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If you’re unemployed and in danger of going into default on your mortgage the nation’s Government Sponsored Enterprises (GSE’s), Fannie Mae & Freddie Mac, are making some important changes to their foreclosure and forbearance (when the bank suspends collection of payments for a period of time, kind of like a timeout on making payments) policies.
 The new rules will direct mortgage servicers (who you make your payment to) go through a forbearance process when the homeowner has lost their job before moving into foreclosure territory. Under the new rules these services have automatic authority to grant homeowners on unemployment a full six months forbearance and can go to the GSE’s for approval of another six months if the homeowner’s unemployment income lasts for longer than six months.
That’s adding up to a year to get back on track before any sort of foreclosure process begins!
There are some exceptions to the new rules however. The house must be a primary residence, not an investment or second home. And the mortgage must be backed by one of the GSE’s themselves, not FHA or VA, and not a private/portfolio loan held by the bank themselves.
That covers the basics. But, of course, there are some more details that might affect you. If you have any questions, please ask! I’m always here to help…
Greg
Home sales in the Sacramento region rose yet again last month, beating the rest of the state (which also rose with us, only not as much). Over 2,400 homes sold across the region in November, up just shy of 12% year over year.
 It was the fifth month in a row of over 10% gains in sales volume, with sales in Sacramento County up just shy of 13% in November alone. Placer County, less hardly hit by the downturn had been leading the way in previous months saw homes sale increase by only half a percent. A small bump but a continuing trend upward.
Most of the demand across the board was for moderately priced homes with volume being in the $200,000 and under range. Homes in the $200-300,000 range stayed about the same while sales of homes costing over $300,000 actually slowed a bit.
Foreclosure rates are still higher than we want them to be (I’d like it to be at 0) however you’ll remember in previous posts that the number today is not what matters, it’s actually almost meaningless when it comes to predicting future distressed sales, the number we need to look at is actually how many homeowners are defaulting on their mortgage payments, a number that is dropping more and more every month.
The “news” knows that what sells is fear, scary doom and gloom is what gets the most readers and hits to their website. And, while the picture is not the prettiest, it’s a lot prettier than it was in the not to distant past and much prettier still than the pictures the promoters of fear want to sell you.
At the end of October there were 6.3 million homeowners currently behind on their mortgage in the US. A big number, right? However the data shows that this number has been on a steady decline for the last two years.
In just January of this year that number was closer to 6.9 million. The January before (2010) the number was 8.1 million!
 We’ve talked about this before (here are a few links: 3.18.11, 7.29.11, 9.6.11) but I like to share the real data whenever I can. All we hear in the media is doom and gloom, how there are so many foreclosures and no one can pay their mortgage, etc. As a reminder, the most accurate way to predict foreclosures in the future is people missing payments today. Likewise as less and less people are missing mortgage payments (to the tune of 2 MILLION less in the last two years) the future foreclosure number is going to go down.
We’re seeing the benefits of this already in the Sacramento/Placer markets as housing inventory is at about a 2 month supply. A more “normal” or healthy market has about a 4 month supply of homes at any given time. I’m also seeing the home values of many of my clients, from midtown Sacramento to Roseville, see the values of homes they bought in the last year or so RISE (not a huge rise, but that is better than declining or even being just flat).
This doesn’t mean a reversal of fortune, that people who bought in 2006 are going to see the value of their homes rise to the level it was back then any time soon, but it’s a start.
Bringing you the good news, with real numbers, that you don’t get anywhere else! 
Greg Cowart
 The Office of the Special Inspector General for the Troubled Asset Relief Program is waging a strong battle against mortgage and foreclosure rescue scammers that advertise online. The agency recently announced that it halted 85 online scams that promised to help homeowners pursue mortgage loan modifications.
Some scammers disguise themselves as government agencies by using government seals or adopting names that are similar to those of a government agency, the agency revealed. The agency also noted that scammers often ask homeowners for an upfront fee to help them pursue a modification through HAMP.
This is the kind of thing we REALLY need to stop and give those that are guilty the maximum sentence. Preying on those already in a hard place is the lowest of the low.
