More Deals Falling Through Due To Appraisal Issues

Appraisals coming in lower than the agreed-upon sales price continue to cause more real estate deals to be cancelled, recent surveys show.

In December, a third of real estate professionals reported they had a real estate contract fall through, up from 9 percent a year earlier.

The National Association of REALTORS®, along with other housing industry groups, point to low appraisals and rejected mortgage applications from a stringent lending environment as the main forces behind the high number of transaction cancellations in recent months.

Too often, foreclosures sales — which tend to be sold at big discounts — are being weighted into valuations, experts argue.

The National Association of Home Builders’ chairman Bob Nielsen has called the use of distressed and foreclosure sales in comparables in appraisals “inappropriate” and “needlessly driving down home prices.”
Sixty percent of builders say they are seeing problems from appraisals coming in below their contract sales price.

“This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market,” Nielsen said in a statement in December about appraisals.

But the lending environment also needs to change for the housing market to recover and for fewer deals to stop falling through, housing experts say.

“If we simply return to the normal credit standards, verifying income and looking at the creditworthiness of an individual to stay in a property long term, we think sales will be 15 percent to 20 percent above where they are,” NAR spokesman Walt Molony told Investor’s Business Daily. “There are more people trying to buy homes than are succeeding today.”

Fannie Starts Accepting Online Offers for Properties

Fannie Mae has announced that it is rolling out a pilot program nationwide that will allow real estate agents to now submit and track their offers online for Fannie Mae-owned properties. Once an offer is submitted, you’ll receive confirmation and be able to track its status through Fannie’s HomePath web site.

Fannie first began piloting the program for online offers in 2010 in San Diego, Orlando, Fla., and Detroit. It now be accepting online offers for properties nationwide.

“Collecting offers online through HomePath.com will provide greater transparency for home buyers and their agents,” Jay Ryan, vice president for REO at Fannie Mae, said in a statement. “Our online platform will make it easier to sell properties to owner-occupants, which is a major factor in helping to stabilize communities across the nation.”

For more information on how the new program works, visit HomePath.com.

Will the Real Estate Market Heat Up This Spring?

The spring season usually brings an increase in buying and selling to the real estate market, and housing experts are mostly optimistic that this spring will be even better than recent years.

Some signs are already there: Housing inventories are declining, housing affordability is at record highs, mortgage rates are at all-time lows, and the job market is improving.

Existing-home sales have been edging up in recent months, and for-sale housing inventories were at nearly 2.4 million units in December, reaching its lowest point since 2005, according to National Association of REALTORS® data.

NAR’s Chief Economist Lawrence Yun says home prices are beginning to stabilize in many markets.
Also, NAR’s Housing Affordability Index is at its highest level since the 1970s, which indicates that for the average family housing is very affordable.

The National Association of Home Builders is also predicting an improvement this spring among the new-home sector. NAHB is predicting that home sales will increase 18 percent this year, that’s after facing their lowest on record in 2011.

However, threats to a housing recovery still loom this spring. Strict mortgage lending is keeping some buyers on the sidelines, and foreclosures continue to put downward pressure on overall home prices in many markets.

"The signals are a little hard to extrapolate, but ultimately by the end of this year we should see the housing market on more solid footing," says Celia Chen, senior housing economist with Moody’s Analytics. "So an improvement but off of very, very weak activity."

Investors Jump in to Turn Foreclosures into Rentals

The government and private equity firms are gearing up to start marketing foreclosed homes as rentals in an effort to help lessen the downward impact foreclosures have on the price of nearby homes.

The Federal Housing Finance Agency plans to offer some of its 180,000 foreclosed homes through Fannie Mae and Freddie Mac to private operators who will turn them into rental properties, Bloomberg News reports.
The Federal Housing Administration also plans to participate in a rental program. In a November memo, it has suggested that its program work with public-private partnerships to share the risk and profits, as well as explore offering rent-to-own opportunities to tenants of the homes.

Private equity firms are stepping up to acquire some single-family homes to manage as rentals. GTIS Partners has already earmarked $1 billion by 2016 to acquire single-family homes to manage as rentals. GI Partners also says it will invest $1 billion on rental housing.

“We’re starting to see this as a billion-dollar opportunity to buy rental housing,” Thomas Shapiro, the founder of the GTIS Partners fund, told Bloomberg News.

A few months ago, the White House solicited ideas from the public on how to work a foreclosure rental program to get a better grip on the government’s foreclosure inventory. The White house says it hopes that by turning some of the foreclosures that have dogged many markets into rentals, it will be able to ward off any further drops to overall home prices.

