Take the Stress Out of Homebuying

  1. Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the REALTOR® you chose is both highly skilled and a good fit with your personality.
  2. Remember, there’s no “right” time to buy, just as there’s no perfect time to sell. If you find a home now, don’t try to second-guess interest rates or the housing market by waiting longer — you risk losing out on the home of your dreams. The housing market usually doesn’t change fast enough to make that much difference in price, and a good home won’t stay on the market long.
  3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of your immediate family — the people who will be living in the home.
  4. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go.
  5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price or by refusing to budge on your offer may cost you the home you love. Negotiation is give and take.
  6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.
  7. Plan ahead. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate home insurance, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
  8. Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be costs. Don’t leave yourself short and let your home deteriorate.
  9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased.
  10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home’s most important role is to serve as a comfortable, safe place to live.

Call our team today to help you take the stress out of buying or selling your home!  Visit us at www.RajQsar.com.

BofA pays $1.3 billion to Fannie, Freddie for foreclosure delays

By JON PRIOR

Monday, November 7th, 2011

Bank of America (BAC: 6.45 0.00%) will spend at least the remainder of 2011 still revising affidavit filings in foreclosure cases around the country.

In October 2010, BofA and other major servicers froze the foreclosure process nationwide when evidence of improperly signed affidavits surfaced in many state courthouses. BofA had to pay $1.3 billion in penalties to Fannie Mae andFreddie Mac in the first nine months of 2011 because of the delays, the bank disclosed in a Securities and Exchange Commission filing.

According to RealtyTrac, more than 8.9 million homes have been lost to foreclosure since 2007. Lender Processing Services (LPS: 18.98 0.00%) said foreclosures completed in September spent an average 624 days delinquent.

“We expect that these costs will remain elevated as additional loans are delayed in the foreclosure process and as the GSEs assert more aggressive criteria,” according to the filing. “We also expect that additional costs related to resources necessary to perform the foreclosure process assessment, to revise affidavit filings and to implement other operational changes will continue for at least the remainder of 2011.”

The government-sponsored enterprises charge servicers for taking too long to complete the foreclosure process under specific, state-by-state guidelines. In June, Fannie said it would even charge servicers retroactively for such delays, though no particular servicers were mentioned.

Federal regulators and the top 14 servicers signed consent orders in April setting standards for how troubled mortgage borrowers would be treated. The orders also included a review of 4.5 million foreclosure files of borrowers directly affected by the mismanaged process. The reviews began last week and could last months, regulators said.

State attorneys general are still in talks with the servicers over a separate settlement to the robo-signing case that could include principal reduction for affected borrowers.

In January, BofA resumed foreclosure sales in judicial foreclosure states, where the bulk of the robo-signing and foreclosure problems occurred, which include Florida, New York, and others.

But the correction continues. BofA claimed extended foreclosure timelines for it and other servicers would only exacerbate the problem — a notion also issued by Republican presidential nominee hopeful Mitt Romney.

“An increase in the time to complete foreclosure sales also may increase the number of severely delinquent loans in our mortgage servicing portfolio, result in increasing levels of consumer nonperforming loans and could have a dampening effect on net interest margin as nonperforming assets increase,” the bank said.

And the bank is already searching for new capital. Also in the SEC filing, BofA disclosed it was exploring an issuance of commons stock to raise nearly $3 billion in cash.

First-Time Buyers Losing Interest in Short Sales

Processing delays have taken their toll on first-time home buyer interest in short sales, which now account for more than one of every six house sales, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

First-time home buyer purchases of short sales dropped to 39.7 percent of short sale transactions in August. That represented a three-month slide and was the lowest level for first-time home buyers ever recorded by the HousingPulse survey.

The first-time home buyer share of short sales hit a peak of 54.1 percent of all short sale transactions in November 2009, just before the originally-scheduled expiration of the federal homebuyer tax credit.

Short sale transactions have long been problematic for buyers and sellers alike, with typical approval times of several months after a homebuyer first submits an offer. Factors slowing down short sale approvals include lost paperwork, coordination with multiple investors, slow appraisals, and mortgage servicer understaffing.

