Fiscal Cliff Negotiations Could Hurt Underwater Homeowners

The fiscal cliff draws closer by the day, and federal lawmakers are now trying desperately to reach an agreement that is at least somewhat palatable to both parties. Now, those negotiations might include a number of costly tax breaks designed to help consumers who owe more on their home loans than their properties are worth.

Full Story: http://realestate.aol.com/blog/2012/12/26/fiscal-cliff-negotiations-could-hurt-underwater-homeowners/

Housing is adding more vigor to the recovery, report says

The U.S. housing market is becoming the leading source of strength for the long-sluggish American economic recovery, outpacing both business investment and exports. But even with the return of that crucial linchpin, job growth is expected to remain weak next year, a new report by UCLA says.


Full Story: http://www2.realtoractioncenter.com/site/R?i=ECYw0FQ_NoT2ez0XpogVLA

“Boomerang” home buyers bounce back from foreclosure

The number of boomerang buyers – locals who lost their home to foreclosure or short sale, but are jumping back into the market just two to three years after default – are small now, but real estate agents and home builders say that while these buyers don't currently make up a big share of their clients, there's evidence that their ranks are set to rise noticeably, and that could have implications for local home sales and neighborhood vitality.


Full Story: http://www2.realtoractioncenter.com/site/R?i=oB598rlfu7D7K7a80Vtulw

Should you buy a home during the holidays?

Once Thanksgiving is over, the real estate world typically starts to wind down for the holidays and doesn’t usually reawaken until after New Year’s.  But potential home buyers who are prepared to close in today’s competitive market may want to keep house hunting while everyone else is waiting for spring.
Making sense of the story

• REALTORS® especially recommend that serious home buyers continue shopping if they have repeatedly lost out on deals because of a limited and continually decreasing supply of homes.  Buying intensity typically cools down at the start of fall through early January, which could increase the odds for those with more patience.

• Would-be buyers historically have bowed out during the winter season because they are overwhelmed by holiday spending and commitments.  There’s also the aversion of moving in the middle of a school year.  Consumer interest typically picks back up again in the New Year and peaks in the spring.

• Certain buyers may be well-served to buy during the winter because of sellers who must move for various reasons including a job change or transfer or the possible sunsetting of the Mortgage Forgiveness Debt Relief Act, which lets certain home sellers get tax relief on mortgage debt forgiven by lenders.  The possible expiration has pushed home sellers to list and short sell their homes before year’s end.

Full Story: http://www2.realtoractioncenter.com/site/R?i=VhqlQyOCfsipK-_TY2irvg

Home prices show biggest jump in 6 years in October

Home prices increased 6.3 percent in October from a year earlier, the biggest year-over-year gain since 2006, according to CoreLogic.


Full Story: http://www2.realtoractioncenter.com/site/R?i=UIMLlPHkfhgvALzUpO6vdg

FHA is tweaking programs to improve revenue and cut losses

There is a strong possibility that the FHA will not require any money transfer from the Treasury, which in any event would not occur until September. Meanwhile, the FHA is making tweaks to its program rules that could affect some loan applicants in the months ahead, and which are designed to improve revenue flows to the agency and cut back on losses.

Among the most immediate changes, new borrowers early next year are likely to be charged slightly higher annual mortgage insurance premiums — 1.35% of the loan balance rather than 1.25% at present.

To increase revenue streams long term, the FHA also is abandoning its practice of allowing borrowers to cancel their annual mortgage insurance premium payments when their loan balance drops to 78% of the property value. In effect, this will mean that borrowers who obtain 30-year FHA loans could be paying premiums for decades.


Full Story: http://www2.realtoractioncenter.com/site/R?i=wpm8DmpcEer3GaqcT2QtBg

Home prices rise 1.1 percent in Q3

U.S. house prices rose 1.1 percent in the third quarter compared with the second quarter, according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI).   Full Story: http://www2.realtoractioncenter.com/site/R?i=pQYxzL7BWu8xknC8ZCiYlQ

Deals on foreclosed homes dwindling

A new look at foreclosure discounts by Zillow found that the price difference between a foreclosed house and one sold outside of foreclosure was 7.7 percent nationally in September.

