Sales of new homes posted another large gain in April as buyers rushed to sign contracts before government tax credits expired.

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The number of delinquent homeowners surged to record highs in the first quarter of 2010, as more than 10 percent of homeowners missed one payment or more, according to reports from the Mortgage Bankers Association.

More than 4.6 percent of homeowners were in foreclosure, which is also a record.  There was a shift in the type of foreclosure activity, as the number of households in the final stages of foreclosure increased, but the number of borrowers entering foreclosure actually decreased.  This appears to indicate that lenders are working through the backlog of foreclosed properties.

Unemployment and reduced income are driving foreclosure activity. The first wave of foreclosures was due to subprime lending and sub-par underwriting standards, but prime borrowers with good credit are the fastest growing segment of foreclosures, making up 37 percent of new foreclosures, an increase from 29 percent in the first quarter of 2009.  Some of this can be attributed the uptick in strategic defaults, which occur when borrowers who are underwater on their mortgages but are able to make their monthly payments make the decision to stop paying their mortgages.

This follows the news that more and more borrowers are dropping out of the Home Affordable Modification Program (HAMP), the Obama Administration’s main anti-foreclosure effort.  Out of the 1.2 million people that have enrolled in HAMP since the inception of the program, only 300,000 borrowers have received permanent modifications, and the rate at which mortgages are being modified is declining.

Although it is good that new foreclosure activity is declining, it suggests that the housing market is in for a slow recovery.  The silver lining is that the combination of near record-low mortgage rates and low property values makes this a buying opportunity that will not likely be repeated in the near future. Click Here to read an article on this subject in Bloomberg Business Week magazine.

If you are in struggling to make your payments and are looking for an alternative to foreclosure, call me today at 760.219.3964 or e-mail me at pam247re@hotmail.com for a free consultation.

As a certified short sale specialist, I’ve been on the front lines of the foreclosure crisis. I’ve heard dozens of stories from struggling homeowners who have become frustrated with the Obama Administration’s Home Affordable Modification Program (HAMP). I have not met anyone who has been successful in applying for foreclosure relief under the program.

Most people I talk to were told they did not qualify for the program after months of back-and-forth with their lender. But, the real problem is that the foreclosure process continues while they negotiate with the bank. Many people are unaware of this and are being forced out of their homes.

Well, my suspicions were correct, the program is a failure and more than twice as many homeowners were kicked out of the Obama administration’s signature foreclosure-prevention program last month as were granted permanent relief, new data released Monday show.        

Here’s the full story in the Huffington Post.

The U.S. Treasury Department announced a plan that could help homeowners who are experiencing financial problems avoid foreclosure. This plan which was announced last November 2009 and has taken effect since April 2010, could help so many homeowners who are at risk of foreclosure be free of their mortgage debt. They will no longer go through foreclosure and will instead be given $3,000 in order for them to relocate.

The U.S. Treasury plan grants incentives to homeowners and lenders to accomplish “short sales.” Short Sales are real estate transactions wherein the lender will conform to a sale price that is less than what the borrower owes on the mortgage. A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff – meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed. If you want to take a lesser hit in your credit then short sale is the way to go.  However, short sale deals have the possibility to fail because the process takes too long.

Short sales often get delayed because of the transaction’s complicated nature. But under the U.S. Treasury Department’s plan, mortgage providers have 10 days to approve or deny a request for a short sale so the process is really fast and simple unlike before. It streamlines and standardizes the documentation necessary for the short sale process. And the borrower must be fully absolved from the debt of the primary mortgage after the sale is done.

Below is the short sale process made simple:

Incentives to Borrowers

Borrowers who accomplish the short sale process are then absolved from the debt of their primary mortgage. They will also be given $3,000 in order for them to relocate.

Incentives for Lenders

Mortgage providers and investors who complete a short sale or a deed-in-lieu transaction are then given payments of $1,500. A deed-in-lieu transaction is the process in which the deed is simply turned over to the lender.

Standardized Documentation

The plan’s program created one standard set of documents which minimizes the complication of the short sale process. It has published standardized and streamlined documentation for short sales. This will significantly increase the use of the option.

Put the Lid On Payments to Subordinate Lien-Holders

Participating subordinate lien-holders can receive no more than $6,000 as a group from the proceeds of a short sale under the new plan. Because in the past, some holders of second mortgages have hindered short sales by asking for very expensive payments in exchange for the release of a claim.

Time Limits for Short Sales

The short sale process often takes a long time to accomplish in the past. But now lenders only have 10 days to approve or reject a short sale which is a very important step. Homeowners are then allowed at best 90 days for them to market their home and sell it, depends on their local market conditions. The marketing of the property can coordinate or continue at the same time as the foreclosure process. No foreclosure can take place during the marketing period, considering the borrower has honest intentions to sell the property.

I am often asked about loan modifications through the Home Affordable Modification Program (HAMP). The common question is, do they work and how do I qualify. In my experience, loan modifications are not working because, bottom line; banks still want their money. My feelings are supported by the numbers as expressed in this article entitled, Foreclosure Prevention Gains Little Ground. The numbers show that roughly 300,000 borrowers have received a permanent modification under the program. Meanwhile, foreclosure filings continue at a rate above 300,000 for the 14th straight month, according to Realty Trac.

It’s an interesting article that I hope you’ll find useful. If you’ve attempted to modify your loan, but were unsuccessful, a short sale may be the best way to go. If so, please call me at 760.219.3964 or e-mail me at pam247re@hotmail.com to discuss your options today. 

There are a couple of interesting articles in the Desert Sun today on the real estate market in the Coachella Valley. The first is an article about how cash buyers are beginning to drive prices up in the valley.

Read the article here.

I am seeing a lot of cash buyers in my real estate business. In fact, it seems that as soon as I list a property, a buyer is waiting with an all cash offer. This is great news if you are a property owner thinking about short selling your home. There has never been a better time to sell your home through a short sale. I am starting to see banks respond much quicker and am also starting to see them accept offers faster (specifically all cash offers).

There seems to be a lot of investors ready (and willing) to purchase homes through a short sale. Here’s some statistics on the local market. Additionally, the Coachella Valley housing market is showing strong signs of recovery throughout the desert – and that’s good news for sellers.

Read an additional article here.

I am a Certified Short Sale Specialist (SFR) and can help you sell your home through a short sale. I am well versed and experienced in this area and will help you move through the process quickly to get you out of your current situation. I am always willing to answer your questions and can be reached at 760.219.3964 or via e-mail at pam247re@hotmail.com.