California Short Sales, Foreclosures, REOs Los Angeles, San Diego, Riverside & Orange County Short-Sales Listings

13 Apr 09 Are Short Sales Helping Homeowners

Lenders agree to let owners who can’t make payments sell their house for less than they owe.

Falling home prices are giving rise to a foreclosure alternative that can help people get out of homes they can’t afford.

When home prices were rising, people who lost a job or otherwise couldn’t pay their mortgage, could have sold and moved on. Declining home values mean some can’t sell for enough to pay off the loan. In those cases, short sales are an option.

In a short sale, the lender agrees to accept less than the mortgage balance as payment in full because it’s a less costly route than foreclosure. Both processes result in losses for lenders, but with foreclosures, they have the added costs of maintaining and selling properties. Short sales also spare homeowners the embarrassment of foreclosure and eviction.

A short sale will damage a person’s credit score, but Fair Issacs, keepers of the widely used FICO credit score, says the impact depends in part “on the composition of the individual’s credit profile.”

“We really think it is a much better experience for everyone concerned,” said David Knight, who handles short sales nationwide as a vice president with Wells Fargo & Co.’s mortgage servicing unit in Fort Mill.

The San Francisco bank, which recently bought Charlotte’s Wachovia, is one of the nation’s largest mortgage lenders and servicers. Knight declined to provide specific figures but said Wells’ short sales have “probably tripled” in the past 18 months as unemployment has risen and home prices fallen. They’re more common in former bubble markets, where prices shot up and fell harder than in areas such as Charlotte.

Short sales aren’t always advertised as such, so there’s no way to get a complete count. Unlike foreclosures, there also are no consistent indicators of short sales in public records. But local Realtors say they’ve seen an increase. Job loss, unexpected bills and job transfers, coupled with lower home prices, are all factors driving the use of short sales.

“They’re really coming on in this last year,” said Joe Clorite, a Realtor for 20 years, who is with Keller Williams Realty’s University office. “People are in over their heads.”

Nationwide, short sales are up about 20 percent in the past six months, said Mark Pearce, N.C. deputy commissioner of banks. That’s based on figures collected from mortgage servicers by a multistate foreclosure prevention group Pearce is part of. The group has not yet publicly released the data.

“Short sales are going up fairly significantly,” Pearce said. “They’re better than foreclosures.”

Homes losing value

Struggling to make their monthly mortgage payment, Meleta and Gerald Wideman called their lender for help.

“Once we got behind, they said we could do a short sale to get out of the loan,” she said.

The couple, with two children, moved to Charlotte in 2006 from Chicago after visiting family and deciding they liked the area. They bought a new house in Oakbrooke, a subdivision north of uptown. They paid about $140,000.

Their troubles began the first year. They were school bus drivers and couldn’t find summer work. She found a year-round job working with blood donors, but her overtime has been cut. They are Seventh Day Adventists, and say their faith prohibits work on Saturday. All the year-round jobs he’s been able to find require Saturday work.

Seeing no way around it, they listed the house for sale. The asking price, $99,900, is well less than what’s owed. Nearby homes have shed value, too. A foreclosed home across the street sold two years ago for $143,000. On Friday, its listing price was $92,700. Another foreclosure is listed for $117,900, down from the $140,000 paid less than two years ago.

Meleta Wideman says they’re looking for a place to rent in the Charlotte area.

“I’m scared to leave because the economy is so bad,” she said. “I’m working full time. We know we can eat.”

Closing can take longer

A big drawback of short sales is added red tape that means closing a deal can take months, a potential turn-off for sellers, buyers and Realtors.

Clorite has had a house listed in Oakbrooke since May. He went through the months-long process of finding a buyer, getting a short sale approved. At the last minute, the buyer’s financing fell through, so the house is back on the market.

“There is more cooperation, but they are still far behind,” Clorite said of lenders handling short sales.

The Oakbrooke owner he represents is a California investor who thought he got a good deal in 2006 when he paid about $155,000 for the new house.

The investor, who asked not to be named, said he has been unable to get a reliable tenant. He’s lost money, paying for extensive repairs as well as the mortgage, taxes and insurance. Now rents are going down. The house is listed for $120,000, likely to sell for less.

“It’s better to just cut the losses and dump the property,” the investor said.

Clorite believes he has another buyer, but again, he’s waiting on lender approval.

