Wednesday, December 1, 2010

It's a Good Time to Buy a Vacation Rental

Right now, the languishing housing market offers some lingering upsides for those who have a pot of investment dollars to burn.



Home prices are low, financing is cheap and inventories are bulging.
The planets have aligned over vacation rental acquisitions.
The road's been rocky for real estate in recent years, but that means it's a buyer's market and good time to grab a piece of the American Dream as a solid, long-term investment.
"Vacation homes are almost always a good investment," says vacation rental guru Christine Karpinski, director of Owner Community forHomeAway.com, the global leader in vacation rentals, hosting some 540,000 vacation rental listings.

"First, if you're looking for a good long-term investment, real estate tends to be a good bet. Second, vacation properties have the ability to pay for themselves, and owners often earn a profit in rental income. Third, the investment comes with the desirable perk of having a place at the beach or in the mountains to call your own," says Karpinski, a vacation rental owner herself and author of "How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment"(Kinney Pollack Press, $26.00).

Vacation rental space is the place more and more travelers opt for when they want a bargain getaway with accommodations that provide all the comforts of home.

According to Karpinski, here's why you want to move on that vacation rental now.

Prices are as low as they are going to go.


Property prices are as low as they've been in ten years. Procrastination won't keep them low. Analysts say the housing market is scraping bottom and poised to move up.
"I don't take the plunge now, I'll look back ten years from now and say, 'Why the heck didn't I buy back in 2010?'" says Karpinski

Interest rates are likewise as low as they are likely to go.


Erate.com had the interest rate for 30-year, conforming fixed rate mortgages at 4.23 percent on Oct. 25 and says rates on non-owner occupied properties is about a half a percentage point higher -- with a virtually mandated 20 to 30 percent down payment.

Markets are flush with inventory.


The slow economy and even slower housing market has left vacation markets brimming with buying opportunities, from sellers looking to move on or up, to foreclosures that warrant careful scrutiny.
"One caveat: Before you let yourself fall in love with a property, make sure it is legal to rent it out as a vacation home. Some areas and homeowners' associations do not allow short-term rentals," Karpinski warns.

Good help is easy to find.


The recession weeded out incompetent, fly-by-night real estate people who jumped on the booming market bandwagon. Those who survived have been around the block a few times and know the game.

Say Karpinski, "Real estate professionals still working today are the top in the business," says Karpinski.

Renting a vacation property is easier than ever.


Vacation rentals are more popular than ever, thanks to their home-away-from-home allure but also because the Internet has made them eminently more visible.

"More and more consumers are choosing to stay in cozy condos, cabins, and chalets instead of cramped, impersonal hotel rooms when they travel. And as market demand has surged, organizations like HomeAway.com have sprung up to help connect vacation homeowners with these potential renters," Karpinski said.

The online vacation rental portals help owners market homes by posting photos, descriptions, testimonials and other marketing information to attract vacationers.

HomeAway.com also offers vacation rental owner support. It's Owner Community offers property owners expert information about proven best practices, setting up your business, upgrading amenities on a budget, handling complaints and cancellations and more.

After the Gulf oil disaster, HomeAway.com set up the unique HomeAway Gulf Coast Response Center to fill a void left by major media and to help Gulf area vacation property owners through the lost income claims process, to provide insight from experts and to offer a forum for sharing concerns, stories and frustrations.

"Ten years ago vacation rental owners were on an island, but now it's easy to get the support you need," said Karpinski.

Buy now, beat the 2011 peak season rush.
The longer you wait to buy, the more likely mortgage rates and prices will rise and the good properties will be snatched up.

Buy now and you've got plenty of time to prepare yourself and your property for the peak rental season. Seasoned vacation property owners' rental fees generated during the twelve weeks between Memorial Day and Labor Day pay their mortgages for an entire year. Most inquiries come in between January and March.

"By buying now, you will have a cushion of time to get the home ready for your guests, take great photos for your property listing, and start marketing it to potential renters," said Karpinski.

PHOENIX REAL ESTATE MARKET REPORT - NOVEMBER 2010













Phoenix Real Estate Market Report Summary

The comparisons of current active listings are based on the current inventory as of September 16, 2010. This data includes single family detached homes, patio homes, condos, and townhomes provided by the Arizona Multiple Listing Service. The monthly charts above are based on trailing twelve monthly averages from December 2009 to November 2010 which shows the total activity in the Phoenix Metropolitan real estate market over a twelve month period. The yearly charts above are based on a yearly average for 2005 to 2009 but a trailing twelve month average from December 2009 to November 2010 for the year 2010. Without the trailing twelve month average for the year 2010, the charts would be substantially skewed and would not portray an accurate view of the market on an annual basis.

Since the expiration of the first time home buyer tax credit on April 30, 2010, the real estate market has decreased in the average sold price and number of transactions. Since April 2010, the average sold price has decreased approximately -6.8% (down from last month), the average days on market have increased approximately +10.4% (down from last month) and the number of transaction has decreased approximately -27.0% (up from last month). Since the beginning of January 2010, the average sold price has decreased approximately -9.1%, the average day on market has increased approximately +17.8% and the number of transactions has increased approximately +16.2%, despite the decrease from the tax credits. Based on this information, it appears that demand in the market is weak since the expiration of the first time home buyer tax credit, which is expected when the government withdrawals stimulus from the market. Since we entered into the holiday season, the market has remained fairly stable after the readjustment in the market from the tax credits, as seen in the charts above.     


