Unemployment-Abbot and Costello style

From Mortgage News Daily: At 8:30 am, Initial Claims were released and projected unchanged at 351k but unemployment benefits actually rose to 362,000 last week from an upwardly revised 354,000 the prior week.


Abbott and Costello
COSTELLO: I want to talk about the unemployment rate in America.
ABBOTT: Good Subject. Terrible times. It's 9%.
COSTELLO: That many people are out of work?
ABBOTT: No, that's 16%.
COSTELLO: You just said 9%.
ABBOTT: 9% Unemployed.
COSTELLO: Right 9% out of work.
ABBOTT: No, that's 16%.
COSTELLO: Okay, so it's 16% unemployed.
ABBOTT: No, that's 9%...
COSTELLO: Wait a minute. Is it 9% or 16%?
ABBOTT: 9% are unemployed. 16% are out of work.
COSTELLO: IF you are out of work you are unemployed.
ABBOTT: No, you can't count the "Out of Work" as the unemployed. You have to look for work to be unemployed.
COSTELLO: BUT THEY ARE OUT OF WORK!
ABBOTT: No, you miss my point.
COSTELLO: What point?
ABBOTT: Someone who doesn't look for work can't be counted with those who look for work. It wouldn't be fair.
COSTELLO: To whom?
ABBOTT: The unemployed.
COSTELLO: But they are ALL out of work.
ABBOTT: No, the unemployed are actively looking for work. Those who are out of work stopped looking. They gave up. And, if you give up, you are no longer in the ranks of the unemployed.
COSTELLO: So if you're off the unemployment rolls that would count as less unemployment?
ABBOTT: Unemployment would go down. Absolutely!
COSTELLO: The unemployment just goes down because you don't look for work?
ABBOTT: Absolutely it goes down. That's how you get to 9%. Otherwise it would be 16%. You don't want to read about 16% unemployment do ya?
COSTELLO: That would be frightening.
ABBOTT: Absolutely.
COSTELLO: Wait, I got a question for you. That means there are two ways to bring down the unemployment number?
ABBOTT: Two ways is correct.
COSTELLO: Unemployment can go down if someone gets a job?
ABBOTT: Correct.
COSTELLO: And unemployment can also go down if you stop looking for a job?
ABBOTT: Bingo.
COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to just stop looking for work.
ABBOTT: Now you're thinking like an economist.
COSTELLO: I don't even know what the heck I just said!
And now you know why the Administration's employment figures are improving!

Fourth Quarter and Year-End 2011 U.S. Foreclosure Sales Report: Shifting Toward Short Sales

RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its Q4 and Year-End 2011 U.S. Foreclosure Sales Report™, which shows that sales of homes that were in some stage of foreclosure or bank owned accounted for 24 percent of all U.S. residential sales during the fourth quarter — up from 20 percent of all sales in the previous quarter, but down from 26 percent of all sales in the fourth quarter of 2010.

“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” Moore continued. “Nationally, pre-foreclosure sales increased 15 percent from a year ago while REO sales decreased 12 percent. Pre-foreclosure sales outnumbered REO sales in several bellwether markets, including Los Angeles, Miami and Phoenix, where REO sales had outnumbered pre-foreclosure sales a year ago. That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans.”

PLEASE READ THIS: 2012 is shaping up  to be the “perfect storm” in the realm of short sales. A) the banks FINALLY realize that it is in their best interests to approve a short sale rather than take a home back in foreclosure, B) the Mortgage Debt Forgiveness Act  is still in place, but only until the end of 2012 (and I wouldn’t bet the farm on the deadlocked politicians/bureaucrats in Washington easily coming to an extension agreement),  C) the inventory of decent single family homes here in Palm Beach County is extremely low, and D) many lenders are offering cash incentives to underwater and delinquent homeowners if they complete a short sale and meet other, minor benchmarks.

If you are upside-down..don’t wait..call me today, please. This year may be your best opportunity to sell your home in a manageable and dignified way.

My direct line is 561-602-1258.

Thanks for reading, Steve Jackson

Winston Trails market update

Below is the recent sales and on-the-market activity in Winston Trails...

A bank-owned home in Golfview Village was just placed on the market. The home is a Cairo on the golf course with a new screened enclosure and granite counters...The bank is asking $220,000

A bank-owned home in Bay Meadow has just been reduced to $194,900. The home is a fairport model, 2012 sq ft under air, 3 bedrooms, 2 baths, screened enclosure, granite counters, very small back yard.

A bank-owned home in Sand Hills just sold. The home was a Paris model, 2 story, 5 bedroom, 3 bath, 2700+ sq ft under air, pool, lakefront...the final sales price was $220,199 in an all cash deal.

There is a new rental at 6899 Perdido Bay Terrace in The Greens. This home is titled to the HOA but is subject to a 1st lien foreclosure. This 3 bedroom, 2 bath home is being rented for only $1250/month


Thanks for reading...Steve Jackson
I can be reached directly at 561-602-1258

Warren Buffet was dead wrong

In Warren Buffets 2011 Letter to Shareholders, he recounts all of his successes but perhaps the biggest mistake Buffett copped to in his letter was being “dead wrong” about a housing recovery in 2011. “Housing will come back — you can be sure of that,” Buffett writes, but he no longer offers an opinion of when and his bet on five businesses directly tied to residential construction was “weaker than he hoped”.

