2010 Year Of The Short Sale

Ada county had 77 short sale properties  fund and record in the month of February 2010. Prices ranging from $531,700 down to$53,000. Ada county includes the cities of – Boise, Garden City, Eagle, Meridian, Kuna and Star.  That is a 100% increase of short sale homes closed from the same month last year, are we seeing a trend? 2009 highest sold price was $700,000 and the lowest was $120,000.

Canyon county had 32 short sale properties fund and record in the month of February 2010. Prices ranging from $359,000 down to $42,000. Canyon county includes the cities of – Nampa, Caldwell, Kuna, Melba, and Middleton.  That is a %90 increase of short sale homes closed from the same month last year, I ask again are we seeing a trend? 2009 highest sold price was $417,500 and the lowest was $71,070 (not including a manufactured sale of $12,500)

So for comparison we have the month of February in 2009 and again the same month for 2010, closed short sales are up while prices have continued to go down. I do feel that values should start finding the floor while more and more short sales get completed. While loan modifications are still trying to make sense (will they write principle balance down to current market value?) or will 2010 be the year of the Short Sale! April 5th is the deadline for new short sale rules to be rolled out which should increase the success of short sales closed. Sum it up short sales sold are up and the prices are down- Great time to buy and also could be a great time to take a look at your home if it is underwater and you have trouble making payments- If your are wondering what your options are and would like assistance please don’t hesitate and call Joshua Groesbeck 208-353-7131 or visit http://www.homeswithjosh.com or http://idshortsale.com

Certified Distressed Property Specialist 208-353-7131

statistics are from the intermountain mls

Overwhelming Negative Home Equity

With more and more evidence of more and more borrowers walking away from their mortgage commitments due to overwhelming negative equity, I got to thinking: What exactly is the monetary tipping point for a homeowner, someone occupying the home, hanging pictures on the walls, perhaps raising their kids in the second and third bedrooms, going to the neighborhood block parties…what exactly is the negative equity number that makes them say, “We’re outta here.”

Negative $70,000.

At least according to First American Core Logic. FACL put out its quarterly negative equity report today, showing that the number of “underwater” loans is rising, from 10.7 million in Q3 to 11.3 million in Q4 or 24 percent of all borrowers from 23 percent.

What interested me was a paragraph lower down in the report:

“The rise in negative equity is closely tied to increases in pre-foreclosure activity and is a major factor in changing homeowner default behavior. Once negative equity exceeds 25 percent, or the mortgage balance is $70,000 higher than the current property values, owners begin to default with the same propensity as investors.”

This behavior is apparently measured by the actual data, that is, the default rates of investors vs.. owners and comparing that to loan-to-value ratios.

Source: Diana Olick

This is a measuring stick of how most home owners view their property. Take into consideration that there still are many people that aren’t quite 25% negative equity but do have loss of income and not enough equity to still sell their home outright that may still qualify for short sale. For more information go to http://idshortsale.com also more information at www.homeswithjosh.com or simply call Joshua Groesbeck at 208-353-7131

Buying Foreclosure Or REO

In the world of real estate there are many, many types of properties that you can buy. The majority of the time people hire a real estate agent to help them buy a property that is listed on the MLS (multiple listing service) of the area that they are looking for. Whilst most people go through this route, other, perhaps more astute, or bargain hunting people, look at houses that are either in foreclosure of REO (Real estate owned) by a bank or Loan Company.

A common misconception that people outside of the real estate industry make believes that foreclosure and an REO purchase is the same thing. Although they are similar, they are in fact different; more precisely they are corollaries of each other, with an REO being a direct result of a failed foreclosure sale. To understand the difference between the two and how they vary from each other it is best to define what each is, and their respective merits.

The term Real Estate Owned propriety is sometimes used ambiguously, but has a specific meaning in the real estate industry; a property that has been fore-closured on by a bank or Loan company and has reverted back to the ownership of the lender. So as already explained above an REO is the result of property that has been foreclosed on, and is produced only as a result of a failed foreclosure sale.

