Archives for 2008

Redding Fireworks Show Saturday Night

Don’t forget Saturday night is the City of Redding’s Freedom Festival. The fireworks show that is normally scheduled for July 4th was postponed this year because of the fires. It will be held outside on the Redding Convention Center grounds. Admission is free and there will be venders, food and live music.

Event Contact: 530-225-4100

Also this weekend:

The Return of the Salmon Festival at the Coleman Fish Hatchery.
Event Details https://www.visitredding.com/eventDetails.cfm?eventID=1265

The Fall Festival in Palo Cedro.
Event Details https://www.visitredding.com/eventDetails.cfm?eventID=1270

C.A.R.’s California Housing Forecast For 2009

LOS ANGELES (Oct. 15) – Home prices throughout most areas of California will post declines next year, while sales of existing homes will continue the rise in 2009, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) "2009 California Housing Market Forecast" released today.

“The current uncertainty about the financial system and economy is likely to persist over the next several weeks, and could extend into next year,” said C.A.R. President William E. Brown. “Our forecast assumes that the financial system will begin to show signs of stabilization late in 2008 and into early 2009.

“We expect that the economy will be at its weakest period over the next three quarters through the second quarter of 2009, with recessionary economic conditions throughout that time period, before we begin to see a turnaround in the second half of next year,” he said. “Going forward, a great deal depends on the state of the financial system in general and the real estate finance situation in particular, as well as the flow of distressed sales through the market. We expect sales of distressed properties to peak in early 2009 – a critical factor in the housing market that directly impacts the timeframe for stabilization in the median price.

“Looking ahead, home prices and favorable interest rates in 2009 will contribute to gains in affordability,” Brown said. “However, we need to move through the current financial crisis and restore the flow of credit so that qualified buyers are able to take advantage of improved affordability and successfully purchase homes.”

The median home price in California will decline 6 percent to $358,000 in 2009 compared with a projected median of $381,000 this year, according to the forecast. Sales for 2009 are projected to increase 12.5 percent to 445,000 units, compared with 395,600 units (projected) in 2008.

“Sales in 2008 will be ahead of last year by 12 percent, with a further increase of 12.5 percent expected in 2009,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “However, the next couple of quarters in late 2008 and early 2009 will be marked by seasonal decreases in activity, with a pickup expected by the second quarter of next year. At 445,000 units sales projected in 2009, the sales environment will be well above the low point of 265,000 units in late 2007.

“The median price will be influenced through the balance of 2008 by the typical seasonal decrease in home prices as well as ongoing downward pressure from distressed sales,” she said. “For all of 2008, the median price is expected to fall by 31.7 percent from $558,100 to $381,000. Next year, we’re projecting that the median price will show a 6 percent decline to $358,000.”

California State Bill 1137 Halts Default Notices

Foreclosureradar.com released their California Foreclosure Report for September, 2008 which shows a substantial decline in default notices. The report claims that the reason for the sharp decline is the California State Senate Bill 1137, which went into effect September 8, 2008. The bill requires lenders to make more of an effort to work with homeowners that are facing foreclosure and make sure they are aware of all their options. Lenders in California will have to wait 30 days after contacting the homeowner or fulfill the required steps before filing the foreclosure notice.

According to the report SB 1137 has affected the amount of default notices, which fell 61.8 percent during the month, and notices of trustee sale, which fell 47.3 percent. The bill did not directly impact foreclosure sales; however, they still fell 12.4 percent.

“California State Senate Bill 1137 has rendered analysis of current activity against prior foreclosure levels useless in understanding market conditions,” said Sean O’Toole, founder of ForeclosureRadar. “What is important to watch now, is how quickly lenders and trustees adjust to the new law. While it is unlikely foreclosures will return to previous levels, given the new requirements; we expect SB 1137 to have no long term impact beyond delaying the foreclosure process for homeowners, and slowing the overall recovery.”

Report Findings:

In September 16,352 notices of default were filed in California, down from 42,790 in August, s decrease of 61.8 percent from August 2008, and a decrease of 36.4 percent from a year earlier.
Notice of Trustee Sale filings decreased 47.3 percent from August, to a total of 19,116 filings. Despite the significant decline, filings increased 33.9 percent from September 2007.
Properties sold at auction increased by 163.2 percent from September ’07 to 23,409 sales in September ’08 with a combined loan balance of $9.75 billion. That is a 12.4 percent drop from August 2008.
Lenders took back 95 percent of properties taken to auction, with a combined loan value of $9.19 billion.
Average discounts offered by lenders on the outstanding loan balance at foreclosure auctions averaged 37.4 percent statewide, with 36 percent of the properties taken to auction being offered at a discount of 50 percent or more.

State Senate Bill 1137 was designed to reduce foreclosure rates by encouraging loan modifications as an alternative to foreclosure. However because most lenders operate under federal law they cannot be forced to modify the existing loans.

“Given the significant negative equity now occurring in most California foreclosures, modifying loans to affordable levels either requires large principal balance reductions, or extending the unsustainable teaser rates that created the foreclosure crisis in the first place,” continued O’Toole. “Wide scale adoption of large principal balance reductions also pose significant risks, as they are likely to encourage non-defaulting homeowners to default in the hopes of securing similar reductions. As such, either type of loan modification is likely to result in increased default, and/or foreclosure activity in the future, a consequence clearly not intended.”