My guess is that Warren looked at the bump/stabilization in home value reports towards the end of 2010 and projected a recovery based upon that.

Take a look at the following 2 charts to see what happened:

In past boom/bust cycles (of not only housing) prices often overshoot to the downside…Looking at home values going forward there is a lot of evidence that the bottom is not yet here and steady appreciation is a ways off: there is a large overhang of vacant housing units and many distressed properties still to come… demand will remain soft as a consequence of ongoing weak employment, very tight mortgage financing criteria, negative home buying sentiment and a great deal of potential buyers excluded because of credit issues.

Note: usually near the end of a housing bust - after nominal prices stop falling - real prices decline slowly for a couple more years, and we will probably see that this time too. Of course, right now, nominal prices are still falling.

If you are in the market as either a seller, buyer or investor and would like to discuss your options, sale or purchase timing or anything housing related…call me on my direct line at 561-602-1258.

 

As always, thanks for reading….Steve Jackson

And now for a word from our sponsor…

Today, the N.A.R. (which I contend actually stands for “numbers aren’t real”) reported the following:

The National Association of Realtors said on Wednesday existing home sales increased 4.3 percent to an annual rate of 4.57 million units last month, the highest since May 2010

Ahhh…but all is not as it seems…the NAR December data was just revised from +5% to -0.5% (from 4.61 million to 4.38 million). Since December market expectations were for a +5.2% print. Needless to say, if this number had been unrevised, the January +4.3% increase would have been a decline!

So all of the celebration that great December number encouraged was all for naught. BUT, when we now compare the January number to the DOWNWARDLY REVISED December number…things look good for 2 months in a row!…until January’s number is quietly revised downward so February’s numbers look good. Or any softening in February will be blamed on the ‘winter’ weather! You can look at the NAR housing numbers as if they were Silly Putty; all soft and pliable at first, but when left out for a month, they shrink and firm up.

Regarding pricing, distressed properties, foreclosures and short sales, which typically occur at deep discounts, accounted for 35 percent of overall sales last month, up from 32 percent in December.

The National Association of Realtors reported that the median home price in January fell 2% from December to $154,700. That's the lowest price reading since November of 2001, before the run-up in home prices that became known as the housing bubble.

And from Zillow today: Online real estate firm Zillow sees home prices continuing on a downward trajectory.

The firm made this conclusion in its monthly forecast of what to expect in the upcoming S&P Case-Shiller Composite Home Price report. Zillow also projects home prices tied to the 10-city composite index will fall 3.9% year-over-year…

And this: New mortgage purchase applications are now at a level not seen since 1997…and this coincides with the lowest mortgage rates in 30 years and the lowest home prices in 11 years!

What do you think will happen when interest rates start to rise?

If you’d like to discuss your options and how the current and near term market environment will impact your sale or purchase decisions, call me directly at 561-602-1258

Thanks for reading…Steve Jackson

New sale reported in Winston Trails, Golfview Village

As reported in public record/MLS, a Nairobi model, on the golf course, with a pool, remodeled kitchen, granite counters...just sold for $265,000. The sale was financed with an FHA loan.

There is another beautiful Nairobi model currently on the market...here are a few photos of that home in the Las Colinas section of Winston Trails:

Give me a call if you are curious about the value of your home in Winston Trails or are searching for a new home in our great community.

My direct line is 561-602-1258.

Thanks for reading...Steve Jackson

Foreclosure Fraud Settlement Update…

Full and complete details are still not available as of today. We have been given only the main points of the agreement. Missing still are the most important aspects; the implementation and enforcement details. As the well known saying goes…’The devil is in the details’ (see below).

A previously ‘settled’ suit by Nevada/Arizona against Bank of America for failing to follow their responsibilities in the Countrywide settlement will be folded into the deal. In that settlement, BofA promised to deliver $8.5 billion in relief for Countrywide borrowers who fell victim to deceptive practices in the mortgage process. In reality, only $236 million was ever spent. Weak settlement terms allowed BofA to take credit merely for offering loan modifications to borrowers. And the Nevada suit alleged that BofA immediately started abusing borrowers who tried to get relief under the deal. But that suit is now gone.

State and federal regulators insist that they learned their lesson with that botched settlement and that this one has tight enforcement guidelines. (Sure!) However, the monitoring process begins with a self-assessment from the banks through quarterly reports, which will then be reviewed by a govt. determined committee. This enforcement process is likely to take months to ‘properly assess’ the settlement.

What has been made public is that 5 billion will go as a hard cash penalty to the states, which can use the monies, for what appears to be, any reason. As a matter of fact, one official close to the talks stated that he feared that much of that cash payout will go in some states toward filling their budget holes. The federal government will get a cash penalty as well (how much? for what purposes?)  Out of that $5 billion, up to 750,000 borrowers wrongfully foreclosed upon will get (up to) a $2,000 check if they sign up for it and it is determined that they qualify (who can qualify and what the process is has yet to be disclosed). For someone wrongfully foreclosed on, foreclosed on with fraudulent documents or denied due process, this is the equivalent of saying to them “sorry we broke the law and stole your home, here’s one months rent, now go away quietly.”

The bulk of the money, NOT actually a payment of any kind, around $17 billion, will go towards loan modifications, principal write-downs, short sales and other foreclosure avoidance efforts.

