Pacita Dimacali - e-PRO, SRES, CDPE, MBA East Bay, North CA real estate

Agree or disagree, this is an interesting outburst --- a voice echoing the cries of distressed homeowners and their advocates. "Homeowners: "Hey Congress.. Get off your a**!"

Petition to the U.S. government from the Homeowners proposing "an immediate halt to all foreclosures until new, mandatory guidelines are established and that these guidelines be overseen by a new Consumer Protection Agency..."

EXCERPT:

We propose an immediate halt to all foreclosures until new, mandatory guidelines are established and that these guidelines be overseen by a new Consumer Protection Agency, which was recently recommended by President Obama and endorsed by Sheila Bair, chair of the FDIC.

We also demand that these guidelines include not only a simple 31% of the borrower's gross monthly income, but that the Net Present Value (NPV) test:

• be created and administered by the government, not the banks,
• have its data, assumptions and formula published so that they may be verified by the public, and
• be made available at www.makinghomeaffordable.gov in a calculator form so that people can learn immediately, with the other eligibility questions available there now, whether they're eligible for HAMP.

We are also strongly advocating that additional guidelines be formulated that would open the door for modifications at an even a lower rate in significant hardship conditions and for writedowns of principal when homes are severely underwater."

Read more at: http://www.huffingtonpost.com/richard-zombeck/homeowners-hey-congress-g_b_342665.html&cp

Lenders make more money on foreclosures than from short sales or loan modifications. That's what Steve Harney converyd in a seminar. He caused an earthquake in San Francisco

When loan modifications are turned down, the next thing we attempt is to do the short sales. And we kinow that lenders turn over the short sale accounts to loan servicing companies who make our lives hell getting short sales approved. As such, we should know that these loan servicing companies make MORE money by letting the properties foreclose than to approve the short sales OR the loan modification.

RUMBLE...GRUMBLE...CRIES OF DISMAY!

Did he just confirm what we were afraid of?

So I researched this topic and found a few articles worth reviewing. How did I miss these? Was I under a rock in a desert?

CONSUMERLAW.ORG REPORt ON "Why Servicers Foreclose when They Should Modify And Other Puzzles of Servicer Behavior"

DAILY PRESS headline. Oct, 30 2009. Do Mortgage Lenders Make More Money when a Loan Goes iInto Foreclosure?

HUFFINGTON POST. Oct. 21, 2009, Foreclosures Are More Profitable Than Loan Modifications, According To New Report

Washington Post. July 28, 2009. Foreclosures Are Often In Lenders' Best Interest. Numbers Work Against Government Efforts to Help Homeowners.

ThinkGlink. October 21, 2009. Loan Modification Help: Why Lenders Are Slow To Provide Loan Modifications

Dayton Daily News. Oct. 17, 2009. Drop in foreclosures called "very scary". Lender's actions show they think properties are not worth pursuing.

Mortgage101.com. October 23, 2009. Mortgage Companies Make More on Foreclosures Than They Do Modifying Existing Loans. (This blog refers to the news article on Huffington Post)

FLASHBACK: Huffington Post, June 8, 2009. Short Sales: Banks Blocking Way Out of Foreclosure Crisis

FLASHBACK: Huffington Post, May 15, 2009. Short Sales Stories. Lenders tend tostic with more familian foreclosure process, losing money for everybody.

UPDATE: Huffington Post, November 2, 2009. Homeowners: "Hey Congress, Get Off You A**"

KNOCKING OURSELVES OUT TRYING TO HELP

So are we engaging in self-flagellation helping our distressed clients with their short sales and loan modification?

Are lenders really more likely to foreclose?

Are the short sale servicing companies really trying to help?

Or are they stalling and withholding their help because they know their leaders would rather have the property burn into foreclosure?

Is there no resolution in signt?

There oughta be a law!

For the statisticians and other folks who prefer graphs to see what's going on a specific market, here's a snapshot of what it looks like in Walnut Creek CA, comparing the market activity the past two years, starting in October 2007 - October 2009.

