Real Estate Information Archive


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97% of Montana Borrowers Have Equity in their Home

by Tim Hart

If Montana already didn’t have enough positive trends for their housing market, more good news came from Realtor Magazine in mid March. The magazine released which states had the highest percentage of borrowers with positive equity in their home—and Montana ranked 3rd, at 97 percent. The magazine analyzed any property with an active mortgage in the United States to reach their numbers. Montana and the Gallatin County rebounded comparatively well from the housing crisis compared to many of the other states in the nation, but seeing how many borrowers in the state have equity in their home really cements that fact.

In the United States, 89% of homes ended 2014 with equity in their home—a great sign for the national housing market. 44.5 million homes had equity and if home prices rise by 5% another 1 million will no longer have negative equity.

Interestingly, home sale values greatly affected whether buyers have been sinking or swimming across the nation. For properties valued over $200,000, 94% of them had positive equity. For properties valued below $200,000, only 84% had equity.

5.4 million home owners are still underwater from the housing crash. The issue of negative equity continues to hold back the potential of the market but negative equity is expected to diminish in 2015. For Montana, the local market has been able to grow so much partly due to the financial freedom of buyers and sellers in the area.

Nevada had the highest percentage of home owners still with negative equity, at 24.2 percent.




Distressed Sales Decreasing

by Tim Hart

Distressed sales have decreased this last year, dropping to the lowest since records began in 2008. These sales accounted for 9% of the total sales last month. Distressed sales can include foreclosures and short-sales. Having less distressed property sales can only suggest the economic improvement that has taken place. Budge Huskey, President and CEO of Coldwell Banker Real Estate, said in a recent interview with Bloomberg that “We (the US) are moving from a market that was driven by the overcorrection, driven by distressed asset sales, to a market that’s returning to being based on the fundamentals,” suggesting that when less distressed sales are carried out, the general market will act less volatile. Cheaper borrowing costs have also helped the situation. An average 30-year fixed rate mortgage hit 4.1% the week of August 21st, the lowest this year. Residential construction start ups increased in July to an annual pace of 1.09 million units, the highest it had been in 8 months.



Latest News in Distressed Sales

by Tim Hart


JUNE 15th, 2012—That is the day that is supposed to change the distressed sales market altogether. Fannie Mae and Freddie Mac loans are to have a decision within the first 30-60 days. If more than the initial 30 days are needed to process a loan, the potential borrower will receive weekly updates and the decision will be reached by the 60 day mark.

This more regimented time-line will benefit both the servicers and the borrowers by increasing the overall accountability of the approval process. Servicers may counteroffer and expect a reply within five days. Borrowers and servicers alike will both know where in the process the transaction is and the timeline will serve as a tool of evaluation for the distressed sales system as a whole.

Edward DeMarco, acting director of the FHFA, says the GSEs new borrower communication and timeline requirements for short sales “set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

What do you think about this change to come?


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Real Estate Market & Short Sales

by Tim Hart

The short sale trend is still surging. In fact, short sales are passing foreclosures in frequency because banks see it as a better route when compared to foreclosures. In addition, mortgage servicers are increasing the pace of approving short sales in order to move away from the stereotypes short sales have acquired of moving too slowly through the process.

The rate of short sales increased33% this last year and "[We] believe 2012 could be a record year for short sales," says Daren Blomquist, vice president at RealtyTrac. So cross your fingers that the process will be sped up and this year will continue to bring positive news to the market.


Source: “Short Sales Expected to Surge This Year,” CNNMoney (April 19, 2012) and “Short Sales Start to Outpace Foreclosures,” REALTOR® Magazine Daily News (April 19, 2012)


Short Sales Continued Growth

by Tim Hart

Banks are changing their attitude on the infamous distressed sales by being more willing to agree to sale at a lower cost than ahome owner’s mortgage balance. This will ultimately avoid the property from shifting to the status of foreclosure for then the property becomes more costly for the lender.  The trend banks are taking to do more short sales is likely to “show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans," said RealtyTrac CEO Brandon Moore.

