Archive for the ‘Financial Crisis’ Category
New Program Pays Owners to Sell for a Loss
With more than 5 million households currently behind on their mortgages, the Obama adminstration is rolling out a new program to encourage lenders to accept a short sale. A short sale is one in which a property is sold for less than the outstanding mortgage owed to the lender. The administration hopes the program will prevent more foreclosures, which further depress property values and harm good neighborhoods.
The program, which takes effect April 5, 2010, pays lenders and borrowers to complete a short sale. Key points of the program are as follows.
- 1. The program compels lenders to accept a short sale offer and forgive the difference they are owed between the market value and the outstanding mortgage balance.
- 2. The lender will receive $1000 for every short sale they participate in.
- 3. The program encourages millions of borrowers to get serious about getting rid of their homes. It pays homeowners $1500 in walking away cash for finding buyer for their property and closing the sale.
- 4. The lender will utilize real estate agents to determine the present market value for a home. That value will set the minimum acceptable price. The estimated value will not be shared with the homeowner. If an offer is submitted that is equal to or higher than the estimated value, the lender MUST take it.
Pro’s and Con’s
- 1. For the investment pools which own most of the home loans, there is the hope of getting more money from a short sale than a foreclosure proceeding.
- 2. For the lender, $1000 will help offset the labor intensive short sale process.
- 3. For the borrower, their credit will suffer less damage. They have the lenders assurance that they won’t be sued down the line for their unpaid balance. And, they get $15oo to assist with their relocation.
- 4. For the community, short sales mean fewer empty houses sitting around waiting for the bank sale. It is estimated as many as half of all vacant properties are ransacked, neglected, vandalized and depress the value of neighboring homes.
- 5. The downside is that short sales are “tailor made” for fraud. House values are inherently subjective, which provides a wide latitude for potential conflicts.
- 6. Another problem is that bankers hate the very idea of accepting an offer short of what they are owed. By nature, they don’t want to sell anything at a discount. If they loan $200,000 …they expect to be repaid $200,000, not $150,000.
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Say “NO” to Megabanks. Move Your Money,Today!!
If you are one of the millions of Americans who are outraged by the unrepentant behavior of the “too big to fail” banks, please consider moving your money to a local, community bank. These arrogant, “Walmarts of Banking” have continued to reward themselves with huge bonuses, expensive trips, parties, private jets and fancy offices at the expense of working people. And, to add insult to injury, these banking shysters are spending millions of tax dollars to lobby Congress, solely to prevent financial reform that might protect us from paying for their fraud and financial fiasco’s in the future.
HAVE WE HAD ENOUGH, ALREADY???
Forget about the politicans in Washington DC, they don’t really work for us and we don’t need them to make our position clear. Americans can simply move their checking or savings accounts from the Wall Street “bailout” behemoths such as Citibank, Bank of America and Wachovia to their local, community bank or credit unions. And, switching banks is not a lot of trouble. If you want to read over a checklist before you start, go to the moveyourmoney.info website for tips and helpful information.
Millions of taxpayers and outraged citizens have already moved their money. They’ve had enough and they’re not taking it anymore. The bonus… even though it surprised many people who made the change, the rewards for switching to a local bank are huge All banks, large and small, now offer Debit and Credit cards, ATM’s and Online banking. But, the big banks can not match small banks in terms of service. Local banks offer lower fee’s, higher interest rates on deposits, personalized service focused on the local community and perhaps best of all, you can speak face to face with someone you know, who can make a decision for the bank. What’s not to LOVE????
Crow Erickson, Inc., parent company of InfoTube.net, puts our money where our mouth is. We conduct all our business at a local, community bank and we hope every hard working American follows our lead. Are you Tired of Feeling Helpless?? Do you Want Change Really??? You have the power, this time! Move ALL Your Money from the Megabanks today. Action is the only change Wall Street understands.
10 Cities with Real Estate Steals and Lifetime Deals
The real estate crash has obliterated home prices and forced millions of people into foreclosure and bankrupty… but as we have been reporting over the last few weeks…we see big signs that the worst is behind us.
New home starts are up 36 percent, factory and industrial output is up, job loss has slowed from 700,000 job losses last January to only 20,000 January 2010. If you need more proof…the Fed just increased the discount lending rate it charges banks for the first time in years. If they didn’t think the economy was heating up…they would have never raised rates. And, we think they know something about an improving job market that they’re keeping to themselves for now…
So, what cities will come out of the crash the fastest? Where can you invest and look like a Warren Buffett investor in 5 years? Here are 10 cities where Moody’s and the New York Post think you can put your money to work now.
