Welcome to the "Z" Team!

Here’s some interesting news to share with you! California’s attorney general has requested that the Federal Housing Finance Agency suspend foreclosure sales in the state for home owners with government-backed mortgages. 

Attorney General Kamala D. Harris has requested that home owners with loans backed by Fannie Mae and Freddie Mac get a temporary reprieve from foreclosures while housing regulators conduct reviews of whether at-risk home owners are eligible to have the amount they owe on their mortgage reduced. 

Fannie Mae and Freddie Mac have stated in the past that they’re opposed to mortgage principal reductions. The FHFA, which regulates Fannie and Freddie, has said that any such program would cost taxpayers $100 billion. 

More than half a million Californians have lost their home to foreclosure since 2008. What’s more, another half a million are in foreclosure or at “imminent” risk this year. Fannie and Freddie guarantee or own more than 60 percent of mortgages in California. 

Source: “California Seeks Suspension of Foreclosures,” Associated Press (Feb. 27, 2012) and “California AG Seeks Foreclosure Suspension,” MarketWatch (Feb. 27, 2012)

The Federal Reserve is running out of options to help the housing market, and it’s time lawmakers step-up and do more, according to a paper by top economists, which was presented Friday at the U.S. Monetary Policy Forum. (Haven’t we heard this before?)

Federal Reserve officials, members of foreign central banks, and economists discussed how the housing market continues to hamper overall economic recovery. The Fed has already lowered its key interest rate to near zero and mortgage rates are already at all-time lows, which are helping refinancers and home purchasers lock in big savings.

However, the overhang in the housing market “may not be easily addressed by monetary policy,” Michael Feroli, chief monetary policyat JPMorgan Chase, said at the meeting.

Some economists said there’s still more the Fed can do: Lower interest rates even more. However, some note that with more stringent lending standards those who can qualify for refinancing likely already have, so lowering the rate may not have impact. 

Source: “Why the Federal Reserve Can’t Fix Housing,” CNNMoney (Feb. 24, 2012)

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.

Other information at: www.dougandbudzeller.com or zteam4u@gmail.com

Here is our  update information to share with you! Are you now starting to ask: When can we buy again? Were you foreclosed on or did a short sale due to circumstances like a job loss or illness? The wait may not be as long as they were once told! 

Many banks have guidelines that prevent them from issuing loans to people with a foreclosure or short sale in their credit history in some cases for as much as seven years. That also doesn’t factor in the damage foreclosures and short sales can do to a person’s credit score, and the work former home owners’ will need to do to repair it so they’ll have a better chance at qualifying for financing again in the future. Please contact a local lender that knows the new regulations and is recommended by your Realtor!  

The wait-time varies among lenders and government entities. For example, the Federal Housing Administration says former home owners with a foreclosure must wait three years before they can qualify, while Fannie Mae and Freddie Mac require a seven-year wait following a foreclosure. So clearify this with those helping you.  

As for short sales, sometimes these waits can be waived or drastically cut, depending on the borrower’s situation. FHA requires a three-year wait following a short sale, but it may waive that wait if the short sale was due to a job loss. 

Also, for borrowers who can come up with a higher down payment on their next home purchase, they may also not have as long to wait. For example, Fannie Mae will reduce the wait from seven years to two years for borrowers who come with a down payment of 20 percent or more. 

Source: “Lost Home to Foreclosure but Ready to Buy Again? Prepare to Wait in Lender ‘Penalty Box,’” Associated Press (Feb. 22, 2012)

A study by the National Low Income Housing Coalition has found that for every 100 families considered “extremely low income,” there are only 30 affordable units available to rent nationwide. “Extremely low income” renters are considered those who earn less than 30 percent of the median income in the metro area which they live. 

The NLIHC has called for more affordable rentals to meet the growing demands of low-income families. It will be interesting to see what happens! Please provide comments?  

The number of extremely low income renters has grown in recent years. In 2010, the number swelled to 9.8 million — nearly a quarter of all renters nationwide.  

“What we’ve seen is a decline in the home ownership rate since 2008, and we’ve seen rent being pushed up,” pushing rent out of each for more low income people, says Sheila Crowley, NHLIHC chief executive. (For nearly a quarter of all renters nationwide)  

The problem appears to be the most evident where the largest gaps exist between the rich and poor, such as in states like Arizona, California, Florida, Michigan, Nevada and Oregon according to the study. Our “Northern California” region is near the top!

“There’s no doubt that there’s a gap, and it’s significant, and it’s getting worse,” said Becky Koepnick, an adviser to HUD Secretary Shaun Donovan. (As many of us know)

Source: “Lowest-Income Renters Left Behind in Housing Crisis,” The Wall Street Journal (Feb. 15, 2012)

“Good News” to share with you! The number of home owners behind on their mortgage payments dropped to the lowest level in three years, according to a report of data from the fourth quarter of 2011 released by the Mortgage Bankers Association. 