This figure pales in comparison to the negative equity in the country, which sits at, at least, $700 billion. Nationally, 1 in 5 mortgages is currently under water…here in Florida, almost 1 in 2 mortgages is under water. AND the banks have 3 years to implement these processes and procedures.

It will be many years into the future, after this ‘landmark settlement’ has faded from scrutiny, before it can be determined if the promises on loan modifications, etc., have been fulfilled. 

Do you think this multi-billion-dollar settlement is tough on the banks?Lets look at the stock prices of the banks involved in this settlement…did they fall through the floor as a result of the drastic penalties invoked?

• Well, just before Christmas, Bank of America stock dipped below the $5.00 mark; on Friday, it closed over $8.00…UP OVER 60% in 60 days! Nice…and one would have to have their head firmly in the sand to think that the terms of this settlement were not widely distributed to the ‘in’ crowd in the past 60 days.
• Citi..again, from a low point of about $25 the same day, just before Christmas, to a close of about $33 on Friday…a 30% return in 60 days…not as good as BofA, but still not bad for the insiders.

**and the mention of insiders brings up this point: Our elected officials do not have to comply with the rules/laws governing the trading of equities on inside information. I’d like to see how many of the ‘peoples representatives’ (privy to the details/impact of this settlement) bought bank stock in the past 60-90 days.

• JPMorgan Chase…Same date of the low…just before Christmas at just under $31, to a close on Friday of just under $38.00…only a 22% return (and that's NOT annualized) on that trade.
• Wells Fargo…SAME low date just before Christmas, of about $25.50 to a close on Friday of $30.30. Another tidy return of about 20% in 60 days.

If you laid these charts on top of one another…they are almost identical in movement! The terms were leaked, the impact evaluated, and then the party started!

I’ll post again on this when the FULL details are finally released, whenever that may be!

 

Thanks for reading and putting up with my heavy dose of cynicism…Steve Jackson

Call or email me any time with your take on the matter, 561-602-1258

The BIG bank settlement…

Here are the main details of todays multi-state bank fraudclosure settlement…my analysis and opinion will come in a few days, after I have had time to read and digest the full settlement (which I have to diligently search for because it is not readily available)

NEW YORK (CNNMoney) -- The nation's five largest banks have finally struck a deal with 49 states to settle charges of abusive and negligent foreclosure practices dating back to 2008.

Under a deal announced Thursday, the banks will commit $26 billion to help underwater homeowners and compensate those who lost their homes due to improper foreclosure practices…

What did the mortgage lenders and loan servicers agree to do? The banks and servicers have committed at least $17 billion to reduce principal for borrowers who 1) owe far more than their homes are worth 2) are behind on payments.

The amount of principal reduction will average about $20,000 per borrower.

Another $3 billion will go toward refinancing mortgages for borrowers who are current on their payments. This will enable them to take advantage of the historic low interest rates currently available.

The banks will pay $5 billion directly to the states, the only hard money involved in the deal. Out of that fund will come payments of $1,500 to $2,000 to homeowners who lost their homes to foreclosure. Other funds will be paid to legal aid and homeowner advocacy organizations to help individuals facing foreclosure or experiencing servicer abuses.

Another $1 billion will be paid directly by Bank of America to the Federal Housing Administration to settle charges that its subsidiary, Countrywide Financial, defrauded the housing agency.

In addition, the banks agreed to eliminate robo-signing altogether and to use proper and legal procedures when putting homeowners through the foreclosure process. They also agreed to end servicer abuses, like harassing delinquent borrowers for payments, and to include principal reductions more often in their mortgage modifications programs.

Is my mortgage lender taking part in this settlement? Bank of America, Wells Fargo , JPMorgan Chase, Citigroup and Ally Financial
are taking part in the settlement.

In addition, nine other unnamed loan servicers may join the settlement later, and that would bring its value to $30 billion.

Loans owned or backed by Fannie Mae and Freddie Mac, however, are not part of the deal. The Federal Housing Finance Agency, which oversees the two government-sponsored mortgage giants, will not allow any balance reductions for loans insured by the companies under the settlement.

I lost my home to foreclosure; how do I know if I qualify for payment? If you were foreclosed on in the calendar years 2008 through 2011, you may be be eligible for a payment of up to $2,000. People who think they may qualify should notify their bank.

What should I do if I think I may qualify for a principal reduction or refinanced mortgage? Contact your lender/servicer and ask them to review your case.

If I take the money, what rights do I give up? Individual borrowers do not give up any right to sue.

As part of this deal, state attorneys general gave up the right to sue the mortgage servicers for foreclosure abuses arising out of the robo-signing scandal. However, they reserve the right to sue if they uncover improper acts when the loans were originated or when they were securitized.

When will the new rules and bank policies be put into place? Most of them have already become part of bank policies.

When will homeowners get paid? HUD said the settlement will be put before a court for approval within two weeks. It is unknown how long it will then take for a court to rule.

The relief for homeowners has to be completed within three years, but the state attorneys general and HUD want it to be front-loaded and completed within 12 months.

Would I have to pay taxes on the principal reductions or the pay-outs? If the principal is reduced in 2012, it will not be subject to income tax.

That's because the Mortgage Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their principal residence. The act is scheduled to expire at the end of this year, however.

So if the act is not extended and the principal reduction occurs in 2013, borrowers may be on the hook to pay taxes on the settlement amount.

