Top Real Estate Market News
Foreclosed homes account for 31 percent of sales ( Go to
www.SCRealEstatePartners.com for a foreclosure list in the Myrtle Beach area )
RealtyTrac, an online marketplace for foreclosure properties, released its first U.S. Foreclosure Sales Report on June 30. It shows that foreclosure homes accounted for 31 percent of all residential sales in the first quarter of 2010, and that the average sales price of properties that sold while in some stage of foreclosure was nearly 27 percent below the average sales price of properties not in the foreclosure process.
A total of 232,959 properties in some stage of foreclosure -- scheduled for auction or bank-owned (REO) -- sold to third parties in the first quarter. This is a decrease of 14 percent from the previous quarter and down 33 percent from the peak during the first quarter of 2009, when sales of foreclosure homes accounted for 37 percent of all residential sales. "First time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts," said James J. Saccacio, CEO of RealtyTrac.
Fannie Mae cracking down on walk-aways ( free Mortgage Calculators and affordability calculators available on
www.SCRealEstatePartners.com )
On June 23rd, Fannie Mae announced policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for a new loan in a shorter timeframe.
"We're taking these steps to highlight the importance of working with your servicer," said Terence Edwards, executive vice president for credit portfolio management. "Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time."
Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement scheduled for this month (July), the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.
Wall Street Home Resale Fees banned in states Florida recently joined state legislatures and governors in states across the country that have taken action to protect American homeowners by placing bans on Wall Street Home Resale Fees (also known as private transfer fee covenants.) Other states taking such action are Arizona, Florida, Kansas, Iowa, Maryland, Minnesota, Mississippi, Missouri, Ohio, Oregon, Texas and Utah. They are all taking action to ban Wall Street Home Resale Fees. Here's what the fees are all about:
Developers, in consultation with Wall Street advisers, are attempting to add languages to home purchase contracts requiring that a percentage of the sales price be paid to the original corporate owner of a property every time the property is sold, typically for 99 years. The right to collect these Wall Street Home Resale Fees would then be securitized and sold to enrich investors at the cost of stealing equity from consumers, according to a report from the American Land Title Association.
The allowance of Wall Street Home Resale Fees would force homeowners to pay a large fee to sell their homes and also add a complicated legal roadblock to the home sale process. As a result, this controversial financial scheme is facing opposition across the country, ALTA said.
New Financial Reform Bill impacts lenders, consumersThe new reform bill creates a Bureau of Consumer Financial Protection, an independent regulator housed within the Federal Reserve. It will consolidate oversight of a wide variety of financial products, including mortgages. Responsibility for these areas is currently scattered across a variety of government agencies, and experts say that creating a single supervisor will help make financial products easier to understand and not take unfair advantage of borrowers.
"The creation of this consumer bureau is really important," says Ellen Bloom, director of Federal Policy at Consumers Union. "Consumers have suffered plenty during this financial crisis and now they have an entity that's watching out for them."
Here's one provision affecting home buyers: If you get turned down for a loan because of your credit score or are offered an interest rate you deem too high, you would have the right to see the score your lender is working with, for free. Consumers may currently see their report, but don't have access to their score. This provision will help consumers understand whether their lenders' concerns are legitimate.
FHA insurance premiums may rise The House of Representatives recently passed a bill to increase insurance premiums charged to borrowers of FHA mortgages. The vote was almost unanimous - 406 to 4. The FHA Reform Act (H.R. 5072) enables the agency to reform its current mortgage insurance premium structure by shifting some of the upfront cost to the annual premium -- a move that HUD Secretary Shaun Donovan says will increase FHA's capital reserves and reduce risks to the FHA insurance fund. The legislation grants FHA the authority to nearly triple borrowers' annual premium cap, from the rate of 0.55 percent, to as high as 1.50 percent.
FHA officials say this will generate an estimated $300 million a month in additional receipts, while costing the average FHA borrower $42 more in monthly premiums.
MLS jurisdictions expanding An increasing number of regional Multiple Listing Services are now further expanding - in one case to statewide coverage. The California Association of Realtors recently implemented a statewide MLS.
The new structure in California will create one multiple listing service provider serving more than 33,000 real estate professionals and 22 Realtor associations statewide. The state's Multi-Regional MLS board of directors representing its 12 member associations unanimously approved the proposal.
"This is an historic step forward in the evolution of CAR's initiative to create a statewide MLS," said Realtor Mike Silvas, CALMLS chairman. "Combining our respective strengths and resources will significantly accelerate our shared vision and position the new entity to deliver even more expanded and efficient MLS services for members. The new entity will increase the momentum of the statewide MLS and members should expect to see even more choices and increased services over time."
FHA's home purchase-rehab mortgage A previously little known FHA mortgage program is now becoming increasingly popular. It's a special financing program that funds not only the purchase of a home but also needed repairs and improvements.