MONTHS SUPPLY OF INVENTORY When there are more buyers than there are sellers, it means that it's a seller's market. The higher the months inventory, the more it becomes a seller's market. Traditionally, if the the months inventory is more than six months, it's a buyer's market, and vice versa.

In Walnut Creek the months' inventory was 8.2 months in October 2007, and 2.2 in October 2009 --- 73% decrease.

UNDER CONTRACT

• October 2009 reports the highest peak, with 155 homes in contract compared to only 65 in October 20007 and 85 in October 2008.
• December 2007 reported the fewest contracts. The following year, December 2008 recorded 68 homes in contract.

MEDIAN PRICE The median price was the lowest in February 2009 and bounced back in April. Nonetheless, the general trend seems to be downwards. October 2009's median price is the next lowest point. Sellers may have to adjust their expectations depending on current market values.

SUPPLY AND DEMAND Here's a good way to correlate number of properties sold (demand) with number of properties for sale (supply). .

DAYS ON MARKET So, how long do the Walnut Creek properties stay on the market before they have accepted offers? With the exception of February 2008 where the average days on market peaked to nearly 100 days, the average days on market is steady at between 60-70 days.



So...what are these graphs telling you?

Berkeley real estate market is nearly unchanged when compared with the frenetic activity in the surrounding cities.

For the statisticians and other folks who prefer graphs to see what's going on a specific market, here's a snapshot of what it looks like in Berkeley CA, comparing the market the past two years, starting in October 2007 - October 2009.

People will see different things and interpret this information in different ways --- I guess it depends on what you want to see or what you hope will happen.

in the meantime, here's what the data is SHOWING us.

MONTHS SUPPLY OF INVENTORY I like starting with the months supply of inventory. When there are more buyers than there are sellers, it means that it's a seller's market. The higher the months inventory, the more it becomes a seller's market. Traditonally, if the the months inventory is more than six months, it's a buyer's market, and vice versa.

In Berkeley the months' inventory was 2.6 in October 2007, and 1.6 in October 2009. This difference is almost insignificant --- but it is an amazing picture to show the movement in the Berkeley market. The inventory levels mirrors the activity in other cities in the East Bay.

UNDER CONTRACT Homes under contract peaked in

• • June 2008 (68 in contract),
  • April 2009 (66)
  • October 2009 (65)

Fewest contracts were recorded in January 2008.That would have been a time when a buyer would have had more negotiating power.

MEDIAN PRICE The median price was the lowest in March 2009 and bounced back in April. Prices increased again. Although not at the peak recorded in June 2008 when median price was a $640K, October 2009's median price is close enough at $696K

SUPPLY AND DEMAND Here's a good way to correlate number of properties sold (demand) with number of properties for sale (supply). This chart shows almost no change. Demand is nearly flat.

DAYS ON MARKET So, how long do the Berkeley properties stay on the market before they have accepted offers? With the exception of December 2008 where the average daays on market peaked to over 90 days, the average days on market is steady at between 30-40 days.

Good for the sellers and their agents! While buyers and their agents are on notice that they should be fleet of foot when searching for property and when strategizing on their offers.


So...what are these graphs telling you?

Received the text this afternoon.

Scrambled to find news articles. The best one I found was on Bloomberg. Headline: "Senate approves extended U.S. homebuyer tax credit"

Posted on Facebook.

Networked at a Chamber mixer. Shared news with other folks who haven't heard about it (yet).

Sent them link to Bloomberg news so that they, in turn, can spread the word.

Extension not passed yet...but with a Senate vote of 98-0 for it, it's almost a certainty that the House will follow suit. Then on for Obama's signature.

Scrambling to find details about this from other news sources.

• Barely mentioned in CNN.com under headline of "Senate extends unemployment benefits by up to 20 weeks...."
• And in Fox News, it's "Senate votes to extend benefts to jobless, homebuyers"
• MSNBC says "Jobless, homebuer aid extensions advance"

Checked National Association of Realtors...not there yet?

In the meantime....this list is enough. Time to inform my buyers. There is hope!