Short Sales See Big Jump in Activity

Despite having a bad wrap for often being slow and problematic (well at least for those who don't use LA City Short Sales), short sales are quickly becoming a preferred method to dispose of distressed properties and avoid foreclosure.

According to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions, short sales accounted for a substantial 15.9 percent of home purchase transactions in January. This was well above the share of other distressed property activity – with damaged REO accounting for 13.4 percent of activity and move-in ready REO making up 13.8 percent.

The January figures represent a steady increase in short sale popularity. As recently as November of 2009, short sales accounted for 12.4 percent of the home purchase market, according to the Campbell report, behind move-in ready REO at 12.6 percent and nearly even with damaged REO transactions at 12.3 percent.

Short sales are an effective method of resolving mortgages in default, both for large lenders and for the government agencies supporting lenders’ efforts. Short sales typically result in lower lender losses and houses left in more saleable condition.
In addition, borrowers that agree to a short sale escape the bad credit marks of a foreclosure and can often buy another house with mortgage financing after only two years. For borrowers going though the foreclosure process, mortgage financing can be unavailable for a period of five to seven years afterward.

Short sale properties are most often purchased by first-time homebuyers, the January survey results revealed. Currently, mortgage servicer approval on offers
for short sale properties can take several months, making these transactions difficult for current homeowners who often need to conduct not one, but two, transactions in quick succession to also sell off their current residence. In contrast, first-time homebuyers more often have flexibility around the timing of short sale closings.

“Short sales activity took a temporary dip in November around the expected expiration of the first-time homebuyer tax credit,” reported Thomas Popik, research director for the Campbell/Inside Mortgage Finance survey. “Few first-time homebuyers wanted to take the chance that their short sale transaction wouldn’t be approved by the November 30 deadline. But now that the tax credit has been extended, we see first-time homebuyers once again snapping up attractively priced short sales.”

The survey results showed that short sales typically sell for 91 percent of the listing price. In contrast, move-in ready REO sells for 99 percent of listing price, on average.

Short sales are becoming particularly attractive in some of the hardest-hit housing markets. As DSNews.com previously reported, 21.1 percent of all existing-home sales in the foreclosure-ravaged Las Vegas area last month were short sales.

According to recent report from the local FOX news agency in Phoenix, Arizona lawmakers are currently considering a bill that would mandate realtors there learn short sale strategies. The state’s Short Sale Task Force is recommending that the Legislature require local agents to take 15 hours of short sale classes so they can successfully navigate the process.

To help the industry meet growing demand for this increasingly popular foreclosure alternative, The Five Star Institute (FSI) will be hosting a Short Sale Summit in Las Vegas on March 12 as part of its West Coast 2010 Spring Training. The day’s full agenda will be dedicated to helping agents and other real estate practitioners master the art of short sales, and upon successfully passing a course exam, attendees will receive The Five Star Short Sale Certification.

In addition to the full-day summit on short sales, FSI’s 2010 Spring Training will be held on March 10, 11, and 13, and covers such areas as building an REO business, mastering broker price opinions (BPOs), and working with the distressed borrower.

You can be ahead of the trends in short selling if you CallToni.com!

2010 Winter Olympics Opening

The 2010 Winter Olympics opened this weekend in Vancouver, BC. with a beautiful ceremony that celebrated Canada's diverse and easy going nature. There was even a bit of improvisation when there was a technical malfunction with the 4th leg of the cauldron. While awkward for a bit the 4 athletes handled the moment swimmingly as if it was all part of the plan.
The United States will be looking to top their 2006 Torino medal count of 25 which was good enough for second overall just behind Germany's 29. The weekend wrapped up with the US leading with 6 narrowly in front of Germany following with 4.

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DSNews: House Committee to Investigate Obama's Modification Program

The House Committee on Oversight and Government Reform has launched an official investigation into the federal government’s foreclosure prevention program.

According to a statement from the head of the committee, the probe was triggered by complaints that servicers have been slow and inconsistent in modifying loans under the Making Home Affordable (MHA) program, and are not communicating clearly with eligible homeowners.

Chairman Ed Towns (D-New York) says he’s a strong proponent of efforts to ease the burden on struggling homeowners but has received “concerning information” that the administration is not fully living up to its pledge to help borrowers mitigate foreclosure.

