Distressed Housing Market Shrinks Dramatically in Last 5 Years

Distressed housing market shrinks dramatically since housing downturn of Great Recession

LOS ANGELES (March 10) – Vastly improved home prices over the past five years have changed the landscape of California’s distressed housing market, which is now just a fraction of what it was during the Great Recession, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

In January 2009, 69.5 percent of all homes sold in California were distressed, which includes short sales and real estate-owned (REOs) properties. Five years later, that figure has shrunk to 15.6 percent.  More specifically, REOs comprised 60 percent of all sales in January 2009, while short sales made up 9.1 percent of all sales but rose to as high as 25.6 percent in January 2012. Short sales currently make up 9.2 percent of all sales.

During the same time period, California’s median home price has soared more than 64 percent from $249,960 in January 2009 to $410,990 in January 2014.

“The dramatic drop in the share of distressed sales throughout the state reflects a market that is fully transitioning from the housing downturn,” said C.A.R. President Kevin Brown.  “Significant home price appreciation over the past five years has lifted the market value of many underwater homes, and as a result, many homeowners have gained significant equity in their homes, resulting in fewer short sales and foreclosures.”

The statewide share of equity sales hit a high of 86.4 percent in November 2013 and has been above 80 percent for the past seven months.

In some of the hardest hit California counties, the distressed market in January 2009 was 93.6 percent in Stanislaus County, 93 percent in San Joaquin County, 89.5 percent in San Benito County, 86.1 percent in Kern County, 85.6 percent in Sacramento County, 84.2 percent in Fresno County, and 83.6 percent in Monterey County.  The distressed market now has shrunk to 24.8 percent in Stanislaus, 25.1 percent in San Joaquin, 17.5 percent in San Benito, 18.4 percent in Kern, 19.9 percent in Sacramento, 26.3 percent in Fresno, and 16.9 percent in Monterey counties.

Of the reporting counties, San Luis Obispo, Orange, Santa Clara, and San Mateo counties held the lowest share of distressed sales in January 2014 at 10.2 percent, 9.5 percent, 7.7 percent, and 6.8 percent, respectively.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 165,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Single-family Distressed Home Sales by Select Counties

Distressed Sales by County	Jan. 2014	Jan. 2009
CA	15.6%	69.5%
El Dorado	20.1%	63.0%
Fresno	26.3%	84.2%
Kern	18.4%	86.1%
Los Angeles	15.8%	62.4%
Monterey	16.9%	83.6%
Orange	9.5%	60.3%
Placer	15.1%	68.1%
Riverside	15.6%	79.4%
Sacramento	19.9%	85.6%
San Benito	17.5%	89.5%
San Bernardino	21.7%	81.9%
San Joaquin	25.1%	93.0%
San Luis Obispo	10.2%	52.2%
San Mateo	6.8%	48.2%
Santa Clara	7.7%	68.0%
Santa Cruz	11.6%	56.6%
Stanislaus	24.8%	93.6%
Tulare	20.0%	45.8%
Yolo	13.3%	74.5%

Bank Faces Lawsuit Over Excessive Fees

Are you facing or someone you know facing foreclosure? There are sources out there to help you! Call me for a list of free resources!  Laura Key 310.866.8422

JPMorgan Chase faces a lawsuit that alleges the bank imposed overly high or unnecessary fees on delinquent borrowers. The banking giant tried to get the case dismissed, arguing to the courts that the claims were unjust, but a federal judge ruled the lawsuit should proceed. 

Borrowers are accusing the bank of “imposing excessive or unnecessary fees to inflate profit, including on services performed by third party vendors, cheating thousands of already-strained borrowers out of millions of dollars,” Reuters reports. 

Among the fees in question range from $95 to $125 for “broker’s price opinions.” The plaintiffs, who reside in Tennessee, California, and Oregon, claim that the BPOs cost $30 to produce and that according to Fannie Mae guidelines they should not cost more than $80.  

Similar lawsuits over mortgage fees charged to delinquent borrowers are pending against Wells Fargo and Citigroup. 

