bubbleinfo.com

The last video we saw over here (in Santa Monica link) has not gone pending, so where is the market?

There are multiple reasons to blame for not selling:

1. It’s early in the season (it’s not).

2. The right buyer hasn’t come along (if they haven’t by now, they aren’t).

3. I’m not giving it away!!!

Sellers should recognize that even though it is a hot market, it is discriminating – and it’s almost always about price.  Lowering the price until you get offers is the best way to find what the market will bear!!

From cnbc.com:

A select group of struggling mortgage borrowers are about to get an offer that sounds too good to be true. Executives at Bank of America say they will begin mailing 200,000 letters offering certain customers mortgage principal reduction.

“If people get these things and toss them, they won’t be eligible,” says Ron Sturzenegger, the Bank of America executive charged with providing solutions to borrowers in need of mortgage assistance.

But the offer is real, and eligible borrowers could get as much as $150,000 knocked off the balance of their mortgages. It is all part of the $25 billion settlement reached this year between federal and state agencies and the nation’s five largest mortgage servicers over fraudulent foreclosure document processing (so-called “robo-signing”).

Bank of America, in a deal with state attorneys general and the U.S. Department of Justice, committed $11 billion to mortgage principal reduction, but executives say they will go beyond that if enough borrowers respond to their offer. Five thousand borrowers have already received a collective $700 million in principal reduction through a pilot program for those already in a modification negotiation. The 200,000 borrowers being targeted now may have already exhausted modification options or may have yet to contact the lender. 

Executives say borrowers receiving the letters are eligible, but they still have to prove they qualify. In order to be eligible, a borrower must be 60 days late on the mortgage payment as of Jan. 31, 2012. The borrower has to owe more on the mortgage than the home is currently worth, commonly known as being “underwater” on the mortgage, and the borrower’s loan must either be owned by Bank of America or serviced by Bank of America for an investor who is allowing the modifications.

In order to qualify for the modification, the borrower must answer the letter with full documentation of income, showing that under the terms of the modification they can still make the monthly payment. A borrower with no income would therefore not qualify. A borrower’s current monthly payment must be  more than 25 percent of gross income, and the borrower must show they are unable to afford that.

“If you can afford to make your monthly payment and are choosing not to, you will not get this principal modification,” says Sturzenegger.

If the borrower qualifies, Bank of America will bring the monthly mortgage payment down to 25 percent of the borrower’s gross income. That could mean principal forgiveness well over $100,000, as there is no limit to the amount of the mortgage. If enough borrowers respond, it could cost Bank of America far more than it committed to in the settlement.

“Yes, we have the capability to go well beyond the $11 billion,” adds Sturzenegger.

New listings have been flying off the market around Carmel Valley, many with multiple offers.  

But it isn’t universal, and those with defects are being scrutinized carefully. 

Everything wrong with this house is fixable – and while it is habitable in its current state, most will determine that it needs a complete makeover. If this goes pending soon, it will be another sign of frenzy:

An excerpt from MND:

FHFA’s REO-to-Rental Initiative, Burns said, is meant to complement the primary disposition strategies used by the GSEs and is intended as a pilot.  Its goals are fairly limited:

• To gauge investor appetite for scattered site single-family rental housing and their price sensitivity;
• To determine whether disposing of properties in bulk presents an opportunity for well-capitalized investors to partner with regional and local property management companies and other community organizations to create appropriate economies of scale while providing civic-minded approaches that can stabilize and improve market conditions;
• To assess whether the model can be replicated to make it a worthwhile addition to the standard retail and small-bulk sales strategies of the GSEs and other financial institutions with large inventories of REO.

Burns addressed what she said were misconceptions regarding FHFA’s intent and goals for the rental pilot.  First, it is highly targeted and focused only on markets that provide an opportunity to correct a fundamental supply-demand imbalance.  “This type of intervention would be highly inappropriate on a national scale and the program was never intended to be offered nationally,” she said.  Second, the pilot will not result in severely discounted sales.  If the properties cannot be sold at close to what they would bring through retail execution then they will not be sold.

Because there are so many uncertainties, the pilot is initially limited to Fannie Mae properties because of its greater concentration of homes in the selected markets and because it seemed most reasonable to expand the capabilities of only one company to executive the program and meet the significant legal and operational challenges involved.

Also because of the uncertain outcomes the first pool of properties includes a large number of properties that are already rented to tenants who were in place when the properties were conveyed to Fannie Mae.  This will minimize the time that properties are held off the market and help to test one of the key objectives of the pilot – to determine investor appetite for this asset class.

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Another skim of the usual myths to justify whether people should buy a home now:

From the nytimes.com:

VALLEJO, Calif. — On a suburban block with six family homes, palm trees and views of the surrounding green hills, nothing at 110 Windsor Court stood out. Its occupants, who had moved into the foreclosed house a few years earlier, were quiet types.

Until the noise from falling roof tiles alerted neighbors to a fire there one recent morning, and Stephen Snowden, who lived nearby, banged on the front door. Nobody was inside, but firefighters discovered that the house had been converted into a type of illegal business found increasingly in suburbia: a marijuana grow house.

The entire second floor of the five-bedroom, 2,251-square-foot home, as well as parts of the first floor, was used to cultivate marijuana plants.

“They just blended right in,” Mr. Snowden said of the residents. “They left early for work and came back late in the afternoon. They mowed their lawn, took out their trash and got groceries. There was never any extra foot traffic.”

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The FHA foreclosures are likely to be picking up steam.

The authorities must know it too, because now they are doling out the REO listings to the usual suspects, instead of a centralized approach.  Back in the day, you had to have a special FHA-REO lockbox key!

These borrowers refinanced their FHA purchase loan two times since buying in 2008 – the latest in May, 2010 – and paid loads of mortgage insurance along the way.  Yet by early 2011 they must have given up, and received their first NOD in July of that year – 14 months after the loan’s origination.

Even though they had to qualify for their loan each time, their initial 3.5% investment ($21,525) wasn’t enough to keep them engaged.  Add these post-peak newer borrowers to the masses who have procurred the FHA reverse mortgages, and there has to be trouble coming.  Luckily, there haven’t been that many FHA loans in the higher-priced areas?