Apparently, the government’s efforts to help in any aspect of the American mortgage market have had little impact, since one in 10 American households with a mortgage found themselves at the risk of foreclosure this summer.

The Mortgage Bankers Association stated recently, that about 9.9 percent of homeowners nationwide had missed at least one mortgage payment as of June 30, 2010.

Although this number has been adjusted for seasonal factors, it still was down slightly from a record high of more than 10 percent recorded as of April 30, 2010.

Last years foreclosure numbers began dipping, leading analysts to believe the foreclosure market was stabilizing, or maybe even improving after four years of consistent upswing in distressed mortgages.

According to RealtyTrac Inc, more than 2.3 million homes have been repossessed by lenders since the recession took hold in December 2007. Economists are expecting the number of foreclosures to grow well into next year.

The number of American foreclosures has followed the upward trend in unemployment, which has consistently been near double digits all year and has shown no sign of dropping soon.

Historically, housing trends have mirrored employment issues, reflecting the delinquencies, sales, or housing starts dependent on the availability of disposable housing income. Basically, when times are good and people working, they’ll buy homes.

State Attorney General Jerry Brown sued the federal government Wednesday, July 14, 2010, asking a judge to stop government – sponsored mortgage buyers from blocking a program that lets homeowners pay for energy-efficient improvements through increased property taxes.

Brown’s lawsuit argues that Fannie Mae and Freddie Mac’s opposition is forcing California counties to halt plans to provide the incentives.  He sued the buyers and their regulatory agency, the Federal Housing Finance Agency, in Oakland U.S. District Court.

The voluntary Property Assessed Clean Energy program encourages homeowners to install solar panels, upgrade insulation and take other steps to improve energy efficiency, Brown said.  Homeowners pay for the improvements through property tax assessments over a decade or more.

Fannie Mae and Freddie Mac say the programs could give counties top priority to be repaid if homeowners default on their mortgages.  As a result, they could not buy or guarantee mortgages or properties that participate.

  Mortgage rates have sunk to the lowest level in more than 50 years, but where are the hordes of refi and new purchase prospects?

 The Federal National Mortgage Corporation, aka Freddie Mac, recently stated the average rate for a 30-year fixed mortgage loan is down to 4.58 percent.

This manifests a continuing downward direction for the fixed-loan product and the lowest since Freddie Mac began keeping records in 1971.  The last time these loans were cheaper was the 1950’s, when most long-term home loans lasted just 20 or 25 years.

 Investors being cautious of the more dramatic European debt crises and our domestic stock market have shifted their monies into Treasury Bonds, thereby driving down yields.  Mortgage rates tend to track the yields on long – term Treasuries.

   Recently the yield on the benchmark 10-year Treasury note dropped to 2.95 percent.  This was the first time since April 2009 the rate had fallen below 3 percent.  Simultaneously during that April, the markets were attempting to recover from the financial crisis.

  All things considered, the tighter lending standards and declining home equities have made it difficult for many borrowers to qualify to refinance; and those who did qualify have already done so over the last 18 months.

  Contemporary mortgage application trends have revealed a gradual increase weekly during the spring of 2010 according to the Mortgage Bankers Association.  But those numbers remain at only half the level of 2009 and a far cry from the refinancing boom of 2003 through 2005, when home prices soared and borrowers pulled equity out of their homes to pay for renovations, boats, and vacation homes.  The subsequent reduction of equity and capital expenditures made on depreciating assets, have glaringly resulted in many Americans owing more on their mortgages than their homes are worth.  This in turn has resulted in the inability to refinance through the usual channels.

Foreclosures made up 59.8% of all residential sales in San Bernardino County in the first quarter of 2010, according to a report by Irvine-based RealtyTrac. The number of foreclosure sales, about 5,700, was a 21.1% decline from the fourth quarter of 2009.

Although there still remains a strong desire for foreclosed properties, the dwindling inventory of distressed properties may lead to the decline in foreclosure sales.

Due to a backlog of such homes, banks continue to hold off on putting distressed properties on the market until the backlog is worked through.

