http://finance.yahoo.com/news/mortgage-lenders-pursue-cnnm-3107909798.html?x=0
I have posted on Trulia and elsewhere that attorney will be buying up the banks bad debt contracts and looking for situation where they can pressure formely foreclosed owners into settlements. Buy and bail homeowners from early in this correction will find it difficult and expensive to fight these collection attorneys.
Sunday, February 14, 2010
Wednesday, February 3, 2010
NY Times news story. Jingle Mail!
New Your times story about Prime Loan holders walking away.
www.nytimes.com/2010/02/03/business/03walk.html
www.nytimes.com/2010/02/03/business/03walk.html
Friday, January 1, 2010
What are agents thinking?
These comments were recently posted in a Q and A question on Trulia;
"I am working with an agent who showed me a house, I was a bit concerned about the cracks on the side of the exterior wall, my agent suggested I find someone to check it out before submitting an offer, if not I would have to get an inspector to look at it. She went ahead and scheduled the inspector. My dad ended up looking at it and stated it was merely the stucco. After I told her to cancel the inspector, she laughted and stated I needed the inspection anyways. Based on her guidance, I had the inspection done. My offer was not accepted, I feel as though I should not be stuck with the bill? Who pays for these types of situations?
When we were going to write the offer, I voiced my concerns to the agent. I notified her that I wondered if there were foundation problems but I told her we wanted the house. She told me to have someone look at it, that she wasn't going to waste any time putting an offer in if I was unsure. I reiterated to her that I wanted the house but that was my only concern, we didn't even make it to her office when she told me to go find someone to see it. She later called me and notified me she had scheduled an inspection, I agreed, but after I had my family member see it and he stated there were only cracks because the stucco was old. So, I told her I didn't need the inspection to be done, that I was comfortable. She was amused and told me we needed it anyway. So I said okay. This is why I agreed to it, she stated we should just do it, since it was required later. I guess I was just not thinking and should have just insisted on canceling it and/or asked more questions. The day of the inspection I realized the listing agent worked in the same firm as she did. We later wrote an offer and even though there were some obvious findings in the inspection, she suggested we not ask the bank to fix as they would probably not take my offer because of it. If anything, I must admit after reading some of the comments, I guess I do look gullible. I just really wanted that house and trusted her to guide me correctly. I truly just wanted to know, for future reference, who pays for inspections before or even after an offer has been accepted. Do I come out of pocket all the time, or do we wait for closing?
I know it sucks to spend money on a home and then not get it. That happens. When it comes to Inspections though you have to look at them like insurance policies. You pay for the protection in order to protect you from what can go wrong. Doing inspections before you write your contract is a good practice. Though it must be mentioned that some practices come with risks.
Agents often act in ways that are important to protect you but there are some things that should have been performed differently here. The question of preinspection comes up very often. It is an adviseable practice for sellers to preinspect theeir homes for maximum liability protection. In California, our disclosure law is based on the sellers expert knowledge of their property and any defects known are to be fully disclosed to buyers in a real estate transaction by law.
Many people are not experts in construction, building codes, and few people crawl around under their home and in attics, regularly inspect HVAC ducts, or clean out plumbing lines. People generally live in their homes and fix problems as they occur. Familiarity with a home also lulls people inot a false sense of security. A current homeowner may have bought thier home decades ago for tens of thousands of dollars and it may be worth hundreds of thousands of dollars now. Some minor quirk to the current homeowner could be a dealbreaker for the new buyer since the expectation level is commensurate with the investment in the home.
Let me make the point by imagining this transaction happening in a different way. Let's say dad said the home was fine and based on that the buyer elected to purchase the home. The bueyr is going to inspect that wall where the home inspector will advise the cracks are probably nothing but protects himself by advising you to perform an expensive destructive test of the wall. You decide its ok based dad's advice and close in 30 days.