The number of Notice of Trustee Sales is currently on a steep decline which is typical since according to the historical charts for 2008 to 2009 the number of notices declined during the holiday seasons.. The number of notices is currently below the number for 2008 and 2009 but is unlikely to fall below the 2007 figures for at least another two years and it could continue its progression upward after the holiday season is over. The number of trustee’s deeds issued at the trustee auctions is also on a steep decline which means the competition for trustee properties has declined over the last two months. There is a large amount of properties sold at the court house steps but there is still a large amount of REO properties sold through the MLS. Although a large amount of foreclosures are being absorbed, the market will continue to see more and more foreclosures until the economy improves. According to the above market statistics, the demand for trustee sale foreclosures has declined but the demand for REO properties has stayed fairly consistent. It is impossible for real estate prices to go down much further since the market will eventually reach a level of equilibrium where demand will exceed supply and all buyers will rush into the market to take advantage of low prices before the prices start to increase.   A lot of investors and home buyer have already realized that now is the best time to buyer while prices are low. The year 2011 will be a better year for the real estate market as a whole.  

Thursday, November 18, 2010

Mortgage Rates Spike Quarter Percent

30 year fixed mortgage rates have risen a quarter point this week to 4.25% on plummeting mortgage-backed securities prices. MBS prices drive mortgage rates in the opposite direction. Conventional 15 year fixed interest rates are also up a quarter of a percent and are at 3.75% currently for well-qualified borrowers who pay a standard .07 to 1 point origination. Both fixed mortgage rates are up substantially from last week and at an immediate risk to rise further.

FHA loan rates move with conforming mortgage rates and are also up this week. Today's 30 year fixed FHA loan rate is at 4.125%, up from 4%. Although the same note rate is available on an FHA 30 year fixed mortgage as a conforming 30 year fixed loan, MI and other fees charged by the Federal Housing Administration make APR higher on an FHA mortgage.

Jumbo mortgage rates are unchanged. The current jumbo 30 year fixed rate is 4.875%
Wells Fargo, the nation's number one originator by volume, adjusted their advertised 30 year fixed rate from 4.25% to 4.625% with an APR of 4.812.

FreeRateUpdate.com surveys wholesale and direct lenders' rate sheets to determine the most accurate mortgage interest rates available to well-qualified consumers who pay an industry standard .07 to 1 point origination. These rates are commonly referred to as "par rates" by mortgage loan officers.

Appraisers up Next for 'Wall Street Reform' Brand of Regulatory Do-Over

Tolling the death knell for the Home Valuation Code of Conduct (HVCC), the Federal Reserve Board recently announced final regulatory orders for real estate appraisers.



The interim final rule for appraisers, part of the massive federal regulatory overhaul known as "Wall Street Reform" (officially, the Dodd-Frank Wall Street Reform and Consumer Protection Act), is designed to keep appraisers independent, free from third party pressure, honest and compensated fairly.

We'll see.

The Fed's interim final rule:

• Prohibits coercion and other similar actions designed to cause appraisers to base the appraised value of properties on factors other than their independent judgment.

• Prohibits appraisers and appraisal management companies hired by lenders from having financial or other interests in the properties or the credit transactions.

• Prohibits creditors from extending credit based on appraisals if they know beforehand of violations involving appraiser coercion or conflicts of interest, unless the creditors determine that the values of the properties are not materially misstated.

• Requires that creditors or settlement service providers that have information about appraiser misconduct file reports with the appropriate state licensing authorities.

• Requires the payment of reasonable and customary compensation to appraisers who are not employees of the creditors or of the appraisal management companies hired by the creditors.
Appraisers have been heavily pressured years -- before, during and after the boom -- to do the home valuation bidding of mortgage lenders, real estate agents, even buyers, sellers and refinancing homeowners who needed home values based on risky assumptions rather than true worth factors.

Bowing to pressure to over-value homes was one of the factors contributing thehousing market crash that spawned the greatest recession since the Great Depression.

Amid howls from appraisers and other real estate industry quarters, the Federal Housing Finance Agency (FHFA) implemented HVCC in May 2009, after the housing bust, purportedly to improve the independence of appraisers by prohibiting lenders and third parties from influencing appraisers' work.

Unfortunately, the code of conduct cut deeply into appraisers' income and, as the housing market floundered, it worsened working conditions for honest, hard working appraisers, who have since been looking forward to new regulations.

Appraisers deemed the HVCC as a bogus effort to clean up the industry, because it didn't focus enough on appraiser competency; it undercut professional relationships between honest appraisers and reputable mortgage professionals; it increased the influence of bottom-line oriented appraisal management companies; and it encouraged the use of glossed-over appraisals that didn't reflect the true value of a property.

By and large, for those and other reasons, real estate agents, new home builders, even mortgage brokers and others likewise detested HVCC.

In advance of the new interim rules, Fannie Mae, working FHFA and Freddie Mac released its own Appraiser Independence Requirements -- new rules for mortgage companies selling loans to the government-sponsored enterprises -- which also overwrite HVCC rules.

Fannie's rules are in line with the new federal regulations, but all conventional, single-family mortgage loans must still be in compliance with HVCC until the release of the final Federal Reserve rules, effective April 1, 2011.

A public comment period on the new rules ends in December, but the interim rules will likely take hold with few changes.

WANT TO BUY A HOME BUT WHERE TO START? ~ 10 TIPS FOR HOME BUYERS

It is a great time to buy for many would-be homeowners. The market offers historically low interest rates, as well as affordable home prices.

Here are 10 steps that buyers can take to make home dreams a reality!

1. Savings. You may already know how much monthly payment you can support (experts recommend no more than 1/3 your monthly income), but the buying process will also include upfront costs, such as a downpayment and closing costs.

2. Downpayment options. Do you qualify for downpayment assistance programs? Will you be able to get an FHA loan and pay 3.5 percent down? Do you have a relative that would like to make a downpayment gift? Many financial experts recommend a downpayment of 20 percent, so be sure to explore your options!