It's not clear whether you would have to pay taxes on the $1,500 to $2,000 payout. The IRS declined to comment on the question.

Will the settlement make it harder to get a mortgage? The new rules and regulations the banks have agreed to under the settlement should have little impact on future mortgage borrowing since most of practices are already in place, said Keith Gumbinger of HSH Associates, a mortgage information provider.

Only $5 billion of the $26 billion settlement will be a direct cost to the banks. The remainder will be the cost of modifying mortgages. Many of those modifications may be in the best interests of the banks to make, however, since the alternative may be foreclosure, which can cost banks more than modifications.

Come back in a day for my insight and analysis of the States Attorneys General settlement with these 5 banks! I’m certain it will be a bit different than the popular spin being put on it now.

 

Thanks for reading…Steve Jackson

561 602 1258 (direct)

Since everyone (taxpayers) will end up paying for it, it probably is important to review

The Federal Reserve recently came out with an unprecedented recommendation to create an “REO to rental” program by facilitating bulk sales to large investors.

Below is an excerpt taken directly from the ‘Plan to Help Responsible Homeowners and Heal the Housing Market’ Fact Sheet given to the press for President Obama's state of the union address:

When there are vacant and foreclosed homes in neighborhoods, it undermines home prices and stalls the housing recovery. As part of the Administration’s effort to help lay the foundation for a stronger housing recovery, the Department of Treasury and HUD have been working with the FHFA on a strategy to transition REO properties into rental housing. Repurposing foreclosed and vacant homes will reduce the inventory of unsold homes, help stabilize housing prices, support neighborhoods, and provide sustainable rental housing for American families.

Today, the FHFA is announcing the first major pilot sale of foreclosed properties into rental housing. This marks the first of a series of steps that the FHFA and the Administration will take to develop a smart national program to help manage REO properties, easing the pressure of these distressed properties on communities and the housing market.

So…having Fannie, Freddie and FHA bundle up foreclosed homes and sell them in bulk, at a discount, to "qualified bidders" (the link will take you to the actual PDF document outlining the financial qualifications needed to apply to be a ‘bulk buyer’) with the stipulation that they be turned in to affordable rentals, rather than sell them to first time buyers (or any other owner-occupied buyer) at the same discount, is the magic potion for our housing recovery? It looks to me like a back door way to reward campaign contributors and hedge funds. And as another back door bailout of the banks holding these bad loans (that are guaranteed by the GSE’s).

Who believes that having renters replace homeowners is better for housing values?

And who will be on the hook for the write downs required to sell these homes at a discount? US, you and me…the taxpayers, who have already bailed out the GSE’s to the tune of multiple billions of dollars…

Oh…and one more small item that causes me some concern is this language contained in the application to purchase these bulk REO (real estate owned) homes:

10. The undersigned acknowledges and agrees that any information furnished to the
undersigned or its agents or representatives by (or on behalf of) Fannie Mae in connection with
any specific offer or sale of any Assets (“Confidential Information”) is proprietary in nature and
must be kept confidential and not disclosed or revealed to any person or entity…

Now, when you read that everything about these sales must be kept ‘secret’ what does that lead you to believe?

If you have the time and inclination, email me with your take/opinion.

Thanks for reading…Steve Jackson

 

 

Winston Trails lakes are stocked pretty nicely !

Spencer Jackson pulls a nice bass out of Bay Hill lake on Saturday, Feb 4th, 2012

Winston Trails Bank Foreclosure...now on the market

Located in The Greens..a Montreal Model...3 bedrooms (with the master bedroom downstairs), 2.5 baths...screened patio...stainless appliances...aprox 1700 sq ft under air.

Banks asking price: $170,000

Call us at 561-602-1258

Home price trend…Florida job prospects…

CNN: Unanticipated home price declines in November.

NEW YORK (CNNMoney) -- Home prices posted a steep, month-over-month drop in November, falling 1.3%, according to the latest S&P/Case-Shiller 20-city report. Prices fell in 19 of the 20 cities the index covers.

Prices are down 3.7% from a year ago, and off 32.8% since they peaked in the summer of 2006. The index is currently only 0.6% above its March, 2011 low. "Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall," said David Blitzer, spokesman for S&P.

The drop in home prices was more than housing bear Peter Morici, professor at the University of Maryland Smith School of Business, anticipated. He had forecast a 0.8% drop. "We've had more robust sales activity in the housing market lately," he said.

Morici thinks recent home price weakness stems at least partially from the fact that more sellers have accepted the weak market conditions and are putting their homes up for sale. Retirees and other home owners had postponed sales, trying to wait out the decline. "Sooner or later, you have to get rid of that house," he said.

Most difficult place to find another job? Florida!

NEW YORK (CNNMoney) -- If you lose your job in Florida, chances are you won't find another one any time soon.

The Sunshine State has the highest rate of long-term unemployment in the nation. Some 53% of jobless Floridians were out of work for more than six months in 2011, according to Brookings' Hamilton Project, which crunched Census data

"During the boom, the Florida economy was going gangbusters," said Sean Snaith, economics professor at the University of Central Florida. "We lost hundreds of thousands of jobs."