Let's say the buyer moves in and in the next rainstorm water comes pouring into the home or worse in an earthquake occurs and the wall fails. Now whose fault is it? You're not going to sue dad, I mean he said the wall was ok, but he's your father. The home inspector(s) protected themselves by advisng the destructive test which few ever especially after having 3 seemingly competent people look at the wall. Where was your agent to protect you? That is the reason for the preinspection.
The agent here tried to do everything he could to protect his buyer from a nightmare scenario but did not do one thing. The agent did not inform the buyer of preinspection risk and did not let the buyer chose to assume the risk for the inspection or "insurance" protection. In this case, the buyer should have been advised the cost and the risks before being asked to pay for the inspection or simply moved on and continued to look.
The buyer should have been given the option to first lock up the home by writing the contract and getting the seller to accept it and the inspection could have been scheduled for the first day after seller acceptance. If the inspection came up badly, then the buyer could have immediately backed out. Agents do not like this way but somtimes it is the way it must be done. Especially if the buyer has little cash.
"I am working with an agent who showed me a house, I was a bit concerned about the cracks on the side of the exterior wall, my agent suggested I find someone to check it out before submitting an offer, if not I would have to get an inspector to look at it. She went ahead and scheduled the inspector. My dad ended up looking at it and stated it was merely the stucco. After I told her to cancel the inspector, she laughted and stated I needed the inspection anyways. Based on her guidance, I had the inspection done. My offer was not accepted, I feel as though I should not be stuck with the bill? Who pays for these types of situations?
When we were going to write the offer, I voiced my concerns to the agent. I notified her that I wondered if there were foundation problems but I told her we wanted the house. She told me to have someone look at it, that she wasn't going to waste any time putting an offer in if I was unsure. I reiterated to her that I wanted the house but that was my only concern, we didn't even make it to her office when she told me to go find someone to see it. She later called me and notified me she had scheduled an inspection, I agreed, but after I had my family member see it and he stated there were only cracks because the stucco was old. So, I told her I didn't need the inspection to be done, that I was comfortable. She was amused and told me we needed it anyway. So I said okay. This is why I agreed to it, she stated we should just do it, since it was required later. I guess I was just not thinking and should have just insisted on canceling it and/or asked more questions. The day of the inspection I realized the listing agent worked in the same firm as she did. We later wrote an offer and even though there were some obvious findings in the inspection, she suggested we not ask the bank to fix as they would probably not take my offer because of it. If anything, I must admit after reading some of the comments, I guess I do look gullible. I just really wanted that house and trusted her to guide me correctly. I truly just wanted to know, for future reference, who pays for inspections before or even after an offer has been accepted. Do I come out of pocket all the time, or do we wait for closing?
(End Question)
I know it sucks to spend money on a home and then not get it. That happens. When it comes to Inspections though you have to look at them like insurance policies. You pay for the protection in order to protect you from what can go wrong. Doing inspections before you write your contract is a good practice. Though it must be mentioned that some practices come with risks.
Agents often act in ways that are important to protect you but there are some things that should have been performed differently here. The question of preinspection comes up very often. It is an adviseable practice for sellers to preinspect theeir homes for maximum liability protection. In California, our disclosure law is based on the sellers expert knowledge of their property and any defects known are to be fully disclosed to buyers in a real estate transaction by law.
Many people are not experts in construction, building codes, and few people crawl around under their home and in attics, regularly inspect HVAC ducts, or clean out plumbing lines. People generally live in their homes and fix problems as they occur. Familiarity with a home also lulls people inot a false sense of security. A current homeowner may have bought thier home decades ago for tens of thousands of dollars and it may be worth hundreds of thousands of dollars now. Some minor quirk to the current homeowner could be a dealbreaker for the new buyer since the expectation level is commensurate with the investment in the home.
Let me make the point by imagining this transaction happening in a different way. Let's say dad said the home was fine and based on that the buyer elected to purchase the home. The bueyr is going to inspect that wall where the home inspector will advise the cracks are probably nothing but protects himself by advising you to perform an expensive destructive test of the wall. You decide its ok based dad's advice and close in 30 days.
