Foreclosures Are Down and Preforeclosures Discounts Are Up

The housing market appears to becoming more efficient

RealtyTrac reported that the share of homes in some stage of foreclosure dropped 5 percent from the first quarter of this year to 31 percent in the second quarter.
Additionally, the average sales price of bank-owned (or “REO”) properties was discounted another 4 percent  (to 40 percent from 36 percent) below the average sales price of a non-foreclosure home in the second quarter, while the average sales price of a preforeclosure home (often sold in a short sale) also dropped 4 percent to 21 percent from 17 percent in the first quarter.
James Saccacio, RealtyTrac CEO, is quoted as saying that the reduction in the share of homes in some stage of foreclosure, the bigger discounts being applied to preforeclosures and a shorter sale cycle for preforeclosures
“all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales… which gives distressed homeowners who do not qualify for loan modification or refinancing… a better chance of completing a short sale to avoid foreclosure… and give lenders the opportunity to more pre-emptively purge nonperforming loans from their portfolios.”
At the same time, according to an article in RealtyTimes, foreclosures are back down to 2007 levels due in part to the fact that fewer foreclosures are being initiated by the lenders, giving borrowers more opportunity to find solutions to keep their homes or avoid foreclosure in other ways.
The article also cites a recent report by the Mortgage Bankers Association (MBA) that shows that although the number of delinquent mortgage borrowers (people who have missed at least one payment) rose in the second quarter, the number of loans that are delinquent more than 90 days dropped. That’s good news, as it is those distressed mortgages that are more often moved by the lender into a repossession process.

Adding to our Value Proposition

Columbia, MD – August 22, 2011 - Corner to Corner Inspections, LLC is very pleased to announce their acceptance into the WEICHERT, REALTORS - New Colony's Gold Services Program. Corner to Corner Inspections is a fully licensed and insured firm, based out of Columbia, MD, offering comprehensive Home Inspections for single family homes, townhouses and condominiums, as well as Radon Testing in both Maryland and D.C.

The Gold Services Provider contact at Corner to Corner Inspections is the President/Owner, Russ Enerson. Holding both a Masters degree in Architecture from Carnegie Mellon University as well as having 30 years experience in the industry, Russ is offering not only the highest quality Home Inspection for your Buyers, but also effective communication of both the inspection process and the findings of the inspection with your Buyer, and is committing to provide a new level of access to the agents.

Russ has already worked on several projects involving Team New Colony (references available upon request) and is honored to be selected to be a member of WEICHERT, REALTORS - New Colony's Gold Services Program. If you are interested in getting a quote or scheduling an inspection, please contact Russ at 410-227-4764 or renerson@verizon.net.  There are currently some coupon programs running, please call for details.

Is a Short Sale For You?

5 Things You Should Know if You’re Considering A Short Sale of Your Home

Three years ago, the term “short sale” was almost unknown by anyone but some experienced Real Estate agents. Today, the term is on the tip of everyone’s tongue — from homeowners to investors to agents to buyers.

For sellers wondering if a short sale is the right solution for them:

1.         This is not a do-it-yourself process —

• Seeing a short sale to a successful close is a complicated transaction requiring approval from not just the buyer and seller, but also the loan servicers involved.
• Find an expert Realtor with experience in short sales; make sure the Realtor has not only listed short sales, but successfully closed them.

2.       Different lenders have different policies —

• Every lender has different policies and attitudes toward short sales.
• A Realtor familiar with your lender is a distinct advantage in reaching the best outcome.

3.       Your Realtor can help you determine if a short sale is the best option—

• Do you meet the necessary hardship requirements?
• Does your lender have a history of approving short sales?
• What are the market conditions in your neighborhood? How does your home compare?

4.       You can prepare for the sale in advance —

• Put and keep your home in buyer-ready shape.
• Ask your Realtor for suggestions to make your home as attractive as possible to potential buyers.
• Ask your Realtor to pre-negotiate the short sale with your lender if possible.

5.       There are risks and advantages

•  Your mortgage payments are still due to the lender during the short sale process. Depending on the lender, new arrangements can sometimes be negotiated.
• A short sale has a negative impact on your credit rating, though less of one than a foreclosure.
• If your short sale is successful and forestalls foreclosure, you will be able to reply no when asked if you’ve ever been foreclosed upon.
• Your lender may pursue a “deficiency judgment” in the future to collect the forgiven debt. Some states have anti-deficiency laws, but more than 30 states allow deficiency judgments.
• If possible, your Realtor should negotiate deficiencies away. Regardless, make sure you fully understand your current and future exposure and obligations.