1. Memphis, TN
2. Salinas, CA
3. Medford, OR
4. Washington DC and surrounding areas
5. Mobile, AL
6. Las Cruces, NM
7. Fayetteville, NC
8. Phoenix, AZ
9. Fort Worth.Arlington, TX
10. Cincinnati, OH
To read the complete article, with detailed explanation for the picks… CLICK HERE!!!
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Finished Building Lots. The Next Boom.
Are you one of the millions of people looking for the next boom in real estate? If so, you might want to consider abandoned subdivisions. Savvy investment groups and individuals have been snapping up finished building lots like candy.
Why? There are so many incomplete developments for sale, that finished building lots are being dumped onto the market at 50 cents or less on the dollar. Small builders or investors, who have the time to hunt down smaller projects, or buy the fill in lots that don’t interest big investors, are doing even better. They report buying quality building lots at 20 – 30 cents on the dollar.
The Law of Supply and Demand.
Supply: The two to three year supply of unsold building lots has stopped developers from investing in more land, finishing projects or starting new ones.
Demand: The United Stated needs 1.2 million new homes for the next 10 years, just to keep pace with population growth. During the past few years, builders have constructed only 500,000-600,000 homes per year, or less than half the amount needed to keep pace. When housing demand rises, the need for finished lots will be painfully obvious and builders will pay a premium to get their hands on them.
Investment in building lots was significant by the end of 2009. Before you jump in and invest in a vacant building lot, make sure your expectations are reasonable. Other than the Golden Rule…Location, Location, Location…, keep in mind, generally, land can not be flipped. Plan to hold on to the property for a minimum of one year and up to three. If you are considering unfinished lots, plan to wait a minimum of three to four years before ringing the register.
MORE…..Check back with us tomorrow. We’ll tell you how to spot a good price for a lot and buy below the finishing costs!
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Get Down Payment Help
Home buyers who are a little short of cash can receive down payment assistance from their local and Federal government. Many city, county and state programs piggy back on the Federal down payment assistance programs.
For information about the help that is available in your area, search for “down payment assistance programs” and include the name of your region of the country. Also, check the HUD website which is providing a Neighborhood Stabilization Program.
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Good news. Bad news. Real Estate Mixed Bag in 2010
The housing market has been sending some serious mixed signals for months now. The one certainty is that the real estate market is in flux, and will likely be for months to come.
FIRST, THE GOOD NEWS:
- Although interest rates have been increasing, they remain at historical lows. This is good news for buyers who act quickly, as none of the experts expect rates to remain this low later in 2010.
- The $8000 tax credit for first time buyers was expanded to include existing home owners, as well. The timing of this offer is crucial. Buyers must close on or before June of 2010 to collect their free cash.
- Home prices and demand have steadily increased month over month throughout October of 2009.
- Although some markets may slide a bit further, we are definitely in the last innings of the crash. Even if we have a bit more downward pressure, 2010 will be the bottom of the housing crash.
- Home seller’s who use the power of the MLS and the Internet to realistically market their properties, will see more buyers and will have much more pricing power than they’ve experienced in years.
- In markets, such as Phoenix, you can buy a new home for $800 a month, making it cheaper to own a home than rent it.
THE BAD NEWS:
- According to Bob Curran, director at Fitch Ratings, a mountain of foreclosures will hit the market in 2010. And, a 10.5 percent unemployment rate will cause a surge in new homeowners that will fall into default.
- Per Lawrence Yun, chief economists with the National Association of Realtors (NAR) expects a record 3 million foreclosures in 2010, up from 2.1 million in 2009.
- John Burns, president of John Burns Real Estate Consulting, is even more bearish. He thinks 50 percent more people will lose their homes to the bank than they did last year. Why? Lenders were under pressure to postpone foreclosures in favor of loan modifications. And, the banks weren’t staffed to handle all the defaulted loans, as they now are.
- The Office of Comptroller of the Currency and the Office of Thrift Supervison released a report that said the results of the loan modification program was disappointing. 61 percent of the loans that were modified are now in default again. The offices predict another wave of foreclosures in 2010, which could cause prices to fall another 5 – 10 percent before the market stablilizes.