Let's say the buyer moves in and in the next rainstorm water comes pouring into the home or worse in an earthquake occurs and the wall fails. Now whose fault is it? You're not going to sue dad, I mean he said the wall was ok, but he's your father. The home inspector(s) protected themselves by advisng the destructive test which few ever especially after having 3 seemingly competent people look at the wall. Where was your agent to protect you? That is the reason for the preinspection.
The agent here tried to do everything he could to protect his buyer from a nightmare scenario but did not do one thing. The agent did not inform the buyer of preinspection risk and did not let the buyer chose to assume the risk for the inspection or "insurance" protection. In this case, the buyer should have been advised the cost and the risks before being asked to pay for the inspection or simply moved on and continued to look.
The buyer should have been given the option to first lock up the home by writing the contract and getting the seller to accept it and the inspection could have been scheduled for the first day after seller acceptance. If the inspection came up badly, then the buyer could have immediately backed out. Agents do not like this way but somtimes it is the way it must be done. Especially if the buyer has little cash.
Wednesday, December 30, 2009
“Shadow Housing Inventory” Put At 1.7 Million in 3Q According to First American CoreLogic
CAR reported today that a company that tracks "Phantom Inventory" places the number at 1.7 million up alomst 30% over the prior year's 1.1 million homes. Corelogic counts the amount of "Phantom Inventory" is the number of homes that banks currently hold in inventory but not yet placed on the market including homeowners that are 90 days delinquent on their mortgages. This number represents the a 3.3 month supply at the current rate of sales.
Visible inventory in September of 2009 stood at 3.8 million units. This represents a 7 month supply down from 10 months a year ago. The total unsold inventory which, (I assume) includes short sales and normal sales is estimated to be 5.5 million units relatively flat from last years 5.7 million units. This number represents 11 months supply down a month from the prior year.
According to Corelogic while the numbers appear to be normal and stabilizing, the market inventory will get worse before it will get better.
Visible inventory in September of 2009 stood at 3.8 million units. This represents a 7 month supply down from 10 months a year ago. The total unsold inventory which, (I assume) includes short sales and normal sales is estimated to be 5.5 million units relatively flat from last years 5.7 million units. This number represents 11 months supply down a month from the prior year.
According to Corelogic while the numbers appear to be normal and stabilizing, the market inventory will get worse before it will get better.
Monday, December 28, 2009
Possible Cause of Credit Limit Reductions or Account Closures
Reprinted with Permission from Credit Line Financial
Why did the credit card issuer do this to me? This is certainly one of most common questions we're getting these days as credit card issuers are continuing to lower credit limits, close accounts, and increase interest rates. While many of you would assume that their decision is simply credit related, that's not the case. There are many other reasons why the credit card issuer may have taken an adverse action against you. I've drafted a list of the possible reasons:
Credit Score Related – Credit score falls below minimum score threshold. Action could be based on how far below the threshold the consumer falls.
Credit Data Related – A new delinquency hit the credit report; a new inquiry hit the credit reports; a new credit card hit the credit report; the consumer increased the amount of debt he or she is carrying; the consumer's credit card utilization increased on one or all cards.
Geography and Economy Related – Consumer lives in an area where home values have descended (no equity). Consumer lives in an area where the unemployment rate is disproportionately high.
Non-Credit Related – Credit card issuer finds out that consumer has lost his or her job; wants to take part in a hardship program; took a pay reduction; got divorced; might be laid off. Other reasons: the consumer has account inactivity; uses the card too infrequently (under usage); pays in full each month; or is otherwise not profitable.
Issuer Related – Issuer determines that your account cannot remain profitable under current terms. Regarding rewards cards, the issuer's terms changed with the rewards partner.
