Patty Manzi's Tri-Valley Real Estate Blog

It has been reported that we are in the worst housing market since the Great Depression and that 7.4 million families are in trouble with their mortgages.  Here’s  a breakdown of some shocking facts:

• 6.3 million US homeowners are behind on their mortgage payments as of June 2010
• In addition, there are 1.1 million REO (Foreclosed) properties
• 3.2 million HAMP (Home Affordable Modification Program) 60+ day delinquent loans
• Of that 3.2 million, 1.7 million Borrowers are likely to be eligible for HAMP modifications but have not applied
• As of June 2010, there are 389,000 active permanent loan modification in process
• the total US delinquency rate was 9.55% in June 2010
• The foreclosure inventory rate remained stable from the month prior at 3.18% so in total the national delinquent mortgage rate, which reflects both foreclosures and delinquencies, is 12.38%.
• It is estimated that over the last several years the US has sustained a 7 trillion dollar loss in home values nationwide. 
• It is also estimated in our local housing market (California) it may be 2018-2020 until we get back to 2003 home value pricing. 

(Source:  Lender Processing Services, Mortgage Monitor, DS News, Making Home Affordable June Scorecard)

This seems to be dismal news at best, however, the recent development of the Home Affordable Foreclosure Alternative (HAFA) program is a positive step in the right direction.  The HAFA  program offers solutions that are an alternative to foreclosure.  The HAFA program complements the HAMP program by making the transition into a short sale easier for the borrower if they do not qualify for a loan modification.  The ultimate goal is home retention, however, if a loan modification effort fails, HAFA is required to be considered and offered by the participating servicer.

HAFA falls under two categories, Government driven (Standard) and Servicer Specific (Non-Standard) .  Under each category, the HAFA guidelines are similar but they do have some profound differences.  Depending on who your lender is determines which HAFA program applies to you.  The best way to find out is to visit the Making Home Affordable website, click on the Loan Lookup tab and enter your lender information.  

As always, it is best to consult with a real estate professional who specializes in this area of the market.

A "Making Home Affordable" Initiative

With the increased number of people losing their homes to foreclosure & short sale there is an increase in the number of people needing to rent.  A few things to be prepared for if you find yourself renting a home after many years of owning;   Landlords will require a rental application and most charge a screening fee to check your credit, criminal,  and rental (eviction) history.  You may also need to provide documents to verify employment and income.  Many landlords and property management companies have a minimum credit score that is acceptable to be considered a candidate for renting.  The more information you can provide to prove your credit worthiness, the better. 

Expect to come up with not only your first months rent, but up to 2 times the rent amount as a security deposit.  Additional security funds can be required if you have pets.   Signing a 12-month lease is customary, but some landlords are willing to provide shorter term leases with an increase in the rent amount. 

If you are in doubts or questions about practices by landlords or property management companies, you can contact Fair Housing for advice and information.  You can also enlist the help of your local real estate agent or property management company to help you find rental properties and represent you in the leasing process.

I’ve heard it, you’ve heard it, many people in the real estate industry are talking about it.  The banks are sitting on this huge reserve of foreclosed homes that are going to hit the market all at once and take down what’s left of our economy!……..  ~NOT! ~ Its a myth.

Last February, HUD instituted the Home Affordable Modifications Program (HAMP) which would allow a borrower to contact HUD and apply for a loan modification.  Many people jumped immediately on this opportunity, however, many banks did not have guidelines in place to be able to service the requests.  So the requests piled up until the banks were on board with the property guidelines.  Once the guidelines were received, banks were able to proceed with the modification request and there are many currently in process.

What one must realize is that the modification request is just that – a request.  There is a three month ’trial  modification period” where the borrower does pay a reduced amount on their mortgage.  It is during this trial modification period’ that the bank has to review all of the borrowers financial inforamtion to determine if they qualify, and if they qualify, they are subject to underwriting review for approval.  

The myth of the banks sitting on these reserves comes from the fact that many modifications were delayed from the beginning because the banks were not prepared with the proper guidelines, thereby delaying the beginning of the trial period.  This created an over abundance of  mods to process when the banks finally got up to speed.  The borrowers that will not be granted a modification may lose their homes to foreclosure if they have no other option.  And those homes will be hitting the market .

Yes, there may be alot of them hitting the market at the same time, but not becuase the bank is holding onto them for some arbitrary reason. Banks are required to sell all foreclosed properties to repay their investors.