Jan
16
Real Estate and MLS Listings
January 16, 2011 | Tagged foreclosure, how to buy foreclosure, sscra debt | Leave a Comment
Health care and real estate, two important areas of interest to me and to the US economy, are due for some changes in 2011. I have no better crystal ball than anyone else, but here are some of the things I expect:
Health care reform will have to be re-reformed. No, I don’t think the Republicans will actually repeal it all. If they do, they’re dumber than I thought, because they would then get caught in the same quicksand the Democrats have been in for the past two years. There will, however, be some necessary changes.
The first thing to go will be an unrelated part of the law that forces people to 1099 anyone to whom they pay more than $600. That’s a ridiculous burden on small business, and of course it doesn’t belong in health care reform in the first place. It will vanish quickly.
Next will come a revision in the way physicians get paid. In a recent survey by The Physicians Foundation, a majority of physicians (60%) said health reform will compel them to close or significantly restrict their practices to certain categories of patients. Of these, 93% said they will close or significantly restrict their practices to Medicaid patients, while 87% said they would close or significantly restrict their practices to Medicare patients.
Because Medicare guidelines are a guarantee of access to care, if physicians cease to see Medicare patients it will impact both their incomes and Medicare’s entire structure. Congress can’t let that happen, because seniors vote and starting next year Boomers turn 65 at a rate of 10,000 a day.
Instead, we will have — and welcome — death panels: caps on what can be spent on treatment of the elderly at the end of life unless it is life-extending with high quality of life as the outcome. No more chemo that extends life by three weeks during which the patient is suffering.
And the ability for seniors to have a free consultation with a physician about how to plan for end of life, prepare the necessary documents, and make their wishes known. This alone will prove a cost-cutter, since many seniors do not want extreme measures used to keep them alive, but haven’t properly documented their desires to the people who will make those decisions when they can no longer do so themselves.
We will also see further explosive growth in online health information sites and support groups as people realize they are going to have to pay higher deductibles and co-pays and finally undertake the responsibility for their own health. This will be slow, but has already begun. A few more years of 30% premium increases to cover costs for the underinsured (because the Republicans may well repeal the individual mandate or it may be found unconstitutional) and most of us will be nursing each other.
Now that we have life and death out of the way, here’s what may happen in real estate:
The loan modification programs that aren’t working will go away. HAMP and HAFA have helped about 300,000 people out of a possible fifteen million foreclosures by the end of 2011.
Instead, one of two things will happen, depending on what the banks, who hold all the cards, want. Either there will be another wave of foreclosures, or loans will finally be written down to the current market value of homes, allowing more people to stay in their homes. Probably there will be some of both.
FHA and VA mortgages, which have always been assumable by a borrower who could qualify, may become assumable for buyers who can’t, since there’s almost no one left in the country who can qualify for a mortgage under the current standards. This will stimulate the lower end of the market, which has gone away since the first-time home buyer credits expired.
The wraparound mortgage and the seller carry back, gone since the days of high interest rates in the early 80s, will be back. These are financial products that allow a seller who has to sell or wants to sell but doesn’t want to injure his/her credit with a short sale to sell to a non-qualifying buyer. Done correctly, the wrap and the carry back can be very advantageous to both buyer and seller, and were the way people built up real estate empires with no money down. If you wanted to, you could do that now. Sooner or later, people have to move for work or other reasons, and they become more willing to sell under unusual conditions. These may surface at the high end of the market, where in Arizona there is a 9-13 year supply of $1,000,000+ homes on the market. The lease purchase will also become more common.
I am an optimist, so I predict (think) these things will happen. Pessimists may comment below. Happy New Year.
Related articles
- Medicare to Pay for Advance Health Care Planning (legallyeasy.rocketlawyer.com)
- End-of-life Counseling or Advanced Directives Are a Good Thing for Medicare But What Direction Would Health Insurers Drive It For Compliance To Reduce Exposure for Profit? (ducknetweb.blogspot.com)
The Aspen Times:
ASPEN — The mountain resort real estate markets in Aspen, Vail and Breckenridge bounced back in 2010 after bottoming out in 2009, but they aren’t close yet to returning to their glory years.
The dollar volume of sales is up by double digits through October this year compared to last year in Pitkin, Eagle and Summit counties, according to reports prepared by Land Title Guarantee Co., which has offices in each of the markets.
Read the whole story: The Aspen Times
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Jan
6
Real Estate
January 6, 2011 | Tagged foreclosure, how to buy foreclosure, sscra debt | Leave a Comment
Health care and real estate, two important areas of interest to me and to the US economy, are due for some changes in 2011. I have no better crystal ball than anyone else, but here are some of the things I expect:
Health care reform will have to be re-reformed. No, I don’t think the Republicans will actually repeal it all. If they do, they’re dumber than I thought, because they would then get caught in the same quicksand the Democrats have been in for the past two years. There will, however, be some necessary changes.
