Housing Report for July 29, 2009/Focused On the Inland Empire
Here are the raw numbers for the last 120 days as of 7/29/09
In Riv. NOD=16,829. NOS=13,161. Sold through Trustee Sale=7,441
In SB. NOD=13,049. NOS=10,840. Sold through Trustee Sale=6,238
Commercial/Apartment (5+)/Industrial/Land/Agriculture
In Riv. NOD=481. NOS=243. Sold through Trustee Sale=277
In SB. NOD=417. NOS=218. Sold though Trustee Sale=266

*A consumer protection agency of some sort is on the horizon. The Federal Reserve and The Department of Treasury are both claiming they have the greater ability to protect the consumer. The debate will go on for some time as to who should be in charge and how much authority it should have, but my prediction is by the end of this year a new organization with new sweeping regulatory powers will emerge. Lenders, Realtors, Municipalities and County government will all need to keep a watchful eye on this subject. We will provide updated information as it comes.
*The Mortgage Disclosure Improvement Act is here and will go into effect on July 30, 2009. There are very specific rules with respect to upfront disclosure and re-disclosure. If an initial rate is disclosed and a subsequent rate is off by a 1/8 (.125), then an additional re-disclosure must be made. From the date the borrower receives this disclosure, an additional three days must pass. Regardless, even if there is no re-disclosure required, after the initial disclosure requirements have been met, loan documents cannot be signed until seven days have passed. There is much to learn and know about this. If there are any questions, please write me and I will be happy to provide direction.
*Option Arms are a growing concern. A just released report from the Government Accountability Office shows that of the 837,000 Option Arms originated from 2000 through 2007, only 30% are current. The report brought up the fact that these loans will be re-casting in 2010 and 2011. Approximately 300 billion of these loans were funded by Countrywide (BofA) and Wachovia (Wells Fargo) in California.
*The Home Affordable Modification Program (HAMP) may offer some hope in obtaining more consistency in both results and reporting of modifications. On August 4, the administration will begin publishing the number of loan mods by each individual servicer involved in the program. The report went on to say that the differences in modification results vary widely and often have very little rhyme or reason.
*The House Appropriations Committee approved the extension of the high cost loan limits through September of 2010. In the IE, this means it will remain at 500k and in OC/LA it will remain at $729, 750.
*14.2% of FHA loans are at least 30 days behind on their mortgage. The Obama administration will announce today a new program intended to offer FHA homeowners an opportunity to stay in their homes, make payments that are affordable and defer monies until the home may be able to be sold to cover the balance owed.
Under the plan, lender will be able to reduce the principle by as much as 30% to make the payments affordable. Under the new plan, borrowers of FHA insured loans will only have to be behind one payment instead of the previously required three. Servicers will receive $1,250 dollars for every successful modification.
This program is different than the Obama, HAMP plan since the GNMA pool has unique contract with investors prohibiting this.
*Fed’s Beige Book reports stabilization in many markets. Recession seems to be easing. It was released on 7/29/09.
*China’s exerting of power, by complaining about their largest investment, US Treasuries, has seemed to not have a positive effect on their own markets. The Central Bank is going to maintain its current policies and continue to purchase our Treasuries.
*The FBI is investigating 2,100 mortgage fraud cases, up 400% from five years ago. Stripping of equity, and taking of one’s title to their property is the biggest scams perpetrated against unsuspecting homeowners.
Jennifer Harmon wrote the following:
With 20% of the nation’s homeowners underwater, the government is introducing new legislation aimed to steer struggling homeowners toward short sales. The government’s new plan will pay a servicer $1,000 for completing a successful short sale, it will pay the borrower $1,500 to assist with relocation expenses and it will pay second-lien holders who release their claims up to $1,000. The government is prosecuting several mortgage scam companies, but new ones pop up every day. The government’s Fraud Enforcement and Recovery Act of 2009 allocated $500 million to the FBI, Justice Department, Secret Service and Postal Service to combat mortgage fraud.
According to a report released from the FBI, in 2008 California topped the list of mortgage fraud and more is expected this year.
HELP will be working with the IEERC to put on Foreclosure Prevention Programs no less than once a month while the need is there. Our next program will be held at the Lake Elsinore Diamond Stadium on August 8, 2009 from 8am until 2pm.
HUD approved non-profit counselors will be available to assist homeowners, as will many lenders. HUD, Springboard, Fair Housing and others have responded that they will be there. Wells Fargo, Chase, BofA, HSBC, Freddie Mac and Fannie Mae are typically there and all have been strong supporters of these events.
These events are free to the public and are a safe environment for those who may be facing challenges and/or difficult decisions. Make your reservation now by logging onto: www.ieerc.org or by calling: 877-418-7943
This Housing report is brought to you by USA HELP, Inc, a Ca. non-profit and its Founder, Chris Sorensen

Chris Miscellaneous

Morning Chris and as always thanks for all your assistance and information.