Knowing that an REO is the result of a foreclosure leads us to wonder what is foreclosure, what are the benefits of buying a house that has been foreclosed on and what are the reasons why they fail to find a buyer.

Under the terms of foreclosure a bank or Loan Company reposes the property due to the tenants inability to continue with payments on their loan; that they used to purchase the property the first instance.

Once the foreclosure notice has been issued and foreclosure has started the bank or Loan Company legally has the right to sell the property; regardless of whether the tenants haven’t moved out yet.

In order to purchase a property in a foreclosure sale there are a number of items that the bidder needs to successfully complete. Firstly the buyer has to submit a minimum bid that includes the following:
The loan balance on the property. All accrued interest on the property Attorneys fees All costs associated with the foreclosure process.

Regardless of the above, in order to bid at foreclosure the buyer must also have a cashier’s check in hand for the full amount of the bid. If the buyers is successful then they will be offered the house in its ‘as is’ condition; complete with tenants who need evicting and liens secured on the property.

Because of all the difficulties and lack of concrete benefits in buying at foreclosure, most people who want to buy a foreclosed property will go through the REO route.

The REO method of purchase offers much more benefits, incentives and less stress than the foreclosure method.

When a bank or Loan company takes back a property they then have the property listed as a sellable asset on their books. The role of the bank is to maximize the wealth of its shareholders. If the foreclosed property can be sold to release cash to invest, then this is the main motive for the bank or Loan Company; sell the property and invest the cash.

In most situations a bank will be looking for a quick sale, and as such will offer many incentives and benefits to prospective buyers:
Savings of up to 20% off the market value of the property Market an REO purchase as the most simple way for first time homebuyers and experienced investors to buy properties Give prospective buyers have immediate access to the property for home inspections Remove all back taxes and liens Allow negation on rehab costs, interest, closing points, loan amount, etc. Describe the purchase as nearly 100% risk-free Accept a less than normal down payment

Although the benefits of an REO seem to out weigh those of a foreclosure purchase you should not take them at just face value; you should always look into exactly what you are getting and what you are liable for, should you choose to purchaser a property.

In a REO sale the bank will evict the tenants (or you could leave them there and let them pay rent), remove any liens etc and do the basics. Most of the time however the bank will not make any repairs to the house and want to sell it to you in what is called ‘as-is’ condition: the condition the house was in when it reposed it. IF this is the case you should seek the services of a home inspector, to find out the sate of the property and to help you decide whether you wish to continue the transaction.

Although a bank owned property might look like a good deal on the outside, it is necessary that you do your background research on the property before you commit to any contracts. Your first priority should be to find out what the house is worth in today’s current market; having a comparative market analysis carried out will help you with this aspect of the purchase.

The reality that a bank or loan company is trying to sell its REO property does not necessarily mean that they are going to sell the property at a bargain price; such would be going against their role: to maximize shareholder worth.

If after you have had the property checked you still wish to continue with the purchase you will most likely make the bank or Loan Company an initial offer. Generally the bank’s response will be to counter the offer and ask for a higher price; a standard trick for the industry.

The emphasis will now be on you to decide on what you want to do. If you decide that the price that the bank or Loan Company is asking for does not reflect the market value of the property then you can stop and walk away. If you are happy you can counter their offer and submit a new bid.

It is most likely that the bank or Loan Company will have a whole department to handle their REO transaction, and as such it may take a while to get back to you, as around 3 or 4 people may have to review your offer.

If the bank approves your offer, then great for you! If they reject the offer however you should look at whether you are happy paying more or whether you feel that the price they are asking is either above market value or unacceptable to you.

If you continue with the transaction the bank or loan company will draw up a contract. It is necessary for you to take a good look at the contract and maybe have your attorney go over it with you, as once you sign it you are liable for what it states.

If you have not done so by the time you accept the banks offer you should have the house inspected by a professional. If you are waiting for an inspection, and already have the contract drawn up you should have an inspection contingency written into the agreement, so that you can pull out of any deal if the result of an inspection produce surprises or faults you are not comfortable with. You should always remember that the bank or Loan Company will always want to sell the property ‘as-is’.