Will Herring, the current owner of Moreno Valley based, Mtg. Experts Inc; a real estate brokerage firm, made the following observation. “If we had inventory, we could sell it. There’s a huge demand for properties,and we don’t have enough that are coming back on the market”.

Banks are also trying to do more loan modifications, although many of those properties fall back into default. This according to Aaron Norris, spokesman for The Norris Group, a real estate investment resource group. Since more distressed properties are attempting to go through the modification process, this leads to a reduction in foreclosure sales.

“Banks are under continual pressure to perform loan modificaitons,” Norris said.

The average price of a foreclosed home in the first quarter of 2010 in San Bernardino County was $160,500, a 26.5% discount from properties not in the foreclosure process.

In 2009, more than 3/4 of San Bernardino County homes sold were for properties that were in some form of financial distress, eg; default, auction, or REO.

Nationally, 31 percent of homes sold in the first quarter were foreclosed properties. This reflects a 14% decrease from the previous quarter. California trailed Nevada, but still recorded the second- highest percentage of foreclosed sales in the country at 50.8% of all sales.

Riverside County saw 56.1 percent of home sales come from foreclosed properties. The sales ratio of foreclosed properties merely reflects the mounting housing crisis. This is the numbers over the last 3 years;

2009– 29% of all sales were foreclosures

2008– 23%, and

2007– 6%

Hey everyone; Here’s more info on watching out for short sale fraud.  If  more detail is needed, be sure to follow the link the the DRE site.

SACRAMENTO – The California Real Estate Commissioner, Jeff Davi, announced the issuance of a Consumer Alert by the California Department of Real Estate (DRE) warning consumers and real estate agents about the perils and potential pitfalls of short sales. The alert has been posted on DRE’s Web site at: http://www.dre.ca.gov/pdf_docs/ca/ConsumerAlert_ShortSales.pdf

“The number of short sales is on the rise and many consumers do not understand the consequences of such a transaction,” DRE Commissioner Jeff Davi said. “Moreover, the Consumer Alert educates consumers and real estate agents to recognize the elements of a fraudulent or questionable deal.”

To put it simply, a short sale transaction involves the sale of a property wherein a seller receives an offer from a buyer that is less than the amount of the mortgage loan(s) on the property. In order to complete the sale, the seller requests the lender to accept less than what is owed in order to allow the transaction to close. While short sales are a popular alternative to foreclosure, like all real estate transactions, they are complicated and sellers need to lookout for the pitfalls.

For example, in some instances a seller may be required to pay taxes on the forgiven debt. In addition, a seller may be an unwitting participant in a fraudulent transaction wherein an unscrupulous agent or a short sale negotiator working with a straw buyer will make a lowball offer to the seller and in turn misrepresent the true market value of the property to the lender. If the lender accepts the offer, the straw buyer immediately re-sells it at the true market value, with the profits split among the conspirators. Had the property been sold for the most amount of money that the market will bear, the potential tax consequence to the seller is diminished and the lender would have received fair market value.

A few of the key elements a homeowner should look out for are the following:

Short sale negotiators must be licensed real estate brokers (or a licensed real estate salesperson where that person is working under the supervision of his or her broker).

Any and all payments must be fully disclosed and made part of the escrow documents. If there are any fees to be paid “outside” of escrow, this may be the red flag that the payment is illegal.

If your agent explains that the buyer is a fictitious person or entity, or your buyer is purchasing the property under a power-of-attorney or is a limited liability company (LLC), this may be a red flag that fraud is involved in your transaction.

If you are told that an unlicensed processor, negotiator or facilitator is handling your short sale, this is a red flag that unlicensed activity is taking place. Only real estate licensees, California lawyers acting as lawyers and investors acting on their own behalf can engage in short sale negotiations.
NEWS RELEASE
FOR IMMEDIATE RELEASE: May 5, 2010
CONTACT: Tom Pool, (916) 227-0772

Hey everyone! This just in regarding the new and first time homebuyers credit.  This goes into effect May 1, 2010 and escrow on your California property must close between that date and before January 1, 2011.