Source: “JPMorgan must face lawsuit challenging mortgage fees,” Reuters (June 14, 2013)

Wells Fargo, Citigroup Halt Foreclosure Sales

Banks seem to be moving in the right direction on this action.  But is it too late? Call me if you are in need of help!  Laura Key 310.866.8422

Wells Fargo and Citigroup have temporarily halted foreclosure sales in several states, taking precautions after a federal regulator released new guidance on minimum standards for foreclosure sales. 

The Office of the Comptroller of the Currency (OCC) recently released the new standards. The OCC’s directive mostly consists of 13 questions banks need to ask themselves before selling a home in foreclosure, such as whether the borrower is protected from foreclosure by bankruptcy or if the borrower is in an active loan modification plan. 

JPMorgan had also mostly stopped its foreclosure sales after the OCC’s standards were released, but has since resumed sales.

Wells Fargo, the nation’s largest mortgage originator, has seen a dramatic drop in foreclosure sales while significantly decreasing the number of sales it’s processing. For example, foreclosure sales by Wells Fargo in California, Nevada, Arizona, Oregon, and Washington plummeted from 349 a day in April to less than 10 a day, according to Foreclosure Radar, a real estate monitoring firm based in California.

"Wells Fargo has temporarily postponed certain foreclosure sales while we study the revised guidance from the OCC," a Wells Fargo spokeswoman confirmed for American Banker. Citibank officials also confirmed the reason behind their halt in sales was to carefully review the new guidance. 

"The OCC did not direct a slowdown or pausing," says OCC spokesman Bryan Hubbard. "However, if servicers are not certain they are meeting these standards, pausing foreclosures is a responsible and productive step."

Are you facing foreclosure? Contact me for a free consultation!

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Source: “Wells, Citi Halt Most Foreclosure Sales as OCC Ratchets Up Scrutiny,” American Banker (May 17, 2013)

Short Sale Process Cut in Half or More, Freddie Mac Says

Short sales are getting much shorter, Freddie Mac says. The mortgage giant launched a Freddie Mac Standard Short Sale program on Nov. 1 that sought to speed up the short sale process and make it 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.

Among the changes that took effect Nov. 1, 2012:

• 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)

Underwater Sellers, what are your Options? Cash to Short Sell? Cash for Keys? Foreclosure?

We get these questions and would like to share our thoughts about this dilemma.  Some home owners who are underwater may not know their alternatives. The “Cash for Keys” is a program that banks do for some home owners. The “new twist” you’ll be hearing more about is “Cash to Short Sale”. Lenders are figuring out that if there is anything they can do to make a deal happen, they need to do it. This apparently is what is starting to take place with people that are trying to “short sale” their homes. Instead of “Cash for Keys” to homeowners that lose their homes to foreclosure. This was not offered to home owners who were trying to short sale their home. Often the banks would basically give them a certain time to complete the short sale until they foreclosed.

Now because of tight lending practices, new buyers would take so long to qualify, it is often “too little, too late” to close escrow before foreclosure.  When that happens it seems everybody loses. The lenders lost a willing & able buyer and the seller because, now, not only did they lose their home to a foreclosure, but also because a foreclosure was now on their credit report instead of a short sale. (It may be better to have a short sale than a foreclosure on a credit report?) Plus, the buyer may or may not wait until the home came back on the market at a later date.

Source:  http://realtyworld-sierraproperties.com by Douglas Zeller

3 Ways Homebuyers Kill Their Own Real Estate Deals

Here are three ways homebuyers are defeating their own deals in today's market:

1. House hunting too long. As many as 60 percent of the homes for sale in some markets are short sales. Many other listings are bank-owned (also known as real estate owned or REO) properties, and those homes tend toward two extremes: terrible condition, or so nice at such a low price they receive multiple offers.

Even the nicer, nondistressed homes on the market can end up in and out of contract over and over again due to appraisal or other lending-related issues.