I attended your seminar in Canyon Lake and got invaluable direction and information for my situation. You have taken me out of “freeze” mode and I realize I have to face reality and do something to help myself.

I am ready for, and in need of, the assistance of a mortgage modification company. I have found Mark Mellor’s company on your site and know he comes highly recommended, but I must admit I am not fully comfortable with his retainer agreement. As I read it he states his is a flat fee, but then goes on to say that this fee covers paper work preparation only and there will be an hourly fee for meetings, conferences, phone calls, etc. I would be happy to pay the flat fee plus the 1/2% of loan balance upon a successful modification but need to be certain that is all I would be responsible for. Have you seen the retainer agreement and (as I hope I am) am I wrong about it?

Also you had mentioned to me a company in Simi Valley that seems to be doing a good job and is quite reasonable in fees. I know you are not “certifying ” them but your having at least some favorable information about them leaves me far better off than “throwing a dart” at the yellow pages. can you please email me their name and how to get in touch with them.

Thanks again

asharpone Miscellaneous

www.freehomeownershiphelp.org

Housing Report-July 10, 2009

Utilizing a running 120 day window, here are the simple numbers since my last report on June 26, 2009; (First number is current, second number was as of June 26, third number is change)
In Riverside County, homes that have had a NOD filed against them equal; 17,954 vs. 17,676, up 278- In SB= 13,713 vs. 13,583, up 130.
In Riv. Co. homes that have had a NOS filed against them equal; 12,602 vs. 13,245, down 643- In SB= 10,357 vs. 10,845, down 488.
In Riv. Co homes that have been sold via a Trustee Sale equal; 7,008 vs. 6,636, up 372- In SB= 5,957 vs. 5,728, up 229.
I want to begin watching Apartments and Commercial/Industrial, as all indicators are pointing to this area having growing difficulty. Utilizing the same 120 window here are the numbers as of today’s date:
Riv. NOD: 103- SB. 138
Riv. NOS: 44 – SB. 70
Riv. REO: 42 – SB. 52 (Source; Foreclosure Radar)
These numbers are significant as these commercial and industrial properties once housed business which employed hundreds or more. We want to see a decrease in these numbers as one indicator that stability is eminent. An increase in these numbers may be a precursor to the residential numbers increasing.
Note the decrease in NOS filings (21 day notice of sale date), I believe this has to do with what I reported on June 26, in which I discussed the lenders voluntarily postponing sale dates based on pressure from the Feds as well as a desire to see what may come next. Stimulus II? The MBA is a very powerful lobby, some say too powerful, they see the horizon and it’s un-nerving. The administration appears to be continuing to push for another stimulus package. However, when Senator Reid expresses concerns, it most likely won’t come to pass! In my humble opinion, I am hopeful it won’t pass. I believe it would continue to afford China the opportunity to place additional pressure on the IMF to discuss moving the World away from the Dollar as the main currency of choice.
Read what Mr. Kronick of Ogilvy Public Relations Worldwide in Beijing had to say back on Jan. 16, 2009;
“Now, the dynamics are changing. For the first time in more than a decade, net trade between China and the U.S. is expected to decline in 2009 against the backdrop of the global financial crisis. In addition, when President-elect Obama is sworn in on January 20th, China will be the largest owner of U.S. public and private debt to the tune of US$2 trillion. We are entering a new era of bilateral relations that will be shaped by unprecedented challenges, some of which we are only just beginning to understand.”
What does this have to do with our local housing market here in Southern California? Plenty. Since January, we have convinced China to purchase even more US Treasuries; I believe this factor has much to do with the lack of liquidity in our market. We continue to print money, China buys the security instrument and we buy more mortgage backed securities from Fannie and Freddie, created by loans from an unstable housing market. This scenario is not giving the warm and fuzzies to the G-20 as well as the G-8 who look to the US to be the rock upon which everyone else builds.
On July 9, 2009 here is what was said in front of the G-8 and right in front of President Obama;
”We should have a better system for reserve currency issuance and regulation, so that we can maintain relative stability of major reserve currencies exchange rates and promote a diversified and rational international reserve currency system,” said Mr Dai, according to the Chinese foreign ministry.
“By faulting the dollar Beijing can express its displeasure at US policy and exert leverage over the US in general, including in the broad debate over the future governance of the international financial system.” Wrote George Parker in the Financial Times.
Bottom line, too much debt should not mean increase the debt to solve the problem. It’s unnerving to those who hold our debt (China). Further compounding things is the MBA whose top four members seem to have an insatiable appetite for tax dollars these days. Under political pressure they are postponing foreclosures. In addition, some circles are indicating they are being assured a second stimulus package to further help them with the poor decisions that were made and allowed to be made. I call this a game of chicken. Stay tuned.
The Treasury is in a quagmire. Consumer watchdog groups are pointing out the tax payer loses if they set warrants to low and the banks who had first right of refusal to buy their own debt back from the tax payers at reduced value, has indicated the Treasury is setting the price to high. Citi this week gave up its right to purchase these warrants, setting the stage for them to be auctioned in the public market. At least this way we can begin the process of getting these assets purchased and the homes therefore on the market and get some of the homebuyers who can now afford to buy, into a home. Once they are in and they are in a payment they can afford, they will go to Home Depot and other stores to purchase the goods and services they need. This would be a good thing! Not so good, seems to be the current course of keep everyone in a home they cannot afford and postpone the inevitable, but that’s just me!
President Obama had Geithner and Donovan send a letter to the top 25 mortgage servicing firms who had previously singed a contract to work diligently on a plan to modify loans under the MHA and the HAMP plans, which had the following quote in it; “We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share,”
This letter was sent out of frustration by the administration as it continues to field complaints from groups such as ACORN and other counselors, who have indicated two things, one, the consumer is expecting more than what they are being offered and two, they are having to explain to the lenders how the program works! The lack of education and willingness to fulfill that which the lenders have apparently agreed to in a contract with the US Treasury, is slowing down the process. (Source; WSJ/Ruth Simon)

