Archive for June, 2012

NEGATIVE EQUITY REFINANCING

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The Home Affordable Refinance Program (HARP) is now available to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 100%. Under the HARP Program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed HARP loan.
The HARP Program and HARP 2.0 are available now.
For a full description of this great program and to see if your loan qualifies go to http://www.harploan.org/faq.html
Here are some recent statistics to illustrate the success of HARP 2:
o. One in 7 of all refinances in the 1st quarter of 2012 was through HARP.
o. The number of refinances in the 1st quarter was double that for the last quarter of 2011 driven by a sharp increase in those with above 105% Loan to Value (LTV)
o. FHFA officials attribute the increase to the removal of the loan-to-value (LTV) ceiling for borrowers who refinance into fixed-rate loans and the elimination — or lowering — of fees for certain borrowers.
o. In March, there were nearly 80,000 HARP refinances, a quarter of them on loans with LTVs greater than 105 percent.
o. More than 4,400 loans with LTVs greater than 125 percent were refinanced since the beginning of the year; over half these loans were refinanced in the states of California, Florida, and Arizona.
• The number of loans refinanced through HARP in the first quarter of 2012 nearly doubled compared with the number of loans refinanced through HARP in the fourth quarter of 2011, driven by a sharp increase in the number of loans refinanced above 105 percent LTV.
• In March, there were nearly 80,000 HARP refinances, a quarter of them on loans with LTVs greater than 105 percent.
• More than 4,400 loans with LTVs greater than 125 percent were refinanced since the beginning of the year; over half these loans were refinanced in the states of California, Florida, and Arizona.

What $25m Payback?

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In February, US Attorney General Eric Holder announced the unprecedented $25 billion settlement with the five largest banks in the US. One of the provisions of the settlement is a $2,000 payment to homeowners who lost their homes to foreclosure.

4 months later, people are asking, “When am I going to get my check?”

The answer is, “It depends.”

One thing is for certain. It won’t be this week or this month. It will take up to two months to select an administrator and six to nine months to actually get the ball rolling.

Then you have to meet a few other requirements.

Did Bank of America, Citigroup, JPMorgan Chase, Wells Fargo or Ally Financial service your loan? If so, good, because the settlement only applies to them. But even then, you’ll only qualify if your loan was NOT a government-backed mortgage (such as FHA, VA, Fannie Mae and Freddie Mac loans), and which account for over half of home mortgages.

Did you lose your house between Jan 1, 2008 and Dec 31, 2011? If so, good, because the settlement only covers those four years. (This period is for when the house went back to the bank or an investor, not the loan origination date, as some reports indicate.)

Are you feeling lucky? The $1.5 billion set aside for these payments will cover 750,000 borrowers. We have no numbers on how many foreclosures these five lenders completed from 2008 to 2011, but there were roughly 3.8 million foreclosure sales during that period, over five times as many as will receive payments.

According to the plan eligible borrowers will be contacted. Given that everyone who is entitled to these checks has lost their home and have now moved, it will be interesting to see if they can actually find you. Hopefully you filled out a Change of Address for with the US Postal Service

Good luck

PENDING RATIOS STILL IMPROVING

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The ratio between pending sales and listed properties is the best single indicator of future market direction.
Silicon Valleys Pending Home Sales Index (PHSI) has now improved for 16 months in a row from from February 2011 to May 2012.
A PENDING SALE is defined as a Signed Purchase Contract.
Given the Federal Reserves commitment to keep rates down for at least another year this trend seems sure to continue with a steady increase of home prices.

SILICON VALLEY REAL ESTATE BOOMS AGAIN

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MULTIPLE OFFERS ARE BACK. In the 1st 5 months of this year I have written 25 offers on properties ranging from $350,000 to $975,000. In every case there have been multiple offers and the winner was over the listing price.

The Silicon Valley housing market (Santa Clara, San Mateo, and Southern Alameda Counties) has been steadily improving, based on statistics compiled by MLSListings for the past 10 years. It has now moved into overdrive.

In month-to-month comparison, last month the median sale prices for single family homes and condos both stood at their highest since 2009; the number of closed sales at their highest since 2007.

The current market is also marked by low inventory. The number of new listings for both single family homes and condos were at one of their their lowest levels in April since 2003