Short sales take time because everyone being short changed must approve the deals. That includes the mortgage holder, others with liens such as home equity loans and investors backing the mortgages. They may negotiate among themselves on how much of the loss each will accept.

Lenders have become more efficient, Pearce said, but the sluggish process can still turn away buyers.

“They’re not going to wait when there are so many homes being sold for lower prices these days,” he said.

See the original article written by Stella M. Hopkins.

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03 Feb 09 California Home Prices Fell 42%

Bloomberg released a report revealing that California home prices plunged 42 % in December from a year earlier as the U.S. housing slump deepened and home foreclosures hit record levels. The median price for a single-family home in the most populous U.S. state dropped to $281,100 from $480,820 a year earlier, the Los Angeles-based California Association of Realtors said today in a statement. “The decline in California home prices has brought the cost of housing more in line with household income, improving affordability across the state,” Leslie Appleton-Young, the association’s chief economist, said in the statement. “This should be especially helpful for first-time buyers who can qualify for a home loan.” More than 236,000 homes, or 2.8% of California’s housing stock, were foreclosed on in 2008, MDA DataQuick said today. Foreclosed properties tend to sell at a discount of 25% or more, and California home sales rose 85 % in response to last month’s drop in prices, the Realtors association said.

Daniel Taub’s article indicated the number of existing single-family detached homes sold soared to 544,580 on an annualized basis from 294,520 a year earlier, the group said. The median number of days it took to sell a property dropped to 46.1 days in December from 66.7 days a year earlier. The Realtors’ Unsold Inventory Index, which indicates the number of months needed to deplete the supply of homes on the market at the current sales rate, dropped to 5.6 months from 13.4 months a year ago.

Mortgage Loan Defaults

California mortgage defaults dropped 7.7 % in the fourth quarter after the state enacted a law to delay foreclosures, MDA DataQuick said in a separate report today. Homeowners in the state received 75,230 default notices in the fourth quarter, down from 81,550 a year earlier. Fourth- quarter defaults were down 20 % from the previous three months, according to the San Diego-based research company. Kelly Media Group President, Jason Cardiff commented, “When borrowers are in line to renegotiate their mortgage, most lenders don’t report loan defaults even if the borrower is behind 6 months.” Cardiff continued, this means “We need to be extremely cautious when considering foreclosure data and housing reports.”

A law that requires mortgage lenders to discuss ways to avoid foreclosure with California borrowers before filing a default notice went into effect in September. Defaults plunged to 14,995 that month, and were back up to 39,993 in December. `No one expected defaults to stay at the much lower levels we saw immediately after the new law took effect,” MDA DataQuick President John Walsh said in a statement.

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12 Nov 08 Another Foreclosure Rescue Plan Announced

Once again, the government has offered another mortgage restructuring plan to help troubled homeowners. This loan workout plan focuses on Fannie Mae and Freddie Mac owned home loans. Fannie and Freddie own or guarantee nearly 31 million U.S. mortgages, nearly six of every 10 outstanding. But they have far lower overall delinquency rates than other lenders — under 2 percent.


Sheila Bair, chairman of the Federal Deposit Insurance Corp. (FDIC), said the plan “falls short of what is needed to achieve wide-scale modifications of distressed mortgages.”


With the government spending billions to aid distressed banks, “we must also devote some of that money to fixing the front-end problem: too many unaffordable home mortgage loans,” Bair said in a statement.


Democrats on Capitol Hill aren’t satisfied, either. “When the home loan is chopped up into a million pieces and any investor can block a modification from happening, a program like this will only scratch the surface of the mortgage crisis,” said Sen. Charles Schumer, D-N.Y.


Deutsche Bank estimates more than 80 percent of the $1.8 trillion in outstanding troubled loans have been packaged and sold in slices to investors worldwide. Most of those loans won’t likely be helped by the new plan.


The rest are “whole loans,” which are easier to modify because they have only one owner.


The new mortgage assistance plan was announced by the Federal Housing Finance Agency, which seized control of Fannie and Freddie in September and other government and industry officials. It takes effect on December 15, 2008. FHA officials say they hope the new approach will become a model for loan servicing companies that collect mortgage payments and distribute them to investors. These loan companies have been roundly criticized for being slow to respond to a surge in defaults.


A Step in the Right Direction

After more than a year of slow and weak initiatives, there now seems to be a serious effort among major retail banks to get at the heart of the credit crisis: falling U.S. home prices and record foreclosures.