Although the market is starting to loosen up, there are four jobseekers for every open position in Florida, said Mason Jackson, chief executive of the WorkForce One career center in Fort Lauderdale. Businesses are still hesitant to hire because of continued uncertainty in the economy. "If we filled every job we could find, 75% would still be unemployed," Jackson said.

The housing market continues to weigh on the Florida economy and its job market. More than one in five borrowers are behind in payments, while 44% of homeowners owe more than their property is worth.

This prevents homeowners from moving away to look for work, said Tony Villamil, dean of St. Thomas University's School of Business in Miami.

"They are locked in their homes," he said.

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To any home owners reading this: If selling your home may be a consideration in the next 36 months, we should discuss the information contained in the two news releases, above, and the other housing and economic factors that may have an impact on your present and future real estate plans.

Call me directly at 561-602-1258

Thanks for reading…Steve Jackson

––For Every Two Homes Available for Sale, There Is One “In The Shadows”––

 

CoreLogic® (NYSE: CLGX), a leading provider of information, analytics and business services, reported today that the current residential shadow inventory as of October 2011 remained at 1.6 million units, representing a supply of 5 months. This was down from October 2010, when shadow inventory stood at 1.9 million units, or 7-months’ supply, but approximately the same level as reported in July 2011. Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales.
CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders. Transition rates of “delinquency to foreclosure” and “foreclosure to REO” are used to identify the currently distressed non-listed properties most likely to become REO properties. Properties that are not yet delinquent but may become delinquent in the future are not included in the estimate of the current shadow inventory. Shadow inventory is typically not included in the official metrics of unsold inventory.
Data Highlights:

• As of October 2011, shadow inventory remained at 1.6 million units, or 5-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or in REO.
• Of the 1.6 million properties currently in the shadow inventory (Figures 1 and 2), 770,000 units are seriously delinquent (2.5-months’ supply), 430,000 are in some stage of foreclosure (1.4-months’ supply) and 370,000 are already in REO (1.2-months’ supply).
• Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
• The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006. A healthy housing market should have less than one-month’s supply of shadow inventory, which would be an easily absorbed stock of distressed assets with little or no discernable impact on house prices, unless the inventory was geographically concentrated.
• Despite 3 million distressed sales since January 2009, a period when home prices were declining at their fastest rate, the shadow inventory in October 2011 is at the same level as January 2009.
• Because shadow inventory is often concentrated in suburban and exurban submarkets, where distressed sales compete with new construction sales, it is one of the reasons why new home sales continue to be weak. In normal times, new home sales account for 12 percent of all sales, but they are currently running at 7 percent of all sales.
• Based on current estimates of the visible inventory (both distressed and non-distressed), the shadow inventory is approximately half of all visible inventory listings. For every two homes available for sale, there is one home in the “shadows”

“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” said Mark Fleming, chief economist for CoreLogic.
The full report can be found at http://www.corelogic.com/ShadowInventoryOct2011.

I do follow CoreLogic reporting every month…however, there are other credible estimates of the shadow inventory 3-4 times what CoreLogic reports. That's very scary and is what is going to keep our values from increasing any time soon.

Thanks for reading…Steve Jackson
Call me directly at 561-602-1258

What if the Federal deficit was your household debt?

Pre market. Awesome lot in The Greens

Not yet on the market...but coming soon.

At the end of a cul-de-sac
Fully fenced yard
Accordion shutters up and down
Screened patio
Over 1800 sq feet under air
3 bedrooms plus a loft
Huge master closet
New A/C (2010)
Well pump for sprinkler
Original owner...lived in 1 month a year

Call me today to set up your private viewing.
561-602-1258

Thanks for reading...Steve

Winston Trails bank owned-new to the market

A Gold Coast home has just been put on the market, it is owned by Fannie Mae. This bank owned home is a Monaco model: 1 story, 3 bedrooms, 2 baths, 2 car garage, patio, 2043 sq ft under air.

This bank foreclosure is priced at $214,900...about $105/sq ft

Thanks for reading...Steve
561-602-1258

Are you “choosing” foreclosure?

It frustrates me to see homeowners continue to stick their head in the sand and choose foreclosure.  Yes, I said CHOOSE! 

Foreclosure is a choice made by uninformed homeowners who have simply given up.  No matter how frustrated you are or how grim the situation has become, foreclosure is almost never the right choice.

Below I’ll explore a number of ways to avoid foreclosure:

1)  Loan Modification

A loan modification is an adjustment to the original loan terms agreed upon by the lender and the borrower. There are three areas that can be adjusted:

1   Interest rate (lowered either temporarily or for the life of the loan)
2.  Length of the loan (extended to 40 years!)
3.  Principal owed/Principal reduction (this is the least likely to occur)

Loan Mod Requirements

You will need to provide extensive documentation to prove why you need a modification.  Your bank will go through a credit check, run an income vs.. expenses analysis, and then will do an appraisal on your home.

By most accounts, the loan modification programs, the most popular one was HAMP (Home Affordable Modification Program), many called it the “Obama plan,” have been an absolute failure.  The criteria to qualify for one of these programs continues to change and most borrowers who have attempted them have been denied.

And those who were approved many times did not get approved for terms that would allow them to keep their home long term.  That is why the re-default rate is over 50% within 12 months after a loan modification.

Our position on Loan Modifications has never changed: If your financial hardship is temporary and the savings from the loan modification will enable you to keep your home, then this is a viable option.

