Archive for November, 2009
Is Permanent Relief Too Good To Be True?
November 30th, 2009 categories: Real Estate News, Relocating
Today’s announcement that the Obama Administration plans on forcing mortgage companies to permanently reduce monthly payments for troubled homeowners was met by a mixed reaction. While the action’s sponsor, the White House, said one thing, many others took a more realistic wait and see attitude.
The Department of Housing and Urban Development’s (HUD) new initiative is part of the Administration’s efforts to provide relief for homeowners who are laboring to pay their mortgages, and is another piece of the effort to stabilize the housing market. The initiative, according to HUD, wants to extend to those already receiving trial modifications to their home loan, a permanent modification to their mortgage. In simple language, what does that mean? A lower payment.
While borrowers have understandably embraced the new program, mortgage lenders aren’t nearly as willing. To ensure their participation, the Administration outlined steps to hold their feet to the fire.
Servicer Accountability
As part of the Administration’s ongoing efforts to hold servicers accountable for their commitment to the program and responsibility to borrowers, the following measures will be added:
- Top servicers will be required to submit a schedule demonstrating their plans to reach a decision on each loan for which they have documentation and to communicate either a modification agreement or denial letter to those borrowers. Treasury/Fannie Mae “account liaisons” are being assigned to these servicers and will follow up daily as necessary to monitor progress against the servicer’s plan. Daily progress will be aggregated by the end of each business day and reported to the Administration.
- Servicers failing to meet performance obligations under the Servicer Participation Agreement will be subject to consequences which could include monetary penalties and sanctions.
- The December MHA Servicer Performance Report will include the data on permanent modifications as well as the number of active trial period modifications that may convert by the end of the year if all borrower documents are successfully submitted, sorted by servicer and date.
- Servicers will be required to report to the Administration the status of each modification to provide additional transparency about situations where borrowers face obstacles to moving to the permanent phase.
While the new initiative is certainly welcome by homeowners whose mortgages have become a greater burden than they can bear, its viability is only as good as the rules it is guided by. The process is riddled by paperwork, and paperwork and the U.S. government sometimes don’t mix too well. Additionally, while the gov’t plans on using a carrot and stick approach when dealing with lenders, only time will tell how well their daily monitoring works in practice.
Former Chief Credit Officer for Fannie Mae, Edward Pinto, calls the new initiative’s goals “a pipe dream”. What do you think? Is it simply eyewash? Or, is the initiative good for homeowners and the economy?
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Our Economic Helter Skelter
November 26th, 2009 categories: Market Trends, Real Estate News
“Sooner or later in life, we all sit down to a banquet of consequences.”
Robert Louis Stevenson
Is a Federal Housing Administration(FHA) crisis on the horizon? With FHA’s insurance reserve ratio falling to the lowest level in history, at 0.53 percent, there are some who believe the FHA is the next subprime crisis waiting to happen. One of those is homebuilder, Toll Brothers Inc., CEO, Robert Toll. Toll predicts that just like the failed bank bailouts, the FHA will be next in the handout line. And, with the reserve ratio as low as it is, he may be on to something. According to a Congressional mandate, the ratio should be no lower than 2.0
In addition to the alarming FHA news, this week’s Wall Street Journal reported that nearly 25 percent of all homeowners are upside down with their home mortgage. In other words, they owe more on the mortgage than their home is worth. Well, considering how values have fallen since ‘05, that isn’t too surprising.
While the recent encouraging national home sales figures provided us a glimmer of hope amidst the current economic downturn, today’s sobering news concerning the viability of FHA home loans, and the depressed values of properties, bring us back to reality. So, what are we to believe? Are things getting better? Is the First Time Homebuyer’s Tax Credit frenzy skewing sales numbers, or, are increased home sales “genuine”? Are these numbers more akin to a mirage? Instead, are we stuck in an economic tailspin for months, or years to come?
In the competition to provide us the latest and greatest updates on where the economy is heading, we see indications that are both promising and discouraging. Where the housing market may be going, we don’t exactly know. But, fortunately, one thing is for sure, there will be homes both bought and sold. So, perhaps we’d best stick to the present, and as they say, the future will take care of itself. After all, as someone once said, “Predicting the future is easy. It’s trying to figure out what’s going on now that’s hard.”
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More Good News
November 23rd, 2009 categories: Real Estate News, Relocating
Invariably, in the course of conversations with friends, one of the topics that normally arises, is the subject of the homes. Usually, the mention comes in the form of, “How’s the housing market?”
Other than the dramatic shock to financial markets during the year following the height of the housing market and subsequent rapid fall in home prices, the sales market has been fairly predictable. Once lenders got a grip on the deluge of foreclosures and short sales, and this glut of properties began to be adequately handled by them (O.K…so, they’ve still got problems with Short Sales, but they’re getting there), the housing market has been relatively stable.
Today’s latest news on the surge in home sales isn’t news to those of us in the business. As one prospective home buyer in the latest USA Today article mentioned, the market is “insane….I’ve never seen a market like this before.”
That, after having finally securing a home following unsuccessful offers on 20 Las Vegas homes. And, while the rush to “get in” and take advantage before the First Time Home Buyers tax credit offer expired can partly be credited with the robust sales numbers, it doesn’t hurt that home prices, in many locations nationwide are 30-50% less than they were in 2005, or that interest rates are rock bottom.
