Archive for the ‘CA’ Category
The Federal Housing Finance Agency’s bulk sales plan, whereby certain banks will allow third party institutional investors to purchase multitudes of bank owned (REO) loans in bulk, is moving ahead at full speed, and is doing so quietly.
Against pleas from members of Congress, the California Association of Realtors (C.A.R.) and others involved in the real estate industry, this program does not offer much for the market nor for individual communities and neighborhoods. In allowing institutional lenders (the identity of which is not being disclosed) to purchase this lender “shadow inventory” (that inventory that is owned by the lenders but not yet on the market), there are several threats to the housing market that are concerning:
• It could bring comparable prices down. Just at the time when home prices are starting to come up, and when demand is high with low inventory, selling large numbers of bank owned homes at discount prices could have significant effects on neighborhoods.
Also alarming, current market data may not have been used. According to C.A.R., old market data may have been used to value the homes that are being sold. With a market that is moving upwards this could create a big problem in some areas, establishing lower sales prices for homes, which in turn bring down the values in those neighborhoods. I know that if it were my neighborhood, and all of a sudden 10 homes sold in the area for way under current comparative market value, I would certainly not be happy. This could be a big problem in areas such as the Inland Empire (Riverside County).
• Increased losses to taxpayers. If these bank owned properties are sold in bulk at discount prices, the burden will fall upon us, the taxpayers, via increased losses on the sale of these homes.
The solution is to put these homes on the market as traditional lender-owned sales. With the market prices trending upwards and the lack of inventory, this is a perfect time to do so. It seems asinine to not consider such an option, as it will save taxpayers, keep the market moving, and keep prices moving up instead of down. And we can’t forget that if these properties sell at higher prices, the lenders also benefit as well!
If you agree that bulk REO sales should not be allowed in California, please contact FHFA:
Federal Housing Finance Agency
400 7th Street SW
Washington D.C. 20024
Graphic courtesy of Dreamstime
Most people who live here, love it here. I am a 100% California girl, have lived here since the day I was born, and have no desire to leave. See what others think of California via moving trends.
Infographic courtesy of C.A.R.
It is official – today California passed the controversial Homeowner Bill of Rights. The controversial bill, which actually consists of a series of bills, was created to protect the rights of mortgage borrowers and those caught in the foreclosure process. The law will take effect January 1, 2013, and focuses on the following:
Single point of contact with lenders: The bill will ease borrower access to their lenders by guaranteeing them a single point of contact in their communications throughout the pre-foreclosure process. Oftentimes borrowers (and agents alike) get the runaround and speak with a different person every time they communicate with the lender. One person may provide information, but on the next call a different person may say something opposite. A single point of contact with the lender could be beneficial.
Dual track foreclosures prohibited: Banks will not be allowed to foreclose on a property while the borrower is attempting to seek a loan modification. Oftentimes, borrowers who have been attempting loan modifications find their home is sold at auction while they are waiting to see if they will qualify. This is due in part to the lack of communication between the different bank departments – the right hand not knowing what the left hand is doing. Many see this as unfair to the homeowner, who is trying to do the right thing to avoid foreclosure.
Homeowner right to sue banks: The bill will allow homeowners to sue their banks under certain circumstances for wrongful foreclosure. This is the most controversial part of the legislation. Many feel it will create frivolous lawsuits, which will lengthen the foreclosure crisis and in turn prevent the housing market from recovering.
Rescue money for blighted neighborhoods: The bill also will provide money to local governments and receivers to fight blight, which resulted from numerous foreclosures and abandoned homes. This is meant to increase property values in these neighborhoods, which in turn will improve local real estate markets.
Protection for renters: The bill will offer protection to renters who live in homes that have been foreclosed upon. Purchasers of these rented homes will be required to honor existing leases, and will be required to give renters 90 days to find a new rental property. Under the current law buyers of tenant-occupied foreclosed homes can refuse to honor leases and even kick out the tenants.
Extension of National Mortgage Settlement provisions: The new bills will extend coverage beyond the 5 lender servicers who were named in the National Mortgage Settlement – if your loan is not covered under the settlement because it is not serviced by one of these 5, the new law will ensure that many of the main provisions of the settlement will apply to your loan.
Despite the controversy, the Homeowner Bill of Rights has noble goals and may actually benefit many borrowers. The lawsuit provision could be disastrous, and it remains to be seen how effective it would be even if used appropriately. All eyes will be on California after January 1 to see how these new laws play out.
Photos courtesy of Dreamstime
Housing Affordability is Up: The National Association of Realtors has reported that housing affordability is at it’s highest level since the 1970s, when such record-keeping started. The Housing Affordability Index measures the relationship between median home price, median family income, and average mortgage interest rates. As the index climbs higher, household purchasing power grows. An index of 100 is the place at which a household with median income is able to qualify for a purchase of a median-priced home; the index in January scored 206. Great news for buyers.
Vacation and Investor Purchases Grow: Rising to the highest level since 2005, vacation home and investor purchases are heating up the market. The National Association of Realtors (NAR) reports that investment purchases rose over 64% last year from 2010 levels. Vacation home purchases rose 7% from 2010. I have definitely felt this to be true, as the majority of my sales in 2011 and again this year have been to investors and those purchasing second/third homes – it’s a great time to negotiate for these buyers.
Fixed Mortgage Rates Keep Falling: Fixed rates have continued to drop, according to a Freddie Mac survey, with a fall again this week for 30 year fixed rates, to 3.62% (compared to 4.60% this time last year). Similarly, 15 year fixed rates and 1 year ARMs also dropped. For more details click here.
California Homeowner Bill of Rights Closer to Approval: The California Homeowner Bill of Rights -which actually encompass two bills – passed by the State Assembly and Senate on Monday, and now go to the Governor for final approval.
The bills will address two main issues: (1) protection from foreclosure of homes while homeowners are working with their lenders on modifications (allowing them to stay in their homes), and (2) establishing a single point of contact with lenders for homeowners in their communications (so they are not passed around to numerous people while trying to work out their modifications – an act that would have a big impact on getting these modifications approved).
The bills will also prevent robo-signing by imposing fines on the lenders for filing any unverified documents, and will allow homeowners to sue before a foreclosure. Lenders of course have been fighting these laws and are against passage. The laws are expected to be passed and would take effect January 1.
California Officials to Use Eminent Domain to Help Restructure Underwater Mortgages: Eminent domain, the process by which the state can take your property for public use, is being considered in a new light in an attempt to help underwater borrowers. The plan would allow seizure of underwater mortgages at a low price, based on fair market value, and would then refinance them (to the homeowner) at a slightly higher amount. The venture capital firm that is financing the seizures would make a profit on the new mortgages, and homeowners would be allowed to participate if they were current on their mortgages. Homeowners would stay in their homes and have new mortgages based on current market values. It will be interesting to follow the path of this clever but controversial plan.
Photo courtesy of Dreamstime