What to Watch Out For: Trial modifications that entice you into paying 3 straight payments and then once you do, they deny you for a permanent modification. But a crucial thing to watch for is when you are in a month over month holding pattern and keep getting told that your file is being reviewed the bank is moving forward with a foreclosure action!

2) Refinancing

If you are upside down, where you owe more than your home is worth, then the only chance to refinance will most likely be through the Home Affordable Modification Program (HARP).  The Obama administration recently loosened the requirements to get into HARP in an effort to assist more underwater homeowners.

HARP Requirements:

• Your loan must be guaranteed (owned) by Fannie Mae or Freddie Mac and have been since prior to May 31^st 2009.
• You must be current on your existing mortgage and current for the prior 6 straight months
• You can only have 1 late payment on your mortgage in the last 12 months

Contact your existing lender to see if they are participating in HARP.

HARP can be a long term solution if a homeowner can get into a lower payment they can afford.  However distressed homeowners need to remember that this does not solve the fact that the home is underwater.  In addition, it pushes your loan out 30 years again. 

What to Watch Out for: Be on the look out for loan modification and refinance scams.  Any time the media shines the light on some of these programs, scam artists try to take advantage of distressed home owners.  Never pay any up front fees of any kind or any fees throughout the refinance process!

3)  Forbearance

Forbearance is a special agreement between the lender and the borrower to delay a foreclosure and come to an agreement as to how missed payments (and associated fees) are to be paid back.

Is Forbearance Right for You?

Forbearance should only be used for a temporary financial hardship.  If someone has a more long term hardship such as unemployment or underemployment then this is not a good option.  The lender will not agree to forbearance unless the terms are favorable to them which may include a lump sum payment or tacking on any missed payment to the back end of your loan. Remember all of those payments that you don’t make get ADDED onto the end of your loan.

What to Watch Out for:  Trying to obtain forbearance because you can no longer afford your home and you are upside down is a bad idea and only makes you further upside down.

 

4) Bankruptcy

Bankruptcy is the legal status of an insolvent person or business that cannot repay debts owed to creditors.

Is Bankruptcy Right for You?

Bankruptcy does not stop a foreclosure forever. But it will delay it and it may eliminate the responsibility for the deficiency balance on your mortgage.

Bankruptcy Requirements

Income and assets guidelines dictate if an individual or a household would qualify for it.  If a foreclosure date does not allow for enough time to find another place to live, there are additional liens on the property that would prevent the home to be sold on the open market, or you are concerned that the bank will come after you for the difference, than a bankruptcy may make sense.

What to Watch Out For:  Bankruptcy has the worst possible effect on your credit and should only be used when absolutely needed.

5)  Deed in Lieu of Foreclosure

A deed in lieu of foreclosure occurs when a borrower conveys all interest in their property over to the lender to satisfy the loan that is in default and avoid foreclosure proceedings.

Is Deed in Lieu of Foreclosure Right for You?

A deed in lieu of foreclosure, is basically a “voluntary foreclosure,” since you are essentially handing over the property to the bank without them having to go through the actual foreclosure process. While a deed in lieu is easier than foreclosure, the only party who will reap the benefits of this program is the bank. The credit implications and impact on your ability to borrow money in the future are identical to a foreclosure. It is not looked upon favorably.

What Are The Deed in Lieu of Foreclosure Requirements?

Like many foreclosure alternatives, there is a long list of requirements that prevents many people from qualifying for a deed in lieu of foreclosure.

For example, other liens and mortgages may limit this option, and a true hardship must exist.   Since the bank is not in the business of owning properties they will only consider this option if the loan is in default and they truly believe they will have to foreclose if they do not agree to it.

Lenders prefer short sales over a deed in lieu because with a short sale they don’t have to take over the property. Even under the Treasury’s HAFA program you are required to first attempt a short sale and if that fails after 120 days then you can apply for a deed in lieu of foreclosure.

What to Watch Out for: A deed in lieu does not automatically forgive the deficiency balance on the loan. Just like with a short sale you need to be sure the language in your Deed-in-lieu agreement waives any deficiency balance.

6) Short Sale

A short sale is the process of selling a home through which the lien holder(s) agrees to settle for less than they are owed.

Any unpaid balance owed to the creditors is known as the deficiency which, if negotiated effectively, is forgiven.

The main reasons our clients opt for a short sale over the other options are: debt forgiveness, credit impact, ability to purchase another home more quickly, the likelihood of a continued depressed housing market, selling with dignity, and moving in a more predictable and controllable timeframe.

We have found that many distressed homeowners will attempt some of the above methods such as loan modification, forbearance, and then leave a short sale for last. Then once the short sale is complete almost all of them wish they had done the short sale from the beginning!

Please…don’t wait until you get the “notice of foreclosure sale” served to you…give me a call now, we’ll discuss what your best option is and how to accomplish it. My direct line is 561-602-1258.

Thanks for reading, Steve Jackson

Freddie Mac offers help for the unemployed

Just this afternoon I received an email bulletin from Freddie Mac that may give some relief to unemployed individuals having difficulty making payments on a Freddie Mac loan.

 

Here is a brief overview with a link to the actual Freddie Mac document I received:

Freddie Mac, (Bulletin 2010-17), is introducing new forbearance requirements to provide a “short-term unemployment forbearance” relief option to assist Borrowers who are unable to make their Mortgage payment due to unemployment.