Many believe that home prices have stabilized. But, with more foreclosures and Short Sale properties landing on the market weekly, we may not have seen the bottom quite yet. With extension of the tax credit, and mortgage rates in a low holding pattern, the surge in home sales numbers may, if we’re fortunate, become a trend instead.
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It’s The Simple Things
November 22nd, 2009 categories: Real Estate News, Relocating
Do you have a favorite season of the year? While many of us like something about each of the four seasons, Fall, or Autumn is probably the one I enjoy the most.
It’s cool mornings and evenings, beautiful natural colors, and inkling of the coming holidays, seems to invigorate a sense of better things yet to come. Around Stafford and Fredericksburg, for many, it’s jacket weather (for others, coats), and the stunning colors are second to none.
How about you, what is your favorite season?
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Celebrating Americana on the Half Shell
November 15th, 2009 categories: Entertainment, Real Estate News
“The first man gets the oyster, the second man gets the shell”
Andrew Carnegie
Fortunately, during last weekend’s 52nd Urbanna Oyster Festival, there were plenty of oysters to be had, even for those in the back of the line. Everyone had loads. And, most of us, way too many! If you’ve not had the chance to venture to Urbanna, Virginia, for the annual oyster celebration, you’re not only missing great food, but also a special glimpse of small town America.
Urbanna is located in Virginia’s Northern Neck, which is situated North of Williamsburg, and Southeast of Fredericksburg, hugging the Chesapeake Bay.
It’s been called a “historic town”, and, in many ways, it is. It’s among the places you’ll see on the National Register of Historic Places. But, each year, on November 6th & 7th, you’ll find some 75,ooo folks headed to this “sleepy” coastal town for oysters, fritters and other assorted dishes, and loads more fun. I can tell you, it’s likely on the “must see” list for those who enjoy touring the country in their RV’s, because there were plenty of those big boys parked in and around the festival.
The two day festival has an assortment of activities, from an oyster shucking contest to the crowning of the festival’s Oyster Queen, among others.
Any number of booths selling food, jewelry, art work, intricate wood design (well, you get the picture, like you’d see at the County Fair), and assorted items dot the town’s landscape. Parking is available, but plan on paying a minumum of $10 or Friday, and $20 on Saturday to park.
And, for those visiting for the first time, it doesn’t matter where you park, the prices are the same. So, for convenience sake upon leaving, use the lots before you come into town.
Enjoying the sights and sounds of Urbanna, and the Oyster Festival, the kids having fun, the adults enjoying each other’s company, the interaction with the booth workers, reminded me of the abundance our Commonwealth has to offer. While most of us relish the time away from work on the weekends, and the relaxation it provides, you might mark the calendar and set aside this early November date next year. It is a piece of Americana that you don’t want to miss.
You’ll meet some very nice people, view a beautiful part of the state, and enjoy some appetizing food dishes. But you might do yourself a favor. In case your eyes are too big for your stomach, don’t forget to bring the Tums!
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Home Buying and Selling Help From Uncle Sam
November 9th, 2009 categories: Real Estate News, Relocating
In times like these, all of us appreciate a bit of assistance. Fortunately, the government has taken steps to extend a couple of programs designed to assist home sellers and buyers. The first is the Housing Assistance Program (HAP) for military personnel selling their home, the second is the First Time Home Buyer Credit, specifically for those purchasing property.
The Department of Defense’s (DoD) HAP offering is designed to provide financial assistance to its personnel who have to move, and will lose money upon selling. Due to the dramatic decrease in home values in recent years, this program was originally designed to provide financial relief to those required to move due to DoD’s Base Realignment and Closure (BRAC) initiative. It expanded to include those DoD personnel whose reassignment or military move was further than what’s categorized as commuting distance. A brief summary of guidelines and what HAP offers can be found here: http://hap.usace.army.mil/Eligibility.html
The original deadline for eligibility was the end of November, 2009. As you might imagine, eligible members were scrambling to get their applications in, and to get their home on the market. Fortunately, the deadline was extended.
Here’s the official announcement of DoD’s Processing and Extension of the HAP Program. It’s got the details, including an extension through Sep 2012. You’ll find the info here, http://tinyurl.com/y8d99pv
Another piece of good news for those in the home market, was this week’s expansion of the First Time Home Buyer’s Tax Credit.
Not only was the tax credit of up to $8000 for qualified first time home buyers extended, but the expansion also offered an additional credit for repeat home buyers. The beauty of the original credit was their definition of a first time buyer; any prospective purchaser who has not owned a principal residence during the three year period prior to the new purchase.
The additional, or expansion of the program included a $6500 tax credit for move-up or repeat home buyers purchasing a home. There are specific details that you need to examine before you assume you qualify for the program’s benefits.
While we can’t always count on the federal government to assist us, it is refreshing to discover their helping hand in times of need. Amid the existing economic downturn, Uncle Sam not only decided to come to the aid of military home sellers whose home values have decreased, but also to help those in the market to buy a home. Let’s hope the prospective beneficiaries of both these offerings are well aware of what’s available, and are taking advantage of them. Who knows when we’ll see this type of assistance again.
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