Obama Extends Foreclosure Prevention Program Aid

The Obama administration will be expanding eligibility requirements for its foreclosure prevention program, the Home Affordable Modification Program (HAMP), to help more struggling home owners participate.

The program will expand its eligibility requirements for those who may qualify for a loan modification, including how the debt ratio of mortgage borrowers is calculated as well as extending the program to owners of rental properties too.

HAMP will also triple the incentives it pays banks in order to get more banks to reduce the principal on loans, and it would offer incentives to Fannie Mae and Freddie Mac to reduce loan principals for those who participate in the program (previously only private lenders and banks were eligible for the incentives).

However, the Federal Housing Finance Agency, which oversees Freddie and Fannie, says that while it will consider the HAMP changes, in a recent analysis it found “that principal forgiveness did not provide benefits that were greater than principal forbearance” — a possible sign the GSEs may not support reducing the mortgage principal on loans, housing experts speculate.

HAMP was first launched in 2009 and set out to help some 4 million struggling borrowers modify their loans, yet it has fallen short from its original goal. To date, HAMP has helped fewer than 1 million home owners.

Some housing experts are optimistic that the changes to HAMP will allow more home owners to take part in the program, and that HAMP will help more “responsible home owners lower their costs and stay in their homes,” Gene Sperling, the director of the National Economic Council, at a press conference.

The new changes to the program will take effect at the end of April. Also, the program has been extended to December 2013.

SHORT SALE YOUR HOME ~ LENDER PAYS ALL CLOSING COSTS ~ RECEIVE $3,000 FOR MOVING

A homeowner that has fallen behind on their mortgage payments have options that they must consider. The first option is to ask their lender for a loan modification. The lender will want to review your tax return, bank statements, pay check stubs (historical financial statements if self employed), a hardship letter, a list of all your assets (car, other real estate, furniture, ect) and much more. The process is similar to when you applied for the loan (Well, if you did not get a stated income loan from 2003 to 2006) and much much more!

A major determining factor if you are qualified for a loan modification is your debt-to-income ratio and your hardship letter. If your debt-to-income is not within +/- 31%, then you could be turn down for the loan modification. This is part of the reason why so few loan modifications have been approved over the last three years. If you qualify and you are able to live more comfortable, then I would accept the loan modification.

If the bank’s offer does not lower your monthly mortgage payments enough to live comfortably, then I would not accept the loan modification. If you are facing a foreclosure, then accepting the loan modification might postpone the trustee sale and buy some time before you would have to move out.

As an alternative, you should consider a short sale which is where your lender agrees to take a loss between what is owed on your mortgage and the sales price. The benefits of a short sale as apposed to a foreclosure is as follows:

• Your lender can’t come after you for a judgment and try to garnish your wages. (Must make sure the agreement released the note and the deed of trust)
• Your credit score may be impacted as little as 50 points vs. 250+ with foreclosure (in some cases no impact).
• You may be able to obtain a new Mortgage, immediately in some cases.
• You will be eligible for Fannie Mae-backed Mortgage after only 2 years vs. 5 years with Foreclosure.
• A short sale is not reported on Credit History vs. 10+ years of reporting with foreclosure.
• A foreclosure may impact your current or future employment, short sale will not.
• A foreclosure may impact a security clearance, a short sale will not.
• You can receive $3,000 or more at closing to help with moving costs.
• You can sleep better at night & know your family is protected!

As you can see, the benefits of a short sale are much better than just letting the home go into foreclosure. My best advice for you is that you need to hire a licensed professional that understands the short sale process to help you with the negotiation process with your lender. We have helped hundreds of people short sale their homes and we would love to have the opportunity to help you as well! We offer a FREE NO OBLIGATION CONSULTATION where we can discuss your situation in total privacy. Call TODAY!!

480-213-5251

10 Housing Markets Getting the Most Web Traffic

Chicago continues to garner the most Web traffic at Realtor.com, taking the No. 1 spot once again for the highest search ranking in December at Realtor.com.

Based on rankings of 146 metro markets, here are the cities that had the highest search rankings for December 2011 at Realtor.com:

1. Chicago
Median list price: $189,000

2. Detroit
Median list price: $80,000

3. Los Angeles-Long Beach, Calif.
Median list price: $324,900

4. Phoenix-Mesa, Ariz.
Median list price: $165,000

5. Atlanta
Median list price: $150,000

6. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $139,900

7. Philadelphia, Pa.-N.J.
Median list price: $224,950

8. Dallas
Median list price: $190,000

9. Las Vegas
Median list price: $120,000

10. Orlando, Fla.
Median list price: $155,000