In addition, Freddie Mac is introducing an “extended unemployment forbearance” relief option to provide an extension of the forbearance period if such Borrowers have not regained employment after the short-term forbearance period has ended. Including these additional relief options in our loss mitigation tool kit gives unemployed Borrowers an opportunity to retain homeownership by providing Mortgage payment relief while they seek re-employment.

Servicers will have delegated authority to approve eligible Borrowers for a short-term unemployment forbearance period of six months during which time the monthly Mortgage payment is either suspended or reduced.

If the Borrower remains unemployed at the end of the short-term unemployment forbearance period, the Servicer must consider the Borrower for extended unemployment forbearance in accordance with the Guide.

If the Borrower meets the eligibility criteria for extended unemployment forbearance, the Servicer must obtain Freddie Mac’s written approval before entering into an extended unemployment forbearance plan with the Borrower.

EFFECTIVE DATE: Changes announced in this Bulletin are effective February 1, 2012 for all new Borrower evaluations for an alternative to foreclosure. However, Servicers may begin implementing the unemployment forbearance relief options earlier for all new requests for assistance in which an eligible Borrower’s hardship is unemployment.

If you have any question about Freddie Macs new plan, above, or any other questions regarding foreclosure alternatives, please pick up the phone and call me directly at 561-602-1258...or send me an email

Thanks for reading my blog…Steve Jackson

Steal this bank foreclousre in Winston Trails

But you better be on my mailing list or see this as soon as it's posted!

Paris: 5 bedrooms, aprox 2750 sq ft under air, 3 baths, 1 bedrooms and full/cabana bath on 1st floor
Lakefront: Great northern rear exposure
Pool

ONLY $225,000!

To get on my HOT BUYS list...send me an email (click 'hot buys')

If you'd like to put in an offer on this home, give me a call at 561-602-1258

Thanks for reading...Steve

2 month payroll tax reduction=30 years of increased mortgage payments!

 

The temporary extension of the payroll tax (and extended unemployment benefits) is being funded with fees from new Fannie and Freddie mortgages. BUT…these fees are not 1 time fees…these fees are not just for 2 months…these fees are not for 10 years (as mistakenly understood by the media)…these fees are for THE LIFE OF THE LOAN! 30 years if one keeps the mortgage!.

How in the world does this make sense? Add costs to an integral part of the WEAKEST part of our economy…add costs to the segment of our economy that almost all agree will have to spearhead any real recovery! And, with all of the political grandstanding about “getting the govt. out of mortgages”,..they have now tied the financing of this bill to ongoing underwriting of mortgages by Fannie and Freddie.

And now that the politicians have dipped into the Fannie/Freddie new loan pocketbook, I shudder to think of what they’ll try to fund through new loan fees to home buyers going forward.

Voice your opinion of this tactic when you exercise your right to vote!

 

Thanks for letting me vent…Steve Jackson

2012

To help you celebrate and reflect here is a collection of quotes to start the new year.

Year’s end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us. -Hal Borland

In the New Year, may your right hand always be stretched out in friendship, but never in want. -Irish toast

Your Merry Christmas may depend on what others do for you … but your Happy New Year depends on what you do for others. -Author unknown

Your success and happiness lies in you. Resolve to keep happy, and your joy and you shall form an invincible host against difficulties. Helen Keller

We will open the book. Its pages are blank. We are going to put words on them ourselves. The book is called Opportunity and its first chapter is New Year’s Day. Edith Lovejoy Pierce

One resolution I have made, and try always to keep, is this: To rise above the little things. John Burroughs

We spend January 1 walking through our lives, room by room, drawing up a list of work to be done, cracks to be patched. Maybe this year, to balance the list, we ought to walk through the rooms of our lives…not looking for flaws, but for potential. Ellen Goodman

Be always at war with your vices, at peace with your neighbors, and let each new year find you a better man. Benjamin Franklin

May the best of this year be the worst of next. Unknown

Resolve to make at least one person happy every day, and then in ten years you may have made three thousand, six hundred and fifty persons happy, or brightened a small town by your contribution to the fund of general enjoyment. Sydney Smith

Lets talk about loan modification...

Over the past 3 years, banks have been given trillions of dollars from Congress (otherwise known as the US taxpayers) to motivate them to modify their home loans as the housing bubble collapsed. However, very few people have actually had their loans permanently adjusted, and instead, banks have been pursuing foreclosures at enormous rates.

Our opinion is that when it comes to loan mods, the homeowner who needs to be wary. On the surface, having the ability to lower ones payments an underwater mortgage certainly looks like a great deal, but we also know that the banks are on the edge of collapse due to the fact that the states and the courts are showing many of these entities do not have the proper documentation and ownership to actually foreclose on property.

The issue at hand is ownership of title, and rightful ownership of the actual note. When banks made their original loans to home buyers, they had the simple contract of title and note. However, when they sold the note to investments banks, who then separated the note from the title, and bundled these obligations with hundreds of others to create the RMBS, they simply put the title into a dummy holding company called MERS, and there was no longer a true and legal chain of ownership of the lien.

As time went on, some courts began to realize that the original banks, or the servicing agents who were simply collecting monthly mortgage payments, did not have the legal right or proper paperwork to foreclose on someones property.

