...Think Again.
HAFA is the new government program to assist distressed homeowners with short selling their home. A short sale is defined as owing more on your home than your home is worth. This program became effective April 5 , 2010 and is a wonderful tool to assist homeowners that have been turned down for a mortgage modification. For more information, please click the link below or call me today at 480-355-8645.
Arizona foreclosures are expected to subside in the coming year. The latest data released by UFA L.L.C., a firm located in Ann Arbor Michigan that researches mortgage activity, states that foreclosures in Arizona and nationwide are expected to decrease in the next year.
After four years on the rise there is no doubt that it will be nice to see Arizona foreclosures start to subside. Improvements in the AZ and nation wide foreclosure arena are seen linked to tighter lending practices, home prices stabilizing, and an improving economy.
The one element working against foreclosures is the increasing unemployment which will leave some without the ability to make their Arizona mortgage payments. The onslaught of no-doc loans and inflated home prices led to four years of increasing foreclosures in Arizona and around the country.
The decline of Arizona real estate values is largely attributed to an elevated rate of Arizona foreclosures. A decrease in Arizona foreclosures will be a welcome sign for the Arizona real estate market in the coming future.
The national and Scottsdale AZ real estate market has been all over the map, today sales figures are looking good
Up, down, sideways, back and forth, it sounds like a game of hopscotch but is actually the way the economy, recession and real estate market have been moving. Mastering what is going on has had experts and professionals confounded, wondering how we can all come out ahead of the game. However there is one aspect that most can agree on – good news is great to hear.
Today’s headlines show that overall real estate contracts are up in volume. That, of course, is good news for housing affected stocks, as they increased in price. Some believe that the spring buying season is starting early. December is rarely, if ever, thought of as a Spring month but December showed that the Pending Home Sales Index is up over 10%.
There is no doubt that the real estate industry is faring better than a year ago. To continue this growth trend: job growth needs to improve, interest rates need to remain low, and consumer confidence has to continue growing. So far though, 2010 is looking better than 2009 and hopefully the national and Scottsdale AZ real estate sales will continue to rise.
Foreclosure activity in Arizona fell 10 percent in August to 17,807 properties with foreclosure filings, up 24 percent from the level reported in August 2008, according to the latest RealtyTrac® U.S. Foreclosure Market Report. One in every 150 Arizona housing units received a foreclosure filing in August, the fourth highest foreclosure rate in the nation.
“Arizona reported a welcome and significant drop in foreclosure activity in August, though the level of activity remained well above what was reported for the same time last year,” said James J. Saccacio, chief executive officer of RealtyTrac. “With a slight dip in unemployment in August, Arizona was the only Southwestern state to report economic improvement in terms of jobs added for the month.”
Arizona had the nation’s fifth highest level of foreclosure activity for August, although significantly below national leader California, which maintained the top position with 92,326 properties with foreclosure filings for the month. Florida continued in second place, reporting 62,401 properties with foreclosure filings. Michigan took over the number three slot, reporting 19,359 properties with foreclosure filings for the month. Nevada narrowly remained in fourth place, documenting 17,902 properties with foreclosure filings.
The remainder of the nation’s top 10 states for total foreclosure filings in August were Illinois (13,078), Georgia (11,947), Ohio (11,368), Texas (11,261) and New Jersey (8,316). Activity in the top five states accounted for 59 percent of all foreclosure filings in the nation for August.
Pinal County posts state’s top foreclosure rate in August
With one in every 95 housing units receiving a foreclosure filing — 3.7 times the national average and 1.6 times the state average — Pinal County posted the highest county foreclosure rate in the state for August. Maricopa County had the second highest rate, with one in every 119 housing units receiving a foreclosure filing during the month — three times the national average and 1.3 times the state average. Third highest rate was documented in Mohave County, where one in every 168 housing units received a foreclosure filing — 2.1 times the national average.
Maricopa County accounts for most of the state’s foreclosure totals for August
Maricopa County tallied the highest county activity level in the state, reporting 12,862 properties with foreclosure filings for August. Pima County had the second highest total, documenting 1,686 properties with foreclosure filings. Reporting 1,442 properties with foreclosure filings for the month, Pinal County reported the third highest total in the state. Mohave County was fourth highest, reporting 601 properties with foreclosure filings, while the fifth highest total was in Yavapai County, where 509 properties with foreclosure filings were reported for the month.