Ken Strey
Business Development ManagerYour Credit Expert For Life!
kstrey@creditlineiq.org
Phone: 925-265-8502
Why did the credit card issuer do this to me? This is certainly one of most common questions we're getting these days as credit card issuers are continuing to lower credit limits, close accounts, and increase interest rates. While many of you would assume that their decision is simply credit related, that's not the case. There are many other reasons why the credit card issuer may have taken an adverse action against you. I've drafted a list of the possible reasons:
Credit Score Related – Credit score falls below minimum score threshold. Action could be based on how far below the threshold the consumer falls.
Credit Data Related – A new delinquency hit the credit report; a new inquiry hit the credit reports; a new credit card hit the credit report; the consumer increased the amount of debt he or she is carrying; the consumer's credit card utilization increased on one or all cards.
Geography and Economy Related – Consumer lives in an area where home values have descended (no equity). Consumer lives in an area where the unemployment rate is disproportionately high.
Non-Credit Related – Credit card issuer finds out that consumer has lost his or her job; wants to take part in a hardship program; took a pay reduction; got divorced; might be laid off. Other reasons: the consumer has account inactivity; uses the card too infrequently (under usage); pays in full each month; or is otherwise not profitable.
Issuer Related – Issuer determines that your account cannot remain profitable under current terms. Regarding rewards cards, the issuer's terms changed with the rewards partner.
Ken Strey
Business Development ManagerYour Credit Expert For Life!
kstrey@creditlineiq.org
Phone: 925-265-8502
10 Trouble Spots to Consider When Purchasing a Foreclosed Home
Reprinted from Lowe's Home Improvement Newsletter
and RIS media
RISMEDIA, December 21, 2009—It’s easy pickings out there for many potential homebuyers. Housing prices are at their lowest in more than a decade, inventories are high, analysts are predicting a new wave of foreclosures and the government is offering two substantial tax credits for which many homebuyers qualify.
But bargain buyers beware, warns Vince Mastronardi, whose property preservation business has been busy preparing foreclosed homes for sale.
“Buyers need to educate themselves about the potential pitfalls of purchasing distressed property,” says Mastronardi, president of On-Site Specialty Cleaning & Restoration. “It’s not so much what damage occurred, but the source of that damage and how long before the problem was addressed.”
These 10 signs may indicate that trouble is around the corner.
1. Unheated house in winter months. If the home has been properly winterized, there’s no need for heat. But if the home has not been properly winterized, pipes will burst and cause water damage.
2. Missing sinks, toilets and other fixtures. Make sure they’ve been properly removed and not ripped from walls and floors.
3. Peeling, bubbling, and discolored paint; swelling in walls or ceilings (especially around kitchens and bathrooms) or a musty odor all indicate water damage and, potentially, the presence of moisture and mold.
4. Fungus growth inside cabinets, behind drawers and built-ins. Fungus could mean that there has been water damage. Since water falls down, look for the source above the mold.
5. Blocked drains or pipes will cause future problems and may have already created sewage backups.
6. Black cobwebs, greasy gray residue on walls and/or a strong oily odor. This could point to potential soot damage or a malfunctioning furnace.
7. An older home with extensive renovations. Check with the city for pulled permits in order to get remolding details. If asbestos is present and has been disturbed, be sure it’s been remediated by a certified specialist.
8. Excessive painting of every nook, cranny, door and floor may mean that the seller is covering up mold.
9. Discolored subflooring. From the basement, check the subflooring above for stains and small holes, both caused by mold.
10. Air Quality. The air quality within a home tells a lot about the home’s condition. Be sure to include air and surface testing in your home inspection. It’s a few hundred dollars well spent.
“Time and technique are the most important factors of effective clean-up and preventing future problems like mold or contamination,” Mastronardi explains. “Ideally, professional cleanup begins within a few days of the damage; technicians are trained, certified or licensed; and equipment is specialized and up to date.”
Ask the seller to explain how the damage was fixed. Plus, check out the company that performed the repairs to ensure it has industry-recommended certification. If needed, follow-up with the seller or repairing company for specific repair details.
For more information, visit http://www.on-sitecorporation.com/.
