One BIG problem, in this kind of market, is IF you need to sell your present house – in order to buy your next one – how can that be coordinated?  If your house is in a different area – miles away – from the area you’ve targeted, I have a suggestion for you.

Sell your present house, for top dollar in today’s SELLER’S market, and pocket your equity, finding a short term rental for the next 6 months. ( And probably putting most of your “stuff” in storage.)  If you are presently far away, this can help you establish a new base camp, right in the middle of your target community, poised to pounce on any opportunity that pops up, in a preferred, non-contingent fashion.

If you don’t find something over the next few months, be aware that in the fall, when the majority of other buyers have already bought places, inventories USUALLY rise, with sellers who were late to the party, and whose houses are no longer getting snapped up in days.

That’s when you can swoop in – in the month or two before the Holidays – with fewer competing buyers, AND more competing sellers, and strike a good, non-contingent purchase.

IF, on the other hand, your old house is reasonably close to the area you’re targeting, consider pulling out a lot of equity – for your down payment to be – and look for a place to purchase, non-contingent, making your present house into a rental.

There are lots of possibilities, and a good, experienced agent will be able to help you sort them out, in a way that will make sense for you. In these parts, I am just that kind of agent, and would love to help you weigh your options.

April 13th, 2012, 9:35 am ·   by Jon Lansner, of the Orange County Register    Pin It

Mortgage delinquency rate to fall 20 percent in 2011

New data from HOPE NOW shows that the industry completed more than 1.5 million loan modifications for at-risk homeowners from January through October of this year. That translates to an average of 154,000 homeowners per month who have been able to remain in their homes with an affordable loan modification solution.

It’s a notable accomplishment, but the report makes it clear that there’s far more work to be done. HOPE NOWsays there are currently 3.4 million homeowners 60 or more days behind on their mortgage payments.

The nation’s overall delinquency rate dropped to 9.85% in the second quarter, down from 10.06% of all loans outstanding three months earlier.

Even better, the percentage of seriously delinquent loans — ones 90+ days late or already repossessed by lenders — dropped to 9.11% from 9.54% in the first quarter.

The drop in loans 90 days or more late was the biggest the MBA has ever recorded, according to the MBA’s chief economist, Jay Brinkmann. “That shows we’re making headway,” he said.

He cited three reasons for the improvement:

• Fewer loans are coming into the default process;
• The homebuyers tax credit, which increased demand for homes, generated many pre-foreclosure sales, removing the attached delinquent loans from the statistics;
• The government- and lender-led mortgage modifications “cured” some payment problems.

However, even with those bright spots, there was one troubling finding: First-time delinquencies increased after four quarters of decline. It inched up to 3.51% in the second quarter from 3.45% in the first quarter. According to Brinkmann, the reversal reflects the weakness in both the housing market and the overall economy.

“It’s a question of jobs,” he said. “It takes a paycheck to make a mortgage payment.”

Underscoring the trend is the foreclosure trend among borrowers with conventional loans, like 30-year, fixed rate mortgages. They accounted for nearly 36% of foreclosure starts during the quarter. And these safe loans rarely get into trouble unless they lose employment or income.

The four worst hit states — California, Florida, Arizona and Nevada — still account for nearly 60% of national delinquencies, but California’s numbers dropped dramatically this year. At the end of 2009, California foreclosure starts made up nearly 20% of the nation’s total. That dropped to 14.7% during the second quarter.

Another positive trend is the gradual downturn in the number of borrowers who are underwater on their mortgages, owing more than their homes are worth. 

CoreLogic reported today that the rate of borrowers underwater dropped to 23% in the second quarter from 24% in the first.

When borrowers fall underwater, it increases the chance that they’ll lose the homes. Brinkmann calls it one of the two “triggers” that lead to foreclosure.

If homeowners have positive equity, they can use it as a source of cash to pay bills, including mortgages. But if their cash reserves are gone and they can’t afford to make payments because their income has dropped, foreclosure is almost inevitable.

CoreLogic found that negative equity is worst in five states: Nevada (68%), Arizona (50%), Florida (46%), Michigan (38%) and California (33%).

By Les Christie, staff writer, CNNMoney.com

In an exclusive interview with REO Insider, Vernon said the bank pre-screened these borrowers who have been considered for a modification under the Home Affordable Modification Program (HAMP) and a short sale under the Home Affordable Foreclosure Alternatives (HAFA) program. They have either fallen out of both programs or failed to qualify. 

“The big question we’re looking to answer is customer responsiveness,” Vernon said. “These are not customers who are seeking short sales but rather distressed customers who are on the road to foreclosure, and we want to provide them an alternative. Our goal is to provide a tailored program with incentives that are attractive to homeowners experiencing a true hardship.” 

Under this “test umbrella” for future programs, no new documents are needed from the seller since they already submitted their financial information to the bank. B of A is waiving deficiencies, or the difference between what the home sells for and how much is left on the mortgage. Vernon said his department will assign a short sale specialist to work with the real estate agent and the homeowner to market the property for 120 days. 

