Loan Modification Applications Lower As Banks Opt for Short Sales

Written on March 12, 2012 at 4:46 pm, by abarker

According to reports by Moody’s, the loan modifications are on the decline. The servicers rather than working through the bulk of delinquencies are working on the alternatives for loss mitigation. These can be the deeds in lieu and the short sales. Moody’s was being able to calculate a decline in the flow of cash and total cure on the loans. This means that there have been successful loss mitigation efforts throughout the second half of 2011. Moody’s have also said that this decline in the loan modification and increase in shorts sales have mainly resulted because the servicers have been working through the significant portions of the eligible 60 plus delinquencies.

Lowered loan modification
In addition to the servicers working through the bulk, it has also been seen that the loan modifications have re-defaulted within the first nine months of the modification. Though there has been brought in some changes with regards to HAMP or the Home Affordable Mortgage Program, still there has been a decline in the modification of the mortgages. The government has declared that the HAMP modifications will be available till the December 31, 2012.
On the other hand, short sales have become more frequent. It has also become more of an economically acceptable mortgage phenomenon in case of a default. It is not only the consumers who are choosing to short sale their home to get out of the economic woes of handling the mortgage. The lenders too are now more readily accepting the short sale requests made by the homeowners. This at the least allow them with the option to get back some of the money which they had given as the loan. There is obviously the option to foreclose the home in case of a default. Then why are lenders too agreeing to the short sale requests?

Short sale mainly helps to avoid foreclosure. The effect of short sale is much less than the effects of foreclosure on the credit score of the debtor. Similarly, the cost of short sale is much less than that of a foreclosure proceeding. In case of the homeowner again, a short sale also provides a sense of control. In a short sale it is not the lender who can simply take away your home to sell it off as they wish. You can handle the sale of your own though you are required to make the lender agree to the short sale request first.

Moreover, the agents too have gained experience as to how a short sale proceeding can be done without much hassle. But still, distressed properties are going to still rule the housing market. Loan modification, short sale, and foreclosure – everything is going to be still the options for both the debtor and the lender.

Homes With Solar Power Sell Better

Written on December 2, 2011 at 12:00 am, by abarker

They might be a costly addition to your home at first but solar panels are boosting a home’s resale value, according to a study earlier this year by Lawrence Berkeley National Laboratory.Homeowners may recoup their full investment from the installation and then some, when their home is sold.Over a period of approximately a decade, about 2,000 solar homes in California were analyzed by researchers and compared to about 72,000 comparable homes not solar powered.

Here’s what the study found: Estimates for average photovoltaic PV premiums among a large number of different model specifications coalesced at a $17,000 price increase for a relatively new “average-sized” based on the sample of homes studied PV system of 3,100 watts DC. According to the report, the PV energy system is rapidly growing, especially in California where at the time of the report almost 100,000 were installed in mostly residential properties.

However, the report authors indicate that, “Although this research finds strong evidence that homes with PV systems in California have sold, on average, for a significant premium over comparable homes without PV systems, the authors recommend that extrapolation of these results to different locations or market conditions be done with care”.Studies like this one may be influencing builders. KB Homes announced this month that the company is making solar power a standard feature in its homes that are being developed in Southern California beginning next year. This development will apply to 28 home communities, an increase from just 10 communities in March.Keeping in line with the study’s findings, KB Homes reports that their homes with solar power as a standard sell for 30 percent higher than in their communities where that feature isn’t offered as standard.

via Cornerstone Real Estate ‘s Real Estate Update.

Can I Refinance With Negative Equity?

Written on November 7, 2011 at 11:10 pm, by abarker

Here is a really good post from the mortgagesexplained.net blog about refinancing with negative equity. The Frustrating thing in the real estate world right now is that about one quarter of homeowners have negative equity, yet these are the people that can’t refinance to take advantage of the all time low mortgage interest rates.

The sad and frustrating reality for many homeowners today is that they owe more on their mortgage than their home is worth. I am in that same boat as I owe owe about 105% of what my home is worth so I can relate to the frustration. Normally in this situation you wouldn’t be able to refinance to take advantage of the incredibly low interest rates, but thanks to a couple mortgage programs that the government has spearheaded it is possible to refinance with negative equity.

FHA Streamline Refinance Without an Appraisal

If you have an FHA mortgage on which you owe more than the value of your home you can still take advantage of refinancing to a lower interest rate by doing the FHA streamline refinance (without an appraisal). This program allows you to use the appraisal from your most recent FHA mortgage transaction, instead of doing a fresh one. This means that you save the cost of an appraisal (anywhere from $375 to $475) and that you can meet the 2.25% equity requirement that FHA requires on a refinance.

What’s the downside to this program?… The downside is that FHA won’t allow you to roll in any closing costs into your loan balance if you opt out of doing an appraisal. This means you will either have to pay for the closing costs out of pocket or take a higher interest rate so that your lender pays your closing costs for you (also referred to as a “no-cost refinance”, duh!). Another potential problem with an FHA refinance is that they are currently charging an annual mortgage insurance premium of 1.15% for loans with an LTV over 95% (1.1% for LTV’s under 95%….big whoop!). Many people that have FHA loans are only paying a .55% annual premium and so it’s possible that the higher mortgage insurance premiums eat up a big chunk of your interest savings.

