Sell My Short Sales

The Moody’s/REAL Commercial Property Price Index (CPPI) published last week showed a decline of 3.9 percent in real estate values from August to September. Prices in September were 37 percent lower than they were a year ago, and 43 percent below the index’s peak in October 2007.

Commercial property prices have clearly taken a nosedive, but Moody’s says the pace of decline appears to be moderating. From February to May of this year, the Moody’s/REAL CPPI averaged a drop of 4.6 percent, falling more than 7 percent during the months of April and May. But looking at the June to September four-month period, the average decline has retreated to just 3.2 percent.

Still, the agency’s analysts expect commercial property values to fall in the coming months by as much as 12 percent more from the October 2007 peak before experiencing a modest rebound to be followed by a long, gradual recovery.

In a report accompanying the agency’s price index, Nick Levidy, Moody’s managing director, explained that cash flows for properties with short-term lease structures, such as hotels and multifamily, are likely to hit bottom in 2010 or early 2011. The bottom for office, retail, and industrial properties, he says, will take longer to form.

“We believe that valuations will rebound off the bottom and settle in for the longer term at levels 30 percent to 40 percent below the market top as liquidity and investors return to the sector and property cash flows begin to recover,” Levidy said.

According to Levidy, in general, commercial real estate lags the overall economy and is dependent on both business and consumers for demand, but he says specific property types are strongly affected by certain macroeconomic metrics. “Employment growth is fundamental, for example, to the office property market,” Levidy said. “The health of the residential housing market is a key for the multifamily sector and retail properties are greatly dependent on rising consumer confidence.”

Cash flows from properties that back commercial mortgage backed securities (CMBS) will recover slowly over a period of several years, Moody’s said in its report. In addition, refinancing risk on CMBS will grow as maturities near on bonds issued during the 2007 peak of the market.

Popularity: 27% [?]

To All California Realtors/ Investors/ Wholesalers/ whomever:
California Revitalization Group is in need of your short sale listings:

My name is Bernie Germani, I work with a group of CASH BUYERS and were interested in working with you and your team, we would like to purchase at least 5-10 Short Sales each and every month, we can have a CASH offer within 24-48hrs on all properties that fit within our buying criteria.

Have you been trying to do Short Sales, but can’t get them completed?

Do they take too much time?

It’s time you discovered:
California Revitalization Group, Exit Real Estate Group, and Short Sale Wealth Builders!

No fees or costs of any kind to you the Realtor, or your seller in default
Get your FULL listing commission of 5-6% on average
Let us negotiate the short sale discount, saving you many hours of time and increasing your success rate
You, as the Realtor, will retain the listing AND your client
No more long phone calls and frustrations dealing with loss mitigation
Access the progress of your short sales online, 24/7!

In other words….

YOU list and sell the property
YOU make your commission
WE do the short sale negotiations

It’s THAT SIMPLE!

That leaves you time to do what YOU do best:

• Finding Sellers
• Finding Buyers
• Marketing and Listing Properties
• Cash Big Fat Commission Checks!

Popularity: 36% [?]

There is news that I just saw that was astounding to me, and could make for a great run for investors in the short sale market.

A record-high 23,117 trustee sales are scheduled for sale Monday, November 30^th coverage area (CA, AZ, NV, WA, OR).

Since state laws do not allow trustee sales on state holidays, we are now hit with an overabandunce of sales today. The total number of trustee sales per day for the region is typically five to six thousand.

To cover Thursday, Friday and Monday, the number of sales should reflect three days (15,000 – 18,000). In addition, trustee sales typically slow during the holidays and see a bump in January.

So it’s a little surprising to see four-day’s worth of sales from a three-day period right after Thanksgiving. That being said, it doesn’t mean 23,117 families will lose their homes on Monday. Lately, ninety percent of trustee sales are just postponed to another day.

Susan Park, a short sale investor in Southern California mentioned “that she could not believe all the trust deed sales scheduled for today just in Los Angeles County.”

Jeff Coga, said “more than likely half of those foreclosures will get postponed.”