2010 Tax Credit for New Home / First-Time

If you find yourself in a situation where your financial circumstances either challenge your ability to make your home mortgage payments or you are no longer able to make the mortgage payments at all, you will be presented with a series of difficult options that will have an impact on your personal and financial life for years to come.

One of the more familiar options is foreclosure. In a foreclosure, the bank/lender (owner of your loan) decides to sell your house as a means to get back the money they loaned you. However, in this current real estate market, some banks/lenders are not exercising their foreclosure rights and instead have opted for either “loan modifications” or “short-sale” deals. Since it appears that successful loan modifications have not been very prevalent, this alert is written to discuss another option that is currently available to the banks/lenders: short sale transactions.

 Short Sale Transactions:

 What is a short sale? To put it simply, a short sale transaction is a sale of a property in which the outstanding debt (in the form of mortgages – such as purchase loans, refinance loans, home-equity loans, or one of the various other types of loans secured by your property) was more than the price for which the property was sold. Example: 1st and 2nd mortgages totaled $470,000.00 and the property was sold for $325,000.00. The sale price was $145,000.00 “short” of the amount that the seller had originally borrowed – thus the term “short sale.” Since the banks/lenders were essentially paid back less than what you borrowed, you could be deemed to have received a debt “forgiveness” of $145,000.00. A sale of this type requires bank/lender approval.

 While there are many reasons why a bank/lender would choose this manner of sale, the important question is: What should you (as the seller of the property) know about this type of sale? If you participate in this type of sale, please be aware that:

 1.         In some instances, you may be sued by the lender/bank for the money that was “forgiven”.

2.         The amount you did not pay back, which is a form of “debt forgiveness”, may be taxed by tax agencies for the “forgiven” amount. In the example above, you may be taxed on $145,000.00. For Mortgage Forgiveness Debt Relief Act and Debt Cancellation tax information visit: http://www.irs.gov/individuals/article/0,,id=179414,00.html

 3.         If there are other lenders or lien holders (such as a 2nd or 3rd loan), the holders of the second or subordinate liens, may file a deficiency judgment in civil court against you to get their money back, even though the first lien holder allowed debt forgiveness.

 These are just three major consequences of choosing to sell through a short sale. Therefore, it is very important that you seek:

 1.         A licensed and qualified real estate agent to represent you in these types of transactions. To determine if the person is licensed by the California State Department of Real Estate and/or to check on a license status, please visit our website at www.dre.ca.gov.

 2.         The advice of an accountant. To obtain the status of a Certified Public Accountant or a Public Accountant, please visit the California Department of Consumer Affairs – California Board of Accountancy at www.dca.ca.gov

3.         The advice of a lawyer. To obtain the status of an attorney, please visit the State Bar of California at www.calbar.gov.

 In addition, contact a free United States Department of Housing and Urban Development (HUD)-approved housing counselor at www.hud.gov or contact your lender directly.

 In April of 2010, the federal government will offer financial incentives to push short sales through a program called Home Affordable Foreclosure Alternatives. The program is designed to spur home sales and one of its components will be providing government payments to homeowners (for moving and/or relocation expenses). For more information, please visit www.makinghomeaffordable.gov.

 Be aware that in response to this new program there may be an increase in the number of companies soliciting homeowners in distressed situations and offering to conduct the short sale negotiations with your bank/lender in exchange for charges and fees. Their interest may not so much be to help you as it may be to try to be the vehicle through which they could “flip” the short sale for a profit.

 Flipping of Short Sale Properties: Either an unscrupulous agent or a short sale negotiator will misrepresent the true market value of the property to the bank/lender and/or fail to forward all offers to the bank reflecting the true market value. They try to buy it themselves through the use of “straw buyers”, many of whom are limited liability companies, which are their alter egos. They will use false broker price opinions or appraisals to support a depressed valuation. Once the unscrupulous agent or a short sale negotiator has convinced the bank of the false value, they have their straw buyer purchase the property and immediately attempt to sell it at the true market value, re-visiting buyers who had made legitimate offers. Had the property been sold for the most amount of money that the market will bear, the potential tax consequence to the seller is diminished. Conversely, by accepting an artificially deflated offer, the seller’s potential tax liability is increased.

