SoCal Sales and Median Price Fall in July

July sales traditionally fall from June however a nearly perfect storm of elements combined last month to produce one of the worst Julys on record. I say “nearly” because interest rates are still fantastic and we can only imagine how ugly it may have been if the cost of money had gone up as well. 

  Sales Volume Median Price
All homes Jul-09 Jul-10 %Chng Jul-09 Jul-10 %Chng
Los Angeles    8,082 6,515 -19.4% $321,000 $339,000 5.6%
Orange         3,128 2,527 -19.2% $420,000 $450,000 7.1%
Riverside      4,699 3,529 -24.9% $185,000 $200,000 8.1%
San Bernardino 3,549 2,556 -28.0% $140,000 $155,000 10.7%
San Diego      3,809 3,070 -19.4% $320,000 $338,000 5.6%
Ventura        837 749 -10.5% $375,000 $370,000 -1.3%
SoCal          24,104 18,946 -21.4% $268,000 $295,000 10.1%

With record low interest, falling prices and an increase in inventory there is great opportunity for well qualified buyers. Even with a potential double-dip in property value, the amount saved in interest should more than balance out.  As the saying goes, you make money when you purchase real estate and with the abundance of distressed properties out there and buyers’ market environment, there is plenty of opportunity.

Cash buyers are definitely is the best position to take advantage, whether changing a primary residence or considering income properties. There’s a lot of single, multi-family and vacation homes currently on the market that have the potential to cover some or all of the cost of ownership. In the best case scenarios owners will see positive cash flow. There some situations where financed income properties can produce a profit, however these are generally larger and much more complex investment s than say 3 to 10 unit properties.

Whether buying and especially if selling, know you market. Be patient and understand what constitutes the best value in your chosen area. The most important thing for a seller now is to be realistic and understand that their home may be worth much more to them than the market will bear.

My job as is to educated my clients so that they know the right deal when it comes along.

For more information regarding this post or other real estate information visit or contact Robert Dixon at RE/MAX Palos Verdes Realty, Telephone (310) 703-1848 or email Content of this or any other post is presumed to be accurate but not guaranteed. DRE License #01828273

Serving the Palos Verdes Peninsula & South Bay Beach Cities, Hollywood and the Hollywood Hills, Silver Lake, Echo Park – Angelino Heights, Los Feliz, the Greater Los Angeles area and Palm Springs.

Southern California Home Sales and Median Price Dip in July

August 17, 2010

La Jolla, CA—Southland home sales saw their biggest year-over-year drop in more than two years last month as the market lost most of the boost from the federal home buyer tax credits. The median sale price dipped for the second month in a row, the result of a shaky economic recovery, continued uncertainty about jobs, and the expiring tax breaks, a real estate information service reported.

A total of 18,946 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in July. That was down 20.6 percent from 23,871 in June, and down 21.4 percent from 24,104 for July 2009, according to MDA DataQuick of San Diego.

This was the slowest July since 2007, when 17,867 homes were sold, and the second-slowest since July 1995, when 16,225 sold. Last month’s sales were 27.4 percent lower than the July average of 26,085 sales since 1988, when DataQuick’s statistics begin. The average change in sales between June and July is a 6.7 percent decline – about one-third the drop seen this year.

Last month’s 21.4 percent sales drop from a year ago marked the steepest year-over-year decline for Southland sales since March 2008, when sales fell 41.4 percent.

“It appears some of the sales that normally would have occurred in July were instead tugged into June or even May as buyers tried to take advantage of the expiring tax credits. Some of last month’s underlying technical numbers were largely flat, indicating that the market is treading water,” said John Walsh, MDA DataQuick president.

“We do expect some sideways buying and selling to kick in, especially among homeowners who have owned for more than seven years and didn’t take out equity during the frenzy. You may have to ‘discount’ your self-perceived home value, but if the person you’re buying from has to do the same thing, it doesn’t matter. And you may get a spectacularly low mortgage rate.”

The median price paid for a Southland home was $295,000 last month. That was down 1.7 percent from $300,000 in June, and up 10.1 percent from $268,000 for July 2009. The low point of the current cycle was $247,000 in April 2009, while the high point was $505,000 in mid 2007. The median’s peak-to-trough drop was due to a decline in home values as well as a shift in sales toward low-cost homes, especially foreclosures.