So now, as a last ditch effort to compile the proper paperwork to satisfy the courts, banks are now suddenly offering loan modifications so that homeowners will by default, re-affirm the loan and justify a chain of ownership to the banks they did not have at the time of the foreclosure proceedings. Another important back-door trick of the banks is that they offer these "trial" loam mods, requesting all manner of financial documentation. And to get a loan modification, the homeowner needs to show income and assets enough to sustain payment on the lower payment. So most homeowner will go to great lengths to find and disclose and affirm assets and income that the bank may not have known about otherwise. Now, the banks know what assets to go after when they terminate the "trial" modification and foreclose instead.

In an article by Bruce Krasting on one of my favorite blogs, Zerohedge, he makes this assessment of the modification offers to homeowners:

One possible response would be to get all troubled borrowers to reaffirm their debt, the second is to get the trouble borrowers back to paying something on the mortgage, even if it were a fraction of what was formerly owed on a monthly basis. A loan modification would achieve both results. When a borrower signs up for a loan mod they sign new papers. A portion of this process will re-establish any loan balance that is due. The language in the mod could have new foreclosure terms that eliminate the banker’s problem with past tainted documentation. Once a borrower makes a few months of new lowered payments they are, in effect, confirming their acceptance of the new terms.

Most Mods go bust in six months or are cancelled for any number of reasons by the lender. So on the surface it would seem little is accomplished from the lenders perspective. But we think the lenders motivation for doing a loan mod is not to get a borrower to a monthly payment that they could realistically pay, but rather the motivation is to circumvent the foreclosure trap the lenders are in. A mod could legally resolve the problems.

To us, it appears to be a strong possibility that the banks and institutions that desire to foreclose on property are offering these modifications NOT as a means to help homeowners, but rather as a way to create new paperwork that will stand up in court, as well as uncovering assets and income that the banks may not have known existed, allowing the banks to foreclose and move on.

That being said, we have heard of homeowners that have received advantageous, permanent, modifications and are happy, keeping up with their payments, and keeping their home.

As we always recommend, any time your bank want documents from you or wants you to sign anything, contact a well educated and experienced real estate attorney.

You can also call us to discuss your options and the relative benefits/drawback to each...

or call me on my direct line at 561-602-1258

Thanks for reading...Steve

Drawn by me...for you

      
        


                 














Merry Christmas…Happy Holidays!

Sold today in Winston Trails...Paris/pool

A Paris (5 bedroom, 3 bath, aprox 2800 sq ft under air) was just reported as sold today. It was a short sale...corner lot...pool...screened enclosure:. Sale price: $220,000

NAR..."oops"!

I think it's time to tell everyone what I have known for a long time now...What the acronym NAR actually stands for. I know that they would like you to believe that it is 'National Association of Realtors', but the real truth, revealed to all recently is that NAR stands for: 'Numbers Aren't Real'!

The NAR US Housing Home Sales Figures were artificially inflated by at least 11% per year for the period of 2007-2010. Nice work NAR! They said there were a few "errors' in data collection and interpretation". And I think that it goes back to BEFORE 2007...why did they only go back and revise to that year?

“Sales were weaker than people thought (or were lead to believe by NAR reports),” said chagrined NAR spokesman Walter Malony. Data firm CoreLogic accused the NAR of over-counting home sales back in May of this year. At the time, the organization insisted that any issues with their numbers would be “relatively minor.” Unfortunately, NAR economist Lawrence Yun has revised that prediction to say that the changes in reporting will be “meaningful,” adding that “this means the housing market’s downturn was deeper than what was initially thought”.

 Being in the business every day for a long time now, I began to see a slowdown in the 1st half of 2006 and an 'accelleration' in price and volume declines right at the beginning of 2007. My analysis shows that the air started to come out of the bubble, at least in Palm Beach County, right at the end of 2005.

I could go in to their methodology and poke a thousand holes in it...but I'd bore everyone but myself.

The readers who regularly read my blog posts will know that I don't "toe the line" when it comes to the NAR/FAR, etc. Coincidentally, a blog post I wrote just about 5 weeks ago, http://winstontrails.blogspot.com/2011/11/if-they-keep-predicting-market.html skewers the NAR for their inept (intentionally misleading) comments.

Below are the charts that reflect the adjustments.

 
 
 
 
 
 
 
 
 
 

So...what does this all mean? And why now? What is the effect of this revision?

Well, I think the "why now" question can be answered by NAR being called out on their numbers by CoreLogic a few months ago.

But the "what does this all mean" question has many possible answers depending upon the angle it is being viewed from. My obvious, but cynical, view is that the NAR and administration can now more easily report "improvments" in home sales. The new sales figures will be compared to the re-benchmarked historical sales and will paint a rosy housing and economic picture going forward. And if the reporters (TV and print) continue to just repeat data rather than dig in to the meaning of the data, the re-benchmarked (lower) figures will fade into distant memory...and the 'improving home sales numbers' will be evidence of our 'robust and recovering' economy.

Lastly, what does this effect? This question is better answered by a formally trained economist, but I have to believe that these numbers somehow impact GDP in a negative sense, retroactively.

If you've read this far, I commend you! Seriously though, if you are considering your options, whether it be selling or purchasing real estate, call me. You don't want to take the chance of ending up getting advice and consulting with an NAR drone who is taught to memorize "objection handling dialogs' and sales tactics.

My direct line is 561-602-1258 or