Initial Effects of the Federal Bailout Program

The market is seeing transition as the Federal Bail Out program begins to trickle in to the many sectors of the credit and housing economy.

I have personally seen a trend from the mortgage note holders on my short sale listings to start to pull back from approving short sale transactions. Instead now they are approving loan modifications which were initially turned down the first time the homeowner/seller called the Home Retention Department for assistance in a loan modification. This is a frustrating experience for me as a Listing Agent, as I end up losing listings that I have managed to market and get viable offers for. This of course depends on the lender with whom we are dealing with, some lenders are still co-operating with us towards a successful short sale transaction. This new trend for short sales is beginning to show that they will not be the 1st priority of the lender/mortgage note holder until they have exhausted the new options of the Loan Modification departments that now have federal subsidies to buy down the original mortgage note to what the actual current appraised value is, which is an incredible deal for the financially strapped homeowner.

I have one client that was nine months behind on their mortgage, was initially turned down for loan modification. We had several viable short sale offers in to the bank for approval and the seller tried one last time to see if the new bailout program gave them a second chance. They have been given the wonderful news that they have been accepted to have the loan modified and the original note amount reduced to current appraised value. This family deserved this, I was happy to hear the news, despite my losing a transaction. They truly loved their home and tried desperately to keep it despite their worsening financial conditions.

The upside of this is that I see that the government’s recent actions to promote stimulus for the mortgage lenders to negotiate with homeowners to retain properties in default or that are likely to go into default has begun to work and move in the right direction. I feel that the inventory of short-sale and foreclosure properties will be coming to an end. This new housing trend is something I look forward to in the near future. As a professional Realtor dealing with the banks and mortgage lenders on these financial issues it is a time consuming and sometimes challenging process.

I have included below the Interest Rate update report from my preferred lender Aaron Gordon at Countrywide Home Loans. This last Wednesday we again saw a large drop in the interest rates to 5.75% with one point paid to the lender; an incredible deal in this market when home prices are at historic lows. To be able to buy during the perfect storm of low rates and low home prices is one that I know will not last forever. I recommend that buyers that have been on the fence to buy, take the time to get online and keep updated of the market conditions so that they can take advantage of the incredibly priced deals available today. If we all had crystal balls we would have known exactly when the last market upswing was going to peak, but we don’t and so looking back we should learn that even the media is usually late to report when the market conditions have changed, usually the news is late to report on average six to eight months.

Morgan Stanley just announced this week to its international investors that it was time to get back into the stock market again. It is a New Year coming and a whole new government will take over on January 20th, 2009. I feel a new optimism for the coming year. I just purchased a bank owned home that I feel was a super steal for the quality of home that I was getting. The home I purchased was selling for $850K in 2004, and I bought it for $529K including closing costs that included rate buy down and money for repairs as well. I invested in new carpet, paint and appliances; and my appraisal came in at $590K at close of cscrow. I feel that the home is worth $650K already due to the rehabilitated condition. I made this investment NOW as I believe the time is right to invest again and that I will not be saying to myself next year that I wish I had, but I am glad I did!

I again will adjust my business to adapt to the changes of this evolving market, and continue to keep myself updated and educated on the changes still to come, so that I can serve my clients the way they deserve to be represented.

Please feel free to call and discuss any questions you may have with me. I always appreciate any referrals you have for buyers and sellers that need professional assistance in the Las Vegas and Henderson Real Estate Market.

I also have a new Website dedicated to understanding the Foreclosure Market, please visit or refer it to anyone that is in need of clarification of this complicated Foreclosure Market. http://www.understandingforeclosureslasvegas.com


Gordon Team - Weekend Rate Report – November 7, 2008
"INTEREST RATE DROP ALERT!"

Here we go again!! Rates have come down substantially since Monday.
CONFORMING 30 YR FIXED RATE
5.500% with 2 points
5.625% with 1.5 points
5.750% with 1 point
5.875% with .250 points
6.000% with no points

FHA / VA - 30 YR FIXED
5.500% with 2 points
5.750% with 1.5 points
5.875% with 1 point
6.000% with .250 points
6.125% with no points

NOW is a great time to lock or shop around for a better rate!! Let's hope they stay this way for a while but don't chance it. LOCK TODAY!!

