Sonoma County, Ca FORECLOSURE REPORT–January 2013 Cancellations leading the pack, REO market going, going, gone?

Here in Sonoma County, California, “The Wine Country with the Coast”, the last report from Foreclosureradar.com (January ’13), shows the impact of the “Homeowner’s Bill of Rights” and the huge national settlement set by the 49 attorneys general–

 

Cancellations–where the bank stalls the foreclosure process are NOW leading the pack over the  bank “Foreclosing” on a house (down -60% over last year!) and “Sold to a 3rd Party where the bank sells at the courtsteps (down -32% over last year but PLUS 40% for the month!!). You can see in January that the “Cancellations far outnumber the “REO” and “Sold to 3rd party” by substantial amounts. The numbers for the month of January are:

Cancellations or foreclosure stalled and put off:  164

Foreclosed homes where the bank has proceeded with the foreclosure process: 46

“Sold to a 3rd party” or where the bank sold at the courtsteps: 38.

 

As you can see the REO market is on the wane with modificatioins (Cancellations) seeming to be hitting stride as predicted by the Attorneys General  historic settlement–NO MORE FORECLOSING! Short-Sales or loan modifications!

Changes in FHA coming…are there alternatives that might make more sense ?

 

 

 

 

 

Pete Phillippe of Princeton Capital will be in studio to answer these and more Real Estate Financing Questions. Sunday 9-10am, 1350am KSRO or Streaming live at www.KSRO.com.

Here’s a good article that explains the changes. Pete will delve into it a bit more….and we’ll discuss possible alternatives to FHA.  Plus; Changes to FHA’s Reverse Mortgage, and Streamline Refi too.  Wondering about real estate in sonoma County? Tune in for a full hour of local and national real estate news…. Continue reading Changes in FHA coming…are there alternatives that might make more sense ?

Growth Predicted in Home Renovations..This is good news!

Real Estate has a huge ripple effect in the community!! When interest rates are down…and real estate is up…and employment is up…and consumer confidence is up….it’s good news for the businesses directly effected, ie; Home improvement stores, carpet stores, tile stores, roofing companies, landscapers, furniture stores, painters, and contractors to name a few. Nationally, 1.4 million homeowners have gone from having negative equity to positive equity since 2011. Additionally, more and more new homeowners are replacing distressed homeowners and making much needed repairs, and more homeowners have successfully modified theirs loans, decided to stay put, have a renewed pride of ownership, and have begun addressing their deferred maintenance. Some underwater homeowners are fixing up and then renting out the home that’s too big, or too small. Flips are also improving neighborhoods and buoying the home improvement industry as well.

Growth Predicted in Home Renovations

By LISA PREVOST, New York Times, January 31, 2013

Homeowners who have been holding off on home improvements, be it a new kitchen or replacement siding, are more likely to call in the contractors in the year ahead.

A report from Harvard University’s Joint Center for Housing Studies predicts accelerating, double-digit growth in home improvement spending through at least the third quarter of 2013.

The growth projections reflect rebounding home sales, a rise in construction and low financing costs, according to Kermit Baker, the director of the center’s Remodeling Futures program.

“All the elements are sort of pushing in the same direction,” Mr. Baker said.

Spending on improvements and maintenance has been on a downward slide since 2007, when, according to the center’s data, it peaked at $328 billion. Spending in 2011 was around $275 billion; all the data aren’t in yet, but in 2012 it very likely rose about 12 percent.

Discretionary projects, like new kitchens and finished basements, were the first to go, as is typical in a down market. Now they are starting to come back, Mr. Baker said, “though people are a little more price-sensitive and a little more budget-conscious than, say, five or six years ago.”

A smaller share of improvement projects are likely to be financed this year. “People have less equity to borrow against,” he said, “and for those who do have equity, the banks are hesitant to loan. And also, people don’t want to overextend themselves.”

Financing for home improvements through cash-out refinancings and home equity lines of credit is generally available for up to 80 percent of loan-to-value ratio, said Penn Johnson, the president of the Stamford Mortgage Company in Stamford, Conn. A few banks will allow up to 90 percent for borrowers with very high credit scores, he added.

Mark Yecies, an owner of SunQuest Funding in Cranford, N.J., says construction loans for major additions are particularly hard to come by, with lenders typically requiring that the borrower have 25 to 30 percent equity, based on the finished value.

Borrowers with negative equity — that is, with houses worth less than their mortgage balance — cannot get any sort of improvement loan, Mr. Yecies noted.

Nationally, as of the third quarter of 2012, about 22 percent of all residential properties with a mortgage had negative equity, according to CoreLogic, a provider of data and business services. As with the other indicators, however, that one has been improving. CoreLogic reports that the equity status of 1.4 million borrowers shifted to positive from negative over the first three quarters of last year.

Greater equity does equate with more spending on home improvements. According to the Harvard study, homeowners with at least 20 percent equity spend an average of 22 percent more on improvements than homeowners with lower equity levels. The difference rises to 30 percent when considering discretionary projects alone.

