Scott Chappell and Brian Bean

Saturday, October 27, 2012

Mortgage Delinquencies Spike | Riverside Short Sale Agents | Brian Bean and Tim Hardin | Mortgage Forgiveness Debt Relief

Missed mortgage payments spike in September

The number of homeowners who missed a mortgage payment jumped unexpectedly in September.

The delinquency rate, which measures the number of home loans 30 or more days past due, reached 7.4 percent, according to Lender Processing Services’ “First Look” Report.

That was a 7.72 percent increase from the previous month but a 4.19 percent decrease from a year ago. The delinquency rate had been on the decline in July and August after increases in April, May, and June.

In California, the delinquency rate hit 8.6 percent, a 19.7 percent decrease from September 2011.

Nationwide, there were 5.64 million homes with mortgages at least 30 days past due or in foreclosure, LPS reported. Of those, 3.7 million were late but not yet in foreclosure, and 1.53 million were seriously past due (90-plus days), a 1.16 percent increase from August.

The top-five high-delinquency states were Florida, Mississippi, New Jersey, Nevada, and Louisiana, according to LPS. States with the lowest default rates were Montana, Alaska, South Dakota, Wyoming, and North Dakota, where job markets are robust.

Meanwhile, foreclosure inventory decreased last month to 1.94 million homes, the lowest level in two years, LPS reported. The number of homes taken back by banks fell to 3.87 percent, down 4.05 percent from the previous month and 7.37 percent from a year ago.

The latest figures indicated that banks and servicers were continuing to work through their standing inventories.

Last month, the American Bankers Association reported that home-equity-loan default rates increased to 4.09 percent in the second quarter, from 4 percent the previous quarter. And home-equity lines of credit rose to 1.91 percent during the same period.

Home-improvement-loan delinquencies increased to 0.9 percent from 0.83 percent, the ABA reported.

“While the housing market appears to have turned a corner, we are many quarters away from seeing improvement filter through to reduce home-related delinquencies,” James Chessen, ABA’s chief economist, said in a release.

The recent statistics could be attributed to several factors:

NO “GOLDEN TICKETS”: Homeowners who had been hoping for a loan modification with a reduction of the loan balance are finally realizing the “Golden Ticket” isn’t coming from their bank.

Only a fortunate few actually will receive principal reductions via the $25 billion Dept. of Justice settlement between five major servicers (Bank of America, Wells Fargo, Chase, CitiMortgage and Ally Bank) and 49 states over improper foreclosures.

Those who don’t qualify must resign to a modification with an upside-down home, riding out the market until values again exceed their loan balance, or doing a short sale and starting fresh.

TAX BREAKS EXPRING: Barring last-minute extensions, the federal Mortgage Forgiveness Debt Relief Act of 2007 and California’s Conformity Act of 2010 are set to expire at the end of this year. Both laws exempt some homeowners from paying income taxes after a home goes to foreclosure or short sale.

Banks claim their losses to the Internal Revenue Service as debt cancellation and send consumers IRS 1099 forms, which must be reported on tax returns. A taxpayer could owe as much as $15,000 to $35,000 in taxes on a $100,000 loss to the bank.

With lawmakers focused on the presidential election, it’s anyone’s guess if the tax exemptions will be extended. The federal and state governments are running in the red, and legislators differ on how to balance the budget.

If lawmakers fail to extend the federal law or the state law, which essentially mirrors the federal law but applies to California income taxes, homeowners who miss the deadline face crippling tax bills.

Those betting on government malaise may be hedging their bets to beat the deadline.

HOLIDAYS APPROACHING: With year-end holidays, and the financial demands that they bring, just around the corner, some homeowners who have been living month to month may have reached a breaking point.

Though unemployment figures have declined in the past year, many homeowners continue to be under-employed or kept jobs by accepting reduced hours or pay. Any financial turmoil could upset the balance for those in survival mode.

Whatever the reason, homeowners having difficulty making mortgage payments that exceed 50 percent of their take-home pay face a devastating foreclosure if they don’t find a suitable workout solution.

If the housing market, which has seen price increases in Southern California the past year, has truly reached the bottom, those who wait could again miss the optimum timing for buying another home.

Want to know if you qualify for any of the workout solutions available? Call us today at 951-778-9700 to make an appointment for an interview.

(Brian Bean and Timothy Hardin are Default Advocates and owners of Dream Big Real Estate. They can be reached directly at Brian@DreamBigRealEstate.com or 951-778-9700.)