3. Check Credit Report. Your credit report says a lot about you. Lenders use it to evaluate your risk potential and to inform themselves on how responsible of a borrower you are. They use this report and subsequent score to figure your interest rate. The more stellar your report, the better your score and thus lower your rate. Be sure to check your report for accuracy, and report any errors to the credit reporting agencies.

4. Get Prequalified. It's time to talk to a lender! Pre-qualification will give you a ballpark figure of how much the bank would be willing to lend you. Are you looking for a $100,000 house or a $300,000?

5. Get Preapproved. This is the official letter from the lender that says they willbe willing to lend you money. Many sellers look for buyers who are preapproved.

6. Affordability. The bank may tell you that you can afford a home worth $300,000. This does not mean you want to borrow to your max. A more modest home may fit better in your financial plans.

7. Housing Criteria. You have a budget, now develop a list of what you need and want. This can include anything from "must have 3 bedrooms" to "hardwoods" or "granite".

8. Neighborhood choice. Location strongly affects prices. A 3,000 square foot home in rural Kansas costs a fraction of one in New York City. Decide what neighborhoods and areas are the best fit for you. This will help narrow your home search.

9. Hire an agent. An agent can help you navigate the entire process from searching, putting in offers, to where to hire an inspector or general contractors.

10. Start the search! The MLS is a wonderful place to begin your search. Eighty-four percent of buyers now start their search online, so you'll be in good company.

Friday, October 29, 2010

The Silver Lining in the Double Dip Recession

Being faced with significant economic and political uncertainty the United States economy and its participants (that's us) have reacted like turtles, hiding in our shells, awaiting better times.

Clearly we are facing challenging times We have been facing low personal income growth, an increasing unemployment rate, uncertainty in the business climate, and a weak housing market.
In particular the weakness in the housing market is marked in six ways:
  1. Record high home foreclosures that, according to Barclay's Bank, will not peak until 2011. These foreclosed properties will continue to flood the marketplace with inventory
  2. A significant increase in strategic defaults, whereby home values have dropped so much that home owners send in the keys and move out, rather than keep owning an overvalued home.
  3. One statistic claims that nearly 20% of all home mortgages are "underwater" because house values have dropped so significantly
  4. Joblessness and economic uncertainty have reduced the demand for new housing
  5. New home construction starts are at record lows. After a 15% drop in May, housing starts fell another 5% in June to a seasonally adjusted annual rate of 549,000. The Commerce Department estimated it to be the lowest level in eight months.
  6. The oversupply of homes in the marketplace has reduced the value of homes in many states as sellers outnumber buyers.
Commercial Investments face major challenges On the commercial side of the ledger, we find that significant increase in business failures and restructuring is resulting in the loss in demand for commercial space nationwide. This has particularly affected:
  • Retail centers,
  • Office buildings
  • Industrial buildings and flex parks This in turn is:
    • Reducing the demand for new buildings – now and for the immediate business cycle
    • Creating challenges for many commercial landlords
    • Reducing the value of commercial assets
Increasing commercial strategic defaults is making debt refinancing difficult. The loss in rental income and market valuation is creating challenges for refinancing of debt for the investors without enough equity or cash to increase their equity positions Highly leveraged purchases made in the real estate hey-days of 2006 – 2008 are the most at risk. At a recent economic symposium Allen Sinai, economist and founder of Decision Economics, voiced his concern: "The challenge is unique: poor and diminishing growth, a sticky unemployment rate, sky-high deficits, and a sovereign debt that makes us one of the most fiscally irresponsible countries in the world." Even more depressing is that more job losses are in front of us. Governors in many states will have to make tough decisions to cut staff as additional federal funds dry up and tax increases will not be warmly received by the electorate. (Note: Most States in the union are facing budget short falls. At Least 46 States have imposed cuts.)

As states have trouble raising revenues, this will in fact also have a trickle-down effect on counties and cities and other government supported organizations that rely on government funds. This in turn will force those agencies to trim staff.

In Oregon, the governor has already implemented a 9% budget decrease and will be implementing an additional 8% cut in order to help balance the budget. This is in addition to increased corporate taxes and use of reserve funds to balance the budget.

This sounds very foreboding but there is a silver lining for those that have a strong cash position.
The silver lining Many companies have right sized their businesses and are making a profit.
I recently had lunch with a business owner of a construction related firm, who cut half of his staff in order to stay in business. But he is now more optimistic and is looking to add staff to help his marketing efforts and re-grow his business. He expects a slow increase in growth moving forward as demand catches up with supply.

At this point, much of the business employment cutting has been accomplished (with the exception of government agencies). As of July 2010, Oregon's official unemployment rate was down to 10.6% from 11.4% in July of 2009. The Federal unemployment rate has been holding steady at 9.4%. Any cuts made by the government agencies may help the economy get stronger in the future.

Real Estate
Unprecedented low interest rates for home purchases:
  • 30 Yr Fixed as low as 4.25%
  • 15 Yr Fixed as low as 3.75%
These low interest rates will fuel demand to purchase homes as the prices drop to a place where average Oregonians can afford them.

Lower rates for apartment property purchases ( currently around 5% compared to the roughly 6.5% for commercial property purchases)
  • Increased residential foreclosures mean lowered prices and opportunities for investors to buy homes as rentals
  • Increased demographic demand for rentals is coming
  • Significant reductions in Apartment vacancy rates are a reflection of the upcoming increased demand. In The Portland Metro area Vacancy rates dropped from 7% to 3.5% from January of 2010 to September of 2010.
  • The "silver-lining" flipside to the unemployment picture is that 85 – 90% of Americans are either employed or in school.
  • SBA financing is available ( at competitive interest rates and with low costs) to help small business owners buy a building for their business
  • They only have to occupy 51% and can rent the rest of it to a tenant until they grow into it.
Other key market place indicators
  • Banks are slowly recovering and have the cash they need to loan and generate income, albeit conservatively
  • Many banks are ending their "pretend and extend" phase and are actively taking back properties and selling them as fast as they can to get them off of their books.
  • Urban areas will recover faster than rural areas, so the risk is lower in urban areas.
  • Oregon has the Urban Growth Boundary (UGB) for cities. This means that land values will come back as the recession winds down and the population increases.
If you have money, you have an excellent 6 – 12 month window to look for real estate opportunities in Oregon.