~Greg
The Keep Your Home California program has increased benefits and expanded eligibility in order to help more homeowners having trouble making their mortgage payments keep their homes.
The program has not only relaxed some restrictions on who qualifies but has extended the length of time currently unemployed homeowners can receive assistance on their home loans to 9 months, from 6 (the program is intended to help people stay in their homes if they are temporarily unemployed by subsidizing some or all of their monthly payment for a period of months).
Claudia Cappio, Executive director of the California Housing Finance Agency said, “this expanded eligibility will allow more families to qualify and receive greater assistance.”
Program officials have also increased the cap on the mortgage reinstatement program from $15,000 to $20,000. The reinstatement program provides a one time assistance grant for homeowners that have fallen behind their payments due to financial hardship.
According to the agency Keep Your Home California has already helped more than 7,000 homeowners statewide and has provided more than $128 million in benefits since launching in February. The funds come from $2 billion in 2008 Federal Stimulus money and the state has until 2017 to use it for this purpose or the remainder is returned.
Keep Your Home California’s website: www.keepyourhomecalifornia.org
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Phone (888) 954.5337.
The big question these days, the one people in my profession get on a near daily basis, what is it?
 If you answered anything with a “how long after”, you’re probably right. The question we hear almost every day is asking how long after a foreclosure, short sale, bankruptcy, or deed-in-liu, etc, can someone be qualified to buy another house, and the question is becoming more common as people with legitimate issues that lost their home or filed BK in 2007-2009 are wanting to take advantage of today’s real estate opportunities and historically low interest rates. The good news is; a lot of them already can.
The thing is, there isn’t just one answer. There are many answers that depend on factors like; how did one lose their home (foreclosure or short sale, ect), what have they done since then, and what kind of loan are they looking for now? The answers to these questions can make a big difference. I’ll try and break it down and make it as simple as possible for everyone below…
Conventional
- 2 Years after short sale, pre-foreclosure sale, or deed in liu with a 20% down payment on the new home
- 4 Years after short sale, pre-foreclosure sale, or deed in liu with a 10% down payment on the new home
- 7 Years after foreclosure in most other circumstances
- 4 Years after Bankruptcy, regardless of if it is a Chapter 7 or 13
FHA
- 3 Years after Foreclosure (after the actual deed transfer date)
- 3 Years after short sale or pre-foreclosure sale
- 1 Year into a Chapter 13 bankruptcy (there is actually no waiting period after a CH13, only that 12 on-time payments to the trustee have been made, can be verified, and the purchase is approved by the court)
- 2 Years after Chapter 7 bankruptcy has been discharged
VA
- 2 Years for all, foreclosure, short sale, or bankruptcy
(There are a few exceptions to these rules, call me with any specific scenarios)
Of course all of these loans would require reestablishing credit and qualifying for the loan program applied for, these are just the general timelines. Please give me a call if you have any questions…
Greg
Your Roseville Loan Guy
 Foreclosure activity in the greater Sacramento real estate market is down more than 20% for the first six months of 2011. This closely follows a deep trend in decreasing foreclosure filings around the country…
According to real estate data company RealtyTrac, Notice Of Default (or NOD) filings dropped to 21,721 for the Sacramento market in the first half of the year, from 27,275 for the same period in 2010. RealtyTrac’s CEO, James Saccacio said; “Foreclosure activity continued to slow in the first half of 2011, especially in the most foreclosure-saturated markets.”
If any of you remember me talking about first payment defaults being down in 2009 and 2010 I predicted exactly this. 21,721 foreclosures is still not a pretty picture but the number is still getting better as less homeowners have been going into default on their mortgage payment for the last two years (as compared to the crisis year of 2008 and the first half of 2009). As this trend continues the number of foreclosures will continue to decline as well.
Foreclosure filings are down even more nationwide, decreasing 29.3% across the board. The Roseville/South Placer market is down even more than this (where we’re seeing a real stabilization and a return to a more normal housing market already).