Foreclosure resales accounted for 34.2 percent of the resale market last month, up from 32.8 percent in June but down from 43.4 percent a year ago. The all-time high was February 2009 at 56.7 percent, DataQuick reported.

Government-insured FHA loans, a popular choice among first-time buyers, accounted for 36.0 percent of all mortgages used to purchase homes in July, down from 38.8 percent in June and 39.2 percent in July 2009.

Last month 21.9 percent of all sales were for $500,000 or more, compared with 21.6 percent in June and 19.2 percent a year ago. The low point for $500,000-plus sales was in February 2009, when 13.6 percent of sales crossed that threshold. Over the past decade, a monthly average of 25.4 percent of homes sold for $500,000 or more.

Viewed a different way, Southland zip codes in the top one-third of the housing market, based on historical prices, accounted for 30.8 percent of existing single-family house sales last month, up from 30.4 percent in June and 27.7 percent a year ago. Over the last decade those higher-end areas have contributed a monthly average of 33.3 percent of regional sales. Their contribution to overall sales hit a low of 21.0 percent in January 2009.

High-end sales would be stronger if adjustable-rate mortgages (ARMs) and “jumbo” loans were easier to obtain. Both have become much more difficult to get since the credit crunch hit three years ago.

Last month ARMs represented 6.1 percent of all purchase loans, down from 6.7 percent in June but up from 3.4 percent in July 2009. Over the past decade, a monthly average of nearly 40 percent of all home purchase loans have been ARMs.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 18.4 percent of last month’s purchase lending, up from 17.6 percent in June and from 15.2 percent in July 2009. Last month’s figure was the highest since January 2008, when it was 18.7 percent. Before the August 2007 credit crisis, jumbos accounted for 40 percent of the market.

Absentee buyers – mostly investors and some second-home purchasers – bought 21.9 percent of the homes sold in July, paying a median of $220,000. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 26.7 percent of July sales, paying a median $218,250. In February this year cash sales peaked at 30.1 percent. The 22-year monthly average for Southland homes purchased with cash is 14.2 percent.

The “flipping” of homes has trended higher over the past year. Last month the percentage of Southland homes flipped – bought and re-sold – within a six-month period was 3.7 percent, while in June it was 3.4 percent and a year ago it was 2.0 percent. Last month flipping varied from as little as 2.8 percent in Orange County to as much as 4.4 percent in Los Angeles County.

MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,204 last month, down from $1,251 in June, and up from $1,180 in July 2009. Adjusted for inflation, current payments are 46.4 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They were 56.1 percent below the current cycle’s peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but is lower than peak levels reached over the last two years. Financing with multiple mortgages is low, down payment sizes are stable, and non-owner occupied buying is above-average, MDA DataQuick reported.



South Bay area Real Estate Sales for 2010

As reported May 18, 2010 on (DataQuick) in Southern California as a whole, homes sales volume dipped slightly last month (see first 3 paragraphs and link to entire report below).

Here in the South Bay sales held steady, significantly ahead of March and April 2009 (see chart below) and the number of pending sales is higher than at any point in the past 18 months. Days on market are down and properties are holding, on average about 95% of their list price (based on 2674 sales in April).

Low interest rates, tax breaks and perceived bargains on homes are still the leading reasons for a percentage of buyers, low interest being the most compelling. Contrary to what many people (not in the market) believe, there are transactions happening. Banks are lending and buyers are closing deals and here locally the majority of properties purchased are not REOs or Short Sales. Of the 416 Single Family Residences, Condominium or Townhomes sold since January 1, 2010 (sample area: Walteria, the Hollywood Riviera, Southwood, West Torrance, North and South Redondo Beach) only 57 were classified as In Foreclosure, Notice of Default, Real Estate Owned or Short Pay.

Southern California home sales dip, median price rises from ’09

Southern California’s housing market leveled off last month as sales activity migrated ever-so-slightly from inland bargain areas toward entry- and mid-market neighborhoods closer to the coast. The overall median price was unchanged from the month before, but it jumped compared with April 2009’s low point, a real estate information service reported.

Sales of new and resale homes totaled 20,299 in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 0.9 percent from 20,476 in March, and down 1.0 percent from 20,514 for April 2009, according to MDA DataQuick of San Diego.