WEEKLY RATE REPORT:
Rates are down from last week. Consumer spending is down and we are facing a weaker job market. This made rates go down. However, don’t plan on them staying that way long. Lenders are tightening lending standards due to a soft economy and record foreclosures. The risks are rising. When risk increases, the price of money reflects the risks. A recent survey of senior loan officers found that about 70% of banks raised their lending standards for prime mortgages. About 90% of banks that offer nontraditional mortgages raised theirs too. Find a rate you like and lock!!

NEW GUIDELINE ANNOUNCEMENTS THIS WEEK:
Construction loans are back in soft markets like Las Vegas. If you have a client who bought a lot but could not secure financing, he can now get a construction loan to finish his dream home. This is great news. Since this is a specialized product, it may not help your business directly. However, it’s one of the more risky loans there is. Bringing it back is a great sign. It shows a measure of lending confidence coming back to our market.

TIP OF THE WEEK:
Escrow Holdbacks Allowed for Repairs and Improvements on Bank-Owned Properties You can now do escrow holdbacks on existing Countrywide REO properties when using conforming loans programs (not including FHA) and a Countrywide loan officer. These holdbacks are allowed in financing of Countrywide-owned properties purchased at either an REO auction or non-auction sale where there is a certain amount of rehabilitation work needed. An escrow holdback is a portion of a loan held in escrow until an additional requirement, usually repairs or unfinished work, is completed. The loan may close and the borrower may occupy the home while incidental work is in progress. Common examples of improvements that may involve holdbacks include exterior painting or flooring, where the property is livable. The cost to make repairs or rehabilitation is placed in an escrow holdback account, along with reserve funds (20% of the repair budget) to ensure completion of work. In all cases, the property must be habitable or livable, and the 20% reserves are required to be escrowed along with the cost to complete.

• Detached SFRs only (no PUDs)
• Owner-occupied only
• Conforming conventional programs only
• Purchase transactions only for Countrywide REO properties
• New and existing construction allowed
• Maximum 95% LTV Allowed
• Mortgage Insurance is required on loans over 80 LTV
• Full appraisal required
• Property does not need to be purchased at an auction
• The property must be livable and must have evidence of working utilities, bathrooms, etc.
• Items such as paint, floor coverings or minor wall damage does not affect livability
• Health or Safety Hazards Escrow Holdbacks are NOT allowed for properties with Health or Safety Hazards
• Minimum Escrow Withhold Amount 120% of the total estimated cost to complete the required work must be held in escrow
• Completion of Work Must be accomplished within 120 days from the loan closing

Why Short Sales Make Sense Even if You Have to File a Bankruptcy

Many bankruptcy attorneys are telling their clients to not do short sales. This may make sense from the attorney's point-of-view, but there are reasons why you might want to consider a short-sale even if you have decided to file bankruptcy:

BUT if you factor in the long term goals of most people, like owning a home, it makes sense to do everything you can to ensure you have a clean credit file. Short sales look better on your credit in the long run, but sometimes people just cant deal with more stress, thats just how it is and they will simply deal with the resulting consequences later when they are in a better state of mind.

It should be noted here, because I'm sure some guy that's been doing short sales, or mortgages or selling Hyundai's for a tenth of the time I have...(I've never sold Hyundai's, just the other stuff) will make some comment about how despite my opinions short sales are still a negative item on your credit.

He would be correct, its just like settling a credit card for less than you owe, it will most likely report on your credit that you did not fully pay the debt. Sometimes we are successful at getting the lender to report it as paid in full, but you shouldn't rely on that as any kind of a certainty...if it happens its a nice bonus, but don't plan on it. So it is BAD, but it IS NOT as bad as a foreclosure nor is it as bad for as long as a foreclosure.

By law, foreclosure stays on your credit for 7 years. Bankruptcy also remains 7 to 10 years depending on what chapter you file under. The major CRA's or Credit Reporting Agencies such as Trans-union, Experian and Equifax do not release to the public how they calculate credit scores, however there are ways out there to simulate how events like bankruptcy and foreclosure factor in to your score, and typically a settled account such as a short sale or a credit card settlement, will affect your credit score negatively for 12 months. After that first year these simulators suggest that the negative impact begins to greatly diminish.

