Obama’s 34 Month Report Card

Mr. Hope and Change wants to create a nation humbled; humiliated, casting-aside capitalism and individual freedoms for one where we the people are government controlled.  This would be a system that genuflects mediocrity, steals personal aspiration and opportunity, and punishes those who strive to succeed.

A gallon of regular gasoline the day Obama was inaugurated was $1.79 on average in the U.S.

Today that price is $3.89, and rising… a 100 + % increase.

The number of food stamp recipients has risen since Obama took office from 31,983,716 to 43,200,878…. a 35.1% jump.

Long term unemployment soared 146.2% during the same 34 month period from 2,600,000 to 6,400,000.  Staggering hope and change isn’t it?

American citizens living in poverty have risen 9.5% from 39,800,000 to 43,600,000, and the number of unemployed has jumped almost 25% from 11,616,000 to 14,485,000 as of August 31, 2011.  People have just dropped out of the job market out of despair and to get on the government gravy train!

The number of unemployed blacks has risen from 12.6% at the end of George Bush’s term to 15.8% today, a 25.4% increase, and finally, our national debt is up 43.2% from 10.627 trillion to 15,022 trillion.

Obama blames Bush for what he inherited, but realize that the budgets and most expenditures that he inherited came from the Bush Congress….a Democratic Congress….of which Obama was a part, although rarely there and rarely voted except present!

 Keep these figures in mind as we recount the number of “FIRSTS” for this presidency:

• First President to refuse to show a valid birth certificate.
• First President to apply for college aid as a foreign student, then deny he was a foreigner.
• First President to have a social security number from a state he has never lived in.
• First President to preside over a cut to the credit rating of the United States.
• First President to violate the War Powers Act.
• First President to be held in contempt of court for illegally obstructing oil drilling in the Gulf of Mexico.
• First President to defy a Federal Judges court order to cease implementing the Health Care Reform Law.
• First President to require all Americans to purchase a product from a third party, soon to be overthrown by the Supreme Court.
• First President to spend a trillion dollars on shovel-ready jobs and later admit there was no such thing as shovel-ready jobs.
• First President to abrogate bankruptcy law to turn over control of companies to his union supporters.
• First President to by-pass Congress and implement the Dream Act through executive fiat.
• First President to order a secret amnesty program that stopped the deportation of illegal immigrants across the U.S., including those with criminal convictions.
• First President to demand a company hand-over $20 billion to one of his political appointees.
• First President to terminate America’s ability to put a man in space.
• First President to encourage racial discrimination and intimidation at polling places.
• First President to have a law signed by an auto-pen without being present.
• First President to arbitrarily declare an existing law unconstitutional and refuse to enforce it.
• First President to threaten insurance companies if they publicly speak-out on the reasons for their rate increases.
• First President to tell a major manufacturing company in which state they are allowed to locate a factory.
• First President to file lawsuits against the states he swore an oath to protect (AZ, WI, OH, IN).
• First President to withdraw an existing coal permit that had been properly issued years ago.
• First President to fire an inspector general of Ameri-corps for catching one of his friends in a corruption case.
• First President to appoint 45 Czars to replace elected officials in his office.
• First President to golf 73 separate times in his first two and a half years in office.
• First President to hide his medical, educational and travel records.
• First President to win a Nobel Peace Prize for doing NOTHING to earn it.  (completely disgusting)
• First President to coddle American enemies while alienating Americas allies.
• First President to go on multiple global apology tours.
• First President to go on 17 lavish vacations, including date nights and Wednesday evening White House parties for his friends, paid for by the taxpayer.
• First President to refuse to wear the U.S. Flag lapel pin.
• First President to have 22 personal servants (taxpayer funded) for his wife.
• First President to keep a dog trainer on retainer for $102,000.00 a year at taxpayer expense.
• First President to repeat what the Holy Qur’an (KORAN) tells us, and openly admit the early morning call of the Azan (Islamic call to worship) is the most beautiful sound on earth.
• First President to be supported by campaign donations from  17 foreign countries (the majority of which were Islamic).
• Remember that in 34 months of Obama, we the people have accumulated national debt at a rate more than 27 times as fast as during the rest of our nation’s entire history, all while the Obama’s plan their next extravagant vacation.  (remember the Indonesian Island nation of Bali?) His and Hers Air Force One’s….
• First President to openly endorse gay marriage and make it a plank in the Democratic platform…after clearing stating that he felt marriage was between a man and a woman!
• First President to blatantly lie about EVERY campaign promise he made to the country while using the race card as a political football!

 Hope and change anyone?

“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.” John Adams 1826

 This guy has got to go!  He is destroying our country, our morals and our way of life!

article/research courtesy of: Rich Carroll
*Sources: U.S. Energy Information Administration, Wall Street Journal, Bureau of Labor Statistics, US Dept of Labor, Standard & Poors/Case-Shiller, Federal Reserve, US Treasury, Heritage Foundation.

March home sales in California’s Bay Area reached their highest level for the month in five years, the result of lower prices, low interest rates and an improving economy.  About 7,700 new and resale houses and condos sold in the nine-county Bay Area in March, up 34.9% from 5,702 in February, and up 9.1% from 7,051 a year earlier, according to San Diego-based DataQuick.  The February to March sales jump is normal for the season, but the latter’s sales count was the highest for the month since 8,317 homes were sold in 2007. Since 1988, March sales have ranged from 4,898 in 2008 to 12,645 in 2004, with an average of 8,812.

Median Price Is Up

“This is the time of year when buying patterns usually start to normalize,” said DataQuick President John Walsh. “And while the changes we’re seeing are incremental, they’re incremental in a positive direction. That said, there’s a long way to go.”  The median price paid for all new and resale houses and condos sold in the Bay Area in March totaled $358,000, a 10.2% increase from $325,000 in February, but down 0.6% from $360,000 in March 2011. 

 What’s The Take Away?

To put these figures in perspective, the low point of the current real estate cycle fell to $290,000 in March 2009, while the peak rose to $665,000 in June/July 2007.  Statewide median home prices posted their first year-over-year increase in 16 months. The California Association of Realtors members said tight inventory (4.1 months) throughout the state and particularly robust sales in the San Francisco Bay area helped fuel the price increase.

“Two of the big issues to watch closely are how fast distressed properties are being put on the market, and the availability of, or lack of availability of, mortgage financing,” DataQuick’s Walsh said.  Distressed property sales, according to the firm, made up 44.3% of the resale market, down from 48.8% in February and 48.2% a year earlier.  Foreclosure resales accounted for 24.9% of resales in March, falling from 26.4% in February, and down from 31.5% in the year-ago period. Foreclosure resales averaged about 10% over the past 17 years.  Short sales made up 19.4% of Bay Area resales in the month, down from 22.4% in the previous month and up from 16.7% a year earlier.

“Buyer traffic is strong, supply of homes for sale is low, and yet home prices continue to defy the usual formula, falling again in March. Prices usually rise as supply shrinks, but demand is still too low to make those historical ‘norms’ compute, not to mention that the type of supply available is largely distressed.  Foreclosures and short sales accounted for 47.7% of sales, in a three month running average measured by Campbell/Inside Mortgage Finance. That’s the 25th month in a row that distressed sales have topped 40% of the market.  ‘With nearly half of the market being distressed, we’re a long way from a return to a normal market,’ said Thomas Popik, research director at Campbell Surveys. ‘Agents responding to our survey say that homeowners with well-maintained properties in good locations are very reluctant to list at today’s prices. That’s why inventory is low–and also why forced REO and short sales are such a big proportion of the remaining market.’  Home prices for non-distressed properties fell 5.7% in March year-over-year, according to the survey. Prices for ‘damaged’ REO (bank-owned properties) fell 5.7% and for move-in ready REO fell 2.5% during the same period. The real sticker shock is in short sales. Prices of those homes fell 14.3% from March of 2011.

 Robo Signing Impetus

Short sales have been ramping up of late, as banks attempt to comply with the so-called ‘robo-signing’ mortgage settlement. Those are part of the losses the banks are required to take in the $25 billion deal. Over the past six months, short sales have moved from 17.8% of all sales to 19.9%, according to the Campbell/IMF survey. They now represent the number one segment for distressed properties.

That share is likely to grow, as the conservator of Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA), last week announced it was directing the two mortgage giants to ‘develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure.’ It includes a requirement that mortgage servicers review and respond to short sale requests within thirty days.  Lengthy timelines have long been the biggest complaint in the short sale sector.

Quicker  Short Sale Decisions

Fannie Mae and Freddie Mac hold hundreds of thousands of distressed loans, and accelerating the process will surely move the numbers up quickly, although the rules don’t go into effect until June 1. The FHFA is requiring the two make final decisions on these sales within 60 days. Previously, short sales could take up to a year and even beyond, with buyers often dropping out in frustration.  ‘This could put short-term downward pressure on home prices, as short sales by their nature occur more quickly than foreclosures,’

writes Jaret Seiberg, analyst at Guggenheim Partners. ‘That could raise questions about the status of the housing recovery, which could be negative for those with housing exposure. That would include homebuilders, mortgage lenders and mortgage insurers.’  On the plus side, short sales tend to sell at higher prices than foreclosures. It appears, however, that regardless of the FHFA edict, banks are already ramping up the short sales. Some began doing so in the aftermath of the robo-signing scandal, as foreclosures stalled. Even now, foreclosures falling as short sales rise.

The good news is that sales of distressed properties are rising, but the headlines will likely focus more on the falling prices, than the much-needed clearing of these homes.”

courtesy: Diana Olick

The government is starting to shed foreclosed, single-family homes it owns — by selling them in bulk to investors, who would turn them into rental properties.  Officials, however, are saying  that only “test” sales will occur “in the near-term” with a focus on the areas hardest hit by foreclosures. They declined to comment beyond a news release they issued.  The test comes after the government in summer 2011 asked for proposals on what to do with more than 90,000 foreclosed properties it then held. The government typically sells foreclosed properties one at a time, but officials specifically asked for ways to move homes in bulk because of the size of the backlog.  About 4,000 groups or individuals submitted ideas on how the government could unload the properties. After The Enquirer filed a Freedom of Information Act request, the government released a list of 423 companies, groups and individuals that submitted responsive proposals, but no details on their proposals.

Another Government Agency To Supervise The Test Sale

The test sale of the foreclosures and conversion of them into rental housing is being supervised by the Federal Housing Finance Agency (FHFA). The agency has acted since 2008 as the federal conservator for Fannie and Freddie, which are public companies although they were created by Congress.  In a news release Wednesday, the finance agency said “Fannie Mae will offer for sale pools of various types of assets including rental properties, vacant properties and non-performing loans” under the test. It also asked investors to pre-qualify to participate in the test.  The investors will be required “to rent the purchased properties for a specified number of years.” FHFA officials hope the rental period will “provide relief for local housing markets that continue to be depressed by the volume of foreclosed properties, and provide additional rental options to certain markets.” 

Limit The Loss To Taxpayers?

 To qualify, investors will have to show the financial wherewithal to buy the assets, sufficient experience and knowledge to bear the risks and manage of the investment and agree to “keep certain information about the REO (real estate) and related matters confidential.”  Nationwide, the 83,000 homes currently up for sale and potential conversion into rental units are among more than 200,000 foreclosures of all kinds that the government holds, apparently making it the nation’s largest owner of foreclosed properties. The 200,000 is almost a third of foreclosed properties across the nation.  Moving the backlog would get them off the books of the Federal Housing Administration. It also would clear the books of Fannie Mae and Freddie Mac, which buy mortgages, bundle them and then sell mortgage-backed securities to investors.  The FHA, Fannie and Freddie became owners of the properties as hundreds of thousands of owners defaulted on their mortgages during the real estate meltdown.  Clearing the backlog would limit the loss to taxpayers, who already have bailed out Fannie and Freddie at a cost of $169 billion and counting. The losses are expected to total $220 billion to $311 billion by the end of 2014, according to latest projections in December by the Federal Housing Finance Agency.

California, New York, Nevada, and Massachusetts are among the states that haven’t signed off on a settlement with banks over foreclosure abuses, according to state officials and two people familiar with the talks.  The holdouts include some with the highest rates of foreclosures. More than 6% of Nevada housing units had at least one foreclosure filing in 2011, the nation’s highest rate, according to RealtyTrac. California was third-highest with more than 3%, said the firm, which tracks foreclosures.  California Attorney General Kamala Harris and New York Attorney General Eric Schneiderman, who have been among the most outspoken in pushing for changes to the accord, were among those who hadn’t joined as of a Feb. 6 deadline.

More than 40 states originally signed on, said Iowa Attorney General Tom Miller, who is helping to lead talks with the banks.

“Adding more numbers probably improves the political dimension of the settlement from the standpoint of the attorneys general,” said Ken Scott, a Stanford University law professor.

“If you can say there were only a handful of diehards that didn’t sign on, that gives you some political protection.”  All

50 states announced almost 16 months ago they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes. Officials from states and federal agencies, including the Justice Department, have since negotiated terms of a proposed settlement with five banks that is said to be worth as much as $25 billion.  At the time of this posting, Arizona, Michigan and Florida have also joined the other 40 states in the deal, for a total of 43.

California attorney general Kamala Harris recently has filed a suit in San Francisco County Superior Court against Fannie Mae and Freddie Mac which will require the two firms to respond to a series of questions to be thrown into them by the state.