It’s possible that a significant number of sales that would otherwise have closed escrow in April were delayed until May as buyers tried to take advantage of new state tax credits effective May 1. In addition, those who rushed to sign a sales contract last month before the April 30 deadline for a federal home buyer tax credit would likely close escrow in May or June.

This report covers the entire Greater South Bay area. If you are interested in similar information on a more specific segment or multiple areas, please contact me with you needs.

The full report includes charts and data on: the Number of Homes For Sale vs. Sold vs. Pended, Average Price per SQFT, Average Days On Market and Sale Price/Original List Price Percentage, Average Price of For Sale and Sold.

Big Banks want MORE!!!

Big Banks and Financial Companies, the same institutions that set the stage for our current downturn, got billions in tax-payer bail-outs and are already becoming profitable (while many American’s continue to struggle or worry) would like yet another pound of flesh from those caught in the cross-fire.

It’s important to note that most of the recent and pending foreclosure activity IS NOT subprime, but prime loans and mortgages. These are A-paper borrowers succumbing to extreme economic challenges.

The piece below, from the CALIFORNIA ASSOCIATION OF REALTORS® provides information and background.

When is Enough, Enough?
The Big Banks are Opposing C.A.R.’s Bill to Protect Borrowers

C.A.R. is sponsoring SB 1178 (Corbett) to extend anti-deficiency protections to homeowners who have refinanced “purchase money” loans and are now facing foreclosure. Most homeowners didn’t even know that when they refinanced they lost their legal protections, and now may be personally liable for the difference between the value of the foreclosed property and the amount owed to the lender. SB 1178 will be voted on soon by the entire Senate.

One can’t help but think, “when is enough, enough?” Banks have already foreclosed upon a family’s home and now lenders can continue to hound them for additional payment. How much more money can today’s families afford to pay when they’ve already lost their homes and most likely their jobs? Are they never to have the opportunity to begin again?

Action Item
Call Senator Rod Wright Today at 1-800-672-3135
Urge him to vote “Yes” on SB 1178.
Non-C.A.R. members enter PIN number — 182003468


California has protected borrowers from so called “deficiency” liability on their home mortgages since the 1930s, but the evolution of mortgage finance requires the statute to be updated.

Current law says that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner’s liability on the mortgage is limited to the property itself. The law has worked well since the 1930s to protect borrowers, ensure the quality of loan underwriting and allow borrowers who are brought down by financial crisis to get back on their feet.

Unfortunately, the 1930s law does not extend the protection for purchase money mortgages to loans that re-finance the original purchase debt — even if the re-finance was only to gain a lower interest rate. Recent years of low interest rates have induced tens of thousands of homeowners to re-finance their mortgages, yet almost no one realized that by re-financing their mortgages to obtain a lower rate, they were forfeiting their protections. These borrowers became personally liable for the balance of the loan.

C.A.R. is Sponsoring SB 1178 Because:

SB 1178 is fair. Home buyers, and lenders, entered into the purchase with the idea that the mortgage would be non-recourse debt, and that the lender would look to the security (the house) itself to make good on the debt if the borrower cannot. It meets the legitimate expectation of the borrowers, who have no idea that they are losing this protection by a re-finance. Homeowners didn’t know that their re-finance exposed them to personal liability, and new tax liability, on the note. It would be unfair to allow a lender, or someone that has purchased a note from a lender, to pursue the borrower beyond the value of the agreed upon security.

SB 1178 is consistent with the intent of the orginal law and simply updates it for modern times. Current law was intended to ensure that if someone lost their home to foreclosure, they wouldn’t be liable for additional payment. Since the law was passed over 70 years ago, homeowners re-financing from the original loan to lower their interest rate has become commonplace. The 1930s legislature didn’t anticipate how mortgages would change over time.

Lenders could pursue families to collect this “deficiency” debt years down the road. Under current law, lenders have up ten years to collect on the additional debt after a judgment has been entered on the foreclosure. Years after a family has lost their home, they could find themselves in even more financial trouble. Lenders could even sell these accounts to aggressive collection agencies or even bundle them into securities. The end result would be banks who didn’t lend responsibly in the first place coming after families for even more money that they don’t have.

SB 1178 does NOT apply to “cash-out” re-finances, unless the money was used to improve the home and it doesn’t apply to HELOCs.

