South Bay Real Estate: General

February 09, 2012

South Redondo Beach Real Estate: Short Sales

Homeowners elect to do short sales as one alternative to forelcosure. Home buyers buy short sales in the hope of getting a better price than they might on a standard equity sale. Buying a short sale is usually a protracted and inconvenient way of acquiring distressed real estatebut can be worthwhile and attractive in certain instances.

As the flow of bank owned foreclosures has eased up, increasingly Redondo Beach home buyers are looking to short sales as a way to acquire a property at a discount to current market value. In theory, it would be nice if short sale buyers were consistently rewarded for the wait and inconvenience they invariably go through.

If you are not familiar with the short sale process, what we are specifically talking about is a real estate transaction wherein the seller lists and sells the home for less than is owed on the mortgage. Realistically, these real estate transactions would be better identified as short pays than short sales because most of the time they are anything but short as far as the time it takes to compete the short sale.

The short sale process begins when a seller accepts an offer on their home for less than what is owed on the mortgage and submits the offer (usually through their real estate agent) to the bank servicing the loan. Once the bank reviews the short sale package, it is submitted to the investor, the party who holds the note, for review and hopefully acceptance.

Assuming the short sale offer has been approved, an approval letter is issued from the bank stating the pay off amount and net proceeds they will accept, the terms, the specific buyer by name, and the time by which the escrow must close. What buyers must understand is that each and every short sale has to be approved in writing specifically for each and every buyer. Which is why buyers have to be very careful when they see a listing agent advertise "Approved Short Sale". It would be more accurate to state that the short sale was previously approved for another buyer and the hope is that it will be approved the second time around as well.

During 2011, there were 38 short sales that closed escrow in South Redondo Beach (90277). This represents 12% of the real estate that was sold. So clearly this is a sale type that agents and buyers have to pay attention to. Click here for the report.

Short sales are done on all types of homes including condos, townhouses, single family houses and on both owner occupied and investment properties. Price range? The lowest priced short sale in South Redondo Beach in 2011 was $342,500 and the highest price was $2,500,000. There were 11 single family residences sold short in 2011 and the balance were townhouses and condos. South Redondo Beach Real Estate may be more heavily weighted toward townhouse and condo short sales due to the epidemic of underwater homeowners in both The Village and Brookside Village.

Currently, there are 16 short sales listed for sale in South Redondo Beach and 17 in escrow. (There are 85 homes listed for sale and 48 in escrow.) So, 18% of MLS listings are short sales and 35% of open escrows are short sales. This is a fairly standard trend line for Redondo Beach in general (North or South), the Beach Cities in general and indicative of the South Bay. In other areas of southern CA, you may find over 50% of the Real Estate activity is short sales.

There are a few curious things happening. Take a look at the following chart:

NODs, notice of default, have been declining while NTS, notice of sales have been increasing significanlty. This should lead to more REO inventory on the market but we just haven't seen it yet.

What we have seen is that many homeoners who have received NODs have not listed their homes for sale. (Incidentally there are instances, although they are rare, when an owner is facing foreclosure and actually has equity. So all NODs do not result in short sales. Every situation is different.)

For example, currently there are 35 homes in South Redondo Beach which have received NODS. While receiving a NOD is not a requirement of doing a short sale, often it is a precurser to the short sale listings and is why these sales are often called pre-foreclosure. Of those 35, about a dozen or so are in some stage of being sold (listed, in escrow, etc.) So clearly not everyone facing foreclosure is interested in doing a short sale.

Are short sales good deals? Sometimes yes and sometimes no. One of the reasons they are often not good deals is that during the time it has taken to get approval, prices have further eroded and you are now buying at fair market value. For reasons we won't discuss here, often the bank is better off letting the short sale be foreclosed on and sometimes they are better off approving the short sale. If your agent is experienced in representing short sale buyers you'll be able to parse the difference.

What we are seeing right now in South Redondo Beach is that often the short sale is the only available property in the price range or area for the buyer and they are going into escrow for that reason alone.

Use the following pre-set quick searches to find short sale listings in the South Bay and Westside.

SOUTH BAY PRE-FORECLOSURE SHORT SALES

WESTSIDE PRE-FORECLOSURE SHORT SALES

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Technorati Tags: agent, Bay, broker, Brokers, Homes, homes, houses, MLS, NOD, pre-foreclosure, RE/MAX, Realtors, Redondo Beach, Sales, Shorewood, South

December 19, 2011

SoCal Merry Xmas

The number of homes sold in Southern California rose modestly last month from both October and a year earlier as investors and first-time buyers targeted homes priced below $400,000. Sales above $500,000 fell nearly 16 %from a year earlier amid a troubled market for larger home loans, a real estate information service reported.

A total of 16,884 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in November. That was up 0.3 %from 16,829 in October and up 4.2 %from 16,208 in November 2010, according to San Diego-based DataQuick.

While November sales of existing (not new) houses and condos combined rose 5.8% from a year earlier, sales of newly built homes fell 15.2% to the lowest level on record for a November.

"'Tis still the season to go bargain hunting -- or at least that's what the November home sales data suggest. The portion of homes sold to investors continued to hover near an all-time high. Lower prices and amazingly low mortgage rates tempted those with the confidence to buy and the ability to qualify for a loan, or to pay cash," said John Walsh, DataQuick president.

"But these sales levels remain subpar, with new-home sales stuck at record lows. Part of it is the economy and would-be buyers' uncertainty -- about jobs, home prices and a potential surge in foreclosed properties hitting the market. Part of it is the folks who can't move up because they're upside down with their mortgages. And many who want to buy more expensive homes struggle with the financing."

When viewed by price segment, sales trends varied considerably. The number of homes that sold for less than $400,000 last month rose 6.1% from a year earlier, while transactions above $500,000 fell 15.7%. Above $800,000, sales fell 17.6% year-over-year. November sales fell 22.8% from a year earlier in the $600,000-$750,000 range, which in coastal counties was impacted by the recent lowering of conforming loan limits.

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Technorati Tags: County, data, home, Los Angeles, median, Orange, prices, real estate, Riverside, San Bernadino, statistics, values

November 27, 2011

FHA Loan Limits Raised

In case you haven't heard, lawmakers have voted to restore loan limits for the Federal Housing Administration to pre-Oct. 1 levels, but the reprieve won't apply to Fannie Mae and Fannie Mac.

House and Senate leaders signed off on a conference report for a "minibus" appropriations bill that included language restoring FHA's ability to insure loans of up to $729,750 in high cost markets through 2013.

