February 8, 2010

Pending Home Sales Stabilize, Remain Above Year-Ago Levels

Washington, February 02, 2010

Pending home sales have leveled from a market swing driven by response to the home buyer tax credit, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in December, increased 1.0 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1. In November, the monthly index had fallen by 16.4 percent from surging activity in preceding months.

Lawrence Yun, NAR chief economist, said it’s important to recognize how the tax credit is skewing market data. “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he said. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years.”

Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

The PHSI in the Northeast rose 2.3 percent to 76.1 in December and is 14.9 percent higher than December 2008. In the Midwest the index increased 5.2 percent to 86.9 and is 8.7 percent above a year ago. Pending home sales in the South rose 2.2 percent to an index of 98.4, and are 5.5 percent higher than December 2008. In the West the index fell 3.8 percent to 119.9 but is 18.6 percent above a year ago.

Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010. “While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010,” Yun said. Last year there were 5.16 million existing-home sales.

He added that one of the greatest benefits of rising sales will be firming home prices. “For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” Yun said. “As a result, the housing wealth for many middle class families has begun to stabilize.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

Existing-home sales for January will be reported February 26 and the next Pending Home Sales Index will be on March 4; release times are 10 a.m. EST.

Article taken from www.realtor.org

http://www.realtor.org/press_room/news_releases/2010/02/stabilize_remain

February 8, 2010

Short Sale and REO Executive Appointed at Bank of America Home Loans

According to a recent company announcement, Matt Vernon has been named short sale and real estate owned (REO) executive for Bank of America Homes Loans.

In his new position, Vernon will develop and implement initiatives to manage and streamline the bank’s efforts to use short sales and other property liquidation tools to prevent foreclosures. In addition, Vernon will oversee the management and marketing of properties in the bank’s REO portfolio.

“The distressed economy is creating extraordinary volume on mortgage servicers in short sales and post-foreclosure REO activities,” Vernon said. “We know we need to improve processes and efficiencies in these areas. We have

begun taking productive steps, and I look forward to working with real estate professionals, customers, investors, and our team on ways we can accelerate that progress.”

Vernon, a 15-year veteran of the financial industry, moves to the loan servicing division from roles in the bank’s residential mortgage origination business. His most recent position in new loan production was as enterprise sales executive, leading mortgage originations and cross-selling efforts through Bank of America’s network of more than 6,000 banking centers.

Previously, Vernon led the bank’s consumer real estate retail sales channel, overseeing 150 offices and more than 2,000 mortgage loan officers. He began his Bank of America career in a banking center in Baltimore and was promoted to broader leadership positions to become division executive sales manager over 479 banking centers in five Mid-Atlantic states before moving into consumer real estate financing.

“Throughout his 15 years with Bank of America, Matt has demonstrated tremendous acumen in strategic planning, performance, customer focus and, other areas that will serve him well in his new position,” said Rebecca Mairone, national servicing executive for Bank of America Home Loans. “This gives him a clear understanding of realty markets and the real estate professionals who play such an important role in short sales and REO marketing.”

February 8, 2010

Administration Updates Documentation Collection Process and Releases Guidance to Expedite Permanent Modifications

WASHINGTON – As part of the Administration’s ongoing housing market stabilization plan, the U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) today released updated guidance for servicers participating in the Administration’s mortgage modification program. This guidance refines the documentation requirements in order to expedite conversions of current trial modifications to permanent ones.

“With more than 850,000 homeowners in trial and permanent modifications, we are providing immediate relief to struggling homeowners,” said Phyllis Caldwell, Chief of Treasury’s Homeownership Preservation Office. “Today’s guidance represents our commitment to more efficiently move qualified homeowners into permanent modifications.”

“Increasing the number of borrowers receiving permanent modifications under HAMP is critical to our efforts to preserve affordable and sustainable homeownership,” said HUD Senior Advisor for Housing Finance William Apgar. “While we continue to meet our goals to provide immediate assistance, the updates announced today should enable servicers to transition borrowers more quickly and easily from trial to permanent modification.”

On December 23, 2009, the Administration required most trial modifications to be placed in a temporary review period to ensure that all borrowers are being fairly evaluated for the program. During this temporary review period, servicers were not permitted to cancel an active HAMP trial modification for any reason other than failure to meet the HAMP property eligibility requirements. This allowed servicers to convert a significant number of trial modifications to permanent ones. In fact, the total number of conversions more than doubled in December. Guidance released today will help improve this conversion process for the future.

The updated process requires that key documents, including proof of income, be obtained from the borrower before a borrower evaluation can begin. This more robust requirement of upfront documentation will make it easier and quicker to convert trial modifications to permanent modifications and enable servicers to use their resources more effectively.

Guidance Details

Supplemental Directive 10-01 provides guidance on two major issues:

1) New Requirements that Documentation be Provided Before Trial Modification Begins

Today’s guidance refines the documentation process and makes it easier for eligible borrowers in trial modifications to get permanent modifications quickly. Under this guidance:

A simple, standard package of documents will be required prior to the servicer’s evaluation of the borrower for a trial modification. This process will be required for all new HAMP modifications that became effective after June 1, although mortgage servicers may implement it sooner.

2) Converting Borrowers in the Temporary Review Period to Permanent Modifications

In December, Treasury implemented a review period through January 31 to provide servicers additional time to collect and submit missing documentation for borrowers in trial modifications, to require that borrowers be notified of any missing documents, and to give borrowers an opportunity to dispute and correct any erroneous information in their applications. Today’s guidance clarifies for servicers the proper procedures for conversion of those borrowers who are current on their monthly payments to permanent modifications.