This is the latest from Atty. Harris against the mortgage-finance giants and their regulator, the Federal Housing Finance Agency. It is the latest attempt of the attorney to keep the battle over states being able to investigate firms under conservatorship of a federal regulator. According to the lawsuit, FHFA wasn’t within its rights to dismiss inquiries against private companies that operate in the state.

It may be noted that just last month, subpoenas have been issued to the firms to provide extensive answers to questions regarding foreclosed properties they own in California.

The subpoenas are asking for the firms to disclose records of every vacant home owned by the companies in the state. Then the subpoenas immediately dropped the bomb, if any of the two were aware of the drug dealing, prostitution or the presence of explosives and radioactive materials in these homes.

Both firms have been backed by FHFA who have instructed both Fannie and Freddie to disregard the subpoenas. The FHFA said the subpoenas are “frequently vague and ambiguous,” then asked the attorney general to withdraw them.

In its statement, FHFA said that the state appears to be “engaged in an open-ended exploratory investigation” which is derogatory to the authority of FHFA while also becoming a lumber on the operations of the firms. The effort required to collect the “voluminous amount of information” to comply with the subpoenas “would be nothing short of staggering.” The FHFA declined to comment further on the issue.

Indeed, Ms Harris’ efforts are phenomenal, trying to save the state, which is among the hardest hit by the bad economy, from further tumbling down. Aside from the ongoing scrutiny, she also criticized Fannie and Freddie for continuously resisting efforts to modify mortgages by reducing loan balances for borrowers who owe more than their homes are worth, calling FHFA’s Edward DeMarco to step aside if he was unwilling to approve principal write-downs by the firms.

Atty. Harris has been a key figure in the continuous efforts of the Obama Administration in forging a $25 billion settlement with banks over foreclosure abuses.

All the snow on the road and your roof can cause so much trouble to you. The road becomes slippery and risky – or impassable at some areas. The roof becomes heavy, and that makes it risky, too, if you think of falling roofs due to heavy snow. But as what happens every year, the worst thing that snow can bring is freezing to death.

Fireplace Care Ideas

Your home is your greatest shield against the undesirably cold weather while your fireplace is your secret weapon. Thank God for the person who conceptualized the fireplace or else most us we’ll be covered in 5 blankets at a time during seasons like this. Can you even imagine yourself being able to sleep comfortably with that much blankets on? In order to keep the fire burning (literally!), here are some ways you can take good care of your fireplace so your house remains safe and your family keeps its protection from the freezing weather for years and years to come.

1. Have your fireplace be inspected by a certified chimney sweeper annually. The perfect time is two to four weeks before the winter season. The certified sweeper should check for the proper operation of the damper and look for possible cracks in the flue liner. He should also sweep the flue to remove the creosote and other products brought by combustion.
2. Be sure to close the damper when the fireplace is not in use.
3. Use chimney cap if you still have none. Some chimneys become a habitat of creatures that shouldn’t really be there and when they stick there for a time, they can affect the functionality of your chimney.
4. Use aged, dry hardwood to burn. Do not burn construction debris as they most often have toxic chemicals that vaporize in the fire and may enter your living space.
5.  Clean the fireplace after use but make sure that no ash remains hot. After cleaning, dispose the ashes properly.
6. Always be alert for unusual colors or smell that come out of your fireplace. This could mean your fireplace or chimney is not functioning properly. Contact your technician immediately. If you smell gas, contact your gas company for assistance.

Maintaining your Furnace Safe and Functional

A furnace is the device used for heating. It needs utmost care to remain functional for years, as well as keep the home warm and safe most especially during winter. Here are some ways on taking care of your furnace.

1. Have a furnace technician look over your gas furnace annually. Your contractor should perform vacuuming the unit, inspecting the blower motor, inspecting the heat exchanger for cracks, checking the electronics, and performing other necessary checkups. The summer season is the perfect time to clean or replace your furnace.
2. Ensure that furniture, rugs and drapes are nowhere near vents, space heaters and baseboards.
3. Keep combustible materials such as paints, rags, clothing, paper, cleaning products, gasoline, or flammable vapors away from the furnace.
4. If you can afford it, try to install a carbon monoxide alarm inside your home. Carbon monoxide is a colorless, odorless and dangerous gas that is produced by combustion. Protect your family, especially your kids, from this harmful substance.

Bank of America said it is looking at developing a new program that will help home renters regain rental possession of a foreclosed home. How would they do this? America’s biggest bank said it is looking for investors who will take for-rent foreclosed homes and take back borrowers as new tenants.

BoA started to form a division back in February that would handle servicing of delinquent mortgages, take care of pending loans, sort out outstanding representation and warranty claims. According to the bank’s 3^rd quarter financial statement,  more than 35,000 employees are tirelessly sorting out 1.1 million loans that have been found 60 days delinquent or worse.

Ron Sturzenegger of BoA’s legacy asset servicing division said the plan is one of which that has caught their attention.

“We are looking at programs where you can capture somebody before the REO process and offer a deed-for-lease. We would go to the customer and say, ‘We’ll do a short sale. Will you be interested in leasing your property back? We’re still going to sell the property. You will no longer be the owner. But you can be a tenant now in that same property and save you from moving on,’”

Sturzenegger said, “BoA would still sell the REO as before in areas where there is a market for them and they can still get reasonable bids.” He added that the program is still new and the bank is yet to test the waters on it.

However, there remain areas that are just areas that are too congested with inventory yet no enough demand from investors and homebuyers. Thus, it sits uninhabited for years.

Rick Sharga, executive vice president at Carrington Mortgage Holdings, said that many firms, including Carrington, are preparing to participate.

“We already have the infrastructure and assets in place to participate effectively,” he said. “Everyone is waiting on final direction from the FHFA.”

At present time, the Federal Housing Finance Agency, which is trying to work out an REO rental program for government-sponsored Fannie Mae and Freddie Mac, has received overwhelming response, getting more than 4,000 ideas from real estate analysts named and unnamed.

Millions of homes owned by private banks still remain vacant today with $50.4 billion of REO properties owned by private banks.

Source: www.SmartRealEstateNews.com

Last week created a buzz as business tycoon and Wall Street veteran, Lean Cooperman, initiated an open letter to Obama criticizing his tone as he urge the wealthy to pay higher taxes. The letter became viral (what do you expect) and made many concerned and now-only concerned to think about how the President has been speaking in front of the public for the last year. Here is a news from SmartRealEstateNews.com about the issue:

“Leon Cooperman, a 68-year-old Wall Street veteran, says he is for higher taxes on the wealthy. He would happily give up his Social Security checks. He voted for Al Gore in 2000. He says the special treatment of investment gains, or so-called carried interest, for private equity and hedge fund managers is “ridiculous.” He says he even sympathizes, at least to some extent, with the Occupy Wall Street protesters.  And yet, Mr. Cooperman, a man with a rags-to-riches background who worked at Goldman Sachs for more than 25 years in the 1970s and 1980s before starting his own hedge fund, Omega Advisors, which has minted him an estimated $1.8 billion fortune, is waging a campaign against President Obama.

Last week, in a widely circulated “open letter” to President Obama that whizzed around e-mail inboxes of Wall Street and corporate America, Mr. Cooperman argued that “the divisive, polarizing tone of your rhetoric is cleaving a widening gulf, at this point as much visceral as philosophical, between the downtrodden and those best positioned to help them.”

He went on to say, “To frame the debate as one of rich-and-entitled versus poor-and-dispossessed is to both miss the point and further inflame an already incendiary environment.”

The letter comes as President Obama is planning to give a speech on Tuesday in Osawatomie, Kan., about the economy and the middle class, following in the path of President Theodore Roosevelt, who campaigned a century ago in that very city against the wealthy and big business.

Mr. Cooperman’s complaint has less to do with the substance of taxing the wealthy than it does the president’s choice of words in promoting it, an emphasis that he says is “villainizing the American Dream.”

While many executives have complained about what they perceive as the president’s antibusiness bent, Mr. Cooperman’s letter has gained credibility and attention in political and business circles because of his own seemingly liberal stances on taxes and the like.  He said, in an interview, that he had been deluged with hundreds of e-mails and phone calls about the letter, “99.9 percent of it positive.”

Mr. Cooperman, who recently signed the Giving Pledge, Bill Gates’s and Warren Buffett’s effort to press the world’s billionaires to give away at least half of their wealth, said he felt he came into his money honestly and said proudly, “I spend more than 25 times on charity what I spend on myself.” Asked whether he had received any response from the president for his letter, he replied with a chuckle, “I’m not optimistic I’ll hear from him.” “

Source:  www.SmartRealEstateNews.com

While it’s the season to be jolly, it’s also the last month of the year. That means you have a little less than three weeks to take advantage of tax deductions that are looking to expire by January 2012. Do I really recommend that you take advantage of these benefits now?  From the looks of the government standing today, you certainly should as the government does not seem to be willing to extend any of them. Remember, you have three weeks and less than 20 days if you were to debar the holidays.

Mortgage Insurance Premium Deduction

This deduction was first introduced in 2007 and is set to expire by the end of 2011.  This benefit entitles you to deduct the premiums you pay for the mortgage insurance similar to mortgage interest. The percentage of deduction varies based on levels of income, and to qualify for a full deduction, a taxpayer or a married taxpayer couple must have a gross income of $100,000 or less.

Only payments made in 2011 are eligible for deduction.

Up to $4,000 Education Expense Deduction

There is a deduction of up to $4,000 available to qualified educational expenses to those whose modified adjusted gross income is not more than $80,000 for a single taxpayer or $160,000 for joint payers. Your classes can be taken in 2012 but your payment must be made before the year 2011 ends.

State and Local Sales Tax Deduction

If you are living in a state with no or low income taxes, you are mostly eligible to avail the state and local sales tax deduction benefit. To avail of this, purchase something huge before the end of the year. This Christmas season seems like the perfect time to do this.

Adoption Credit

There is an enhanced adoption credit made available this year which enables any qualified individual to credit up to $13,360 in adoption expenses.

Home Energy Credit of Up to $500

Any homeowner may qualify for an energy credit if in 2011 – you purchase solar panels for electricity or water heating, you install wind energy equipment, geothermal heat pump or any type of fuel cells to generate electricity. You can credit up to 30% of the amount you spend or up to $500.

2% Social Security Tax Cut

Available only in 2011, this benefit aims to add about $1,000 to $2,000 to low income earners or $4,000 and above to income of families with high income earners.

Other benefits to take advantage before January 1, 2011 are IRA to charity tax-free transfers and $250 school teacher expense deduction.

Source: http://www.inman.com

In the season of gift giving, the Santa Claus over at the White House agreed that you can keep your home… for now.   So if you’re going through a hardship this holiday season, you’d be amused, surprised, glad and relieved that the government and some other large mortgage lenders has promised not to take any homes this Christmas.

Government-sponsored (GSEs) Fannie Mae and Freddie Mac, among other mortgage lenders, said that there will be a temporary foreclosure moratorium,  stating that all single-family homes and two-to-four unit properties will be spared from being foreclosured from December 19, 2011 to January 2, 2012.

“If the property is occupied, our foreclosure attorneys will suspend the eviction to provide families a greater measure of certainty during the holidays,” said Tracy Mooney, SVP of servicing and REO at Freddie Mac.

Although during the enforcement period legal and administrative proceedings for eviction may continue,  families will be allowed to stay in their homes and celebrate the yuletide.

Huge mortgage lender Chase Mortgage, on the other hand, will refrain from sending any families out of their homes between December 22, 10 and January 2, 2011.  Wells Fargo said it is not shutting down its foreclosure procedures entirely but will not touch any homes due for foreclosure during the same period.

Bank of America, meanwhile, stopped evicting homeowners last Thanksgiving. It promises to do the same thing during the Christmas Season.

“The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure,” said Terry Edwards, EVP of credit portfolio management at Fannie Mae. “No family should give up their home during the holiday season.”

Because of this new moratorium, more than 10,000 homeowners will feel relieved that instead of paying for rent in December, they can just buy themselves food for the table.  Analysts, however, see that this may lead to a permanent benefit as some people may find miracle money during this season that will keep them from giving their homes away.

“It’s a temporary reprieve, a symbolic gesture to help people out during the holidays,” said Daren Blomquist of RealtyTrac.  However, come the New Year, reality will strike  again.

There are two reasons to buy homes today – home values dropping and mortgage costs increasing.  As more distressed homes are being sold quickly, the perfect time to buy homes is now, when banks are rather willing to give you what you’re bargaining for.

Home Prices Fall

Twenty eight of the nation’s largest metropolitan areas have home values dropping down in almost all housing markets in the third quarter of the year. From August to September, prices declined by 0.6%, according to the Standard & Poor’s/ Case-Shiller index of 20 metro areas.

For the third quarter of the year, prices were down 3.9% nationwide compared with a year earlier; however, this is a slight improvement from the 5.8% annual decline recorded at the end of June, says Case Shiller National Index.

The reason for the price drop is still the distressed real estate market as banks are keeping themselves busy selling foreclosed and distressed properties at discounted, very low, prices. Analysts say that even if summer saw a lot of home buyers closing on sales, they had to buy homes at bargain prices, and most often, they weren’t too proud about their new purchases.