Full Story: http://www2.realtoractioncenter.com/site/R?i=Zy2gkZZd5SpLt-XqaRIyZQ

Higher home prices reduce California housing affordability.

Rising home prices offset lower interest rates, reducing housing affordability in California during the third quarter of 2012, C.A.R. reported Monday.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California fell to 49 percent in the third quarter of 2012, down from 51 percent in second-quarter 2012 and from 51 percent in third-quarter 2011, according to C.A.R.’s Traditional Housing Affordability Index (HAI).

Full Story: http://www2.realtoractioncenter.com/site/R?i=oBg0YSlmr99HzXxNI9er8A

OCTOBER ASKING PRICES RISE 2.9% YEAR-OVER-YEAR, BUT RENTS RISE FASTER AT 5.1%

Trulia today released the latest findings from the Trulia Price Monitor and the Trulia Rent Monitor, the earliest leading indicators available of trends in home prices and rents. Based on the for-sale homes and rentals listed on Trulia, these monitors take into account changes in the mix of listed homes and reflect trends in prices and rents for similar homes in similar neighborhoods through October 31, 2012.
 

Asking Prices Rise 0.7% Month-over-Month for Largest Year-over-Year Gain to Date

Full Story: http://info.trulia.com/trulia-price-and-rent-monitors-oct-2012

Foreclosure victims buying homes again

Fannie Mae and Freddie Mac make people wait seven years after a foreclosure to approve a new home loan, but the Federal Housing Administration will approve loans after three years, providing the buyer has established good credit and the ability to pay the mortgage.

Full Story:  http://www2.realtoractioncenter.com/site/R?i=-vX0VLfcSskC8LVPjjMCsg

Home prices rise for fifth month in a row

The housing market picked up more momentum in August, as the average home price for 20 major cities jump 0.9 percent, according to the S&P/Case-Shiller home price index.

Full Story: http://www2.realtoractioncenter.com/site/R?i=QvhS8CGkXu8vSVTOJaM1qw

Interest Rates.....Historic low!!!

California home prices rise in September; sales fall

A continued shortage of available homes for sale lowered California home sales in September, while the median price reached the highest level in more than four years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported this week.

Full Story:  http://www2.realtoractioncenter.com/site/R?i=6sMgvn29NIPcc7GNE2CCxg

Asking prices up year over year in six out of seven swing states

Asking prices on for-sale homes increased 2.5 percent in September, according to the latest findings in the Trulia Price Monitor. Excluding foreclosures, year-over-year asking prices rose 3.5 percent. Meanwhile, asking prices rose 1.6 percent nationally quarter-over-quarter, seasonally adjusted, and 0.5 percent month over month, seasonally adjusted.

Full Story: http://www2.realtoractioncenter.com/site/R?i=sk-sGMC36wc9g7RsmFGt2A

C.A.R. releases 2013 California housing market forecast

California’s housing market will continue to recover in 2013, as home sales are forecast to increase for the third consecutive year and the median price to rise for the second straight year, according to C.A.R.’s “2013 California Housing Market Forecast,” released Tuesday.

The statewide median home price is forecast to increase a moderate 5.7 percent to $335,000 in 2013. Following a decrease in 2011, the California median home price will climb a projected 10.9 percent in 2012 to $317,000.

Full Story: http://www2.realtoractioncenter.com/site/R?i=ueb89iVr80mFRk1BP_MeBw

Landlord Must Disclose Notice of Default to Prospective Tenants

Starting January 1, 2013, every landlord who offers for rent a residential property containing one-to-four units must disclose in writing to any prospective tenant the receipt of a notice of default that has not been rescinded. This disclosure must be made before executing a lease agreement. If a landlord violates this law, the tenant can elect to void the lease and recover one month’s rent or twice the amount of actual damages, whichever is greater, plus all prepaid rent. If the lease is not voided and the foreclosure sale has not occurred, the tenant may deduct one month’s rent from future amounts owed. The written disclosure notice as provided by statute must be in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean. A property manager will not be held liable for failing to provide the written disclosure notice unless the landlord has given the property manager written instructions to deliver the written disclosure to the tenant. This law will expire on January 1, 2018. Senate Bill 1191.

