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 The Federal Housing Finance Agency Federal Housing Finance Agency announced a new policy to speed up the process that mortgage servicers use to handle short sales, deeds-in-lieu, and deeds-for-lease for mortgages that are backed by Fannie Mae and Freddie Mac.

The FHFA, the regulator of Fannie and Freddie, says the new policy includes a revised timeline that will require mortgage servicers to respond to a request for a short sale offer within 30 days. Servicers also will be required to make a final decision on the short sale offer within 60 days.

For any short sale offer still under review after 30 days, banks will be required to provide weekly status updates to borrowers regarding the pending short sale offer.

The new policy, which will roll out in stages starting in June, aims to “prevent foreclosures, keep homes occupied, and help maintain stable communities,” says Edward DeMarco, the FHFA’s acting director. “These timeline and borrower communication announcements set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

The FHFA also says that by the end of the year there will be additional announcements from Fannie and Freddie that are aimed at addressing borrower eligibility and evaluation, simplifying documents, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance. Please provide your thoughts about this policy?

Source: Federal Housing Finance Agency 

The El Dorado County, California region strikes Gold again? Investors are buying foreclosure bargains and then turning the properties into money-making rentals, which has some drawing comparisons to another “Gold Rush” of sorts. 

Diane Gozza, the executive vice president of Integrated Mortgage Solutions in Houston, recently wrote in an article for National Mortgage News that investors are eyeing the properties similar to how those risk-takers did back in the 1848 California “Gold Rush,” who also had dreams of striking it rich.

They have plenty to choose from: The government-sponsored enterprises, which includes Fannie Mae and Freddie Mac, own more than 200,000 single-family foreclosed homes, and banks own about 600,000 more. To help accelerate the “rush,” the Federal Housing Finance Administration recently launched a pilot foreclosure-to-rental program, offering up investors the chance to bid on 2,500 foreclosure properties owned by Fannie. But some housing experts have argued that such REO-rental programs aren’t needed because investors are already flooding the market to buy up foreclosures and a government intervention isn’t necessary. (Read “NAR: REO Rental Programs Largely Unnecessary” and “Calif. Lawmakers Oppose REO Rental Program“)

“Taking into account the enormous stockpile of REO properties currently held by the GSEs, the auction and bulk investment in REO to rental properties may indeed be the next gold rush,” Gozza writes. “Much in the spirit of the 1848 gold rush, there will be risks and tough lessons learned. But, this private-sector imitative has the potential to be the catalyst for housing market recovery.”

Source: “Tapping into the Next ‘Gold Rush,’”  National Mortgage News (4/10/12)

A “hardest hit” fund to help 18 states that were most battered in the mortgage crisis isn’t meeting its goals of helping underwater home owners, according to a report by the Special Inspector General for the Troubled Asset Relief Program (TARP).

Three percent of the $7.6 billion in the Hardest Hit Housing program has been used by the states since Dec. 31, 2011, but most of those funds so far have gone to help the unemployed and not underwater home owners, according to the report.

According to the report, more than 75 percent of the funds have gone toward shoring up states’ unemployment programs, such as by paying the mortgages of unemployed home owners. But the money was supposed to also be used for loan modifications and principal reductions to help underwater home owners as well, the report says.

The 18 states participating in the hardest hit program were selected due to having the highest number of home owners in negative equity and unemployed.

The Treasury department maintains the fund is serving its purpose. The program provides states the ability to “leverage their unique understanding of the conditions in their communities to create effective, locally-tailored programs,” Timothy Massad, assistant secretary for financial stability, wrote in a letter to Romero about the fund.

Source: “Watchdog Blasts Housing Program for ‘Hardest Hit,’” CNNMoney (4/12/12)

“High gasoline prices provided the trigger that burst the [housing] bubble,” says JunJie Wu, an Oregon State economist and one of the authors of a new study that blames high gas prices as the main culprit for the housing crisis that started in 2007.

