Bank of America, Citigroup and EMC Mortgage Corp. are among seven companies that have received permanent exemptions to California’s 90-day foreclosure moratorium, which began last week.
More than 20 other lenders and loan servicers, including Wells Fargo and JPMorgan Chase, have received a temporary exemption while they wait to learn if it will become permanent.
The California Foreclosure Prevention Act, or Assembly Bill X2 7, which Governor Arnold Schwarzenegger signed in February, is meant to push banks and loan servicers into lowering mortgage payments of homeowners in financial trouble. It reflects a similar federal plan.
Several companies have already applied for exemptions, said Mark Leyes, a spokesman for the state’s Department of Corporations. The department must grant or refuse an exemption within 30 days, during which companies need not comply with the moratorium. The law impacts loans made from 2003 to 2007.
A lender or servicer gets an exemption by demonstrating it already has a loan modification program in place, including lowering owner payments to a target of 38 percent of their income going to housing. Methods of choice are lowering the loan’s interest rate or extending its term to 40 years.
The bill, however, seems to lack teeth. The 38 percent debt-to-income ratio is merely a target.
And the bill says it does not require a servicer to violate contracts for “investor-owned loans.” The most troubled loans are generally those investment banks packaged and sold, and if the servicing contract says foreclosure is preferable to a loan modification, nothing in the law stops foreclosure.
Exemptions are granted by the three agencies that regulate companies that make, service or broker loans.
See the California Department of Corporations exemptions list HERE.
S&P/Case-Shiller index down 18.1% year over year, but monthly drop narrows to 0.6% in April.
By Les Christie, CNNMoney.com
Last Updated: June 30, 2009: 10:25 AM ET
NEW YORK (CNNMoney.com) — Home prices continued to tumble in April, falling 18.1% from a year earlier — but the change from March narrowed sharply, indicating that housing markets may be starting to turn.
The 20-city slice of the S&P/Case-Shiller Home Price index recorded a drop of 0.6% from March to April, compared with a 2.2% drop in the prior month. The index has declined every month since July 2006.
“The pace of decline in residential real estate slowed in April,” says David Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Thirteen of the 20 metro areas also saw improvement in their annual return compared to that of March.”
Not only that but every metro area save one — Charlotte, N.C. — reported improvement in their monthly return compared with March.
“While one month’s data cannot determine if a turnaround has begun, it seems that some stabilization may be appearing in some of the regions,” said Blitzer. “We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here.”
Blitzer pointed to some factors that may be lifting the housing markets. For one thing, the stock market bottomed out in March and started a strong recovery. The S&P 500 has gained about 37% since then. Consumer confidence has also improved, making house hunters more likely to pull the trigger on deals.
Not all optimistic: The housing market picture is still very murky, according to Pat Newport, a real estate analyst with IHS Global Insight. He’s not convinced that the improved April report means much more than a seasonal variation in housing markets. Spring is, historically, a strong time of year for housing markets.
He said that not only are home prices still falling but other metrics, such as unemployment and foreclosure rates, are worsening as well.
“Foreclosures are still driving markets, and the rate of foreclosure is still going up,” Newport said. “I think that’s going to continue”
Job losses will all but guarantee that will happen, according to Newport, especially since price declines have put so many homeowners underwater, owing more on their mortgages than their homes are worth. By some calculations as many as 20% of homeowners are underwater.
When people are underwater and they’re losing their jobs or some of their income, that’s bound to result in more foreclosures, more vacant homes for sale and more downward pressure on prices.
Huge declines from peaks: Phoenix, where homes have lost 35.3% of their value over the past 12 months, was the worst performing market over that period. Las Vegas prices plunged 32.2% and San Francisco dropped 28%.
Denver prices fell the least over the last 12 months, down 4.9%, followed by Dallas at 5% and Boston at 7.7%.
Prices in Dallas rose 1.7% between March and April, the largest increase among the 20 cities. Las Vegas prices dropped 3.5%, the biggest decline — which was still narrower than the month before.
Dallas also has suffered the smallest decline from the top of its market, off just 9.6% from its peak in June 2007. The rest of the cities have all suffered double-digit percentage drops from their peaks, with the worst being Phoenix, down 54.1% from June 2006.
The article below paints a somewhat rosy picture, however, if you’ve seen the chart for Alt-A mortgage resets that are due, and have been paying attention to unemployment, then I suspect you might agree with me that the enthusiasm we’re seeing now will probably be somewhat short lived as things are going to undoubtedly get worse before they get better. The data-point that the press and CAR talk about most is the affordability index, which, as history has shown, does not indicate that prices are going to go up anytime soon. Take a look at the data for Notice of Default and ask yourself, where are all these properties going to go? My bet is that they are going to go into foreclosure and make the already bad unsold inventory numbers worse.
