Bay Area Short Sale Center » Palo Alto

Fluctuations in Housing Market in Bay Area

Amitesh Kumar — Mon, 10 May 2010 20:00:25 +0000

In the 9 county San Francisco Bay Area, the fluctuations recorded in the housing market are worth watching, since they are the indicators for both sellers and home buyers. While home sales are up, the participation of foreclosure properties in home sales shows a downward trend.

The total home sales in March, in all the counties of the Bay Area, were recorded as 6,992 properties closing escrows. This shows an increase by 40.2 percent from the figure of February and again up by 10.5 percent from March 2009, when only 6,325 homes were sold. It is noteworthy that the Bay Area home sales have continued to record increase during February and March every year from 1988.

Two favorable comparisons can still be made. March home sales were the first to show a year-over-year increase in sales, since December 2009. Secondly for the month of March, the total sales made were the highest since 8,317 homes sold in March 2007, although it fell short by 22.4 percent of the average number of homes sold in March – 9,016 properties – since 1988.

As regards home sales made out of foreclosure properties, in the month of March the participation is recorded as 31.7 percent of total home sales, from properties lying under pre-foreclosure, scheduled foreclosure auction and repossession by lenders after foreclosure sale public auction. On comparison, foreclosure property sales peaked at 52 percent of total sales in February 2009, 50.2 percent in March 2009 and this March the figure is down from 36.3 percent recorded in February 2010.

Another area-specific fluctuation observed in SF Bay Area is the jumbo loan market – with the specified limit of $417,000 for high-end home purchases – is lying low now. Before the credit crunch hit the market in August 2007, nearly 60 percent of Bay Area home loans were falling under this segment, compared to last month’s jumbo loans made up a mere 29.5 percent.

The reason for the above decline is lack of interest by borrowers in Adjustable-Rate-Mortgages (ARMs). Prior to the credit crunch in 2000, the average home loans through ARMs was 50 percent, declined to 13.7 percent of all home purchase loans in September 2008 and dwindled to mere 8.7 percent in March 2010.

"Short sale" is a compromise for the better!

Eureka Expert — Tue, 02 Feb 2010 15:01:16 +0000

The foreclosure situation in the 9 county San Francisco Bay area is as worse as it is elsewhere. The distressed home owners are amazed. But there is a short-cut to come out of the melee with some dignity – instead of forfeiting their homes to full-fledged foreclosure and eviction.

It is the “short-sale” route which helps both the home owner and lender. This way, homes can be sold to interested buyers, with the consent of the mortgage banks and lenders of course, to a mutually agreed price. This may not be the real asking price of the seller, or in other words a distressed sale for price lesser than the assessed value of the property.

But it acts like a catalyst for the buyer to get profits and the short sale is becoming more popular now. Earlier the banks and lenders were reluctant for obvious reasons to agree for this. They may not get the whole amount of the mortgage loan back. They will have to “forgive” the difference between the loan amount and the short sale price.

As such the consent for short sales was not forthcoming easily. It took weeks to months for the banks to give their consent for the short sale. But prudence prevailed over ambition. Instead of going through the foreclosure process which would entail expenses and delay, short sale was a better proposition for both the lender and the borrower.

Short sale is beneficial far more in that it avoids vacant premises after foreclosure (leading to crimes); the cost for upkeep and maintenance of the property concerned, virtual good money after the bad money for the banks; the home owner scraps through without a foreclosure to ruin his or her credit history and finally the time taken for disposal of the property is considerably reduced.

Short sales will be order of the day in the near future because of the advantages derived by one and all – the home owner; the bank or mortgage lender and the buyer.

U.S. housing bailout plan to be announced next week

Eureka Expert — Fri, 13 Feb 2009 22:22:21 +0000

A housing rescue plan being considered by the Obama administration could strike at the heart of the credit crisis but its scale, complexity, and the potential for controversy poses challenges for policymakers.

The plan is due to be announced by President Barack Obama on Wednesday and is expected to break new ground by helping troubled borrowers even before they miss a mortgage payment.

If it works, officials will have a standardized approach to quickly determine whether a borrower is in trouble, revalue the home, and set new mortgage terms under a program that could help contain losses for banks that have incurred huge losses on bad housing investments.

The hope is that a uniform standard will do two things: give legal cover to rewrite loan terms and provide a universal template to quickly churn through the rolls of troubled borrowers. Mortgage servicers, the companies that collect a borrower’s monthly payments, are often hamstrung by contracts and cannot loosen loan terms. See full article

Fannie Mae is testing a Short Sale Program

Eureka Expert — Mon, 26 Jan 2009 06:28:14 +0000

Mortgage giant Fannie Mae is testing a program to pre-approve short sales in Phoenix and Orlando, two of the areas hardest hit by foreclosures. The goal is to expedite the often difficult short-sale process by Fannie Mae agreeing on a sales price for a home on the brink of foreclosure and the loss it will take before a deal is even done. The problem has been that short sales take too long and often don’t go through because an agreement over price can’t be reached with lenders in time.

Fannie Mae’s short-sale program focuses on homes listed to sell for less then the mortgage balance and that are being serviced by Countrywide Financial.

If the program is successful, it will be expanded to other parts of the country.

Why the lenders like REALTORS to be gatekeepers for short sales?

Eureka Expert — Sun, 21 Dec 2008 01:33:16 +0000

It is a common practice that Realtors are facilitating the short sale transactions with the lenders. It is also well known that this is a quite time consuming effort and can easily de-focus the agents and brokers from their core business. In the mean time it is less obvious that the realtors have a fundamentally voulanrable role in this posture.

Why?

Realtors fiduciary responsibility is to represent the seller. Are the interest of the seller and the bank different? Of course, this the the reason for the short sale since there is a breach of contract between the seller and the lender. Now, how strong the negation position of the realtor towards the bank can be when she/he represents the seller’s conflicting interest? Could he/she be really effective effective in this position?

The lenders like the idea to work with the Realtors since they know that agents can not not present a real negotiation leverage. In the mean time realtors’ work is for free for the bank. Most of the mitigator companies are charging mitigation fees, not the agents though who’s compensation is rolled into the commission. So it a “perfect” setup for the bank.

Common wisdom is to focus on what we are good at and source out ourbackdoor operation. This is especially true if we are fundemantally limited to become effective in our secondary activities. Ignoring this often leads to burn out and ineffective operations.

REALTORS – Is it a burden or opportunity for you?

Eureka Expert — Sat, 20 Dec 2008 23:55:59 +0000

Studies and forecasts show that short sales expected to be 20-40% of the real estate transactions in the upcoming year. Who will be facilitating most of these sales?

No question the REALTORS.

The legality and the logistics of this transactions are often becoming a jungle not only for agents and brokers, but also to the employees of the lenders, not to mention the sellers. In the mean time there is a seldom better opportunity to create win-win and financially rewarding scenarios for all participants involved in these transactions. Our mission is to provide relevant information and discussion forum to creatively overcome this economic challange.