Brian Bean and Timothy Hardin

Licensed Default Advocates

DRE Lic #01889132

Info@DreamBigRealEstate.com

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If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.

Henry David Thoreau

Mortgage Delinquencies Spike | Riverside Short Sale Agents | Brian Bean and Tim Hardin | Mortgage Forgiveness Debt Relief

Labels: Mortgage Forgiveness Debt Relief, Riverside Short Sale Agents, Short Sales

# posted by Scott Chappell and Brian Bean @ 6:05 PM

Riverside Short Sale Agents | Short Sale vs. Foreclosure | Brian Bean and Tim Hardin | Riverside Real Estate

Short Sales on the increase as foreclosures fall

Short sales are expected to overtake foreclosure in 2013 as the dominant workout solution for distressed homeowners.

Credit-rating agency DBRS attributed the change to “the record number of servicers that are using short sales as their primary loss-mitigation tool to prevent delinquent loans from entering foreclosure.”

HOPE NOW, an alliance of mortgage servicers, investors and non-profit counselors, reported this week that nearly 40,000 short sales were completed in August, bringing the total to more than 1 million since December 2009, when it began tracking statistics.

Another 36,260 were completed in July. “The increase of short sales has been significant and, for the first month since reporting on short sales, we estimate a high of 39,559,” HOPE NOW Executive Director Faith Schwartz said in a release. “Short sales provide another tool to avoid the high cost of foreclosure for families, communities and investors.”

The Office of the Comptroller of the Currency reported earlier this year that 138,000 short sales were completed in the first half of 2012, and anecdotal evidence from the industry suggested that number would continue to increase in the second half of the year.

HOPE NOW also reported foreclosure sales nationwide in August increased 12 percent to 71,149, up from 63,527 in July. And foreclosure starts increased 14 percent to 187,941, compared with 164,593 in July.

In the West, foreclosure starts have been on the decline. California saw a 20.7 percent decrease in September from August, according to ForeclosureRadar, an online industry tracker. The number of starts dropped by as much as 40 percent in Nevada and Oregon.

Regional foreclosure filings were down even more from the previous year. California dropped 48.1 percent from September 2011, while Nevada and Washington saw decreases of more than 70 percent.

Still, more than 14,000 foreclosure actions were filed last month in California.

“There has been speculation that the banks would rush to clear inventory before the California Homeowner Bill of Rights takes affect in January 2013, causing an increase in the number of foreclosures,” ForeclosureRadar said in its report. “Clearly this is not the case as we continue to see the number of Foreclosure Starts decline.”

But the recent foreclosure activity, along with the approximately 5 million homes in shadow inventory (homes 60-plus days behind or already owned by banks but not on the market), indicates the housing market has a long recovery ahead. Short sales and loan modifications will play an integral role in putting the economy back on its feet.

HOMEOWNER OPTIONS

LOAN MOD: Despite what they may have been told by friends, family or neighbors, a loan mod that reduces the loan balance is unlikely for all but a few homeowners. Others may get a lower interest rate but still owe the full balance on their loan, later opting for a short sale when they realize just how long it will take to reach break-even.

SHORT SALE: Others immediately choose a short sale, in which a home is sold for less than the loan balance and the bank agrees to discount the payoff.

Short sales in recent years have lost their stigma as hundreds of thousands of homeowners have used it as the best solution to avoid foreclosure. Banks responded by creating massive departments and streamlining the process. Why? Because they net 12 percent to 25 percent more money in a short sale than a foreclosure.

Is it any wonder why banks prefer a short sale over foreclosure?

LEASE-BACK: This year, some homeowners are opting for a short sale in which they can stay in the home and perhaps even repurchase the property three years later.

The Short Sale Lease-Back Program, which was introduced earlier this year, has become a popular option, though not everyone can qualify.

In the program, the homeowner completes a short sale to a qualified non-profit organization with the intent to lease the home for three years and then buy it back at a predetermined price, presumably less than they currently owe on the home.

Candidates must have sufficient income to pay fair-market rent and many parties must say “yes” to the deal.

Whichever solution is best for a homeowner, they must take action, or the bank surely will. Because despite recent improvements in the real estate market, local homeowners have a deep, dark hole out of which to climb.

Want to know if you qualify for any of these programs? Call us today at 951-778-9700 to make an appointment for an interview.

(Brian Bean and Timothy Hardin are Default Advocates and owners of Dream Big Real Estate. They can be reached directly at Brian@DreamBigRealEstate.com or 951-778-9700.)

