3 Month Moratorium...
The Financial Times reported this weekend that JP Morgan Chase will freeze foreclosures for up to 3 months on $70 billion of mortgages in an attempt to renegotiate and avoid taking over thousands of houses.
The measures they say, will "stave off the threat of home repossessions for 400,000 families by cutting their mortgage bills through reductions in interest rates or principal repayments and other loan modifications."
WaMu Added a Big Chunk...
When JP Morgan took over Washington Mutual, the deal added $176 Billion to JP Morgan's home portfolio, including $50 Billion of adjustable rate mortgages which is a big troubled area.
Legitimate Case to Ease Public Antipathy or Just Trying to Get a Grasp???
JP Morgan states they will add 300 loan counselors to the 2,300 it already employs. That's a total of 2,600 to handle 400,000 cases. Could it take 10 hours worth of legwork per case, per counselor to renegotiate a positive solution for each homeowner?
If they have 400,000 cases to address with 2,600 counselors, at 10 hours per case, each counselor will have 153 cases assigned and will need to work 17 hours per day, EVERY DAY, for the next 90 days (including each Saturday and Sunday) to meet their resolve.
Just a PR Move???
Personally, I believe this is a public relations spin on a situation, according to their own published numbers, that has grown out of their control and they need this moratorium in order to re-group and figure out how the heck they best address this growing crisis.
As a Short Sale Specialist...
I wasn't sure what to expect when the bailout was first announced. Some said that Short Sales would go away while others felt they still would be an option. Weeks after the bailout and the lack of success of the 90% FHA Rescue and similar re-financing programs, Short Sales continue to be a viable solution. A Short Sale is not a solution just for the homeowner but for the lender as well.
I am usually very optimistic, but I sense that there are still millions of homeowners in the pipeline that need assistance and the resources currently available are much less than what is required to mitigate the situation. I truly feel that we are still far from seeing the light at the end of the tunnel.
I've read in the last few days several posts on ActiveRain regarding Short Sales and what the negotiated selling prices have been.
I am surprised to read that some of the negotiated prices are a bit higher than what is common in the Miami Area. A year or so ago it was common to see a bank accept 70% to 75%of what was owed. You then started to hear that 60% to 70% were being approved.
Most recently, we've started to see some agree to 50% to 55% of the original loan amout....and yesterday....
I saw one get approved at 47%!!
By no means are all of them at the 50% to 55% but it seems that the recent spike of foreclosure sales has influenced a sharp downturn in what some banks are willing to accept.
This is NOT good for our business!! My regular market priced listings are just sitting while the telephone rings for Short Sales and REO's.
Is anyone else experiencing a sharp drop in what banks are starting to accept?
Is this only happening in hard hit markets like South Florida, Las Vega and California?
Curious to know how banks are reacting in other parts of the country.
Many buyers opt for condo purchases. There are actually many nice condominiums in the Miami area. What I find with many buyers though, especially first time buyers is that they don't ask all of the necessary questions. As a matter of fact, few Realtors ask all the questions that I would expect them to ask when they call on a condo listing.
Questions I usually get...
How many bedrooms and bathrooms?
How much is the maintenance fee?
What does the maintenance cover?
Questions I do not get...
What is the contribution to the reserve account?
I don't understand why anyone would purchase a condo in a building that does not have a reserve account for major repairs. A building with no reserve account is a building with Special Assessments as a way of life.
What percentage of the units are owner occupied?
Buying as your primary residence in a building with 5%-10% owner occupied is like buying an apartment in a rental complex. If you really do care about the well being of the community, you have a better chance of being satisfied with a higher owner occupied percentage.
Are there any units in foreclosure?
The answer here is an obvious one. No foreclosures, good quality paying owners. Some foreclosures, the building could be struggling financially. 10% to 20% foreclosures, you have serious problems. You probably have another 10% to 20% delinquent on the maintenance also.
Once you've determined that the Association of the building is financially sound you should then proceed to see the unit(s) that are of interest. If you like what you see and are inclined to place an offer, there are a few additional things you should be sure of.....
Additional questions that you may want to know the answers to...
If the building has elevators, are they up to date with their yearly certifications?
There are a few buildings that you hop on the elevator and you notice that the certification is not current. Usually it's just fees that haven't been paid as of yet or they are running late on their yearly inspections but don't assume that this must be it. In South Florida for example, Dade County code requires that all old buildings with older elevators have their cylinders replaced. Old building I'm not talking about being built in the 30's or 40's. I could be a building built in the early 70's. Cylinders ca cost anywhere between $15,000 and $30,000 or even higher. The taller the building the more expensive the cylinder. No cylinder, no certificate. No reserves equals special assessments.
Does the building have any open Fire Violations?
Exit lights are easy to change and don't cost too much at a wholesale electrical supply house. That would take care of that violation. What about a fire violation requiring the building to install a sprinkler system in the trash chute? The handyman that fixed the Exit lights is now out of his league. Now you need licensed fire safety firms, plans, permits and again (a reserve account).
Is the building a minimum of 75 feet high and does not have a sprinkler system?
Think special assessment then. And BIG!!! By 2014 all buildings with a minimum of 75 feet in height by law has to be retrofitted with a sprinkler system. The complete building!! You're looking at 100's of thousands of dollars that are being forced upon those owners in the upcoming years.
It's getting late so I'll post a few more questions in the next couple of days.
I'd like to hear from some of the readers regarding questions that are important to you that usually aren't asked.
It's common knowledge that bad news sells newspapers or in the tube's case, increase ratings. August was full of great news and I didn't hear any of it in the main stream media.
Consumer confidence rose to a five month high in August posting a sharp recovery from depressed levels. Did anyone hear this on the news lately?
Did anyone hear that the argument for a Recession just went out the window? Didn't hear that one either huh? A Recession is when we have two back to back quarters with negative Gross Domestic Product (GDP) growth. We experienced two quarters with very little growth which could have been attributed to inflation. The 1st Qtr growth in 2008 was .9 percent. The 2nd Qtr figures released this past Thursday came in at an unexpectedly 3.3 percent.
The US Dollar also had great news to share posting the best monthly gain in more than 16 years.
Yes the housing market is still in a slump and many homeowners are still facing foreclosure. Don't you think though that indicators reflecting signs of some improvement in our economy may inspire even higher consumer confidence? Wouldn't higher consumer confidence translate into more home sales? Sure it will!!
Unfortunately, it will be up to us to spread the positive news until main stream media determines that good news is what consumers what to hear.
Better days are in fact around the corner!!!
Sergio Rebollo Jr.
Licensed Realtor
Exit Prime Realty
www.SergioRebollo.com
www.YouTube.com/SergioTheRealtor
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I am a Short Sale Specialist with Exit Prime Realty in Coral Gables. Visit www.SergioRebollo.com for SELLER info on Short Sales. Buyers view my listing videos at www.YouTube.com/SergioTheRealtor
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