Gov. Arnold Schwarzenegger waives state taxes on mortgage debt forgiven in a foreclosure or short sale

There’s good news for thousands of California taxpayers who sell homes at a loss, a practice known as a short sale. A measure (SB 401) signed last week by Gov. Arnold Schwarzenegger waives state taxes on mortgage debt forgiven in a foreclosure or short sale.

The federal liability waiver for mortgage debt relief is still in place, but the state waiver was set to expire at the end of 2008. The new state provision applies to mortgage debt forgiven by lenders during tax years 2007 to 2012.

Without the tax shelter, the difference between the mortgage debt and sale price on a short sale becomes taxable income. So a state earner making $65,000 who sold a home at a $100,000 loss would be responsible for taxable income of $165,000.

On April 5, the Obama administration expanded the existing Home Affordable Modification Program to include new federal guidelines and incentives for lenders and qualified borrowers. The new Home Affordable Foreclosure Alternatives program helps eligible homeowners avoid foreclosure by providing options for short sales or deeds-in-lieu of foreclosure.

Borrowers are required to be owner-occupants of the principal residence, show financial hardship and have a first lien mortgage originated on or before Jan. 1, 2009 with a principal balance that does not exceed $729,750. In addition, the borrower’s total monthly mortgage payment must be greater than 31% of his or her monthly gross income.

Under the new HAFA program, borrowers can get up to $3,000 in relocation assistance. Service providers can get $1,500 for administrative and processing costs. Forgiven debt that does not exceed the debt used for acquisition, construction or rehabilitation of a principal residence is not taxed as income. (Make sure that you check these guidelines with a tax advisor or the IRS.)

If the home remains unsold despite a good-faith effort by the owner, the lender may accept a title transfer and release the borrower from the debt and further claims through a deed-in-lieu of foreclosure. For more information about HAMP programs, visit Making Home or call (888) 995-4673.

Source: LA Times, Money & Company, On the Market: Short sales

Realty Check: Televison Hit Show ‘Extreme Makeover’ Downsizes

Interesting, mostly due to the television aspect… In my mind dealing with smaller homes should have broader appeal.

Realty Check: ‘Extreme Makeover’ Downsizes Its Dream Homes
Producers of Hit TV Show See Bad Loans, Dashed Dreams, Default
The Wall Street Journal
April 6, 2010

The house at 10512 Baldy Mountain Rd. in Sandpoint, Idaho, looks like just another vacant foreclosed home. Some appliances, a bathroom mirror and even the hot tub are missing. The dining room of the three-bedroom house has water damage.

But this isn’t your run-of-the-mill problem house. Call it an Extreme Foreclosure. The 3,678-square-foot McMansion is a product of the popular “Extreme Makeover: Home Edition” reality television show. It isn’t the only “Extreme” home to fall on hard times.

Each week, an average 9.4 million viewers tune in to ABC-TV for what, over seven seasons, has become a classic formula: Find a struggling family with a heart-tugging story and send them on vacation as an army of volunteers work frantically to replace an existing home with a much nicer and bigger one in just 106 hours. Each episode ends with a dramatic tear-filled tour of the new home, packed with donated furnishings, and outsize extras like a carousel or bowling lanes.

But after the cameras have gone, another trend has been developing: Homeowners struggle to keep up with their expensive new digs. In many cases, the bigger, more lavish homes have come with bigger, more lavish utility bills. And bigger tax assessments. Some homeowners have tapped the equity of their super-sized homes only to fall behind on the higher mortgage payments.

The show’s producers say they are aware of the problem and are making changes appropriate to current economic reality: downsizing.

Back in the boom, the makeovers got a little out of hand because of competition among home builders aware of the free publicity that came with the show and who tried to outdo previous projects. These days, the show is backing away from the boom-era showpieces. We “scaled back,” says Conrad Ricketts, an executive producer for the show created and produced by Endemol USA.

The average size of current makeovers is 2,800 to 3,000 square feet. A 2005 episode featured a house in Lake City, Ga., that became a 5,300-square-foot English castle boasting five bedrooms, seven bathrooms, five fireplaces and an outdoor kitchen. These days, the houses appear more subdued, eschewing over-the-top amenities.

A swimming pool is no longer a must, unless it could be used for therapy. When pools are built, the show explores a well system to help reduce water usage and costs. Lavish landscaping is out, working with the local environment is in. “We’re not going to New Mexico, the desert, and trying to put sod down,” Mr. Ricketts says.

