Julia Huntsman, CDPE, e-PRO, SFR, Broker

With a glut of bank-owned properties dragging down the recovery of the real estate market, as well as the national economy, major lenders are more eager than ever before to avoid foreclosure.

A recent study finds that, "If a borrower abandoned the property while he was delinquent, sales within 500 feet suffered a 3.1% drop in prices. But a vacant home also in foreclosure — further down the distressed pipeline — lowered nearby home sale prices by 7.1%."

The biggest lenders in the country increased staffing to ensure rapid processing of short sale applications. They’re contributing cash incentives at closing for homeowners who pursue a short sale. And they’re proactively reaching out to Realtors and putting them in touch with delinquent borrowers.

This is big news and the media has not really caught onto it yet. What’s important for you to know is that whatever you’ve read or heard in the past about long lag times and frustrations with short sales may no longer be the case.

I work with major lenders and stay on top of major developments affecting short sales and bank-owned properties. I invite you to visit "Help for Homeowners" at my website www.juliahuntsman.com to learn more and feel free to contact me any time if you or anyone you know is struggling with an unmanageable mortgage. Don't assume you have no chance to avoid foreclosure -- but don't wait until the last minute to find out your options!

The two-year picture for median selling price of single family homes in Long Beach is a pretty diverse picture, just like the city itself. From September 2008 to September 2010:

Interestingly, the overall drop for the SFR from 2 years ago is only 3% from $390,000 to $379000 (per CARETS data). This is in contrast to the median price for Los Angeles County which has increased from $339,500 (Sept. 2009) to $350,000 (per CoreLogic data). There is a 30% decrease in expired house listings, and the number of sold properties is up 15% over two years ago, while the months supply of inventory is down 33%.

Condos in Long Beach have taken a bigger hit--the median sold price has dropped 22% in two years from $263,000 to $205,000 from 2008-2010, and for Los Angeles County the median price has dropped from $337,000 to $320,000 from 2009-2010. The overall median for sale condo price in Long Beach has dropped 22% in the last 2 years, but there are fewer expired properties (down 37%), and an increase in the number of sold condos in the last 2 years, by 5%. The months supply of inventory is down 32% from two years ago.

For both houses and condos, the number of properties for sale is down by 26% and 22%, a condition that eventually may contribute to more listings on the market to meet demand, driving sales volume higher and in some cases sales prices higher as inventory decreases in certain areas.



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Posted By Julia Huntsman to Long Beach/Southern California Real Estate at 10/29/2010 10:03:00 AM

Often when prospective buyer(s) think about making the change from being a renter to a homeowner, they add up all their monthly costs as a renter and then compare it to their monthly costs as a homeowner. If the amount as a homeowner is more, then they get discouraged and assume that buying is not a good deal for them. But instead of focusing on only their current role as a renter, they should go further and realize their role, and their opportunity, as an homebuyer/investor for their future:

Some people define leverage as using other people's money but another way to describe it is when a small down payment controls a large asset by placing a high loan-to-value mortgage on it. There are not many investments that allow leverage but homes certainly do and especially with FHA or VA loans.

Let's assume a couple or single buyer has the down payment and good credit that would allow them to buy a home. We'll compare some alternatives to see where their best outcome may be.

If a person put $6125 in a certificate of deposit (CD) that earned 2% annually, it would be worth $6,762 in five years and the profit would be taxed as ordinary income. If a person could take a little more risk and pick the right stock, the $6,125 might grow to $7,817 and the profit would be taxed at the more favorable long-term capital gains rates if they held the stock for more than one year.

On the other hand, if the $6,125 were used as a down payment for a $175,000 home (possible with an FHA purchase) that went up in value only 1% per year, the equity would grow to $30,575 in the same five year period of time based on appreciation and amortization. In most cases, the gains on principal residences are excluded from income tax subject to limits. (Single person usually has an IRS $250,000 capital gains exemption and married couple usually has an IRS $500,000 capital gains exemption.)

The difference is dramatic and is one more reason that buyers should be taking advantage of the great selection of homes, the lower prices and incredibly low interest rates to fix their cost of housing for years to come. There may never be a better time to buy a home than now.

For more information on this, a rent vs. buy analysis may be obtained. Or please contact me through http://www.juliahuntsman.com/

Inspired by Pat Zaby

The California Housing Financing Agency offers some great 1st time buyer opportunities. They have a conventional loan program, but might work easiest with FHA loans.

And, interest rates are even lower when combined with California Down Payment Assistance program (CHDAPP). The acronyms might get to you at first, but just remember you're allowed a 3% subordinate silent lien with this CHDAPP program which can work with any agency or non-agency 1st mortgage. If it's combined with a CalHFA loan, buyer gets an additional 1/8% lower interest rate (today's rate is 4.5%)--and only a 1% minimum contribution from buyer when combined with CHDAPP program.

Requirements:

First time Homebuyer, Income and Sales Price Limits (Los Angeles County: $95,160 annual income up to 2 people; up to $111,020 for 3 or more), Citizenship Requirement, Homebuyer Counseling, Owner Occupied for one unit (single family house or condominium).

Go to http://www.calhfa.ca.gov/homebuyer/information/borrower-requirements.htm for more information.

Please contact me for a lender approved for this program.

A few more buyer programs are located at http://www.juliahuntsman.com/down-payment-programs.html.

Short sales have been here and are here in large numbers for quite a while into the future. Many lenders are getting better in certain respects about speeding up their responses, even if it's not a HAFA program which does have numerous requirements, in their regular short sales. There can be many aspects and issues in a short sale depending on the bank or servicing company involved, if a notice of default has been filed, if a notice of sale date is already set, if the HOA dues are delinquent, how many lienholders there are, to name a few.

But what is one thing that's going on a lot? Second position mortgage lienholders who are refusing to accept the payoff from the first, and decide instead they would rather have their investors get nothing rather than something. So typically these 2nd lien negotiators, who are probably looking at a computer screen bearing instructions from their bosses, are allowing the entire property to go into foreclosure over a failure of $5,000-$10,000. Many do not want to deal with the HAFA program, due to the few thousand dollars obtainable under that program, nor even 10% payoff offers from the first, so their response is to say they will take nothing rather than something, and let it go into foreclosure, presumably under the belief they will be able to come back and get it later. What many servicers may not understand is that in certain states, such as California, they have no deficiency rights after foreclosusre when the loan was original purchase money mortgage on a principal residence.

And so what do we need? I know we have plenty of laws, but we need another one. We need another law that prevents junior lienholders from obstructing the successful completion of a short sale:

"...passing legislation barring junior lien holders from preventing a short sale and forcing a foreclosure would be wildly beneficial to the heart of America. It would keep homes occupied, free up capital, curb the slide in property values and it wouldn't cost the taxpayers, or anyone else, a dime."

Also, as Lawrence Belland says on Foreclosure Radar:

"... in 37 other states the investor could accept the offer and still have the right to pursue the deficiency. That's why forcing the foreclosure doesn't make sense to me; it defies logic."

Second lienholders always knew they were just that, in second position. They were all too willing to make loans, and others have been very willing to buy them up, based on the continuing inflation in the subprime market. They just don't like to face reality now.

www.juliahuntsman.com