 The key elements for you as a homeowner to look out for are:

 1.         Short sale negotiators must be licensed real estate brokers (or a licensed real estate salesperson where that person is working under the supervision of his or her broker).

2.         Real estate licensees wishing to collect an advance fee in connection with performing short sales must first submit an advance fee contract to the DRE for review and then receive from the DRE the issuance of a no-objection letter relative to that contract. All advance fees collected thereafter under the terms of that contract must be placed in a trust account and handled as client trust funds.

3.         Any and all payments must be fully disclosed and made part of the escrow documents. If there are any fees to be paid “outside” of escrow, this may be the red flag that the payment is illegal.

4.         If your agent explains that the buyer is a fictitious person or entity or your buyer is purchasing the property under a power-of-attorney or is a limited liability company (LLC), this may be a red flag that fraud is involved in your transaction.

5.         If you are told that an unlicensed processor, negotiator or facilitator is handling your short sale, this is a red flag that unlicensed activity is taking place. Only real estate licensees, California lawyers acting as lawyers and investors acting on their own behalf can engage in short sale negotiations.

 If your house is already listed with a real estate broker and the broker recommends the services of a “short sale negotiator” or its variations, “debt negotiator”, “debt resolution experts”, “loss mitigation practitioners”, “foreclosure rescue negotiators”, “short sale processors”, “short sale coordinators”, “short sale expeditors” or some other type of unlicensed short sale or debt specialist, ask him or her to provide you with a printout of that person/company’s real estate licenses.

 If you are considering engaging in a short sale transaction, you should fully educate yourself about the mechanics of the process and the related legal and ethical issues and work only with legitimate professionals. In addition, become aware of other options that made be available to you by visiting the Homeownership Prevention Foundation at www.995hope.org.

 Finally, if you become aware of information about fraudulent short sale activity, please contact the DRE’s Enforcement section in Sacramento or at the office closest to you, or via the Internet at http://www.dre.ca.gov/cons_complaint.html. In addition, report suspected scams to the California Attorney General’s Office at www.ag.ca.gov, the U.S. Department of Housing and Urban Development at www.hud.gov, and the Federal Bureau of Investigation at www.fbi.gov.

 For additional information on Short Sales, please review the Department of Real Estate’s web page on Consumer Alerts: Short Sales – An Overview and Warning to Real Estate Licensees Re: Fraud, and Legal and Ethical Minefields, which may be accessed by visiting www.dre.ca.gov/pdf_docs/article_shortsales03_2010.pdf

   Hey everyone! Received this in an email from the California Department of Real Estate and wanted to post on my blog.  Things are going to start getting serious now. I believe this trend will become national, and hopefully soon, all of us still in the business and licensed and registered Federally and State- wise can start operating relatively stress free again.

 NEWS RELEASE

FOR IMMEDIATE RELEASE: March 24, 2010

 Loan Modification Firm Surrenders License to California Department of Real Estate

Los Angeles – A loan modification firm and its principals have surrendered their real estate licenses rather than fight charges of fraud and dishonest dealing filed by the California Department of Real Estate (DRE). In an action filed last June, the DRE accused Green Credit Solutions Inc. (Green Credit), and its designated broker, Jeffrey Alan Chiuminatta, and real estate salesperson Curtis James Melone, of illegally collecting advance fees from homeowners in exchange for loan modification services that were very rarely performed.

“Loan modification scams are particularly egregious as scammers prey on financially stressed and vulnerable homeowners who are often bilked out of their last few dollars,” stated Real Estate Commissioner Jeff Davi. “While getting the bad actors out of business is important, consumer education efforts and legislative changes are the key to keeping consumers from falling victim in the first place.”

In addition to the accusation, the DRE also issued a desist and refrain order to Brian LaRuffa and Christopher Fox, unlicensed corporate officers of Green Credit, ordering them to stop illegally providing services for which a real estate license is required, including loan modifications.