Prices fell in all twenty cities except for Washington, D.C., New York and Portland who earned gains.

Mortgage Loan Limit Increases

Why wouldn’t you want to buy a home if you can get a bigger loan today?  With the Congress recently increasing FHA loan limits, there are more reasons to finally grab a home you can call your own.

Rental and mortgage rates have risen across the country, with the latter at nearly 4%, the lowest since the 1950s.  This has caused massive slashing of the monthly mortgage payments on the median priced home including taxes and insurance.  Payments are lower than the average rent levels in 12 metro areas. The data was found by The Wall Street Journal, in cooperation with Marcus & Millichap, a real estate brokerage that tracks 27 metro areas.

However, the data also found that it is less expensive to rent that to buy in 15 cities. The average asking rent standing at $840.

Meanwhile, in metro cities Detroit, Minneapolis, Orlando, Las Vegas, Miami, St. Louis, Chicago and Phoenix, owning is cheaper than renting.

Another reason to consider buying homes today is that apartment rents are looking to rise by around 4% this year.

“Banks are often much quicker to cut prices to unload properties quickly, which means that the greater the share of “distressed” sales, the more prices tend to fall.”

Source: Smart Real Estate News

It’s not hard to see the effects of a distressed economy. Jobless claims, mortgage loans, rates and delinquencies, foreclosures and short sales rise and fall. Just this November, headlines under mortgages in inman.com prove that the country’s real estate industry is ever changing and ever inconsistent. Obviously, thanks to the big help coming from the White House, many Americans are still unemployed, homeless, and in debt.

Let’s trace the headlines back to the first week of the month.

November 3, 2011 — Mortgage rates stay in the basement

“Mortgage rates sagged this week as ongoing concerns about the European debt crisis had investors fleeing to the relative safety of mortgage-backed securities that fund most U.S. home loans.”

November 9, 2011 – New settlement disclosure form to replace HUD-1

A prototype for a new unified settlement disclosure form may replace the separate HUD-1 Settlement Statement and Truth in Lending disclosure form which is currently used. Should the new forms’ designs are finalized, consumers will receive a unified loan disclosure form when they apply for a mortgage, and a unified settlement disclosure form if they want to purchase a home.

November 10, 2011 – Low rates sparking demand for mortgages

Low rates of mortgage loans increased demand to purchase mortgages and refinancings.

November 11, 2011 – 10 guilty pleas in scheme to take control of Las Vegas HOAs

“Federal prosecutors have negotiated guilty pleas with 10 defendants for their alleged involvement in a scheme to take control of as many as a dozen homeowners associations in Las Vegas in order to file construction defect lawsuits against builders and then win contracts to do remediation work.”

November 17, 2011 – Mortgage rates near historic lows for third straight week

Mortgage rates remain low for the third consecutive week averaging 4% and still nearing the all-time low of 3.94 percent in the week ending October6.

November 17, 2011 – Congress votes to restore FHA loan limits

The Congress and Senate vote  with 298-121 and 70-30, respectively, to restore FHA’s ability to insure loans of up to $729,750 in high cost markets through 2013.

November 23, 2011 – Economic worries keep lid on mortgages rates

Mortgage rates reach record lows for the fourth consecutive week in November for the week ending November 23, which is down by percent last week and 4.4 percent a year ago, according to Freddie Mac’s Primary Mortgage Market Survey.

Source: www.inman.com/news/category/Mortgages

Where has all the money gone?

It should be understandable that you have forgotten about the $1B federal housing program called “Emergency Homeowners’ Loan Program” which the government allotted to help distressed homeowners work through their mortgage situations.   The program gave up to $50,000 of no-interest loans which will be forgiven if their recipients stay in their homes for five years.

Only a little more than half of the $1B was used and the other remaining money was sent back to the U.S. treasury. Meanwhile,  government data showed that three states got the majority of shares in the program.  The fund, which the government based on population and unemployment rate, was supposed to be used by 32 states and Puerto Rico.

However,  another failed government attempt occurred as mismanagement of funds and misappropriations resulted in Pennsylvania, Maryland and Connecticut receiving the lions share– according to the figures released by the Department of Housing and Urban Development.

In addition, the program, targeting 30,000 homeowners,  expired on September 30, with merely 12,000 applicants approved.

Loop holes, come one, come all!

Loop hole # 1: Why did the government leave half of the $1B unspent? Don’t tell me you only have 12,000 applications approved. If you were really targeting 30,000 homeowners, why would you set a stupid deadline?  It’s either you have a target date or a target number.  Besides, if you really wanted to help, you don’t have to be so strict.  After all,  you do want to help people and not punish them, don’t you?

Loop hole #2: Why were there misappropriations on the budget?  The amount spent exceeded the target budget in some states while in other states the budget was below the line.  For instance, Pennsylvania, Maryland and Connecticut were budgeted at $179 million each but because they used up their initial funds,  HUD decided to give them $46 million more.

More Details from USAToday.Com:

• HUD initially expected almost 22,000 homeowners to get help in the other 27 states and Puerto Rico. Only 27% of that goal was reached, preliminary numbers show.
• Puerto Rico fared best. With funds to help 652 homeowners, it got 468 preliminary approvals, or 72%. South Dakota hit 52% of its maximum allocation.
• In five states — Utah, Iowa, Arkansas, Missouri and North Dakota— less than 10% of the expected number of homeowners received preliminary approvals. North Dakota’s allocation allowed for 43 borrowers to get help; just four got preliminary approvals.
• New York state has 458 preliminary approvals — 17% of its maximum allocation for 2,633 loans. Its total will likely go up because a data transmission problem delayed some applications there, Sullivan says.

I’m so sick of hearing about impasse in Washington…especially now with the Super Committee.  Give me a break, already!   We are 15 trillion dollars in debt!  That is 15 followed by 12 zeroes…or put another way, a trillion is a thousand billion!(short scale)   Democrats don’t want to stop spending…at all, while Republicans resist increasing taxes on the wealthiest of Americans, the ones who probably could  absorb some increase… even though it would make no difference in the deficit.  It is simply a Democratic talking point designed to misinform their liberal and ignorant base so they will keep voting Democratic.

It’s the spending.. stupid!

The problem is SPENDING!!  Giving money to people who expect it and don’t want to work for it!  Giving money (billions and billions) to foreign countries under various guises to buy political favor.  Creating huge government agencies to over-regulate our lives and burden our businesses and then overpaying the people put in place to run them.  I could go on for awhile, but I think you get my point…if you pay any attention at all!

These bureaucrats just don’t give a crap about working for the good of the country and cooperating with each other for the best outcome for the American people.  All they are concerned about is politically expediency and what will keep them in office collecting their shameful salaries,  expense accounts,  lobby perks, paid for healthcare (which is exempt from Obamacare and any other public healthcare) and totally egregious retirement packages.  Since there is no tenure and there are no term limits, consider the following:

WAGES

Congress raises FHA loan limits amidst the latter continuously running out of cash.

The Federal Housing Administration is the governing body that insures mortgage loans thus as an insurance, it needs to maintain a certain amount of money called cash reserves, that will keep it operating. The cash reserve also guarantees that if ever an unfortunate even happens to FHA (it got closed down or something) it can still pay off all insured. The government’s mandated FHA reserve must at least be 2% of its total insurance in force.

According to CNBC.Com’s Diana Olick, But the FHA is right inside the danger zone now. An actual independent actuarial report found that FHA’s loan loss reserves is already 0.24% of its $1.1 trillion dollars insured mortgages.

From 5% in the market share, FHA has gone up to 30% now – obviously an indication that there are much more mortgage loans now (spell: debts) that FHA is insuring. This will continue to grow big, according to the auditor, as home prices fall and mortgage delinquencies grow high.

FHA’s reserves is at $2.6 billion as of end of September which means it is down by a whopping 45% from last year’s $4.7 billion. This is hardly 2% of the required reserves (which the Congress has set) yet now that the loan mortgages are raised, there could be more loaners running after FHA.

Well in that case, the government must prepare itself for a bailout program, unless it wants FHA to continue going down the drain, which seem to be the case when the Congress approved for higher loan limits.

Bob Nielsen, chairman of the National Association of Home Builders (NAHB) was caught saying, “The FHA program is fully self-supporting, and a great example of a public-private partnership with lending institutions. Restoring the loan limits will provide millions of potential consumers in markets throughout the nation access to safe, affordable mortgage financing.”

Good intentions, wrong execution. It’s still a fail for the government.

Has America become a country of renters?

Don’t worry, America, you are still a nation of homeowners! Technically, it’s something to be proud of, right? Homeownership proved more affordable today than home renting, and this is how it’s going to be tomorrow and in the long run.

The notes were in conclusion of the findings of various real estate studies presented at the Realtors Conference & Expo 2011 which ran from November 11 to 12, 2011 during the “Buyer or Renter Nation.”

This is according to the results of a 31-year comparative analysis of 23 metropolitan areas wherein ownership benefits in terms of appreciation, interest deductibility and costs homeowners incur with down payment, taxes, insurance and maintenance.

Ninety one percent of all areas examined saw that renters had a great record compared to homebuyers in terms of reinvesting savings on rent, maintenance and down payment; however, when it comes to renters spending these savings, 84% of homebuyers scored better and proved to be generally wealthier.

Ken Johnson of Florida International University and East Carolina University said, “These findings indicate that homeownership is a self-imposed savings plan. Not everyone should own a home, but from a financial perspective, people who are planning to stay in a property over the long term can benefit from buying.  According to the most recent data from the Federal Reserve Board, a homeowner’s net worth is 45.9 times that of a renter’s.”

Analysts testified that home ownership remains above par today due to housing affordability which is currently at record levels. Housing today is more affordable than any other time in the last 30 years based on the price-to-income ratios.

Many people today value the importance of homeownership as member of a family, as part of a community, and as a nation.

Real estate analysts, agreed by the National Association of Realtors (NAR), said that reasons why Americans should still pour their hearts out to own or buy a home than to lease include enhanced civic pride, improved voter turnout, increased personal happiness, reduced crime and a better living environment.

National Association of Realtors (NAR) President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. said: “We, like the nation’s 75 million homeowners and many other who aspire to one day own a home, know homeownership is an investment in the future of our families, communities, and nation. That is why we will continue to fight for public policies that promote responsible, sustainable homeownership; we believe that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.”

In a recent article, NAR also said that commercial real estate will be improving soon. Fingers crossed.

Courtesy: SmartRealEstateNews.com

Is this a good thing or a bad thing? For the city government and the federal state, this is a unfavorable to the city and the state’s image but for homeowners who are still looking to buy their dream homes, this could be a lucky break.

Last week, I cited the results of a study courtesy of RealtyTrac about cities with the most short sales. Los Angeles topped that rank and many think that because with the city’s high cost of living, that wasn’t very surprising. This week, we receive news from a similar study from RealtyTrac, this time focusing on the numbers of foreclosures. According to the study, the city that has been on top of the foreclosure list for the last 22 months, Las Vegas, Nevada, has been replaced by Stockton, CA which has one (1) in every 143 homes receiving a foreclosure filing in October.

More Foreclosures Ahead, Confirmed

According to the study, at least around 230,600 properties have been sold in the US in October, or a hefty 7% increase from last month’s numbers! As real estate analysts foresee, there will be more foreclosures in the future and the results of this study seems like an early premonition of what we are about to see in the next months – rising foreclosures!

On the other hand, the numbers could be a good indication that servicers have finally improved their system in processing foreclosures, thus being able to close more than what they were able to in the previous months.

“The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” CEO James Saccacio said. “However, recent state court rulings and new state laws keep changing the rules of the foreclosure game on the fly, creating more uncertainty in the housing market and threatening to prolong the road to a robust real estate recovery.

Nevada is Still Top Foreclosure State

“Meanwhile, Las Vegas dropped to the fifth spot, thanks to the Nevada State Assembly Bill 284 which was taken into effect last October 1. The provisions of the Bill made processing foreclosures more stringent in paperwork. The Bill could be responsible for the 34% drop in the number of foreclosures completed last month; however, with one (1) in every 180 homes receiving a foreclosure filing in October, Nevada is still the Top Foreclosure State. It has been so for the last 58 months.

The US government, particularly the Department of Housing and Urban Development, had granted a total of $6 billion since July 2008 to help recover vacant foreclosures in the country through the Neighborhood Stabilization Program. In all fairness, a number of homebuyers and home sellers got their fair share of help, but not for long! Three years later, many communities are still experiencing more than the average vacancy rate. Based on Census data, vacancy rates today stood at 2.4%. This is something to be alarmed about, especially that this is already a notch higher than pre-crisis levels.

What happens is like an “A causes B thus we’re all doomed” situation. In a recent report from Federal Reserve Bank of Cleveland, it has been found that when a borrower abandons a property even before foreclosure is completed, sales of surrounding homes drop to 7.1%. And as analysts predicts more foreclosures in the future, the need to maintain these homes increases exponentially. Making a rehab could be really expensive!

For instance, a foreclosed home in Sacramento that has been sitting for quite some time will experience deterioration overtime. Obviously, a foreclosed property without a worthy property manager could be unheated, without air condition, without proper maintenance. For a home seller, this could mean an average of $50,000 worth of rehab materials and service that are indispensable for the home sale. Either the home seller gets a rehab loan or sheds out from his own savings.