Fannie Mae DU REFI PLUS

This program is for all you people that got Conventional mortgage loans that were sold to Fannie Mae. To find out if Fannie Mae owns your loan, you can use this Fannie Mae Lookup tool. Lenders like Wells Fargo, Bank of America, Citi-Mortgage, MetLife, etc. etc. will sell the loan to Fannie Mae without your knowledge because they continue to service the loan, take your payments, etc.

In a nutshell, this program allows you to refinance your mortgage up to a loan to value of 125%, meaning if you owe $125,000 on your home the appraisal only has to be $100,000. You will be required to still qualify regarding income and credit and your loan must be owned by Fannie Mae. This is one of those programs where it might be easier to qualify with your current lender because they may grant you an appraisal waiver.

The interest rates on this program may be a little bit higher than a standard Conventional loan but it might also be a little easier to qualify because the guidelines aren’t as strict.

Freddie Mac Relief Refinance

This is basically the same program as the Fannie Mae DU refi plus but for those people whose mortgages are owned by Freddie Mac. Use the Freddie Mac Loan Lookup tool to find out if Freddie owns your mortgage.

The biggest difference that I have seen with this program is that it is not as easy to switch lenders as with the Fannie Mae program. If you are currently paying mortgage insurance it will be impossible to switch lenders. In fact, it may be impossible altogether to use this program if you are paying mortgage insurance, but a few lenders do allow it. You would continue to pay the same mortgage insurance premiums that you currently do. Also, be aware that this applies to those mortgages that have lender-paid mortgage insurance (where you took a higher interest rate but don’t pay monthly mortgage insurance).

via Can I Refinance With Negative Equity?.

26 Emotions of Home Buying

Written on November 7, 2011 at 11:01 pm, by abarker

For first time home buyers these emotions are usually magnified for the simple fact that you’ve never done it before.

Some of these emotions are warm and fuzzy like a unicorn that farts rainbows; Others are of the “kill me now!” variety. Either way it’s good to know about some of the emotions that may arise during the home buying process so that you can be more prepared. Here are 26 of them…

Excited

When you get your first decent-paying job and realize that you might be able to tell your landlord to stick it.

Annoyed

When you go online to search for homes and the real estate website makes you register after just 3 searches.

Nervous

When you make that first call to a Realtor after spotting their sign next to a house (It’s probably more than you can afford).

Oblivious

When you go to your first appointment with the loan officer that the Realtor recommended and he uses lots of jargon (like “amortization”) to sound smarter than he really is.

Embarrassed

When the loan officer tells you that your credit score has been hurt by a couple late credit card payments from 1 year ago.

Encouraged

When you find out that you can still qualify for an FHA loan with your marginal credit. Thank you USA government!… for once.

Grateful

When your parents agree to gift you the 3.5% required down payment for FHA.

Frustrated

After touring 30 houses in your price range and none of them feel just right.

Shocked

When your Realtor fires you for “wasting his time”.

Optimistic

When you finally find a home that has all the features you want and is in your price range.

Confused

When you take a glance at the real estate purchase contract and think, “What in the Sam Hill is a due diligence deadline?”

Exhilarated

When your offer is accepted by the seller.

Heartbroken

When the home inspection reveals asbestos in the furnace and the seller isn’t willing to fix it. You think, “Asbestos isn’t that big of a deal, right?” Turns out it is and your parents talk you out of buying that home. At least you get your $500 earnest money deposit back. Thank you title company!

Foolish

When you make an offer on the very next home you tour because you are burnt out on the home hunting process.

Relieved

When your offer on that home isn’t accepted.

Smart

When you take a break to regroup, refocus, and re-energize your home hunting efforts.

Hopeful

When you give it another shot and get a home under contract. The Realtor says you will have “instant equity”!

Overwhelmed (A tad)

When you have to undress financially for the mortgage company by supplying 2 tax returns, 3 pay stubs, 2 months checking and savings account statements, 401k and IRA statements, 3 letters of explanation for derogatory credit and credit inquiries, a gift letter from your parents, a copy of the canceled earnest money check, a copy of your drivers license and social security card, and a blood and urine sample (I’m kidding… kind of).

Hopeless

When the appraisal comes in less than the purchase price and the seller doesn’t want to renegotiate.

More than hopeless

When the same appraiser requires that the crawl space be increased from 14 to 18 inches to be compliant with FHA’s property condition guidelines.

Reinvigorated

When the sellers agrees to pay for the crawl space improvement. They finally realized that they don’t live in the Taj Mahal and it’s a buyer’s market!

Disillusioned

When the underwriter asks for one more pay stub on the day you are suppose to close. Seriously?!! “Just kill me now.” (actual quote from home buyer)

Indifferent

When the underwriter finally issues the “clear to close” and sends “docs” to the title company.

Amazed

When you are sitting at the title company and you can’t believe that it is finally happening.

Forgiving

When the loan funds and you get the keys to your new house and forget about all the crap you had to go through.

via The Mortgage Nerd — Informational Mortgage Blog.

Real estate prices continue slide in September | Inman News

Written on November 7, 2011 at 10:59 pm, by abarker

U.S. single-family home prices declined on both a monthly and annual basis in September — the second straight month that property data firm CoreLogic reported a decline in both measures.

CoreLogic’s price index fell 4.1 percent year over year and dropped 1.1 percent on a month-to-month basis in September, according to a company report released today. That follows a 4.4 percent annual decline and a revised 0.3 percent monthly decline in August.

via Real estate prices continue slide in September | Inman News.

Hello world!

Written on August 1, 2011 at 4:36 pm, by abarker

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