Affluent households with healthy home values and access to cash are driving remodeling activity for now.

“The middle to upper-middle class is where we are seeing movement,” said Tom O’Grady, the chairman of the strategic planning and research committee of the National Association of the Remodeling Industry, and the president of O’Grady Builders in Drexel Hill, Pa. “People are starting to feel better about their jobs.”

Mr. O’Grady noted that his company was just now finishing up a custom basement — to be refashioned as a “man cave” — for a customer who had put off the project for several years because of economic fears.

The remodeling association’s most recent survey of its member companies showed that customer inquiries were up 2 percent in the last quarter of 2012, and the total value of jobs sold was up 4.3 percent.

The decline in home values during the last decade will most likely benefit the remodeling industry in the decade to come. Mr. O’Grady predicted that as baby boomers head toward retirement, more will probably decide to renovate — perhaps add a first-floor bedroom, for instance — rather than sell and buy anew.

“The aging-in-place concept will be a huge driver of the market,” he said.

FHA to hike mortgage insurance premiums…..

The Federal Housing Administration, which is the largest insurer of low-down payment mortgages, announced last week that it will raise premiums by 10 basis points, or 0.1 percent, on most of the new mortgages it insures.

(FHA makes a lot of sense for many borrowers, in some cases it’s the only option, but it’s important to note that there may be other low down-payment options available that do not require mortgage insurance. It’s definitely a conversation worth having with your Realtor or your lender…give us a call/email for more info)

Making sense of the changes;

  • A borrower opting for a 30-year, fixed-rate mortgage who puts down 5 percent or more will now pay an annual insurance premium of 1.3 percent of their outstanding balance. Someone who puts down less than 5 percent will pay a premium of 1.35 percent.
  • The FHA said it also will raise premiums for borrowers with jumbo loans – loans of $625,000 or more – by 5 basis points, and increase the minimum down payment requirement on these loans to 5 percent from 3.5 percent.
  • Additionally, the FHA said it will require most buyers to pay insurance premiums for the life of their loan. A policy that was put in place in 2001 allowed borrowers to cancel premium payments once their debt fell below 78 percent of the principal balance. One exception will be for borrowers who put more than 10 percent down at the time of purchase.
  • Other new policies include a requirement that any mortgage for an applicant with less than a 620 credit score and debt-to-income ratio above 43 percent must be underwritten manually. Lenders who want to issue loans to these applicants must be able to adequately document why they decided to approve the loans.
  • The FHA also decided to put new restrictions on reverse mortgages, no longer permitting retirees to take such large, upfront payments.

Read the full story at  CNNMoney

Eight ways to improve your home appraisal

Sonoma County, California Home Sellers AND buyers–get out of the Appraisers way! Let me start by saying there are many really good appraisers. Unfortunately, not all home appraisers are created equal.  Some make a genuine effort and others are just in a hurry to get this appraisal done and move on to the next one.

 

Some come from out of the area, and they’re not familiar with your particular neighborhood, and how it compares to the others nearby..  Low appraisals can be a real problem as scarcity of homes and multiple offers are driving up prices.

Appraisers are limited to looking back at recently sold properties within a limited radius of your home, not what homes are in escrow for today.  They need all the help they can get…although, some are not interested in anything you have to offer.  Your best bet is to have the information available anyways.  Here are some good suggestions for things you can do to improve your home appraisal; Thanks to loan officer, Kevin Long. http://kevinlongloans.blogspot.com/

Eight Ways to Improve Your Home Appraisal

1. Make Sure Your Appraiser Knows Your Neighborhood

There are pockets and micro communities.  If you step off the curb, you’re in a different zone.  So make sure your appraiser knows that just because you’re in one district doesn’t mean you’re in the same neighborhood as the places 3 miles down the road.

2. Provide Your Own Comparables

If you provide the appraiser with three solid and well-priced comparable properties, you will save them time as well as ensure that they have appropriate comparables rather then having them randomly pick some from the neighborhood.

3. Know What Adds the Most Value

Kitchens and bathrooms get the most value.  However, wood floors, landscaping and enclosed garages also increase appraisals.

4. Document Your Fix Ups

You’d want to do this for tax and insurance purposes.  But if the records are a little haphazard, take some time and organize it into different file folders, and make them available for the appraiser.

5. Talk Up Your Town

Has your town gotten any award, or award winning restaurants, museums, parks, colleges, etc?  Make your community seem vibrant as it will increase the  perceived value of your home.

6. Distinguish Between Upstairs and Downstairs

If you’ve remodeled and completely finished a basement or an attic, you will need to point that out to the appraiser, as these are often not counted in the square footage, and therefore the final appraisal.

7. Clean Up

Clean up and declutter where you can.  Put flowers out.  Have cookies baking.  Make your home seem clean, upscale, and organized.

8. Let the Appraiser Alone to Do Their Job

If you follow the appraiser around, they’ll be more focused on you then on the home, so let them know where you are if they have any questions.