Because the minibus appropriations package also contains a continuing resolution to avoid a government shutdown and continue federal operations until Dec. 16 -- or until Congress completes nine remaining appropriations bills -- lawmakers didn't dally in approving it.

The House approved the bill today in a 298-121 vote, and it sailed through the Senate 70-30.

So, while this is good news for both home buyers and sellers in the South Bay and Westside, it really doesn't make any sense. Didn't we learn anything from the housing crisis?

FHA loans allow for lower down payments, lower credit scores, and a host of other factors that don't add up to as tough a standard as let's say the 10% down "conventional" loans require. So, while this is good news because it will help to shore up prices in the mid $700's and everything underneath, it should have been extended to Fannie-Freddie loans as well. Although in the current political climate, anything that helps housing is better than the alternatives.

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Technorati Tags: Beach, buy, FHA, Hermosa, limits, loan, Los Angeles, Manhattan, real estate, Redondo, sell

October 24, 2011

HARP: The Home Affordable Refinance Program

HAMP, HARP, and HAFA. The big three of failed programs - at least so far.

Today, it was announced that the government would be expanding the HARP program to include more underwater borrowers. The problem is that as currently construed only loans currently guaranteed by Fannie and Freddy will qualify. Whoops. That eliminates most of the higher dollar amount, interest only or neg am, NINJA product sold in CA (except for maybe the Inland Empire and does anyone there really want to refi anyway?).

A randomly check of a few dozen properties and guess what, none qualify.

HARP fails to address the major issue for upside down borrowers: they owe more than the house is worth. Will borrowers refi properties that will never be worth what they owe just to save a few hindred dollars a month when a strategic default or short sale makes more sense? That remains to be seen.

Here's how NAR rolled this out to it's member Realtors.

HARP Refinance Program Expanded

Borrowers who are current on their home loans may be able to refinance for lower interest rates, even if they are seriously upside down. The Federal Housing Finance Agency (FHFA) announced today that it will broaden the scope of the Home Affordable Refinance Program (HARP) by removing the current 125 percent loan-to-value cap for fixed-rate mortgages backed by Fannie Mae and Freddie Mac. Other program enhancements include, among other things, reducing certain fees, eliminating the need for a new property appraisal if the FHFA has a reliable automated valuation model (AVM) estimate, and extending HARP until the end of 2013. New federal guidelines for the HARP changes should be released to mortgage lenders and servicers by November 15.

The basic eligibility requirements for an enhanced HARP loan are as follows:

Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac. To check whether a borrower has a Fannie Mae or Freddie Mac loan, go to http://www.makinghomeaffordable.gov/get-assistance/loan-look-up/Pages/default.aspx.
Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).
Current loan-to-value (LTV) ratio must be more than 80%.
Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.

If the new guidelines aren't released to the lenders until mid November, maybe they implement them by Jan 1, 2012 if we're lucky. Stay tuned for updates as they become available.

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Technorati Tags: HAFA, HAMP, HARP, Home Affordable Refinance Program, loan modification, principle reduction, short sale, strategic default

September 06, 2011

FHA Loan Changes Coming

WHAT YOU NEED TO KNOW ABOUT
UPCOMING CHANGES TO FHA LOANS

As you may know, unless Congress extends the expiration deadline, Federal Housing Administration (FHA) loan limits set in 2008 will drop significantly beginning October 1. Congress raised the loan limit amount in response to the housing crisis to help spur the homebuying market. FHA loans offer borrowers very competitive rates and terms, and they only require a 3.5% down payment. Allowable debt ratios are higher than the typical debt-ratio limits imposed for conventional loans, and there are no income limit qualifications, so more people can qualify for them.

If the loan limit drops on October 1, many California homebuyers will face higher down payments, higher mortgage rates and stricter loan qualification requirements. Borrowers seeking larger mortgages will have to apply for conventional loans or jumbo loans, which may be subject to higher interest rates and down payments. Here are four things you should know to help your clients now.

1. LOWER LOAN LIMITS. The conforming loan limit determines the maximum mortgage amount that FHA, Fannie Mae and Freddie Mac can buy or guarantee. If your client wants to stay under the current loan limits, then encourage them to purchase now and close by September 30th.

2. DROPS BY COUNTY. Under the new FHA loan limits, some counties will see significant drops in their loan limits. San Diego County will experience a $151,250 drop, Sonoma County a $141,550 reduction, while Orange and Los Angeles Counties will drop by $104,250.

3. JUMBO LOANS. The current FHA loan limit is $729,750. After October 1, that limit may drop to $625,500. Mortgage loans higher than that amount will be considered non-conforming jumbo loans, which typically have rates that are 0.875% to 1.5% higher than conforming rates, depending on the loan product, and require higher down payments.

4. MORE STRINGENT REQUIREMENTS. FHA loan requirements may allow for lower credit scores. So an applicant with a lower FICO score can still qualify for an FHA loan, even if they can’t for a conventional loan. Your clients may be able to obtain an FHA loan three years after defaulting or having a loan foreclosed.

I believe that some of the collateral damage and fallout will be further price erosion and more foreclosures which will fuel the cycle of leading to even more short sales and foreclosures.

Let's pray that Congress decides to continue the current price guidelines.

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Technorati Tags: condos, FHA, homes, houses, loan limits, market, prices, pricing, real estate, townhouses, trends, values, zillow

May 31, 2011

Case-Shiller Shows Continued Home Price Declines: Buy a Foreclosure or Short Sale

Today’s release of Case-Shiller reported that the non-seasonally adjusted Composite-10 price index declined 0.62% since February while the Composite-20 index declined 0.77% over the same period falling to the lowest level seen since the Great Housing Collapse commenced in 2006 further indicating that housing is continuing slump into a double-dip.

The latest CSI data clearly indicates that the price trends are continuing to slump and the more timely and less distorted Radar Logic RPX data is continuing to capture notable price weakness nationwide. While some of this data has no relationship to local Los Angeles markets, psychologically it weights heavily on both buyers and sellers.

Further, both composite indices are now showing notable year-over-year declines, a weak sign indeed.

The 10-city composite index declined 2.91% as compared to March 2010 while the 20-city composite declined 3.61% over the same period.

Additionally, both of the broad composite indices show significant peak declines slumping -32.98% for the 10-city national index and -33.10% for the 20-city national index on a peak comparison basis.

