11 Million Mortgages are Underwater

Actually, to date there is an estimated 11.3 million mortgages underwater but who's really counting? Put in perspective that's about 24% of all homeowners and guess where one of the "hot spots" for this activity is? Yep, right here in the Inland Empire!

"First American says that “among the top five states, the average negative equity share was 42 percent, compared to 15 percent for the remaining 45 states.” In other words, the odds are relatively high that some of the home owners in those states will never sell their houses for more than the amount of their mortgages." see full story from 247WallSt.com here.

I read commentaries every day encouraging folks to stay put and ride it out if possible. I read others that tell people to walk away from their debts because it's "as American as apple pie". Businesses do it every day by claiming bankruptcy. 20 banks were closed this year (15 in December). Oh and by the way, 15% of home owners are already a payment behind.

I get a little tired of the gloom and doom of most Real Estate reports (just like this one). The numbers are amazing and large. But even as I read everyone's opinion pieces I think of the old adage that you wouldn't get heart surgery from your mail person. What? Here's the thing, no matter how many numbers you look at or how many opinion pieces you read, every single household has its own story. No two clients are ever the same. I've talked clients out of short selling their home. I've helped others get out from under the weight. Still others came a little too late to save.

Only the homeowner knows what these numbers really mean. My job seems to take on a different role in this market - becoming more of a counselor and financial advisor and a lifestyle expert. Every person is different. It would do everyone some good to see the numbers and then remember that each number that adds up to 11.3 million is a single household with their own right path. Don't ask the mail person their opinion... get the facts and then decide what's right for you and your family.

1 in 5 Homes Upside Down

This is just a quick numbers update for you from the Bloomberg Business Week Report on the current state of the housing market in the United States. I could spend a lot of time analyzing them but the numbers pretty much speak for themselves. This is a little more exacerbated in areas like the Temecula Valley where most "Standard" sales (meaning homes that still have equity in them) are being sold in the higher price range rather than in normal tract homes.

More than a fifth of U.S. homeowners owed more than their properties were worth in the fourth quarter.

More than 1 in 1,000 homes were repossessed by lenders in December.

There were 2.82 million foreclosures in the U.S. last year, according to RealtyTrac Inc..

Bank sales of foreclosed properties accounted for a fifth of all U.S. home sales in December.

Almost 29% of homes sold in the U.S. went for less than their sellers originally paid for them.

You can read the full article on Business Week here.

Temecula Home Prices

I posted up a video with my home price predictions here in the Temecula Valley as of February 2010... enjoy!

To view the post click here...

Deficiency Time Bombs

This was a great article from CNN Money that talks about deficiency judgments as ticking time bombs that can explode years after borrowers lose their homes. Honestly it is a frightening proposition that banks can come after borrowers when the bank receives less than what is owed, even people who got their bank to approve them selling their home for less than it is worth.

Before you panic let me start by saying that California is a non-recourse state (thankfully) and don't allow deficiency judgments. "Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there's a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them."

So if you are considering a short sale or a foreclosure on a property outside of California, please, please check to see if that state is one of 30 that supports these deficiency judgments!

For the full article from CNN Money click here.

DRE Responds to Loan Mod Scams

The California Department of Real Estate has been pretty busy lately protecting the public's interests by going after licencees who are participating in fraudulent loan modification services. This year the amount of licenced Real Estate Agents who have had their licenses revoked has grown by 50% and there has been an 80% rise of people who have voluntarily surrendered their licenses while facing accusations.

To date, the California Department of Real Estate reports over 775 licensees had their license revoked or simply surrendered their licenses while facing accusations. The downturn in the real estate market is a big reason disciplinary actions are up.

"With so many people struggling to stay in their homes, foreclosure rescue and loan modification scams have risen dramatically," DRE Commissioner Jeff Davi says.

"And what is even more unsettling, a majority of offenders involved in loan modification scams are not even licensed, which limits a consumer's ability to obtain restitution or verify the legitimacy of a business."

In 2009 alone there have been 2,000 investigations in California involving loan modifications. That's huge!

So here is my cautionary tale... first and foremost if you are looking into a loan modification, please beware of companies who are asking for a significant financial investment up front - there is no guarantee that your money will get you a modification. Two, check to see if the individual has a Real Estate License - no license, less ability to prosecute later should something go wrong. And three, check on the DRE website where "Cease and Desist" orders are published to verify no complaints have been filed.

Here is the link for the California Department of Real Estate. The quick link to check on a sales person's license if found here. For the full article from The Real Estate Channel click here.

Standardizing the Short Sale Process

It's finally here! While it has a few little glitches, the standardized and streamlined short sale process we've been screaming is ready to go into action in April. The HAMP (Home Owners Modification Program) which was rolled out in November helped people who qualified for loan modifications receive them just didn't cover everyone. For hopefully most others, this new program HAFA (Home Affordable Foreclosure Alternatives) should help the short sale process.

Not interested in watching an 8 minute video? Here's the synopsis:

There are couple of main ideas that will really help streamline the short sale process.

1. The property value and the outline of what the bank will accept for the sale of a property will be agreed upon UP FRONT. It will be the first thing the bank does, not the last so we will know exactly what the offers need to come in at.

2. Once an offer is submitted, the bank has 10 DAYS to accept or reject it. Much better than the months of quandary now present.

3. There are a couple of new forms that will help standardize the needed information and listing agreements with the bank.

4. There are some financial incentives built into the program such as $1,500 credit to the seller for moving expenses, $1,000 to the lender for servicing the sale and $1,000 to the buyer for matching the $3,000 towards a 2nd mortgage payout if required.

5. No deficiency judgements can be filed against the seller once the agreement is in place.

6. The possibility of a loan modification will be reviewed during the process as well.

Hopefully this will help some of the confusion and the timelines at least for the buyers to be shortened. To read more details I found that the article in Realty Times was very thorough here.

Real Scoop on Prices in Riverside County

I was tired of reading articles that contradicted each other, touting rising home prices and dropping prices. That said, both reports are correct. If you check out this chart, here in Riverside County we've had a 3% drop in sales since last December and a 6% drop in home prices since last year as well. In other areas of Southern California those prices and sales are on the rise.

What does that mean for my sellers? If you've got the equity for a Standard Sale, there are plenty of buyers looking for a bargain so run your numbers carefully and price according to what the MARKET is telling you. If you don't have the equity and you need to sell who cares are what the market is telling you? The ups and downs are due to continue for some time and will take years to start balancing out to where they should be.