Daily Real Estate News | January 28, 2010 |
Treasury to Cut Foreclosure Relief Paperwork
The Treasury Department is announcing a plan Thursday to reduce the burdensome paperwork surrounding the foreclosure relief plan.
Source: The Associated Press, Alan Zibel (01/27/2010)
NEW YORK (CNNMoney.com) -- One roadblock slowing President Obama's foreclosure prevention program seems to be clearing away. Bank of America, the nation's largest mortgage lender, said Tuesday that it was the first lender to agree to lower or eliminate payments on second mortgages.
This federal initiative, called the Second Lien Modification Program, pays incentives to second mortgage holders to work closely with first mortgage holders under the Home Affordable Modification Program.
The lack of an agreement with second lien holders "has been a major impediment to getting successful modifications done," said John Taylor, CEO of the National Community Reinvestment Coalition, a group whose members include foreclosure prevention counselors.
Without alteration to the terms of second mortgages, first mortgage holders often have to lower their payments even more to hit the HAMP target requiring that borrowers' total mortgage payments represent no more than 31% of their pre-tax income.
"For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment," said Barbara Desoer, president of Bank of America (BAC, Fortune 500) Home Loans.
The second lien plan has been in the works since last spring, shortly after HAMP was initiated, but implementing it proved difficult.
HAMP itself has been a disappointment. Originally designed to help as many as 4 million borrowers obtain mortgage workouts, it had produced fewer than 70,000 permanent modifications as of Dec. 31. Another 800,000 or so homeowners were in a trial-modification phase.
The Treasury Department hopes the second lien program will make a big difference. It's estimated that as many as half of at-risk mortgages are burdened with second liens.
Signing on Bank of America was an important first step because it is the nation's top mortgage lender with 14 million loans outstanding, including 3 million second loans.
The lender said it has all systems in place to begin implementing the program as soon as the final program policies and guidelines are released by federal regulatory agencies. That is expected to happen soon.
More banks are expected to sign on to the program very quickly, according to a Treasury spokeswoman.
"They need a lot more of the major banks to sign up," Taylor said. 
The homebuyer tax credit is not as simple or straightforward as you might think. Here are some nuances that will affect homebuyers who plan to use it.
Source: Bankrate.com, Marcie Geffner (01/21/2010)
In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.
Beginning February 1, the costs of government backed loans are rising.
This monthly Market Update separately includes the Northern Virginia Association of Realtors, the Dulles Association of Realtors (Loudoun County), and the Prince William Association of Realtors. Numbers do not include new homes not listed on MRIS, which are probably not significant at this time.
Improved numbers are in green. Worse numbers are in red.
December listings compared to November: Decreased 11% to 5,421.
December sales units compared to November: Decreased 14% to 1,349.
December 2009 Sales Units compared to December 2008 Sales Units: Down 11%
The average sold price for all homes in December was $474,104, Up 12% compared to 2008.
Absorption Rate* comparing July thru December 2009:
| JUL | AUG | SEP | OCT | NOV | DEC | |
| Under 249,999 | 117 days | 71 days | 130 days | 115 days | 120 days | 143 days |
| 250,000 - 299,999 | 107 days | 110 days | 106 days | 99 days | 97 days | 115 days |
| 300,000 - 399,999 | 93 days | 88 days | 83 days | 94 days | 85 days | 95 days |
| 400,000 - 499,999 | 71 days | 82 days | 83 days | 101 days | 82 days | 108 days |
| Over 500,000 | 131 days | 131 days | 176 days | 193 days | 160 days | 128 days |
DULLES ASSOCIATION OF REALTORS (LOUDOUN COUNTY)
December listings compared to November: Decreased 8% to 1,806.
December sales units compared to November: Increased 6% to 391.
December 2009 Sales Units compared to December 2008 Sales Units: Increased 6%.
The average sold price for all homes for December was $393,735, Up 11% compared to 2008.
| JUL | AUG | SEP | OCT | NOV | DEC | |
| Under 249,999 | 137 days | 132 days | 122 days | 129 days | 137 days | 132 days |
| 250,000 - 299,999 | 92 days | 101 days | 136 days | 109 days | 89 days | 83 days |
| 300,000 - 399,999 | 103 days | 97 days | 92 days | 99 days | 106 days | 101 days |
| 400,000 - 499,999 | 104 days | 145 days | 153 days | 114 days | 163 days | 120 days |
| Over 500,000 | 244 days | 193 days | 235 days | 253 days | 249 days | 188 days |
December listings compared to November: Decreased 4% to 2,630.
December sales units compared to November: Decreased 11% to 578
December 2009 Sales Units compared to December 2008 Sales Units: Decreased 42%
The average sold price for all homes for December was $249,211, Up 23% compared to 2008.
Absorption Rate* comparing July thru December 2009
| JUL | AUG | SEP | OCT | NOV | DEC | |
| Under 249,999 | 102 days | 96 days | 108 days | 102 days | 106 days | 124 days |
| 250,000 - 299,999 | 123 days | 148 days | 132 days | 100 days | 110 days | 134 days |
| 300,000 - 399,999 | 140 days | 121 days | 139 days | 128 days | 129 days | 116 days |
| 400,000 - 499,999 | 162 days | 146 days | 153 days | 164 days | 179 days | 152 days |
| Over 500,000 | 241 days | 311 days | 325 days | 398 days | 336 days | 392 days |
*Absorption Rate is the number of days, at current rates of sale, that would be required to dispose of current inventory, provided no additional listings are added to the market. This calculation accurately tracks market conditions and has been used by the home building industry for more than 30 years.
This past year was an interesting time for real estate in Northern Virginia. We went from a flurry of foreclosure properties to a very limited inventory. As home prices fell and many found themselves underwater, it became difficult if not impossible to sell their homes. A large majority of the homes in Prince William County were found to be short sales. A short sale occurs when the seller’s lender, due to some sort of hardship, allows him to sell for less than the full amount owed. Buyers hurried to compete on these homes, only to wait for up to 6 months to find out whether the lenders would approve the sale. These buyers were encouraged by the federal tax credit giving a break of $8000 to any purchaser who had not owned a home in the past 3 years.
2010 is now here! There is still very little inventory. The tax credit was expanded to include many current homeowners as well as first time buyers, yet it expires on April 30th. There has been little success in loan modifications. Most owners that qualify to modify, find that in three to six months they are right back where they started. The federal government had been buying up some of these “toxic” assets, or defaulting loans but that is also set to expire soon. This should certainly have an adverse impact on interest rates. Although prices are extremely good right now, what will a 7 or 8% home loan rate mean? We are not talking about in a couple of years. We are talking about in the next 4 or 5 months!
Anyone on the fence should beware! If this doesn’t give you an incentive to get your DREAM HOME now, I don’t know what to say. Why wait for that investment property?
It is true, short selling will continue well into 2010. Foreclosures will continue to come on the market as well. Question is: Will anyone be able to afford them?