Maureen Maitland, a S&P vice president, attributed the continued bad news to the varying states of recovery in regional economies, a general lack of confidence in the housing market and an oversupply of homes, including foreclosure inventory that is dragging down prices.

"If you can hang onto a house right now and you don't have to sell, you don't," Maitland said. "All indications are that prices are going to continue to fall."

"This month's report is marked by the confirmation of a double-dip in home prices across much of the nation," said David Blitzer, chairman of the S&P index committee, said. "Home prices continue on their downward spiral with no relief in sight."

When left unadjusted for seasonal variations, 18 out of the 20 cities declined from February to March, with Los Angeles down 0.3%, San Diego down 0.8% and San Francisco falling 0.1%. Seattle, up 0.1%, and Washington, up 1.1%, were the only two cities to post month-over-month gains.]

Although economists say there are many factors in favor of purchasing a home -- including increased affordability and rock-bottom interest rates -- falling prices influence buyer psychology because people don’t want to lose money on an investment that may drop in value in the near term.

Our advice: Buy a Foreclosure or Short Sale.

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May 21, 2011

Loan Modification and Short Sales: Changes to HAMP, HAFA, and UP.

The U.S. Treasury released updated guidance for the Home Affordable Modification Program (HAMP) this week requiring certain servicers to provide borrowers with a single point-of-contact through the entire default resolution process.

The new directive applies only to the largest servicers – those with a program participation cap of $75 million or more – however Treasury says all servicers participating in HAMP are encouraged to adopt the new guidance for providing borrowers with a single point-of-contact.

In addition to HAMP, the new rule also applies to the Home Affordable Foreclosure Alternatives (HAFA) program and the Home Affordable Unemployment Program (UP). However, it does not encompass second lien mortgage loans that may be eligible for the Second Lien Modification Program (2MP) under the Making Home Affordable umbrella.

According to the new guidance issued, servicers must assign each borrower a dedicated “relationship manager” who is responsible for communicating and working with

the borrower throughout the entire process, including any home retention and non-foreclosure liquidation options, and, if the loan is ultimately referred to foreclosure, that same relationship manager must be available to respond to borrower inquiries regarding the status of the foreclosure.

No later than September 1, servicers must assign a relationship manager to any borrower who is potentially eligible or who requests consideration for HAMP or one of the applicable government programs.

For borrowers who are in the process of being evaluated for HAMP, UP, or HAFA, who are in a trial mod plan or an UP forbearance plan, or who have executed a HAFA short sale or deed-in-lieu agreement, servicers have until November 1 to connect them with a dedicated relationship manager.

Within five business days of the assignment, the relationship manager must provide written notice to the borrower which includes a toll-free telephone number and at least one other method by which the borrower may directly contact the relationship manager, and the relationship manager must attempt to initiate contact with the borrower “promptly following the assignment,” according to Treasury.

The relationship manager is responsible for communicating to the borrower all options available for resolving their delinquency, and for coordinating maintenance and tracking of documents provided by the borrower to ensure the borrower is notified promptly if additional information is needed and to eliminate the need for the borrower to resubmit the same paperwork.

The single point-of-contact supplemental directive, along with specific details on the relationship manager’s responsibilities, can be accessed online.

Obviously, this addresses a long standing problem in the process and we hope to see this implemented in way that eases the process and serves underwater and distressed homeowners better than the current system.

If, in any way, this adds to your interest in buying a short sale or REO home, here's some quick links to view currently active MLS listings in the South Bay and on the Westside.

When it's time to Buy or Sell Real Estate use a local expert!

www,socalupdates.com is published by Ellis Posner (DRE # 01416970), a local Los Angeles area Real Estate agent who specializes in the South bay, Beach Cities and Westside Los Angeles. Ellis can help you buy or sell a home, acquire investment - income property or rent or lease a condo, town home or single family home. Call 310 975 5139 or email socalistings@yahoo.com. Other Ellis Posner published websites include www.90254realestate.com, www.90266realestate.com, www.socalistings.com, www.90277realestate.com, and www.90278realestate.com. You can follow socalistings on Twitter or become a fan of Socalistings on Facebook. Experience counts. Call Ellis Posner for "straight talk" on Real Estate and "results you can count on".

MARKET SNAPSHOT REPORT

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November 12, 2010

HAFA Short Sale Program: Eligibility, Requirements, Homeowner Benefits

The Home Affordability Foreclosure Alternative Program, HAFA, allows eligible homeowners to complete a short sale as an alternative to foreclosure. The HAFA program provides a number of benefits for eligible sellers including $3,000 cash for relocation, full release from future liability for first mortgage debt, and pre-approved HAFA short sale terms. HAFA has 5 very specific program requirements in order to be elgible. Lenders participating in HAMP are required to offer HAFA, but the program details and implementation may differ between servicers. The HAFA short sale program should offer more attractive and predictable timelines than those found in standard non HAFA short sales.

Are You Eligible for HAFA?

There are 5 very specific guidelines that homeowners interested in pursuing HAFA short sale eligibility must meet. They are:

The home being sold must be the primary residence.
Amount owed on the first mortgage must be no more than $729,759.
Current first mortgage was taken out on or before January 1, 2009.
Payment on the first mortgage (including principle, interest, taxes, flood and hazard insurance, and homeowner's dues if applicable) is more than 31% of current gross income before taxes and deductions.
The Homeowner is experiencing a hardship such as job loss, divorce, or medical emergency, and is unable to afford the current home loan.

These eligibility requirements are cited as a guideline and it is highly recommended that anyone considering a HAFA short sale verify their eligibility with the servicer of their loan. Certain HAFA eligibility requirements such as hardship may be open to subjective interpretation on the part of the servicer. You may be able to obtain approval if you are not living in the home due to job relocation more than 50 miles away. The HAFA short sale program is clearly not intended, however, for second homes, income, or investment properties.

Benefits of a HAFA Short Sale

As mentioned above, upon completion of a HAFA short sale, the seller will receive $3,000 in order to help with or defray their relocation costs. Certainly that alone should be more appealing than having an eviction notice placed on your front door. Beyond that, it is a requirement of the HAFA program that the seller is given full release from future liability for first mortgage debt. While California is a non recourse state relative to purchase money mortgage loans, some lenders have included verbiage in their non HAFA short sale paperwork that reads as if the seller is being asked to relinquish or waive that protection. (Consult an attorney prior to signing any non standard paperwork requrired by the lender, servicer, or investor.)

So, in addition to the the $3,000 relocation money, full release from first mortgage debt (no cash contribution, promissory note, or deficiency judgement is permitted in a HAFA short sale), what are the other benefits?