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Incentivizing Short Sales

by Tim Hart

More banks are offering home owners incentives to sell their houses in a short sale to prevent a costly foreclosure to the bank. In fact, some banks are offering struggling home owners as much as $35,000 to do a short sale, according to an article at CNNMoney.

Many home owners have been surprised at banks’ recent willingness to approve short sales.


"Initially, the home owners are skeptical," says Elizabeth Weintraub, a real estate professional in Sacramento, Calif. "The bank may have already turned down their request for a modification. Then, one day, they call and say, 'Let us give you some cash.'"

For banks, the incentives have proven to be a smarter move than letting a property fall into foreclosure.

"The first choice is a modification, but if that's impossible then a short sale is a faster, more efficient solution," Tom Kelly, a spokesman for Chase Mortgage, said. 

With a foreclosure, home owners stop making their mortgage payments and usually property taxes as well. They also often put off maintenance issues, which can cause the home to lose value even more. Foreclosed homes sold, on average, for 22 percent less than homes not in foreclosure in December, according to National Association of REALTORS®’ data. For comparison, discounts for short sales were about 14 percent.

"I've seen a lot of foreclosures for sale where it would cost a lot more than $20,000 to get them into condition to sell again," says John Hayton, a short sale specialist in Orlando, Fla.

Source: “Banks Pay Delinquent Borrowers $35,000 to Sell Their Homes,” CNNMoney (Feb. 10, 2012)


Getting an Edge in Buying Foreclosures

by Tim Hart

Getting an Edge in Buying Foreclosures

First Look. The First Look program offered by Fannie Mae and Freddie Mac allows home buyers who are looking for primary residences to see the bank-owned homes prior to the investors. Home Buyers have a 15 time-period to get offers in before any investors have initiated bidding.

Competitive. Bidding wars are infamously correlated to buying distressed properties. The prices are already heavily discounted therefore low-ballers will not get very far. Many housing experts suggest starting at your best offer—this way you will be all in from the start, but your first offer will be the only one you make.

Deposit. Getting the banks attention can make the difference in a deal. Large deposits are a way of making a bold first step, just be careful. If the deal dissolves, this deposit may be lost.

With these steps, buyers need to always be cautious with their real estate endeavors. Realtors are there to make sure no unreasonable demands are met (ie waving a home inspection). Local Realtors know their market and will be able to assist you in taking the above tips to heart or telling you why in your situation they are not the best move.

Source: “How to Beat the Competition and buy a Foreclosure,” Sun Sentinel (Fla.) (Feb. 5, 2012)


Decrease in Foreclosure Sale Timelines

by Tim Hart

Decrease in Foreclosure Sale Timelines

Foreclosures are speeding up. JPMorgan, Chase, and Wells Fargo trimmed their foreclosure periods by 100 days as 2011 drew to a close. The backlog built-up dam finally broke says a Moody’s Investors Service report. Yet there is a long way to go before the inventories of REO’s are sorted through.

The more efficient foreclosure process boasts stats like:

“Chase averaged 264 days from referral to foreclosure sale in the third quarter for subprime mortgages — a big drop from the 412 days it averaged three months prior to that. Chase boasted the shortest time of any of the big five mortgage servicers. Wells Fargo also greatly reduced its foreclosure timeline to 314 days from 454 days compared to the previous quarter.” 

The delays are still there for mortgage lenders, realtors, and aspiring home owners, but this is improvement.

Source: “Chase, Wells Slash Foreclosure Timelines but REO Lingers,” HousingWire (Jan. 23, 2012)

As a Consumer, do YOU Understand Your Mortgage?

by Brittney Dahlberg

As a Consumer, do YOU Understand Your Mortgage?