~Greg
I have some GREAT news. Government-chartered mortgage giant, Fannie Mae announced they are bringing back closing cost assistance to buyers of HomePath-eligible homes. People buying one of the Fannie Mae owned REO’s will receive a 3.5% credit towards closing costs. In most cases this 3.5% should be enough to cover 100% of the buyer’s costs, or even buy the interest rate down further! HomePath is already a GREAT program for local homebuyers, especially those with decent to above average credit. These loans already…
 A.) require a smaller down payment than even FHA (3% compared to 3.5%)
B.) require no appraisal, saving $400-$500 as compared to pretty much any other loan
C.) have no Mortgage Insurance premium added on to the payment, realizing a significant saving over other low-down options
To qualify for the credit the offer must be submitted by 4.11.10 and escrow has to close no later than 6.30.11. to be eligible for the incentive. Also, while HomePath is available to investors (with at least a 10% down payment) ,the 3.5% closing credit is only available to people intending to live in the property as their primary residence.
“Terry Edwards, VP of Fannie Mae’s Credit Portfolio Management team said “attracting qualified buyers to the market and reducing the inventory of vacant homes remains essential to stabilizing neighborhoods and helping the market recover. Since interest rates remain low, the incentive will go a long way toward helping even more families buy a new home so this is a great time for Fannie Mae to offer some assistance.”
To find a list of HomePath eligible homes give me a call/e-mail or check it out yourself at http://Homepath.com. You can also ask your Realtor to do a search for HomePath homes for you (if you need a referral to a top-quality Realtor in your area let me know). I see a lot of these properties in the Sacramento and Roseville real estate markets. The lists are updated with new properties as they come to the market.
Fannie’s Press Release
~Greg
Continued depreciation of property values in 2010 has made housing more undervalued relative to income than ever before. Using the latest Case-Shiller home price index American housing was 21% undervalued when compared with disposable income per-capita.
This data includes the index published by the Federal Housing Finance Agency and shows that housing in the 4th quarter of 2010 was 15% undervalued as measured against American’s disposable income. The results point to the idea that housing is exceptionally undervalued, and the gap has gotten bigger.
Current low housing prices, coupled with historically low interest rates (the 20 year average is 7% but a minimum down FHA loan can be had for 4.5% today), explains why the monthly mortgage payment on a median priced house bought with a 20% down payment has fallen to an all-time low of 13% of the median income. Real estate costs now appears close to fair value when set against rents according to the numbers (and I have seen plenty of people buy for less than they were paying in rent recently).
These low prices and rates mean there is plenty of scope for housing to perform well in the near to mid-term. Also, the Sacramento market currently has MANY more buyers than there are properties to sell in this low-mid price range, so the demand is there to keep it moving.
Looking at the long term, as I have talked about a number of times recently, a sharp fall in the mortgage delinquency rate throughout 2010 means there will be fewer homes in the foreclosure pipeline, and as current foreclosure pipelines continue to shrink we should see a return to a more normal real estate market in the Sacramento region. This will not happen overnight but with less and less first payment defaults, there will be less and less foreclosures going forward.
So, with home prices as “undervalued” as any time in history, what are you waiting for?
~Greg
As of January 31, 2011; the FTC has banned consulting firms from charging up-front fees for negotiating modifications of residential mortgage loans. In Nevada, the Mortgage Lending Commissioner said the constraints of the federal rule “will have substantial impact” on the number of licensed consultants for mortgage loan modifications. His office counts 39 licensed loan modification firms with 185 licensed associates in Nevada (I would guess there was that many in the Sacramento area alone a year ago).
Critics say that the ruling favors large banks, which don’t want advocates representing homeowners. However while there might be a small grain of truth to that, the ruling really favors consumers in my opinion. As one would suspect, unethical mortgage modification firms often fail to do any work after collecting fees, and the FTC rule will prohibit mortgage modification firms from being paid in advance so this can not (legally) happen ever again. What some may not expect is the vast majority of these companies should be considered unethical. Most of them have little to no experience in the business and if they so it’s usually that they were mortgage originators for the predatory lenders than put so many people into very bad situations during the real estate boom of 2004-07, but couldn’t get the proper licensing required to originate mortgage loans in today’s regulatory environment. Taking advantage of people on their way in (giving them the predatory loan) and again on the way out (charging thousands up front to try and modify their mortgage)…
Greg
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