By Robert Freedman, Senior Editor, REALTOR® Magazine
The Federal Reserve’s move to boost the economy with $600 billion in U.S. Treasury bond purchases earlier this week helped ignite the stock market and could also help real estate in the short term if businesses follow suit by adding jobs.
NAR Chief Economist Lawrence Yun told REALTORS® at the 2010 Conference & Expo today that job growth is key to getting home sales back up to where they should be based on historic norms. Although housing markets are steadily improving and prices are stabilizing, home sales remain at levels last seen in 2000, when the U.S. had 30 million fewer people.
Yun says weak consunmer confidence, which is a function of continuing high unemployment (about 9.6 percent currently), is behind the lag, so anything that can boost job growth could help home sales.
But the latest Fed stimulus could come with a cost, says Federal Reserve Governor Thomas Koening. Joining Yun at the REALTORS® conference to talk about the residential housing market, Koening said continued efforts to stimulate the economy could spark inflation, particularly with the federal budget deficit already at historically high levels. Koening was the only Fed governor to vote against the new stimulus.
Although inflation remains quiescent, and indeed some economists are even talking about the risks of the U.S. moving into a period of Japanese-styled deflation, there are worrisome signs of inflationary pressures building, says Yun.
If you focus on the consumer price index (CPI), which is up only 1.1 percent from a year ago, then inflationary signs are absent, he said. But Yun thinks the housing component of CPI, which is up only 0.2 percent in the last year, is what’s keeping inflation in check.
When you focus on producer prices, which are up 4 percent for finished products and more than 20 percent for crude products (products in the earliest stages of production) and commodities, the picture looks very different.
With nothing to change these trend lines, these price increases are likely to show up in consumer prices at some point in the future. And once they do, the increases will be hard to reverse. “Inflation is like toothpaste,” Yun said. “Once it’s out of the tube, it’s hard to put back in.”
Bottom line: The latest Fed stimulus could in fact spur job growth and therefore give home sales a boost. But will the cost be higher inflation down the road? If so, that can put home buying out of reach to households who have to contend with higher interest rates.
Thursday, November 11, 2010
Tuesday, October 5, 2010
Foreclosures are being stopped...for now.
By Steve Beede.
For many months, we’ve been hearing of Courts throwing out lender lawsuits for judicial foreclosure based upon falsified declarations. Now many States are jumping in and suspending certain foreclosures. Here’s the background in what is going on and what to expect in the future.
Each State has its own laws for handling defaulted home loans. For example, California allows both Judicial foreclosures (lawsuit in the courts) and non-judicial foreclosures (non-court Trustee Sale). Each method has its pros and cons for lenders, but because of the speed and lower cost of Trustee Sales, that is generally used for home foreclosures. However, in California if a lender does do a Trustee Sale, they give up any right to recover a deficiency judgment on the unpaid balance. It’s different in other States. 23 States only allow Judicial Foreclosure so their foreclosures are always Court supervised. The remaining States allow a choice of either method but only a few bar deficiency judgments after Trustee Sale. So there are two issues arising in a foreclosure: 1) loss of home; and 2) deficiency judgment risk.
The problem for lenders first arose in the judicial foreclosure States. As part of their legal filing, the lenders were required to provide a sworn statement as to the truth of the facts claimed in their lawsuit such as that they owned the loan and that the procedures for foreclosure were properly followed. However, it was discovered that attorneys for the lenders were falsifying the sworn statements and in many cases simply having someone sign the form without any actual knowledge of the facts, so called “robo-signers”. Presumably the lenders and their attorneys filing thousands of such lawsuits believed that no one would pick up on this and they hoped they could get quick results. They were wrong. Attorneys for some defendants challenged the lawsuits and the false statements and the Courts have responded by throwing out the lawsuits.
While lawsuits get challenged all the time and typically are corrected, the extent of these falsified Complaints indicated a systemic policy of lenders committing this fraud. Faced with potentially damning publicity and possible legal sanctions, lenders stated damage control. Last month, GMAC admitted that their employees had falsified foreclosure documents. Recently, Chase and BofA admitted the same. Each has stated that they are suspending foreclosures until the problem is fixed. Meanwhile, the States have started to act. on Friday, Connecticut suspended all foreclosures for 60 days. California’s attorney general has ordered Chase to stop foreclosures or prove the validity of its process. More are expected to follow as further evidence comes out showing the corruption in the foreclosure process. However, other lenders such as Wells Fargo have not made any suspension and have recently indicated its intent to increase the pace of foeclosures. This is surprising given indications that Wells Fargo has also filed lawsuits against borrowers without legal merit.