A short sale may not be as damaging to your credit as a foreclosure. Some lenders, such as BofA advertise that upon completion of a HAFA short sale, they will report your loan was "paid in full for less than the full balance". BofA also indicates that if you complete a HAFA short sale, you may qualify for a home purchase again sooner than if your home is foreclosed on. As the credit reporting agencies change their calculation of the FICO score from time to time, these statements may or may not holf true going forward. However, it is almost a certanty that HAFA resolution of the debt will always be more preferable to credit scoring than a foreclosure.

Another benefit of the HAFA short sale is that you may get to stay in your home longer than if you are foreclosed on. During this time if you are not making mortgage payments, you may be able to resolve other debts or save money while not worrying about your home being sold at auction and an eviction notice placed on your front door.

Finally, another benefit is that you will be able to maintain some level of control over the timing of your move to your new home and be able to remove many of the unpredictable elements involved in a standard short sale or a foreclosure and eviction.

Timeline of a HAFA Short Sale

While HAFA is a government program introduced by the Treasury Department in 2009, the servicer of your mortgage implements the program and there may be some variation from lender to lender.

In general, here's what you might expect if BofA is the servicer of your first mortgage. Other lender programs may work differently.

Submission of full financial package. If you have applied for a loan mod under HAMP, BofA may already have your financials on file. If your loan mod file is already on Equator, which is the internal processing platform BofA uses, you may only have to submit a few other items (such as updated pay stubs, utility bills, etc) in order to get started on HAFA short sale.
Within 60 days you will receive a Short Sale Agreement and an acceptable sales price if you are accepted into the HAFA program. (Please note, BofA advertsises 30-60 days for HAFA approval).
You then have 120 days to list your home with a licensed Real Estate Agent and enter into a purchase agreement. (Sorry, you can't do a FSBO HAFA short sale.) BofA indicates that in their HAFA implementation, that you may be able to get an extension if you can not secure a buyer for your home in 120 days.
Within three days of accepting an offer on your home, the RPA (in California) will be submitted to the bank along with a Request for Approval of a Short Sale document. BofA states that they will respond within 10 days.
If the offer is accepted, the HAFA short sale is completed and the mortgage and other loans against the home are setteled from the proceeds of the sale.

You may have some questions as to item 4 above. In a HAFA short sale, first the homeowner is approved for HAFA eligibility. Then, when an offer is accepted, the sales contract and terms are approved.

HAFA Short Sale Tips for Sellers

If you have not already submitted a loan modification package you will need to prepare your financial information for submission. Typically, this will include 2 years of tax retruns, current pay stubs (if you are working), a detailed list of all your outstanding credit card debt, car loans, student loans and any other debt you may owe. You will also need to provide a full accounting of you monthly expenditures for such items as food, gas, child care, etc.
If you have a second mortgage or HELOC that is with a different lender, many servicers (BofA for example) will require that you (or your agent) receive a release from that loan separately. If you have a first and second with BofA they will usually handle both for you.
List your home for sale as soon as you dedice to do a short sale. Even if you are not eligible or approved for HAFA, you can still try to do a standard short sale which may still be preferable to foreclosure.
Engage a Real Estate Agent who specializes in short sales as early as possible in the process. The agent or negotiator working with the agent should have familiarity with your lender's processes and systems.
Return collection calls from the lender and let them know that you have initiated a HAFA short sale or that your home is currently listed for sale as a short sale. While the collector can often to nothing more than note the file as such, it is still better than not communicating.
Even if you have received a NOD (notice of defauly), it is still not too late to start the HAFA short sale process. While there are no guarantess, most servicers will not foreclose if you have a valid purchase agreement and an open escrow.
There are higher first loan limits available if you occupy one unit of a 1-4 unit residence.
If you can not complete a HAFA Short Sale, you may be offered an option of a deed in lieu of foreclosure. Consult your attorney as to whether that might be a viable solution for you.

Summary

The purpose of the HAFA short sale program is to provide an alternative for homeowners who are not able to complete a HAMP or other loan modification. For some, who realize that they will no longer be able to afford their mortage payements, they may skip the loan mod step and proceed directly to initiating a HAFA short sale. Others may elect to try a loan modification first.

HAFA was implemented in order to take a lot of the guesswork out of the short sale process. Previous to HAFA many short sales dragged on for months without any resolution creating uncertainty for both buyers and sellers. It is the hope of everyone involved in the process that HAFA is a significant improvement to the short sale process.

If you need to list and sell your home as a short sale in Los Angeles or Orange County.....

Call Ellis Posner (dre # 01416970). Ellis Posner specializes in representing buyers and sellers of distressed properties including short sales, REOs, and probate sales. Ellis Posner can help you buy or sell a home, acquire investment income property or rent or lease a condo, townhouse or single family home. Call 310 975 5139 or email socalistings@yahoo.com. Experience counts. Call Ellis Posner for "straight talk" on Southern California Real Estate.

Follow Socalistings on Twitter or become a fan of Socalistings on Facebook to receive real estate updates and and breaking news daily. If you like this website, you may also want to check out www.socalistings.com.

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October 21, 2010

Foreclosure Update: MERs, Robo-Signers, and more....

Bank of America (BOA) and GMAC announced Tuesday that they were resuming the prosecution of foreclosures following several weeks of a self imposed moratorium. The moratorium in BOA's case extended to all 50 states while GMAC at first stopped evictions and owned real estate sales 23 states primarily those in which judicial foreclosures were the primary mechanism for repossession and then also halted foreclosures. The moratorium was initially provoked by suspected problems with the way in which foreclosure affidavits had been processed. Additional questions then arose about ownership of mortgages and the standing of entities to foreclose. BOA will resume foreclosures on over 100,000 homes in two dozen states while GMAC will resume foreclosures, evictions and sales as individual documents are reviewed.

Despite the assurances from the two financial institutions that they feel secure in their right to move forward, the matter will probably not go away any time soon. Attorneys general in all 50 states have announced investigations, affected homeowners have brought suit, and the White House announced Tuesday that an interagency task force on mortgage fraud has launched an investigation as has the Federal Housing Administration.

At the heart of the problem are three apparent issues. Robo-signing, the process of generating thousands of affidavits seeking summary judgment, often by unskilled and unqualified employees who have neither read nor certified the underlying documents, has been well covered by the press including MND. Two other issues, however, have not received much exposure.