Citigroup said Monday it is halting foreclosures for borrowers who live in their own homes, have decent incomes and stand a good chance of making lowered mortgage payments.


JPMorgan Chase & Co. last month expanded its mortgage loan modification program to an estimated $70 billion in loans, which could aid as many as 400,000 customers. The bank already has modified about $40 billion in home loans, helping 250,000 customers since early 2007.  Bank of America Corp. plans to modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion legal settlement reached with 11 states in early October.

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10 Nov 08 California Brokers Get Caught up in Loan Modification Scheme

The Justice Department is gearing up to probe potential scams targeting distressed homeowners in San California.  Last week, Rep. Dennis Cardoza, D-Modesto, urged Attorney General Michael Mukasey to investigate mortgage-loan modification schemes now being marketed through the Valley. For an upfront fee, homeowners are being told, their monthly mortgage payments can be negotiated with loan modifications.  At best, the homeowners may end up paying for work that’s available for free. At worst, they’ll pay for work that isn’t done at all.  “People need to be very careful who they send their money to,” Cardoza cautioned Friday.  

The mortgage-reduction schemes are just one of the housing-related problems now confronting law enforcement officials. As the market melts down, the investigations are heating up. Two weeks ago, Modesto-based FBI agents assured Cardoza’s office they were forming a task force to zero in on mortgage-related frauds.  In his letter Friday, Cardoza told Mukasey that it was “imperative” that law enforcement authorities “crack down on these foreclosure scams quickly and comprehensively.” He called San Joaquin Valley residents “particularly vulnerable” because of the region’s foreclosure crisis.

The questionable solicitations come in different ways. Phone calls offering mortgage negotiation services have been ringing through the San Joaquin Valley for several months. Sonia Neal, a Realtor and volunteer counselor with the Community Housing Council of Fresno, added that sometimes “they will even just show up at the door.”  Official-looking letters are arriving in Valley mailboxes, some citing congressional bill numbers or phone numbers for a “loss mitigation department.” And on Thursday, in Modesto, some homeowners attended a workshop in which they were asked to pay $3,500 for getting their mortgage woes resolved.

Typically, the companies are offering to renegotiate the mortgage in exchange for an up-front fee amounting to one month’s mortgage payment, or more.  “We called some of these companies back; they don’t even have Web sites, and they seem fly-by-night,” Cardoza said. “When they found out we were a congressional office, they stopped responding.”

Even before Cardoza’s encouragement, federal investigators began pouring more resources into mortgage-related cases. The FBI reports having 1,569 pending mortgage fraud investigations open as of August; the number of new mortgage-fraud causes opened annually doubled between 2003 and 2007.  The FBI now has 42 separate mortgage fraud task forces and working groups currently established nationwide. A Justice Department official could not be reached to comment Friday afternoon.

For the scammers and investigators alike, the Valley is a target-rich environment. Stockton, Modesto and Merced top the foreclosure rankings among cities nationwide, and Fresno is not far behind. As house prices have dropped and adjustable-rate mortgages have risen, more homeowners have found themselves on thin ice.  Neal noted a number of companies offering so-called “loan modification” services have consequently popped up throughout California. While she acknowledged “there are some legitimate” companies offering the legal loan-modification services, she joined Cardoza in stressing caution.  “Some people will get desperate and pay the money,” Neal said, “and then nothing happens.”  Some of the scams appear to be an unexpected byproduct of the Hope for Homeowners Act passed by Congress earlier this year. The bill expands the ability of eligible borrowers to get better terms. For instance, homeowners must be spending more than 31 % of their monthly incomes on their mortgages. Distressed homeowners who heard about the bill, but don’t know its details, could be particularly vulnerable to fleecing.

The non-profit Community Housing Council of Fresno and the affiliated group No Homeowner Left Behind will do for free what the loan-modification companies do for money. The non-profit counselors will help homeowners prepare applications for modified mortgages; the lenders are not obliged to change the terms, but sometimes they do.  The foreclosure prevention counselors further advice consumers to be wary of businesses that call themselves a “mortgage consultant” or “foreclosure service,” or businesses that contact people whose homes are listed for foreclosure, or that collect a fee before providing any mortgage-related service.  A foreclosure-prevention workshop, co-sponsored by Cardoza’s office and No Homeowner Left Behind, will be held Saturday starting at 9 a.m. at the Stanislaus County Agriculture Center.

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