You should if possible always consult a realtor or real estate agent before committing to a contract, or indeed making your offer to the bank or Loan Company. If you do have a realtor working for you, you should as him or her to find out from the listing agent the following details about the property, before you come to you conclusion on the offer you will make:
Are there any inspection reports? What repair work has the bank agreed to? Is there a special “as is” form? How long will it take the bank to accept your offer? How do you, or your agent, deliver the offer?

Boise Idaho Quick Facts

*  The greater Boise Valley is comprised of the following fast-growing communities: Boise, Meridian, Nampa, Eagle, Star, Emmett, Garden City, and Caldwell.
* Total Population within a 45-minute draw area: 632,000
* Average Age: 33.1 years
* Average Commute Time: 18 minutes
* Forbes, Wall Street Journal and Inc. Magazine rate Boise as one of the best places in the US to live and work.
* Money magazine rates the Boise Valley as one of the best places to live in the U.S.
* National Geographic Adventure says the Boise Valley is one of the Top 31 Best Live & Play Towns.
* The Boise Valley has a workforce of more than 280,000. Nearly 110,000 of the workforce are degreed workers.
* Workforce within a 45-minute draw area: 330,000
* The overall cost of doing business is nearly a third lower than in California or Washington.
* The cost of living is 96 percent of the national average, and the average cost of a home in the boise Valley is approximately $170,000 compared to a national average of $226,000.
* The Boise Valley is located 430 miles from the seaport terminal of Portland, Oregon; 384 miles south of Spokane, Washington; and 360 miles northwest of Salt Lake City, Utah.
* The airport serves more than 3 million people a year and is less than five miles from downtown Boise.
* Idaho Northern & Pacific Railroad (INPR) provides freight service over four branch lines in southwestern Idaho and northeastern Oregon.
* There have been more patents generated in the Boise Valley than any other region in the country
* Boise and Nampa, Idaho, are ranked as the most secure locations to live in the United States among large metropolitan areas with populations of 500,000 or greater. (Source: Third Annual Most Secure U.S. Places to Live rankings from Farmers Insurance Group of Companies)
* According to the National Census Bureau, Idaho is among the top five fastest growing states in the nation.

Idaho Top Ten In Foreclosure Filings

Idaho has slipped out of the top five for the most foreclosures, but expectations remain that the state will see a continue in its numbers.

RealtyTrac Inc., an online marketplace for foreclosure properties, Thursday said foreclosure filings increased 15% in January, compared to the previous year, but declined 10% from the previous month. Nevada, Arizona, California, and Florida posted top state foreclosure rates during the month. Further, RealtyTrac cautioned that the numbers may increase over the next few months.

While Financial News services writes The post-boom states of California, Nevada, Arizona and Florida still contribute more than half of filings, but Utah, Idaho and Illinois are starting to see foreclosures surge.

Only last week, it was reported Canyon County’s home defaults had dropped off in the last few months of 2009, but they came back with a vengeance in the first month of 2010.

The county’s foreclosures hit a high in January, rising from 214 filed in December to 365 filed in January for a total increase of 70.5 percent, according to IdahoDataProviders.com.

“What this all means is that you should brace yourself for a double dip in the housing market in 2010,” Charlie Nate, president of the foreclosure-tracking company, said in a release. “Look for local prices to still fall another 7% to 10% starting in the next few months. A bottom to the housing market and the beginning of a real recovery is unfortunately still at least one year away.”

Ada County’s number of foreclosures filed dropped 8 percent to 408 in January this year, a 19 percent increase from January 2009.

Short sales dropped 1.3 percent in the two counties in January, a lull which Nate calls the “calm before the storm.” He expects a new flood of short sales this year caused primarily by the U.S. Treasury Department’s Home Affordable Foreclosure Alternatives program, which must be implemented by April 5, 2010. The program requires each distressed property to first be considered for a loan modification, and then evaluated for a short sale or deed in lieu before a foreclosure can be initiated.