The first is the involvement of the Mortgage Electronic Registration System (MERS). This company, formed in 1998 by Fannie Mae, Freddie Mac, and several major lenders, actually is the owner of record of approximately 60 percent of American mortgages. Arguments have been made that MERS does not have the right to foreclose on properties where the note is held by others. However, according to the MERS website, at closing a borrower signs a security instrument - the mortgage or deed of trust - which names MERS as nominee for the lender and its successors. The lien is recorded in the name of MERS and as long as any sale of the note is to a MERS member MERS remains the mortgagee of record and continues to act as a nominee for each subsequent note-holder.

The rights of MERS to act on behalf of the note-holder in foreclosures as well as other actions have been upheld in a number of state court decisions. These decisions have variously recognized MERS' standing to foreclose and have confirmed the company's ownership of the security instrument.

The existence of MERS appears to actually correct many of the ownership issues that arose during the savings and loan and banking crises of the 1980s. At that time it was very difficult to track the owners of mortgages loans were sold, servicing rights were transferred, or financial institutions failed. Whether by accident or design, banks had a pervasive tendency to avoid recording assignments. This created an enormous problem, not so much with foreclosures as for attorney's attempting to backtrack and obtain discharges for long paid notes. This deficiency in assignments was also a problem when interest rates dropped precipitously and homeowners were in serial refinancing mode - moving to a new loan before the last mortgage or even the one before that could be recorded. Having a mortgages assigned permanently to MERS with a unique identifying number makes it possible to track down a current or previous mortgage quickly and inexpensively.

The third issue in the current foreclosure controversy is Transfer of Trust. According to a research paper produced by BOA, when a note is transferred to a trust, it is endorsed "in blank", meaning that the owner of the note is not assigned. The note is only endorsed to the trustee or servicer on behalf of the trust if they need to institute foreclosure proceedings. The physical documents are typically delivered and held by the designated custodian for the trust. The existence and validity of the notes should be verified by the seller and the custodian prior to transfer and the loan purchase agreements also requires evidence of ownership of the loans by the trust. That ownership should also be recorded with MERS.
Several of the lawsuits which upheld the rights of MERS as owner of the security agreements also addressed the issue of "in blank" endorsements. In Mortgage Electronic Registration Systems, Inc. v Ventura for example, the court observed that the current practice of bundling and servicing mortgages by third-party companies is now the rule rather than the exception. The note was endorsed in blank and was therefore bearer paper; MERS could therefore bring the action.

Regardless of the outcome of the various investigations that are now starting up, the banks are going to pay dearly for this controversy. They probably have every right to foreclose, but this is a PR disaster that brings to the forefront - and probably to a number of eager committees in the next Congress, not only foreclosure documentation but the debacle surrounding various loan modification programs. It will certainly also remind a lot of people of the malfeasance of the middle decade that led to the mess in the first place.

So, if all this hasn't totally scared you away from wanting to buy a bank owned REO or a pre-foreclosure short sale, feel free to browse the foreclosures currently listed in the MLS.

You can find more listings at www.socalistings.com.

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August 23, 2010

11 Closed Escrows YTD 2010

This puts me a somewhat behind my blistering pace of 2009 when I completed the year with 23 closed sales. Like everyone else in the business I've been affected by the slowdown since the first time buyer credits expired a few months ago. Data indicates that Southern CA sales volume is off about 20%. I think when the numbers come out for August, it will be the same or worse.

A lot of activity has been moved to short sales which unfortunately put the buyers on the sidelines for months at a time. I recently looked at short sale activity in Redondo Beach. Of approximately 135 open escrows, 55 were shot sales. Curiously, of the 65 closed escrows for July only 8 were short sales. What that leads me to conclude is that almost 50% of the escrows are tied up in the months long short sale approval process while only about 12% of closed sales are shorts and that only 1 out of 5 short sales go through. Well maybe my math isn't exact, but I'm sure you get the idea. Meanwhile, asset managers continue to hold on to the bank inventory and I'm concerned that there may be a fire sale at year end further depressing prices as they look to clean up their balance sheets.

Looking at the numbers of NODs out there, I can tell you that the housing market is nowhere near healthy anytime soon, and I'm an optimist.

CURRENT WEB SITES

For those of you who have been wondering, here's the current lineup:

www.90266realestate.com Manhattan Beach Only

www.90278realestate.com Redondo Beach Only

www.socalistings.com South Bay and Westside MLS

www.socalupdates.com Ellis Posner sales and general news updates.

More later on how I will be branding these differently going forward.

Posted at 09:36 AM in General | Permalink | Comments (0)

July 07, 2010

You can now find Socalistings on Facebook!

The next time you are in your Facebook account (right now?), do a search for my new "business page" for socalistings. You'll find Real Estate updates with a focus on Los Angeles area activity in the South Bay and Westside. Hopefully, you'll "like" the page, become a fan and recommend it to your friends who may be thinking of buying or selling or just like market updates and other stats.

If you haven't been to any of my other sites recently, www.socalistings.com, www.90266realestate.com, and www.90278realestate.com have all been updated with my new IDX search which I believe is the best consumer facing product on the market. (Well, with one exception - some visitors haven't figured out yet that after you hit "search", you also have to click on "results" to get the map to load.)

I'll be implementing the same IDX search on www.socalupdates.com sometime in the near future as well.

You can also follow socalistings on Twitter.

Posted at 09:22 PM in General | Permalink | Comments (0)

June 18, 2010

Changes coming to socalistings.com - best of breed IDX MLS Search

I recently decided to change vendors for my MLS search on my various websites: www.socalistings.com, www.ellisposner.com, www.90278realestate.com, www.90266realestate.com and this one.

I used my previous vendor for about 6 years and being the loyal kind of guy that I am, I would have stayed with them even longer. Truth of the matter is that their product, while it offered many great features was just slow. Things came to a head for me last month when their tech support tried to convince me that a 5-10 second response time, with no counter, was acceptable. No way.

If you would like to check out the new MLS search, here's a link to my "beta": http://tinyurl.com/socal-IDX.

It also appears in the post immediately preceeding this one.

I'll be integrating this tool into the other websites and transitioning over the next month or so, meanwhile I'd love to get your feedback. I think it's a killer app for MLS search.

Some other tools you may also want to check out.

For a market snapshot-trend report of prices and other real estate related info, try http://tinyurl.com/socal-snaphot (LA area only, sorry). To search foreclosures, this is a good one, http://tinyurl.com/search4closures.