Want some good news?! It’s there, you just have to look at the numbers according to Mr. Bruce Norris of The Norris Group. In his quarterly Newsletter (Thank you Aaron) here is a quote that should cause you to bust out your checkbook if you still have one;
“Now, just three years later in 2009, another interesting trend has emerged. We have come from the ridiculously high 63% (Gross income going towards housing expense, allowed by stated income loans) to an all-time low of 21%. Never before has the payment of the median priced California home taken only 21% of household income. With the help of low interest rates, the payment for the median priced California home is about 1/3 of what it was just three years ago! That is astonishing! Yet, more people would have been willing to buy a property in 2006 than they are now.”

Mr. Norris goes on;
“We have never seen anything like this before. Truly, it is one of the most fantastic opportunities I have ever witnessed in my lifetime.”

Mr. Norris has made himself and his followers plenty of money with his researched opinions over the years, I suggest looking into what he has to say.

Here is the challenge, borrowers who are in trouble, can see these numbers as well. They are on the flyers in the flyer box on the sign across the street. They are asking themselves, “Why should I stay? Why not bail and buy three to four years down the road?” The current lending guidelines will allow this.

This is the unknown. How many will make this decision amid the widely predicted increase in foreclosures?

Since my last report two weeks ago, nothing has really changed except we continue to wring our hands over what to do about homeowners who are in trouble and the banks that allowed them to get there. We continue to postpone the inevitable and because of this we are creating a bottleneck and avoiding what could have been a recovery sooner. Now we have the commercial lenders asking for their bail out and explaining to the Feds how the existing monies made available, could be used to help them as well. Here is a great quote from The Baseline Report; “We cannot have the Fed indefinitely take over the provision of credit to most of the economy. Asset prices need to fall and, if necessary, debts have to be restructured.”

Simple and straightforward. We need to allow many Americans to fail in their dream of home ownership. They simply paid too much. It wasn’t their entire fault. The derivative market, unregulated, allowed for easy credit, ridiculously easy credit, which caused debts to go far too high and allowed prices of homes to skyrocket. It was unsustainable and we now have to be willing to counsel people on how to bow out gracefully and do our collective best, to assist in a “soft landing.” They’ll be financially hurt, this is true. However, until we get the qualified buyers into the homes that are just waiting to be purchased, we will continue to create a larger and larger bottleneck, that upon bursting will reign much more devastation than what is necessary.

I understand the challenge. In California, Foreclosure Rader reports that approximately 900k borrowers have stopped making their payments. Based on the average loss the lenders are taking, you can see that we are talking about a low of 45 to a high of approximately 60 billion or more in California alone. Regardless, we need to allow buyers who qualify to get into the homes that they are currently locked out of. Foreclose and move the inventory to a new segment of society. Harsh, but honest. Don’t shoot the messenger.