“Mortgage performance is also improving faster than the overall economy,” says Jay Brinkmann, MBA’s chief economist. (We’re finding this is not true with some lenders.)

According to MBA, 7.6 percent of residential mortgages were at least 30 days past due on their payments in the fourth quarter of 2011. Last year, the percentage was 8.3, and the peak of 10 percent was reached in early 2010. Mortgage delinquencies usually hover around 5 percent in more stable markets. Let’s hope this trend continues.

Still, while the lower delinquencies serve as an important sign needed for a healing housing market, MBA still cautions that the number of loans in foreclosure remains high. About 4.4 percent of all loans were in foreclosure in the fourth quarter. The peak reached one year earlier was 4.6 percent.

Source: “Mortgage Delinquencies Hit Three-Year Low,” The Wall Street Journal (2/16/12)

Here’s the “good news” from the weekly mortgage market survey. Rates continue to hover at record lows, with the 30-year fixed-rate mortgage staying at the record low of 3.87 percent since the first week of February, Freddie Mac reports. The 30-year fixed-rate mortgage, the most popular choice among home buyers, has been below 4 percent for the past 11 weeks. 

A closer look at mortgages rates for the week ending Feb. 16: 

30-year fixed-rate mortgages: averaged 3.87 percent, with an average 0.8 point, matching last week’s average. A year ago at this time, 30-year rates averaged 5 percent. 

15-year fixed-rate mortgages: averaged 3.16 percent, with an average 0.8 point, also matching last week’s average. Last year at this time, 15-year rates averaged 4.27 percent. 

5-year adjustable-rate mortgages: averaged 2.82 percent this week, with an average 0.8 point, dropping slightly from last week’s 2.83 percent average. Last year, 5-year ARMs averaged 3.87 percent. 

Source: Freddie Mac

“Mom and pop investors” are trying to capitalize on a depressed real estate market in the hopes of one day being able to cash in. An article in USA Today highlights this new breed of small-scale investors who like to buy and hold properties, opposed to the high-dollar large investment firms that once dominated the real estate market who preferred to buy and flip their property investments. 

For “mom and pop investors,” the strategy is to buy homes at rock-bottom prices, rent the properties out to cover costs of home ownership for several years, and then one day sell the homes when prices recover. “An unprecedented number of investors are looking into this,” John Burns, CEO OF John Burns Real Estate Consulting, told USA Today. We find some buy for eventual relocation to another area for retirement.

For investors in the rental market, an 8 percent annual return is fairly normal, according to Burns. “That means that someone who buys a $100,000 property — and pays cash for it — makes $8,000 a year after expenses, including maintenance and taxes,” the USA Today article notes. 

The threats of tenant or maintenance issues may be the potential to derail that potential profit, so investors need to be careful. Many of the investors we work with are cautious and seek advice from their real estate agent, property managers or other experts. 

Source: “Mom and Pop Investors Propping Up Home-Buying Market,” USA Today (Feb. 14, 2012)

Thought these points would be of interest to home sellers and their real estate agent to coordinate? We believe, marketing a home is a mutual effort of todays home selling! 

Do you want to increase buyer traffic at an open house? Instead of just a flyer or e-mail blast announcing the event, try to give buyers more reason to come out and tour?

A recent article at RISMedia offers some of the following ideas: 

1. Host a speaker:A guest speaker, such as a general contractor or home stager, may draw more of a crowd. Potential buyers may also be looking to sell their own homes, so a stager can offer tips to spruce up a home for sale. 
2. Offer a gift: Hold a raffle, such as by raffling off a gift certificate. Plus, with a raffle, buyers will have to share their contact information with you, which you can then use to follow up. If there’s ever a price change on the house, be sure to notify them. 
3. Involve the community:Invite the neighbors to come to the open house and share their thoughts about the school system or current events in the community, the RISMedia article suggests. You’ll not only be raising awareness about your listing but also helping “to unite the community on important issues,” the article notes. Just be sure to avoid political issues, which can polarize a crowd.

 Source: “5 Ways to Increase Open House Traffic,” RISMedia (Feb. 14, 2012)

The U.S. Department of Housing and Urban Development announced that it will offer nearly $1.8 billion to public housing authorities nationwide, allowing agencies to make large-scale improvements to public housing units. 

The funds also can be used to make energy-efficient upgrades to replace old plumbing and electrical systems, according to HUD. 

 “This funding will help housing authorities address long-standing capital improvements, but it only scratches the surface in addressing the deep backlog we’re seeing across the country,” said Hud’s Shaun Donovan. “Today, we are closer to helping housing authorities and our private sector partners undertake their capital needs over the long haul.”

Source: HUD 

Have you followed this program since it started as a solution to the housing problems? In 2007, 70% of the nations jobs were related to the housing related.  Have the Fed’s programs/ideas since then,  provided economic recovery? Is this just another “Smoke Screen”? Please provide your comments on how or if this may help your region?