“While I applaud Treasury’s efforts, numerous concerns have been brought to my attention regarding the effectiveness and efficiency of the MHA program and the extent to which it has assisted struggling homeowners,” he said.
In a letter to Treasury Secretary Timothy Geithner, Towns wrote, “… it is my understanding that Treasury has thus far refused to reveal in detail how it defines ‘net present value’, one of the key criteria for homeowner participation in the mortgage modification program.”

Towns added, “Moreover, if a homeowner is denied a permanent mortgage modification, the specific reasons for the denial are not revealed. Finally, Treasury has not established a process for homeowners to appeal the denial of a permanent mortgage modification.”

The latest figures from Treasury show that servicers have initiated just over 900,000 trial modifications, but according to the Congressional Oversight Panel, home foreclosures across the nation have increased faster than the rate of new HAMP trials, by more than 2 to 1.

Towns also noted that the servicer progress report issued last month demonstrates that certain institutions have made “dismal progress” in modifying loans, even though they service a large number of homeowners potentially eligible for HAMP.
Chairman Towns says he expects specific data requested for the investigation and a response to his inquiry from the Treasury Department by February 18.

Towns’ concerns echo similar accusations made by foreclosure counselors and distressed homeowners alike over the past several months that servicers still may not be equipped to handle the excess workload brought on by the government program and may be letting an unsettling number of borrowers slip through the cracks.

LA City Short Sales is here to help make sure you don't slip through the cracks.

Synopsis: LA City Short Sales

Our Mission

LA City Short Sales, a division of Toni Patillo & Associates, is dedicated to assisting distressed homeowners nationwide by identifying and implementing the best available loss mitigation option to prevent foreclosure.

Following a thorough analysis of each situation by our specialist, we work with homeowners and their lenders to come up with the appropriate loss mitigation solution, whether it is reinstating the mortgage, a forbearance agreement, a loan modification, a repayment plan, a deed in lieu of foreclosure, or a short sale agreement. LA City Short Sales diligently works on behalf of the homeowner to market the sale, negotiate and secure a fair agreement with their lender.

The Short Sale

Also known as a real estate short pay-off or a pre-foreclosure workout, a short sale is an agreement with a lender to accept less than the amount owed by a borrower via a sale of the property to a third party. With this agreement, the lender releases the borrower from the mortgage, thereby preventing foreclosure.

What is a Loan Modification?

A loan modification is a change in one or more of the terms of a borrower's loan, and results in a payment that the borrower can afford. These changes may include either an extension of the term of the loan, and/or a reduction or modification of the interest rate, the monthly payment, or the principal balance

If you would like to know more about the short sale process, review the Short Sale Process. Borrowers Options and our Option Comprison.

If you're planning on buying review our Short Sale Listings, or search the MLS for properties in Playa Vista, Marina del Rey, Ladera Heights, Leimert Park/Baldwin Hills and Westchester. Get a free market snapshot today to learn more.

If you have any questions, please feel free to contact Toni Patillo directly.

310.482.2035

DSNews: Real Estate Market Trasitions Into 'New Normal'

As the real estate market begins to recover, new research from the Urban Land Institute (ULI), a nonprofit education and research institute, says the “old normal” will not be returning.

According to Housing in America: The Next Decade, a new research paper authored by John K. McIlwain, senior resident fellow of ULI, emerging trends in demographics and consumer behavior will become major drivers of new housing opportunities, resulting in a residential market vastly different from the one that existed prior to the recession.
“The ‘old normal’ will not return,” McIlwain said. “Over time, a new mode of metropolitan development will emerge, presenting opportunities and stiff challenges. Those who fail to understand these new trends will find themselves building what is no longer in demand.”

Although housing stabilization has begun in the nation’s strongest employment markets, McIlwain predicts overall home prices will likely decline an additional 10 percent in 2010. He said the growing number of consumers who are choosing to walk away from their mortgages suggest a fundamental change from the long-held notion of home ownership as the ultimate “American dream.”

As those entering the housing market will be more apt to rent longer and to place more emphasis on buying for shelter rather than investment, McIlwain believes the disillusionment over homeownership as a way to build wealth could persist for decades to come.