Letters have already gone out to the homeowners, and they have 120 days to list the property. Vernon said they are looking at a six month program. The bank will be working with the homeowners’ real estate agents, meaning the bank will not be selecting agents to work with the homeowners. 

Once sold, the former homeowner receives a $3,000 relocation fee, and the real estate agent gets a 6% commission. If it doesn’t sell, B of A will accept a deed-in-lieu of foreclosure in order to satisfy the mortgage. 

Vernon said the homeowners targeted are heavily concentrated in the sand states, California, Florida, Nevada and Arizona. 

“It’s a small test of customers who have been pre-screened,” Vernon said. “We’ve also worked with an investor to get their approval in the program before hand. This allows us to test and learn. Our hope and desire of this is that this pilot and others will help us design expansion of these programs in the future.” 

That investor held a stake in the original mortgage that is now in default. Lenders need approval from these investors for a short a sale to go through. It has been one of the major hurdles in the short sale process. 

The industry is beginning to recognize short sales as a serious alternative to foreclosure. According to the real estate data and service provider Core Logic, short sales in the US have tripled since 2008. Freddie Mac recently reported that its short sale figures were up 600% from two years ago and said in its Q210 financial statement that it completed 22,117 short sales in the first half of 2010, up nearly 180% from 7,914 in the first half of 2009. 

In Q210, B of A completed more than 25,000 short sales, almost three times the amount done in the same quarter last year. Roughly 90% of the short sales are performed on the Equator platform, and Vernon said by the end of the year, the entire short sale business will be. 

“Bank of America is committed to constantly improving the short sale process for our customers and our real estate business partners,” Vernon said. “We continue to test new ways of completing short sales to provide customers with a dignified exit and help avoid foreclosure.”

If you are approached by Bank of America for this program, please know that I have a long-term, successful relationship with them, in both distressed and non-distressed properties.  I am thoroughly qualified to be your chosen local Realtor, for this program.

Foreclosure filings rose 4 percent nationwide last month versus June, according to foreclosure-tracking firm RealtyTrac.com. For the 17th straight month, total filings topped 300,000.

A foreclosure filing is defined as default notice, scheduled auction, or bank repossession.

As with most months, just a handful of states dominated foreclosure activity nationwide.

• California : 14.9 percent of all activity
• Florida : 11.6 percent of all activity
• Arizona : 6.4 percent of all activity
• Michigan : 6.2 percent of all activity
• Georgia : 6.1 percent of all activity
• Texas : 4.9 percent of all activity

Together, these 6 states represent just 30 percent of the overall U.S. population.

The other 44 states (and Washington D.C.) were home to the remaining 49.0%.

Despite this imbalance, though, in all markets, foreclosures and REO are making a profound impact on pricing and product. “Distressed” homes now represent 32 percent of the overall resale market nationwide, according to the National Association of Realtors®.

Buying a foreclosed home can make for a terrific “deal”, but buying in the REO market is decidedly different from buying a non-foreclosed property.

As 3 examples:

1. Buying bank-owned homes can take 120 days to close.
2. Foreclosures aren’t always listed for sale publicly. Some inventory is privately-held.
3. Bank-owned homes are often sold “as is”. There may be defects that render the homes mortgage-ineligible.

If you have an interest in buying REO, consider talking with a distressed properties experienced real estate agent first. Even the negotiation process is different as compared to a non-distressed sale. It helps to have an experienced professional representing your interests.  As a local Realtor with over 33 year’s experience, I would be a qualified choice.

If lenders really had all this stockpile of “shadow inventory”, waiting for prices to rebound higher, why didn’t ANY of them take advantage of the market that existed in Orange County between January of 09, and April 30th of 2010, when, largely due to tax credits and low inventory, there were multiple offers – sometimes as many as 20 to 50 – on practically every listing in the lower price ranges? ( Under $350k, for condos, and under $500k for detached houses.) 

That was a well known, more than a year’s worth of time, when it would have been an IDEAL time to unload excess inventory, getting prices bid up to higher than market value, in many cases, while the median price in Orange County rose more than 10%. 

If all those lenders were holding all that alleged inventory, their agents would have been imploring them to take advantage of such conditions. 

The reason that DIDN’T happen is because that stockpile really only exists in the minds of conspiracy theorists, who can only offer their opinions or theories on the idea of shadow inventory, with charts, graphs, and stories concocted from still more theories. 

Here’s MY theory.  There is no shadow inventory - at least not as promoted by doom & gloom bloggers - where lenders have huge stockpiles of properties that they’ve already foreclosed on, and are “holding”, waiting for prices to come back. 

What there is, is a lot of properties wending their way through each lender’s labyrinth of systems with loan mods, short sales, and even cancellations, all preferable to eventual foreclosure.  That pile of properties is probably going to take 2 or 3 more years to work their way through these systems, and will likely do so in an extremely manageable fashion, a little bit at a time. 

As such, there’s very little likelihood of anything much more than a trickle of such properties hitting the market at any given time – pretty much as it has been for the past year and a half.  Those on the lookout for a Tsunami of distressed properties to arrive, over this next few years are in for quite a disappointment.   

Of course, this is just my opinion.