The first thing to go will be an unrelated part of the law that forces people to 1099 anyone to whom they pay more than $600. That’s a ridiculous burden on small business, and of course it doesn’t belong in health care reform in the first place. It will vanish quickly.
Next will come a revision in the way physicians get paid. In a recent survey by The Physicians Foundation, a majority of physicians (60%) said health reform will compel them to close or significantly restrict their practices to certain categories of patients. Of these, 93% said they will close or significantly restrict their practices to Medicaid patients, while 87% said they would close or significantly restrict their practices to Medicare patients.
Because Medicare guidelines are a guarantee of access to care, if physicians cease to see Medicare patients it will impact both their incomes and Medicare’s entire structure. Congress can’t let that happen, because seniors vote and starting next year Boomers turn 65 at a rate of 10,000 a day.
Instead, we will have — and welcome — death panels: caps on what can be spent on treatment of the elderly at the end of life unless it is life-extending with high quality of life as the outcome. No more chemo that extends life by three weeks during which the patient is suffering.
And the ability for seniors to have a free consultation with a physician about how to plan for end of life, prepare the necessary documents, and make their wishes known. This alone will prove a cost-cutter, since many seniors do not want extreme measures used to keep them alive, but haven’t properly documented their desires to the people who will make those decisions when they can no longer do so themselves.
We will also see further explosive growth in online health information sites and support groups as people realize they are going to have to pay higher deductibles and co-pays and finally undertake the responsibility for their own health. This will be slow, but has already begun. A few more years of 30% premium increases to cover costs for the underinsured (because the Republicans may well repeal the individual mandate or it may be found unconstitutional) and most of us will be nursing each other.
Now that we have life and death out of the way, here’s what may happen in real estate:
The loan modification programs that aren’t working will go away. HAMP and HAFA have helped about 300,000 people out of a possible fifteen million foreclosures by the end of 2011.
Instead, one of two things will happen, depending on what the banks, who hold all the cards, want. Either there will be another wave of foreclosures, or loans will finally be written down to the current market value of homes, allowing more people to stay in their homes. Probably there will be some of both.
FHA and VA mortgages, which have always been assumable by a borrower who could qualify, may become assumable for buyers who can’t, since there’s almost no one left in the country who can qualify for a mortgage under the current standards. This will stimulate the lower end of the market, which has gone away since the first-time home buyer credits expired.
The wraparound mortgage and the seller carry back, gone since the days of high interest rates in the early 80s, will be back. These are financial products that allow a seller who has to sell or wants to sell but doesn’t want to injure his/her credit with a short sale to sell to a non-qualifying buyer. Done correctly, the wrap and the carry back can be very advantageous to both buyer and seller, and were the way people built up real estate empires with no money down. If you wanted to, you could do that now. Sooner or later, people have to move for work or other reasons, and they become more willing to sell under unusual conditions. These may surface at the high end of the market, where in Arizona there is a 9-13 year supply of $1,000,000+ homes on the market. The lease purchase will also become more common.
I am an optimist, so I predict (think) these things will happen. Pessimists may comment below. Happy New Year.
Related articles
- Medicare to Pay for Advance Health Care Planning (legallyeasy.rocketlawyer.com)
- End-of-life Counseling or Advanced Directives Are a Good Thing for Medicare But What Direction Would Health Insurers Drive It For Compliance To Reduce Exposure for Profit? (ducknetweb.blogspot.com)
Curbed LA:
Celebrities’ houses are just like the plebs’: some are awesome, others are ridiculous, and almost all sold below asking in 2010, if at all. From Tom Hanks to Angelyne, and from shower aquariums to monkey turrets, here are the top ten great and/or hideous celebrity houses of the year.
Read the whole story: Curbed LA
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Dec
29
Realty
December 29, 2010 | Tagged foreclosure, hardship letters, letter of hardship, real estate investment | Leave a Comment
Very timely article for me.
I have a snoring problem. Actually, it’s more of a problem for my spouse than me. I had a sleep study done and they said I did not have sleep apnea and was not a candidate for the CPAP machine. The doctor wanted to set up an appoint for me with a surgeon. I just smiled, took the buisness card and dumped it in the trash on the way out. My policy on surgery is very simple and can be distilled into the following phase -” good for the other guy” even if it’s covered by insurance which this wouldn’t have been. Good thing too, a friend of mine had the surgery. It didn’t work and he was left with a lot of residual pain that took a long time to recede. I took to sleeping on my side as a temporary fix..
Fast forward some years and my wife had a sleep study done after she had an atrial fibrillation incident during the night. They diagonsed here with severe sleep apnea and sent her home with the super duper, humidified CPAP machine. She tried to use it, but could not adjust to thel face mask, and ended up turining it in. She claimed she slept worse with it and was tired the next day.
SInce she doesn’t snore much or loudly, and does not have the usual sleep apnea symtoms in the day, She thinks the diagnosis was faulty.