With the NSP to help out, this used to be a little less painful; however, apparently, the House of Representatives has already approved a bill that will put a stoppage – what they call a “defund” – for the second round of NSP. But even as government funds dry up, the need for rehab is still high and so the next big help must come from the lenders themselves. This is the perfect time for banks to make the difference! They can very well participate in providing help to make rehabilitation of foreclosed homes possible as well as take care of property issues that investors could be facing right now.

The Short Sale Transparency Act, introduced by Congresswoman Susan Davis (D-San Diego),  will (if enacted) require Fannie Mae and Freddie Mac to disclose the minimum asking price they are willing to accept for a short sale if the first offer is rejected.  “People deserve a real chance to avoid foreclosure.  It is unfair to expect someone to complete a short sale instead of abandoning their home to foreclosure, if the banks don’t meet them half way,” said Davis. “So many homeowners are willing, even eager, to work with banks to get out from under the mortgage and protect their credit rating. But far too often, they find themselves in a guessing game as to what dollar amount will complete the sale.”  For many Americans a short sale, the sale of a home below its value, is a last chance to avoid foreclosure.

However, when the asking price is unknown, short sales become less viable because homeowners are essentially shooting in the dark when submitting bids to a bank. As a result, loan servicers can repeatedly deny short sale offers without giving homeowners guidance on the price the bank is asking. Ultimately, this back and forth ends in foreclosure.  On the other hand, if an offer is, for example, $2,000 short and the homeowner knows this, they could find a way to make up the difference in order to complete the short sale.  Disclosure is essential to ensuring fair transactions between investors and borrowers. Fairness to consumers is critical to boosting the economy and ending the cycle of foreclosures.

The price tag to settle the state and federal investigation of bank foreclosure practices has increased by at least $5 billion in recent weeks, people familiar with the negotiations say.  The proposal on the table now puts a $25 billion value on a settlement by the nation’s five largest mortgage servicing companies—Ally Financial Inc., Bank of America Corp.,Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. In exchange for picking up a bigger tab, banks would be released from certain legal claims tied to mortgage originations. Representatives of the five banks declined to comment.

The price tag could go as high as $29 billion if the agreement includes a longer list of servicers, sources familiar with the discussions said. Earlier discussions had revolved around $20 billion in cash penalties and homeowner assistance programs, sources familiar with the discussions said. There was confusion in those talks as to whether that figure applied only to the five big banks or to as many as 14 large mortgage servicers that agreed with regulators this past spring to fix their foreclosure practices.  Banks and government officials have been negotiating for months over a pact in which the banks would pay to settle some legal claims, but it’s still not clear that a deal will be reached. Reaching an agreement with the $25 billion price tag for the five biggest banks depends on the participation of California Attorney General Kamala D. Harris, who bolted from the talks in early October. At the time, Ms. Harris called the terms on the table “inadequate.” A spokesman for Ms. Harris declined to comment.

Other key issues also remain in flux. Negotiators must still finalize how the cost of the settlement will be allocated among the banks. The two sides must also agree on the selection of a monitor charged with overseeing the agreement.  The selection of a monitor is considered a critical part of the deal because it provides a way to ensure that banks comply with the terms of the settlement. The agreement would require banks to pay a substantial financial penalty if they fall short of the settlement’s requirements, these sources added.  Administration officials have viewed the broader foreclosure settlement as a chance to break the foreclosure log jam, increase the number of financially troubled borrowers who receive principal reductions and provide other assistance to homeowners.

The deal would include $5 billion in cash penalties. In addition, banks would be required to do refinancings worth $3 billion. The refinance program is considered particularly costly for the banks because they would be forced to give up expected interest income on loans for which borrowers are current on their loan payments and deemed unlikely to default.  The rest of the settlement’s value would come from principal reductions and other aid to homeowners. Banks would get credit for various types of assistance based on a set of formulas being finalized by negotiators.  After Ms. Harris left the talks, negotiators came up with a plan to help certain “underwater” borrowers get refinancing assistance. The plan would apply only to mortgages owned by the banks; it would allow borrowers whose houses are worth less than their loans but are current on their mortgage payments to refinance into a loan with a lower interest rate, people familiar with the discussions said. Allowing more underwater borrowers to refinance could have an outsize impact on California, which has more than 2 million underwater borrowers, more than any other state, according to CoreLogic.

In exchange for the refinancing piece, banks would be released from certain claims related to loan servicing and origination, sources familiar with the discussions say. Banks wouldn’t be released from claims related to the securitization of mortgage loans, these sources add. The exact details of any release are still under discussion.  Ms. Harris has a limited ability to bring legal claims related to originations and servicing practices if she decides not to agree to a settlement, sources familiar with the negotiations say. The statute for filing cases related to loan originations is four years in her state, meaning any legal action could only cover mortgages originated in 2007 and after. California allows foreclosures to proceed through a non-judicial process, limiting the state’s ability to argue that banks lied to the courts, these sources add.

There is no other time to buy a new home than today, when homes sales have dropped again on its third consecutive month in September. The report came out last week, Thursday, from a real estate industry group. According to the National Association of Realtor (NAR), Pending Home Sales Index was down by 4.6 percent to 84.5 based on contracts that were signed in September.

It was another upset for economists who were tracked by Reuters earlier, saying they see the homes sales percentage going up instead of declining.  According to Lawrence Yun, the NAR’s chief economist, the index was still above the September 2010 level of 79.4; however, numerous factors affected the decline and thus, the real estate homes sale market is still at low.

In a report by Reuters, Yun said, “”A combination of weak consumer confidence and continuing tight lending criteria held back home buyers, even though the private sector added nearly two million net new jobs in the past 12 months.”

The Pending Home Sales Index reported that all regions in the country dropped from August levels.

Going back to the question: Is it the best time to buy homes now? The answer is a resounding yes! That is, if you want to help the economy, too.

Despite the Obama Administrations’ efforts of saving the housing market, it still faces several more years of foreclosures. This is because of the 800,000 to 1 million new foreclosed properties annually, according to Rick Sharga, an executive vice president with Carrington Mortgage Services, and former RealtyTrac senior vice president. Sharga has been known for helping RealtyTrac with building a network that efficiently tracked foreclosure filings in the country.

Since 2007, there had been a total of 8.9 million homes, in number and not in value mind you, that have been lost due to foreclosure. The year 2007 was recognized as the peak of the crisis.

Looking at lender behavior, Sharga said he does not see a peak happening this year.

“I think it’s less likely that we’re going to see a ‘peak’ year in REO sales that looks dramatically different than what we’ve been seeing over the past few years. This is partly due to relatively weak demand, partly due to what I’d call ‘inventory control’ being executed by the lenders and servicers, and partly due to the fact that foreclosure processing, evictions and redemption periods have all become extended, and often appear to be in a state of flux,” he said.

Sharga said what he is looking at is rather slow movements, sometimes steady, that would help spare home prices from being reduced further.

“Sales volume will be high in 2012, 2013 and probably 2014 as well. But it still seems more probable that we’ll see consistently high – yet closely managed – numbers of these sales over several years than it is that we’ll see a huge spike followed by a precipitous drop.”

Meanwhile, Bank of America analyst Merill Lynch said real estate owned (REO) sales would peak until 2013, when more than 1.5 million properties would be sold. Today, roughly 4 million homes sell per year. A million and a half REOs sold would mean almost 40% of the market. That means double the current market share of these properties!

So what is causing this delay? The culprit that causes majority of the delay last year are servicers who handle foreclosures improperly. According to RealtyTrac, “The delays, investigations and ongoing attorneys general settlement talks pushed more than 1 million foreclosures that were supposed to occur in 2011 to 2012.”

Furthermore, Lender Processing Services said mortgages facing foreclosure are delinquent in an average of 611 days! This isn’t too far from the normal 400 days needed to complete a foreclosure once initiated. Thus, a loan entering foreclosure in December 2011 can only hit the market as an REO by January or February 2013.

Courtesy: Smart Real Estate News

The Senate makes a move to restore mortgage loan limits just before Halloween. But…Will it save the real estate market? Will it increase home sales? Will it attract more homeowners to sell home? Will it push home buyers to buy home? Or will it be just another scheme to make the government look like it is doing something to save the home sales market?

Calling all real estate agents, home buyers and home sellers, an important amendment was passed by the senate last Thursday, October 30, which will restore the mortgage loan limits back to $729,750. This is still in connection with the request of National Association of Realtor (NAR) to restore the mortgage loan limits and give more chances for home buyers to purchase the house of their dreams.

The amendment to a spending bill would restore the $729,750 maximum loan limit on government backed mortgages for two more years. The increase in ceiling is joined by another Senate amendment that would bring back the formula for determining the upper loan limit in high-cost housing markets from now until 2013.

With a 60-38 vote, the new amendment was approved by the Senate, and now moves to the House, which is now responsible for approving or disapproving the said bill.

NAR lobbied real hard for the amendment despite continuously failing to have related bills reach the House or even the Senate and despite the Obama Administration not wanting to extend its role in mortgage lending by opposing the higher limits taking place.

To rationalize with those against the higher limits, the new amendment will impose a new loan fee of 15 basis points a year on unpaid principal balance for the entire time of the mortgage. A basis point is equal to a hundredth of a percent thus, 15 basis point fee means $750 on a loan with a $500,000 balance. This would raise the revenue to $300 million according to backers of the bill.

Meanwhile, according to Fannie Mae, Freddie Mac and FHA, lower loan limits would affect approximately 83,000 mortgages in areas with higher living costs.

Courtesy: Real Estate Insider News

This was in the Waco Tribune Herald, Waco , TX Nov 18, 2010

Put me in charge of food stamps. I’d get rid of Lone Star cards; no cash for Ding Dongs or Ho Ho’s, just money for 50-pound bags of rice and beans, blocks of cheese and all the powdered milk you can haul away. If you want steak and frozen pizza, then get a job.

Put me in charge of Medicaid. The first thing I’d do is get women Norplant birth control implants or tubal ligations. Then, we would test recipients for drugs, alcohol, and nicotine and… document all tattoos and piercings. If you want to reproduce, use drugs, drink alcohol, smoke, or get tatoos and piercings, then get a job and pay for your own vices.

Put me in charge of government housing. Ever live in a military barracks?
You will maintain our property in a clean and good state of repair. Your “home” will be subject to inspections anytime and possessions will be inventoried. If you want a plasma TV or Xbox 360, then get a job and your own place.

In addition, you will either present a check stub from a job each week or you will report to a “government” job. It may be cleaning the roadways of trash, painting and repairing public housing, whatever we find for you. We will sell your 22 inch rims and low profile tires and your blasting stereo and speakers and put that money toward the “common good..”

Before you write that I’ve violated someone’s rights, realize that all of the above is voluntary. If you want our money, accept our rules.. Before you say that this would be “demeaning” and ruin their “self esteem,” consider that it wasn’t that long ago that taking someone else’s money for doing absolutely nothing was demeaning and lowered self esteem.

If we are expected to pay for other people’s mistakes we should at least attempt to make them learn from their bad choices. The current system rewards them for continuing to make bad choices.

AND while you are on Government assistance, you no longer can VOTE! Yes that is correct. For you to vote would be a conflict of interest. You will voluntarily remove yourself from voting while you are receiving a Government welfare check. If you want to vote, then get a job and contribute to society. Hmmm!! How about them apples…
Now, if you have the guts – PASS IT ON…

Big investors are showing interest in an evolving Obama administration plan to sell off foreclosed homes, although the government will have to make the offer sweet enough to coax private funds.  The White House is assessing how best to encourage private companies and investors to snap up foreclosed properties held by the government and convert them into rentals.
Officials want private partners to take over as much as $30 billion in single-family properties that are currently on the books of government-run Fannie Mae, Freddie Mac and the Federal Housing Administration.  Several money managers with large fixed income funds are interested, according to sources, and a request for ideas on how to construct a program received nearly 4,000 responses.  The foreclosure conversion program would come as the next step to complement other government supports for housing, including an expanded refinance program announced on Monday.

The main question for prospective investors, which include broker-dealers and firms already overseeing similar rental programs, is the type of financing the government will make available—an issue officials are still struggling with.  “In order to get a better bid, there has to be some incentive involved to get qualified investors involved,” said Ron D’Vari, co-founder and chief executive of NewOak Capital. “The reality is not a lack of interest, but so far it looks like a lack of financing.”  Incentives could include low interest rates, tax benefits or some type of rental assistance, said D’Vari, a portfolio adviser who has been involved in mini-bulk auctions of real estate-owned properties, or REOs, in California.  REO properties are those acquired by a lender, whether a bank or the government, after an unsuccessful auction attempt. Fannie Mae, Freddie Mac and the FHA own about 250,000 properties, close to a third of the country’s REO pool.