Residentially, we are one of the states with highest foreclosure rate (percentage wise), so there will be opportunities to buy your second home or a couple of investment homes. You can still buy a small home in Bend for $100,000 - $120,000 and many other rural areas around the state. (The Bend area unemployment rate is 17 – 20%, but rentals are showing lowered vacancy rates).

Commercially, there are buildings on the market but, with the exception of SBA loans that require only a 10% down, it is harder to finance commercial purchases unless you have lots of cash.
In my lifetime I have never seen prices this low for residential real estate. There is a market place adjustment occurring, which will reduce the value of residential homes in the near term, but values will go up as jobs and our population increases, especially in Oregon where the UGB limits the amount of land available for growth. Now is the time to invest… and for the turtles among us to start sticking our necks out.

FHA's Rehabilitation Program

If you have your sights set on a home, but fear being able to get financing because it requires a little work, then have no fear. The FHA offers a program that could help you purchase the home and rehab the property.

The Federal Housing Administration's (FHA) 203(k) rehabilitation program is "an important tool for community and neighborhood revitalization and for expanding homeownership opportunities."
How does it work?

With conventional financing, a lender won't close on a loan unless the condition of the property, and thus the value, ensure loan security. This means that a property requiring rehabilitation may be out of reach for many buyers. These properties generally require the buyer to find additional financing for the needed construction and repairs. These loans can involve short term loans with high interest rates. And in a housing market where many new homes are out of reach for buyers, rehab ready may be a good financial choice. The FHA's program should allow more buyers to enter the market, and to help to move a specific segment of inventory.
As an alternative to conventional financing, the FHA is offering a chance for buyers to get just one mortgage loan, at a long-term fixed (or adjustable) rate, to acquire and rehab the property.
To be eligible, a property must be a one- to four-family dwelling that has been completed for at least one year. If a home has been demolished, part of the existing foundation must still be in place.

This program has been in use since 1978. Many borrowers, however, think that only "far gone" properties are eligible.

The house “doesn’t have to be falling apart; it could just be outdated,” said Joseph Latini Sr., the president of Hartford Funding, a lender in Ronkonkoma, N.Y. “It just has to appraise below market value and then at market value with the repairs.”

For more information and requirements, review them at hud.gov.

More Than One In Three Say It's Okay To Walk Away From Mortgage

The majority of Americans, say it's "unacceptable" for homeowners to stop making their mortgage payments and abandon their homes, but more than a third, 36 percent, say "walking away" is okay.



A Pew Research Center study found that 59 percent believe it is wrong for homeowners to deliberately stop paying their mortgages and surrender their homes to the mortgage lender.


Among those who said walking away is okay, 19 percent said it's acceptable outright and an additional 17 percent volunteered that it depends on the circumstances.


Either way, walking away can sink your credit score and come with an extra tax burden, not to mention the potential of a court suit.


The survey, conducted May 11 to May 31, queried 2,967 adults and found more than one-in-five homeowners (21 percent) say they owe more on their mortgages than their home is worth.
The "underwater" situation compels some homeowners to stop making their mortgage payments and let the bank foreclose on their homes.


Many homeowners, who can afford a mortgage payment, have nevertheless stopped making payments in what's called a "strategic default" and that's caused mortgage finance giant Fannie Mae, reeling from mounting losses, to sue them.


Alternatives to walking away, say a short sale, mortgage modification, a refinance (if possible), even an outright sale for less then the home is worth, are probably better ideas.


According to RealtyTrac.com, in August, lenders foreclosed on 95,364 U.S. properties in August, the highest monthly total in the half-decade history of the report.


Nearly half (48 percent) of all homeowners say the value of their home declined during the recession, and as a group they were more likely than those whose home did not lose value to say it's acceptable to bail out on a mortgage (20 percent vs. 14 percent).


The study also found:


• Twenty-five percent of renters said it was okay to walk away.


• Nearly one-in-four adults (24 percent) who say their families are just able to pay their monthly bills or can't meet expenses said it's okay to stop paying a mortgage, compared with 14 percent of those who say they "live comfortably."


• Eighteen percent of homeowners who say their homes are worth less than what they owe, vs. 17 percent those who would break even or make money on a sale said it's okay to stop mortgage payments.


• Among ethnic groups, 24 percent of all Hispanics say it's acceptable to abandon a mortgage, compared with 17 percent of whites and 21 percent of blacks. However, roughly similar majorities of Hispanics (58 percent), blacks (56 percent) and whites (61 percent) say abandoning a mortgage is wrong.


• More liberal Democrats were about twice as likely as more conservative Republicans to say it is acceptable to walk away (23 percent vs. 11 percent).


• Black homeowners vs. whites (35 percent vs. 18 percent); lower-income homeowners vs. upper-income homeowners (33 percent vs. 15 percent) and middle-aged homeowners vs. younger or older homeowners were more likely to be underwater.