Anyway, I just bought a Snore-Ex mouth piece through Amazon for $25 and have started using it. In the four nights I used it, the volume of my snoring has decreased to the point where it’s tolerable for the Mrs.
Anyone else out there hace experience or comments on this?
— Night Rattler
“It’s raining, it’s pouring, the old man is snoring…” Wake him up, and wake yourself up, with these videos–mostly of the cheesy flashback variety–where rain reigns as motif supreme…and leads to lusting, contemplating, navel-gazing, and, thankfully, dancing. We apologize in advance for causing any hard-to-dislodge earworms. Blame it on the rain!
Milli Vanilla: “Blame it on the Rain”
Madonna: “Rain”
Nelson: “After the Rain”
Weather Girls: “It’s Raining Men”
Nov
18
Getting FSBO Prospects
November 18, 2010 | Tagged expireds, fsbo, redx listing leads, redx real estate | Leave a Comment
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That said, the community policy of Gawker Media is forgiving. If your criticism is articulate, it will likely get through. We dole it out; we can take it. What do we mean by articulate? Support your point with argument, facts and citations. Good grammar and spelling also help.
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It’s possible to make real money in virtual worlds, as one user of the MMOG Entropia Universe recently experienced. He sold a set of virtual real estate properties for $335,000:
Jacobs, who goes by the in-game name of Neverdie, has made a number of high-profile transactions over the past few years, from the $25,000 sale of his in-game items, to his purchase of a virtual asteroid for $100,000. The purchase of the asteroid, in 2005, was believed to be the most expensive virtual item sale in history. That record was broken by the 2009 sale of the Crystal Palace Space Station for $330,000.
The recent sale, confirmed by Jacobs to the fansite, amounts to a value of $335,000. Jacobs sold a number of bio domes, a mall, stadium and a club to Kalun.
Link via Geekologie | Image: MindArk
Oct
30
Real Estate and Marketing Listings
October 30, 2010 | Tagged realtor leads, realtor letters, redx fsbo, redx listing leads, redx real estate | Leave a Comment
Boston Properties Inc. (NYSE: BXP) agreed to buy Boston’s 62-story John Hancock Tower, New England’s tallest building, from a joint venture between affiliates of Normandy Real Estate Partners and Five Mile Capital Partners for $930 million, or about $550 per square foot.
The deal would be the largest sale of a commercial building of any type in the U.S. for at least the past two years. More than a dozen potential buyers, including Vornado Realty Trust (NYSE: VNO) and Beacon Capital Partners of Boston participated in ferocious bidding for the iconic tower.
On Sept. 24, Boston Properties closed the $275 million acquisition of the 350,000-square-foot 510 Madison Ave. office tower in the Plaza District of Midtown Manhattan. BXP bought the newly built tower from an affiliate of developer Harry Macklowe, who was forced to sell properties after taking on too much debt. …
Boston Properties has joined many other REITs that have become net buyers of property this year. BXP’s acquisition spree is driven at least in part by the more that $1 billion in cash sitting on the company’s balance sheet earning next to nothing due to the current ultra-low interest rate environment, said Alexander Goldfarb, REIT analyst for Sandler O’Neill + Partners, LP. But it also shows a growing appetite for the best assets in the best markets.
REIT acquisition activity significantly accelerated in the third quarter, with over $14 billion in transaction volume, according to Citigroup. REITs also raised almost $4 billion in common equity in the third quarter for a total of $17 billion year to date.
High-quality CBD properties continue to be in demand by investors who believe they will better retain their value over the long run than suburban properties in lesser locations, which can become obsolete more quickly.
With the huge pools of capital raised for investment, with banks being enticed back into the market and disposing of REO properties, it appears that the CRE market is getting healthier, yet far from being resolved. While the John Hancock Tower makes headlines, it is the “general CRE” properties, the B and C properties, that are clogging up the regional and local banks. The ongoing problems of high delinquency rates and still declining prices will continue to plague banks. But from the sales data presented here and from anecdotal evidence I am seeing, more properties are now being offered by banks which is a good sign. In addition sales are increasing in most key markets.
If I were to guess, all things being equal, we still have another two years or so for the CRE market to tighten up. On top of all of the above is the $1,5 trillion of CRE debt that still needs to be refinanced over the next five years. If prices firm, if banks clean up their REO departments, and if interest rates stay low, then that will help the refi problem. But it’s not over yet. There are positive things happening, a loosening up of the REO market that we haven’t seen for the past two years, plus growing sales, which are good signs.
Gawker Media Community Policy
These are our sites, and we reserve the right to moderate the discussion. The basic rules are standard: An attack on authors or other commenters is unlikely to make you popular. Think before you disparage social or ethnic groups. Don’t spam. Don’t post pornography or copyrighted imagery. Stay on topic.