Posted at 02:12 PM in General | Permalink | Comments (0)

May 14, 2010

Housing Prices - Market Update

I recently posted an article from USA Today titled "Home Prices Could Sink without Tax Credit" to my FaceBook account. The reporting discusses the anticipated effect the expiration of the various Federal Tax Credits available to both first time buyers and more recently repeat buyers will have on prices. Basically, they regurgitate the usual drivel that in the absence of an incentive for first time buyers, the market will collapse. The market may implode, but for entirely different reasons.

There are three significant determining factors that may move prices down again this year and into 2011 and for the most part, I have not seen much discussion on the blogs or elsewhere mentioning the following.

1. There is not an endless supply of first time buyers: Any recovery predicated solely on first time buyers is built on significantly false assumptions. Not every first time buyer will, or even wants to be a home owner. There are many valid reasons for renting and it serves many people's financial requirements and lifestyle well. In speaking with brokers in the area, everyone is noticing a slowdown on the buy side, particularly first timers. A reasonable conclusion might be that almost everyone (FTB) who is going to buy has already taken advantage of the low interest rates, tax incentives, and depressed prices.

2. The published numbers of "underwater" home owners is understated: I have seen numbers thrown around in the 25-30% range on a national basis. In Southern CA, the true number is over 40% and in some areas over 50%. What I am specifically referring to is home owners who either owe more than their home is worth or who don't have enough equity to sell when transaction costs (5-7%) are taken into account. Consequently, there are many potential sellers who simply are stuck where they are for as long as they can make their payments. These may be families who in other times were move up buyers or even downsizing sellers.

3) This gets very ugly when the investors leave the table: In this example I am referring to the investor who is buying rental properties (not the flipper). Real life example. A few days ago, my partner and I submitted an offer on a 2 unit rental property in the Hancock Park area. The property was priced to sell at $400,000. Our client offered $450,000 (although I did advise him to go higher). He is an all cash investor who can close in 10 days. The REO listing agent informed us that they have over 100 overs many of which are all cash and most of which are significantly above list price. Our client is just one of dozens thinking the same thing. Owning real estate pays a lot more than bonds, CDs, or other "safe" investments. Once there are other reliable safe harbors (not gold or stocks) and prices rebound a but more, many of these all cash investors will be long gone.

In conclusion. While tighter inventory should push prices up (standard supply and demand), artificial elements (government supported lower interest rates and tax incentives) may have boosted a market that was otherwise on life support. It will probably only be apparent in the rear view mirror as to whether it was pent up demand and a new affordability which collaborated to stabilize the market or other elements entirely. Let me know what you think.

Remember, you can search the entire MLS for Southern CA as well as access a powerful foreclosure database at www.socalistings.com. Follow me on Twitter for daily Real Estate "tweets".

Posted at 09:58 AM in General | Permalink | Comments (0)

March 11, 2010

Shorewood Realtors - Agent of the Month

OK, if you aren't worn out yet with all the awards I've been receiving recently, February Agent of the Month again for my office.

But you're probably more interested in what's happening in the market right now. Inventory continues to be scarily low. I could probably sell 12 houses next week if we had the inventory. The most common requests are still SFR - Redondo around $500K, condo $400K; N Torrance SFR under $400K, West Torrance SFR $600K, and anything in Manhattan Beach under $1M. Well almost anything.

If you know anyone looking to sell a house in Torrance over 2000 sq ft, SFR or nicer towhome near Riviera Village under $650K, or MB under $1M let me know, I have buyers today.

On the marketing side of things, I have updated www.90278realestate.com with a number of new searches and current news. I'm working on doing the same for www.90266realestate.com as well. My main search site, www.socalistings.com will be getting a refresh soon as I look to incorporate some new widgets I'm testing for realtor.com.

Posted at 05:42 PM in General | Permalink | Comments (0)

March 01, 2010

YTD Sales 2010 $5,110,500 as of 2-28

As of the end of February I have sold and closed escrow on 4 properties (5 sides) for a total of $5,110,500 in sales. Curiously the last two sales were homes that never even hit the MLS (Spreckels and 11th St). I have one more in escrow, 70 Cypress in Rolling Hills Estates, which is a 2 bedroom pus den townhouse that is selling for $695,000. That one should close by 3-12.

The state of the market right now is "active". While some areas still have an over supply of inventory and are experiencing price declines, there is not adequate inventory to satisfy the current buyer demand in other segments. Well, let me qualify that somewhat. Well priced properties in desirable areas are selling if they show well and are easily accessible. Torrance and North Redondo have strong demand as does RPV, particularly in the Hawthorne Blvd corridor close to Peninsula Center.

While there are now more REOs in the better South Bay neighborhoods than a year ago at this time, most aren't being priced so as to depress neighborhood prices.

My new blogsites, www.90266realestate.com (Manhattan Beach) and www.90278realestate.com (Redondo Beach) seem to be getting traffic. As they are more targeted than this format, I intend to expand on the idea.

Posted at 08:20 PM in General | Permalink | Comments (0)

February 09, 2010

Shorewood Realtors Top Producers

I just came back from Shorewood's annual achievement - top producers awards presentation and was pleased to find out that I was in a 4 way tie for number 8 in the entire company (over 350 agents-7 offices).

The take away for anyone working in a sales capacity in any industry is that if you focus on helping other people and love what you are doing, you can be pretty successful. That plus my two favorite axioms, sense of urgency and fanatic attention to detail, will get most people pretty far in any client facing service capacity.

Posted at 06:03 PM in General | Permalink | Comments (0)

December 22, 2009

I want to thank ALL of my 2009 Clients

Whether you were buying or selling Real Estate during 2009, it certainly wasn't an easy year for anyone. Between appraisers, lenders, HOAs/CC&Rs, REO asset managers, loss mitigators (short sales), termite companies, home inspectors, FHA-VA, roof repairs, handymen, homeowner insurance, escrow companies, home warranty policies, the agents on the other side of the deals and on and on....well it sure was fun.

So, thank you for your business, your trust, your patience and hanging in with me through the process.

Orn and Raj Patel - buyers of a duplex in El Segundo.

Rashmi Shah - investor buyer of condos in Gardena, Hawthorne, and Long Beach.

Mark Grantham and Karen Driskill - sellers in Walteria (Torrance), buyers in Hollywood Riviera (Torrance).

Tom and Grace Maeda - buyers in Torrance.

Toby and Carla Harwell - buyers in Torrance.

Brett Hinton and Brooke Lowrey - buyers in Culver City.