Understanding the Foreclosure Debacle


It has been a month since GMAC Mortgage suspended sales of foreclosed homes to review its paperwork procedures. While the company has lifted the freeze, the mess it unleashed has no end in sight.
A White House financial-fraud task force, which includes the Justice Department, is investigating how mortgage companies handled their documents. All 50 state attorneys general are hunkering down for their related probe, which also is at an early stage.
Courts are in chaos as banks cancel foreclosure hearings, review documentation for loans on houses heading for the auction block until they were detoured and replace questionable affidavits prepared by "robo-signers."
Some experts predict that the only way out of the debacle is a huge settlement in which home-loan servicers modify the terms of billions of dollars of mortgages. Depending on how a settlement is structured, the potential losses could hammer banks. Investors who bought securities created out of pools of mortgages now in trouble are worried they could be stuck footing much of the bill.
The number of foreclosures, length of time that borrowers typically get to stay in their home after missing loan payments and foreclosure-sale processes vary widely by U.S. state and mortgage-servicing company.
Here are some basic questions and answers:
How many payments has the average borrower in foreclosure missed?
The foreclosure process typically begins no sooner than 90 days after the borrower begins missing payments. But of the 2.1 million mortgages in foreclosure as of Sept. 30, the average loan is 484 days—or about 16 months—past due, according to LPS Applied Analytics. That is up 93% from 251 days in January 2008.
[QANDA]
In New York, the average borrower in foreclosure hasn't made a payment in roughly 20 months. The shortest foreclosure timelines occur in Nebraska and Wyoming, where the average is 358 days, according to LPS.
The process tends to move slower in the 23 U.S. states where foreclosures are handled in courts. Some states and cities imposed temporary curbs to give borrowers more chances to work out a compromise with their lenders.
With so many borrowers so far behind, why did the controversy just erupt?
GMAC, a unit of Ally Financial Inc., which is majority-owned by the U.S. government, suspended foreclosure sales one week after several Florida law firms representing lenders in GMAC-related foreclosures withdrew their cases against borrowers.
The move drew scrutiny from state attorneys general, judges, lawyers representing borrowers and other mortgage servicers, who began reviewing their own foreclosure procedures.
"In a judicial foreclosure state, you are using the power of the state to take away someone's home," says Patrick Madigan, assistant attorney general for Iowa, which is leading the nationwide review. "This is about protecting property rights and about the rule of law."
How often do lenders and servicers pursue foreclosures?
At Provident Funding Associates LP, about 2.8% of mortgages serviced by the Burlingame, Calif., company are delinquent or in foreclosure, according to Inside Mortgage Finance, an industry newsletter. That is the lowest percentage among the largest mortgage servicers.
In contrast, about 42% of loans handled by Ocwen Financial Corp., West Palm Beach, Fla., are delinquent or in foreclosure. Differences reflect "the hand they are dealt," says Guy Cecala, publisher of Inside Mortgage Finance. Ocwen often is called in on defaulted loans, while Provident services "the cream of the crop," he says.
A four-month probe by the Obama administration into five of the biggest mortgage servicers concluded that some are far more skilled at handling foreclosures than others are. Laurie Goodman, a senior managing director at mortgage-bond trader Amherst Securities Group LP in New York, says some servicing firms also "move the process along more aggressively than others."
Aren't many foreclosed-upon homes already empty?
In a conference call with analysts Tuesday, Bank of America Corp. said 33% of its foreclosures in the first eight months of this year involved vacant properties. J.P. Morgan Chase & Co. recently said 35% to 40% of homes are empty when a foreclosure sale occurs.
Some government officials and borrowers' lawyers say the figures should be viewed with caution. Some borrowers move out when they receive notice that their home will be sold if they don't catch up on their payments.
In addition, some mortgage companies rely on outside contractors to determine if a house is occupied or vacant. "I've had clients where someone has hung a note on the door saying they've determined the property is vacant, and it's not," says Margery Golant, a Boca Raton, Fla., lawyer who represents borrowers in foreclosure.
Why can't borrowers who are essentially living rent-free just get back on track?
Unpaid loan amounts typically are added to the loan balance. And with home values down sharply across much of the U.S., a ballooning balance increases the likelihood that borrowers will owe more than their homes are worth.
Many borrowers struggling to keep their homes have run into trouble because of the weak economy. Bank of America has said half of its delinquent mortgage borrowers were unemployed or had a significant loss of income.
Why has the number of days borrowers are in foreclosure increased so much?
Sheer volume is a big factor. Mortgage companies are straining to keep up with the surge in delinquencies. Some servicers have said they were too slow to beef up staffing levels.
"The system was never designed to handle more than a few hundred thousand [troubled loans] at a time," says Mark Zandi, chief economist of Moody's Analytics.
Efforts to keep people in their homes have also slowed the process. Mortgage companies have struggled with the Obama administration's housing-rescue plan. But some borrowers complain that banks and servicers keep losing their loan paperwork, stretching out the time it takes to complete a loan-modification review.
Any foreclosure moratorium also triggers delays. Bank of America has temporarily halted foreclosures or foreclosure sales at least four times, a company spokesman says. Two of those halts lasted a combined five months.

Monday, October 18, 2010

30-Year FRM Under 5 Percent for 23 Consecutive Weeks

McLean, VA – Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), which found that the 30-year fixed-rate mortgage rate fell again to break the survey’s all-time low; the 30-year FRM has been under 5 percent for 23 weeks in a row. The last time 30-year FRM rates were this low was April 1951 (based on a data series of FHA rates going back to 1948). The 5-year ARM tied the all-time survey low set last week.


30-year fixed-rate mortgage (FRM) averaged 4.19 percent with an average 0.8 point for the week ending October 14, 2010, down from last week when it averaged 4.27 percent. Last year at this time, the 30-year FRM averaged 4.92 percent.


15-year FRM this week averaged a record low of 3.62 percent with an average 0.7 point, down from last week when it averaged 3.72 percent. A year ago at this time, the 15-year FRM averaged 4.37 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.47 percent this week, with an average 0.6 point, tied with last week when it also averaged 3.47 percent. A year ago, the 5-year ARM averaged 4.38 percent.

1-year Treasury-indexed ARM averaged 3.43 percent this week with an average 0.8 point, up from last week when it averaged 3.40 percent. At this time last year, the 1-year ARM averaged 4.60 percent.