That said, the community policy of Gawker Media is forgiving. If your criticism is articulate, it will likely get through. We dole it out; we can take it. What do we mean by articulate? Support your point with argument, facts and citations. Good grammar and spelling also help.
Got questions? Need answers? See our FAQ and site-specific community guidelines.
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Jul
18
Getting FSBO Prospects
July 18, 2010 | Tagged GRAR, mls real estate, mrmls, mslni, NJMLS | Leave a Comment
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Over the past two years, real estate professionals have found creative ways to overcome the real estate crisis, including finding innovative uses for social media. After facing drops in home sales well into 2010, real estate pros have been forced to utilize their offline skills in an increasingly social way online. By using photo and video sharing to enhance listings, along with professional networking sites to hone their sales skills, real estate veterans have made strides in moving inventory in tough times.
Agents, brokers and realtors have found successes in lead generation, sales and brand building through use of mass audience social platforms, including TwitterTwitter, FacebookFacebook, YouTubeYouTube, FlickrFlickr, Meetup, and LinkedInLinkedIn, as well as real estate specific platforms, like Trulia, Zillow, WellcomeMat and Architizer.
Whether they are sharing videos, listings or advice with their communities and prospective buyers or sellers, real estate pros are making progress in using social media for real results.
Attracting Buyers and Sellers
The core goal of real estate pros utilizing social media is to attract sellers looking to list their homes or buyers looking to purchase homes. Naturally, the 1.0 version of social media for real estate is setting up pages on social networks that fit your company’s content and audience.
Corcoran Group, the largest residential real estate firm in New York City, is a fitting example of how real estate agencies are going above and beyond to make themselves available for buyers and sellers. Corcoran differentiates itself by simply being available and open. The “Do More” tab on their Facebook page says it all — you can find them on Twitter, Facebook, YouTube, FoursquareFoursquare, and GowallaGowalla, among other sites. And if you need more, you can download their iPhone app, where you can find nearby homes for sale or rent and open houses. The app also promotes their Twitter, Facebook and YouTube pages. If you dig a little deeper, you can also find Corcoran on TumblrTumblr, Blip.tv and VimeoVimeo. Simply put, Corcoran has found a way to be everywhere for its clients. This is the first step to converting fans and followers into buyers and sellers.
It Depends on What the Meaning of “Tax” Is
The print edition of the Washington Post and the online Real Estate home page feature this headline:
Debunking rumors of a housing sales tax
The article begins:
Rumors are flying that the health-care legislation Congress passed this year will impose a sales tax on all real estate sales.
So I’m thinking, OK, more crazy Glenn Beck tea-party stories about mythical Obama tax hikes, and the Post is going to debunk them. Then I keep reading:
But the rumors are based only partly on fact. Although there is a new tax, it will not apply to everyone, and existing tax breaks for home sales will remain in place.
The Health Care and Education Reconciliation Act of 2010, which President Obama signed into law March 30, is comprehensive and complex. Section 1402, “Unearned Income Medicare Contribution,” imposes a 3.8 percent tax on profits from the sale of real estate — residential or investment.
But the levy is aimed at high-income taxpayers, leaving most people untouched. And it will not take effect until Jan. 1, 2013.
Let’s look at the facts of this new law.
First, it is not a sales tax, nor does it impose any transfer or recordation tax. It is called a Medicare tax because the money received will be allocated to the Medicare Trust Fund, which is part of the Social Security system.
Next, if your adjusted gross income is less than $200,000, you are home free….
How is the tax calculated? Through a complex formula that could be called “the accountants’ protection act.” As a taxpayer, you (or your financial adviser) must determine which is less: the gain you have made on the sale of your house, or the amount by which your income exceeds the appropriate threshold.
So let’s recap here. Post contributor Benny Kass promises to “debunk” the “rumors” that “the health-care legislation Congress passed this year will impose a sales tax on all real estate sales.” And he concludes, “In the meantime, don’t believe the rumors.” But in fact the health-care law did include a new tax on real estate profits. It’s not exactly a sales tax, and it won’t apply to most people. But the only real inaccuracy in the “rumors” that he said “are flying” was the word “all.” It’s only a 3.8 percent tax on some real estate sales, no doubt only a minority of sales, though perhaps affecting more readers of the Washington Post Real Estate section than people in less-affluent regions where housing prices didn’t soar and then remain high. Frankly, I’ve seen more effective debunkings.
This “rumored” real estate tax is also discussed on page 20 of Michael Tanner’s new study “Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law.” But if you’re really going to try to understand the new health-care legislation, you may want to clip the Kass article to keep with your copy of the Tanner paper, as no one study can guide you through every detail of a 2000-page law. Journalists and HR experts will be kept busy for years tracking down every sub-reference and interaction in the bill.
Yahoo is outsourcing yet another product to an outside company. Tonight, Yahoo is announcing an exclusive partnership with real estate listings and search site Zillow. As part of the partnership, which will go into effect later this year, Zillow will power all for-sale listings on Yahoo Real Estate. The financial terms of the partnership were not disclosed.
