The Phoenix Area Foreclosure Experts

Super Bowl outcome determines housing market?

Before anyone takes this article too seriously, it is intended only to make you smile.  It is in no way a prediction of the housing market. After all, the housing market is floundering regardless of the Super Bowl.

This article was originally posted on The Mortgage Reports Blog.   What follows below is a reprint of that article and the reason everyone should root for the Arizona Cardinals to win the Super Bowl.   Here is a reprint:

The Pittsburgh Steelers have won 5 Super Bowls in the history of its franchise and -- for the sake of the housing markets -- let's hope this year doesn't make Number 6.

In 4 of the 5 years the Stillers won it all, the national real estate market floundered over the 12 months immediately following their championship.  Check it out:

    * 1975: Home prices fell 1.37%
    * 1976: Home prices rose 3.22%
    * 1979: Home prices fell 2.84%
    * 1980: Home prices fell 4.81%
    * 2006: Home prices fell 3.60%

Meanwhile, let's look at the championship history of the Arizona Cardinals franchise:

    * 1925: Home prices rose 5.2%
    * 1947: Home prices rose by 21.3%

Clearly, this spring season's home sellers should be rooting for the Cardinals Sunday.

But, it doesn't stop there.  More than few economic analysts fingered the housing market as our nation's way out from recession.  It's an idea that easy to latch onto, after all.  As housing prices have plunged, mortgage lending has tightened and consumer spending has gone la bye-bye.

A reversal in home prices could turn the economy around.

Therefore, aside from two major caveats -- (1) that there's no such thing as a national real estate market, and (2) that median sales price is an irrelevant statistic -- it's pretty clear: it's in America's best interest for the Steelers to lose the Super Bowl.

So, in the name of all that is patriotic and good, here's your personal plan for Super Bowl 43: Cheer for the Cardinals, jeer for the Steelers. Anything else is anti-American.

Fulton homes Corp. files chapter 11 bankruptcy reorganization

The Phoenix Business Journal confirmed that Fulton homes Corp. has filed Chapter 11 bankruptcy.   Normally in Chapter 11 cases, companies continue to operate during restructuring, which is the expectation with Fulton homes.   The company was founded 35 years ago by Ira Fulton.   Doug Fulton, his son, is the president of Fulton homes.

Neither the   Fultons nor company bankruuptcy attorney Marc Roth returned calls from the Arizona Republic seeking comment late last night.  The company is scheduled to have its court mandated meetings with creditors on March 3.

Filing for bankruptcy will undoubtedly affect their ability to continue operations during their reorganization.   Not only does filing bankruptcy erode the confidence of customers, but it's likely that future lenders will require Fulton to secure its credit with company assets and charge higher interest rates.

Many Valley homebuilders, including Fulton, had a large inventory of spec homes built from 2005 to 2007.  Builders have been aggressively trying to sell spec homes, but it has been a tough road to compete with the low prices of bank owned homes.

 According to the Arizona Department of Real Estate,there are 41 projects by a variety of builders that have filed for bankruptcy protection since 2007.  Some of the more notable builders include Trend Homes, KB Homes, Americabuilt Communities, and Engle Homes.

Common loan modification myths

 Federal Loan Modification Law Center spokesman,  Ralph Roberts, recently talked about the top myths concerning loan modification. He said many people  have  heard rumors which, sometimes, are perpetuated by passing them on to other people.   Here are the five myths he addresses:

1. "The bank wants me out of my house" -- Instead, banks make more money when you make monthly payments.  Going through the foreclosure process costs them lots of money to include: losing  the homeowners payments, attorney expenses, rehabbing the home, and selling expenses.
2.  "My credit score is so bad I won't qualify" --  Instead,  this is not a refinance.  Credit scores are not much of a factor in loan modifications.  The major factor in a loan modification  is your ability to make the payment.

3. "I am not late on my mortgage payments so I won't qualify" -- Instead, many lenders are now working out loan modifications with borrowers who are up-to-date on their payments.  This was true in the early days of loan modifications.  Some lenders required you to be at least 61 days delinquent.    However, lenders have had to change requirements to adapt to the market.

4. "I would be better off walking away or declaring bankruptcy then modifying my loan" -- Instead, you are better off to save your credit and  retain the chance to borrow money in the future.

5. " It's too late.  I have  already received a foreclosure notice" --  Instead, as long as you still reside in the home you may have time to work out a loan modification.  The sooner you take action, the more options you may have available.  Contacting the lender demonstrates a good-faith effort.

Real Estate "risk list"

I have written about title giant PMI Group in previous posts on this blog.Their quarterly metropolitan area "risk list" came out last week. The list covers 381 markets and ranks them according to the probability of real estate price declines during the next year.

The 10 areas most likely to see real estate price declines:

1. Fort Lauderdale, FL
2. Riverside-San Bernadino, California
3. Orlando
4. Miami and Miami Beach
5. Tampa-St Pete
6. Las Vegas
7. Los Angeles
8. Santa Ana-Anaheim-Irvine; CA
9. Jacksonville, Florida
10. Sacramento-Arden-Arcade-Roseville; CA

The least risky markets, in terms of avoiding short-term valuation losses, according to PMI: Texas dominates the list with Dallas, Ft. Worth, Houston and San Antonio all in the top five. But Pittsburgh, Charlotte, Cleveland, Denver and Indianapolis also are among the safest bets to grow property values in the next 24 months.

Another way to state the results of this report would be: the best deals ( lowest prices) can be found in cities on the top 10 list. The banks are still clearing out inventory.  The least risky markets will have less depreciation and, therefore, there is much less motivation (area more stable) to sell properties as cheaply.

Where was Phoenix-Mesa on the list? #11.