Brian Bean and Timothy Hardin

Licensed Default Advocates

DRE Lic #01889132

Info@DreamBigRealEstate.com

If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.

Henry David Thoreau

Riverside Short Sales | Short Sale vs. Foreclosure | Brian Bean and Tim Hardin | Riverside Real Estate

Labels: Foreclosure, Riverside Short Sale Agents, Short Sale Lease Back, Short Sales

# posted by Scott Chappell and Brian Bean @ 5:56 PM

Strategic Default vs. Short Sale | Avoid Foreclosure | Brian Bean and Tim Hardin | Riverside Short Sale Agents | Riverside Real Estate

One-third of Americans justify strategic default

In the wake of plummeting home values and government bailouts, Americans are more open to simply walk away from their underwater mortgages.

Nearly one-third of Americans said homeowners should be allowed to strategically default without repercussions, according to a recent survey commissioned by ID Analytics.

Strategic default, in which a homeowner stops making their payment even though they have the ability to pay, is frowned upon by creditors but has seen a marked increase since 2008 when housing prices went into free-fall.

ID Analytics reported this week that 13 percent of those surveyed expect to strategically default on a home loan, while 17 percent said they know someone who already has. Thirty-two percent of respondents said they should be allowed to stop paying and face no consequences.

“What jumped out is how many Americans feel it is acceptable for homeowners to walk away from a mortgage and go into foreclosure,” John Zogby, senior analyst at JZ Analytics, which did the survey, said in a release. “If Americans carry on with that mindset, it will continue to cause problems as the economy undergoes a slow recovery.”

The survey offered telling reasons respondents justified strategic default:

CONSUMERS CONNED: The “mortgage market has been a scam for many years, built on false promises that took advantage of people that didn’t understand what was happening,” according to the survey.

CREDIT SCORES: Low credit scores have lost their stigma. More than one-third (36 percent) of those surveyed said damage to their FICO is now socially acceptable.

NEW CREDIT TACTICS: 17 percent of respondents said they would “exaggerate” to obtain new credit after their mortgage default.

The survey results are not surprising, considering the negative perception consumers have for big banks that received billions in assistance while homeowners endured frustrating and failed attempts to modify their loans while struggling to make payments on ballooning adjustable-rate mortgages.

And though the American attitude of “I pay my bills” is still the moral imperative of two-thirds of Americans, an increasing number of those willing to walk away could have a major impact on the fragile economic recovery, and everyone’s home values.

MAKING INFORMED CHOICES

But simply walking away and letting a home go to foreclosure may not be the best option for homeowners who want to get back into the housing market before prices skyrocket.

Here are a few alternatives to foreclosure:

LOAN MOD: The most common loan modification available today simply reduces the interest rate and perhaps recasts the payoff period to a longer payback.

Despite what you may have been told by friends, family or neighbors, a loan mod that reduces the loan balance is unlikely for all but a few homeowners. Most will still owe the full balance on their loan, later opting for a short sale when they realize just how long it will take to reach break-even.

SHORT SALE: This option, in which a home is sold for less than the mortgage balance and the bank agrees to discount the payoff, has become the dominant type of sale in the Inland Empire.

A short sale allows a homeowner to escape a financial nightmare on their own terms, is less damaging to a consumer’s credit history, and it allows them to return to the housing market as a buyer more quickly, presumably before home prices again shoot through the roof.

Short sales in recent years have lost their stigma as hundreds of thousands of homeowners have used it as the best solution to avoid foreclosure. Banks responded by creating massive departments and streamlining the process. Why? Because they net 12 percent to 25 percent more money in a short sale than a foreclosure.

Is it any wonder why banks prefer a short sale over foreclosure?

LEASE-BACK: This year, some homeowners are opting for a short sale in which they can stay in the home and perhaps even repurchase the property three years later.

The Short Sale Lease-Back Program, which was introduced earlier this year, has become a popular option, though not everyone can qualify.

In the program, the homeowner completes a short sale to a qualified non-profit organization with the intent to lease the home for three years and then buy it back at a predetermined price, presumably less than they currently owe on the home.

Candidates must have sufficient income to pay fair-market rent and many parties must say “yes” to the deal.

Any of these solutions can be more advantageous for a homeowner than simply walking away from a home. Want to know if you qualify for any of these programs? Call us today at 951-778-9700 to make an appointment for an interview.