Zillow’s will integrate its 4 million for-sale listings on Yahoo’s real estate site, where users will still be able to search for home listings by the same parameters as on Zillow’s site, such as by geography, price and other criteria. For-sale listings placed on Zillow will automatically appear on Yahoo Real Estate.
But the partnership is more than just an outsourcing of listings. Zillow and Yahoo Real Estate will be coordinating sales efforts for the advertising network, so that advertisers who buy Showcase Ads or Featured Listings on either site will automatically have those placed on both Yahoo Real Estate and Zillow. Zillow’s Premier Agent program will be extended to Yahoo Real Estate, and current Zillow advertisers will be offered the first chance to purchase Premier Agent placement on Yahoo.
This deal feels like deja vu of two months ago, when Yahoo announced that it was outsourcing personals to Match.com. Yahoo also outsources job listings to Monster, after it sold HotJobs to the job listing service for $225 million.
Similar to the situation with Match.com a few months ago, Yahoo and Zillow have a history of working together. In 2006, Yahoo Real Estate integrated Zillow’s home valuation technology into its user experience.
But it seems that yahoo isn’t completely handing over the keys to its real estate search to ZIllow. Zillow, which launched as a mortgage marketplace in 2008, also powers rentals, which Yahoo doesn’t appear to be aggregating. For now, at least.
Still, it’s a good deal for Zillow, a startup that survived the real estate market implosion, and seems to be back on its feet. The site has seen record traffic over the past six months and has seen 1.75 million downloads of its mobile apps. In my opinion, it’s only a matter of time until Yahoo just outsources all real estate listings, including rentals, to Zillow.
In an on-stage interview during the Inman Real Estate Connect conference this week in San Francisco Google’s Carter Maslan said that the company was not pushing into real estate specifically or going to build a direct national database of property listings and become a “universal MLS”:
“What we are doing in real estate is really (no different than) what we are doing in (other areas of) local search,” Maslan said. If there’s a property for sale, wherever its mentioned on the Web — whether on “Rotten Neighborhoods” or Trulia.com — Google wants to put those pages at users’ fingertips.
After the announcement of the intended acquisition of travel software vendor ITA many people assumed Google would make similar moves in other high-value verticals. Real estate certainly falls into that category.
In the past there had been rumors of Google wanting to make a destination site acquisition in real estate (e.g., Trulia). So far nothing has come to pass.
But while Google may not seek to control or own the listings data it clearly is interested in building a richer user experience in real estate. That includes Places Pages for individual properties.
Compared to Trulia, Zillow, Roost and other consumer destinations, however, the Google real estate experience is fairly thin overall:
I would frankly be surprised if Google didn’t seek to improve on what it currently offers and develop a deeper and more refined user experience for real estate. The additional traffic and consumer usage that it would likely bring could result in incremental advertising revenue on those pages.
Real estate ad spending is a multi-billion dollar proposition in the US, having shifted over the past several years from print newspapers to online and other media.
Today Google Earth Pro has tools and data specifically designed for the commercial real estate market. It’s just a hop, skip and a jump to the residential market. Aggregating better and richer information (online and in mobile) to support the rental or home-buying decision is something that I would expect Google to attempt to do. Indeed, it’s doing it today in a limited way.
However if Google declines to push fully into real estate we might see something more structured coming out of Redmond as Bing seeks out new verticals to conquer.
Jul
12
Learning For Sale By Owner Prospecting
July 12, 2010 | Tagged for sale by owner, landvoice, real estate, real estate data xchange, redx fsbo, redx real estate | Leave a Comment
la.curbed.com:
This reader has done some crack digital forensics work and declares that the abuse of Photoshop in MLS listings has gone too far:
Read the whole story: la.curbed.com
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Observe the House of Gaga in All Its Glory (Updated)
Take a look at the $25,000-a-month Los Angeles mansion that pop supernova Lady Gaga is currently renting. There's a spa, a wetbar, six bedrooms, and eight bathrooms. It's huge. There's even a room for Alejandro!
Update: Hah! Just kidding with those first pictures. The folks at RealEstalker, which is where we got the images, made a little mistake. The original pictures are of a house that's owned by the guy who rented a house to Lady Gaga, but it's just the wrong house. He owns two places, apparently. We've swapped in the real pictures.
Send an email to Richard Lawson, the author of this post, at richardl@gawker.com.
Jul
11
Foreclosure
July 11, 2010 | Tagged free real estate investment analysis software, real estate investment software, Real Estate Software, realty software | Leave a Comment
Thursday, June 24, 2010
Democrat Says Foreclosure Mitigation Helps Good American People, Not Minorities, Defectives [Stephen Spruiell]
Wow:
We're giving relief to people that I deal with in my office every day now unfortunately. But because of the longevity of this recession, these are people — and they're not minorities and they're not defective and they're not all the things you'd like to insinuate that these programs are about — these are average, good American people.