Bernie Germani, another short sale investor said in his market place Lakewood, Long Beach California that he is starting to see the affects of the mortgage meltdown starting to affect the higher end luxury homes, and a lot more people from the higher economic financial status is now starting to call me more in need of help.”

Jesus Yinh, and Exit Real Estate Group Realtor, said that he got a large number of calls over this Thansgiving weekend to help new clients from foreclosure.”

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Fannie Mae announced a program aimed at helping ordinary home buyers compete with investors for foreclosed homes. We are not sure this is a right choice, because across the nation real estate investors have less than 10% foreclosure rate.

Under the program, dubbed First Look, Fannie plans to consider offers only from potential owner-occupants and certain public-housing entities during the first 15 days in which a foreclosed home is on the market.

Fannie and its main rival, Freddie Mac, are government-controlled companies that buy or guarantee home mortgages. They are among the biggest owners of foreclosed homes. As of Sept. 30, Fannie said it had 72,275 single-family foreclosed homes on its books. Freddie had 41,133 as of that date.

Bernie Germani said” many of us real estate investors can move faster on home purchases because we are able to pay cash and don’t have to wait to qualify for a loan and get an appraisal. Investors often turn the homes into rental units or resell them to other buyers for a quick profit. People seeking to take advantage of the drop in housing prices to buy their first homes have been grousing that they often lose bidding wars to investors.”

Fannie said it also would help owner-occupants acquire homes by reducing deposit requirements to as little as $500 and giving them a chance to renegotiate offers after appraisals. Such buyers also are to be allowed as many as 45 days to complete the transaction, up from the usual 30 days.

A Freddie spokesman said the company has similar pilot programs and is helping owner-occupants pay closing costs.

Fannie announced Tuesday that 4.72% of the single-family home loans it owns or guarantees were 90 days or more overdue in September, up from 4.45% in August and 1.72% in September 2008.

Jesus Yinh, and Susan Park, short sale investors in Southern California said ” We are not sure why Fannie would even consider this program. Us investors are the ones who are helping the economy not adding to the foreclosure challenges, but at the same time we welcome the competition of non-investors.”

Popularity: 17% [?]

Do you remember when the mortgage meltdown crisis started and all we could hear was how the mortgage companies allowed this by giving mortgages to those who could not afford one in the first place?

Do you remember how we were told that it was the “stated incomes” that anyone could just claim an amount they earned that would qualify them for a mortgage.  Then as the bubble was deflating in the real estate market we were seeing foreclosures on the rise, and continuing to this day.

Well today there is a new story that is unfolding to the old foreclosure story.  We are now seeing people with good credit who did not use stated incomes in order to get their mortgage, now going in default.  We are seeing fixed rate home loans that were made to good credit applicants now in foreclosure, a big difference from a year ago.  It was the sub-prime and adjustable rate mortgages that was driving the housing crisis then, and that is not the case today.

A report from the Mortgage Bankers Association found that an alarming large percentage of mortgages were either in foreclosure or behind, 14 percent as of the end of September.  This was a record high for the ninth quarter in a row, which is a very scary situation, because this could mean we have not seen the bottom of the real estate market despite what other reports on TV, and the news are telling you.  This report went on to say that it was unemployment that was the main cause of foreclosures.  We have seen prices fall on real estate and that gave us a little “bump” in the market during the summer.  There is a new wave of foreclosures that will hit the market within the next year and that will drive the price of real estate down further.

We here in California along with Nevada, Florida and Arizona make up 47 percent of all new foreclosures. 

How much lower can we expect real estate prices to fall?  A chief economist at Moody’s Economy. com, Mark Sandi is predicting that on a national basis, home prices will fall another 10 percent between now and next fall.  Will this be the bottom?  Susan Park, an Exit Real Estate Group Realtor said “In her opinion it is all going to depend upon the private sector and jobs.  If unemployment continues to rise then we will see more and more foreclosures and the price of real estate falling further than 10%. In my market I’m now seeing more high end homes going into foreclosure.”