State a significant contributor to the nation’s foreclosure activity in August
Arizona accounted for 5 percent of the 358,471 properties with foreclosure filings reported nationwide in August. Total U.S. activity declined fractionally from the previous month but was still 18 percent ahead of August 2008. One in every 357 U.S. housing units received a foreclosure filing during the month.
Report methodology
The RealtyTrac Monthly U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing reported during the month — broken out by type of filing at the county, state and national level. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). If more than one foreclosure document is filed against a property during the month — which is extremely rare — only the most recent filing is counted in the report. The report also checks if the same type of document was filed against a property in a previous month. If so, and if that previous filing occurred within the estimated foreclosure timeframe for the state the property is in, the report does not count the property in the current month.
The prime borrowers are rapidly going into foreclosure, especially in those states of mass unemployment or decreasing property values, all which saw a huge run-up during the housing boom.
It’s a marked shift from earlier this year, when foreclosures were driven by defaults on subprime loans. It has major implications – ravaging the credit scores of those borrowers who once had impeccable records and dragging down property values in the more wealthy neighborhoods.
It also threatens to weaken the housing recovery.
“It’s definitely a concern,” says Brian Bethune at IHS Global Insight. “(Unemployment) is a major driver of foreclosures, and it will frustrate the housing recovery process.”
In the first quarter, almost half of the overall increase in the start of foreclosures was due to the increase in prime, fixed-rate loans, according to the Mortgage Bankers Association (MBA). At the end of the fourth quarter, 2.4% of prime mortgages were seriously delinquent, more than double the 1.1% at the end of March 2008, according to a report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
“In the beginning, the higher-end (homes) were a bit isolated,” says Kevin Marshall, president of Clear Capital, a provider of real estate asset valuation. “But in the last several months, we’re seeing a significant erosion in the higher-end homes. It’s reached into the prime loans.”
California, Florida, Arizona and Nevada represent 56% of the escalation in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts, according to the MBA.
That conforms with states reporting some of the highest unemployment rates. In California, the unemployment rate in April was 11%, according to the Department of Labor. In Nevada, it was 10.6%.
Economists fear that further increases in unemployment could lead to more defaults on prime, fixed-rate loans.
That’s what happened to Marvin Clayton, 47, of Waco, Texas. He lost income after his wife had a stroke and was unable to work. Then he lost his job a year ago. He’s now behind on his 30-year, 5.78% prime loan and is facing foreclosure in July. He is currently trying to get another job in retailing.
“I was trying to make it off one income but was struggling to make payments,” Clayton says. “I’m still hoping for a modification from my bank.”
A short sale is used to describe the sale of a home in which the owner owes the bank more than the home is worth. The bank agrees to allow the home to be sold for less that what it owed.
In a complicated market like todays, it is hard to know whether you should keep your home or walk away from it. Many homeowners have watched their property values drop over 25 percent, sometimes more. Some say the market hasn’t even hit the bottom yet.
Some homeowners are beginning to wonder if staying in their home is even worth it anymore. Some wonder, “If I owe more on the mortgage than the house is worth, why throw good money after bad?” When homeowners are thinking of walking away, they need to remind themselves of why they purchased the home, when they did, in the first place. It could be the fact that is was and still is a great neighborhood, apart from the declining value. It also could be that it is close to a great school that your children still attend. Maybe the drive to work is a breeze from your home. The reasons could go on and on. Homeowners should also consider the following reasons to stay in their current homes:
•· If you sell now, you’re basically selling at a loss. The loss in equity is not an actual loss unless you sell; property values are likely to come back up over time.
•· If you’re having trouble making payments, this would be a great opportunity to lower your house payment through refinancing or a loan modification.
•· Walking away and vacating your home can tarnish your credit and make it much more difficult and costly to purchase a home when the market does recover, which it will.
•· More and more lenders are seeking deficiency judgments against homeowners in states in which deficiency judgments are allowed. In other words, if homeowners abandon the property and the lender can’t sell it for enough to cover the remaining balance on the loan, the lender may pursue legal action to collect the difference.
•· Lenders are increasingly unwilling to accept a short sale or deed in lieu of foreclosure for borrowers who can afford to make the payments.
As a borrower, you must justify your reasoning of why you are unable to stay in the house and why you are no longer able to afford it. If you are financially able to make the payments and stay in the house, but you do not see the point of making payments on a house that is only worth a fraction of what you owe, the lender is highly unlikely to accept a short sale or deed in lieu of foreclosure.