Frank Nothaft, vice president and chief economist of Freddie Mac, notes, "September’s employment report held no big surprises to financial markets, allowing long-term bond yields and fix mortgage rates to continue to ease. As a result, both the 30-year and 15-year fixed mortgage rates hit all-time record lows for the third consecutive week."

"Historically low rates have spurred yet another refinancing wave. Conventional mortgage applications for refinance jumped 24 percent over the week of October 8th to the strongest pace since mid-April 2009, according to the Mortgage Bankers Association . The Bureau of Economic Analysis estimates that homeowners held an average effective mortgage rate of 6.07 percent in the second quarter of 2010. By refinancing into this week’s 30-year fixed-rate mortgage, the average homeowner could save over $230 a month in principal and interest payments on a $200,000 loan balance."


Monday, October 11, 2010

PHOENIX REAL ESTATE MARKET REPORT - SEPTEMBER 2010



Phoenix Real Estate Market Report Summary

The comparisons of current active listings are based on the current inventory as of September 16, 2010. This data includes single family detached homes, patio homes, condos, and townhomes provided by the Arizona Multiple Listing Service. The monthly charts above are based on trailing twelve monthly averages from September 2009 to August 2010 which shows the total activity in the Phoenix Metropolitan real estate market over a twelve month period. The yearly charts above are based on a yearly average for 2005 to 2009 but a trailing twelve month average from October 2009 to September 2010 for the year 2010. Without the trailing twelve month average for the year 2010, the charts would be substantially skewed and would not portray an accurate view of the market on an annual basis.

Since the expiration of the first time home buyer tax credit on April 30, 2010, the real estate market has decreased in the average sold price and number of transactions. Since April 2010, the average sold price has decreased approximately -9.7%, the average days on market have increased approximately +11.7% and the number of transaction has decreased approximately -25.0%. Since the beginning of January 2010, the average sold price has decreased approximately -9.2%, the average day on market has increased approximately +16.7% and the number of transactions has increased approximately +17.5%, despite the decrease from the tax credits. Based on this information, it appears that demand in the market is weak since the expiration of the first time home buyer tax credit, which is expected when the government withdrawals stimulus from the market. As we go into the holiday season, the market is expected to see a continued decrease in the average sold price and number of transactions and a continued increase in the average days on market.    

The number of Notice of Trustee Sales is currently on the rise but according to the historical charts for 2006 to 2007 the number of notices start to increase around June and July. The number of notices is currently below the number for 2009 but if the number of notices continues its steep progression upwards, then it will surpass the figures for 2009. The number of trustee’s deeds issued at the trustee auctions is rising which means the competition for trustee properties are at an all time high. There is a large amount of properties sold at the court house steps but there is still a large amount of REO properties sold through the MLS. Although a large amount of foreclosures are being absorbed, the market will continue to see more and more foreclosures until the economy improves. According to the above market statistics, the demand for foreclosures is rising as the average sold price continues to decrease. A lot of investors and buyer have realized that now is the best time to buyer while prices are low.    

Monday, August 16, 2010

Take a Walk to Higher Home Values

Homes in "walkable" communities are becoming more and more popular, according to an August 2009 study released by CEOs for Cities. Not only are they more popular, homes located in these urban areas are showing a marked increase in value.

The study, entitled, "Walk the Walk," concludes, "More than just a pleasant amenity, the walkability of cities translates directly into increases in home values." CEOs for Cities defines walkable neighborhoods as "those with a mix of common daily shopping and social destinations within a short distance."

The study maintains houses with "above-average levels of walkability" sell for a premium of about $4,000 to $34,000 over houses with just average levels of walkability in the typical metropolitan areas studied.

The Walk the Walk study turned defining a community's walkability into a fine science and explores the connection between home values and walkability as measured by a Walk Score algorithm and other mathematical and scientific equations and controls.

Bottom line: People like to walk and more people are creating designer lifestyles that allow them to live without a car. They want to walk to stores, schools, parks and to places that provide them with the services they need. And, they are willing to pay.

"The property value premium for walkability seems to be higher in more populous urban areas and those with extensive transit, suggesting that the value gains associated with walkability are greatest when people have real alternatives to living without an automobile," the study said.

The study's measure of walkability focused on the benefits of walking along with better accessibility in general.

The report concludes, "This research makes it clear that walkability is strongly associated with higher housing values in nearly all metropolitan areas. The choice, convenience and variety of walkable neighborhoods are reflected in housing markets and are the product of consumer demand for these attributes."

As the nation watches the housing market with baited breath, it's good to know people are still looking to a bright future and focusing on ways to increase home values through research and without speculation.

CEOs for Cities -- a national cross-sector network of urban leaders from the civic, business, academic and philanthropic sectors - is calling for urban leaders to pay close attention to walkability "as a key measure of urban vitality and as impetus for public policy that will increase overall property values - a key source of individual wealth and of revenues for cash-strapped governments in a tough economy."

Design Your Home to Conserve Water

Design Your Home to Conserve Water
Posted by Sean Heideman
Go Green. Save Green (and Water)!

Water is one of the world's most precious commodities. Whether you're building a new home, have purchased an older home, or are simply trying to cut down on utility bills, there are many measures you can take to conserve water.

1. Drip, drip, drip. You know that annoying little drip in the bathroom sink? Did you know it can send up to 20 gallons of water down the drain every single day? If the drip has become a steady little stream, you can multiply that amount by many times.

If you're building a home, use high quality fixtures that won't leak. Proper installation is critical. Don't overlook even the smallest of leaks. Take a "Do-It-Yourself" course from a local building supply or plumbing store so you know how to identify problem pipes and fixtures and feel confident in repairing them. (Just think of the money you'll save!)

