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

Foreclosure filings rose in August, as more homeowners fell behind on their mortgage payments.  

Filing were up 7% compared to July, but were still 33% lower than a year ago. 

According to Realty Tract’s report, 228,098 homes in the US received some kind of foreclosure filing in August.  Foreclosure auctions and bank repossessions, which come later in the process, both fell slightly. 

The increased in default notices may signal that lenders are starting to finally push through foreclosure paperwork that was previously delayed by “robo-signing”. 

The good news is that bank repossessions have been falling.  Lenders repossessed 64,813 homes in August, a six-month low and a 37% decline after they hit a peak in September last year. 

Meanwhile, foreclosure auctions were scheduled for 84,405 homes, the lowest number in more than three years. 

Nevada, California and Arizona housing markets are the hardest hit by foreclosures. 

Information from CNNMoney.com

Related articles

• Foreclosure filings jump 7% in August from July Foreclosures fall over the year, but monthly figures signal trouble ahead (lonerangersilver.wordpress.com)
• Mortgage default warnings surged in August (sfgate.com)

Image via Wikipedia

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

Image by Bohman via Flickr

With married couples comprising less than 50% of all US households, home buyers are changing.  A growing number of non-family households, according to a report from John Burns Real Estate Consulting are on the increase.  Non-family households where no one is related to the house holder have increased nearly five times in the last 50 years from 7.9 to 39.2 million. 

A lot of non-family households are looking at SMALL HOMES: preferring a home under 2500 sf with three or fewer bedrooms.  LOCATION:  the proximity to work and entertainment over home size and they are less interested in media rooms and pools.

Related articles

• Emerging Demographic Means Changes For Real Estate Market (robertsinohue.wordpress.com)

Americans have a renewed interest in all things frugal during this recession.  They’re spending less money, using credit cards less. 

About ½ of Americans report they either avoid shopping altogether or shop only for those things that are absolutely needed, according to a survey sponsored by Citi.  72% of Americans say they have cut back on everyday expenses. 

In addition, 80% claim to have at least a plan for income and expenses, up from 47% in 2006, according to a survey by Synovate commissioned by personal finance author Matt Bell. 

Since consumer debt peaked in 2008, Americans have chopped $922 million from their debt, or 7.4%, according to the Federal Reserve.  Americans are reducing debt at a pace unseen in at least a decade, according to a recent Fed report.

 How do we make these changes? 

Change your words – instead of a temporary exercise in deprivation, view it as a lifestyle. 

Have goals – “I’ll pass on purchasing this item because I want to go on vacation in June.” 

Track Progress – Monitor your debts and vacation accounts.  When you see that spending smart is getting you closer to accomplishing your goal, that’ll motivate you to keep going. 

Make savings automatic – The easiest way to save is to have your savings deposited automatically from your paycheck to a savings or retirement plan. 

Make a windfall rule – When you receive a sudden increase of cash (i.e. tax refund, bonus, gift); make it a rule that these are used to paying off high-interest debt or savings.

 Source: RIS Media

Related articles

• Five Financial No-Brainers (turbotax.intuit.com)

Image via Wikipedia

Your credit score is a three-digit number that helps lending institutions assess their risk associated with lending you money.  They are used for loans, credit cards, renting, insurance and background checks on employment.

People with lower credit scores may pay higher interest rates or may not be approved at all.  Those with higher, less-risky credit scores often qualify for lower interest rates and special options.  Credit scores are calculated based on computer “predictability” models that analyze credit information and patters from your credit report against those of other consumers.

There are trillions of score combinations used in the calculations.  Most scores are calculated and provided individually by each credit bureau, including the three major ones in the United States, which are Experian, Equifax and TransUnion.  Additionally, many lenders use third-party credit scoring systems, such as FICO, NextGen, CE Score and VantageScore.  For consumers, the variations in scoring models and score ranges can create some confusion.

In 2006, the three major bureaus joined forces to create a single credit scoring system called the VantageScore.  The VantageScore and FICO model lead the industry as competitive rivals in credit-scoring systems.

Your VantageScore may not be exactly the same if your lender only orders a credit report from one of the bureaus.  This is because the data each bureau receives may be slightly different.  If your lender does not report your payment history to Equifax but does report to Experian and TransUnion, it will create a difference in scores.  The VantageScore should be more consistent across all three bureaus since the mathematical formula is the same.