Bruce Lee and Doris Chan - sellers in Torrance.

Allan and Gigi Freeman- buyers in Gardena.

Mike and Gina Knight - buyers in Torrance.

Serma and Pidor Oeura - buyers in Long Beach

Carly McCabe and James Redd - sellers in Hermosa Beach

Caren Balde and Carl Peterson - sellers in Redondo Beach

Jenny Wang an Alex Dong - buyers in Rancho Palos Verdes.

Diane Corcoran - buyer in San Pedro.

and my clients who currently have their homes listed with me - we'll get it done in 2010.

Dennis Swee (in escrow - Redondo Beach).

Melanie Foo and Eugene Yang (listed in RPV).

Tom Roseland (listed in PVE and Torrance).

Plus all the great buyers I'm currently working with.

I also want to thank my great support team:

Cathy Haryung - Brighton Escrow

Roxanne Gangi - Brighton Escrow

Matt Goeglein - Fidelity Title

Judy Kesselman - Bank of America

Ron Campbell - US Bank

Tom Clarke - Signature Inspections

Diane Sanders - Old Republic Home Warranty

plus the team at All City Termite.

Lastly, there is no way I could do any of this without the support of my wife, Laksika.

Best wishes and blessings for 2010.

Posted at 12:55 PM in General | Permalink | Comments (1)

December 16, 2009

Mortgages - Not Expected to Get Easier

More than three years into a painful housing crash, the real estate market has sent recent--albeit tentative--signs of stabilization. Home sales have increased, inventory levels are down, and price declines have become less precipitous. Along with more affordable home prices and a tax perk from Uncle Sam, attractive mortgage rates--which remained below 5 percent as of late November--have been a driving force behind this development. The availability of low mortgage rates will play a decisive role in the performance of the 2010 housing market as well. To help consumers better understand the requirements and costs they will face as they shop for a home loan next year, U.S. News spoke with a handful of housing market experts and compiled a list of 10 things to know about getting a mortgage in 2010.

1. Still tight: The steep run-up in home prices during the first half of the decade was fueled in large part by breezy lending standards. Some bankers handed out loans without down payments or documentation requirements. But when the housing bubble popped and those loans became massive losses, banks began raising lending standards for borrowers of all stripes. And with the labor market continuing to erode--the unemployment rate hit 10.2 percent in October--and mortgage delinquency rates setting new records, there is no reason to expect credit requirements to loosen in 2010. "Lending standards have tightened dramatically between 2007 and 2009," says Scott Stern, CEO of Lenders One, a cooperative of independent mortgage bankers. "I think there will be a little more belt-tightening in 2010."

2. Down payments: This tight credit environment affects consumers in several ways. First, down payment requirements will be higher than they were just a few years ago. Loans backed by the Federal Housing Administration are at the low end of the spectrum and come with minimum down payments of 3.5 percent. (More on FHA loans below.) Down payments on loans outside of the FHA will vary depending on the market, the borrower, and the property type. "Generally, to get the best rate around, you need at least 20 percent for a down payment," says Guy Cecala, publisher of Inside Mortgage Finance. "That doesn't mean you can't get a mortgage if you have less of a down payment . . . it just means that you are not going to get the best interest rates." Could lenders ease up on down payment requirements in 2010? Possibly. If lenders become convinced that home prices are improving, they may allow borrowers to put slightly less down. But don't expect that to occur until the end of the year--if at all.

3. Credit scores: Cecala says that borrowers will need a FICO score of at least 730 to get the best mortgage rates. They also will need to fully document their income and assets. To ensure that your credit score is as strong as possible, borrowers should access their credit reports. The Fair and Accurate Credit Transactions Act entitles consumers to one free credit report from all three major credit reporting bureaus--TransUnion, Equifax, and Experian--each year. (The free reports can be obtained at annualcreditreport.com.) Consumers should examine each report to make sure it doesn't include any errors. "[Consumers] ought to know what their credit score is; they ought to know what's on their credit report; they ought to make sure that what's on their credit report is in fact theirs," says Rick Allen, director of strategic initiatives for Mortgage Marvel, an online mortgage shopping website. "That's a must do for everybody."

4. FHA: Borrowers who can't meet these tighter lending requirements can turn to the FHA, a federal agency that insures mortgage loans against default. Standards for FHA loans are typically less onerous than those for private lenders. The average credit score for FHA borrowers is about 690, and the minimum down payment is 3.5 percent, Cecala says. "If you can't make the 730 [credit score] or you can't make the 20 percent down [payment], the next best thing is FHA," Cecala says. The downside is that FHA loans come with additional costs. Borrowers must pay an insurance premium as well as a slightly higher interest rate, Cecala says.

5. FHA increase? With so many borrowers unable to meet today's stricter lending requirements, FHA-backed loans have become increasingly popular. Today, the FHA guarantees nearly 3 of every 10 new home mortgages. That's a stunning increase from 2006, when the agency backed roughly 3 percent of new home loans. Meanwhile, the agency's finances have deteriorated considerably. The seasonally adjusted delinquency rate for FHA loans increased from about 13 percent in the third quarter of last year to 14.36 percent in this year's third quarter. At the same time, the agency's capital reserve ratio dipped below the level that Congress mandates. In the face of mounting political pressure, the Obama administration has announced new steps that may make it more difficult for some borrowers to obtain mortgages backed by the agency. The steps include raising the minimum FICO score, increasing up-front cash requirements, and possibly charging higher insurance premiums. "We want to ensure that we are able to continue to support the housing market in the short term and provide access to homeownership over the long-term, while minimizing the risk to the American taxpayer," Housing and Urban Development Secretary Shaun Donovan told a congressional committee in written testimony.

6. Asset purchase program: Mortgage rates in 2010 are expected to climb from 2009's extremely low levels. After the Federal Reserve announced plans to purchase debt and mortgage-backed securities from Fannie Mae and Freddie Mac last year, rates on 30-year fixed conforming mortgages fell to historic lows, plunging to 4.97 percent in late November from 6.19 a year earlier. But the Fed's asset purchase program is scheduled to expire at the end of the first quarter of 2010, and a lack of private demand for mortgage-backed securities could lead to higher rates. Keep in mind that the Fed has already extended this program once. And if it appears that the market needs additional government support to keep rates low, the Fed could always decide to remain in the market. Keith Gumbinger of HSH.com expects rates to increase from current levels to between 5 and 5.25 percent by the end of March 2010.