According to McIlwain, the lasting stability of the U.S. housing market depends on how and when the private home mortgage finance system is revived. As the federal government now supplies virtually all new mortgage funds through mortgage purchases or securitization, McIlwain said reducing this massive support will entail revamping or replacing mortgage suppliers and tightening risk requirements for mortgage issuers to restore investor confidence in mortgage-backed securities.
“Re-establishing a robust private mortgage market will require both strong market fundamentals and a reformed mortgage securitization structure that eliminates past abuses,” he explained.

In his paper, Housing America, McIlwain made two key predictions for the decade ahead. He said home appreciation will slow considerably to about 1 percent to 2 percent, and he expects the current U.S. homeownership rate, now at 67 percent, to fall to about 62 percent.

The report also cited four major U.S. demographic waves to watch for in the next 10 years.

Aging baby boomers (55 to 64 years old) will keep working even though they are nearing retirement age, and some will be forced to stay in their suburban homes until values recover. Those who are able to move will not choose traditional retirement locations, opting instead for more mixed-age living environments with an urban feel.
Younger baby boomers (46 to 54 years old) will find it difficult to their homes, hampering their ability to move. In addition, this group’s ability to purchase second homes will be greatly diminished, as the recession has left many younger boomers with flat incomes and less home equity. Like their older counterparts, they will be drawn to more connected, compactly designed communities when they are able to move.
As Generation Y enters the housing market, they will be far less interested in homeownership than their parents were when they were young adults. McIlwan said the recession has tempered the interest of this generation, and they will be renters by necessity or choice for years to come. Despite their small incomes, this group will gravitate towards close-in communities, choosing isolated housing on outer edges only as a last resort, and “green” homes powered by alternative energy will have a strong appeal to this generation.

Immigrants will make culturally-motivated decisions regarding housing and location. Already 40 million strong, the total population of legal and illegal immigrants in the United States has an even greater impact when the children and grandchildren are included as a factor. The tendency of this group to cluster and to live in multi-generational households suggests that they would prefer larger homes in neighborhoods with a strong sense of community.

McIlwain said all of these groups have some characteristics that reflect a desire to live in more pedestrian-friendly, transit-oriented, mixed-use environments that de-emphasize auto dependency. In addition, he said urbanization is being driven by the growth of two-person and single person households without children, a halt to baby boomer migration to the suburbs, the likelihood of Generation Y to rent rather than own, and public policies encouraging compact development.
As economic and land constraints make it impossible for urban infill development to accommodate all the housing demand represented by all the demographic groups, McIlwain said suburban development “must adapt or it will be obsolete.”

“The suburban century is over,” he said. “This is the urban century.”

Earth Song

If you missed the 2010 Grammys this was a must see.

Pending Sales Leveling

Following a market swing driven by response to the homebuyer tax credit, pending home sales in December have leveled off, according to a report Tuesday by the National Association of Realtors (NAR).

In November, the Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed during the month, fell to 95.6, a 16.4 percent decrease from surging activity in preceding months due to the anticipated expiration of the homebuyer tax credit. Following the extension and expansion of the credit, though, the PHSI in December jumped 1 percent to 96.6 and remained 10.9 percent above December 2008 when it was 87.1.

December’s PHSI varied from region to region. Compared to November, the PHSI in the Northeast jumped 2.3percent to 76.1 and was 14.9 percent higher than December 2008. The Midwest’s index of 86.9 was 5.2 percent higher than November and 8.7 percent above a year earlier.

In the South, pending home sales in December rose 2.2 percent from November to an index of 98.4, a 5.5 percent surge year-over-year. However, the index in the West fell 3.8 percent in December to 119.9 but was still 18.6 percent higher than the index one year earlier.

Lawrence Yun, NAR chief economist, said it is important to recognize how the tax credit is skewing market data.

“There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he explained. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years.”

Yun projects 2.4 million households will take advantage of the extended and expanded tax credit. While new-home sales will remain low due to a lack of construction, Yun expects existing-home sales to rise to around 5.6 million this year, up from 5.16 million in 2009. He said one of the greatest benefits of rising sales will be firming home prices.

“For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” Yun said. “As a result, the housing wealth for many middle class families has begun to stabilize.”