06/24 02:48 PMShare
BofA executive Jack Schakett made some interesting comments earlier today:
“There is a huge incentive for customers to walk away because getting free rent and waiting out foreclosure can be very appealing to customers.”
Schakett noted that the foreclosure process is currently taking 13 to 14 months …
For many the timeframe is apparently much longer. On Monday David Streitfeld wrote in the NY Times: Owners Stop Paying Mortgages, and Stop Fretting
The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.
…
More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property …
These long foreclosure time lines can have a significant adverse impact on housing.
Housing economist Tom Lawler alerted me to a 2008 research paper by Freddie Mac economists Amy Crews Cutts and William A. Merrill: Interventions in Mortgage Default: Policies and Practices to Prevent Home Loss and Lower Costs. They studied the foreclosure time lines and costs in several states and found that 270 days is sufficient time to allow the borrower to cure, and any more time actually incentivizes the borrower to strategically default:
There are many challenges that policy makers, investors, servicers and borrowers face in minimizing the incidence of home loss through foreclosure. Among them is the tension between too little time in the foreclosure process, such that some borrowers are unable to recover from relatively mild setbacks before they lose the home but investors minimize pre-foreclosure time related costs, and too much time in the foreclosure process, such that the borrower is incented to let the home go to foreclosure sale during which no mortgage payments are made (in essence, free rent for a significant time) and investor costs rise rapidly.
…
A sweet spot for the optimal time in foreclosure likely exists around a statutory timeline of 120 days (the current national median, and equivalent to 270 days after adding in 150 days for pre-referral loss mitigation activities by servicers through workouts) in which the borrower’s incentives are aligned with both a high probability of curing out of the foreclosure and keeping the pre-foreclosure costs to the investor contained.
One of unintended consequences of the government foreclosure delaying strategy (probably aimed at limiting supply and supporting house prices), is that strategic defaults have gained fairly widespread acceptance. And that means the eventual cost to the taxpayer will be higher than if the lenders had either modified the loans, or foreclosed, or approved a short sale, within about 270 days.
May
10
Real Estate Purchases
May 10, 2010 | Tagged free real estate investment analysis software, real estate investment software, Real Estate Software, realty software | Leave a Comment
The Obama administration's $75 billion foreclosure prevention program has only been able to help a small fraction of troubled homeowners.
About 231,000 homeowners have completed loan modifications as part of the Obama administration's flagship foreclosure prevention program through March. That's about 21 percent of the 1.2 million borrowers who began the program over the past year.
But another 158,000 homeowners who signed up have dropped out – either because they didn't make payments or failed to return the necessary documents. That's up from about 90,000 just a month earlier.
Last month, the administration expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.
The states with the highest foreclosure rates in the first quarter were Nevada, Arizona, Florida and California, with Nevada leading the pack, RealtyTrac said.
Rising home prices and speculation fueled a wave of home construction there during the housing boom. But now the state, particularly around the Las Vegas metropolitan area, is saddled with a glut of unsold homes.
Still, the number of homes in Nevada that received a foreclosure filing dropped 16 percent from the first quarter last year.
All told, one in every 33 homes in Nevada was facing foreclosure, more than four times the national average, RealtyTrac said.
Foreclosure filings rose on an annual and quarterly basis in Arizona, however.
One in every 49 homes there received a foreclosure-related notice during the quarter.
Florida, meanwhile, posted the third-highest foreclosure rate with one out of every 57 properties receiving a foreclosure filing.
California accounted for the biggest slice overall of homes facing foreclosure – roughly 23 percent of the nation's total. One in every 62 properties received a foreclosure filing in the first quarter.
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Florida Mortgage Bankers Push to Undermine Foreclosure Mediation, Call It ‘Homeowner Relief’
Our guest blogger is Andrew Jakabovics, the Associate Director for Housing and Economics at the Center for American Progress Action Fund, and Alon Cohen.
The Florida Bankers Association has been pushing hard in that state’s legislature for passage of the cynically named Homeowner Relief and Housing Recovery Act. The Act is pure doublespeak; it speeds up foreclosures, reduces the homeowner’s involvement in the process, and circumvents Florida’s burgeoning foreclosure mediation program and replaces it with an optional informal meeting of the parties. Luckily, the bills have been tabled for this session, but homeowners, housing counselors, and community advocates — who have all vociferously protested the bill — should expect them to reappear.
Attempting to Move Foreclosures Outside the Court
The Act seeks to radically change the foreclosure process in Florida, which is currently a judicial foreclosure state, meaning servicers must file a case in court to foreclose on a property. This gives homeowners the opportunity to appear, present evidence, and – most recently – negotiate with the servicer in a mediation session. The Act would create a new option in Florida – nonjudicial foreclosure, in which the servicer sends notice to the homeowner that it is foreclosing on the property and can do just that around 90 days later.