“The theory recognizes the role of subprime mortgages and lax lending practices as inflating the housing bubble,” Wu says, but a spike in gas prices was the “trigger.”

The new study, conducted by economists at University of California, Berkeley, and Oregon State University, attempts to pinpoint the cause of the housing crisis. The researchers say that while the housing market is blamed on initiating the 2007 financial crisis, researchers have found little consensus on what actually caused the housing crisis in the first place.

The researchers offer rising gas prices as the main culprit, noting that oil prices more than doubled between late 2006 and 2008 to $4.15 per gallon.

“The real estate mantra is ‘location, location, location,’” Wu says. “If you find yourself in a location that is far from work and transportation costs rise suddenly, that location can lower the value of your house.”

The researchers note that mortgage default rates were highest in commuter areas. Also, low-income households and suburban homes located away from business centers were the most vulnerable. We see these trends in our region, what about yours?

Source: “Some Economists Say High Gas Prices Triggered Housing Crisis,” RISMedia (4/8/12)

Great news for our regions of Lake Tahoe and the Sierras. Some buyers are calling the vacation-home market the “perfect storm,” — falling home values, low mortgage rates, and increased affordability — prompting more opportunity in the second-home market!

The National Association of REALTORS® reported last week that vacation home sales increased 7 percent in 2011 over the prior year. Of those surveyed, 33 percent of the vacation home owners surveyed say they purchased a home because of the low real estate prices. Also, 91 percent reported they plan to rent out their second home purchase in the next year. Seventy-one percent say the higher rental income potential from investment properties helped motivate their purchase.

Many second home owners may have been sitting on the sideline, waiting for the perfect time to pounce on bargain prices, but are seeing that time as now, housing experts say. And more buyers are making all-cash purchases, too: 42 percent of vacation-home buyers paid cash for their home, according to the NAR survey.

Vacation home buyers are also looking past popular beach or ski resorts to make their purchase, says Walter Molony, spokesman for the National Association of REALTORS®. “Name destination resorts are only a component of the picture,” Molony told MSNBC.com. “Most people want to be within an easy drive of their [vacation] home.”

Check out: www.sierraproperties.com for some ”Best Buys” and regional information.

Source: “‘Perfect Storm’ Encourages Sales of Vacation Homes” MSNBC.com (4/ 4/12)

Fannie Mae and Freddie Mac reportedly are in talks with their regulator to allow principal write-downs in order to minimize losses and prevent foreclosures. Both firms seem to have concluded that giving homeowners a big break on their mortgages would make good financial sense in many cases.

“Principal reduction works,” says Mark Zandi, chief economist of Moody’s Analytics. “If someone gets a reduction in their principal amount, it gives them a powerful hook to really fight to try to hang on to the home and not go into foreclosure.”

The Obama administration has increased incentives to lenders for write-downs, reimbursing half of what the lender writes off in some instances. Your comments?

More information at source: “ Fannie, Freddie Press for Mortgage Write-Downs,” WBUR.org (3/23/12)

Encouraging news to share! As part of a settlement with state attorneys general, the five largest mortgage servicers are adopting new requirements for short sales, which is expected to speed-up what has been known as a lengthy process.

Here are some of the new requirements for servicers under the settlement:

Servicers must provide borrowers with a decision within 30 days after receiving a short sale package request.

Servicers will be required to notify a borrower, also within 30 days, if any necessary documents are missing to process the short sale request.

Servicers must notify a borrower immediately if a deficiency payment is needed to approve the short sale. They also must provide an estimated amount for the deficiency payment needed for the short sale.

Servicers are also required to form an internal group to review all short sale requests.

Banks will be considered in violation of the settlement requirements if they take longer than 30 days on more than 10 percent of the short sale requests. Violations can carry fines of up to $1 million and $5 million for repeat offenses.

“If a real estate broker can get a checklist from the bank detailing what documentation is needed, everything can be provided up front, and the bank will be required to give a thumbs-up or a thumbs-down within 30 days,” short sale specialist Chris Hanson with the Hanson Law Firm told HousingWire. “That’s not a bad deal.”