Your comments are always welcome,
TRD
By LESLIE BERKMAN The Press-Enterprise
With foreclosures representing a smaller portion of home sales, median home prices in Southern California rose slightly in May, showing the first month-to month price increase since July 2007.
The one-month gain was not reflected in Inland Southern California, and analysts hesitated to say prices wouldn’t fall further. In Riverside County the median home price — where half sold for more and half for less — was unchanged from April at $180,000, while in San Bernardino County the median price slid by $1,500, from $138,500 in April to $137,000.
More sales of expensive homes in coastal counties and fewer sales of cut-priced foreclosures in the Inland counties caused the price elevation in Southern California, according to MDA DataQuick, which on Wednesday released its May housing report.
DataQuick spokesman Andrew LePage said it is uncertain whether the leveling of home prices means they have hit a solid bottom. The median home price has dropped more than 45 percent in San Bernardino County and nearly 38 percent in Riverside County in the past year.
“It is still a pretty nasty recession, and we know more foreclosures are coming, but we just don’t know how many,” said LePage. “The uncertainty over foreclosures and the depth of job losses makes it very tricky to call a bottom right now.”
Chapman University Economist Esmael Adibi said the most promising trend is a surge in sales, as first-time home buyers and investors have jumped in to buy bargains. Home sales were 28 percent higher last month in Riverside County than in May 2008 and 51 percent higher in San Bernardino County than a year earlier.
“Sales are reducing the inventory and laying down a foundation for prices to go up,” said Adibi. He predicted that if the job market improves as he anticipates, in a year the Inland counties will see median home prices that are higher than today’s.
Sue Acker-Bare, an agent with Century 21 Showcase in Highland, said she has seen first-time buyers drawn into the market by a $8,000 federal tax credit and low home prices. Also an increase in interest rates — from about 4.5 percent a month ago on a fixed-rate conforming loan to nearly 5.9 percent Wednesday — has convinced some not to wait any longer, she said.
“I think it is a good time,” said Mayra Gomez, 24, who with her husband and two children moved a week ago into a three-bedroom house on a golf course that they bought from a bank for $254,000 in Riverside.
Gomez said they’re overjoyed to buy a house with a Federal Housing Administration loan that required only a 3.5 percent down payment. When they first went house-hunting 18 months ago, she said, lenders wanted 20 percent down, and houses cost a lot more.
Real estate agents say because the number of foreclosed properties on the market has declined substantially this year, buyers are forced to bid against one another for what is available, with successful offers frequently above list price.
“Just about every property now has multiple offers. The market is looking more and more like a sellers’ market,” said Mike Teer, broker-owner of Teer One Properties in Riverside
Ed Leamer, director of UCLA’s quarterly Anderson Forecast, said an unknown is the impact of mortgages that were extended often without income documentation and with alternative payment plans to home buyers and homeowners who refinanced a few years ago. These mortgages are scheduled to reset to higher monthly payments in coming months.
Homeowners with such mortgages may not be able to refinance because of lower property values and could decide to let their homes go to foreclosure, said Leamer.
Leamer said he believes the number of such mortgages that fail will be fewer than the subprime mortgage failures that fueled the initial wave of foreclosures. Also he said this second round of foreclosures would not be as concentrated in the Inland counties.
DataQuick noted that with fewer foreclosed houses for bargain hunters, sales have begun to rise for higher priced houses. In Riverside County between April and May sales of homes priced less than $100,000 remained the same, but sales of homes priced more than $400,000 rose 5 percent.
SACRAMENTO, Calif.—California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday.The law is expected to make lenders try harder to keep borrowers in their homes. Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing.
But supporters acknowledge the California Foreclosure Prevention Act won’t stop thousands of foreclosures from eventually happening. There have been more than 365,000 foreclosures in California since early 2007, with many more already scheduled.
The bill passed in February is similar to the Obama administration’s Making Home Affordable Program that began in March.
Both encourages lenders to cut interest rates or rewrite loans to affordable levels.
JP Morgan Chase, Morgan Stanley and Goldman Sachs are among the banks able to return the taxpayer funds. But it’s unclear if all 10 can do so now.
By Jim Puzzanghera
9:28 AM PDT, June 9, 2009
Reporting from Washington — The Obama administration today announced it has given approval to 10 of the nation’s largest banks to repay $68 billion in government bailout money they have received to stabilize the financial system.
FOR THE RECORD: An earlier version of the headline on this article indicated that Bank of America and Wells Fargo were among the 10 banks given approval to repay government bailout money. Bank of America Corp. and Wells Fargo & Co. have submitted acceptable capital-raising plans, according to the Federal Reserve, but they are not among the 10 that received approval to repay bailout money.
“These repayments are an encouraging sign of financial repair, but we still have work to do,” Treasury Secretary Timothy Geithner said.