To read more about the pros and cons of selling your home short, visit these resources (remember, rules, policies, regulations and requirements vary state by state and lender by lender so review everything with your Realtor for the most accurate information):

• Short Sale Sellers FAQs (Residential Law Group of Suzanne Watts, LLC)
• Risks in Short Sales and Overview of the Pre-Foreclosure Short Sale Process (Foreclosure Law Firms)
• Questions to Ask A Short Sale Listing Agent as a Buyer or Buyer’s Agent (Massachusetts Real Estate News)
• You Lost Your House – But You Still Have To Pay (CNN Money)
• Short Sales: Are They Worth the Trouble? (AOL Real Estate)

Record Lows and Lowest Levels

Latest Mortgage Rates and Foreclosures

Inman News reportedthat “mortgage rates sank to or near all-time lows this week as turmoil in financial markets had investors moving money into the relative safety of bonds and mortgage backed securities that fund most home loans.”

Rates for 30-year fixed averaged 4.32 percent, the lowest average for 2011. In his phone interview for an article on Bloomberg.com, Doug Lebda, chief executive officer of Tree.com Inc. in Charlotte, North Carolina, said “we’re going to look back in five years and see these historically low rates. People are going to wish they jumped in.”

At the same time, foreclosures have hit their lowest level since 2007. According to an article in Realtor Magazine, foreclosure filings dropped in July for the 10^th month in a row of year-over-year declines. Although some analysts ascribe the decrease to processing delays by the banks, RealtyTrac CEO James Saccacio notes “the downward trend in foreclosure activity has now taken on a life of its own. It appears that processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts, may be allowing more distressed home owners to stave off foreclosure."

More time combined with the possibility of low rate refinancing is a good combination for struggling homeowners attempting to keep their homes.

What the New Concept in Community Planning Might Mean

According to a January article in the Wall Street Journal, surveys reveal that roughly one-third of Gen Y’ers are willing to pay for the ability to walk to work. Which would explain why a variety of experts — from sociologists to architects to real estate professionals to economists — are re-examining the relevance and desirability of that quintessential American phenomenon, suburban sprawl.

In a blog post on Switchboard, Kaid Benfield breaks down an article by architecture professor Roger Lewis regarding walkable neighborhoods. He boils the zoning and planning of suburban sprawl of the last 60 or so years to four basic assumptions, all of which are now in question:

1. Unlimited land supply— something that even though logically impossible, felt true for most of the 20^th century
2. Unlimited, inexpensive (and presumably harmless) petroleum supplies— allowing a disproportionate reliance on cars and roads rather than public transportation or denser, mixed-use communities
3. Single use land allocation was ideal— the consensus was that separating residential areas from business from commercial would best protect property value
4. The definition of the “American Dream”— to own and live in a mortgaged home

For homeowners and real estate investors, this means a long, hard look at the old  chestnut “location, location, location.” Inman news recently reported that Rosemary Beach, a Florida Panhandle planned community, saw home sales increase 111 percent from 2009 to 2010 — not a sales trend seen many other places in the country.

The designers of Rosemary Beach, which was the location for the movie, “The Truman Show,” define new urbanism as “neighborhoods that are compact, mixed-use and pedestrian-friendly; districts of appropriate location and character; and corridors that are functional and beautiful.”

Rosemary Beach itself, according to the article, is a “dense community of cottages and vacation homes and walkable streets interspersed with common areas, greens, parks, swimming pools, etc., surrounding a city-like interior of shops, restaurants, coffee bars and small office space. Above the ground floor was loft space. All of this built along a gorgeous Gulf of Mexico shoreline.”

To put it in real estate terms, a house recently put on the market there received an offer for nearly asking price. In less than 24 hours.

Encouraging Mortgage Servicers to Perform Better

3 Ranking and Reward Programs Aim To Help Servicers

This year has seen an industry-wide effort to overhaul the performance of mortgage servicers. Three of the biggest names in the industry, Freddie Mac, Fannie Mae and PMI Mortgage Insurance Co., have implemented programs to quantify, rank and reward servicers according to varying criteria.

1. Last week, Freddie Mac announced its new Freddie Mac Servicing Success Program, which combines scores with reviews to, as the Servicing Success Program page puts it,  “transform how [Freddie Mac] defines, measures, and recognizes servicing excellence.”


2. In June, PMI Mortgage Insurance Co. announced its new MODEL program to “recognize best-in-class servicers for the work they're doing to prevent foreclosures," according to Chris Hovery, PMI senior vice president of servicing operations and loss mitigation.


3. In February of this year, Fannie Mae launched its STAR (Servicer Total Achievement and Rewards) program “to measure and evaluate mortgage servicers' performance in supporting the housing recovery by helping homeowners avoid foreclosure.”

The intent of all these programs was nicely summed up in Tracy Moony, SVP of single-family servicing and REO at Freddie Mac, when she noted Freddie Mac’s commitment “to invest in the future of U.S. homeownership by strengthening servicing practices and enabling servicers to more effectively preserve homeownership.”