In its January 2010 U.S. Foreclosure Market Report, RealtyTrac stated foreclosure filings, which include default notices, scheduled auctions and bank repossessions, were reported on 315,716 U.S. properties during the month. The report also showed that one in every 409 U.S. housing units received a foreclosure filing in January.

Real Estate Owned, or REO, activity nationwide increased 31percent from January 2009, but was down 5 percent from the previous month. Default notices rose 4percent from last year, but dropped 12percent from the previous month. Scheduled foreclosure auctions were up 15percent from last year and down 11 percent from last month.

Despite an year-over-year decrease of about 18 percent in foreclosure activity, Nevada’s foreclosure rate remained highest among the states for the 37th straight month. One in every 95 Nevada housing units received a foreclosure filing during the month, which is more than four times the national average.

Arizona’s foreclosure rate was the second highest among the states in January, owing to a 4 percent month-over-month increase in foreclosure activity. One in every 129 Arizona housing units received a foreclosure filing during the month, the seller of default data said.

In California and Florida, foreclosure activity decreased by double-digit percentages from the previous month, and the two states registered nearly identical foreclosure rates with one in every 187 housing units having received a foreclosure filing.

With one in every 231 housing units receiving a foreclosure filing, Utah registered the nation’s fifth highest state foreclosure rate, although foreclosure activity declined nearly 12% month-over-month.

Other states with foreclosure rates among the nation’s 10 highest were Idaho, Michigan, Illinois, Oregon and Georgia.

Further, RealtyTrac said California, Florida and Arizona posted the three highest state totals in terms of properties receiving foreclosure filings in January. These three states together accounted for more than 44 percent of the national total.

In California, total foreclosure filings were 71,817 and Florida reported 47,069 filings. In Arozona, 21,048 properties received foreclosure filings in January.

Source:IBR

FHA Short Sale Rules

Mortgagee Letter 2008-43 contains the new FHA short sale [a/k/a FHA Pre-Foreclosure Sale (PFS)] program guidelines.  It’s definitely an improvement for anyone involved in shorting an FHA loan.  Here’s some of what you need to know about the FHA PFS:

* They removed the calculation that required the property to appraise for at least 63% of the indebtedness (this is helpful because many properties have dropped below 37% of the mortgage balance).
* HUD used to accept 82% of the appraised value as their net – now it is 88% if it sells within 30-days marketing time, 86% if it sells in 60-days, and 84% after 60 days.
* Prior to ML 2008-43, HUD would pay zero buyer closing costs on an FHA short sale, now they will pay 1% of buyer’s closing costs if the new buyer is obtaining FHA financing.
* They’ve increased the amount allowable to discharge junior liens up to $2,500.
* FHA allows the seller to walk away with up to a $1,000 check at closing

With the increase we’ve had in FHA loan originations, everyone should expect more and more FHA short sales moving forward.  And I’ll conclude with one final comforting comment from our friends at HUD regarding deficiency judgments and FHA foreclosures:

“A PFS sale must be an outright sale of the property.  If a foreclosure occurs after the mortgagor unsuccessfully participated in the PFS process in good faith, neither the mortgagee nor HUD will pursue the mortgagor for a deficiency judgment.

FHA/PFS is becoming a kinder more gentle model.

First Time Home Buyers Time To Buy?

Several upcoming changes will soon increase the cost of buying a home.

Fed will stop buying mortgage back securities on March 31st, 2010

The Fed has purchased $1.25 TRILLION (yes, Martha, that’s a “T”) of MBS in a successful effort to keep mortgage interest rates low and thereby “stimulate” the economy.

No one knows for sure, but removing this “liquidity” from the mortgage market is forecast to result in mortgage interest rates rising to as high as 6% by the end of 2010.

For example $200,000 mortgage, going from a 5% to a 6% interest rate increases your monthly payment by $125, which totals a stunning $45,000 over the term of a 30-year mortgage.

But, if you only keep your home for the typical 7 years, that 1% increase in your interest rate will only cost you $10,500.