Tracy Hutson, an interior designer who has been with “Extreme Makeover” since the beginning, says homes are receiving more earth-friendly products, such as low water-flow toilets and solar panels, curbing the giant electricity bills that caused a hardship for some families. “I think our hearts were in the right place, but we just got carried way,” says Ms. Hutson. “It can be extreme without being the biggest house you’ve ever seen.”

Back in 2003, the 59-year-old Mr. Ricketts, who has worked in movies and TV for nearly three decades, was looking to develop a home-remodeling series. As he traveled down a “nice street” in Santa Clarita, Calif., he came upon a broken-down house that didn’t seem to fit in. He learned the family had a child battling leukemia, leaving little money for maintenance. “I knew at that moment it was the soul of the TV show,” Mr. Ricketts recalls.

The California family’s home was remodeled for the first episode airing later that year. But soon, remodeling gave way to razing and rebuilding houses, making for more dramatic television during the housing boom. As the show became more popular, donations flowed and builders got more and more ambitious.

It has since become part of pop culture, and, while plenty of makeover shows have come and gone, it remains the most ambitious, well-known and generous of the genre.

It’s also important to ABC when it comes to ratings and selling ads: Among broadcast networks, the show ranks second in the key female demographics and tops with children ages 2 to 11.

Huber Engineered Woods LLC has donated its premium floor, wall and roof products for 25 houses. While TV viewers don’t always see the brand, “connecting with builders and framers on job sites” has led to increased awareness and additional sales, says Matt O’Brien, vice president of commercial operations.

For many families featured on the program, the Extreme Makeover experience has been a dream come true. But for some, the experience has been financially stressful.

Several owners have sought loan modifications to reduce their payments in order to stay in their homes, lenders say. Some families seek a quick-fix by trying to sell. But because Extreme Makeovers tend to be big, fancy residences plopped into working-class or rural communities, the houses can be a hard sell.

The house in Sandpoint, which was owned by Eric Hebert, appears to be the first Extreme Makeover home to actually fall into foreclosure, in October. Mr. Hebert did not answer requests for comment. But he told a local television station last year that “the biggest mistake I think that I made was I took too much money out on the house thinking that I was going to have a job, you know, in the future.”


Foreclosure activity for Q1 in 2010

“Foreclosure activity in California fell 6.4 percent from the same time last year, but rose 4.7 percent from the fourth quarter, giving the state the fourth-highest foreclosure rate. One in every 62 units got a filing.”

I realize that this is not what a lot of you what to see… however I post these reports for several reasons not the least of which is that there are those who choose to fan the flames stating this is a recovery. Isn’t that the approach that got us into this mess? I tend to want to paint a clearer picture. I want my clients, whether buying or selling to be thoroughly aware of the environment in which they venture. Yes, there’s been a spike in activity and this activity can potentially continue, providing that financing remains available. It’s predicted, however that roughly 50% of the real estate sales volume in 2010 will involve distressed property and the numbers indicate that there will be plenty of inventory available.

An estimated 3.2% of all loans are in foreclosure with an additional 10% being more than 60 days late. With the more recent activity involving prime loan (as opposed to the wave of sub-prime failures last year) this is not just a matter of irresponsible buyers and lenders.

Where the topic of California’s part is concerned, it’s common to hear that we’re not really touched in the South Bay. A quick search of Redondo Beach, Hermosa Beach, Manhattan Beach and the Palos Verdes Peninsula produces 603 properties in some stage of foreclosure.

For many homeowners foreclosure is not the only option. Losing a home is a devastating reality; however a loan modification or short sale, when possible is far better than allowing a home to go back to the bank and new government guidelines through HAFA (part of HAMP) seek to streamline the process. If you are a homeowner with a legitimate hardship you need to understand your options and act immediately.

If you or someone you know is concerned about whether they will be able to keep their home or have already received a notice of default do not wait.

Call for additional information and guidance at (310) 750-5751

Foreclosure activity escalates in Q1
Utah’s foreclosure rate soars
By Inman News, Thursday, April 15, 2010.

Properties receiving foreclosure filings jumped 16 percent in the first quarter compared to the same period last year, according to a quarterly report by foreclosure data site RealtyTrac.