One key challenge would be finding big enough blocks of properties in specific geographic areas that could be sold at one time. Analysts say this is what it would take to make the program attractive to large institutional investors.  The transaction and liability costs property managers will face as they try to bring deserted units back up to code also pose a hurdle.  The government also needs to determine how it will protect taxpayers, and it might explore ways to pair up with investors and allow Fannie Mae, Freddie Mac and FHA to keep some type of an ownership stake in the rental properties.  A public-private partnership, somewhat along the lines of a program the Treasury tried to use to soak up toxic bank assets during the financial crisis, would allow the government to gain from the sales.  Fannie Mae, Freddie Mac and the FHA have already undertaken some small efforts to reduce the backlog of foreclosed homes. They have donated a few vacant properties for demolition and have held some small auctions.  Having already received $141 billion in taxpayer support since being seized by the government in 2008, Fannie Mae and Freddie are under enormous pressure to make sure they maximize the returns from the properties they hold.  “This has got to be thought out. Fannie and Freddie would need to assess if they are getting the return they need from a rental,” said Ken H.
Johnson, a real estate professor at Florida International University. Johnson said one way to get over the hurdle would be for the two agencies to be given an explicit mission of market stabilization.

courtesy: smart real estate news

Thousands of Americans will find mortgage relief in what the Obama Administration claims is an attempt to prevent economic and political fallout in housing crisis. This move is in direct correlation to Obama’s new rules on federally guaranteed loans, as part of his efforts to address economic troubles and various challenges faced by homeowners and investors.

The Obama’s Administration made the efforts despite the Republicans’  block on a majority of his proposals. But critics said it’s finally time that the President make a move to improve (or technically, save) housing in the country. In fact, his lack of action with respect to the home foreclosures and other housing crisis has resulted in demands from his own allies to do something!

These new bailout plans known as the Home Affordable Refinance Program (HARP 2.0), however, are questionable in terms of scope of benefits. Under this proposal, homeowners who are still current on their mortgages are still able to refinance even if the value of their home has dropped lower than what they still owe. But what percent of the population can benefit from it? Will it really be that beneficial to majority of people suffering from mortgage debt?

An explanation of the things one should consider before thinking they could benefit from the mortgage bailout plan was revealed in an interesting feature article:

“Will you qualify for the revised HARP (HARP 2.0) program…will this program really work to ‘save housing’?

…few things to consider:

1. There are 11,000,000 underwater owners in the US. (and growing). Estimates are that HARP 2.0 can only ‘help’ 10% of those underwater owners…big reason, the owner must be current on their mortgage. If you are late, don’t apply. Of the estimated 11 million underwater owners nearly half are already behind on their payments, in default.
2. HARP 2.0 has nothing to do with homes already foreclosed. There are millions of homes readying to become REO listings over the next 12-24 months. Millions of homes that will be put for sale and discount prices. What effect will this have on property values?
3. 3) Did HARP 1.0 work? The HARP program in its current form has fallen well short of its intended target of 4-5 million homeowners, helping just 894,000 of which only 70,000 were significantly underwater.
   4) THE BANKS have to agree to participate in HARP 2.0. Its estimated that the banks will ‘lose’ 15,000,000,000 (15 BILLION) if they participate with this new program. Do you think banks will be eager to participate in 2.0?
   5) AND THE BIG QUESTION….how many owners does the Obama Administration think HARP 2.0 will help? Their answer…’Time will tell’. In other words, they have no idea.

So, I ask you….does the new HARP 2.0 offering any real substance and hope or will this program follow the same path as HAMP and all the other failed efforts?”

Courtesy: Real Estate Insider News

Investing, buying or selling homes in an “empty city” (a city where there are thousands of vacant homes” is almost always a crucial challenge for real estate investors. Despite home values stabilizing, an interesting article was published in Yahoo Real Estate last October 12, 2011, courtesy of Paul Toscano of CNBC.Com which listed down the top 5 America’s Emptiest Cities, 2011 and based off the rankings on two signifiers: homeowner vacancy rate and rental vacancy rate.

“It’s no secret that the U.S. housing market has seen better days. From falling home values and impaired labor mobility, to backed-up inventories and a flood of foreclosures, there are countless ways that real estate affects the economy at large.

One of the unfortunate results of a bad housing market is an increase in vacant homes, which has grown by 43.8 percent since 2000, according to the U.S. Census Bureau. Homes can be vacant for various reasons, but they are defined as both rental inventory that are unoccupied and “for rent,” as well as homes that are unoccupied and up for sale. As of the 2010 Census, there were approximately 15 million vacant housing units in the country, with an 11.4 percent gross vacancy rate nationwide.

Much like the range of diversity in home values from city to city, homeowner and rental vacancy rates vary dramatically depending on where you live. Every quarter, the Census publishes data on homeowner and rental vacancies in the 75 largest U.S. cities that reveal which metro areas have the highest number of empty homes. The cities listed here are ranked by CNBC.com according to equal-weighted rankings in both rental and homeowner vacancies, which reveal the most significant outliers in both categories relative to other major U.S. cities.

Here are the five emptiest major U.S. cities:

5. Atlanta, Georgia
Rental vacancy rate: 11.8%
Homeowner vacancy rate: 5.4%

Atlanta’s homeowner vacancy rate is the fourth highest among other major U.S. cities, standing at 5.4 percent. The rate has been rising since early 2010, when it stood at just 2 percent. Rental vacancies have been much worse for Atlanta — in 2010, the rental vacancy rate never dipped below 13 percent and was as high as 14.9 percent at the beginning of the year.

4. Memphis, Tennessee
Rental vacancy rate: 13.5%
Homeowner vacancy rate: 4.0%

For both rentals and owned homes in Memphis, the proportion of vacant homes is high compared with most other major U.S. cities. With a rental vacancy rate of 13.5 percent, the city is the 11th highest in the nation, while the 4 percent homeowner vacancy rate ranks the city ninth.

3. Toledo, Ohio
Rental vacancy rate: 19.3%
Homeowner vacancy rate: 3.6%

Of the 75 largest cities in the U.S., Toledo, Ohio, has the highest rate for rental vacancies at 19.3 percent, although in the third quarter of 2010 the rate was much higher, at 24.1 percent. Toledo also has a high number of empty homes, at 3.6 percent, which ranks it 17th among major U.S. cities.

2. Indianapolis, Indiana
Rental vacancy rate: 13.5%
Homeowner vacancy rate: 5.2%

The capital of Indiana is also one of the emptiest major cities in the country, according to data from the Census Bureau. The 5.2 percent home vacancy rate in Indianapolis ranks it fifth in the country, while the 13.5 percent rental vacancy rate places it 10th. With these levels, the city is more vacant than nearly every other major U.S. metro area.

1. Tucson, Arizona
Rental vacancy rate: 15.9%
Homeowner vacancy rate: 6.8%

The emptiest city in the U.S. is the second-largest city in Arizona: Tucson. With rental vacancies at 15.9 percent, the city is seventh most vacant among major cities, while the 6.8 percent homeowner vacancy rate is the highest in the country as of the second quarter of 2011.”

Borrowers who are current on their home loans may be able to refinance for lower interest rates, even if they are seriously upside down.  The Federal Housing Finance Agency (FHFA) announced today that it will broaden the scope of the Home Affordable Refinance Program (HARP) by removing the current 125 percent loan-to-value cap for fixed-rate mortgages backed by Fannie Mae and Freddie Mac.  Other program enhancements include, among other things, reducing certain fees, eliminating the need for a new property appraisal if the FHFA has a reliable automated valuation model (AVM) estimate, and extending HARP until the end of 2013.  New federal guidelines for the HARP changes should be released to mortgage lenders and servicers by November 15.

The basic eligibility requirements for an enhanced HARP loan are as follows:

• Existing mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac.  To check whether a borrower has a Fannie Mae or Freddie Mac loan, go to http://www.makinghomeaffordable.gov/get-assistance/loan-look-up/Pages/default.aspx.
• Existing mortgage loan must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
• Existing mortgage loan cannot have been refinanced under HARP previously (except for Fannie Mae loans refinanced between March and May 2009).
• Current loan-to-value (LTV) ratio must be more than 80%.
• Existing mortgage loan must be current, with no late payments in the past six months, and no more than one late payment in the past 12 months.

More information is available from FHFA at http://www.fhfa.gov/webfiles/22721/HARP_release_102411_Final.pdf.

Two key indices of home prices likely fell in August, suggesting large numbers of foreclosures and continued high joblessness are acting as a drag on the market, according to a new forecast.  The Case-Shiller 20-city composite home price index, scheduled to be released on Tuesday, likely fell 3.8% in August from a year earlier and 0.3% from July on a seasonally adjusted basis, said a forecast from Zillow Inc. chief economist Stan Humphries. The downward trend will continue through the end of the year, he predicts.  “We expect to see continued home value depreciation as unemployment and negative equity remain high,” said Humphries.
“The large foreclosure pipeline will produce relatively low priced REOs in the market, putting downward pressure on prices going forward, and we do expect the pace at which homes exit this pipeline to pick up in the near-term.”  The Case-Shiller 10-City composite index is expected to register a seasonally adjusted decline of 3.5% in August from the previous year, and 0.2% compared to July.

“After showing monthly appreciation earlier this year and building some momentum, recent weak economic data is starting to be reflected in home values,” Humphries said. “Existing home sales have been disappointing, with September sales down 3% from August.”  Humphries is bearish on the overall housing market for at least the next year.  A survey of more than 100 economists by Pulsenomics shows the median expectation for that group is a decline in the Case-Shiller 20-city index of 2.8% in the fourth quarter from the final three months of 2010. Zillow, on the other hand, has projected a 4.5% decline, and then another 2.5% drop from the fourth quarter of 2011 to 2012.  Zillow has a strong track record of accurately forecasting changes in these Case-Shiller indices. Zillow’s July forecast for the non-seasonally adjusted 20-city index was off by just 0.1 percentage point, coming in at 4.0% compared to the actual number of 4.1%.

This is an interesting article about dealing with the foreclosure issue in the Chicago area.  It was aired recently by Diana Olick of CNBC and has some thought provoking ideas!  Enjoy..

“Chicago has the highest inventory of bank-owned (REO) homes of any large city in America.  It also has the most homes in the foreclosure process.  We tend to use state numbers, and that usually means Florida, California, Nevada, and Arizona make the headlines.  But when you drive around these South Side Chicago neighborhoods, like I did today, you really see one city’s plight and blight.  I’m here today doing a story on Bank of America’s new program to demolish some of these homes and donate them back to the city. They expect to do a mere 150 over the next two years, which is really a drop in the bucket when you go on foreclosure websites and see thousands of these properties for sale, with many more coming.  A bright side to this is that Bank of America is also ‘deconstructing’ some of these homes. They are taking them apart and giving the still-valuable parts to a non-profit which then sells the pieces back to the community at deep discounts. It’s kind of like selling an old car for parts.

‘The significant thing about using a deconstruction process is 70-80% of the material in those homes can be re-used,’ says Bank of America’s Rebecca Mairone. ‘Those all go to non-profit and those also serve an employer in the local community.’  Mairone claims most neighbors of these abandoned homes want to see them bulldozed, but in talking to folks out here, the reaction was mixed. One man wearing a bold Cubs tee shirt said that while the whole situation is sad, it’s better to have these run-down homes gone than have to walk by them every day. But another woman who asked what we were doing and then promptly said she was going to call city hall, remarked, ‘The banks should be building these communities up, not tearing them down.’ ”

Still More Foreclosures….

A new report out today from RealtyTrac notes overall foreclosure actions are still down due to the continuing lags in paperwork and problems in states where foreclosures must go before a judge.  Properties foreclosed in Q3 took a record 336 days to make it through the process nationally, but in New York the average was 986 days and in Florida 749 days.  New notices of default, however, the first stage of foreclosure, are rising, up 14% from the previous quarter. Banks are clearly ramping up the process where they can, which will mean more distressed properties coming to market.  In Chicago, with an already over-bloated stock of bank-owned properties, we are likely to see more demolition. The banks make a calculation on each home and each neighborhood.  These are calculations, of course, which in my estimation should have been made long before handing out all those bad loans.  What do you think?

Many thousands of homeowners are subject to foreclosure each year after a failure to keep up with the mortgage repayment required. The compromising situation leaves many people homeless and with no funds to rent or buy other accommodations. As the average time for a foreclosure sale to materialize is around two years, the whole process of foreclosure really does linger longer than all parties would like.

When a property is up for foreclosure, it is in the interests of both the owner as well as the money lender to finish the process as quickly as possible, cutting their losses and freeing up cash. But, with a wait of nearly two years for this to happen, a quicker solution is necessary.

Thankfully, Bank of America, who deals with hundreds of such homes and properties, has now come up with a solution that will indeed speed up this process, and allow the previous owner some financial freedom. Bank of America is the nation’s largest money lender, and has been involved with the foreclosure fiasco from the outset and now, during the period of scandal scrutiny.

This largest money lender is offering a solution experiment to homeowners in Florida by allowing the home owner up to $20,000 for the short sale of their homes. This offer is for a short and specific time period, and will indeed allow the Florida homeowners the chance to stop their property lingering in a foreclosure deal.

Plans for this offer have been published and sent to banks and selected real estate dealers in the Florida area, giving a date of November 30th as the maximum time to submit and receive approval from the Bank of America. In order to qualify, not only must the deal have approval from the Bank of America before the end of November, the property must have no current offers on it. The time scale for the whole operation is in fact the end of August of 2012, and this solution will indeed help many delinquent homeowners in the state of Florida.

The news has been welcomed in and around Florida, and a minimum payout of $5,000 is being welcomed by home owners. When a homeowner is entering foreclosure proceedings it is due to severe financial difficulty, and under these circumstances the homeowner would welcome a sum of cash that would free them from the financial stress and turmoil.  A sharp cash injection, albeit it small, will release them from the abyss they are about to step into, and indeed give them the cash they need to relocate and rent a property.