Respectfully,

Chris Sorensen
Chairman
USA HELP, Inc. A California non-profit corporation

Chris Miscellaneous

FHA Endorsements Hit 9-Year High

The Federal Housing Administration endorsed 94,069 single-family mortgages in June, the highest number in nine years, according to the agency. Refinance transactions totaled 48,200 and purchase transactions 41,600. The endorsements also included 4,600 FHA-insured reverse mortgages. The Mortgage Bankers Associations reported that demand for FHA-insured and Department of Veterans Affairs-guaranteed loans is increasing and nearly 36% of mortgage applications submitted in June were for government loans. The FHA and VA share of mortgage applications is the highest in 19 years. FHA and VA offer homebuyers low-downpayment loans that conventional lenders can’t match because of the capital constraints on the private mortgage insurers. FHA and VA benefited from rising mortgage rates in June, which reduced refinancings and strengthened their hold on the purchase mortgage market.

Chris Miscellaneous

I know IRS capital gains statutes define principal residence req’ments as being lived in for 24 of 60 months etc. But IRS publication 4681 which deals with Debt Forgiveness defines a Principal Residence (on pgs 7 & as “the home where you ordinarily live most of the time. You can have only one principal residence at any one time” Am I wrong in interpreting this to say there is no statutory time frame for which the home must be occupied as a principal residence? I was told by a CPA that he could not find a time frame requirement of principal residence in the debt forgiveness statues and this seems to support his opinion.

asharpone Tax Issues

Hi thanks for all the information you have posted on your site. We need some assistance and I’m not sure who to call. We cannont afford our home anymore. My husband has lost his bonus checks which we counted on as income. We have been living off our credit cards and charged our property taxes last year.  Our 1 st mortgage payment is 1,438.00  at 6.25% and our second is 560.00 8.75%.  We have an 80/20 on an interest only loan. Our property taxes are 500.00 a month and we are currently behind $7000.00. Wells fargo would not help us a few months ago and as far as we know they still service both are first and second. We decided not to pay our second and it has been two months, just this month we did not pay our first either. What would you advice us to do? We thought about calling springboard, but were told that they were more of a consumer credit counseling service and not who we should go through.  Thanks for any advice or phone numbers you can provide!

cjacobs71 Miscellaneous

This article is from Mr. Herman Thordsen:

The Federal Trade Commission filed an amended complaint adding several new defendants in the action currently pending against Federal Loan Modification Law Center LLP, and six related defendants. The original complaint, filed on April 3, 2009, charged the defendants with misrepresenting that in exchange for a large up-front fee, they will obtain a mortgage loan modification or stop foreclosure in all or virtually all cases, and by misrepresenting that they are affiliated with or endorsed by the U.S. government.

The amended complaint adds the following defendants to the case: Venture Legal Support, PLC; Federal Loan Modifications; SBSC Corporation; and Steven Oscherowitz. FTC alleges that the additional defendants participated in the challenged practices independently and as part of a common business enterprise. The amended complaint also adds MGO Capital and Legal Turn LLC as relief defendants. Relief defendants are individuals or entities that did not participate in the alleged deceptive practices, but financially benefited as a result.

If you’ve been a victim, complain.  You may not receive instant gratification, but the more complaints, the better chance of putting these bad guys out of business and behind bars.  CS

Chris Miscellaneous

The following is a Fannie Mae announcement. In simple terms it means that you can be upside down in equity by 25% and still get a loan. THIS IS SIGNIFICANT. I like it. Keep in mind, they only count the underlying first trust deed, not the second or third if applicaple.
Here is the announcement:

“A critical part of Fannie Mae’s role in the Making Home AffordableSM Program is Home Affordable Refinance, available for refinances of existing Fannie Mae loans only. The goal of the refinance effort, as announced by the President, is “to provide access to low-cost refinancing for responsible homeowners suffering from falling home prices.” The expectation is that refinancing a Fannie Mae loan will put responsible borrowers in a better position by reducing their monthly principal and interest payments or moving them from a more risky loan structure (such as interest-only or short-term ARM) to a more stable product. Our solutions provide mortgage refinances for current LTVs up to 125 percent, and mortgage insurance flexibilities for refinances with LTVs above 80 percent. ”

Since this is the Make Home Affordable Refinance Program, you need to know whether or not your loan is owned by Fannie Mae or Freddie Mac.

Here is a link to Fannie Mae FAQ on their look ups;

http://www.fanniemae.com/aboutfm/pdf/loanlookupfaq.pdf

Chris Miscellaneous