Mortgage rates at record low again

Freddie Mac's weekly survey of mortgage rates showed the average 30-year fixed-rate mortgage fell to 3.49 percent from 3.55 percent the previous week. That matched the previous record low set in July. The fixed-rate 15-year mortgage reached a new record low of 2.77 percent, down from 2.85 percent a week earlier.

Full Story:  http://money.cnn.com/2012/09/20/real_estate/mortgage-rates/index.html?source=cnn_bin

Tax relief on forgiven debt set to expire Dec. 31, 2012

Unless Congress and the California State legislature take action, a break for mortgage principal forgiven in loan modifications or short sales will expire at year’s end.

The mortgage debt forgiveness issue is only one of approximately 60 expiring tax provisions that Congress appears unable to extend prior to its recess for the November elections.  Congress is pushing the extension of any expiring tax provision to the lame duck session, along with any increase in the debt ceiling, and any serious attempts to prevent the mandatory budget cuts agreed to during last year’s debt ceiling deal.

Full Story: https://www.ftb.ca.gov/aboutFTB/newsroom/Mortgage_Debt_Relief_Law.shtml

U.S. home prices make biggest jump in six years

Nationwide home prices shot up 3.8 percent in July, making their largest year-over-year leap since 2006, according to real estate data provider CoreLogic.

Read Full Story:  http://www.latimes.com/business/money/la-fi-mo-home-prices-20120904,0,1983417.story

California home prices near 4-year high

California home sale prices came close to a 4-year high in July, with the pace of sales year-over-year growing for the fourth month in a row, the CALIFORNIA ASSOCIATION OF REALTORS® reported.

The median home price in July for an existing single-family home was up 4.2 percent in June and nearly 13 percent from a year ago.

July’s median home price was the highest since August 2008.  July also marked the fifth consecutive month that the median price increased month-over-month and year-over-year.
 
Sales in July rose to an annualized pace of 529,230 homes, an increase of 15.3 percent compared with last July.

Full Story: http://lansner.ocregister.com/2012/08/20/california-home-sales-near-4-year-high/165628/

Asking prices rise for sixth consecutive month

Asking prices on for-sale homes – which lead sales prices by approximately two or more months – increased 0.5 percent in July compared with June, according to Trulia’s Price Monitor.  This marked the sixth consecutive monthly gain.  For the first time, a majority (62 out of 100) of large metros had year-over-year price increases.

Full Story:  http://info.trulia.com/trulia-price-and-rent-monitor-july-2012

Home Prices Rise in June

CoreLogic recently reported that home prices nationwide, including distressed sales, increased on a year-over-year basis by 2.5 percent in June 2012 compared to June 2011, according to its June Home Price Index report. On a month-over-month basis, including distressed sales, home prices increased 1.3 percent in June 2012 compared with May 2012. The June 2012 figures mark the fourth consecutive increase in home prices nationally on both a year-over-year and month-over-month basis.
Excluding distressed sales, home prices nationwide increased 3.2 percent on a year-over-year basis in June 2012. On a month-over-month basis excluding distressed sales, home prices increased 2 percent, the fifth consecutive month-over-month increase. Distressed sales include short sales and REO transactions.

