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Eminent Domain Plan and Real Estate

by Tim Hart

Freddie Mac is making a bold move by threatening legal action against the city of Richmond, CA because they are planning to use eminent domain to seize underwater mortgages.

  • Richmond’s Stance: In offering to buy troubled loans at below market value from mortgage companies, they are then able to write down the loan balances for the new home owners and refinance the loans into government-backed mortgages. IF the mortgage companies refuse to allow them to buy the loans, they city will play the eminent domain card and seize them. This whole plan is theorized to help residents curb the loan debt and avoid foreclosure. Circumventing the federal government in this process is the key point. Richmond officials hope this new method will speed up the currently stagnantly moving foreclosure aid assistance. “We’re not willing to back down on this,” says Richmond Mayor Gayle McLaughlin. “They can put forward as much pressure as they would like, but I’m very committed to this program, and I’m very committed to the well-being of our neighborhoods.”

Richmond is not the only city considering this option for their residents. About two dozen local and state governments — including Newark, N.J., Seattle, and several other cities in California — have been considering similar uses of eminent domain. 

  • Freddie Mac’s Stance: Voicing cautionary rhetoric, Freddie Mac feels the loan sales will be made only under pressure instead of being clean, tidy, and voluntary as assumed by Richmond. Freddie Mac and its backer, the Federal Housing Finance Agency, are considering taking legal action against such a plan.

This new method of circumvention may threaten real estate recovery. "We are concerned that the proposed use of eminent domain would slow the return of private capital to the housing finance system, and threaten our fragile housing recovery," writes California House Republicans John Campbell, Gary G. Miller and Ed Royce in a letter to Housing and Urban Development Secretary Shaun Donovan. "We do not believe this is appropriate public policy, even if this use of eminent domain were to survive the inevitable legal challenges that would follow any decision to seize mortgages.”  

Freddie Mac Considers Legal Action to Block Eminent Domain Plan

http://realtormag.realtor.org/daily-news/2013/06/13/congress-hud-eminent-domain-proposal-threatens-recovery

http://realtormag.realtor.org/daily-news/2012/06/13/can-eminent-domain-be-used-take-over-mortgages

Short Sale Predictions: Steep Drop Off Of Inventory

by Tim Hart

 The name short sales is becoming much more accurate to the shortening frequency short sales are entering the market. Freddie Mac initiated Standard Short Sale program on November 1st. Since then, the short sale process has become easier and more transparent.

"We estimate that the time to complete a short sale will decrease by approximately 50 percent to 75 percent," as a result of the changes, writes Tracy Mooney, Freddie Mac’s EVP in a recent blog post.

Here is a list of changes that took effect:

  • Mortgage servicers have 30 days to make a decision on a short sale once they receive an application. If they need to negotiate with a third party, they have 30 additional days. A final decision on the short sale must be made within 60 days. 
  • Mortgage servicers are required to acknowledge they received the short sale application within three days of submission. Servicers must provide weekly status updates if they end up needing more time to review the application past the initial 30-day period.
  • Mortgage servicers have authority now to approve short sales when qualifying financial hardships for home owners who are past due or current on their mortgage payments. 
  • Mortgage servicers are also now able to approve short sales without seeking a separate review by the mortgage insurance company.
  • Following a short sale, home owners may be able to qualify for up to $3,000 in relocation assistance. 

Source: “The Shorter Short Sale: Long on Borrower Benefits,” Freddie Mac Executive Perspectives Blog (Jan. 22, 2013)

 ATHOMEINBOZEMAN
 

 

 

“Distressed properties can have great appeal,” says Wendy Forsythe, executive vice president at Atlantic Pacific Real Estate. “Discounted prices and historically low interest rates make these homes affordable to many families who might otherwise not be able to buy a property. But buyers also need to be selective because not every distressed property is a bargain.” 