This offer is of more interest to delinquent home owners in the Florida than to others nationwide as the average time for foreclosure to complete in California is indeed twice the national average. Although hit by much criticism and known by many as a bribe for the desperate homeowner, the fact remains that many individuals will welcome this sum of cash if it will allow them to essentially start their lives again.

This whole process is being kept away from the limelight as much as possible in order to stop it from attracting the wrong type of news. But what must also be noted that many homeowners are already being offered a relocation fee of as little as $3000 in exchange for leaving their home in a decent condition.

Bank of America (BOA), the nation’s largest mortgage servicer, is offering Florida homeowners up to $20,000 to short sale their homes rather than letting them linger in foreclosure.  The limited time offer has received little promotion from the Charlotte, N.C.-based bank, which sent emails to select Florida Realtors earlier this week outlining basic details of the plan.
Only homeowners whose short sales are submitted for approval to BOA before Nov. 30 will qualify. The homes must have no offers on them already and the closing must occur before Aug. 31, 2012.
Realtors say the BOA plan, which has a minimum payout amount of $5,000, is a genuine incentive to struggling homeowners who may otherwise fall into Florida’s foreclosure abyss.  The current timeline to foreclosure in Florida is an average of 676 days – nearly two years – according to real estate analysis company RealtyTrac. The national average foreclosure timeline is 318 days.  Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance, called the short sale payout a “bribe.”
“You can call it a relocation fee, but it’s basically a bribe to make sure the borrower leaves the house in good condition and in an orderly fashion,” Cecala said. “It makes good business sense considering you may have to put $20,000 into a foreclosed home to fix it up.”  Homeowners, especially ones who feel cheated by the bank, have been known to steal appliances and other fixtures, or damage the home.

A spokesman for BOA said the program is being tested in Florida, and if successful, could be expanded to other states.  Wells Fargo and J.P. Morgan Chase have similar short sale programs, sometimes called “cash for keys.”  Wells Fargo spokesman Jason Menke said his company offers up to $20,000 on eligible short sales that are left in “broom swept” condition. Although the program is not advertised, deals are mostly made on homes in states with lengthy foreclosure timelines, he said.  And caveats exist. The Wells Fargo short sale incentive is only good on first lien loans that it owns, which is about 20% of its total portfolio.  BOA’s plan excludes Ginnie Mae, Federal Housing Administration and VA loans.  Similar to the federal Home Affordable Foreclosure Alternatives program, or HAFA, which offers $3,000 in relocation assistance, the BOA program may also waive a homeowner’s deficiency judgment at closing.  A deficiency judgment in a short sale is basically the difference between what the house sells for and what is still owed on the loan.  HAFA, which began in April 2010, has seen limited success with just
15,531 short sales completed nationwide through August.

Courtesy: smart real estate news

The US housing market hit bottom this year and will remain flat until 2014, when it will start to slowly recover, said Rick Sharga, an executive vice president with Carrington Mortgage Holdings.  “We’re looking at a catfish recovery,” he told attendees at the Asian Real Estate Association of America conference in San Francisco Friday, saying the market will bump along the bottom for some time before starting to revive.  More than a million foreclosure actions that should have taken place this year have not yet moved forward, and that delay pushes a resolution of the housing market’s problems into next year and beyond, he said, citing data from RealtyTrac, where Sharga served as a senior vice president until this week.  “We can’t expect to see home price appreciation until we work through these distressed assets,” he said.  Since 2005, there’s only been one quarter in which US banks have sold more properties than they’ve taken back through foreclosure, leaving a huge overhang of real estate-owned assets that need to be cleared out.

Shadow inventory still a big problem

Banks hold about 800,000 REOs, and three-quarters of those are not listed for sale, said Sharga. Another 800,000 homes are in foreclosure and 1.5 million loans are delinquent.  This “shadow inventory” will slow down a housing market recovery, he said, as monthly foreclosure numbers will remain elevated through 2012 and REO inventories will stay high through 2013.  Even with the continuing distress in the housing market, the country is not likely to enter a double-dip recession, said Eugenio Aleman, a director and senior economist at Wells Fargo & Co.  Although US workers have suffered as the nation has lost 9 million jobs over a two-year period, the manufacturing and service sectors are expanding, he noted.  “The rest of the economy is not booming, but it’s doing fine,” said Aleman. Wells Fargo is projecting that the US economy will expand over the next few years, but at anemic rates: 1.6% this year, 1.4% in 2012 and 1.9% in 2013.  “We are standing firm,” said Aleman of Wells Fargo’s economic forecast. “We are not going to go into a recession.”

About 2.3 million homeowners could have refinanced their mortgages last year if they didn’t owe more than their homes were worth or if lending standards weren’t so strict, according to a Federal Reserve study released yesterday. Long-term mortgage rates are near record lows and have been below 5% for all but two weeks this year. The average rate on a 30-year fixed loan is now 4.09%. But lenders typically require homeowners to have equity in their homes to refinance. And many lenders are approving only borrowers with high credit scores. Roughly 22.5% of homeowners, or about 11 million, are “underwater” — they owe more than their homes are worth — according to CoreLogic, a real estate data research firm. The figures don’t show how many of the homeowners obtained loans during the housing boom, when lending standards were often lax. Many lenders offered loans to people with poor credit, no employment checks and little or no money down. The Fed said about 4.5 million refinancing applications were approved last year. In a healthy housing market, that figure would be nearly 34% higher, it said.

The Federal Housing Finance Agency has said it’s reviewing a program it launched two years ago to see if it might be expanded to let more homeowners qualify. The program, called Home Affordable Refinance Program, or HARP, lets people whose homes are underwater by up to 20 % refinance at lower rates. But to be approved for the program, homeowners must be current on their mortgages, which must date from 2009 or later. As of July, about 838,000 homeowners had refinanced through the program. Officials had hoped at least 4 million Americans would take advantage. The Fed’s study reviewed information from more than 7,900 lenders.
The number of approved mortgages fell from nearly 9 million in
2009 to fewer than 8 million in 2010. The peak was 15.6 million in 2005.

Home Prices Relatively Flat

Home prices remained relatively unchanged in July across the 25 markets surveyed by Radar Logic. The research and analytics company’s monthly housing report also showed real estate-owned inventories are expected to grow in the coming months as more foreclosures make it through the pipeline. The average home price in July in the 25 markets surveyed inched up 0.9% to
$187.24 per square foot from June and is 4.7% below a year earlier, according to Radar Logic. Still, there remains a fundamental issue with supply rapidly outpacing demand, and “if nothing is done to prevent it, the problem is going to get worse in coming months,” the company said. The supply of homes for sale could grow in coming months if recent increases in foreclosure filings become a lasting trend.

Foreclosure filings, including default notices, scheduled auctions and bank repossessions, increased 33% from July to August, according to recent data released by RealtyTrac. The company cites statistics from economist Tom Lawler who said there were about 548,000 REO properties on the books at the end of the second quarter. That figure includes properties held by Fannie Mae, Freddie Mac, the Federal Housing Administration, as well as trusts for private-label securities and non-FHA government agencies. “The supply of homes for sale could grow in coming months if recent increases in foreclosure filings become a lasting trend,” Radar Logic said.

articles courtesy:  SmartRealEstateNews.com

In 1887 Alexander Tyler, a Scottish history professor at the University of Edinborough, had this to say about the fall of the Athenian Republic some 2,000 years prior:
“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury.. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse over loose fiscal policy, (which is) always followed by a dictatorship.”

“The average age of the world’s greatest civilizations from the beginning of history, has been about 200 years. During those 200 years, these nations always progressed through the following sequence:

From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage.”
The Obituary follows:

Born 1776, Died 2012

It doesn’t hurt to read this several times.

Professor Joseph Olson of  Hamline University School of Law in St. Paul , Minnesota , points out some interesting facts concerning the last Presidential election:

Number of States won by: Obama: 19  -  McCain: 29
Square miles of land won by: Obama: 580,000  -  McCain: 2,427,000
Population of counties won by: Obama: 127 million  -  McCain: 143 million
Murder rate per 100,000 residents in counties won by: Obama: 13.2  -  McCain: 2.1

Professor Olson adds: “In aggregate, the map of the territory McCain won was
mostly the land owned by the taxpaying citizens of the country.   Fancy that!

“Obama territory mostly encompassed those citizens living in low income
tenements and living off of various forms of government welfare…”  the entitlement-minded!

Olson believes the United States is now somewhere between the
“complacency and apathy” phase of Professor Tyler’s definition of democracy,
with some forty percent of the nation’s population already having reached
the “governmental dependency” phase.

If Congress grants amnesty and citizenship to twenty million criminal
invaders called illegal’s – and they vote – then we can say goodbye to the
USA in fewer than five years.

If you are in favor of this, then by all means, ignore this post and go about your life, or what’s left of it as you now enjoy.

This is truly alarming!  Of course we are not a democracy, we are a Constitutional Republic, by design of our great founder-forefathers .   Someone should point this out to Obama…but, of course, we know he and too many others pay little attention to The Constitution.

There couldn’t be more at stake than on Nov 6, 2012!

Well, we’ve had about two and half years now of government intervention in the mortgage and banking industry and I’ve got to tell you, things are still terrible!  HAMP was/is a dismal failure with a 2 to 4% success rate in helping homeowners keep their homes, depending on which source you get your information from.  Conversions form trial to permanent are right at 50% +/-.   What is more disturbing is the default rate.  The number of people that are right back in arrears after a HAMP workout…is upwards of 21% and projected to go above 40% over the next few years.  Remember TARP?  Well the homeowner assistance portion was supposed to be 75 billion.  The government has spent less than 5 billion on the HAMP program so far!  Where is the money??  Typical government waste, fraud and abuse…!  Not that throwing more money at it would help, mind you…it’s just the principal of it. (no pun intended)

HAMP…More questions than answers..

HAMP was supposed to provide relief for people who had been impacted by the economy and/or the sup-prime meltdown that occurred in this country.  However, the only thing that banks would talk about were rate reductions or term extensions or both…with little or no consideration given to mark-to-market, (better known as principal reduction) of existing mortgages,  most of which were and are grossly under water.   This stalwart attitude on the part of banks has spurred a tremendous amount of controversy on all sides of the moral and political spectrum raising questions about recovery, capitalism, our free market system, fairness, responsibility, honor and so on!   I have my views on the issue and I can definitely understand both sides of the argument.

All for one or all for all…

But what is right to get this housing market off it’s ass and moving again?  What is more important than our nation getting back it’s footing and once again revving up our massive economic engine?  It’s not going to happen until housing stabilizes and begins to, once again, become the cornerstone for family wealth building in this country.  When people begin to sense that their single biggest investment is again, in fact, an investment…they will buy stuff!!  Like cars and durable goods and clothes and, well you get the picture!  So…should the banks reduce principal as part of  HAMP or their own private workout programs?  Should it be across the board to include strategic defaulters who just don’t like the fact that they are underwater, but are not financially distressed?  Should it be tied to a certain percentage of the underwater difference or should it be marked-to-market as determined by full appraisal?  Please comment…

The HAFA Alternative

Now we have HAFA, another government backed program designed to complicate the short sale process!  Well, not really…but it sure seems to get in the way of doing a quick and easy short sale.  Homeowners have to write a letter opting out of the HAFA alternative so that they don’t have to go through the same ridiculous paperwork fiasco as a HAMP workout to be given “permission” to short sell their home and receive move out assistance (a bribe).   The move out assistance is really so that pissed of homeowners don’t trash their home out of anger when they leave.  The irony in all of this is simply this:  The banks have to agree to reduce (short) the loan balances in a short sell to make the property go away.  In other words, they have to reduce the principal balance in order to sell the home!  Go figure!!

I don’t get on the bandwagon all that often, but after this latest round of budget talks and debt ceiling wrangling, I’m PISSED!  For the record…I’m conservative minded, both fiscally and socially, but philosophically, Libertarian.   I don’t think we should be subsidizing or paying people to:  retire early with huge pensions, have babies,  have babies aborted, stay at home and claim they can’t find work, buy food while they squander it on candy, chips and all sorts of other crap…,  buy cell phones (yeah…you heard me right!), go to college on the taxpayer, use emergency rooms for stupid purposes and probably a thousand other non-essential, entitlement-mind breeding reasons!

There is a legitimate form of public assistance in certain instances for the truly needy…and then there is the OUT OF CONTROL MONSTER that has been created by progressive liberal sentiment in this country that has been allowed to foster and take root!  We’re in trouble..PERIOD!!

So while President Dumbass travels the world on weekly vacations and tries to figure out more ways to take wealth from those who create it so he can give it to those that don’t do shit, we are forced to sort through the morass of political idiocy and ideology in an attempt to make sense of it and plot a course of action to protect ourselves.  But not the Congress…Oh No!  They are better than us.  They live, work and take care of themselves and their families under a different set of rules…!  Exempt from the restrictions and regulations that hamper the rest of us…They have an ELITE status regardless of how long they serve.  I’m sure many of you have seen what I’m about to post here.  I know I have numerous times in the past couple of years and I just sort of sluffed it off as one of those things that I can’t do anything about!  That stops now.  There is something that can be done!  These people that we entrusted to watch over our Constitution and act in the best interest of we, the American People, have bent us over and taken turns abusing us in the name of countless lobbies and lobbyists who keep their palms greased and their political careers in the balance.  I’M SICK OF IT!   Did I already say that?  Here…you read the following for yourself and do your own homework…!