As a result, it is not at all bizarre to hear homebuyers today say they've been house hunting for a year, 18 months, even two or three years. When you house hunt that long, you become susceptible to house hunt fatigue, which causes irrationally extreme overbidding out of sheer exhaustion.

Alternatively, it can cause you to settle for whatever house you can get, even if it doesn't actually meet your needs -- then spend the next 10 years obsessively spending to upgrade, improve, repair and furnish the place to try to make it more like the home you actually wanted. 

Both of these outcomes negate and deactivate the bargain you stood to score. 

To avoid house hunting too long, it's uber-important to get and stay clear on the differences between what you want and what you need, and to work with a local real estate professional you trust.

Look to your agent to get and keep your expectations centered in reality, so you can make more strategic decisions throughout your entire house hunt, like house hunting in a price range where you're likely to both find homes that will work for your life and be successful in your efforts to obtain one.

2. Making lowball offers way too low. Overbidding seems like an obvious way to cancel out the bargain potential of your deal. But making excessively low offers -- offers sellers couldn't afford to take if they wanted to -- can have the very same result.

Buyers who think they can operate strictly on the basis of buyer's market dynamics -- without realizing that most sellers will need to make enough to pay off their mortgage or at least receive the fair market value for their home -- are cutting off their own noses to spite their faces, all in the name of trying to score an amazing deal. 

Note to "lowballers": If you don't actually secure the home, the superlow price you offered is no deal at all.

3. Freak-outs, stress, drama and mayhem. Once was, it was mostly the buyers uneducated about the homebuying process who tended to freak out and stress the most, especially at the top of the market. These were the folks who found themselves defeated at every turn by buyers who knew what they were up against and were prepared to make their best offer on their first offer.

Fast forward, and now the norm is for buyers to spend much more time reading up on what to expect, but the inundation of information can create brand new mindset management challenges.

Almost every buyer is stressed about whether they can qualify for a loan, and about buying into a down market. Some buyers try to apply national headlines about home prices being depressed to the superlocal dynamics of their neighborhood market.

This is unwise if you happen to be, for example, trying to buy a home in the boomtown real estate markets of Silicon Valley. Others go the opposite direction and deny that the basic truths about, say, buying a short-sale listing will actually apply to them (attention homebuyers: buying a short sale usually takes a long, long time). 

The emotional freak-outs that result from having your expectations shattered, sometimes brutally, in the course of buying a home often lead to panic-based and fear-based decisions, which can be costly in the short and long term. Additionally, the stress itself can take a toll on your ability to be productive at work, and can even impair your relationship with your mate, neither of which are worth any deal you think you stand to strike. 

Again, managing your expectations by working with a trusted broker or agent you feel comfortable relying on to understand the market in your neck of the woods and the type of transaction you want to pull off is essential to downgrading the role emotion plays in your real estate decision-making.

Call Laura Key today to schedule a one on one appointment to learn more!  310.866.8422 or email Laura.A.Key@gmail.com

Source: http://lowes.inman.com/newsletter/2012/02/02/news/175752 by Tara-Nicholle Nelson 

The Most Important Short Sale Facts!!!

Do educate yourself. This is THE most important thing you can do.  Short sales can be complicated. You need every bit of information you can get when you jump into the short sale process.

Don’t wait until it’s too late. If you drag your feet and hide from the fact that you’ve stopped making mortgage payments, it will cost your credit rating and it will put any chances of a short sale in risk.

Do be diligent. There have been very closable short sales that fail because the homeowners either stop responding to their agents, stop returning paperwork, stop returning phone calls, stop caring, etc. It can be a difficult process, but at the end of it you will be free of the mortgage, the upside-down house and your financial future will have a better foundation.

Don’t stop taking care of your home. Yes, you will be moving, but if you stop mowing the lawn or keeping the place tidy, that unkemptness will discourage any potential buyers.

Do keep paying your HOA dues! Any unpaid HOA dues will need to be settled either before or at the close of a short sale escrow. Sometimes the buyer or the first lien mortgage bank will contribute to these outstanding bills, but not every time. And Home Owner Associations will send your defaulted HOA bill to a collection lawyer who will slap you and your property with their own outrageous charges.

