Archive for January, 2009
EXTREME MAKEOVER HOME EDITION-COMING TO REDDING?
REDDING LIFESTYLES, SHASTA COUNTY
A little birdie told me local radio is running a spot to find candidates for a home makeover in the Redding area for a future episode of this prime time TV series. Has anyone heard the commercials? Have their producers heard about our local homeless advocate? She might just give them an earful about spending hundreds of thousands of dollars to makeover (actually bulldoze and rebuild) a home for only one family. She would likely tell host Ty Pennington to buy several homes, rehab them and provide them gratis to homeless families. Not going to happen, good idea, though!
The ABC show is for entertainment, not charity. A handful of lucky families are the beneficiaries of their efforts, but it was never intended to solve the nation’s housing problems. Try to explain that to those who see their efforts as a major waste of time and money.
If you know of someone deserving, click on this website for details:http://abc.go.com/primetime/xtremehome/index?pn=apply
Considering Shasta County’s current double-digit unemployment rate, and the apparent suffering of its citizenry, indicated by the county’s ranking second in the state for highest death rate (detailed in a recent R/S article), one local family would seem to be deserving of this TV show’s charity. Who will it be?
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
SOME LENDERS OFFER “EARLY WORKOUT” LOAN MODIFICATIONS
I read with interest a recent article in the LA Times reporting Fannie Mae, holder of more than 18 million loans in their portfolio, will allow borrowers in trouble to apply for a loan modification before they miss two or more mortgage payments. Up to this point, borrowers were told they must be behind in their payments 60-90 days prior to applying for a loan modification.
In response to increasing job losses, this policy change will allow thousands of borrowers facing financial difficulties the opportunity to apply for a loan modification before their credit is dinged for late payments. A borrower must be reasonably certain that changes to their income will result in missed mortgage payments, according to reporter Kenneth Harney of the LA Times. Fannie Mae may modify the loan payment for a trial period, usually four months, and will make the payment change permanent if the borrower makes the lower payment on time during the trial period and the lost income is not restored.
Loan servicers will look at each loan modification on a case-by-case basis verifying income, checking credit and requesting supporting documentation to weed out borrowers “faking it” to get a lower payment. Now that Fannie Mae is on board with their program, the majority of the big players in the secondary market have some sort of early intervention program to assist borrowers at risk for foreclosure. This is key to stemming the tide of foreclosures that are destabilizing the housing market, in my opinion.
As a side note, a recent government survey found, of borrowers who negotiated loan modifications in the first quarter of 2008, more than 53% were missing payments within 6 months of the work out. Bob Tedeschi, reporter for the New York Times spoke with Steven Horne, a former Fannie Mae executive who suggested the cause of these failed modifications was inadequate analysis of the borrowers financial situation to structure a modification to “best meet the borrowers’ financial circumstances.”
Loan servicers were anxious to resolve the problem quickly, not spending the time or effort necessary to devise a workable solution. The advice of Mr. Horne is for consumers to be more proactive by studying their own finances thoroughly and asking their lender for more personal attention to their financial situation. One option for consumers is to visit the Internal Revenue Service website and type “Collection Financial Standards” into the search box. The program offers help, based on consumer surveys, of what one can reasonably expect to pay for housing, food, clothing, health care, utilities, housekeeping supplies and transportation. Sometimes these cost estimates are specific for the state where you live. Spread the word to those hoping to keep their homes out of foreclosure.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
REDDING AREA REAL ESTATE MARKET: YEAR IN REVIEW
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Now that 2008 is history, I can summarize local real estate market activity as reported by real estate agents to the Shasta MLS. Residential units sold slid 10% from 2007, 1931 for 2008 vs. 2144 in 2007. The number of distress sales, foreclosures and preforeclosures, increased significantly last year. According to the Shasta MLS, 176 homes sold during 2007 were designated as REO’s, or bank-owned properties, compared to 625 in 2008. That represents a 355% increase in the number of foreclosures sold from one year to the next.
Preforeclosure, or short sale listings sold in 2008 created a new statistic virtually non-existent in 2007. 121 homes listed as short sales, where the asking price is less than what is owed on the home, closed escrow in 2008 compared to only 1 in 2007. 433 homes listed in 2008 were attempting a short sale. Only about a quarter of sellers were successful navigating the short sale process to a closing. The balance have or will be foreclosed upon or, in rare instances, the owners will refinance/modify their loan(s) and keep their home off the auction block.
Land sales dropped by a larger percentage due to new construction slowing to a crawl. In 2007, 398 land parcels sold. Last year, that dropped back to 205, almost a 50% drop. Mobile home sales (in parks and on private land) fared better with 169 sold in 2008 vs. 183 in 2007.
On New Year’s Day, only 1493 homes were available on the Shasta MLS and 121 of those (8%) are REO’s. 11% of the active residential listings are designated as short sales, where any potential sale must be approved by the seller’s lender. Based on the success rate in 2008, only 1 out of 4 of these sales will ultimately make it to the closing table.
Thus far, the majority of the bail out money earmarked by the federal government to aid the housing industry seems to be directed to unfreeze credit for future home buyers but provide little help to those in foreclosure. The sales numbers in Shasta County appear to support this reality. Rumor has it that mortgage rates could sink to history making lows in hopes of getting first-time buyers into home ownership. Restoring consumer confidence and stemming the tide of foreclosures will be key to turning the housing industry around in 2009!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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