Background

The Home Affordable Modification Program aims to help responsible American homeowners maintain a sustainable monthly mortgage payment through a pay-for-success framework that aligns incentives of borrowers, lenders and servicers. Over 900,000 Americans have begun trial modifications since the program’s inception and over 110,000 have been approved for permanent modifications as of December 31, 2009. The median monthly savings for individual homeowners is more than $500 per month. Over 100 servicers have signed up to participate in HAMP, covering more than 89% of mortgage debt outstanding in the country.

January 28, 2010

Supplemental Directive 10-01 is available at https://www.hmpadmin.com/portal/docs/hamp_servicer/sd1001.pdf

February 8, 2010

FTC Rule Bans Up-Front Fees for Modifications

The Federal Trade Commission has proposed a new rule that would prohibit third parties, including loan modification specialists and loss mitigation attorneys, from collecting payment for foreclosure prevention services until after they obtain a documented offer from a lender or servicer for a modification or other form of mortgage relief.

“Homeowners facing foreclosure or struggling to make mortgage payments shouldn’t have to contend with fraudulent ‘companies’ that don’t provide what they promise,” FTC Chairman Jon Leibowitz said. “The proposed rule would outlaw up-front fees so companies can’t take the money and run.”

The FTC has brought 28 cases against companies suspected of foreclosure rescue and mortgage modification scams, and state and federal law enforcement partners have brought hundreds more. According to the agency, generally these cases charged that companies do not provide the services they promise and that they misrepresent their affiliation with the government and government housing assistance programs, including the Making Home Affordable program.

The FTC notes that historic levels of consumer debt, increased unemployment, and an unprecedented downturn in the housing market have contributed to high rates of loan delinquency and foreclosure, and the agency says this mortgage crisis has launched an entire industry of companies purporting, for a fee, to obtain loan modifications or other relief for consumers facing foreclosure.

“Far too many homeowners have paid up-front fees to bad actors who promised loan modifications but never delivered,” Treasury Secretary Timothy Geithner said. “I commend the FTC for proposing a strong set of safeguards to protect consumers from these predatory practices.”

The proposed rule also would bar providers from telling consumers to stop communicating with their lenders or mortgage servicers. It would also require them to disclose to consumers that they are for-profit businesses, the total amount consumers will have to pay, that neither the government nor the lender has approved their services, and that there is no guarantee that the lender will agree to change their loan.

The rule would apply to all for-profit companies that, in exchange for a fee, offer to work with lenders and servicers on behalf of consumers to modify the terms of mortgage loans or to take other steps to avoid foreclosure. Entities that own or service mortgage loans are exempt, and attorneys would have limited exemption if they represent the consumer in a bankruptcy or other legal proceeding.

The FTC is seeking public input, particularly from attorneys and other professionals, on the notice of proposed rulemaking.

February 1, 2010

Sellers

A short sale may be your best alternative if you have financial trouble and a house that will not sell for enough money to pay off all the debts associated with the home. It is not for everyone. It is not for people who do not have a financial crisis, because they will not qualify with their lender. Lenders will not let you fail to pay back a loan just because you do not feel like it, it has to be impossible for you to pay it back.

Realtors used to say they could not help homeowners who were “underwater” where their home would not bring enough to pay off the liens and the homeowner did not have the money to pay the balance. Short Sales are a tool just for this situation. Price the house so that it will sell, and negotiate with the lender to pay everything possible on the loan.

You need to evaluate the alternatives. You can let the bank foreclose. But, that has worse effects on your credit and the image of the sherrif evicting you from your house may be something you do not want your children and neighbors to see. If you have only one lien (only one loan and no other secured debts), you might consider giving the bank a deed in lieu of foreclosure. That may work for some people, particularly if you negotiate a full release form the rest of the debt. However, it has worse consequences on your credit. You can try a loan modification. With the new legislation and regulations, there may be a way where you can get your payments in line with what you can afford so that you can keep the home.

A short sale is not an easy process. You have to get the buyers to be patient, as the lenders may take a while to review the offer. You need to realize that you might pay income tax on the amount you do not pay back, as discussed in a complete post on this site about tax consequences. You may qualify to pay no income tax if it is your primary residence being sold and you meet other requirements. You need to look into whether the bank will accept the payoff in full settlement of the debt, or whether they are going to chase you for the balance owed after the sale closes.

Some people will tell you that you have to be behind in your payments to do a short sale. That is not true, although some banks have some odd rules.

Some people will tell you that you cannot do a short sale on an investment property. That is not true, but you stil have to show financial hardship.

One oddity of this process is the real negotiation is done with the bank and lien holders. Normal negotiations in real estate sales are between the buyer and the sller. But, if you are not paying income tax on the amount you are not paying back to the bank, you may not care what the house sells for. Also, a lower price will make it sell quicker and elmininate your pain faster. However, the bank will only accept a sale that is close to market value, so you have to price the home well. Just like Goldilocks, the price cannot be too high so that the house does not sell and it cannot be too low so that the bank does not approve the sale. Pricing has to be just right.

If you have a Realtor who sent you to this website, you have found someone schooled in short sales, so read what you need here and listen to their counsel. If you do not have a Realtor to quide you through this complicated process, contact us using the form below, because our mission is to get more short sales done by properly trained Realtors throughout America so we can get out of this financial crisis.

If you would like to sell your house in the Char/Meck area of North Carolina, or be referred to a short sale expert anywhere in America, use this form. It is secure and we keep your information confidential.