Read more: http://rismedia.com/2009-12-20/10-trouble-spots-to-consider-when-purchasing-a-foreclosed-home/#ixzz0b176HpdK
and RIS media
RISMEDIA, December 21, 2009—It’s easy pickings out there for many potential homebuyers. Housing prices are at their lowest in more than a decade, inventories are high, analysts are predicting a new wave of foreclosures and the government is offering two substantial tax credits for which many homebuyers qualify.
But bargain buyers beware, warns Vince Mastronardi, whose property preservation business has been busy preparing foreclosed homes for sale.
“Buyers need to educate themselves about the potential pitfalls of purchasing distressed property,” says Mastronardi, president of On-Site Specialty Cleaning & Restoration. “It’s not so much what damage occurred, but the source of that damage and how long before the problem was addressed.”
These 10 signs may indicate that trouble is around the corner.
1. Unheated house in winter months. If the home has been properly winterized, there’s no need for heat. But if the home has not been properly winterized, pipes will burst and cause water damage.
2. Missing sinks, toilets and other fixtures. Make sure they’ve been properly removed and not ripped from walls and floors.
3. Peeling, bubbling, and discolored paint; swelling in walls or ceilings (especially around kitchens and bathrooms) or a musty odor all indicate water damage and, potentially, the presence of moisture and mold.
4. Fungus growth inside cabinets, behind drawers and built-ins. Fungus could mean that there has been water damage. Since water falls down, look for the source above the mold.
5. Blocked drains or pipes will cause future problems and may have already created sewage backups.
6. Black cobwebs, greasy gray residue on walls and/or a strong oily odor. This could point to potential soot damage or a malfunctioning furnace.
7. An older home with extensive renovations. Check with the city for pulled permits in order to get remolding details. If asbestos is present and has been disturbed, be sure it’s been remediated by a certified specialist.
8. Excessive painting of every nook, cranny, door and floor may mean that the seller is covering up mold.
9. Discolored subflooring. From the basement, check the subflooring above for stains and small holes, both caused by mold.
10. Air Quality. The air quality within a home tells a lot about the home’s condition. Be sure to include air and surface testing in your home inspection. It’s a few hundred dollars well spent.
“Time and technique are the most important factors of effective clean-up and preventing future problems like mold or contamination,” Mastronardi explains. “Ideally, professional cleanup begins within a few days of the damage; technicians are trained, certified or licensed; and equipment is specialized and up to date.”
Ask the seller to explain how the damage was fixed. Plus, check out the company that performed the repairs to ensure it has industry-recommended certification. If needed, follow-up with the seller or repairing company for specific repair details.
For more information, visit http://www.on-sitecorporation.com/.
Read more: http://rismedia.com/2009-12-20/10-trouble-spots-to-consider-when-purchasing-a-foreclosed-home/#ixzz0b176HpdK
Saturday, December 26, 2009
Prediction 1: Rise of the Short Sale
Welcome 2010! We are coming into a new year. With the economy stable and troubled, real estate stable and troubled and the job market still in flux, we will see continued efforts from the federal government to make an impact on the economy starting with more corrections to improve the housing market.
Housing is a big driver in the economy, new home sales create secondary demand for "durable goods" like home appliances and fixtures. Unlike a year ago, loans are now available but new home sales are still low and housing starts have not yet shown any signs of improvement. Real estate recover is going to be driven by resales. Through 2009, year foreclosures have continued at historicly high rates and defaults are continuing in record numbers.
Me and others have commented on the existence of Phantom Inventory. I recently posted about the number of foreclosures at auction and the number of homes released for sale not being equal. In addition to all this market insanity, the banks have been slow to release a number of homes in this area. Moderating the number of listings, while lending conditions have improved has created an artifical shortage and has inflated prices.
The reason this is nuts is that all the while the above is happening, foreclosures are continuing at a rate higher than the listed foreclosure inventory is sold. (If anyone at the too big to fail bank are listening, could you kindly release all your bay area real estate under 500k, we need more of those homes on the market.)