Full Story: http://www.corelogic.com/about-us/news/corelogic-june-home-price-index-rises-2.5-percentrepresenting-fourth-consecutive-year-over-year-increase.aspx

For renters, buying a home pays off after three years on average

A new analysis by real estate website Zillow shows that, on average, a renter thinking about buying a home will reach what it calls the “break-even horizon,” after just three years.  The break-even horizon compares what it would cost to buy or rent the same home in a number of U.S. markets over time.
Full Story: http://www.latimes.com/business/realestate/la-fi-rent-or-own-20120802,0,6114437.story

Headlines abound: The Housing Bust is over… In June, a survey of economists concluded that housing has hit bottom. Realtors®, homeowners and renters, Americans, and citizens of the world all are sighing with collective relief. The economy and housing values both have cycles. It has been more than eighty years since the difference between the top and the bottom was so great.  So we are cautiously engaging the new reality, but first we need to pause. If we do not learn from history, we are bound to repeat it. We do not want to repeat the last ten years. So what are the lessons we should learn?
Read full story at: http://voicesofrealestate.blogs.realtor.org/2012/07/18/10-lessons-to-learn-as-the-housing-market-recovers/?om_rid=AAB0GY&om_mid=_BQEerkB8r8btu7&om_ntype=NARWeekly

Home values rise for first time in 5 years

Nationwide, home values rose 0.2% year-over-year to a median $149,300 during the second quarter, the first annual increase since 2007, real estate listing site Zillow reported. Prices were up 2.1% from the first quarter.
"[I]t seems clear that the country has hit a bottom in home values," said Zillow's chief economist Stan Humphries. "The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own."
Other home price indexes have also recorded gains lately, including the S&P/Case-Shiller home price index. In it latest release, it reported that home prices in 20 major markets rose 1.3% in April, the first monthly increase in seven months.

Full Story: http://money.cnn.com/2012/07/24/real_estate/home-values/index.htm?hpt=hp_t2

New Anti-Deficiency Protection for Refinance Loans

Starting January 1, 2013, a new California law will protect homeowners who default on their refinance loans from personal liability for any deficiency following foreclosure. Existing anti-deficiency law protects a borrower from personal liability for the difference between the principal balance and what the lender receives at foreclosure if the loan is a purchase money loan secured by an owner-occupied property with one-to-four residential units. The new law, Senate Bill 1069, extends that anti-deficiency protection to include any loan used to refinance the purchase money loan, plus any loan fees, costs, and related expenses for the refinance. The anti-deficiency protection, however, does not extend to any "cash out" in a refinance.

Either Modify or Foreclose...not BOTH

SACRAMENTO — California lawmakers have passed legislation that would provide homeowners with some of the nation's strongest protections from foreclosure and such aggressive bank practices as seizing a home while the owner is negotiating to lower mortgage payments.  The legislation would make California the first state to prohibit lenders from "dual tracking," the practice of negotiating with clients to modify a mortgage so that payments become more affordable while simultaneously pursuing foreclosure. In such cases, homeowners can wind up being evicted even though they had been working with the bank to modify their loans.

Full Story:http://www.latimes.com/business/la-fi-homeowner-rights-20120703,0,5215367.story

Year over Year Gains

June 22 - Pending home sales in California were flat from April but posted double-digit gains from the previous year for the fourth straight month, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today. Additionally, the share of distressed sales continued to decline from year-ago levels, signaling a return of non-investors to the housing market.

 “Despite a slowdown in economic growth ...in recent months, sales in California remain strong as record low mortgage rates and favorable home prices continue to fuel demand in the housing market,” said C.A.R. President LeFrancis Arnold. “The strong results in pending sales – double-digit year-over-year gains in the last nine out of 10 months – suggest solid housing market performance for the state in the upcoming months.”
Full Story: http://www.car.org/newsstand/newsreleases/2012releases/mayphsi

Interesting Housing Recovery Timeline

Home Prices Increase Month over Month in April

Home prices, including distressed sales, rose 2.2 percent in April on a month-over-month basis, marking the second consecutive month-over-month increase this year, according to a report by CoreLogic.Excluding distressed sales, prices increased 2.6 percent compared with March.  The CoreLogic Home Price Index (HPI) also shows that year-over-year prices, excluding distressed sales, rose 1.9 percent in April compared with the prior year. Distressed sales include short sales and real estate owned (REO) transactions.