“For too long we have been too complacent about the workings of Congress.  Many citizens had no idea that members of Congress could retire with the same pay after only one term,… that they didn’t pay into Social Security,… that they specifically exempted themselves from many of the laws they have passed (such as being exempt from any fear of prosecution for sexual harassment) all while ordinary citizens must live under those laws.  The latest outrage is to exempt themselves from the Healthcare Reform…in all of its forms.  Somehow, that doesn’t seem logical.  We do not have an elite that is above the law.  I truly don’t care if they are Democrat, Republican, Independent or whatever.  The self-serving must stop and there is a good way to stop it.”  (author unknown)

The Congressional Reform Act of 2011
“An idea whose time has come”

The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified!  Why?  Simple!  The people  demanded it.  That was in 1971…before computers, before e-mail, before cell phones, etc.

Of  the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the  land…all because of public pressure.

So..here it is…

1.   No Tenure / No  Pension.
A.  Congressman collects a salary while in office and receives no pay when they are out of office.

2.   Congress (past, present & future) participates in Social Security.
All funds in the Congressional retirement fund move to the Social Security system immediately.  All  future funds flow into the Social Security system, and Congress participates with the American people.  It may not be used for any other purpose.

3.  Congress can purchase their own retirement plan, just as all Americans do.

4.  Congress will no longer vote themselves a pay raise.  Congressional pay will rise by the lower of CPI or 3%.

5.  Congress loses their current health care system and participates in the same health care system as the American people.

6.  Congress must equally abide by all laws they impose on the American people.

7.  All contracts with past and present Congressmen are void effective 1/1/12.

The American people did not make this contract with Congressmen.  Congressmen made all these contracts for themselves.   Serving in Congress is an honor, not a career.  The  Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

Servicers completed 10,438 short sales through the government’s Home Affordable Foreclosure Alternatives program since it launched in April 2010, according to the Treasury Department.
HAFA was designed to provide an incentive to servicers for completing short sales and deeds-in-lieu of foreclosure for loans that fail out of the larger Home Affordable Modification Program.
Through June, servicers started 21,412 short sales and DILs, up 20% from the month before. A total of 10,754 were completed, up 25%.  JPMorgan Chase is the programs leading performer, completing nearly 3,600 through the program, including nearly 1,000 in June alone.  Wells Fargo was second, completing more than 3,100 since the program launched and roughly 700 in June.
Bank of America completed 1,873 HAFA transactions, an increase of roughly 200 in the month.

Pam Marron, a senior loan officer with Gold Start Mortgage Financial Group in Tampa Bay, Fla., said more and more homeowners in negative equity view a short sale as their only way out. Many, she said, are defaulting because banks require them to do so in order to qualify for a short sale.  “The growing problem in Florida is the alarming increase in the number of short sale listings that are coming onto the market. These people are still employed but severely underwater and are having to short sale because they are not able to pay the vast difference owed between the mortgage amount and the value of these homes,” Marron said.
“Banks are requiring homeowners to default in order to qualify for the short sale.”  In 22% of the HAFA agreements started — equal to roughly 4,700 mortgages — the homeowner began a HAMP trial but later requested a HAFA agreement or was disqualified from HAMP.

So I’ve got this beautiful 1968 Martin D-28 herringbone that I picked up about ten years ago from the original owner.  The guitar is in great shape but definitely shows that it was played.  I don’t mean to imply that it is all scratched and gouged up…it is not.  However, one thing is clear and I have known it to be the case since I bought it.  The guitar has never been properly set up by a luthier since it was built!  How do I know?….well I have owned many, many guitars and being somewhat of a perfectionist with the curse of  “perfect pitch”, a proper set up was and is the determining factor for a guitar staying in my possession for any length of time.  There are other important factors of course such as tone, sustain, projection, attack characteristics and much more, but it all starts with intonation  and playability, without which it just plain ain’t no fun to play!

So why am I talking about this?  Well…this D28 has never been set up and I’ve been playing with it in my guitar rotation off and on for quite a while now while telling myself  “I’ve got to get this thing worked on”.  The thing is that it’s not horrible…but it could be sooo much better!  For example, the 3rd string, G, is about 10 cents flat at the 12th fret.  That in and of itself does not pose a huge initial tuning problem (even though it is never good enough) but as soon as oil and dirt begin to deteriorate the string, middle register playing becomes maddening and temper tuning becomes an “every 2 or 3 minutes” thing.  Really frustrating!!  There are a couple other less annoying issues as well that need attention.

Here’s the thing…  Today is the day that I get it all taken care of!  Finally…I’m gonna actually put the guitar in my car and take it to Nick, my local guitar shop owner and whiz guitar tech.  When he gets done with it, it will be about as nice a guitar as anyone could hope for, not too mention a real boomer that just plain sings, and when all is good with your guitar, it is truly inspirational to pick it up and play!

If you’ve got a guitar laying around that you tinker on every now and then, or if you’re a real player and just haven’t taken the time to really have your guitar fine-tuned, I’d love to hear from you and I hope that you will also take it in and get it set up.  The increase in playability and enjoyment could be life changing.

Under a new state law in California, any lender who agrees to a short sale, which by definition will yield insufficient funds to cover the outstanding loans on a property, must accept the short amount as payment in full for all loan balances.  That is a good thing for upside-down homeowners who need to sell, says the California Association of Realtors.   “The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said association President Beth L. Peerce.   “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders — those in first position and in junior positions — will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property,” she added.

While the incidences of lenders pursuing homeowners has not been pandemic, there have been and would, undoubtedly continue to be scenarios where senior and/or junior lien holders harass homeowners for short pay subsidies through the use of in-house or third party collection agencies.  SB458 will put the issue to bed permanently and allow for the homeowner(s) to move on with their lives unharrassed while they rebuild their credit and sense of self worth.

What is not clear and probably not affected is the ability of the lien holder(s) to report the transaction as “settled for less than amount owed” or something to that effect.  It would be great if  SB458 required all lenders to report to the credit bureaus as “paid in full” as well, but that is wishful thinking.  To read the bill, click here!

“At what point is moral hazard trumped by corporate survival and the cold hard need to get people to pay their mortgages? The answer is: Now.  As home values continue to fall and more borrowers fall into a negative equity position on their home loans, those who stand to lose, banks and investors, are working to keep borrowers current.  To date, they have focused on delinquent borrowers, offering loan modifications and foreclosure alternatives, like short sales and deeds in lieu of foreclosure.

Last fall, New Jersey-based Loan Value Group launched a new business model, offering lenders and mortgage investors a way to keep their current, but underwater, borrowers current through cash incentives.  It’s called Responsible Homeowner Reward, and today, one of the nation’s largest mortgage insurers, PMI Mortgage Insurance, joined in.  Here’s how it works. Borrowers pay nothing. They sign up with the program, promising to keep current on their mortgages for a certain period, generally 36 to 60 months (LVG has worked out the contract with the participating lender/investor).  After that period, the borrower will be paid anywhere from 10 to 30% of the loan principal, depending on the contract, in cash. The lenders/investors pay LVG, which receives a servicing fee, and LVG pays the borrowers. Again, the borrowers pay nothing for this bonus.

Even PMI is getting into the act

The PMI deal works the same, with PMI paying a scaled reward for select borrowers over a five-year period. If the borrowers stay current, they earn the payoff over the five years and receive the cash at the end. PMI created its own subsidiary, Homeowner Reward, but that subsidiary will work with LVG, and PMI will pay LVG an administration fee. To date, 38 states have borrowers enrolled in the LVG program, totaling approximately 10,000, according to LVG. The largest number of borrowers are from the hardest hit states, California, Florida, Arizona, Nevada and Michigan.  So far, RH Rewards has offered, but not paid out, $107,393,922, according to the company’s website.  ‘All of those states have achieved greater than 50% reduction in default rates than respective control group,’ said an LVG spokesperson.

Okay, so now that we get it, we have to ask what exactly are we getting here? From a purely business perspective, it makes sense.
By targeting borrowers with the most negative equity and therefore at the greatest risk of strategic default, lenders and investors are cutting their losses by keeping the borrowers current. They stand to lose more in a foreclosure.  But does it sound slightly ironic to anyone else that a mortgage insurance company, whose business is to insure loans by charging borrowers premium fees, is now paying those very same borrowers back to stay current on the loans they’re insuring?  ‘For borrowers in our pilot program, Responsible Homeowner Reward (SM) provides an incentive to stay current on their mortgage by helping them earn an offset to the decline in home values. Such programs, if successful, could reduce the incidence of foreclosure, which could help stabilize house prices and stabilize communities,’ said Chris Hovey, PMI’s SVP of Servicing Operations and Loss Management.

Strategic default is the only card left

Like I said, it’s business, a numbers game where companies have now figured out how much they need to pay to avert a larger loss.
Apparently we have hit that tipping point where strategic default is now so pervasive and so acceptable that companies are forced to pay borrowers to stop.  So what exactly is the difference between that and principal write-down, which the big lenders seem to abhor as a bigger moral hazard even for borrowers facing foreclosure?  In an interview with HousingWire back in April of this year, the managing partner of LVG, Frank Palotta, said, ‘There is little focus on loss-mitigation efforts for current loans, as these homeowners typically pay. As a result, the vast majority of these homeowners are left with no other option than to become ‘the squeaky wheel’ by becoming delinquent in order to receive a call from their servicer.’

courtesy:  Diana Olick

The Obama administration is ramping up talks on how to revive the housing market, which is weighing on the economic recovery—and possibly the president’s re-election in 2012.  Last year, advisers considered several housing-policy prescriptions but rejected them in favor of letting the market sort things out.
Since then, weak demand and a stream of foreclosed properties have put renewed pressure on home prices, prompting concern within the White House.  Housing “hasn’t bottomed out as quickly as we expected,” President Barack Obama said at a White House town hall last week. Mr. Obama said housing remained the “most stubborn” problem facing the country and conceded that a raft of federal mortgage-aid programs were “not enough, and so we’re going back to the drawing board.”

Lending Vs Renting

Unlikely to get Congress to provide additional funds, the administration is left to examine options that it can implement without congressional consent. Fannie and Freddie, the so-called government-sponsored enterprises or GSEs, could be one policy lever. “There are a number of things that we can look at on the GSE side,” said Austan Goolsbee, departing chairman of the Council of Economic Advisers.  Last year, officials considered a range of policies that included allowing borrowers with loans backed by Fannie and Freddie to refinance more easily by relaxing fees that lenders are charged for riskier borrowers.  Others outside the administration have pushed for federal entities to lend more freely to mom-and-pop investors or to create public-private initiatives that would allow institutional investors to buy more foreclosed properties. “Because we have limited credit availability, we need investors to help soak up the supply,” said Ivy Zelman, chief executive of housing-research firm Zelman & Associates.  Fannie and Freddie also could rent, instead of sell, some of their huge inventory of foreclosed homes, which could take some pressure off prices. The firms owned about 218,000 properties at the end of March, and sold around 100,000 during the first quarter, or more than one-third of all foreclosed property sales, according to analysts at Barclays Capital. The firms could take back as many as 700,000 homes over the next year, according to estimates by economists at Goldman Sachs.

Principal Reduction Already..C’mon Guys

All these options could boost lending and attack the overhang of foreclosures, but would put more risk on federal agencies and Fannie and Freddie. The mortgage giants have cost taxpayers $138 billion and counting.  They also would require the blessing of the Federal Housing Finance Agency, which is charged with limiting losses at Fannie and Freddie. The FHFA last year refused to go along with an Obama administration initiative to reduce loan balances for certain borrowers who were current on their mortgages but heavily underwater. The agency has typically resisted programs which produce substantial, upfront losses designed to offset potentially larger but harder to quantify long-term losses.

The same skepticism that prompted advisers last year to push for giving the market room to heal on its own could prevail once again. Simply focusing on the broader economy is “one of the best things we can do for the housing market,” Mr. Goolsbee said.
Still, the high-level housing discussions are significant because Mr. Obama hasn’t put much emphasis on his housing policies over the past year. The administration has taken fire from both sides over its housing-relief plans, with Democrats saying the administration has let banks off too easily while Republicans have said the programs wasted money. The housing market could be a top election issue for voters in swing states such as Florida, Ohio, and Nevada.

According to RealtyTrac, the online marketplace of foreclosed properties, foreclosure filings fell 33% In May from a year earlier and 2% month-over-month. The number of homes repossessed (referred to as REOs or real estate-owned properties) in May also declined to 66,879, down 3.8% from April and 29% year-over-year.
The huge year-over-year drop in foreclosures doesn’t necessarily mean the housing market is staging a recovery, however.

James Saccacio, the CEO of RealtyTrac, says the declines are likely due to lingering effects of the “robo-signing” scandal, which broke last September, when it was discovered that banks were playing fast and loose with foreclosure documents.  There’s another factor at play, as well. The banks can’t sell the homes they’ve already seized so they aren’t as incentivized to repossess more homes.  “There’s weak demand from buyers, making it tough for lenders to unload their REO inventory,” said Saccacio. “Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month.”
The banks don’t want to take on the expense of maintaining the homes — property taxes, heating costs, repairs and insurance — if they can’t sell them quickly.  Selling off the inventory of repossessed homes is crucial to the housing market.