- The Federal Reserve plans to end the program that has kept mortgage rates so low for so long. Rates have already passed the 5 percent mark in anticipation.
- The first time buyer and existing home buyer tax credit program expires in early 2010. To qualify for the stimulus, buyers must purchase by April and close no later than June of 2010. This program has certainly lured buyers into the market place and its expiration will take a toll on demand in the 3rd and 4th quarters.
InfoTube Prediction: Since the housing market peak in the summer of 2006, home prices have dropped over 30 percent on average. Prices in some markets such as Las Vegas, Phoenix and parts of Florida and California have fallen more than 60 percent. Some markets have further to go, but we are in the final innings of the crash. Even if we go lower, we will see the bottom in 2010. But, don’t look for a rebound off the bottom. The damage was too deep and too systemic for a “V” shape recovery. The housing market will skate along the bottom for quite a while and it will probably be 2013 before most people notice any rebound.
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Mortgage Rates Jump over the Holidays
Mortgage Rates jumped nearly one-half percent during the week ending January 1, 2010. The average rate climbed to 5.18 percent, up from 4.92 percent one week earlier.
Overall demand for home financing has also fallen dramatically. Loan applications were down 23 percent the last week of December. Even worse, applications for refinancing were down a whopping 30 percent.
Through the grapevine… I continue to hear from brokers, loan officers and buyers that loans and appraisals are very difficult to obtain. Apparently, our lenders don’t want to loan any of their money for real estate these days.
Side note… The banks are also sitting on 2 million foreclosed homes, apparently waiting and praying they’ll make more money later on…hmmmm…. I guess we’ll take their position as a positive sign. Since they are willing to set on these non-performing assets, I assume they expect less competition later in the year or firmer pricing…
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Nicolas Cage Loses Homes to Foreclosure
Is it a sign of the economic times, or more like MC Hammer deja vu??
Academy Award winning actor, Nicolas Cage, lost 2 New Orleans homes to a foreclosure sale this week.
More bad news for freespending Cage. He owes more than $6 million in back taxes to the IRS. And, his properties in California and Las Vegas have been foreclosed on and are scheduled for auction this month.
Mr. Cage owed the City of New Orleans $151,730 in back real estate taxes and defaulted on his $5.5 million mortgage debt. His home at 1140 Royal Street in the French Quarter, valued at $3.5 Million, sold for $2.3 million. The other property located at 2523 Pataniya Street, appraised at $3.3 million, sold for only $2.2 million. Pataniya Street is located in the Garden District. Famous neighbors include author Anne Rice and football great Archie Manning, father of Peyton and Eli.
Bad Times or Crazy Spending? Nicolas Cage, a member of the famous Coppola family, is known for being a big spender and news maker. His obsession for Elvis resulted in a one minute marriage to Lisa Marie Presley. He once paid $276,000 for a dinosaur skull. At one time Cage owned 2 islands in the Bahama’s, luxury yachts (plural), a room full of shrunken heads and drove a stable of expensive cars, including a Lamborghini.
Stars may occassionally fall to Earth, Nic won’t stay long. Nicolas Cage and the Coppola family are Hollywood Royalty. His movies have generated over $8 Billion in Box Office Sales. Although Mr. Cage is facing financial ruin because he continued to spend, while millions of dollars drained from his bank accounts, we predict he will crank out more movies and will be back to living the high life in no time. Also, it is rumored that Johnny Depp may come to Nic’s rescue. It seems Depp has a soft spot for Cage, who got him his first roll in Nightmare on Elm Street. Aren’t friends great!!
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Home Buyer Motivation at Highest Level in Years
According to a survey by Move.com, 12.1 percent of homebuyers intend to purchase an investment property this year, compared to only 5.6 percent of buyers polled in April. 
The percentage of investors shopping for property also jumps higher when it comes to foreclosed property. 42 percent of foreclosure buyers are purchasing for an investment. 57.6 percent of foreclosure shoppers plan to live in the home they buy.
The survey also shows that 23.6 percent of investors and buyers believe that home prices are already as low as they will go. Nearly 20 percent feel a sense of urgency when searching for a bargain.
Another factor motivating home buyer’s off the sidelines is the real threat of rising interest rates. Wall Street guru’s, who agree on very little, warn that lending rates will rise in the near future. With real estate prices at their lowest levels, buyers risk much more in waiting to purchase, than they do by locking in record low rates on their loan.