Full Story: http://www.corelogic.com/about-us/researchtrends/home-price-index.aspx?WT.mc_id=MarHPIJanData_crlg_1e_hpr_1_120307

Encouraging Headlines...

Why this may be the ideal time to buy real estate
http://moneyland.time.com/2012/05/21/why-this-may-be-the-ideal-time-to-buy-real-estate/

Home sales surge in April
http://money.cnn.com/2012/05/22/real_estate/home-sales/index.htm?iid=HP_LN

Reports: Sellers boosted prices in April
http://blogs.wsj.com/developments/2012/05/16/report-sellers-boosted-prices-in-april/

Foreclosure activity sinks to a five-year low
http://articles.latimes.com/2012/may/17/news/la-foreclosure-activity-sinks-to-a-five-year-low-20120517

Home prices rose most in two decades in March
http://sfgate.ldc.bloomberg.wallst.com/SFChronicle/Story?docId=1376-M4FZA66VDKIX01-1U3J4A48C72LJOLUO1B6P26SFG

Defaults and Foreclosures Decline...

Foreclosures in California dropped again in the first quarter of 2012 — a good sign of a stabilizing housing market. Notices of default (NODs) and real estate owned (REO) resale volume also declined, suggesting that lenders are finally working through their backlogged foreclosure inventory. As a result, locally, we are experiencing a large drop in inventory creating an artificial increase in property values. Hopefully the trough in the market is behind us and remains there. We shall see....

A Flicker of Hope Appears in the Housing Market

THE boom in housing in the middle of the last decade created a huge oversupply of homes in the United States. But now that oversupply appears to be close to vanishing, at least in most parts of the country. Full Story: http://www.nytimes.com/2012/04/28/business/economy/a-flicker-of-hope-appears-in-the-housing-market.html?_r=2&ref=realestate

It’s safe to sell your home again?

While analysts debate when the housing market will hit bottom, for a surprising number of cities the turnaround has already begun. In December, prices rose in 109 of the 384 metro areas tracked by data firm CoreLogic. Making sense of the story There are certain signs to help determine if a particular neighborhood is on the verge of a rebound. For instance is local employment on the upswing? That’s a critical factor for a region to get itself on the path to recovery. Improving jobs picture has led to shrinking housing stock across the country, as investors and bargain hunters have started buying up foreclosures that have been preventing a recovery. For years, buyers were scared of overpaying for a home, but less so now. Many buyers have grown accustomed to thinking they’ll score deals, so they tend to act slowly, and typically start bidding around 10 percent to 15 percent below list price. However, a growing number of buyers are beginning to realize that if they wait too long in this market, they may miss out. Sellers can hold firm on price if they’re patient. The days of having to deal with low-ball offers are coming to an end. The higher the price, the more patient the seller must be. Cheaper homes are affordable to more buyers and appealing to investors, so recoveries usually start there. Sellers should keep in mind that while they don’t have to placate low-ball offers anymore, they also can’t shoot for the moon either. Working with a REALTOR® and setting a realistic price from the get-go is key. Sellers should know what they’re competing against. Homeowners should let their home’s value dictate the price. While this may seem self-evident, some owners may have lost sight of it during the bust. On the one hand, some sellers clung to the false hope of a return to boom prices, so they set prices unrealistically high. Others may have gone too far the other way, and set their price too low. It’s also important that sellers understand they’re no longer competing with gutted foreclosures. Buyers are tired of looking at worn-down, neglected, distressed properties and often don’t have much extra money to do a lot of fixing up. REALTORS® often report their clients are willing to pay a little more for a home that’s ready to move into. Full Story: http://money.cnn.com/2012/04/19/real_estate/housing-market.moneymag/index.htm?iid=HP_River

First gain for Calif. prices in 16 months

The median price for an existing, single-family home in California rose 1.6 percent in March compared with the year before, marking the first year-over-year increase in 16 months, the CALIFORNIA ASSOCIATION OF REALTORS® reported Monday.