Don’t rent your home out. In these economic times there are unsavory renters, many of them lost their own homes, that don’t mind giving you the first month’s rent and a security deposit, only to never pay you another payment. You lose the house to foreclosure, but they live rent free for the foreseeable future.

Do your homework when choosing a real estate agent or broker when you go to list your house for a short sale. The wrong short sale agent can ruin your chances of avoiding foreclosure.  Short sales require diligence, confidence and an unmatched work ethic. Find that short sale REALTOR that knows her stuff, knows how to work and knows exactly what the banks want to approve your short sale.

Don’t think that you need a real estate agent that knows your neighborhood to short sale your home. In a short sale transaction, it’s about the short sale negotiation and working relationship with your lender(s), not that your home’s location is special compared to the listing around the corner. Out-of-area agents easily price properties using a Comparative Market Analysis (CMA). In fact, banks regularly pay agents and real estate brokers a minimal fee, usually $50 or $75, to price out-of-area properties for them. Your local neighborhood real estate agent may not be the right person. You need a tough and knowledgeable short sale specialist.

Do expect to move soon, or not for months. When your home receives an offer that is just the start for your short sale transaction. But the bank could decide to approve your short sale right away, which means you may only have 30 to 45 days to relocate. But, the approval process could take up to three to six months!

Don’t move prematurely. It makes no sense to pay rent while your home sits empty. Communicate with your agent and keep updated on where the short sale process is.

Don’t stop paying your water bills, sewer bills or trash bills! Any unpaid bills may slow down or stop the short sale process.

Do consult your tax man or even a tax attorney when considering a short sale. Even the best short sale agents are not legally allowed to advise on tax implications of your particular situation, and the best short sale real estate agents don’t. A tax accountant CPA or real estate attorney has a better understanding and the legal right to advise you on such matters.

Don’t think that you must have a real estate attorney to execute your short sale. Most times these lawyers don’t understand real estate or the short sale process as well as an experienced short sale agent does. In fact, many if not most of these lawyers offering short sales require an upfront fee to process your short sale.  real estate agents and brokers only collect commissions from the proceeds of the sale, which comes out of the bank’s pocket, not yours.

Do let your real estate agent put a yard sign in the yard. Yard signs tell buyers trolling streets looking at neighborhoods and houses that yours is a possible candidate.

Don’t make viewing appointments unavailable and hard on buyers and their agents. The more potential buyers that see your home the better chance of short selling it and avoiding foreclosure. Make that home as available to buyers as possible!

Do yourself a favor and remember that millions of Americans are going though their own short sale, or unfortunate foreclosure. This economy is dreadful, and many are experiencing financial hardships and your particular situation is nothing to be ashamed of.

Don’t apply for a home equity line of credit or any other type of credit. If you own other properties that have equity, refrain from pulling money out of any of them during a short sale approval. Your bank and any of your bank’s back-end investors will dig deep into your credit history and find this activity. This kind of action says you are just out for your own financial bottom line, and yes, they will take offense to that.

Do a quick pick up of toys, laundry and any other items lying around when a buyer’s showing appointment is scheduled. Buyers will criticize your messiness like your mother-in-law, and worse, it could affect their offer which in turn could affect your short sale!

Don’t make the mistake of thinking a foreclosure is not much worse than a short sale. It is. A foreclosure will decimate your credit; it will keep you from owning another home for years and it will be a part of your financial incompetence far more than you hope it won’t.

Do keep your hardship letter short and sweet. Explain your situation as-matter-of-factly as possible. Then your bank will look at your finances, tax filings and other documents to verify and support your story. But DO NOT include in your hardship that you bought your home for more than it’s worth. The bank does not care your home is underwater. The bank is losing money too.

Don’t strip the house of its fixtures or other potentially valuable assets. Taking the pool system, or the ceiling fans or the beloved touch-action faucets will degrade your home’s marketability, and for what? A few hundred bucks will not make the financial blow of foreclosure any softer.