I think he is right, why shouldn’t we all get principal reductions, I would consider a hit to my credit to get 20 or 30 percent taken of my principal balance. Joking aside, this will most likely cause a delay in foreclosure filings but we do not expect it to prevent very many foreclosures.

Hope for Homeowners: FHA to Provide Additional Mortgage Assistance to Struggling Homeowners.

The President has signed into law legislation that will allow HUD’s Federal Housing Administration (FHA) to continue providing targeted mortgage assistance to homeowners. The Hope for Homeowners program will continue FHA’s existing and successful efforts to provide aid to struggling families trapped in mortgages they currently cannot afford. Under the program, certain borrowers facing difficulty with their mortgage will be eligible to refinance into FHA-insured mortgages they can afford. The program will be implemented on October 1, 2008.

Hope for Homeowners maintains FHA’s long-standing requirement that new loans be based on a family’s long-term ability to repay the mortgage. FHA only allows owner-occupants to be eligible for FHA-insured mortgages. Borrowers must also meet the following eligibility criteria:

Their mortgage must have originated on or before January 1, 2008;
Their mortgage debt-to-income must be at least 31 percent;
They cannot afford their current loan;
They did not intentionally miss mortgage payments; and
They do not own second homes.

Features of FHA-insured loans under the new program include:

30-year, fixed rate mortgage;
Maximum 90 percent loan-to-value ratio;
No prepayment penalties;
$550,440 maximum mortgage amount;
Extinguishment of any subordinate liens; and
New home appraisals from FHA-approved appraisers.

HUD, Treasury, FDIC and the Federal Reserve will form the Congressionally-mandated Board of Directors and work together to establish additional program standards.

Voluntary Lender Participation

FHA will continue to offer lenders an alternative to foreclosing on borrowers. Similar to FHASecure’s recent expansion, lenders will be encouraged to write-down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principle will cost lenders less than the losses associated with foreclosure.

Market Stability and Liquidity

By continuing to slow the rate of foreclosures, this program will support FHA’s existing effort to stabilize local housing markets. From September 2007 to June 2008, FHA has guaranteed more than $93 billion of mortgage capital.

Funding

FHA will insure up to $300 billion in new loans. Borrowers will pay an upfront premium of 3 percent of the original mortgage amount and an annual premium of 1.5 percent of the outstanding mortgage amount. Any additional costs incurred by FHA will be reimbursed by Fannie Mae and Freddie Mac.

Program Timeline

The program will last from October 1, 2008 through September 30, 2011. Since September 2007, FHASecure has helped more than 290,000 families obtain safer, more affordable mortgages. FHASecure is on pace to help 500,000 families by the end of the year.

More information at https://www.hud.gov/hopeforhomeowners/index.cfm

September Foreclosure Filings Drop 71% in Shasta County

Foreclosure filings in Shasta County dropped significantly compared to the previous month. There were only 59 Notices of Default filed compared the previous months number of 206.

When we compared this month last year we saw a 34% fewer filings. September 2007 there were 89 notices of default file and only 59 in September 2008.

This significant drop could be a result of lenders being more motivated to work with borrowers and resolving the loan delinquency before it gets to foreclosure. This could be a good sign however we are expecting next month’s number to be well above a hundred but below Augusts high of 206.

Deed-in-lieu of Foreclosure, How Does It Work?

A Deed-in-lieu of Foreclosure is basically giving the house back to the lender. In most cases this will only work if the borrower does not have a second loan on the property. The reason is, you can only give the property to one lien holder and the other lender would not agree to release the lien unless they were to receive some sort of compensation.

There are some advantages for both the lender and the borrower and well as some disadvantages. The benefits to the borrower are you can escape the public notoriety and embarrassment of a foreclosure. In most cases it will release you of the debt from your loan. The benefits to the lender are they get the house back quicker and cheaper than if they were to foreclose.

There are several considerations the lender will go through to determine whether or not they will be willing to take the property back. One is the value of your property. They are going to get an appraisal or a Broker Price Opinion (BPO) to determine the value of the property. If the lender feels that they can sell the home for what you owe then they will consider taking it back. However if the lender is feels the value of the property is less than what they can sell it for then they may ask the borrower to sign a promissory note. Typically there will be no interest on the note and the payments are very low.

Another consideration is how far in default the borrower is. If they have filed a notice of default and they are within 90 days of the scheduled sale date then they are less likely to take the house back. The deed-in-lieu process can take 4-6 weeks for them to approve, at this point they will have incurred legal fees to foreclose and they will be close enough to the sale date so they might as well sell it at auction.

The lender is also going to look at how many non performing loans & REO properties (real estate owned) they have on their books. If the lender is already overloaded with REO properties then they will be less likely to agree to take the property back. In cases like this the lender will encourage the borrower to sell the property either through a short sale or full payoff.

A deed-in-lieu foreclosure is still going to negatively affect the borrower’s credit, but it will be less damaging than a foreclosure, especially if they were not behind on their payments. It could also prevent any further collection attempts from the lender.

For other solutions to foreclosure download our Free ebook “Avoid Foreclosure” written by Bill Parsons & Josh Deknoblough.

Archives for 2008

Redding Fireworks Show Saturday Night

C.A.R.’s California Housing Forecast For 2009

California State Bill 1137 Halts Default Notices

Hope for Homeowners: FHA to Provide Additional Mortgage Assistance to Struggling Homeowners.

September Foreclosure Filings Drop 71% in Shasta County

Deed-in-lieu of Foreclosure, How Does It Work?

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