The current popularity of the program is largely keyed to the many distressed properties now being purchased by today's homebuyers. The bargain prices often justify their purchase even though the home may have certain defects or need a general facelifting.
The purchase-rehab financing can now be obtained in one FHA loan. The Department of Housing and Urban Development has introduced enhancements to the streamlined 203(k) program to facilitate the purchase of property that needs only minor rehab work.
The 203(k) program is the primary FHA program for the rehabilitation and repair of single-family properties. Unlike the basic 203(k) program where funding can be provided for the total reconstruction costs, the new program is intended to provide funding for only basic repairs, according to a report from the National Association of Realtors.
Given the fact that the cost of materials has risen, one of the primary changes to the program is that the minimum repair cost of $5,000 is eliminated and the ceiling is now raised to $35,000. NAR has been a strong supporter of the FHA 203(k) program because it has been a viable source for expanding homeownership and revitalizing neighborhoods.
The program has allowed many lenders over the years to partner with state and local housing agencies and nonprofit organizations to rehabilitate properties in dire need of repair. The 203(k) program has also been a useful tool in the disposition of the HUD Real Estate Owned (REO) property, especially multi-unit properties, the NAR report noted.
Mortgage industry leaders fight scams Mortgage modification scams can occur when unscrupulous people prey on borrowers who are struggling to keep their homes, it was pointed out in a new PR program launched by Fannie Mae. Such an educational program is supported by most real estate and mortgage professionals.
While they promise to help, the people who perpetuate mortgage scams do little to no work, charge excessive fees, and use tactics that often put the homeowner at greater risk of losing their home.
The key points and suggestions made by Fannie Mae to consumers are as follows: Do your homework and know your options. Ask questions and get explanations so you have a complete understanding of modification procedures.
Don't pay for counseling. Free help is available. Beware of high-pressure sales tactics. Know the person you're working with. Make sure your housing counselor is HUD-approved. Before responding to any person or organization offering to "save" you from foreclosure, find out if the organization is HUD-approved.
Don't submit your mortgage payments to anyone other than your mortgage company. Beware of people who ask you to send your payment to them. Scammers might ask you to make your payments to them. However, they pocket your payments instead of sending them to the lender. You should only send your mortgage payment to your mortgage company.
Home inspection industry growing The home inspection industry is growing. As home sales rise, the demand for inspection services grows. This motivates more individuals to put a "Home Inspector" sign on their door. Some are highly qualified, while others are not. More than three-quarters of today's home sales (about 77 percent) involve a home inspection before the transaction closes, according to a report from the National Association of Realtors. About 84 percent of buyers request such an inspection.
The reason for the rising demand is quite simple. Buyers want to be sure the house is structurally sound, free of any unseen defects that could be very costly after they move in. To a large extent, an inspection objective is to give the buyer peace of mind, especially when the purchased home is a distressed property.
Generally, home inspections on a property about to be purchased, particularly an older home, are a good idea. But be careful about selecting an inspector. Get referrals from your lawyer, Realtor or friends. Check references.
Universal Design homes growing in popularity GUniversal Design homes are gaining in popularity. Buyers are more apt to be seeking out these homes. Many homeowners are remodeling and retrofitting their residence, following Universal Design criteria.
In simplest terms, a Universal Design home is one that meets the needs of all people, healthy or disabled, young or old. It's a particularly strategic design plan for the increasing number of owners who want to "age in place" - living in their residence long into their retirement years. Such a home will comfortably accommodate a young active family or a retired couple with age-related special needs. Physically impaired friends or relatives who visit for a weekend will greatly appreciate the home's special features.
Home builders and architects are well aware of the trend toward Universal Design and are including such features as wider doorways, step-free entrances, and decorative grab bars. Definitive information about special features can be seen at the site for The Center for Universal Design.
FHA mortgages now major source of home financing FHA home mortgages are now the most popular way to finance the purchase of a home, according to a survey recently taken by the Home Buying Institute. In fact, it revealed that about 87 percent of prospective homebuyers plan to use this form of financing when purchasing their next home.
Among those respondents, 53.8 percent said they wanted to use an FHA home loan for the smaller down payment, 19.2 percent said they thought the overall qualification process would be easier, 13.5 percent said they previously had trouble qualifying for a conventional loan, 7.7 percent said they had low credit scores and 5.8 percent felt their income was too low to qualify for a regular loan. FHA's market share has already grown considerably in recent years. In the first quarter of this year, almost half of all homebuyers used an FHA loan to purchase a home.
Home-flipping returns In some markets up to one home sale in every six is to a flipper - a buyer who intends to quickly resell the property for a profit.
The incentives for flippers are the availability of mortgages at historically low interest rates and low-priced distressed properties now on the market. However, the risks are great for these buyers with home values in many markets still in an up-and-down volatile mode.
For more information or to buy or sell a home in the Myrtle Beach area, please contact Jake Lee 843-240-0431 or visit
www.SCRealEstatePartners.com