Today we are seeing fixed rate, prime loans to borrowers who had good credit accounting for almost 33 percent of new foreclosures and that number is up over twelve percent from a year ago. These figures are based on the last quarter.  FHA loans are beginning to see problems in their loans; over 18 percent are either behind or in foreclosure as of last quarter.

The current real estate situation is like a cancer that is quickly spreading across all sectors of the financial landscape and is affecting all sectors of employment.  As we continue to see layoffs, downsizing and underemployment, we will continue to see more and more foreclosures and consequently the value of real estate falling more and more.  The job market will drive the number of foreclosures not Wall Street.  Until we get a handle on just how and where we, as a nation, are going to increase jobs, we will continue to see this spiral go deeper and get tighter and tighter.

Jeff Coga, a short sale real estate investor in California said “that he hears so many sad stories as he is in the trenches every day helping people from fore closure that he wishes he could help more people, but many times the banks are not interested in peoples situation and foreclose anyways.

Bernie Germani, another short sale investor said “People are in such need of hope, and there is a lot of desperation in California, and he has noticed many homeowners just giving up hope, because their loan mod failed,  that was their last shot at staying in the home, and now they just thrash the house before giving the house back to the bank.”

Popularity: 28% [?]

According to a securitization research note by Barclays Capital, short sales have been boosted by mandatory and voluntary foreclosure prevention efforts that prevent mortgages from entering real estate owned (REO) status.  As federally-funded modifications made through the Home Affordable Modification Program (HAMP) grow in frequency and lenders are expected to hold off on foreclosure proceedings, the REO pipeline shrunk, according to BarCap researchers. The foreclosure prevention efforts have had the effect of “artificially” boosting short sales.  “The artificial constraints to foreclosure auctions have resulted in a reduction in REO stock,” BarCap said. “As a result, the net volume of REO liquidations has also dropped.

As short sales are not affected by moratorium, their rate held up and their overall share in distressed sales increased.  It has now risen more than 10 points from the lows to about 35% of overall liquidations. It remains to be seen if this increase will sustain itself once the large number of loans sitting in foreclosure are finally released into REO.”  BarCap researchers pointed to the difference in severity seen in foreclosure and short sale scenarios as one of the drivers behind servicers choosing short sales.

Servicers that pursue foreclosure on non-performing loans held within securitization have to make principal and interest advances until the loan’s liquidation, BarCap said. If the asset declines in value during the liquidation timeline and it neighbors other REOs, the final selling price will likely come in far below the current broker price opinion (BPO), which leads to high severity.  Short sales, on the other hand, pose a shorter timeline during which fewer principal and interest advances are needed. The asset has less time to depreciate, and borrowers have a strong incentive to maintain the property in order to sell it. After all, a better-maintained house attracts stronger bids, reducing overall severity in comparison with the REO liquidation scenario.  A short sale also tends to cost the lender less than foreclosure and it spares the borrower the negative credit score implications.

Jeff Coga, a California short sale investor said “We don’t need to do transactions outside of California because we have our hands full with all the short sales that Realtors are bringing to us to write a No contingency offer on and help their clients from a foreclosure. Realtors are now flocking to us, because they know we can get these transactions closed.”

Susan Park, an Exit Real Estate Group Realtor, said in the Los Angeles area west of down town  short sales make up about 1-3 transactions in that market space.”

Popularity: 26% [?]

Housing stats slowed significantly in October, falling by 10.6 percent to a seasonally adjusted annual rate of 529,000, the Census Bureau and HUD reported yesterday.

Housing starts are 30.7 percent below the October 2008 rate of 763,000. Single-family housing starts in October were at a rate of 476,000; this is 6.8 percent below the revised September figure of 511,000. The October rate for units in buildings with 5+ units was 48,000, down 33.3 percent from 72,000 in September.

Total housing stats are at their lowest level since April, single-family starts are at their lowest level since May and multifamily starts are the lowest in the history of the series, which goes back 50 years.

All regions saw declines in single-family starts; the Midwest had the smallest decline with 4.8 percent, followed by the West, down 5.9 percent; the South, down 7.3 percent; and the Northeast, down 9.6 percent.