Worse, even before they actually take possession of the house, the new law would allow servicers who wish to sell the foreclosed property at auction or to market it for sale on the open market to enter the property and put up a “FOR SALE” sign or its equivalent.
Homeowners could shift the foreclosure back to court by submitting a request within 45 days of receiving the notice of sale, but there is solid evidence that opt-in programs reach far fewer people than opt-out ones. (Under the current judicial process, a borrower can opt-out by simply failing to appear in court.) Philadelphia’s foreclosure mediation program sees a participation rate of 75 percent while Connecticut’s program, saw participation rates of 36-39 percent while it was opt-in. (They have since changed to automatically schedule mediation sessions.)
Circumventing Foreclosure Mediation
Moving foreclosures outside the court system would also circumvent Florida’s newly-unified foreclosure mediation program. In late December 2009, the state Supreme Court issued an order requiring all judicial circuits to implement automatic foreclosure mediation programs, based on successful programs in Miami-Dade, Okechobee, and Okaloosa counties. Since May 2009, parties in over 2,000 foreclosure cases have reached settlements that keep Miami homeowners in their homes.
Under the new regime, the parties receive notice of a scheduled mediation when the case is filed; the homeowner may appear with an attorney or housing counselor, and the servicer must have available a representative ready to make a deal. The $750 cost is borne by the servicer. As in any mediation, the parties are just required to meet, not to settle. Settlement is only appropriate if it is in the best interest of both parties.
The Act replaces this with an informal meeting. Under the Act the servicer must schedule an informal meeting if the homeowner requests one. The meeting conditions fall far short of mediation:
• Face-to-face negotiations are important for creating successful outcomes, but the new law would allow the meeting can take place by phone “or other reasonable means,” with the decision left up to the servicer.
• In mediation, the servicer must make available a representative with authority to agree to settlement terms. In this meeting, the servicer’s representative must have only the “authority to terminate the foreclosure if the representative determines that there is no legal basis for foreclosure.” Settlement is not mentioned.
• In judicial foreclosure, the servicer – as plaintiff – bears some of the responsibility to provide financial documentation necessary for settlement negotiations. The Act places this burden squarely on the homeowner, who must provide documentation and prove to the servicer the grounds for a forbearance or modification.
There is No Homeowner Relief in This Act
With a name this promising, we were hoping to find legislation that could help Florida’s homeowners land on their feet while netting maximum value for servicers. Instead, we found Florida Bankers Association pushing an Act that speeds up foreclosures, limits or removes homeowners’ participation in the process, and seeks to circumvent Florida’s recent efforts at proven foreclosure relief through mediation, the better to relieve Florida residents of their homes.
Apr
27
Foreclosure
April 27, 2010 | Tagged free real estate investment analysis software, real estate investment software, Real Estate Software, realty software | Leave a Comment
No wonder the Obama administration has suddenly rediscovered the foreclosure prevention policy arena. Banks foreclosed on homes in the first quarter of this year at a rate 35% higher than in the first quarter of 2009, and the process appears to be accelerating:
A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.
RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.
More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.
What caused the big jump? Mainly the initial economic collapse of 2008, and continuing unemployment. As the AP reports, these are homes that government intervention on the federal and state levels prevented banks from seizing earlier in the process:
Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.
These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.
In short, all of these government interventions did little to solve the actual problem homeowners faced on troubled mortgages, which was an inability to make the payments. Like Cash for Clunkers and the homebuying credit, Barack Obama’s policies had the effect of postponing the inevitable. Most homeowners who were in trouble in 2009 are still in trouble this year, and instead of simply getting all of the pain into a single year, Obama managed to drag it out into 2010.
What are the real problems behind foreclosures? Housing market speculation with adjustable-rate mortgages and unemployment. The first group took calculated risks intended on maximizing their profit, either in cash through resales or in equity through refinancing. Foreclosure was always a risk if the market turned sour. Government has no place in indemnifying those speculators through interventions on foreclosures, and certainly taxpayers shouldn’t foot the bill for risk taxpayers didn’t take.
Government could do something about unemployment, though. The Obama administration could demand an austerity program from Congress and stop signaling huge tax and fee burdens on businesses through programs like ObamaCare and cap-and-trade. Permanent tax reductions on capital gains would also help, as would an end to bailouts of any kind. That would allow capital to come back into the market and create jobs, which would be the best and most permanent solution to the foreclosure crisis that we could implement. Unfortunately, all we can expect from Obama is more kick-the-can policies and further attacks on capital that will just make the situation worse.
In a time when you can stroll over to the computer and rattle off an e-mail to your elected official because you think your taxes are too high or leave an anonymous comment on a blog or article voicing your disapproval with a particular reporter, it would seem that the days of face-to-face action and rallies are unfortunately a thing of the past.