The Treasury Department, which administers the $700 billion bailout fund, did not name the banks. And it was unclear whether all the banks that have received approval to repay the money will actually do so.
But all 10 made their own announcements after Geithner’s statement.
Banks that received permission to repay the government capital are American Express Co., BB&T Corp., Bank of New York Mellon Corp., Capital One Financial Corp., Goldman Sachs Group, JPMorgan Chase & Co., Morgan Stanley, Northern Trust Corp., State Street Corp. and U.S. Bancorp.
Several large financial institutions, including Morgan Stanley and Goldman Sachs, have been pushing to repay the bailout money, which many of them said they were forced to take last fall by then Treasury Secretary Henry Paulson. Large banks have chafed at executive compensation restrictions and other strings attached to the bailout money.
More than 600 banks have received about $199 billion from the bailout fund, which was initially called the Troubled Asset Relief Program, or TARP. The Obama administration has changed the name to the Capital Purchase Program. The government received preferred stock in the institutions and warrants to purchase additional stock as part of the investments. The banks also were required to pay dividends on the preferred stock, and so far the government has received $4.5 billion in such payments.
Several smaller banks already have been allowed to repay their bailout money, totaling about $1.9 billion so far. But the Obama administration has been concerned about the implications of some of the nation’s largest banks repaying their bailout money, fearing that a rush to return the money could prevent the banks from having enough capital to continue lending.
The Treasury Department, in conjunction with the Federal Reserve and other bank regulators, conducted stress tests of the 19 largest banks this spring to see if they had enough capital to withstand worse-than-expected economic conditions. Nine of the banks passed the test, but 10 others were required to raise a total of $75 billion in capital as a cushion against potential future losses on bad mortgage loans and other investments if the recession worsened.
Those banks have been working on plans to raise the money in recent weeks and faced a Monday deadline to submit those plans to the government. The Federal Reserve said Monday that the 10 banks, including Bank of America Corp. and Wells Fargo & Co., had submitted acceptable capital-raising plans.
The Treasury Department said today that banks that repay their bailout money will have the right to repurchase the government warrants “at fair market value.”
The Financial Services Roundtable, which represents large banks, said the announcement by Geithner today showed the industry is strong.
“The financial services industry is well-capitalized,” said Steve Bartlett, the group’s president. “This is a positive sign for the industry and the economy.”
Homebuilders hope for a second round of the homebuyer tax credit
May 26, 2009
SACRAMENTO – Single-family home construction in California showed a significant increase in April when compared to March and was the largest monthly total since October of 2008, which the California Building Industry Association said provided more evidence that the homebuyer tax credit enacted in the beginning of March is helping to clear out inventory and generate new-home construction.
According to statistics compiled by the Construction Industry Research Board, 2,265 single-family permits were pulled throughout California during the month of April, down 33 percent when compared to the same month a year ago but up 21 percent when compared to March. It was the largest monthly total since October of 2008 when 2,352 permits were pulled.
Robert Rivinius, CBIA’s President and CEO, said the month-to-month increase in single-family production indicates that builders are clearing out inventory due to the tax credit and are starting to build again, but that the tax credit funds need to be replenished in order to continue the positive momentum.
“The tax credit enacted in March is having the desired effect of stimulating home sales and clearing out inventory, which is helping to generate new construction and put people back to work in the process,” Rivinius said. “Our elected officials gave our industry a much-needed shot in the arm for which we are very grateful.
“However, almost two-thirds of the allocated funds for the credit have been applied for since the program was enacted just 12 weeks ago, which is why we are pushing for a second round of the tax credit by adding another $200 million to the fund in hopes of keeping the positive momentum going while generating construction and much-needed tax revenues for the state and local government.”
Rivinius cited the most recent report from the Franchise Tax Board which says applications for the tax credit total $65.7 million as of May 20.
In April, a total of 3,127 permits were pulled throughout the state, down 52 percent when compared to April 2008, but down just 12 percent when compared to March. Multifamily permits totaled 862, down 72 percent from the same month a year ago, and down 48 percent from March.
Ben Bartolotto, Research Director for the Construction Industry Research Board, attributed the overall month-to-month decline to the volatile multifamily sector which saw an unexpected large increase in March.
CIRB is forecasting permits will be pulled for just 40,000 total units in 2009, which would be by far the lowest total on record, down 38 percent from the record-low 64,962 units produced in 2008. The forecast calls for 16,600 multifamily units, the lowest since 1993 when 14,755 permits were issued, and 23,400 single-family units, which would be the lowest on record.
“It’s clear that the tax credit is performing as expected, and if it is extended we believe housing starts will continue to strengthen in the months ahead. And that would be great news for state and local government revenues and for the economy as a whole,” Rivinius said. “Without the extension of the credit, we might not even be able to build what CIRB is forecasting.”