Unlike FICOs traditional 300-850 credit score range, the VantageScore ranges from 501-990.  There is no way to compare the results of the VantageScore to a FICO score especially when the formulas are constantly changing.  However, to put some perspective in place a 650 FICO score approximately compares to a low, 800-range VantageScore.

The one constant for both scoring systems is that paying your debts on time will typically be the primary factor that positively impacts your credit score.

This past week, I have posted several articles on credit reports.  Below are a few things you should know before buying a home:

1)  Get Pre-Qualfied – you will need to find out what you can qualify for and obtain a Pre-Approval letter before going out to look at homes.

2)  If you have marginal or bad credit, consult your lender -they will be able to advise you on whether your credit history will prevent you from qualifying for a home loan.

3)  You will need a down payment – Down payment requirements vary depending on the type of loan.  There are a few down payment assistance programs, but gone are the days of lots of  ZERO down loans, unless you are a Veteran.  Consult with a lender about the programs available in your area.

4)  You will need funds for closing costs – In addition to your down payment, you may need to have additional funds for closing costs (i.e. Escrow, title, mortgage insurance, taxes, loan fees and fire insurance).

5)  Some loans have “points” and some do not – A point is a loan origination fee equivalent to 1% of the loan amount.  Together with the interest rate they constitute the yield on your loan for the lender.  Some lenders charge a higher interest rate to compensate for charging no points.  It is important to comparison shop lenders to make sure your loan is at a competitive yield.

6)  Should you select a mortgage with a fixed rate or an adjustable rate?  It depends on whether mortgage rates are at a high or a low point when you purchase, and on how long you plan to live in the home.  If rates are low, a fixed rate would be more attractive and if rates are high, an  adjustable rate might be attractive since subsequent rate drops could reduce your monthly payments.  Also lenders may offer a low rate during the first few years of an adjustable mortgage to make it appealing to you.

7)  Be aware of the two main type of loan categories – Conventional Loans and Government Loans (FHA/VA) .  Both of these loan types are available with fixed or adjustable interest rates and some require mortgage insurance.

8)  If you are a low or moderate income home buyer – there are some local and state housing agencies, like the California Housing Finance Agency(CalHFA) that have special loan programs available.

9)  Why might I have to pay mortgage insurance?  Generally, conventional loans that require larger down payments do not require mortgage insurance.  Mortgage insurance is always required on FHA loans.  Mortgage insurance protects the lender from potential loss if you should default on your mortgage loan payment. 

10)  Many organizations offer home loan counseling to prospective home buyers- These organizations provide classes for home buyers to cover the steps to home ownership.  They will cover home selection, realtor services, lenders, loan programs, home ownership responsibilities, saving for a down payment, and other important pieces of information.  Many first-time home buyer programs require home buyers to attend this type of class to be eligible for selected programs.

Related articles

• Misleading FHA Rumors & FHA Myths – Information needed to be properly armed (annarborundressed.com)

On an average of 36.6% closing costs have risen over the last year according to the 2010 mortgage fee survey from Bankrate.com.  Bankrate, which gets its survey data from online Good Faith Estimate (GFE) forms, say the increase may be due to the new GFE form and changes to the Real Estate Settlement Procedures Act. 

Lenders are penalized now for lowballing fees and the numbers may be more accurate than those reported in the past. 

The three most expense states for closing costs on a $200,000 purchase are New York (avg. $5,623); Texas (avg. $4,708); and Utah (avg. $4,605) according to Bankrate.

Image by TheTruthAbout… via Flickr

New data was released on 9/22/10 by Treasury and HUD on the Home Affordable Modification Program (HAMP).  Just over 33,000 homeowners received a PERMANENT HAMP modification in August, 2010.  This figure is down 27% below the number of PERMANENT HAMP modifications in July, 2010. 

The borrowers whom received the PERMANENT HAMP modifications have seen their mortgage payments drop by a median of 36%, or more than $500 per month.  Homeowner’s who received these modifications saw their housing expenses fall from 45% to 31% of their monthly income. 

In August, 2010, 26,628 TRIAL HAMP modifications were added to the HAMP roster.  Currently there are 202,521 active trial modifications.  Federal officials are pushing the loan servicers to make decisions for borrowers who have completed the trial phase and either drop them from the program or make them permanent modifications. 

The Treasury stated that the most of the cancellations are due to insufficient documents received or missed or late trial payments.  In addition, if their principal housing expenses are already less than 31% they do not qualify for the program.

Related articles by Zemanta

• 22% of private mortgage mods redefault (money.cnn.com)
• Home Affordable Modification Program (flowerblossoms.wordpress.com)

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.