Still, for many first-time home buyers, average short sale prices of 27 percent lower than non-distressed properties compensated for the wait time. But with average time-on-market for short sales stalled at 16.6 weeks—with the majority of that time spent waiting for short sale approval—short sale transactions are becoming less popular with first-time home buyers.

Short sales are just one type of distressed property, with damaged REO and move-in ready REO also being significant components of today’s housing market. In August 2011, short sales accounted for 17.1 percent of the home purchase market, with damaged REO and move-in ready REO accounting for 13.2 percent and 15.6 percent, respectively.

The total proportion of distressed property, as represented by the HousingPulse Distressed Property Index (DPI), fell to 45.9 percent in August from 46.2 percent in June.

Real estate agents responding to the August survey indicated that home buyers frustrated with short sale delays are resorting to placing offers on multiple properties, with the intention on closing on only one. This practice can bog down the short sale approval process at mortgage servicers.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

To search for all short sales & foreclosures please visit www.RajQsar.com/search-foreclosures

 

FHA Mortgage Rates Drop for 5th Straight Month

The average interest rate on mortgages sold to the government-sponsored enterprises in August averaged 4.56%, a drop of 1 basis point from the previous month, according to the Federal Housing Finance Agency.

It’s the fifth straight month of declines since the rate to reached 4.84% in March. On Oct. 3, the Federal Reservewill begin purchasing up to $400 billion in longer-term Treasurys and new agency mortgage-backed securities as part of an effort to keep borrowing costs low.

According to Frank Nothaft, chief economist at Freddie Mac, the Fed’s previous policies have already pushedinterest rates to the lowest level since the early 1950s.

Any additional drop would accelerate already declining rates, according to FHFA data.

In August, the 30-year fixed-rate mortgage averaged 4.63%, down 6 bps from the prior month. On all fixed- and adjustable-rate mortgages sold to the GSEs, the average rate was 4.52%, down 3 bps from July.

Roughly 30% of the purchase mortgages were “no-point” loans, the same share as the prior three months. The average term on these loans also declined more than six months to 27.6 years in August.

The average loan-to-value ratio was 77.2%, up more than one percentage point, and the average loan amount increased slightly to $214,300 in August.

 

Should Congress Extend Higher Federal Mortgage Limits?

Will they stay or will they fall?

The expanded loan limits that Congress boosted for federally backed mortgages three years ago are set to shrink modestly at the end of the summer, but there’s a movement afoot in Congress to delay the decline in the so-called “conforming” limit, citing the shaky housing market.

On Friday, Reps. John Campbell (R., Calif.) and Gary Ackerman (D., N.Y.) introduced a bill that would defer the loan-limit reduction for another two years. They say that housing markets are too shaky to consider any reduction in loan ceilings that could raise borrowing costs for some homeowners.

In 2008, Congress raised the maximum loan amount that mortgage giants Fannie Mae and Freddie Mac and federal agencies could guarantee in certain housing markets. Home buyers in dozens of cities faced a credit squeeze when private lenders pulled back from originating loans that exceeded $417,000, the limit for government-backed loans. Congress allowed limits to rise above that mark in certain high cost markets to as high as $729,750. After September, they’ll fall on a sliding scale, topping out at $625,500.

A spokesman for Rep. Campbell said Friday that the measure has significant bipartisan support. “There’s a wide recognition in the House and hopefully the Senate that we need to do this,” he said. Congress passed a one year extension last fall, and another extension the year before that.

The Obama administration in February said it supported allowing the limits to fall as scheduled:

In order to further scale back the enterprises’ share of the mortgage market, the administration recommends that Congress allow the temporary increase in limits that was approved in 2008 to expire as scheduled on October 1, 2011…. We will work with Congress to determine appropriate conforming loan limits in the future, taking into account cost-of-living differences across the country. As a result of these reforms, larger loans for more expensive homes will once again be funded only through the private market.

But it’s not clear whether the administration would stand in the way of an effort by Congress to keep the limit at its current level for another year. The administration is “paying attention to market conditions” and “looking carefully” at the impact of the decline in the limits, said Housing Secretary Shaun Donovan in a brief interview on Thursday. He said the administration would make a decision “shortly” on any changes.

