Jeff Engle EnglePropertiesOnline

Hi Neighbors,

Just a reminder that you should always check with a tax consultant when doing a short sale to validate the tax implications of your transaction. A recent article in the SF Chronicle (read article here). The article states "Californians who lose their homes in a foreclosure, short-sale or deed in lieu of foreclosure this year could be hit with a state income tax on canceled or forgiven debt." Federal law excepts taxing the forgiven debt through 2012. State rules are more complex, so check with your tax professional.

Two state tax bills are in the Assembly to expand the tax relief.

Have a great weekend,

Jeff

The California Association of Realtors published a great article originally from the LA Times that I would like to share with my neighbors.

What to do if your mortgage is sold to another lender

Approximately half of all mortgage loans are sold from one lender to another, often because the original lender is not equipped to collect payments, manage escrow accounts, pay taxes and insurance, respond to questions, and prepare payoff statements when the home is sold or refinanced. Some borrowers may receive letters in the mail alerting them of the sale of their loan a few days after closing, while others may not receive a notice for years.

In the mortgage-industry, this is called a "transfer of servicing," and is a common practice. Borrowers should not be concerned about these changes, as the majority of lenders transfer their servicing rights to loans. Generally, the selling of a mortgage loan from one lender to another is a smooth transition and does not impact the borrower. Every so often though, there is a misstep by either the loan buyer or the loan seller.

Under the National Affordable Housing Act, when a mortgage loan is sold, the borrower is required to receive a "goodbye" letter from their current servicers at least 15 days before their next payment is due. The letter must state the name, address, and telephone number of the new servicer; the date the old company will stop collecting payments; and the date the new company will start accepting them. Under the Helping Families Save Their Homes Act, signed by President Obama on May 20, the new owner of the loan-which may or may not be the servicer-also must notify the borrower of the transfer within 30 days, known as the "hello" letter.

The "hello" letter should outline the same information as the "goodbye" letter sent from the former loan servicing company. Borrowers should be cautious if they receive a "hello" letter without receiving a "goodbye" letter, as they may be the intended victim of a scam by someone who is hoping to unlawfully receive the monthly mortgage payments. Concerned borrowers should contact their current loan servicer to verify if their loan has been transferred. If it hasn't, authorities should be notified immediately.

In most cases, a mortgage payment sent to the old servicer automatically will be forwarded to the new servicer for a brief amount of time, typically 60 days. However, if payments are not sent to the correct servicer, they could become lost, and the homeowner may incur late fees.

Best regards,

Jeff - Neighborly Realty

The San Gabriel Valley Times is reporting:

Home sales increased 12 percent in July in California compared with the same period a year ago, while the median price of an existing home declined 19.6 percent, according to the latest sales and price report released by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

MAKING SENSE OF THE STORY FOR CONSUMERS

· Closed escrow sales of existing, single-family detached homes in California totaled 553,910 in July at a seasonally adjusted annualized rate. The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the July pace throughout the year.

· Many housing analysts believe the first-time home buyers tax credit has helped fuel home sales in recent months. According to a survey of first-time home buyers, nearly 40 percent reported they would not have purchased a home if the tax credit was not offered. Because the tax credit has helped so many first-time buyers become homeowners, it is critical that Congress extends the credit beyond the Dec. 1 deadline, and includes all buyers, not just first-timers.

· The median price of an existing, single-family detached home in California declined 19.6 percent in July compared with July 2008, but rose 3.9 percent compared with June. The median price statewide during July 2009 was $285,480. July marked the fifth consecutive month of month-to-month increases in the median price and the smallest yearly decline in 19 months.

· C.A.R.'s Unsold Inventory Index for existing, single-family detached homes in July 2009 was 3.9 months, compared with 6.9 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

· Thirty-year fixed-mortgage interest rates averaged 5.22 percent during July 2009, compared with 6.43 percent in July 2008, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.82 percent in July 2009, compared with 5.24 percent in July 2008.

Jeff
Neighborly Realty

Hello Neighbors,

More evidence that sanity is returning to Real Estate!

Freddie Mac has thrown its weight behind helping us in the industry.

Thank you NAR (National Association of Realtors) for posting this update.

Short Sale transactions are the hardest escrow to conclude. Even when we have a Willing buyer, and a willing Seller - the Seller's lender will do a variety of evil things to kill the process. Only 25% of escrows on Short Sales are actually making it to COE (Close of Escrow). The other 75%? Who knows. Default (foreclosure), Loan Modification, or the Seller "catching up" are the other likely outcomes.

One of our least favorite actions is when the Short Sale lender comes after our wages. We can get through the entire negotiation process, inspection period, escrow .... and then have the lender say "by the way, we are cutting your commissions to ZERO". Yep. Working for free. Or - more realistically, since we've invested a great deal of time, energy, and our own funds - we are working for a loss. Now factor in that the majority of the houses on the market are short sales. Do the math, earnings risk is pretty high concern in this profession.

Why does this Freddie Mac news help?

We can now work with less fear of "Short Sale Earnings Theft". More confidence when showing Short Sale homes to Buyers. More faith that we can operate a business as a business - not as a collections agency.

We have more assurance that the industry is recovering, and some level of logic is returning to the key principles who drive this market. Stability is around the corner!