To add to the insanity, investors are snapping up foreclosures at auction, cleaning them up and reselling them at a profit. On one hand this is good for the economy, good for the banks but on the other hand it is bad for homeowners in distress and first time home buyers. It is adding unnecessary expense for the people who are actually buying homes to live in. What a crazy idea that is...
To my point, more changes are on the way for consumers in morgage trouble. As we speak the federal government is creating legislation to make it easier for short sales to occur by limiting damands by second lenders and creating new rules and incentives for banks to operate with to try to stop the impending flood of foreclosures. We should see these rules in place and I would guess by the third quarter of this year those homes will reach the market.
From an agents perspective this whole short sale process is madness. Lost papers, delays, buyers backing out (I have had to get 2 offers at different times on each of mine), the process has to restart once a buyer backs out, there are no guarentees that the bank is going to approve the sale or they demand a top dollar and unreasonable price. It's nuts. The consequences of this madness is that short sales have to offered at a discount to foreclosures.
Think about that. The administrative costs are higher on short sales, the offer price is lower to incentivise buyers to stick the process out. The banks provide awful service on Short Sales and they demand top dollar. (Sounds a lot like the Microsoft business model). I wish everyone could a business that way. It would solve the job's problem in an instant.
The last thing I learned in business business school is that good corporate citizenship is the key to free enterprise. When you start to generate profits at the expense of your consumers, expect the government to get involved to solve the problem in ways businesses won't like. The good news for homeonwers in distress is that help may actually be on the way. It only took 3 years. The question is, is it too little too late.
Housing is a big driver in the economy, new home sales create secondary demand for "durable goods" like home appliances and fixtures. Unlike a year ago, loans are now available but new home sales are still low and housing starts have not yet shown any signs of improvement. Real estate recover is going to be driven by resales. Through 2009, year foreclosures have continued at historicly high rates and defaults are continuing in record numbers.
Me and others have commented on the existence of Phantom Inventory. I recently posted about the number of foreclosures at auction and the number of homes released for sale not being equal. In addition to all this market insanity, the banks have been slow to release a number of homes in this area. Moderating the number of listings, while lending conditions have improved has created an artifical shortage and has inflated prices.
The reason this is nuts is that all the while the above is happening, foreclosures are continuing at a rate higher than the listed foreclosure inventory is sold. (If anyone at the too big to fail bank are listening, could you kindly release all your bay area real estate under 500k, we need more of those homes on the market.)
To add to the insanity, investors are snapping up foreclosures at auction, cleaning them up and reselling them at a profit. On one hand this is good for the economy, good for the banks but on the other hand it is bad for homeowners in distress and first time home buyers. It is adding unnecessary expense for the people who are actually buying homes to live in. What a crazy idea that is...
To my point, more changes are on the way for consumers in morgage trouble. As we speak the federal government is creating legislation to make it easier for short sales to occur by limiting damands by second lenders and creating new rules and incentives for banks to operate with to try to stop the impending flood of foreclosures. We should see these rules in place and I would guess by the third quarter of this year those homes will reach the market.
From an agents perspective this whole short sale process is madness. Lost papers, delays, buyers backing out (I have had to get 2 offers at different times on each of mine), the process has to restart once a buyer backs out, there are no guarentees that the bank is going to approve the sale or they demand a top dollar and unreasonable price. It's nuts. The consequences of this madness is that short sales have to offered at a discount to foreclosures.
Think about that. The administrative costs are higher on short sales, the offer price is lower to incentivise buyers to stick the process out. The banks provide awful service on Short Sales and they demand top dollar. (Sounds a lot like the Microsoft business model). I wish everyone could a business that way. It would solve the job's problem in an instant.
The last thing I learned in business business school is that good corporate citizenship is the key to free enterprise. When you start to generate profits at the expense of your consumers, expect the government to get involved to solve the problem in ways businesses won't like. The good news for homeonwers in distress is that help may actually be on the way. It only took 3 years. The question is, is it too little too late.
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