2. That toilet is sure noisy. If you suspect the toilet is leaking, try this tip. Remove the lid from the toilet tank and put three or four drops of food coloring in the water there. Wait 30 minutes (don't flush the toilet). If you see color in the bowl, that is an indication that your toilet is loosing water and replacing it with water from the tank. Find out where the water is going! Replace any parts that need to be replaced and repeat the test.

You can reduce the volume of water required to stop the flow into the toilet tank by inserting a commercial space taker in the tank away. To save even more money, simply use jars or jugs that are weighted down and will sink to the bottom of the tank. Be sure to keep room in the tank for at least three gallons of water.

When building your home, purchase toilets specifically designed to minimize the amount of water they use. Be sure to write down all of the water-saving measures you take in case you decide to sell your home. Conservation efforts will make your home more valuable and easier to sell.

3. Where is it all going? Play "Water Detective." Water leaks can be sneaky. You might be using excessive water and not even know it. Turn off all of the water in your house and yard. Record the numbers on your water meter. Wait two hours. The meter should display the same numbers as when you started. If not? You're losing water to a sneaky leak somewhere. Find the culprit and put an end to the waste.

4. Slow the flow. If you're building a new home, make it a point to use low-flow faucets and shower heads. If you're trying to make an older home more efficient, install flow restrictors. They are inexpensive and easy to install.

Aerators are readily available for faucets. Aerators allow you to adjust the spray volume you need for the task at hand. Aerators may feature a valve to easily reduce the flow of water without turning of the taps or readjusting them. Discuss the concept of water conservation with others living in your home. Carefully review water bills for water usage and plan a reward for significantly reducing the amount of water used each month. Encourage people to take shorter showers, avoid leaving water running needlessly, turn of the water while brushing teeth, etc.

5. The heat is on. Properly adjust your hot water heater and insulate pipes so hot water in the pipes stays hot and is readily available on demand. This will prevent you from having to run the water for an extended period of time to get water from the heater to the faucet.

6. Cool it down. Keep fresh, cold water in the refrigerator. That way, there will be no need to run water for an extended period of time to get it good and cold.

7. Fill it up. Purchase conservation conscious appliances. Even if you don't purchase new appliances, you can save water by making sure you only start appliances with a full load. Use the proper settings for the load you are washing. For example, if you're washing a regular load of dishes, don't use the "Pots and Pans" cycle of your dishwasher.

Set your clothes washer to a cycle that requires the fewest rinses.

8. Recycle. Garbage disposals require the use of running water to rinse food waste down the drain. You can recycle and save water by starting a compost pile. Instead of washing food waste down the drain, turn it into a valuable resource for your garden.

Go Green - Build an Environmentally Friendly Home, Business

The concept of building an environmentally friendly home or business is more than just a passing political fad. According to the U.S. Environmental Protection Agency, buildings have a tremendous impact on energy consumption and the natural environment.

Following are statistics reported by the EPA online:

In the United States, buildings account for:
39 percent of total energy use
12 percent of the total water consumption
68 percent of total electricity consumption
38 percent of the carbon dioxide emissions

Whether you are building a new home, an office, or a large or small business, the best approach to environmental responsibility is to integrate conservative building strategies into your plans from the point of conception. Energy saving strategies can also be applied to remodeling plans and reconstruction.

In addition to the following benefits taken directly from the EPA Green Buildings website at http://www.epa.gov/greenbuilding/pubs/whybuild.htm, the value of your home or business will be greater for a variety of reasons including an appeal of social environmental responsibility to potential buyers and many buyers' interest in long-term savings through energy efficiency, maintenance and overall operational costs. Green buildings feature many major selling points that could help you close a sale or lease agreement over buildings that are not designed with the environment in mind.

Environmental benefits

Enhance and protect biodiversity and ecosystems
Improve air and water quality
Reduce waste streams
Conserve and restore natural resources
Economic benefits

Reduce operating costs
Create, expand, and shape markets for green product and services
Improve occupant productivity
Optimize life-cycle economic performance
Social benefits

Enhance occupant comfort and health
Heighten aesthetic qualities
Minimize strain on local infrastructure
Improve overall quality of life
Any building can be a green building. Homes, schools, commercial buildings, healthcare facilities and more are now being constructed with a vested interest in conserving energy and water. Green buildings are designed to reduce waste and toxins with building materials and specifications that also help improve indoor air quality and sustain smart growth in neighborhoods, on Main Street and in industrial developments.

Want more good news? There are many local, state and national programs that reward builders for incorporating responsible green building components in construction and reconstruction projects.

If you would like more ideas on how you can emphasize the environmentally friendly aspects of your building for sale, contact us today. If you're looking for a green building to buy, we can help you there too. Green buildings are the wave of the future and there's no time like the present to get started preserving our environment and our future.

Americans on the Move: Relocation Information is at Your Fingertips

Americans are on the move. Recent housing market fluctuations and economic conditions have prompted many Americans to relocate. Some relocate to find employment or meet job requirements. Others are (sadly) losing homes to foreclosure and looking for a new start. Some are finding affordable housing as a result of the slow housing market in new locations. Believe it or not, there are some who simply seek new and better surroundings.

People choose different locations for different reasons at different stages of their lives.


Whether you're moving to a new community by chance or by choice, the transition can require a long period of stressful adjustment. There are ways to minimize the stress and prepare you and your family for life in a new neighborhood.

Tap Into Technology

If you have decided to move to a specific location (such as in the case of a job transfer), it's a good idea to become familiar with your new surroundings before you make any decisions about housing or local location.

The Internet is a wonderful, wonderful tool that can take you places without ever having to leave your home. Take full advantage of the tools the Internet offers. Start by contacting a real estate agent who can act as a "virtual guide" and, later, a location guide.