First Time Home Buyer Tax Credit ends April 30th , 2010

This incredible (free money to first-time homebuyers!) program has helped thousands of Boise first-time homebuyers, with roughly 65% of all Ada County home sales occurring in the under-$200,000 price range.

Upfront Mortgage Insurance Will increase FHA on April 5, 2010

It will rise from the current 1.75% to 2.25% of the loan amount, which will increase the buyer’s closing costs by $1,000 on a $200,000 loan.

FHA Monthly Mortgage Insurance Will Rise April 5, 2010

This will also increase the borrower’s monthly payment.

Looking For The Bottom

Waiting for “the bottom” could end up costing you dearly because your increased financing costs could easily exceed what you (might) save by waiting for a lower price.

If you’re buying a home for the long term as your personal residence, this may be as good as it gets.

Source:RE News

Idaho Exports On The Rise

Export sales by Idaho companies grew by more than 3 percent from the third to fourth quarters of 2009, totaling $1.12 billion for October to December. Nationally, exports for the same period were nearly flat, at less than 1 percent growth.

Idaho export results in the fourth quarter increased by 5 percent from a year earlier.

“Idaho’s export results for the fourth quarter and for the year mirror the national economic conditions,” Damien Bard, administrator of the international division of the Idaho Department of Commerce, said in a release. “The growth shown in the last two quarters provide positive signs of an ongoing return to export health.”

Exchange rates are one factor in economic conditions that remain favorable for Idaho exporters, he later said in an interview. The semiconductor industry, which accounts for a large percentage of Idaho exports, remains down but is showing some signs of recovery, he said.

International sales of Idaho products for 2009 were down 22 percent compared to 2008’s record high, with U.S. exports down nearly 18 percent for the year, the Idaho Department of Commerce said. Significant declines in exports during the first three quarters of 2009 mean Idaho is still behind in its year-to-date results compared to 2008, when the value of state exports set a record at more than $5 billion for the full year. Idaho exports for 2009 totaled nearly $3.9 billion.

The top Idaho export category continues to be semiconductors, but exports of industrial equipment, precious metals, mineral concentrates, poultry and dairy products, fruit and seeds also grew during the fourth quarter.

The top export destinations for Idaho goods in 2009 were: Canada, Taiwan, China, Singapore and South Korea. In 2009, Idaho exported products to 150 countries.

Idaho companies export products ranging from integrated circuits to musical instruments to fresh produce. Idaho maintains trade offices in Taiwan, Mexico and China.

Source:IBR

Idaho Short Sale

An Idaho Real Estate Short Sale of a property, in it’s simplest form, is the process of selling your property for less than what is owed to the lender, with the lenders approval. If you are looking for realtors that do short sales than you have come to the right place, we do Idaho Real Estate Short Sales.

This process is used generally to prevent Idaho Foreclosure, and a home owner can qualify for a Idaho Short Sale if they have had financial hardship and their property is worth less than what is owed to the lender.

Many home owners purchased their homes with adjustable rate mortgage, interest only and even negative amortization loans. These loans don’t provide any payoff of the principle and payments can fluctuate and/or increase over time.

Other home owners have lost a job, had a death in the family or other unforeseen situations that have devastating affects on their financial situation. With their financial situation worsening and home values continuing to decline many people are seeking an Idaho Short Sale as a viable exit strategy.

To see if you qualify go to http://idshortsale.com/

F- 35 In Idaho

The U.S. Air Force has short-listed both Mountain Home Air Force Base and Boise’s Gowen Field as possible locations for the F-35 fighter aircraft. These new missions would secure operations at these bases for the next 50 years. This is no small matter, as these two military installations together provide more than $1.0 billion to the Idaho economy each year. If our bases are not chosen, their current missions could face phasing out in coming years, putting jobs and economic benefits at risk.

Here is how you can help: A series of environmental scoping meetings (in an open house format) will be held throughout February. We ask that you attend the most convenient one to learn more about the missions. Comment cards will be available so you can express your support. A schedule of these meetings is attached.

Idaho’s bases have already made the short list for these new operations; please help us pass this next critical hurdle.

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