Full Story:http://www.ocregister.com/articles/median-349624-statewide-months.html

As Rents Increase Home Ownership Becomes More Attractive

Rising rents, coupled with slumping home prices and interest rates near record-lows, are boosting demand for homes at entry-level prices.

Making sense of the story
Increased buying activity from investors and second-home purchases may be factors behind the recent pickup in home sales, but real estate agents say they are fielding more calls from anxious tenants complaining about rising rents.
Average apartment rents rose by 2.7 percent last year, while the national vacancy rate dropped below 5 percent for the first time since 2001, according to a quarterly survey released Wednesday by REIS Inc., a real estate research firm.
The largest rent increases came in San Francisco and San Jose, Calif., which saw increases of 5.9 percent and 4.9 percent, respectively. Such increases are one reason why industry analysts believe 2012 will be the first year since 2005 when the share of apartment renters that moves out to buy a house increases from the previous year.
Historically, the cost to rent an apartment has been about 10 percent lower than the after-tax cost of owning a home. That rental discount began to fall in 2010 and disappeared entirely last year, according to analysts at Deutsche Bank who track housing costs. By the end of 2011, the bank’s research found that the cost to rent an apartment was about 15 percent higher than the cost to own a home.
It isn’t always easy for home buyers to make it to the closing table though. Lending and appraisal standards remain tight, keeping many would-be buyers out of the market. And aspiring buyers are competing with savvy investors who have turned buying and reselling foreclosed homes into a business.

Read Full Story: http://online.wsj.com/article/SB10001424052702304750404577322011443831768.html?mod=WSJ_RealEstate_LeftTopNews

Elusive Bottom Near?

Improving economic data and government-policy developments have led Bank of America/Merrill Lynch to call for the long-awaited bottom in housing prices this year.

The firm tweaked its forecast from November, when it expected home prices to fall 3.5% in 2012. Now, it expects a modest gain of 0.5%, a good sign for the sector that continues limping through its worst downturn in generations.

Still, “along with the earlier bottom is a slower recovery,” the firm warns. It expects home prices to gain 2.8% in 2014, solidly below its prior estimate of 8.1%. Its prediction for 2020 remains roughly the same, when it expects beaten-down home prices to have recovered by 42%.

full story: http://blogs.wsj.com/developments/2012/03/22/elusive-bottom-for-home-prices-near-forecast-says/?mod=WSJBlog&mod=WSJ_Real%20Estate_BLOGSDEVELOPMENTSFEED

HARP 2 – A refinance plan that might work?

HARP 2 is a revision of the Home Affordable Refinance Program (HARP), whose original goal was to allow homeowners to refinance their loans, even if they owed more than their homes were currently worth. HARP was introduced in 2009, and it was designed to help homeowners with mortgages owned by Fannie Mae or Freddie Mac. The program let borrowers refinance at up to 125 percent of their homes' current values. For example, under HARP, if you owed $125,000 on a house that was now worth $100,000, you could qualify for a HARP refi, because your loan was 125 percent of the home's value. But if you owed more than 125 percent of the home's value, you were out of luck. For most Californians, we were those described as out of luck.

However, the 125 percent loan-to-value limit has been eliminated under HARP 2. Under new rules in HARP 2 there is no loan-to-value limit on HARP refis -- at least, for borrowers who have fixed-rate mortgages.