Prediction: We believe the leading indicator of an interest rate hike will be falling unemployment claims. When unemployment claim filings fall below 500,000 per month, a rate hike is likely!
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Mortgage Giant Cuts a Deal with Homeowners
Mortgage giant Fannie Mae announced that it is willing to play “Let’s Make a Deal” with homeowners who are behind on their mortgage payments.
According to CNBC, Fannie Mae will give homeowners, who are in default on their loan, the option of renting the home and staying put for up to one year. To be eligible, the homeowner must sign over the deed to the property.
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Home Buyer Tax Credit Extended.
Great news for home buyers, sellers and owners, alike. The homebuyer tax credit has been expanded to include step up buyers, who have owned a home for 5 years. It also extends the tax credit through the end of 2010.
GREAT NEWS!
It appears that Senate Democrats have recognized the tremendous value of the First Time Homebuyers Tax Credit and odds are it will be renewed soon. At this time, it is believed that the credit will allow anyone purchasing a home, by April 30, 2010, to participate and receive the full credit available.
The credit will continue until the end of 2010, but the amount of tax credit will drop by 2 percent every 90 days. The graduated benefit should help the housing market recover into and through the 2010 summer selling season.
Here is the text of the story as reported in Bloomberg News today:
Senate Democrats on Board with Credit Extension
Senate Banking Committee Chairman Chris Dodd (D-Conn.) says Senate Democrats have agreed to extend the first-time home buyer tax credit. The latest version extends the program to home sales signed not closed by April 30. Purchasers would have another 60 days to close the sale. The credit will also be expanded to include so-called step-up buyers who have lived in their current home for at least five years.
The credit would be cut slightly to a $7,290 cap. Income eligibility for first-time home buyers would stay the same, but it would rise for step-up buyers to $125,000 for individuals and $250,000 for couples.
Source: Bloomberg News, Dawn Kopecki and Ryan Donmoyer (10/27/2009)
3 News Stories for Real Estate Lovers
3 Short Real Estate News Items of Interest.
- Good news for US Housing. For those of you still searching for a BOTTOM in the real estate market, we hit it in January 2009. A double bottom, in fact. Take a look at the CHART.
- China raised its minimum down payment requirement to 40 percent, in an effort to slow down the overheated housing market in Hong Kong. Conversely, in the US, we still offer financing with NO Money Down, when the tax rebate is combined with FHA or VA financing. Quite startling in light of the lessons we learned from subprime loans.
- Uncle Sam Added 5 Percent to Home Prices. Government interventions in the housing market have inflated home prices at least 5 percent higher than they would have been. Artifically low interest rates, $8000 tax credits, push for loan modifications and efforts to stall foreclosures may have created a false bottom. Since the props won’t last forever, the risk of price decline in the future is significant.
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Friday Good News for Housing!!
The stock market is back to 10,000, the level it reached in 1999. Sales of existing homes were up a whopping 8 percent, to the highest level seen in 2 years. The news is abuzz about an extension of the First Time Buyer Tax Credit….But, is it time to “Party like it’s 1999″???
Here is a snapshot of Friday’s real estate news. You decide.
- A record number of people snapped up bargains in September. The median price of a home sold in the US fell to 174,000, down 9 percent from $191,200 one year ago. Note: The significant price drop could be blamed in part to the First Time Buyer Tax Credit which favors the lower priced homes.
- Keep in mind that the homes counted as “sold” in September were actually purchased in June, July and August. No doubt the push to buy this summer had something to do with the expiring $8000 Tax Credit.
- 70 percent of all homes closed in September were foreclosures or distressed property.
- 80 percent of the homes closed, were sold for less than $250,000. The market above $250,000 has stalled and inventory is rapidly growing. And, the more expensive the home, the slower the market.
- The biggest sales gains (not price gains) were seen in the hard hit cities of Miami and Orlando. Sales in Miami were up 71 percent from last year, Orlando 65 percent. Note: Prices are still falling dramatically in the Sunshine state. In Miami and Orlando prices declined more than 30 percent from last year; Tampa prices fell to $133,000, down 17 percent.
- Sales of existing homes were down nearly 20 percent in Atlanta and Birmingham. Local Realtors blame job loss for lack of activity.
- Prices were flat or up a bit in some cities: Dallas, Houston, San Antonio; Tulsa; Jackson, MS and Washington DC.
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