Do all your paperwork and return to your real estate agent in a timely matter.  Short sales can die if the proper paperwork is not supplied. It’s a silly way to screw your short sale, but it happens all the time.

Don’t use a short sale negotiating company. They will charge you large upfront fees that they don’t have to return to you even if they do not complete the short sale. And these companies aren’t held up to the same Department of Real Estate code of ethics that real estate agents and REALTORs are. In fact, some banks will not work with them!

Do call and communicate with your bank(s) and let them know you are attempting a short sale. They have thousands of mortgages defaulting, and if they don’t know you are pursuing a short sale, your property may automatically be classified as a pre-foreclosure. Not keeping your mortgage holder informed of the status of your short sale can help expedite your house to foreclosure which will not help your short sale.

Don’t violate the bank’s At Arm’s Length requirement for the short sale. The Arm’s length agreement required from the short sale lender prevents you from “renting the house back”. To avoid any fraud or risk that can result in the bank coming back at you for the balance of your loan. Do it by the book and follow the rules. The risk is not worth it.

Do know that credit card companies may decide to pull your credit due to foreclosure. When a foreclosure shows up on your credit, it says that you are in financial distress and your credit risk increases dramatically.

Don’t think you can’t short sale if you own other properties. This is a common mistake many multiple property owners make. A bank will more than consider a short sale even if you own two or more homes.

Do clean the home and property when you move out. Remove any trash, debris and take or dispose of any of your personal property. The condition of the property before transfer can have a negative effect on the buyer and their desire to own the home, and give them a reason to back out. Cleanliness is next to Godliness, and Sold Short Sales!

Don’t assume the information about short sales you read on the internet is always correct. There are many real estate professionals, and many not-so-professional individuals, giving advice regarding short sales. Some do not have a clue how to handle a short sale, let alone give advice on the subject. Your best bet is to call and talk to any prospective short sale experts. Get a feel of their knowledge base and real estate confidence, and above all else only hire a real estate short sale agent with experience.

DO CALL Laura Key at 310.866.8422!  I am a Short Sale Expert! HAFA, Making Home Affordable, and many more programs, just give me a call, I will  help you through this difficult time!

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Source:  Garrigus Real Estate Blog

California State Senate Votes to Extend Mortgage Protections

California lawmakers voted Monday to extend a law passed during the peak of the mortgage crisis that provides added protections for property owners, renters and neighbors of foreclosed properties.

The law passed in 2008 says foreclosure proceedings can’t begin until the lender has tried for 30 days to work out alternatives with the delinquent homeowner.

Lenders also must notify renters that they are beginning foreclosure proceedings. And they must give renters 60 days’ notice before evicting them from a foreclosed property.

They also are required to maintain vacant foreclosed houses or risk fines up to $1,000 a day.

The law was set to expire after this year, but senators voted to extend it another five years, through 2017.

“Unfortunately, foreclosures remain a major problem throughout the state. This legislation continues important protections for homeowners and renters that have proved tremendously helpful in this trying time,” Sen. Ellen Corbett, D-San Leandro, said in a statement after her SB708 passed on a 32-1 vote.

Senators unanimously approved a second bill, this one designed to prevent the California Housing Finance Agency from foreclosing on certain borrowers who rent out their homes.

The prohibition is limited to homeowners who are current on their mortgage payments, but rent out their homes because they owe more than their house is worth. The bill’s author, Sen. Mark DeSaulnier, D-Concord, said it is designed to help property owners who find themselves in financial trouble because of circumstances like a lost job or growing family, and is not aimed at helping housing market speculators.

Housing agency officials previously said they believed they were required to foreclose if the property was no longer the borrower’s primary residence. The agency suspended those foreclosures in October at the urging of DeSaulnier and Senate President Pro Tem Darrell Steinberg, D-Sacramento.

The agency’s board is scheduled to consider the policy at its meeting in March. DeSaulnier said his SB447 would give the agency the statutory authority to change its policy.

There was no opposition and no debate on either bill. Both bills now go to the state Assembly.

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By DON THOMPSON, Associated Press