Green Credit also operated under the names of www.getgreencredit.com, www.greencreditsolutions.com, www.gogreencredit.com, www.yournewcreditcompany.com, Green Credit Advisors, Green Credit Holdings, Green Credit Collections and Servicing, and Leads2Green.

The DRE and California State Bar investigated numerous consumer complaints and found that Green Credit collected advance fees for loan modification services but failed to perform the promised services, failed to provide refunds and/or failed to provide an accounting for the fees the consumers had paid. The investigation also revealed that, in some cases, Green Credit and its agents had consumers sign documents indicating the consumers would be represented by attorneys paid by Green Credit. However, only rarely did attorneys meet or communicate directly with the borrowers or perform loan modification services on behalf of the consumers. In December of last year, the State Bar seized the records of Green Credit based on its unauthorized practice of law.

In 2009, the DRE investigated more than 2,000 complaints involving loan-modification scams. Nearly 350 individuals and companies received a Desist and Refrain Order to stop illegal activity. All the loan modification actions have been posted on the DRE’s website as well as important consumer information on how to avoid falling victim to scams. In October of 2009, SB 94 was signed to law making it illegal to collect advance fees in connection with loan modification services.

This case has been a collaborative effort between the Department of Real Estate, the State Bar of California and the Orange County District Attorney’s office.

If you have a complaint against a lawyer, contact the State Bar Complaint Hotline at 1-800-843-9053. Complaint forms are available online at: www.calbar.ca.gov.

For information about DRE and its programs, visit www.dre.ca.gov.

 CONTACT: Tom Pool, (916) 227-0772

Here is an item by item listing of the disclosures pursuant to new changes to Regulation Z, aka “The Truth in Lending Act” and when they are disclosed:

At time of application:

• “Key Questions to Ask About Your Mortgage” pamphlet
• “Fixed vs. Adjustable Rate Mortgages” pamphlet, which would replace the “Consumer Handbook on Adjustable-Rate Mortgages” booklet.
•  Revised ARM-loan-program disclosure with terms in a question –and – answer format.

 Within three days of application:

• Revised early Truth in Lending Act (TILA) disclosure, which also would be required three days before charging any fees other than those for credit reports.
• New calculations for annual percentage rates and finance charges to be more inclusive of third-party charges.
• Column comparison of interest rates for borrowers with varying credit grades.
• Summary of key loan features, total settlement costs and potential changes to interest rate and monthly payment

 Three days before consummation:

• Final TILA disclosure
• Procedures for disclosing loan changes after the final TILA

After consummation, note that the time period for notice of changes to ARM’s is now 60 days, and more-detailed statements are required for payment-option ARMS.

The Harvard Business School did a study to determine the common characteristics of top salespeople.

The evidence they found is clear that most people can be top sellers if they are willing to study, concentrate and focus on their performance.  Here are the attributes the study found in highly successful salespeople:

• Did not take “no” personally and allow it to make them feel like a failure.  They have high enough levels of confidence or self-esteem, so that, although they may be disappointed, they aren’t devastated.

• 100% acceptance of responsibility of results.  They didn’t blame the economy, the competition, or their company for dips in closings.  Instead, the worse things were, the harder they worked to make negatives work to their advantage.

• Above average ambition and desire to succeed.  This is a key area because it affected priorities, how they spent their time on and off the job, with whom they associated, etc.

• High levels of empathy.  The ability to put themselves in the customer’s shoes, imagine needs and concerns, and respond appropriately was a habit.

• Intensely goal – oriented.  Always knowing what they were going after and how much progress they were making kept distractions from side – tracking them.

• Above – average will power and determination. No matter how tempted they were to give up, they persisted toward goals. Self-discipline was a key.

• Impeccably honest with themselves and the customer.  No matter what the temptation to fudge, these people resisted and gained ongoing trust of customers.

• Ability to approach strangers even when it’s uncomfortable.

            How many did you rate high in?  What should you be doing to help yourself?  Selling is a great field filled with opportunity.  But that opportunity must be utilized… and that takes concentration and focus.