Fannie Mae policy change helps investors buy condos

Fannie Mae changed its policy for investors appling for condo financing. Investors will no longer have to deal with its former rule whereby vacant, bank foreclosed and REO units were counted as non-owner occupied.

That's an important distinction for investors who can't qualify for properties with less than 51% owner occupied residences. The idea is that there's a greater risk of default in projects that have high numbers of investor units, with absentee owners renting out their units.

Under the revised policy -- which was requested by the National Association of Realtors in November -- Fannie says it will now count bank-owned REO units that are listed for sale, but are not rented, as if they are owner-occupied when computing the 51 percent ratio.

Countrywide is not so bad

by Shawn Roberts   shawn@reliablepropertysoltions.com

I know that Countrywide has a pretty bad rap in today’s market, but I disagree!  Due to what Reliable Property Solutions has experienced over the last year I don’t cringe anymore when we work a short sale with Countrywide.  I can almost 100% promise (OK, maybe 95%) that if everyone involved (Listing Agent, Buyer’s Agent, Seller and Buyer) with the transaction stay the course with Countrywide their short sale will work out.

This entails everyone understanding from the beginning that it will take 90+ days for an approval.  This may also entail calling 2-3 times a day (our job) to get what you want until it is done!  Extreme diligence and patience always pays off with Countrywide.  For example, we have had a handful of short sales where the Buyer’s lender presented appraisal issues after Countrywide approved the short sale.  We went back to Countrywide with the appraisal, price change addendum and a letter from the listing agent.  Every single one of these short sales got reapproved at the reduced price. It may have taken an additional 7-30 days to get the new approval, but we got it!

Here is a breakdown of the Countrywide timeline:

Order/Review Appraisal                        30 days
(once value deemed sufficient the file will be assigned)

Stage 1
(setup file)                                15-20 days

Stage 2                               
(negotiation stage)                    15-20 days

Stage 3                               
(final approval and closing)        15-20 days

This rough timeline reflects business days and is subject to change.  I recently received a Countrywide approval in less than 6 weeks.  I thought it was a mistake!

Trust me, extreme diligence and patience from all involved will get everyone what they want.  Don’t give up and keep pushing!

Buy and Bail Protection

by Craig

One of the best ways to buy a foreclosure in this market is of course with no money down. think about it,  you put no money down and buy a home for let's say 100,000 that was selling for 200,000 a year and a half ago  - that's not just a good deal it's an amazing deal. USDA has 100% financing or "rural" areas. Yes that means you people who want to live in the city can not get this!  But they are even coming around to the buy and bail protection that Fannie and Freddie and FHA have already put into place.

So everybody seems to be falling into line on this policy - here is the exact wording from USDA...  

An increasing number of homeowners are attempting to purchase new homes but cannot sell their existing principal dwellings because of prevailing market conditions. Some homeowners are attempting to retain and rent out their existing principal residence, while at the same time trying to purchase a new principal residence. The homeowners attempting to rent out their existing properties are producing newly signed leases as evidence of income to offset the costs of maintaining the old residence and continue making payments on it. Increasingly, income from the new leases never materializes and the old principal residence goes into foreclosure.

Newly signed leases:

A newly signed lease has no historical basis to conclude that the income is likely to continue. Applicants who wish to purchase a new principal residence and retain or rent a residence must qualify with all mortgage liability payments. Income from newly signed leases cannot be used in debt ratio calculations. The exclusion of rental income will ensure the applicant has sufficient monthly income to meet all mortgage and liability payments. This applies to manual and automated underwritten loan files.

So basically if you want to buy a screaming deal out there right now but have not sold your home first - NO PROBLEM -  just make sure that your payment on your current home that is for sale and the new home mortgage payments added together are still something you can qualify for with your current income. IF not, sell your home first then find the screaming deal... if the deal is gone just stop close your eyes and listen  - I promise you that you will hear another deal screaming very close by.

Mesa joins ranks of cities under $100 per-square foot

It took 2 years for the city of Mesa, Arizona to fall below the sales price of $100 per-square foot.  Phoenix went under $100 per-square foot in November of 2008. Glendale hit that mark in September 2008.  These three cities are mentioned because they comprise three of the four largest cities in the state of Arizona. In case you don't know your Arizona statistics: Phoenix is the largest city, Tucson is the second-largest, Mesa is the third largest, and Glendale is the fourth largest city.

Read the chart this way: 3,519 homes were available for sale in Mesa on December 1, 2008.  415 sold ( 11.8% of the total) creating 8.5 months of inventory.  The average "sold" home was 1,801 square feet and sold for $172,749.  105 days was the market time.  The average price per-square foot was $96.

source: Arizona regional MLS; January 5, 2008

Picture day

Sunday's are days of relaxation, meditation, family, gratitude, and worship (if you are so inclined). I like to share my favorite photos on Sundays. I hope you enjoy this one. It was taken from 147 stories above the streets of Toronto, Canada in the CN Tower ( Canadian national). Here is a link to the tower if you would like more information:

CN Tower, Toronto

 

Then: bad mortgages now: unemployment?

Many industry sources will say that the majority of foreclosures due to bad loans have already transpired.  Granted, there are still five year ARM's  that will be coming due in 2009 and in 2010 ( including one for yours truly). However, for the sake of argument, let's say that the majority of bad loans and three year ARM's have already been foreclosed upon.

Enter unemployment. Many of us know people who have either lost their homes -- or are in the process of losing them -- due to unemployment.  Many people in the real estate industry were looking forward to a real estate recovery in 2009. The chances of such a recovery seem to be getting dimmer. After all, it makes no difference how low your interest rate or monthly payment is if you're not making any money.

Any thoughts?