Freddie Mac Issues Written Short Sales Commission Policy

On August 20, 2009, Freddie Mac confirmed in writing that its servicers are not allowed to renegotiate short sales commissions. According to the policy, as a condition of the servicer’s acceptance of a short sale offer, servicers cannot renegotiate the sales commission below the amount agreed to by the real estate broker and the seller/borrower. However, if the negotiated commission exceeds 6 percent, servicers are required to limit it to 6 percent. This Freddie policy is consistent with Fannie Mae’s policy.

NAR has asked Freddie to establish an appeals process for cases when servicers refuse to comply with Freddie Mac’s policy.

Links to more in depth information can be found here:

Freddie Mac Single-Family Seller/Servicer Guide Bulletin 2009-22 (August 20, 2009) http://www.freddiemac.com/sell/guide/bulletins/pdf/bll0922.pdf

Fannie Mae Short Sales Commissions Policy and Appeals Process http://www.realtor.org/wps/wcm/connect/4fb4f4804e824cf0a6e8e696c79aa288/government_affairs_fannie_short_sales_policy.pdf?MOD=AJPERES&CACHEID=4fb4f4804e824cf0a6e8e696c79aa288

NAR’s Short Sales Website http://www.realtor.org/realtors/basics_short_sales

Just another sign that logic is returning (if slowly).

Jeff

Neighborly Realty

(Note to self though - the rumored zillions of foreclosures still to hit the market could drive things down again... but when will those homes hit the market? I've been told "next month" for 11 months now...)

Thank you NAR (National Association of Realtors) for the updates posted below!

STRONG Gain in Existing-Home Sales Maintains Uptrend

Washington, August 21, 2009

For the first time in five years, existing-home sales have increased for four months in a row, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 7.2 percent to a seasonally adjusted annual rate1 of 5.24 million units in July from a level of 4.89 million in June, and are 5.0 percent above the 4.99 million-unit pace in July 2008. The last time sales rose for four consecutive months was in June 2004, and the last time sales were higher than a year earlier was November 2005. Lawrence Yun, NAR chief economist, said he is encouraged. “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” he said.

The monthly sales gain was the largest on record for the total existing-home sales series dating back to 1999.

“Because price-to-income ratios have fallen below historical trends, there are more all-cash offers. In some recovering markets like San Diego, Las Vegas, Phoenix, and Orlando, the demand for foreclosed and lower priced homes has spiked, and a lack of inventory is becoming a common complaint,” Yun said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.22 percent in July from 5.42 percent in June; the rate was 6.43 percent in July 2008.

An NAR practitioner survey showed first-time buyers purchased 30 percent of homes in July, and that distressed homes accounted for 31 percent of transactions. NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the first-time buyer tax credit is working. “In addition to first-time buyers, we’re also seeing increased activity by repeat buyers. While many entry-level buyers are focused on the discounted prices of distressed homes, they’re also freeing some existing owners to sell and make a move,” he said.

“Realtors® are the best resource for consumers in these changing market conditions because the transaction process has become more complex. Since it’s now taking longer to complete a home sale, first-time buyers who want to take advantage of the $8,000 tax credit should try to make contract offers by the end of September,” McMillan said. “Otherwise, they may miss the November 30 closing deadline.”

Total housing inventory at the end of July rose 7.3 percent to 4.09 million existing homes available for sale, which represents a 9.4-month supply2 at the current sales pace, which was unchanged from June because of the strong sales gain. Raw inventory totals are 10.6 percent lower than a year ago when the number of unsold homes was at a record.

The national median existing-home price3 for all housing types was $178,400 in July, which is 15.1 percent lower than July 2008. Distressed properties continue to weigh down the median price because they typically sell for 15 to 20 percent less than traditional homes.

Single-family home sales increased 6.5 percent to a seasonally adjusted annual rate of 4.61 million in July from a pace of 4.33 million in June, and are 5.0 percent higher than the 4.39 million-unit level in July 2008. The median existing single-family home price was $178,300 in July, which is 14.6 percent below a year ago.

Existing condominium and co-op sales jumped 12.5 percent to a seasonally adjusted annual rate of 630,000 units in July from 560,000 in June, and are 5.9 percent above the 595,000-unit level a year ago. The median existing condo price4 was $178,800 in July, down 18.9 percent from July 2008.

Regionally, existing-home sales in the Northeast surged 13.4 percent to an annual pace of 930,000 in July, and are 3.3 percent higher than July 2008. The median price in the Northeast was $236,700, down 15.0 percent from a year ago.

Existing-home sales in the Midwest jumped 10.9 percent in July to a level of 1.22 million and are 8.0 percent above a year ago. The median price in the Midwest was $157,200, which is 5.9 percent less than July 2008.

In the South, existing-home sales rose 7.1 percent to an annual pace of 1.95 million in July and are 5.4 percent higher than July 2008. The median price in the South was $164,500, down 7.1 percent from a year ago.

Existing-home sales in the West slipped 1.7 percent to an annual rate of 1.13 million in July, but are 1.8 percent above a year ago. The median price in the West was $202,300, which is 28.0 percent below July 2008.

Buyers, we are getting close to the "now or never" point.

Jeff