had been offered to only about 434,716 borrowers.  The Treasury has cancelled the temporary modifications of 616,839 borrowers. 

The analysts at Barclays are predicting a 60% re-default rate and Fitch Ratings projects 55-75%. 

http://www.dsnews.com/articles/print-view/treasury-corrects-its-math-for-hamp-redefaults-2010-08-12

Related articles by Zemanta

• HAMP: Still fundamentally broken (hsh.com)
• Treasury Correction: Modified Mortgages Perform Less Favorably (blogs.wsj.com)
• Bank of America Permanent HAMP Modifications Increase 5.9% in July (housingwire.com)

We have received questions from many concerned sellers on what is required of them when preparing their home for prospective buyers.  Due to the current economy we are seeing a large increase in the number of short sale homes available for sale.   Sellers in a short sale situation are concerned about the costs to prepare their home for sale so that it doesn’t sit on the market for a long time.  They also ask what needs to be done in order to fix their home up for sale for the least amount of money.

Here are a few inexpensive tips that will help you stage and sell your home more quickly:

• Wipe down all of the walls and outlets of dirty fingerprints
• Shampoo Carpeting
• Wash the Windows and Screens
• Vacuum and Dust often
• Remove all books from bookcases
• Pack up the knickknacks
• Clean off everything on kitchen counters
• Put items used daily in a small box that can be stored away when not in use
• Re-Organize Closets and Pantry
• Make Minor Repairs – Touch up any holes, scratches or damage to the walls and if you have touch up paint laying around, touch up these areas
• Keep Lawns Mown and Watered
• Trim Shrubs & Plant Colorful Flowers
• Air out House of Musty or Pet Odors
• De-Personalize – Pack up personal photos and heirlooms.  Buyers can’t see past personal artifacts and you want them to see the home.
• De-Clutter – If you don’t need it, sell it, donate it or throw it away
• Get a head start on packing, you will eventually need to do it anyway