The steepest drops in filings have come from judicial states, ones in which the courts are involved in repossessions. In these states, where foreclosure proceedings are subject to the scrutiny of the courts, it appears banks are taking special care to make sure they’ve stamped out the last vestiges of the robo-signing issues.  Nevada, where most cases are handled outside of court, continued to be foreclosure central. One of every 103 households received a notice of some kind in May. However, that was an improvement of 23% compared with May 2010. Arizona, with one filing for every 210 households, and California, one for every 259, were second and third.  The judicial state of Florida, where the housing market is no better, has seen a much greater drop-off in filings over the past year, down 62%. It now has the eighth highest foreclosure rate, of one filing for every 461 households.
A year ago, it was in the top four, along with the other “Sand States.”

This from Diana Olick:

“Any time I see a 74% jump in anything, I hear alarm bells, so when the Treasury Department reported just that big a jump in its Home Affordable Foreclosure Alternatives (HAFA) program, I figured there had to be something really big behind it.  And I was wrong.  There’s nothing big behind it, in fact there’s something very small behind it: Small numbers.

HAFA provides financial incentives for servicers and borrowers to do short sales (selling the property for less than the value of the mortgage) and deeds in lieu of foreclosure (basically just giving the property back to the bank). The program launched in April of 2010 and was later streamlined in December, 2010, based on feedback from mortgage servicers, real estate agents and homeowners.  So far, HAFA has completed 7,113 short sales or DIL’s. In April, however, HAFA saw 1,666 completed, up 74% from the 959 done in March.  Why the jump?’  It’s too early to draw broad conclusions,’ says Treasury spokesman Andrea Risotto, noting that Treasury just began reporting the numbers two months ago. She also points to a long reporting lag because the short sale process still takes so long. But none of this is the story.
The 74% jump exists because the numbers are just so small, and that’s the story. HAFA is doing a relatively miniscule number of short sales, when you compare the program to what the big banks are doing on their own.

JP Morgan Chase has done over 110,000 short sales since 2009, now processing about 5000 a month, according to recent reports to Congress, and they are the number three servicer behind Bank of America and Wells Fargo. If you extrapolate that out, the top three banks are probably doing more than 20,000 a month, and they’re ramping up the sales as we speak.  ‘Short sales shot up in the Spring as banks wrestled with foreclosure problems and delays,’ says Guy Cecala of Inside Mortgage Finance. In fact, the Campbell/Inside Mortgage Finance Housing Pulse Tracking Survey reported short sales hit a record high of 19.6% of all home purchase transactions in March. ‘Banks have discovered that short sales are often the fastest and most cost effective way to resolve a severely delinquent mortgage, and they have greatly improved their processing systems (any turnaround times) for handling these transactions.’

Compared to a foreclosure, other sources say, short sales result in smaller losses. There is more financial certainty than from an REO (bank owned) sale many months down the road when the property has likely deteriorated. The banks are currently looking at so many potential REO’s from so many delinquent loans in the pipeline, they’d be ridiculous not to try to short sell as many as they possibly could.  Some servicers are aggressively seeking out borrowers for short sales.  ‘Chase reaches out to borrowers who have already listed their homes or were recently denied a modification to initiate the short sale evaluation process. The goal is to have as much paperwork completed as possible prior to receiving the offer, thereby reducing the time from offer receipt to approval,’ a Chase spokesman explains.

But why, if HAFA actually pays borrowers and servicers to do short sales and DIL’s, would banks be doing so many outside of the program?  ‘HAFA is a taxpayer funded program, so it has eligibility requirements targeted at a certain segment of the population,’ says Risotto, noting that the program is for owner occupants who can demonstrate financial hardship and whose first mortgage is less than $729,750. ‘HAFA is not meant to be for every person looking to do a short sale,’ she adds.  That knocks out investors, jumbo loans and borrowers who don’t meet the ‘hardship’ requirements of the Treasury. The big banks are likely more lenient on that last one, again knowing that a short sales will be cheaper in the end than a foreclosure.”

As the housing market started to weaken earlier this year, analysts feared that the seasonal bump would not materialize at all – a sure sign of deepening problems that could tip the economy back into recession.  From January through to March, home prices fell so far that they are now back to levels not seen since the middle of 2002, according to the widely watched S&P/Case-Shiller Index.  Slowing job growth and declining consumer confidence added to the perception that the market was worsening.

What do the Realtors Say?

And yet interviews with realtors in half a dozen cities around the country paint a different picture. They say that the volume of sales and prices started to strengthen in April and have continued to gain momentum through the first weeks of June.  The housing market in many US cities is performing better than recently released national data would suggest.  List prices rose in 24 of 26 cities tracked by Altos Research in May, with San Francisco, Washington and San Jose, California, showing the biggest gains.  New York and Las Vegas were the only two cities in the index where prices declined.  A separate index compiled by CoreLogic that tracks prices in 6,507 postal codes rose slightly in April compared with March – the first such increase since a homebuyer tax credit that helped prop up the market expired in April 2010.  It may well be the beginning of a reversal,” said Mark Flemming, CoreLogic’s chief economist.

No one is suggesting there is a boom under way, only that the market may not be as bad as some recent analysis has suggested.
Most predictions call for at least a 5% price decline this year and no bottom until 2012. Despite the hand-wringing, there are encouraging signs.  California, hard hit by the housing crisis, has seen a notable pick-up. “People are still unsure, because there are a lot of mixed signals,” said Jim Hamilton, the former head of the California Realtors Association. “But, overall, more buyers are coming into the market.”

Luxury housing leading the recovery

The housing market is showing “signs of improvement” with help from luxury home sales, Toll Brothers Chief Executive Douglas Yearley said yesterday.  “There are some signs luxury is leading us out of this a little bit,” he said. “We’re clearly off the bottom.”  But while Toll is a builder of those luxury homes, the CEO expects sales the rest of the year to be relatively flat.
That’s despite 60% of Toll sales coming from the northeast corridor of Boston to Washington, D.C., which was not hit with the same housing problems as Las Vegas and Florida, among others.
“I think in pockets we’ll see some success,” Yearley said.
“The good news is pricing has definitely stabilized. We’re not seeing price reductions. In some isolated cases, we have some pricing power, we’re able to raise prices.”  He added that after five or six years of waiting, buyers want “to move on with their lives and I think they’re done trying to time the perfect point to get in the market. They’re taking advantage of great interest rates. Affordability’s at an all-time high…It’s helping us but we have a long ways to go.”

Home prices have sunk to 2002 levels, effectively wiping out almost a decade’s worth of home equity across the U.S. and imperiling the fragile economic recovery as Americans confront the falling value of their biggest investment.  A closely watched home-price index released Tuesday, the S&P/Case-Shiller National Index, showed that prices nationwide fell 4.2% in the first quarter after declining 3.6% in the fourth quarter of 2010. The index had seen increases in 2009 and early 2010.  “Home prices continue on their downward spiral with no relief in sight,” said David M. Blitzer, chairman of S&P’s index committee. The report signals “a double dip in home prices across much of the nation,” he said.

That doesn’t bode well for the economy, which historically has depended on home buying and other consumer spending to rebound.  Falling prices hurt economic growth in a number of ways.  Not only do homebuyers curb spending when their homes are losing value, but continued price erosion keeps families stuck in homes they can’t sell because they are worth less than what they owe.

Another 5% decline in prices will increase the share of underwater homeowners with mortgages to 28%, up from 23% at the end of 2010, according to CoreLogic Inc.  A 10% drop will leave more than one-third of all U.S. borrowers underwater.  Declining home values, rising prices and unemployment continue to weigh on consumer confidence.  Another wild card is wrangling over the debt-ceiling in Washington, where lawmakers remain at odds over raising the nation’s $2.4 trillion cap.  The Conference Board, a business research group, said Tuesday that its confidence index fell to 60.8 last month, down from 66.0 in April, as Americans grew more pessimistic about the economy.

Economists are similarly downbeat, revising expectations downward for second-quarter growth; Goldman Sachs last week notched its forecast down to 3% from a previous 3.5%.  “If you had to identify one thing in particular that’s been responsible for the subpar nature of this cycle, it would be housing,” said Joshua Shapiro, chief U.S. economist for MFR Inc.  “The bad news is I don’t expect it to turn around any time soon.”  Economists say it could take years for the housing market to return to health and it will take faster growth, strong job gains and improvements in consumer confidence to make it happen.  Residential construction has subtracted from growth in gross domestic product, the broadest measure of all goods and services produced in the economy, in four of the seven quarters since the recession ended in June 2009. That’s a contrast with the past three recoveries when housing added to economic growth for at least a year and half following the downturns in the 1980s, 1990s and early 2000s.

Two years ago, home prices stopped falling as low prices, along with home-buyer tax credits, spurred a surge in sales. But demand collapsed last summer after those credits expired and left markets without enough buyers to absorb a steady flow of foreclosed properties.  Home prices have tumbled for eight straight months, and in March they slid to their lowest level since the start of the 2006-2009 downturn, according the S&P/Case-Shiller monthly 20-City Composite Index.   Indeed, 12 of the 20 metropolitan areas tracked in the index posted new lows in March. Only the Washington, D.C., and Seattle markets saw month-to-month growth of 1.1% and 0.1%, respectively. Minneapolis led the declines, with prices falling 3.7%; on an annual basis, its prices were down 10%.

Insight from Diana Olick:

“Earlier this week, when we got the report of a bump up in sales of newly constructed homes, I cautioned that the home builders are still facing huge competition from distressed properties (foreclosures and short sales). Today we have some new numbers showing just how big and how widespread that competition is.   Foreclosed properties made up 28% of all home sales nationwide in the first quarter of this year, according to RealtyTrac.  That’s up slightly from Q4 of 2010, but not the record 29% we saw a year ago. More than 107,000 bank-owned (REO) properties sold, which is actually a drop from the previous quarter and a bigger drop (36%) from a year ago. Foreclosed properties sold at a 35% discount to their non-distressed counterparts.

So here we have fewer selling but making up a larger share of total sales. That’s not particularly healthy. We need to get more of these properties sold, because as I showed you on the blog Tuesday, there are hundreds of thousands of them and millions more in the potential pipeline.  This is not exactly news, but every time I report it I get the argument back here on the blog that these distressed sales are only happening in certain states and don’t affect the overall housing market. There is some truth to that, at least the first part. I asked RealtyTrac to pull some other numbers for me to show what I’m talking about.  More than three quarters of all distressed sales (78%) were in just ten states.  You can see the usual suspects, California, Florida, Arizona, Nevada and much of the Mid-West. That’s a problem for the builders because so much of their most recent inventory is in those states. But what about the rest of us?  It begs two questions:

1) If I don’t live in these states, why should I care?
2) If the worst is only in a few states, then why are home prices falling nationwide?

Here’s RealtyTrac’s Rick Sharga’s explanation:  ‘The 10 states include several of the states with the highest number of overall home sales; driving prices down in California and Florida has much more impact on national averages than fluctuating home prices in Alaska and Wyoming.  It’s not all about geography.  While foreclosure sales obviously depress the price of homes nearby, they also affect prices by limiting new home sales, which typically help drive home prices up. But foreclosure sales are only one of the factors behind falling home prices. Weak demand is probably the biggest driver.’

And I contend that weak demand is driven by several factors, not the least of which are credit and confidence. The banks are looking at their overall book of business and the losses they’re still taking; the losses are concentrated in those states that are continuing to suffer the most. Regardless, they spread that pain nationwide in their lending standards, tightening up to the point that many borrowers far far away from California can’t get a loan.  Confidence, or lack thereof, is a bigger factor than we often give it credit. Yes, the big bad media report all these numbers, and yes, some of the worst of it is nowhere near where you live, but you see and process it. It affects your confidence and consequently how you act.

Housing demand is nowhere near where it should be, and the mix of what is selling is all on the low end. Investors with cash and first time home buyers are bargain hunting, and that pushes the price average/median down in every market. As prices fall on real sales, thousands of borrowers fall underwater on paper…on their mortgages, and that puts them at higher risk of foreclosure.  ‘Residential home sales fell by 18% in Q1 2011 compared to Q4 2010 and by almost 32% from Q1 2010,’ notes Sharga. Foreclosures and distressed sales, even if they’re not in your back yard or in your state, affect your home’s value because they affect the overall demand for your home.”

All told, the nation’s biggest banks own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider.  In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.  Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales.  With the spring home-selling season under way, real estate prices have been declining across the country in recent months.

Although sales have picked up a bit in the last few weeks, banks and other lenders remain overwhelmed by the wave of foreclosures.  In Atlanta, lenders are repossessing eight homes for each distressed home they sell, according to March data from RealtyTrac.  In Minneapolis, they are bringing in at least six foreclosed homes for each one they sell, and in once-hot markets like Chicago and Miami, the ratio still hovers close to two to one.

Before the housing implosion, the inflow and outflow figures were typically one-to-one.  “It remains a heavy weight on the banking system,” said Mark Zandi, the chief economist of Moody’s Analytics.  “Housing prices are falling, and they are going to fall some more.” Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes.  As a result, home values nationally could fall 5% by the end of 2011, according to Moody’s, and rise only modestly over the following year.