Source: “AG Settlement Starts the Clock on Short Sales,” HousingWire (March 14, 2012)

Four of the the country’s 19 largest banks do not have enough capital to withstand another economic downturn, if one occurs, according to the Federal Reserve’s latest stress test for banks.

Would you have guessed the four banks at risk named in the report are Citigroup, SunTrust, Ally Financial, and MetLife?

The hypothetical stress test, conducted annually by the Federal Reserve but not usually released publicly, analyzes if banks could weather the storm if the economy saw a 21 percent reduction in home prices, 13 percent unemployment, and a 50 percent drop in stock prices. The test aims to see which banks would be able to continue to lend money to individual and businesses even if such catastrophic losses occurred.

For any banks that fail the stress test, the Fed can force them to raise money, such as by selling additional stock or issuing debt.

For the banks that did pass, they are able to raise their dividends and take action in luring more investors to their stocks. This year’s results are “clearly good news — the U.S. banking system can now withstand a quite severe recession without falling over,” Douglas Elliott, a fellow at Brookings Institution, told the Associated Press. Among the banks that passed the stress test are U.S. Bancorp, JPMorgan Chase, and Wells Fargo.

Source: “Federal Reserve Annual Stress Test Fails 4 of 19 Big Banks,” The Associated Press (March 12, 2012)

This ‘Mega Force’ is becoming a growing force in the housing market, with this demographic’s purchasing power more than doubling over the past decade, according to a new report by the National Association of Hispanic Real Estate Professionals called “The State of Hispanic Home Ownership 2011.”

Reconizing the purchasing power of Latinos grew to $1.1 trillion in 2011 and is projected to reach $1.6 trillion by 2016, according to NAHREP. We assist in helping Hispanic Clients!  Hablamos Espanol, www.dougandbudzeller.com or zeller123@gmail.com

Rapid population growth (the Hispanic population more than tripled between 1980 and 2010), the population’s relatively young age, dramatic employment growth, and growing incomes are all triggering a higher rate of Hispanic home buyers, according to NAHREP. Fifty-three percent of the total U.S. population’s 545,000 new owner-occupants in the third quarter of 2011 were Hispanic home owners, according to Census Bureau data.

What’s more, about two-thirds of Hispanic renters have said they plan to purchase a home, according to a 2011 Fannie Mae survey.

“Despite recent losses suffered by Hispanics during the housing crisis, young Latino families that were unaffected by foreclosure or lost home values are ready to enter the market,” says NAHREP President Carmen Mercado. “When they do, they will have an exponential impact on housing sales.”

New household growth is projected to be greater for the Hispanic population than any other demographic, says David Stevens, president of the Mortgage Banker’s Association. “The need to recognize the most critical variables in housing type, price range, affordability, and mortgage product terms will be critical for all housing stakeholders — from lenders and [real estate professionals] to policy makers — in order to ensure that the home ownership needs of Hispanics and other Americans are met,” he says.

Source: National Association of Hispanic Real Estate Professionals 

Interesting that nearly half of home owners recently polled in an online survey said they would walk away from their mortgage if home prices continued to fall. The poll included 1,000 visitors to HousingPredictor, a real estate Web site.

While the poll is unscientific, we question whether home owners are starting to grow more acceptance of the strategic default idea? Strategic default is when home owners walk away from their mortgage obligations, despite being able to make their payments.

In a similar poll in March 2010, HousingPredictor found that 32 percent said they would strategic default if prices fell further — compared to 47 percent in the most recent poll.

But for home owners who walk away from their mortgage obligations, they often do so with later regrets. Experts caution that home owners take a big hit to their credit score — a 30-day late payment alone could bring your credit score down by 100 points, says Glamis Haro, a lending manager who was interviewed by AOL Real Estate. Defaulters may also have to wait up to seven years to even apply for a mortgage again.

Source:“Strategic Default: Would Half of Home Owners Walk Away?”  AOL Real Estate (March 9, 2012)