Privately owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 552,000. This is 4.0 percent below the revised September rate of 575,000 and is 24.3 percent below the October 2008 estimate of 729,000. Single-family authorizations in October were at a rate of 451,000; this is 0.2 percent below the revised September figure of 452,000. Authorizations of units in buildings with five units or more were at a rate of 85,000 in October.

Privately owned housing completions in October were at a seasonally adjusted annual rate of 740,000. This is 1.9 percent above the revised September estimate of 726,000, but is 29.9 percent below the October 2008 rate of 1,055,000. Single-family housing completions in October were at a rate of 528,000; this is 10.7 percent above the revised September figure of 477,000. The October rate for units in buildings with five units or more was 200,000.

Earlier this week, the National Association of Home Builders reported that its Home Builder Index remained unchanged at 17. According to the index, a reading below 50 indicates negative sentiment; still, the index is up from its low of 9 earlier this year.

Additionally, the Labor Department reported yesterday that its Consumer Price Index rose by 0.3 percent in October, with core inflation (excluding energy and food) rising by 0.2 percent.

Data show the higher numbers were driven by an increase in energy prices in October, as well as higher prices for new cars, used cars and used trucks, all of which saw their highest price jumps since 1980. The Labor Department said the increase in new and used car prices, fueled in part by the Cash for Clunkers program, represented 90 percent of the increase in core inflation. Cash for Clunkers increased demand for new cars and reduced inventory.

Jesus Yinh, a Realtor with Exit Real Estate Group said ” that in the mid Wilshire area of Los Angeles I have seen a slight drop in value the last 6 months, but it appears to have affected the commercial market more than residential.”

Popularity: 10% [?]

According to data released by ForeclosureRadar.com, foreclosures in California increased 22.24% from September to October.  Last month’s foreclosures increased 20.95% from October 2008, which were 42.56% below California’s peak month of July 2008.  But since then, the inventory of real estate owned (REO) properties has grown 131.36% in California.  “While we continue to see a steady stream of properties entering foreclosure, relatively few are completing the process and being sold at auction despite the increase this month,” said Foreclosureradar.com CEO Sean O’Toole.  “The bigger picture is that more and more homeowners are finding themselves upside down in foreclosure limbo,” O’Toole added, “some hoping for a loan modification or short sale, while others are just waiting for a knock on the door.”  The number of foreclosures initiated in October remained level with September levels but this is due in large part to recent legislation enacted in California that will temporarily slow the foreclosure process. The majority of properties foreclosed on in October were originally purchased with mortgages originated between January 2005 and December 2007.

Jeff Coga, a short sale investor in So. Cal. said ” he has seen a trend in the number of trust deed sales in Norwalk, California being reduced, but an increase in the number of short sales on the market.”

Bernie Germani, another short sale investor in So. Cal. said he is seeing in his market place that banks are postponing the trust deed sales sometimes 3-5 times, and homeowners are staying in their homes longer without making mortgage payments.”

Jesus Yinh, and Susan Park, Realtors with Exit Real Estate Group, said “that their inventory of REO listings they currently have multiple offers on, and are moving quickly, but the servicers they work for which include many large banks, are scrambling for inventory to allow us to keep unloading their assets to the Los Angeles County market place at a discount.” Exit Real Estate Group is one of the largest REO asset managing companies in the mid Wilshire area of Los Angeles.

Popularity: 54% [?]

Barbra Streisand obviously wasn’t singing about Bond prices or interest rates in her 1980’s song. But those lyrics were fitting last week when the Federal Reserve stepped in with more buying of Mortgage Backed Securities (MBS), helping Bond prices recover from news of a weak Treasury Auction. Overall, home loan rates bounced around last week and ended the week very slightly improved.

But that said, we can’t “push our luck” and think the Fed will continue to step in and help support home loan rates…we have to remember that the Fed is actually winding down exactly this type of buying support.