The elimination of the loan-to-value limit is the biggest change under HARP 2. Here is a summary of HARP 2's guidelines:
•The program is for borrowers whose mortgages are owned by Fannie Mae or Freddie Mac, and who got their loans before May 2009. ***loan lookup at: http://www.makinghomeaffordable.gov/get-assistance/loan-look-up/Pages/default.aspx
•HARP had been scheduled to expire at the end June 2012; HARP 2 extends the expiration to the end of 2013.
•There is no loan-to-value cap for borrowers who now have fixed-rate mortgages.
•For borrowers with ARMs, the loan-to-value cap remains 105 percent.
•Borrowers can qualify for HARP 2 refis if they have paid on time for the last six months and have no more than one 30-day late payment in the last 12 months. Originally, HARP didn't allow any delinquencies in the last 12 months.
•Fees have been reduced. Lenders are fond of adding fees to loans that have an added amount of risk. Fannie and Freddie call these fees "loan level price adjustments," and the charges easily can climb to 2 percent of the loan amount on HARP refis. Under HARP 2, the fees are reduced to zero percent on loans for 20 years or fewer, and 0.75 percent for mortgages for more than 20 years and for ARMs.

The new program, in many cases, will virtually eliminate the risk that lenders will have to pay for losses on either the existing or the refinanced loan under HARP 2. This could be a big incentive for lenders to refinance loans, especially ones they already own.

But there are still many questions about the program, such as what interest rates banks will charge, whether they will impose additional fees or underwriting requirements beyond what Fannie and Freddie require and whether investors will be willing to buy securities backed by these new HARP 2 loans in the secondary mortgage market.

While borrowers will clearly benefit, the losers will be investors who own the guaranteed loans that are refinanced. They will be repaid, but will have to reinvest their proceeds, probably at a lower rate. These investors include Fannie and Freddie, the U.S. Treasury and the Federal Reserve - in other words, U.S. taxpayers. The hope is that taxpayers as a whole will benefit if homeowners who lower their monthly payments under the program spend some of their savings (thus boosting the economy) and become more likely to stay in their underwater homes and not default. (***For those considering a refi please keep in mind that a refi removes the non-recourse protection that their original purchase money loan provides in the event of a foreclosure. In other words, the bank can pursue a deficiency judgement after a foreclosure on a borrower that participates in any refinance so please make sure you weigh your future circumstances and likelihood of being able to stay in the home long-term prior to participating in a refinance and consult an attorney)

As Realtors® we obviously don’t receive any direct benefit from HARP2. But we continue to feel that by “helping first” we may someday be remembered when your real estate needs require the services of a trusted professional. We are happy to field questions and assist in any way possible. Please contact us if there’s something that we may do for you.

Short Sale then Immediately Purchase? - YES

As a Realtor who has been heavily involved negotiating short sales over past years, one of the questions that I get asked quite often from potential short sale sellers is, “How long will it take before I will be able to buy a home again?” The answer to this question is specific to the seller and does not have any clear cut answer as there are quite a few variables to consider when figuring when someone will be able to purchase a home after a short sale. However, there exists a misconception of sorts in the real estate market in that a short sale will prevent a subsequent home purchase for at least two years. While this is true in some circumstances we wanted to take a few moments this month to highlight a program backed by the FHA that will allow a home purchase directly after a short sale.

The biggest guideline that must be met to enable you to participate in this program is that you MUST remain current on your mortgage, including no late payments, and on any installment debt payments (credit cards, car loans, etc). If, within the past 12 months of your new purchase loan application date, you have not been late on your mortgage or any installment debt payments then you may be eligible for an FHA loan for purchase.

Now I understand that for some this may be difficult as oftentimes a short sale results from the inability to make the payment in the first place. But for those who have been making their payments and have just experienced or are anticipating a hardship (reduction of income, medical expenses, job relocation, job loss, etc.) this program provides the opportunity to purchase again directly after your short sale.

Another criterion that will be examined is your credit score (and this is the second most popular question I get in regards to short sales and foreclosures). To be eligible for this program you must have a 620 FICO after the short sale is completed. This is a difficult metric to guestimate as credit scoring factors vary from individual to individual. The scoring change is heavily dependent on where the credit score was before the negative event took place and oftentimes those in a higher starting position fall the farthest. According to FICO the average score will drop from 85-160 points with the more extreme examples from 200-300. However, if you remain current on your mortgage during the short sale process then you will not experience the effect that monthly missed payments and delinquencies will have on your credit score – a win-win scenario.