Filings — default notices, scheduled auctions and bank repossessions — went to 932,234 properties, a 7 percent surge from the fourth quarter. That means 1 in every 138 housing units in the country received a foreclosure filing, the report said.

March saw the biggest monthly total since RealtyTrac’s first U.S. Foreclosure Market Report in January 2005: 367,056 properties posted filings in March — 39.4 percent of total for the first quarter.

“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said James J. Saccacio, RealtyTrac’s CEO.

“One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009.”

With a total of 257,944 properties repossessed by the lender during the quarter, REOs hit a record-high total, the report said, and REOs soared 35 percent compared to the same period last year.

“This subtle shift in the numbers … may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline,” Saccacio said.

At 369,491, scheduled auctions during the first quarter also hit a record high, rising 21 percent quarter-over-quarter and 12 percent from the fourth quarter.

The number of properties receiving default notices was mostly flat, rising 1 percent to 304,799 quarter-over-quarter and falling 1 percent from the previous quarter. They peaked in the third quarter of last year at more than 342,000, the report said.

More than 70 percent of the nation’s first-quarter foreclosure activity was concentrated 10 states, the report said. California had the nation’s highest total of properties receiving foreclosure filings: 216,263, or 23 percent of all activity.

Next came Florida, with 153,540 properties receiving a filing, followed by Arizona (55,686), Illinois (45,780), Michigan (45,732), Georgia (39,911), Texas (37,354), Nevada (34,557), Ohio (33,221) and Colorado (16,023), the report said.

The number of properties in Nevada receiving a foreclosure filing fell 16 percent from 2009’s first quarter, but rose 15 percent from the fourth quarter.

According to RealtyTrac, Nevada has been contending with the nation’s highest foreclosure rate for the past 13 quarters. A staggering 1 in 33 housing units received a foreclosure filing in the first quarter, four times the national average, the report said.

For the third straight quarter, Arizona posted the nation’s second-highest rate with one in every 49 properties receiving a foreclosure filing, the report said. The state’s foreclosure rate rose 13.8 percent quarter-over-quarter and 22.4 percent from the previous quarter.

Florida registered the third-highest foreclosure rate in the nation for the second straight month. One in every 57 properties got a filing, increasing 28.8 percent quarter-over-quarter and 7 percent from the previous quarter.

Foreclosure activity in California fell 6.4 percent from the same time last year, but rose 4.7 percent from the fourth quarter, giving the state the fourth-highest foreclosure rate. One in every 62 units got a filing.

Utah had the fifth-highest rate — 1 in every 88 housing units had a foreclosure filing. There, foreclosure activity skyrocketed a whopping 75.1 percent from the same quarter last year and 21.2 percent from the fourth quarter.

Michigan, Georgia, Idaho, Illinois and Colorado rounded out the states with the top 10 foreclosure rates.

RealtyTrac bases its foreclosure reports on foreclosure filing data from 2,200 counties across the country, accounting for more than 90 percent of the American population.

Source: Inman News

SHORT SALES: Home Affordable Foreclosure Alternatives Program (HAFA)

Distressed Properties are expected to comprise 50% of the U.S. market transactions this year

New government guidelines designed to streamline the Short Sale process go into effect April 5th. All HAMP lenders and real estate agents working in the rapidly expanding Short Sales market MUST be familiar with these new guidelines. The new program is called HAFA: The Home Affordable Foreclosure Alternative program

According to the National Association of REALTORS®, Short Sales and Foreclosures (REO’s) are the new traditional transaction and as part of my standard real estate business I specialize in helping distressed homeowners’ determine their options. To this end, I am certified by the NAR through their SFR (Short Sale and Foreclosure Resource Certification) program.

Home Affordable Foreclosure Alternatives Program (HAFA)

In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program takes effect on April 5, 2010—although some servicers may implement it sooner, if they meet certain requirement–and sunsets on December 31, 2012.

Home Affordable Foreclosures Alternatives Program: Guidelines and Forms

HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA.

A list of servicers participating in HAMP (including HAFA) is available at: Making Home Affordable

HAFA Provisions

•• Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.

•• Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.

•• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

•• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).

•• Uses standard processes, documents, and timeframes/deadlines.

•• Provides the following financial incentives:

•• $3,000 for borrower relocation assistance;

•• $1,500 for servicers to cover administrative and processing costs;

•• Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.

•• Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

Source: National Association of REALTORS®