$8,000 First-Time Homebuyer Tax Credit Can Now Be Applied Toward Purchase of FHA-Insured Home
Washington, D.C.–The U.S. Department of Housing and Urban Development announced today that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration’s new $8,000 first- time homebuyer tax credit toward the purchase costs of an FHA-insured home. According to Secretary Shaun Donovan, today’s action will help stabilize the nation’s housing market by stimulating home sales across the country.
The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing a first home. Families can only access this credit after filing their tax returns with the IRS. Homebuyers using FHA-approved lenders can apply the tax credit to their down payments in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate.
“We believe this is a real win for everyone,” says Donovan. “Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders.”
Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their homes. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment; but, under the terms of today’s announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate.
Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower’s own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment.
According to estimates by the National Association of Home Builders, the Administration’s homebuyer tax credit will stimulate 160,000 home sales across the nation—101,000 of which will be first-time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because their homes were purchased by first- time buyers.
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In my last post, I talked about how door knocking can yield a great deal of information about a neighborhood. Having this knowledge is key to being the most informed buyer for that neighborhood.
In addition to collecting information, you need to create an identity as THE buyer of choice for that neighborhood. In marketing circles, this is called being Top Of Mind, or TOM, for short.
Being TOM isn’t that hard to do, it takes consistency more than anything, combined with a little creativity.
For example; as you are door knocking, not everyone will be home, and, of those you do talk to, very few will actually be thinking of selling their house. For the ones that you’ve talked to, you’ve (hopefully) made a good first impression. For those that weren’t home, obviously, you’ve made no impression at all.
In both cases, keeping in mind the goal of being TOM and being unique, here’s what I do: I hand out fridge magnets that have a clear USP (unique selling proposition) and a call to action (something they need to do).
My USP is that I buy houses fast, and they don’t have to pay a commission to work with me, I will buy the house as-is, and close within 10 days.
My call to action is a website link that is short (reduce chance of typos for them) and takes them to a page where there is a video of me giving the relevant message. Why video? Two reasons: one, it allows them to get a feel for my personality, and two; most people hate to read.
The reason that I use a fridge magnet is that is most people use their fridge as a family billboard, and therefore, giving them a magnet pretty much assures they’ll be seeing my message several times a day, every day, for years.
In my next post, I’ll talk about the way I target a certain type of seller and what I do to get them to call me.
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Do you have an opinion or thought about this topic? Please write a comment on this blog post by entering your thoughts in the form below. Let me know what you think and if my thoughts resonate with yours. My readers enjoy reading what others think.
Also, send a link to this blog to one or more of your friends and get them to become one of my subscribers. This will help me to expand my circle of influence and allow me to share this and other great material with your friends.
Your comments are always welcome, TRD
Do you have a Roth-IRA earning less than 8%? Want to learn how to earn more than 8%, secured by local real estate? Visit www.InvestWithTrent.com to learn how.
There are a number of ways to find opportunities in Real Estate. Some of them are used by everyone, some of them cost money, so of them just take time.
If you are just starting out, you probably don’t have much money, but I’ll bet that you do have some time. The question then becomes, how are you going to invest this most precious asset?
If you want to be successful at something that others are attempting to do was well, you need to do things that others aren’t willing to do. In other words, Successful buyers (or real estate) are willing to do what unsuccessful buyers aren’t. For me, that means knocking on doors.
Knocking on doors doesn’t cost a cent, other than your time; although, its definitely a good idea to leave something behind with both the people you talk to, and the people who weren’t home (we’ll call this breadcrumbs – as in your leaving a trail of breadcrumbs) when you came calling.
If you want to be a successful buyer, you need to be an expert in your market. You need to know what properties are selling, how much they are selling for, who’s selling, what percentage of the street is renting, how much rent they are paying, what the neighborhood is like, etc… There is no other way to get all this information than to talk to the people that live there.
In the last two days, I’ve knocked on a total of 52 doors and that took me about 3 hours in total. Out of that, I’ve left 52 breadcrumbs and have uncovered 5 leads. For one of the leads, I’ve spoken to the seller at length, and, depending on the balance of their first mortgage, there could be a real deal there. The other leads were from neighbors telling me that this owner, or that owner was thinking of selling. Needless to say, those folks will be getting a letter from me.
In my next post, I will talk about my second buying system, so stay tuned.
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Do you have an opinion or thought about this topic? Please write a comment on this blog post by entering your thoughts in the form below. Let me know what you think and if my thoughts resonate with yours. My readers enjoy reading what others think.
Also, send a link to this blog to one or more of your friends and get them to become one of my subscribers. This will help me to expand my circle of influence and allow me to share this and other great material with your friends.
Your comments are always welcome, TRD
Do you have a Roth-IRA earning less than 8%? Want to learn how to earn more than 8%, secured by local real estate? Visit www.InvestWithTrent.com to learn how.