These foreclosure suspensions will give affected upside-down owners some more time but they will not result in loan foregiveness. The lenders will fix the problem and defaulted loans will eventually be foreclosed unless an alternate resolution is reached. This means that impacted lenders will likely be much more receptive to a loan modification or short sale without deficiency recourse. The one step that we do not expect to see is Congress or State legislatures coming to the rescue of homeowners. They have shown no willingness to date to do anything other than bailout lenders without recourse for the terrible lending practices that drove us into this Recession.
So, if you or your clients are upside down on a loan and facing foreclosure, this is a time to act to seek that modification or complete that short sale. If you are facing a lender lawsuit, get representation and put up a challenge. The lenders’ hope with these fraudulent lawsuits was that they would win without challenge. I’s up to you to stop them and the Courts may be willing to help.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are upside-down on your loan(s), especially if you’re facing a lender lawsuit, get competent legal advise in your State immediately so that you can determine your best options.
For many months, we’ve been hearing of Courts throwing out lender lawsuits for judicial foreclosure based upon falsified declarations. Now many States are jumping in and suspending certain foreclosures. Here’s the background in what is going on and what to expect in the future.
Each State has its own laws for handling defaulted home loans. For example, California allows both Judicial foreclosures (lawsuit in the courts) and non-judicial foreclosures (non-court Trustee Sale). Each method has its pros and cons for lenders, but because of the speed and lower cost of Trustee Sales, that is generally used for home foreclosures. However, in California if a lender does do a Trustee Sale, they give up any right to recover a deficiency judgment on the unpaid balance. It’s different in other States. 23 States only allow Judicial Foreclosure so their foreclosures are always Court supervised. The remaining States allow a choice of either method but only a few bar deficiency judgments after Trustee Sale. So there are two issues arising in a foreclosure: 1) loss of home; and 2) deficiency judgment risk.
The problem for lenders first arose in the judicial foreclosure States. As part of their legal filing, the lenders were required to provide a sworn statement as to the truth of the facts claimed in their lawsuit such as that they owned the loan and that the procedures for foreclosure were properly followed. However, it was discovered that attorneys for the lenders were falsifying the sworn statements and in many cases simply having someone sign the form without any actual knowledge of the facts, so called “robo-signers”. Presumably the lenders and their attorneys filing thousands of such lawsuits believed that no one would pick up on this and they hoped they could get quick results. They were wrong. Attorneys for some defendants challenged the lawsuits and the false statements and the Courts have responded by throwing out the lawsuits.
While lawsuits get challenged all the time and typically are corrected, the extent of these falsified Complaints indicated a systemic policy of lenders committing this fraud. Faced with potentially damning publicity and possible legal sanctions, lenders stated damage control. Last month, GMAC admitted that their employees had falsified foreclosure documents. Recently, Chase and BofA admitted the same. Each has stated that they are suspending foreclosures until the problem is fixed. Meanwhile, the States have started to act. on Friday, Connecticut suspended all foreclosures for 60 days. California’s attorney general has ordered Chase to stop foreclosures or prove the validity of its process. More are expected to follow as further evidence comes out showing the corruption in the foreclosure process. However, other lenders such as Wells Fargo have not made any suspension and have recently indicated its intent to increase the pace of foeclosures. This is surprising given indications that Wells Fargo has also filed lawsuits against borrowers without legal merit.
These foreclosure suspensions will give affected upside-down owners some more time but they will not result in loan foregiveness. The lenders will fix the problem and defaulted loans will eventually be foreclosed unless an alternate resolution is reached. This means that impacted lenders will likely be much more receptive to a loan modification or short sale without deficiency recourse. The one step that we do not expect to see is Congress or State legislatures coming to the rescue of homeowners. They have shown no willingness to date to do anything other than bailout lenders without recourse for the terrible lending practices that drove us into this Recession.
So, if you or your clients are upside down on a loan and facing foreclosure, this is a time to act to seek that modification or complete that short sale. If you are facing a lender lawsuit, get representation and put up a challenge. The lenders’ hope with these fraudulent lawsuits was that they would win without challenge. I’s up to you to stop them and the Courts may be willing to help.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are upside-down on your loan(s), especially if you’re facing a lender lawsuit, get competent legal advise in your State immediately so that you can determine your best options.