Not for a group of activists in Florida heading to the Capitol in Tallahassee on Wednesday, April 21.
Michael Redman (4closureFraud), together with the Law Offices of Carol C. Asbury, Attorney Matt Weidner, and Lisa Epstein of Foreclosure Hamlet, in an effort to convince Florida legislators to listen to their constituents, are organizing a transport to the capital. An old fashion road trip of attorneys, advocates, and homeowners. Transportation is being organized and buses will be available from key areas throughout Florida and along major roadways. Redman and Epstein had initially dipped into their own pockets to charter buses for the event.
As of April 16th, according to Redman's blog, in a Friday post,
“Team Ice in West Palm has sponsored their bus and now one of Pinellas County's toughest foreclosure fighters has generously agreed to sponsor a bus to make sure any attorney and homeowner who wants to go to Tallahassee and make his or her voice heard has the opportunity to get up there and meet face to face.”“One of the most inspiring things about all of this is seeing how the defense attorneys are all throwing their time, talent and treasure into this fight. We all share our ideas, insight and experience because doing so serves the interests of not just our clients but those folks out there who cannot afford an attorney and it especially serves the Constitution we took an oath to protect and the judiciary we respect,” Redman says.
The most important piece of legislation the group was trying to stop was a push by bankers to change the way Florida handles foreclosures. Florida currently, and always has had Judicial foreclosures. The bank's proposed legislation would have allowed banks to foreclose on Florida homes without going to court. According to Matt Weidner, a Florida attorney, the bill for now appears to have been stopped in the House, but the Senate will meet next week and according to an old Florida saying, “No one's safe while the legislature is in session.”
A non-judicial foreclosure would mean that, “you the homeowner won't automatically get your day in court if your lender tries to take your house away. The way it works right now is the lender is required by law to file a civil lawsuit against you in order to foreclose. You then have to answer it. If you don't answer it or don't show up to court, the judge issues a summary judgment against you. In a non-judicial foreclosure everything is done administratively and your right to due process is compromised and you have to beg for your day in court,” as explained by Steve Dibert of MFI-Miami.
Although the bill appears to have died, and the bankers appear to have conceded, this motivated band of advocates doesn't want to leave anything to chance.
An e-mail from Weidner reads:
As Mark Twain said, 'News of My death was greatly exaggerated.'
Although the legislation appears to have died, the passion and concern that its introduction incited has only increased with word of its demise. Tapping into broad based anxiety and concern felt by homeowners all across Florida, the group has turned its focus from defeating this legislation to demanding legislation that will increase protections for Florida homeowners. Talk about turning the tables. They are meeting with Senator Mark Aronberg and Rep. Darren Soto who introduced a “Homeowner's Bill of Rights”. They're asking that this legislation be resurrected… at the very least they want to make sure their legislators are fully aware of their concerns and the problems they're facing.
According to Weidner's press release,
“The response from legislators to this movement has been awe-inspiring. Our leaders in Washington may have trouble hearing the voices of their people, but the leaders who represent us in Tallahassee hear the voice of the people loud and clear! Already leaders from both houses have graciously agreed to meet with their voters, we're confident many more will agree to meet with us when we arrive.”
Michael Moore spoke of the apathy and lack of action he witnessed despite his tireless work drawing attention to key issues affecting millions of Americans.
“Two years ago, I tried to get the health-care debate going, and it did eventually, and now where are we? We may not even have it. What am I supposed to do at a certain point?, ” Moore said in an 2009 Toronto press conference.
I wrote about that similar frustration with apathy in “Where are the Screaming Liberals?,” back in September 2009.
It's refreshing and inspiring to think that may be changing.
Denise Richardson (givemebackmycredit.com) posted the following from Lisa Epstein on her blog:
This is not just for homeowners!
We are ALL reduced by the actions behind the mortgage frauds and scams. Tenants! Anyone who relies on any public service funded by our now shrunken tax revenues! Anyone owning any property at all, fully paid off or not. Any business owner! Unemployed family members! Credit card/bank account fees victims! Those with drained 401Ks and college savings accounts!
We will be heard as was the Florida Bankers Association on their own “Capitol Day” on March 10, 2010. Florida Bankers, guess what? You wanted a “Taste of Florida”? You are gonna get one! We are having our own “Capitol Day”! But our collective voices will be a harmony; louder, clearer, unwavering, and with a foundation firmly planted in the historical roots of our country as a nation for WE, THE PEOPLE!
Bankers and other stealth foreclosing entities, listen up! We are NOT boobs, chumps, doormats, dupes, easy marks, fools, goats, gulls, patsies, pigeons, pushovers, saps, scapegoats, schmucks, sitting ducks, stooges, suckers, victims, or weaklings, And we most certainly are not “deadbeats”!
To find out more about the rally and let them know you'll be along for the ride, see Redman's site at 4closurefraud.org or Weidner's blog for more information.
www.shamethebanks.org
www.zombeck.com