(Brian Bean and Timothy Hardin are Default Advocates and owners of Dream Big Real Estate. They can be reached directly at Brian@DreamBigRealEstate.com or 951-778-9700.)

Brian Bean and Timothy Hardin

Licensed Default Advocates

DRE Lic #01889132

Info@DreamBigRealEstate.com

If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.

Henry David Thoreau

Strategic Default vs. Short Sale | Avoid Foreclosure | Brian Bean & Tim Hardin | Riverside Short Sale | Riverside Real Estate

Labels: Foreclosure, Mortgage Forgiveness Debt Relief, Riverside Short Sale Agents, Short Sale Lease Back, Short Sales

# posted by Scott Chappell and Brian Bean @ 5:51 PM

Short Sale Lease-Back | Short Sale and Stay | Brian Bean and Tim Hardin | Riverside Short Sale Agents | Short Sale and Buy Back

Short Sale Lease-Back Program ramps up in California

The Short Sale Lease-Back Program is expanding in California.

Nearly 40 California real estate agents from around the state completed the required training course last week and can now offer the program to homeowners looking for another option to avoid foreclosure.

The pilot program, which has completed one lease-back transaction and has another approved and marching toward completion, is monumental and game-changing, providing a more attractive solution for homeowners who cannot afford their homes but have valid economic hardships and steady incomes to afford a lease payment.

A short sale occurs when a property is sold for less than is owed on it and the bank agrees to a discounted payoff. In recent years, banks and servicers have required that a short sale be an “arm’s-length” transaction, meaning the buyer and seller could not be related and could not have a prior agreement for the homeowner to stay in the property.

Last year, changes to the federal Home Affordable Foreclosure Alternatives short sale program opened the door for a short sale without the arm’s-length requirement. The U.S. Treasury Department in March 2011 issued a supplement to its HAFA guidelines to allow “servicers the discretion to approve sales to non-profit organizations with the stated purpose that the property will be rented or resold to the borrower, so long as all other HAFA program requirements are met.”

The Short Sale Lease-Back Program was created in the wake of that change to allow a qualified homeowner to sell their property, rent it back for three years and then buy it back at a pre-determined price.

PROGRAM DETAILS

Here is an overview of the Short Sale Lease-Back Program:

You must work with a real estate agent who is trained and certified by the Short Sale Lease-Back Program.
A qualified non-profit will purchase the home in a short sale.
The seller will then rent the home back for a minimum of three years, allowing their credit to heal so that they can qualify for a mortgage.
Homeowners must attend ongoing HUD and financial-literacy counseling and speak with legal and tax experts to ensure the program is the right fit.
If approved, the former owner can repurchase the home, perhaps at a giant discount from what they once owed on it. Not all homeowners qualify for the program. Borrowers must have sufficient income to afford the monthly rent payments in addition to their other debt payments.

For those who do qualify, the impact could be similar to a slow-motion loan modification with a principal reduction to their loan amount.

Homeowners who don’t qualify for this program can still proceed with a traditional short sale, which may include a relocation incentive from $2,500 to as high as $45,000, depending on their lender, loan amount and individual situation.

Either option is better than a financially devastating foreclosure, which can crush a consumer’s credit, hinder their ability to find a home to rent and perhaps even impact their jobs.

Banks prefer short sales over foreclosure and even loan modifications because they net 12 percent to 25 percent more money from them.

DO YOU QUALIFY?

The Short Sale Lease-Back Program is now interviewing California applicants for qualification in this new program. To qualify, homeowners must:

Live in the property as their primary residence.
Have steady, verifiable income.
Have a valid hardship and be able to qualify for, and complete, a HAFA short sale.

Want to know if you qualify? Call us today at 951-778-9700 to make an appointment for an interview.

(Brian Bean and Timothy Hardin are Default Advocates and owners of Dream Big Real Estate. They can be reached directly at Brian@DreamBigRealEstate.com or 951-778-9700.)

Brian Bean and Timothy Hardin

Licensed Default Advocates

DRE Lic #01889132

Info@DreamBigRealEstate.com

If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.

Henry David Thoreau

Short Sale Lease-Back | Short Sale and Stay | Brian Bean & Tim Hardin | Riverside Short Sales | Short Sale and Buy Back

Labels: California Homes for Sale, Foreclosure, Riverside Short Sale Agents, Short Sale Lease Back, Short Sales

# posted by Scott Chappell and Brian Bean @ 5:46 PM

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