A real estate agent can be your best friend in this situation. Real estate agents are generally very well connected and can provide you with quality community information in an instant. Peruse your agent's website for local information and links that will help you evaluate:

Communities and neighborhoods
Recreational opportunities
Climate and geography
Commerce and local economy
Education
Social settings
Housing markets
Local demographics
Utilities
And more!
Your real estate agent can provide you with external local website links that will help you provide in-depth information.

Nearly every incorporated city and some unincorporated communities feature websites with helpful information. Simply access your favorite search engine and type in the name of the city. You may get more accurate results by using quotation marks around the name of the city (especially if the city name includes more than one word), for example, "Salt Lake City, Utah" or "Salt Lake City, UT". Be sure to use the name of the state in your search. Look for official websites with a ".gov" or ".org" extension. You can also type in questions such as, "In what county is Salt Lake City located?"

Local chambers of commerce are almost always willing to send relocation packets with selected information including visitor guides and local resources. Often their websites feature links that allow you to request a relocation packet online. Some charge a minimal fee.

If you are still deciding where you want to live, there are many public and private enterprise websites that compare communities and offer demographic information on multiple communities.

U.S. Census Bureau - www.census.gov

The U.S. Census Bureau is a great source of information. Be forewarned that smaller communities may only feature information based on the most recent complete census conducted in 2000. There are many different data sets available through the U.S. Census Bureau including:

The Decennial Census taken every 10 years to collect information about the people and housing of the United States.

American Community Survey - an ongoing survey that provides data about communities every year.
Puerto Rico Community Survey - the equivalent of the American Community Survey for Puerto Rico
Population Estimates Program - population numbers between censuses
Economic Census - profiles the U.S. economy every 5 years
Annual Economic Surveys - data from the Annual Survey of Manufactures, County Business Patterns and Nonemployer Statistics
You will also find:

American Indian and Alaska Native data and links
FastFacts for Congress - Demographic and economic data for Congressional Districts
Kids' Corner - Learn fun facts about your state and take a quiz
CNNMoney.com (Money Magazine) - money.cnn.com

Each year Money Magazine conducts a study of America's small towns and compares them to other small towns throughout the country. The information provided by this source is more subjective than hard statistics provided by the U.S. government, but its also more user-friendly and in some cases more in-depth. The information is somewhat limited depending on the towns studied in a given year. Money Magazine Places a high value on strong economy, education, low crime, affordable housing, etc.

Wikipedia - wikipedia.org

Wikipedia is a multilingual, Web-based, free-content encyclopedia. You will find information on many states, counties, cities and towns, and counties on Wikipedia. Remember Wikipedia is written collaboratively by volunteers from all over the world. Anyone with access to the internet can make changes to its articles. On this site you will find information about demographic (usually based on the most recent decennial census), history, geography, climate and more.

Sperling's Best Places - www.bestplaces.net/

Sperling's Best Places is another good private site that compares community features and gives readers an inside look at the best features of many communities. Here you'll find information about the cost of living, crime, education, the economy, population, climate and more.

Where to Retire -- wheretoretire.com

If you're ready to retire and are looking for a new location, Where to Retire can help you analyze different areas armed with information. Where to Retire strives to be America's foremost authority on retirement relocation.

Relocating to a new area is a monumental event! Choose the right location and know the location before you actually make your move.

Building a New Home? Choose Colors You Can Live With!

You're building a new home. That's great! Once you've selected the location, hired a builder and decided on a floor plan, you'll begin working on the interior design of your home. The colors you choose to adorn your walls will play a major role in the overall look and feel of your home.

Colors can have an amazing effect on our physical and mental well-being. In most cases the impact is subconscious. Whether you're planning your new home or painting a home that's new to you, colors are important.

I should note, if you're preparing a home to sell, stick with very plain, neutral colors and let homebuyers choose their own favorite accents. You never know when a color may evoke the wrong emotion in a home shopper.

Before you decide on paint colors, take these factors into consideration:

emotional appeal for which you are striving in each room, sometimes called the room's "mood."
lighting styles, sources and intensity
carpeting color and texture
What Mood are You In?

Different colors have different effects on individual, but some pretty good generalizations can be made about many. The mood can be intensified or diluted with various shades.

Looking for tranquility? Try blue, a color that can actually slow your pulse rate and lower your body temperature. Some claim blue can even reduce your appetite.

Other words associated with the color blue are:

Harmony
Unity
Loyalty
Security
Confidence
Cold
And . . . sorry, depression
Be careful how you use blue. You'll want to stay on the lighter side of things to avoid unintentionally bringing people down.

Ready to kick in some high energy? Look to red. Can't imagine painting a wall red? Reconsider.

Red evokes a sense of high energy in some and warmth in others. Used correctly, red can create feelings of:

Love
Speed
Strength
Desire
Overdone, red can also evoke a sense of:

Danger
Anger
Violence
Did you know the Chinese consider red to represent luck? This probably isn't the best color for a hyper-active child's room. Painting a work-out room? Pump it up with red.

Do you love nature and the environment? Green is a great color to put you at ease with its calm, cool appeal.

Green can evoke feelings of:

Health
Youth
Spring
I don't want to lead you astray, so I should add that green has a tendency to inspire jealousy and envy too.

Simplicity and harmony are best represented by white. Never discount the power of white when choosing colors for your home. White is clean, peaceful and innocent.

White can be boring if its overused and improperly complemented with home d├ęcor - so don't go crazy with white, but use it where you are looking for a sense of purity such as in a nursery or cleanliness in a laundry room.

You Choose the Colors and Make Your Choices Consciously

There are so many, many colors from which to choose. Do a little of your own research and find out what a color can do for you. If you consciously choose colors with a goal in mind, you're more likely to stir in yourself and your family members the emotions and feelings you want to have in your home. Consider researching different colors' meanings as they apply to your own religion and beliefs.