Other top officials, including Treasury Secretary Timothy Geithner, have previously said that the limit should decline in order to create more room for private lenders to compete against federal entities. Bob Ryan, now a senior adviser to Mr. Donovan, reiterated that position at a housing conference in New York last month.

So-called jumbo loans that are too large for federal backing typically carry higher interest rates and bigger down payments, raising concerns that higher borrowing costs could reduce sales and put pressure on prices.

“There’s a trade-off there between supporting the higher-priced homes and weaning the system off the unusual limits that were put on during the crisis,” said Federal Reserve Chairman Ben Bernanke in response to questions from Rep. Ackerman at a House hearing on Wednesday.

Source: The Wall Street Journal

“No Double Dip” According to Chapman Study

Orange County’s economic recovery is indeed slowing, but fears of another recession or “double dip are unfounded, according to economists at Chapman University.

The highly anticipated midyear economic update, presented by the A. Gary Anderson Center for Economic Research at Chapman University, last week confirmed that both the regional and national economies have been hit by a series of factors that have combined to put the brakes on the weak, but steady recovery over the past 18 months. Soaring gas prices, the Japanese earthquake and the end of government stimulus spending, as well as the federal budget stalemates, have impacted manufacturing output and chilled consumer confidence – and therefore spending – since January.

However, Chapman President James Doti is still predicting that the recovery is “downshifting, not reversing itself.” He also said this is not entirely unexpected when rebounding from a recession, particularly one as deep and unprecedented as the most recent downturn.

The wild card in the recovery picture, is housing prices, which were down 4.3 percent for the first three months of this year after slight gains in 2010. Falling home prices have a direct and negative impact on personal wealth and generally cause consumers to curb or stop spending on durable goods altogether.  And then this triggers a domino effect that hurts retail and manufacturing – resulting in a very negative cycle. The other significant concern with declining home prices is the risk of more foreclosures and ultimately more stress and troubles for the nation’s banks.

Although affordability has rarely been better than it is today we are still faced with a lot of mixed signals and concerns on the housing front.  And even though the foreclosure rate has peaked, it may take another three years before the unprecedented foreclosure chapter in this recession is finally over. As many as 3 million more properties are at risk nationally and, ultimately, must be refinanced or sold before we reach normal foreclosure levels in a healthy economy.

Chapman economists predict that housing prices in the county and California will show a 4 to 4.5 percent decline in 2011 and virtually no appreciation in 2012.

In terms of gas prices, another major drag on the recovery since January, Chapman predicts the price per gallon will remain steady between $3 and $4 through the year, barring any unexpected oil supply disruption.

On the all-important jobs front, most industry sectors will continue to show positive growth through 2012. The fastest growing jobs will be in the professional and business services, leisure and hospitality, and education and healthcare. Doti forecast that Orange County will have a net job gain of 20,000 or 1.5 percent by the end of this year and about 30,000 jobs or a 2.2 growth in 2012, roughly the same as California. He further characterized this level of job growth as positive and added that it will improve personal income and ultimately consumer spending.

REO Inventory Reaches All-Time High

Daily Real Estate News  |  May 5, 2011

REO Inventory Reaches All-Time High 
The national inventory of REO properties rose in March to a record high of 2.2 million. Foreclosure starts also increased by 33 percent month-over-month, according to the March Mortgage Monitor report by Lending Processing Services Inc. 

However, it’s not all doom and gloom for the housing market. The report revealed a significant increase in foreclosure sales, which is helping to chip away at the swelling inventories that are battering many markets. 

Also, delinquencies continue to decline, which is a sign of fewer foreclosures brewing in the pipeline. Delinquencies fell more than 11 percent in March from February — the lowest level since 2008 and a nearly 20 percent year-over-year decline, according to Lender Processing Services Inc. The total U.S. loan delinquency rate, which is for loans 30 or more days past due (but not in foreclosure), is 7.78 percent. 

States with the highest percentage of loans where home owners have fallen behind are Florida, Nevada, Mississippi, New Jersey, and Georgia. 