As you can see from the chart below, the Federal Reserve’s purchases of MBS peaked at an average of $25 Billion per week back in May – and they are getting closer every day to being done spending their allotment of $1.25 Trillion. Since they announced that their remaining purchases would be rationed out until the end of March 2010 – but that they wouldn’t be making any additional purchases beyond the original commitment – the average purchases per week have been moving lower, down to $14 Billion per week so far in November.

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Chart: Fed’s Purchase of Mortgage Backed Securities (Weekly Averages Per Month)

Why is this important? Because home loan rates are based on MBS – so when the Fed agreed to be a big buyer, it helped provide a market and helped keep MBS prices high and home loan rates low. So as the Fed’s program wraps up and eventually stops, home loan rates are quite likely to be on the rise. So while rates are still very good, they may not be for long. Let’s be sure to talk if you haven’t yet explored how the current rate environment might benefit you or someone you know.

Popularity: 11% [?]

Wachovia Corp. is offering its borrowers money for selling their houses short, rather than going into foreclosure. Are the times changing for lenders to get your short sale approved?

Homeowners with Wachovia mortgages who are upside down on their property can get 1 percent of the price of their short sale, with a minimum of $2,500. The incentives only kick in once the deal closes.

In a short sale, borrowers get their lenders’ permission to sell their property for less than they owe in loans.

Last month, short sale transactions made up 37 percent of all home sales in California, and they’re expected to make up a larger part of the market in the next two years, according to an analysis by market research firm Campbell Communications.

Homeowners are often unfamiliar with the concept of a short sale, and the deals have a well-earned reputation for causing heartburn —- often taking months, and months to get approved by lenders. As a result, many homeowners allow themselves to fall into foreclosure, because they want to put this siutation behind them.

Lenders typically say a short sale is quicker and less costly for them than a foreclosure, but Wachovia is being unusually aggressive in converting potential foreclosures into short sales.

The program was originally intended to be temporary, but there’s no fixed end date for it yet. A source in Wachovia’s short sale unit said “the program will definitely run through November, and probably beyond”. The source preferred not to be named for fear of getting fired.

In Southern California, many of Wachovia’s mortgage customers originated their loans with World Savings Bank, which Wachovia took over in 2006. Last year, Wells Fargo & Co. took over Wachovia, but the integration is not complete. While the short sales unit is still operating as Wachovia, the communications are through Wells Fargo.

Depending on the situation, Wachovia may offer a small sum of money generally an amount that can help with moving expenses. In exchange, the former owner agrees to leave the house by a specified date and that the property will be left in a good and clean condition.

Wachovia is promoting the program quietly by inviting real estate agents to seminars run by employees from the bank’s short sale unit. At the moment the only seminars available in California are taking place in the San Francisco Bay Area, but they will be coming to Southern California early next year, the Wachovia source said.

Another key feature for borrowers is that Wachovia’s program leaves them with no lingering mortgage debt. Across the nation, attorneys have reported that the fine print on short-sale contracts from major lenders hold borrowers responsible for the unpaid mortgage balance, and lenders have pursued collections in court after the sale.
Jesus Yinh, heard about the incentives through a professional organization. He called Wachovia, confirmed what he’d heard, and began seeking out Wachovia customers through his real estate association

“It’s a big deal,” he said. “Most people who are short selling don’t have money to get another place. At least they’ll have some money to get a mover or get a rental.”

The cash incentive is only one of several steps Wachovia is taking to promote and streamline short sales. The lender dramatically curtailed the amount of paperwork short sellers must provide to get a sale approved, allowing them to get a short sale closed in as little as 10 days.

Wachovia is planning to shorten that time further by asking real estate agents to alert it to short sale listings so it can order an appraisal before a bid is made. When a bid comes in, Wachovia will know whether it’s in the range of negotiation.

Bernie Germani, a Southern California short sale investor said ” this program has been a blessing to many of his clients he works with to save their home from foreclosure. The extra money is a great to start moving.”

Jeff Coga, a real estate investor in Southern California also said ” His program of helping 90 families in 90 days from foreclosure, will be obtained because of this program from Wachovia.”

Popularity: 30% [?]