However, it sometimes makes sense for homeowners to flee the property, assuming all of the following apply:
•· They owe way more on the property than it is worth.
•· They flat out cannot afford the payments no matter how much they trim their budget in other areas and even if the lender is willing to modify their mortgage.
•· They’re way behind on payments and will never be able to catch up.
•· Trying to do the right thing is putting them further and further in debt.
•· The lender rejects their request for an affordable loan modification.
•· They can’t refinance into an affordable monthly payment.
•· They have come to terms with the fact that they may lose this house.
•· They have exhausted or dismissed all other options, including bankruptcy.
If these conditions apply to your clients’ situation, they may need to walk away, but there are right ways and wrong ways to abandon a property. In the case of abandoning a home, your clients may want to consider the following options from best to worst:
•· Short sale: List the house for sale. If they can’t sell it for at least what they owe on it, offer to negotiate short sales with the lenders who hold liens against the property. Real estate agents are often the best qualified to assist homeowners with the short sale option.
•· Deed in lieu of foreclosure: If short sales are not an option, your clients can offer their lender a deed in lieu of foreclosure. They sign the deed over to the lender, hand them or ship them the keys, and walk away debt free. If your clients decide to pursue this option, advise them to hire an attorney to review any documents before they sign them. Also, let your clients know they may be able to negotiate with the lender to obtain some cash from the lender for turning in the keys and leaving the premises “broom clean.” Or, the lender may allow them to live in the home rent-free until it sells – a vacant home is harder to sell.
•· Walk out: Once homeowners have exhausted all other options and the lender is being totally uncooperative or uncommunicative, sometimes all they can do is walk away. This really is an option of last resort. A short sale or deed in lieu of foreclosure damages your credit less than a foreclosure. With your help, your clients should be able to avoid this unpleasant choice.
Homeowners should fight to keep their homes and real estate professionals should help them as much as possible. Keeping our clients in their homes is not only the right thing to do, but it is good for the industry- it helps stabilize our neighborhoods and the housing market and keeps the American Dream of Homeownership alive. When homeowners find themselves fighting a losing battle, however, they shouldn’t throw good money after bad. Sometimes a graceful exit is the only choice.
The most common foreclosure-prevention scams works like this:
The despaired home owner gets a letter that says something like, “We know you’re having a hard time. We have a pipeline to your lender and can help you save your home. Call this toll-free number now.”
The poor home owners call the number and agree to pay an outrageous amount of up to $1,500 upfront for help with their mortgage. Then, nothing happens. Finally, the home goes into foreclosure and the home owner has no one to fall back on.
Harold Kirtz, a lawyer for the Federal Trade Commission who is prosecuting these scammers, says victims are often well educated and financially savvy, but they also are “in a very vulnerable state.”
Here are some red flags that should make a home owner think twice about calling this, probably bogus, phone number:
* If the company guarantees success. Nobody can guarantee a lender won’t foreclose or will modify a loan. Your mortgage company has the final say in what is approved and what is not.
* If the company wants money upfront. “We can’t say all advance fees are illegal,” Kirtz says, “But in most cases they probably are.”
* If the company wants the home owner to send mortgage checks directly to the modification firm. The only certainty there is that the company will cash the checks. You should never send your mortgage payment to anybody except for your mortgage company.
Arizona reported 19,694 properties with foreclosure filings for the month, a 17 percent increase from the previous month, and 48 percent above the level reported in July 2008, according to the latest RealtyTrac® U.S. Foreclosure Market Report. One in every 135 Arizona housing units received a foreclosure filing in July, once again the third highest state foreclosure rate in the nation.
“Arizona foreclosures are up significantly in July and from this time last year,” said James J. Saccacio, chief executive officer of RealtyTrac. “With unemployment at 9.2 percent in July, Arizona homeowners are struggling with rising joblessness and the growing risk of negative equity.”
California continued to show the highest total properties with foreclosure filings for the month — 108,104, as second ranked Florida reported 56,486 properties with foreclosure filings. The closest competition was for third and fourth place this month, as Arizona reported 19,694 properties with foreclosure filings compared to Nevada’s 19,535 properties with foreclosure filings. Illinois came in fifth, reporting 14,524 properties with foreclosure filings.
The remainder of the nation’s top 10 states for total foreclosure filings in July included Texas (12,077), Georgia (11,136), Ohio (11,021), Michigan (8,257) and New Jersey (6,467). All told, the top four states accounted for 57 percent of the nation’s foreclosure activity for the month.