Read more...

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If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Nevada Department of Business & Industry Names Short Sales as One Alternative to Foreclosure

There are a number of ways that upside-down homeowners can avoid foreclosure. Short Sales are an important alternative among them.

SHORT SALE

In a short sale, you sell the house for less than you owe. You can't do a short sale without the lender's permission.

With a short sale, you make necessary repairs to the house; pay the real estate commission, taxes and government fees; and give the lender whatever money is left over -- a partial payment.

Read more...

If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

FHA Relief Program HOPE Starts Today--October 1, 2008

As part of the Relief Program, passed by Congress and signed into law on July 31, 2008:

The HOPE for Homeowners (H4H) program was created by Congress to help those at risk of default and foreclosure refinance into more affordable, sustainable loans. H4H is an additional mortgage option designed to keep borrowers in their homes.

The program is effective from October 1, 2008 to September 30, 2011.

As many as 400,000 homeowners could avoid foreclosure through this program over the next three years. If you are having trouble making your mortgage payments, HOPE for Homeowners may be able to help you, by refinancing your loan into a new 30-year fixed rate loan with lower payments.

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If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Myths about Foreclosures from Home Ownership Preservation Foundation

The Home Ownership Preservation Foundation helps home owners stay out of bankruptcy. Their site is worth visiting. We especially liked the Myths:

MYTH: My mortgage company would rather foreclose on my home than keep me in it. The mortgage company sustains an average loss of about $58,000 when foreclosure occurs (TowerGroup study). They are in the business of providing mortgages - not owning or selling homes - and would always prefer to keep you in your home. By calling the Homeowner's HOPE Hotline™ at 888-995-HOPE, we'll help you work with your mortgage company to pay back your loan and stay out of foreclosure.

MYTH: I’m getting many offers of “help” from a variety of different people. Are they all scams?

Because of the public nature of foreclosures, anyone is able to access foreclosure listings on a daily basis. These include the owner's name and address at the very least, and in some states, they could include other sensitive information. Armed with this data, scammers can take advantage of a desperate owner. Here's what to look for to avoid foreclosure scams:

1. Your home's ownership changes hands. A common scam is where a party buys your home, then lets you rent it back. It sounds good at first, but you're losing your property, and your new landlord can now legally kick you out of your home with little to no notice.

2. You're asked to pay something up-front and/or you're asked to stop making mortgage payments. Usually, these scams involve paying large sums of money to some sort of "foreclosure prevtention service." These services offer to do what our counselors do: counseling, a budget and approaching the mortgage company to consider a payment plan. But the services don't do always do this work thoroughly, or follow through at all. The most important thing to remember when it comes to any foreclosure service is this: Foreclosure advice and direction should always be free.

3. You're under pressure to act immediately. Some will prey on the stress and anxiety surrounding the foreclosure process by convincing owners to sign things they don't understand. Don't sign anything without either first talking to an attorney, your mortgage company or a nonprofit foreclosure prevention organization like the Homeownership Preservation Foundation.

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If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Short Sales and Your Credit Score

From a great article on Short Sales & Credit:

It is quite possible to do a short sale and still have decent credit afterwards. When you do a short sale, you can sometimes negotiate with the bank about two major issues: how they report your credit, and how whether they can go after you later for their financial losses.

The reason you can sometimes negotiate this is that you are not letting your house go through the foreclosure process and leaving it to the bank to deal with. When you do a short sale you are helping the bank. You are getting rid of a problem for them.
Most people don't realize that when they tell the bank that they are not going to be able to pay their mortgage anymore, the bank has a problem. And by selling the house, you are saving the bank tens of thousands of dollars they would otherwise spend going through the foreclosure process, getting the house back and fixing it up, marketing it and selling it.

Since you are doing this for the bank, you can make some requests in return. Especially if you have someone sharp helping you with the short sale.

If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Short Sales Help Homeowners Avoid Foreclosure

This is an article from last year about Short Sales. While the market has change, the concept is still the same: Selling Short hurts, but not as much as foreclosure.

If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.