Where is the inventory???

Something is amiss. CoreLogic®, which tracks virtually 90 percent of all mortgages and the circumstances of those houses, said that the shadow inventory is in its words: ”persistent” at 1.6 million homes that are delinquent or in some part of the foreclosure process – about 6 months supply. This doesn’t include the estimated 3 million properties that are on the market that are seriously delinquent, in foreclosure or in REO.

Where is the shadow inventory the largest? Combined, California, Florida, Illinois already represent about one third of all shadow inventory. If you add that of New York, Texas and New Jersey, you get to fifty percent. However, according to CoreLogic, “In some hard-hit markets, the demand for REO and distressed property is now over-stripping supply.” It’s not only REO and distressed, it’s all property.

Where? Arizona, and in particular Phoenix, a hard hit area that now appears to be an owner-occupied buyer’s nightmare. According to Andrew Waite, publisher of personal Real Estate Investor Magazine, there isn’t a lot of inventory to buy, and when there is inventory, it is being snatched out of the hands of people who want to live in these homes by investors with cash – even when the cash price is lower than the price that will require a mortgage. Mortgages are hard to come by these days; evidently, cash is not.

The issue with paltry inventory is not limited to the distressed states. The heretofore pattern of buy-sell-trade up has been shut down by tougher lending standards making it really difficult for first time buyers to get loans to buy their first property. This, of course, makes it challenging for the move up buyers who would sell to these first time buyers move on up. In addition, sellers unwilling to sell at today’s very low prices limit both housing supply and impede the important move up buyer market.

With all the distressed housing and all the plans to help people who have been displaced, caused to be underwater, etc., it’s an unexpected thing that in so many places you are hearing the refrain: “Where’s the inventory?”
by Tracy Velt

Should I stay or should I go???

In 1981, English punk rock band The Clash wrote “Should I Stay or Should I Go?” about the rocky personal relationships between members of the band when facing the dilemma of sticking together or breaking up. The lyrics could not be more appropriate for homeowners buried in a mountain of negative equity and wondering what to do. After all “if I go there will be trouble and if I stay it would be double.”

The first step in answering this question is to find out if you qualify for a modification or if you can refinance using the HARP program to take advantage of today’s low interest rates. The process of getting a modification can be very frustrating. It’s “always tease, tease, tease, you’re happy when I am on my knees.” It not only takes a while to get approved, you must keep in mind that the lender does not have a legal obligation to offer or approve a loan modification. It is important to note that they may dual track your file, which means that while they are considering the modification they are moving forward with the foreclosure. Sometimes they “set you free” and foreclose in the middle of your modification application.

Let’s say you get a modification. I have a friend who was approved for what at first appeared to me to be an unbelievable loan modification. The modification did not lower the principle but did lower the interest rate to just 2 percent and locked that in for 30 years! This reduced their payment to the same amount that they would pay to rent a similar property. As such, it certainly seemed reasonable to stay – they get to keep their credit intact and remain owners, while paying no more than they would in rent anyway. Plus the payment remains fixed for 30 years, while rents would increase. But that analysis is incomplete. The question that remains is their status when they might want or need to sell, and when do they break even given the substantial negative equity that would remain?

Life events like divorce, death, job loss, job transfer, and others happen. Also sometimes folks just want to relocate. Based on our analysis, and assuming long-term home price appreciation rates, these folks would need to stay until 2026 to simply BREAK EVEN vs. paying rent. Worse, unless they use the rent savings to pay down principal, they’ll be stuck upside down in the property, and unable to sell without bank approval of a short sale until 2033. So whether or not it is a good deal for them depends a lot on how long they plan to stay.

For my friends, the best financial decision appears to be to try to short sell their current home, or if necessary let the bank foreclose. If they then rent for 3-5 years they should be able to qualify again to buy. Assuming interest rates don’t skyrocket, or some other major change doesn’t occur, this will save them over $100,000, and give them the flexibility to move if needed without being stuck in their current prison of debt until 2033.

Unfortunately, few homeowners facing this decision have the financial skills to really analyze the various scenarios, and few will consult a qualified accountant or other professional to do it for them.

This analysis is different for every homeowner facing this question. How far under water they are, and the terms of the loan modification are clearly important. It also requires some assumptions about price appreciation, rent inflation, and future interest rates. And importantly, it requires some serious thought as to how long they plan to stay, and perhaps some soul searching on the moral implications of walking away.

Bottom line, this question can be answered only by the homeowner based on their current situation and what is best for them. Would you stay or would you go now?

Is Today a Good Time to List Your Home as a Short Sale??

If you are one that is on the fence and thinking about should I or shouldn’t I???  My answer to you is “Yes”.  Now is the time.  The two main reasons in my opinion is: Banks are becoming more sensitive to the home owners needs of getting rid of the home and secondly agents are out there selling more of the short sale homes due to the banks becoming more cooperative and a better track record of a successful closing.  Another reason why more short sales are being sold in TODAY’S market is due to the lower inventory of REO’s (foreclosed homes).

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Short Sale Myths cont’d

Myth #3 – There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure

This is a myth that probably hurts homeowners the most. Many do not realize that foreclosure is a process, and that there is time to make decisions that may result in better outcomes.

The foreclosing party—in most cases a lender—can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete. *

For more information on your options, call us today at 925-998-5902 or 209-836-0896. Discover the truth about the short sale myths. Visit this site tomorrow for more information.


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Foreclosure: What it really means and how to avoid it

Are you stressed about the late notices that the bank has been sending? Worried about foreclosuring on your home? Here are a few ways to avoid foreclosure….
* Reinstatement: bring the loan current
* Forebearance: Temporary repayment plan
* Refinance: New loan with reduction in monthly payments
* Loan Modification: Modify original loan terms
* Sell the Property: Must make loan current
* Rent the Property: Must make loan current
* Short Sale: Negotiate with bank to accept sale under loan amount
* Deed In Lieu of Foreclosure: Friendly foreclosure
* Bankruptcy: Will stall foreclosure but not prevent it

You have options. Call us today to get the confidential, caring help that you deserve. Learning about your options will allow you to make an informed decision and reduce the stress. Utilize our CDPE (Certified Distressed Property Experts) staff to negotiate with your lender. Call today and don’t let time run out.  Clare LeForce 209-836-0896 / Karen Ross 925-513-2702.

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