7. Jumbo mortgages: Rates on more expensive home loans--or jumbo mortgages--have dropped to extremely attractive levels, hitting 5.88 percent in the week that ended November 27. "That ranks with all-time bests," Gumbinger says. But while he expects rates on jumbo mortgages to remain historically attractive throughout 2010, many borrowers won't be able to obtain them. That's because most banks have to keep jumbo mortgages on their books and therefore apply much stricter lending standards to them. (Smaller conforming loans can be sold off to Fannie and Freddie.) "Your down payment requirements [for jumbo mortgages] are anywhere between 40 percent down to 20 percent down, depending upon what is happening in your marketplace," Gumbinger says. "You may have to show superhuman strength in terms of credit, [and] you may have to show extraordinary income size."

8. Fed rate hike: In attempting to jump-start the economy, the Fed has slashed its benchmark federal funds rate to as low as zero percent. And even as some express concerns about future inflation, the central bank in early November said that economic conditions were "likely to warrant exceptionally low levels of the federal funds rate for an extended period." As such, economists don't expect the Fed to raise rates anytime soon. "The statement does not lead us to change our view that the Fed will keep rates unchanged until the September 2010 meeting, when we expect the first rate hike," Dean Maki of Barclays Capital Research said in a report. But while an increased federal funds rate could push rates on certain products--such as adjustable rate mortgages or home equity lines of credit--higher, it has little direct influence on fixed mortgage rates.

9. Recovery: A recovery in the U.S. economy may also lead to increased mortgage costs. That's because economic improvement could create more demand for credit, which pushes rates higher. At the same time, a recovery could embolden investors to move money out of ultrasafe assets like 10-year treasuries and into more risky investments. And since 30-year fixed mortgage rates tend to track the yield on the 10-year treasury note, such a development would put upward pressure on mortgage rates. Gumbinger says that economic improvement and other factors could push rates on 30-year fixed mortgages as high as 5.75 percent by midsummer. "After that, you are going to be at the whims of the economy," he says.

10. Fannie and Freddie's future: A wild card in the outlook for mortgage rates is the administration's plans for Fannie and Freddie. The two mortgage finance giants--which buy home loans from banks--are a key source of liquidity for the market. The government-chartered companies have long been controversial, and speculation about their future has been mounting since their shaky finances forced Uncle Sam to take over last year. The administration's plans for their future--which could include liquidation or converting them to public utilities--could become clearer in early 2010. This decision could have profound implications for mortgage rates, Gumbinger says. "We could have some dislocations in the supply chains with mortgages depending upon how immediate or how gradual the changes to the structures of those companies are," he says.

Posted at 07:47 AM in General | Permalink | Comments (0)

November 26, 2009

Loan Modifications - Are they Working?

Interesting article in the LA Times today http://tinyurl.com/yh7qan8 regarding loan modifications. Some high, or rather low, points:

Making Home Affordable has only achieved about 350,000 trial modifications as of 9-1-2009.
Of those, only 1700 have been made permanent. Yes, that's one thousand and seven hundred, not a misprint, not 17,000.
The government has recently allowed servicers 5 months, not the original 3 months to handle each case.

This program is supposed to reduce mortgage payments to 31% of the borrowers income. My issue with ths concept is that it doesn't address the huge underlying problems:

Nearly one in four homeowners are underwater - they owe more than their house is worth today and to be fair, anytime soon.
According to the Mortgage Banker's Association, more than 4 million homes are either in foreclosure or more than 90 days past due.

As for that last statistic, what I've heard is that there are more homes in some stage of foreclosure than there are homes currently listed for sale. That's a big, big problem.

As I have stated throughout the current housing crisis, unless the issue of the underlying valuation is addressed in a comprehensive systemic manner, we can't begin to see daylight. Specifically, homeowners who can no longer either afford their payments or who simply want out and a fresh start have to be given a viable alternative to foreclosure. Foreclosure is lose - lose. It's a platitude, but we need win - win.

One possible solution would be a streamlined short sale process with the government picking up some of the shortfall (from repaid or unused TARP funds) thus allowing sales of underwater homes and possibly some money in the pockets of the borrowers to move and get on with their lives.

In any case, collective denial as to the eventual outcome of 25% of homes having negative equity does not move the ball forward and neither does programs such as Making Home Affordable if they are poorly thought out and implemented.

Curious about the foreclosure activity in your area. Check out http://tinyurl.com/search4closures.

Posted at 12:27 PM in General | Permalink | Comments (1)

November 24, 2009

Are you upside down on your Mortgage?

According to recently released data, almost 25% of Americans owe more on their mortgage than their home is worth. Wow. California is one of the worst states in the country for borrowers who have negative equity in their homes. Florida, Nevada, Arizona, and Michigan are worse than CA. Clearly parts of 4 of these sun belt states were over built in the boom. Michigan has well documented economic problems.

Nationally, nearly 10.7 million residential properties are underwater and another 2.3 million have less than 5% equity which means that realistically they can't sell without doing a short sale.

The bulk of the affected mortgages were taken out between 2005-2008. No surprise there, other than even as the market tanked, banks continued to lend against declining assets. What is even scarier is that of those who took out mortgages in 2009, 11% now have negative equity and 5% are approaching it.

The last statistic is not entirely surprising as many homes were purchased in 2009 using FHA financing which only requires a 3.5% downpayment (up from 3% previously). I have long been predicting that FHA will raise the minimum down payment from 3.5% to something closer to 10%. We'll see.

So while the S&P/Case-Shiller HomePrice index has reported two consecutive quarters of increasing prices, the over hang of foreclosed inventory and willingness of homeowners to walk away continues to place extreme prcing pressure on existing non distressed inventory.

Here's a real world example.

I recently listed 909 E Denwall in Carson for $449,000. It is a four bedroom SFR. No sooner had my listing hit the market than two comparable REOs came on the market priced at $399,000. I have no dount that the REOs will sell for more than the list price, maybe even up to the list price of 909 Denwall. But, most buyers looking at all three properties will conclude that Denwall is over priced. What they won't see is that the REOs will sell for $439,000 or more, be in worse condition, and have more onerous sale terms (the bank addendum). Typically, aggressively priced REOs in this price range are getting 20 offers or more. Unfortunately for my sellers, they don't have enough equity to go much lower. So, as the market for standard sales becomes stalled, the REOs and short sales slowly erode everyone else's equity.

If you want to see the current foreclosure activity in your area paste this URL into your browser: tinyurl.com/search4closures.

Posted at 08:16 PM in General | Permalink | Comments (0)

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