On the other hand, states that boast the lowest percentage of delinquent loans are Montana, Wyoming, Alaska, South Dakota, and North Dakota. 

To search all REO homes on the MLS please visit www.RajQsar.com/search-foreclosures

Source: “Banks Build Record Foreclosure Inventory,” RISMedia (May 5, 2011)

Distress Sales Used as Comps: Right or Wrong?

 

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Distress Sales Used as Comps: Right or Wrong?

Should residential appraisals use distress sales as comparables? It’s a thorny question that some states are weighing.

In a recent Realty Times article, the author notes that in a normal market using distress sales as comparables is often viewed as inappropriate because such sales are unusual and do not represent the standard market.

However, nowadays in many markets, distress sales may comprise 30 percent to 40 percent of current sales activity and may be impossible to ignore.

Four states are considering laws that would affect how appraisers should consider the sale of distressed properties. Here’s a breakdown of legislation those states are considering:

Illinois: A proposed law says that an appraiser may not “use as a comparable sale the sale price for a residential property that was sold at a judicial sale at any time within 12 months after the date of the judicial sale… .” The Illinois law would sunset after five years, according to the Realty Times article.

Missouri: Legislation says that appraisers must comply with the Uniform Standards of Professional Appraisal Practice (USPAP), but not in cases when a property has been foreclosed. “An appraiser shall not utilize the foreclosure price as a comparable property when developing an appraisal,” the legislation states.

Maryland: The proposed law is somewhat vague, but it says in cases of duress or unusual circumstances “such as a foreclosure sale or short sale,” the appraiser is to “consider” the property’s history (e.g. whether it’s being sold at auction or as a short sale) and “consider” the seller’s motivation, such as if the home owner was seeking to avoid foreclosure.

Nevada: A pending law covers both short sales and foreclosures: “Except as otherwise required by federal law or regulation, an appraiser shall not include as a comparable sale in an appraisal a short sale or a sale of property which was the subject of a foreclosure sale.”

Appraisers are required to comply with the Uniform Standards of Professional Appraisal Practice guidelines for weighing comparables in federal transactions, which “mandates that appraisers must analyze such comparable sales as are available. Further, the standard cannot be voided by a state or local government.” That said, a recent article at Appraiser News Online raises the issue that appraisers have a difficult decision to make when their state has different regulations than USPAP when it comes to weighing distressed sales.

Source: “Should Distress Sales Be Used as Comparables?” Realty Times (April 5, 2011)

Which Bill to Pay – Mmmmm?

As home values fell and unemployment rose, an increasing percentage of homeowners opted to make their credit-card payments before their mortgage payments — a trend that has been occurring for about three years, according to TransUnion, a credit reporting company.  But that may be changing.

A TransUnion study released this week found that the percentage of consumers who remained up to date on their credit cards but were delinquent on their mortgages reached as high as 7.4% in the third quarter, up from 4.3% in the first quarter of 2008. However, the percentage dropped to 7.24% in the fourth quarter, TransUnion reported. Traditionally, consumers make their mortgage payments the priority, so as not to default on their loan and possibly face foreclosure.

The reversal of the traditional payment hierarchy was driven in large part by home-value depreciation and rising unemployment, both of which speak to consumer willingness and ability to pay their mortgages versus their credit cards.  Home-value concerns and stubbornly high unemployment continue to drive this dynamic, though the decline in the number of consumers delinquent on mortgages and current on credit cards may be a sign that the divergence in the payment hierarchy has peaked.

As the job market improves and housing values stabilize, the thinking is that more consumers will revert to a traditional order when it comes to their monthly financial obligations: They’ll pay their mortgages before their credit cards. But the return to a “traditional payment hierarchy” will most likely be gradual.

Though we saw the first decline in the number of consumers who are delinquent on their mortgages and current on their credit cards in the most recent quarter, the percentage of people in this position still remains more than 72% higher than it was at the beginning of the Great Recession.

World events affect your mortgage rate

As world events dominated the news in recent weeks, mortgage rates enjoyed a reprieve from a climb that began late last year, keeping the 30-year fixed-rate mortgage down below 5% at the start of what is traditionally the home buying and selling season.