Wednesday, September 15, 2010
Get The Forgiven Debts Off Your Credit Report
By Steve Beede
Over the past several years, we’ve assisted thousands of property owners in coping with upside down loans. Although very few have gotten actual modifications that made their homes affordable (the lenders and our government won’t go that far), most have used short sales to avoid judgments against their credit that would follow them for years. Even most people who have gone through foreclosure have avoided the lenders’ deficiency recourse. But now, many are shocked to discover that, although the lender has no judgment against them, the debt still appears on their credit reports as an unpaid debt. This can block future credit and could possibly used by a collection agency to force a payment that is no longer owed.
When a property is sold in a short sale, agreements are generally made with the lenders in which the unpaid balance is forgiven, ie: there is no deficiency recourse. Similarly, in California at least, most foreclosures are done through a Trustee Sale process through which the foreclosing lender has no recourse against the debtor for any unpaid balance. These unpaid amounts are considered “forgiven debt” and the debtor may be taxed on this amount unless they have an exemption such as the 2007 Federal Debt Forgiveness Relief Act, or their accountant determines that they are otherwise exempt: purchase money debt, insolvency, etc. When this occurs, the debtor’s credit report should show the loan as “settled”; or “paid less than full” or some similar reference… not that anything further is due. So what do you do if this happens.
First, get your records together to show that the loan deficiency was actually resolved. This may be the short sale closing documents, particularly the lenders’ short sale consent letters addressing the deficiency (or removing any deficiency language). For a foreclosure, the type of foreclosure used will provide guidenance. In either case, the debtor should receive a 1099 form from each lender. A 1099C indicates that the debt is forgiven but sometimes the lenders use the wrong one.
Second, send a dispute letter to each of the credit bureaus - Experian, TransUnion, and Equifax - and challenge the debt reference. Send this my Certified Mail Return Receipt and keep all your records. Once the credit reporting agency has received your dispute letter, they are obligated to investigate. According to the Fair Credit Reporting Act, the credit bureaus must take the following steps:
•The credit reporting agencies must resolve consumers’ disputes within 30 days limit, unless you have used the services of annualcreditreport.com, then the bureaus can take up to 45 days.
•In response to consumers’ complaints that documentation in support of their disputes was disregarded, the credit bureaus have to consider and transmit to the furnisher all relevant evidence submitted by the consumer the first time.
•Consumers will receive written notice of the results of the investigation within five days of its completion, including a copy of the amended credit file if it changed based on the dispute.
•Once information is deleted from a credit file, the credit bureaus can not reinsert it unless the entity supplying the information certifies that the item is complete and accurate and the credit bureau notifies the consumer within five days.
All of the big-three agencies are working on making sure that all disputes are handled within 30 days. See http://www.creditinfocenter.com/repair/Repair.shtml#4 for more specific details.
If a lender fails to respond to the credit bureau’s investigation, they may delete the refeence themselves. If not, or if the lender actually refuses to remove the derogatory credit reference, then you may need to initiate legal action against the lender. Reporting a false debt on the debt reporting system is slander and you could have a legal claim against the lender and the reporting credit bureau to both remove the reference and recover damages.
Are these strategies for you? Every person’s situation is different. The information presented in this Article is not to be taken as legal advice. If you are facing false credit reports which claim you still owe a forgiven debt, get competent legal advise in your State immediately so that you can determine your best options.
Over the past several years, we’ve assisted thousands of property owners in coping with upside down loans. Although very few have gotten actual modifications that made their homes affordable (the lenders and our government won’t go that far), most have used short sales to avoid judgments against their credit that would follow them for years. Even most people who have gone through foreclosure have avoided the lenders’ deficiency recourse. But now, many are shocked to discover that, although the lender has no judgment against them, the debt still appears on their credit reports as an unpaid debt. This can block future credit and could possibly used by a collection agency to force a payment that is no longer owed.
When a property is sold in a short sale, agreements are generally made with the lenders in which the unpaid balance is forgiven, ie: there is no deficiency recourse. Similarly, in California at least, most foreclosures are done through a Trustee Sale process through which the foreclosing lender has no recourse against the debtor for any unpaid balance. These unpaid amounts are considered “forgiven debt” and the debtor may be taxed on this amount unless they have an exemption such as the 2007 Federal Debt Forgiveness Relief Act, or their accountant determines that they are otherwise exempt: purchase money debt, insolvency, etc. When this occurs, the debtor’s credit report should show the loan as “settled”; or “paid less than full” or some similar reference… not that anything further is due. So what do you do if this happens.