Typical discounts on foreclosures are at about 19% on average. That number gets brought up and buyers have a tendency to become blinded to other relevant details that are top priorities in real estate. Here is a convenient list to keep in mind if you are looking to save the big on the distressed property sales:

Know any prior claims on the property. “If a distressed home has been financed with two or more loans then the sales process can be far more complex,” according to an article for RISMedia written by Atlantic Pacific Real Estate.

Get Financing. How does a buyer hope to purchase the property? By preparing financing in advance, buyers are able to move more efficiently when a distressed property does come on the market.

Judge the Condition. Getting a deal my result in getting in over your head. Getting a thorough home inspection prior to committing financially to anything!

Foresee Delays In Advance. Ask your realtor to talk you through any potential delays.

Source: “Buying a Distressed Home: What You Need to Know,” RISMedia (July 15, 2012)

 

Bank of America Offers $30K to Short Sale Owners

by Tim Hart

 

To curb the rate of foreclosures, BofA is offering $25,000-30,000 of assistance in relocation fees if they are willing to complete the short sale instead of foreclosure. Why? Banks are seeing short sales as a money saving avenue than if a homeowner falls into foreclosure. The difference between the two processes is simple; short sales tend to give the bank ownership of the home more efficiently leaving the condition of the property optimal for a speedy turn around on the selling end with low fees. In addition, data reveals that short sales bring in more money than foreclosures in the long run.

With that information at hand, banks have started to put forth special offers for homeowners struggling to enter into either short sales or foreclosures. BofA ran a pilot program in Florida and JPMorgan Chase piloted a similar program with the same incentive.

"This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home," says Bob Hora, a Bank of America executive.

Source: “Bank of America Offering up to $30,000 for Short Sales,” CNNMoney (May 15, 2012) andBank of America

Read More

BofA Starts Writing Off Borrowers' Mortgage Debt

Abandoned, Deteriorating Homes … Just Let Them Burn?

 

 

 

Real Estate Market & Short Sales

by Tim Hart

 

The short sale trend is still surging. In fact, short sales are passingforeclosures 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)

 

Government Reduces Foreclosure Inventory

by Tim Hart

 

In 2011, the government cut the foreclosure inventory by half. “From the end of 2010 to 2011, Freddie Mac, Fannie Mae, and the Department of Housing and Urban Development saw a 49 percent reduction in the number of REO properties it owns. The three government enterprises held about 150,700 properties as of Dec. 31, 2011, compared to 296,000 at the end of 2010.”

 

Who Decreased By How Much?

HUD: Reduced foreclosures by 32,000, a 47% decrease.

FANNIE MAE: Decreased by 118,000, 27% of its total inventory.

FREDDIE MAC: Dropped 16% of REO inventory, 60,500 compared to 72,000 in the prior year.

 

Read More

NAR: REO Rental Programs Largely Unnecessary

Determining the Speed of Foreclosures

Source: “Government-held REO Halved During Robo-Signing Freeze,” HousingWire (March 9, 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)

 

One-Year Cap of Foreclosures Deficiencies

by Tim Hart

One-Year Cap of Foreclosures Deficiencies

The House of Representatives introduced a new bill on Tuesday that seeks to limit and standardize the timeline in which a mortgage company can go after a home owner following a foreclosure for a deficiency judgment.

Dubbed the Fairness in Foreclosure Act of 2011 (H.R. 3566) wants to place a one-year cap on deficiency judgment (with the exception of states that already have shorter time limits in place). In addition, the bill proposes that mortgage lenders will not be allowed to go after “low-income” borrowers for a deficiency judgment.

"A deficiency judgment after foreclosure seems to be one of the greatest injustices that occur to home owners after they have gone through the arduous foreclosure process," Rep. Edolphus “Ed” Towns, D-N.Y., who introduced the bill, said in a release. "Not only are they behind by thousands of dollars on their mortgage payments and facing public auction of their houses, the ordeal may continue indefinitely."

Source: “House Bill Proposes 1-Year Limit on Foreclosure Deficiencies,” HousingWire (Dec. 7, 2011) and “Rep. Town Introduces the Fairness in Foreclosure Act,” Congressman Ed Towns (Dec. 6, 2011)

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

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