Zillow Mortgage Marketplace recently conducted a survey with results indicating home buyers may not fully understand the basic ideas behind real estate mortgages. Zillow Mortgage Marketplace Director, Erin Lantz, noted that, "Most people wouldn't jump out of a plane if they didn't know how to use a parachute, yet each year many buyers commit to the largest loan they will take out in their lifetimes without understanding essential information about mortgages. By simply spending a few hours researching how a mortgage works, and by shopping around for the most competitive rates and fees, buyers can save a lot of money."

  • 44% of prospective buyers are not confident of their knowledge of mortgages or the process as a whole.
  • 57% do not know how ARMs (adjustable rate mortgages) work.

An ARM is a mortgage loan with the interest rate adjusted periodically based on an index reflecting the cost to the lender of borrowing on the credit markets. ARM interest rates adjust according to prevailing rates. Borrowers may experience lower or higher rates when the ARM is reset. 

  • 34% do not understand that lender fees are negotiable and vary by lender.

Lenders are not required by law to charge a constant fee for credit reports and appraisals. As a buyer, ask your agent or shop around for the best fees-they are running a business too.

  • 45% believe they should always buy mortgage discount points.

Depending on how long the buyer intends on owning a home, mortgage discount points, or prepaid interest, may not be beneficial. On average, each discount point on a 30-year loan lowers the interest rate by .125%. Calculating your monthly payment without and with the points and comparing them will get you the true savings each month. If you divide the amount charged for points at closing by the monthly amount saved, the resulting number is the number of months you must keep the loan to break even.

  • 55% do not know mortgage rates fluctuate throughout the day.

Mortgage rates are very similar to stock prices in the amount they can vary from day-to-day. Shopping around and watching overall trends in the market will benefit a buyer.

  • 37% think pre-qualifying for a loan means they have secured financing.

Pre-Qualifying is an approximation built by a loan officer of what a buyer can afford. It is an estimate that is not committed to be funded until a lender has approved it.

  • 42% do not know that FHA (Federal Housing Administration) loans are available for all buyers.

Not just for first time buyers, the FHA insures mortgages on single family and multi-family homes with fixed rate, adjustable rate, energy efficient, graduated payment, condos, and for growing equity mortgages.

 As agents, we have an obligation and should insist that the lenders we are associating with have educated the buyers regarding the type of loan they are committing to and answer any questions they may have. From the exposure agents and lenders have to the market as a whole, we can grow numb to the fact that this world is foreign to many buyers.  If a client does not know what they are getting into, it can only lead to problems for them down the road.  Transactions can be smoother, more efficient, and overall more enjoyable for all involved with a simple effort to clarify, be detailed and thorough, and help answer your clients’ questions.

“Ipsos, a market research company, performed the survey and said that it involved a "nationally representative" sample. The results are considered accurate within +/-3.1% of what they would have been had the entire U.S. adult population been polled.”


BofA's Short Sales Outnumber Its Foreclosures

by HousingWire

BofA's Short Sales Outnumber Its Foreclosures

Bank of America seems to be favoring short sales over foreclosures, at least according to new housing data released this week. The banking giant completed more short sale transactions than foreclosure sales every month for the last year and a half, HousingWire reports. Bank of America completed more than 95,000 short sales in 2010--more than double compared to the year prior.

BofA as well as other banks say the Home Affordable Foreclosure Alternatives program, introduced in April 2010, has helped make it easier to collect documents and reduce the time it takes to close on a short sale transaction. For example, Citigroup says it has dropped its average closing time from 120 days (from when the property was listed to when it closes) to 83 day currently.

"It's a lot easier to qualify now for HAFA than it was in 2010. All I need is a hardship affidavit and one water bill. We're trying to make it as easy as possible," David Sunlin, Bank of America’s real estate management executive, told HousingWire.

Source: “BofA Completes More Short Sales Than REO for Last 18 Months,” HousingWire (June 14, 2011)

Displaying blog entries 1-10 of 10