First, get your records together to show that the loan deficiency was actually resolved. This may be the short sale closing documents, particularly the lenders’ short sale consent letters addressing the deficiency (or removing any deficiency language). For a foreclosure, the type of foreclosure used will provide guidenance. In either case, the debtor should receive a 1099 form from each lender. A 1099C indicates that the debt is forgiven but sometimes the lenders use the wrong one.
Second, send a dispute letter to each of the credit bureaus - Experian, TransUnion, and Equifax - and challenge the debt reference. Send this my Certified Mail Return Receipt and keep all your records. Once the credit reporting agency has received your dispute letter, they are obligated to investigate. According to the Fair Credit Reporting Act, the credit bureaus must take the following steps:
•The credit reporting agencies must resolve consumers’ disputes within 30 days limit, unless you have used the services of annualcreditreport.com, then the bureaus can take up to 45 days.
•In response to consumers’ complaints that documentation in support of their disputes was disregarded, the credit bureaus have to consider and transmit to the furnisher all relevant evidence submitted by the consumer the first time.
•Consumers will receive written notice of the results of the investigation within five days of its completion, including a copy of the amended credit file if it changed based on the dispute.
•Once information is deleted from a credit file, the credit bureaus can not reinsert it unless the entity supplying the information certifies that the item is complete and accurate and the credit bureau notifies the consumer within five days.
All of the big-three agencies are working on making sure that all disputes are handled within 30 days. See http://www.creditinfocenter.com/repair/Repair.shtml#4 for more specific details.
If a lender fails to respond to the credit bureau’s investigation, they may delete the refeence themselves. If not, or if the lender actually refuses to remove the derogatory credit reference, then you may need to initiate legal action against the lender. Reporting a false debt on the debt reporting system is slander and you could have a legal claim against the lender and the reporting credit bureau to both remove the reference and recover damages.
Are these strategies for you? Every person’s situation is different. The information presented in this Article is not to be taken as legal advice. If you are facing false credit reports which claim you still owe a forgiven debt, get competent legal advise in your State immediately so that you can determine your best options.
Tuesday, March 2, 2010
January sales and price report
Source: CALIFORNIA ASSOCIATION OF REALTORS®
LOS ANGELES (Feb. 23) – Home sales decreased 10.6 percent in January in California compared with the same period a year ago, while the median price of an existing home rose 15 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
“Many sales that closed escrow in January were on homes with offers accepted during the holiday season--a time when many house hunters are first-time buyers,” said C.A.R. President Steve Goddard. “First-time buyers typically purchase homes priced below an area’s median home price. Reflecting this, the percentage of homes priced under $500,000 increased to 77 percent of all sales in January, compared with 75 percent in December.
“Despite the year-to-year decline, sales remained above the 500,000 unit threshold for the 17th consecutive month, holding steady at pre-peak levels from early in the last decade,” said Goddard.
Closed escrow sales of existing, single-family detached homes in California totaled 539,040 in January at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 10.6 percent from the revised 602,660 sales pace recorded in January 2009. Sales in January 2010 decreased 3 percent compared with the previous month.
The statewide sales figure represents what the total number of homes sold during 2010 would be if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The median price of an existing, single-family detached home in California during January 2010 was $287,440, a 15 percent increase from the revised $249,960 median for January 2009, C.A.R. reported. The January 2010 median price decreased 6.3 percent compared with December’s $306,820 median price.
“The story for the median price in January was mixed. In year-over-year terms, California’s median home price saw the greatest percentage increase since December 2005,” said Leslie Appleton-Young, C.A.R. vice president and chief economist. “However, the median fell by 6.3 percent from the December 2009 median price. Although the monthly decline was large, it was less than the declines for the same time period in both 2008 and 2009 when the median price fell by more than 11 percent.
“The median price still is 17.2 percent ahead of the trough in this cycle,” added Appleton-Young. “However, the expiration of the federal tax credit for home buyers and the impact of the Federal Reserve’s withdrawal from the mortgage market continue to be the wild cards as we move through the year.”
Highlights of C.A.R.’s resale housing figures for January 2010:
. C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in January 2010 was 5.8 months, compared with 7.3 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
. Thirty-year fixed-mortgage interest rates averaged 5.03 percent during January 2010, compared with 5.05 percent in January 2009, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.33 percent in January 2010, compared with 4.92 percent in January 2009.
. The median number of days it took to sell a single-family home was 33.8 days in January 2010, compared with 50 days (revised) for the same period a year ago.
Regional MLS sales and price information are contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.
In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 160 of the 366 cities and communities reporting showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)
Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for January may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org/marketdata/historicalprices/2010medianprices/jan2010medianprices/.
. Statewide, the 10 cities with the highest median home prices in California during January 2010 were: Newport Beach, $1,158,000; Santa Monica, $838,000; Santa Barbara, $810,000; Danville, $800,000; Arcadia, $799,000; Mountain View, $755,000; Yorba Linda, $703,750; Redwood City, $680,000; San Ramon, $660,000l; and Redondo Beach, $649,500.
. Statewide, the cities with the greatest median home price increases in January 2010 compared with the same period a year ago were: Redwood City, 43.2 percent; Rancho Santa Margarita, 38.1 percent; Laguna Niguel, 35 percent; Pittsburg, 29.7 percent; Fullerton, 25.9 percent; Yorba Linda, 24.2 percent; Oxnard, 23.6 percent; Galt, 19.9 percent; Auburn, 19.9 percent; Chino Hills, 19.1 percent; and Petaluma, 17.9 percent.
LOS ANGELES (Feb. 23) – Home sales decreased 10.6 percent in January in California compared with the same period a year ago, while the median price of an existing home rose 15 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
“Many sales that closed escrow in January were on homes with offers accepted during the holiday season--a time when many house hunters are first-time buyers,” said C.A.R. President Steve Goddard. “First-time buyers typically purchase homes priced below an area’s median home price. Reflecting this, the percentage of homes priced under $500,000 increased to 77 percent of all sales in January, compared with 75 percent in December.
“Despite the year-to-year decline, sales remained above the 500,000 unit threshold for the 17th consecutive month, holding steady at pre-peak levels from early in the last decade,” said Goddard.
Closed escrow sales of existing, single-family detached homes in California totaled 539,040 in January at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 10.6 percent from the revised 602,660 sales pace recorded in January 2009. Sales in January 2010 decreased 3 percent compared with the previous month.
The statewide sales figure represents what the total number of homes sold during 2010 would be if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The median price of an existing, single-family detached home in California during January 2010 was $287,440, a 15 percent increase from the revised $249,960 median for January 2009, C.A.R. reported. The January 2010 median price decreased 6.3 percent compared with December’s $306,820 median price.
“The story for the median price in January was mixed. In year-over-year terms, California’s median home price saw the greatest percentage increase since December 2005,” said Leslie Appleton-Young, C.A.R. vice president and chief economist. “However, the median fell by 6.3 percent from the December 2009 median price. Although the monthly decline was large, it was less than the declines for the same time period in both 2008 and 2009 when the median price fell by more than 11 percent.
“The median price still is 17.2 percent ahead of the trough in this cycle,” added Appleton-Young. “However, the expiration of the federal tax credit for home buyers and the impact of the Federal Reserve’s withdrawal from the mortgage market continue to be the wild cards as we move through the year.”
Highlights of C.A.R.’s resale housing figures for January 2010:
. C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in January 2010 was 5.8 months, compared with 7.3 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
. Thirty-year fixed-mortgage interest rates averaged 5.03 percent during January 2010, compared with 5.05 percent in January 2009, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.33 percent in January 2010, compared with 4.92 percent in January 2009.
. The median number of days it took to sell a single-family home was 33.8 days in January 2010, compared with 50 days (revised) for the same period a year ago.
Regional MLS sales and price information are contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.
In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 160 of the 366 cities and communities reporting showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)
Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for January may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org/marketdata/historicalprices/2010medianprices/jan2010medianprices/.
. Statewide, the 10 cities with the highest median home prices in California during January 2010 were: Newport Beach, $1,158,000; Santa Monica, $838,000; Santa Barbara, $810,000; Danville, $800,000; Arcadia, $799,000; Mountain View, $755,000; Yorba Linda, $703,750; Redwood City, $680,000; San Ramon, $660,000l; and Redondo Beach, $649,500.
. Statewide, the cities with the greatest median home price increases in January 2010 compared with the same period a year ago were: Redwood City, 43.2 percent; Rancho Santa Margarita, 38.1 percent; Laguna Niguel, 35 percent; Pittsburg, 29.7 percent; Fullerton, 25.9 percent; Yorba Linda, 24.2 percent; Oxnard, 23.6 percent; Galt, 19.9 percent; Auburn, 19.9 percent; Chino Hills, 19.1 percent; and Petaluma, 17.9 percent.
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