David Ormonde's Homes for Sale

Mortgage foreclosures on ice, or not on ice

Friday, October 15, 2010

What we know is there may be a lot of hoopla about nothing, but here are the facts:

In late September and early October some lenders and servicers began voluntarily halting foreclosures in select states while they reviewed their foreclosure processes.

So far, only Bank of America has extended its foreclosure moratorium to California, where the vast majority of foreclosures are conducted without a court order. Foreclosures in the other 23 states are processed through the court system.
Non-judicial foreclosures in California, however, do have legal requirements that lenders must follow. For example, California law requires that lenders for certain mortgage loans made between Jan. 1, 2003, and Dec. 31, 2007, attempt to make contact with borrowers to discuss options for avoiding foreclosure at least 30 days before filing a notice of default. Lenders also must sign a declaration in the notice of default stating that they tried to contact the borrower, made contact with the borrower, or fall within an exception (such as a bankruptcy filing).
The lenders and servicers that have placed their foreclosure moratorium on properties in the 23 states where courts are involved in the foreclosure process include: Goldman Sachs Group Inc’s Litton Loan Servicing, Ally Financial Inc.’s GMAC Mortgage unit, JPMorgan Chase, and PNC Financial.
These lenders/servicers have only temporarily halted their foreclosures while they review their foreclosure process. This is in response to findings that questioned whether some lenders/servicers were following the correct procedures to foreclose on a property.
This halting of foreclosures is a voluntary action taken on the part of these lenders/servicers and has not been mandated by either the states or the federal government.
Some members have begun to report the immediate impact of this moratorium on transactions that involve foreclosed properties. Delays in escrow and the removal of listed foreclosures are temporary results of this moratorium.
The immediate impact on the market will be the slowing of home sales, which could put upward pressure on home prices in the short term. The long-term effect on the market is uncertain at this point as it depends how long the moratorium remains in place.
Assuming the moratorium is lifted in the next month, the flow of REOs to the market should resume, but the uncertainty created by the moratorium may cause hesitation on the part of buyers.
Federal agencies, including the Office of the Comptroller of the Currency, the Federal Housing Administration, and the conservator of Fannie Mae and Freddie Mac, have asked lenders and servicers to review their foreclosure processes. This review would apply to all states including those like California where the vast majority of foreclosures are non-judicial.
The participating lenders and servicers believe their internal review processes should take anywhere from a few weeks to 30 days to complete.

A number of major banks recently have suspended foreclosures in 23 states due to problems with the signing of declarations in connection with judicial foreclosures — foreclosures that proceed through the court system. Bank of America has further expanded its suspension of foreclosures to all 50 states. In California, the vast majority of foreclosures are conducted through non-judicial foreclosure or trustee sales which do not involve a court process.

While California foreclosures are not conducted through the court system, lenders in California must still comply with other legally required procedures for non-judicial foreclosures. The media, politicians, consumer advocates, ambitious state attorneys general, and hungry lawyers everywhere have seized on “RoboForeclo,” (the “robo-signing“/rubber-stamping foreclosure docs scandal) the nation’s newest self-destructive mania. The question is, is there any substance to all the hoopla?

The ten year rule for real estate hasn’t changed for Tracy and the Central Valley of California

Tuesday, October 12, 2010

: Image via Wikipedia

It may be the worst of times, but then again it may be the best of times depending on whether you are buying or selling. Recent economic forecasts suggest that the housing recovery could take years. As a seller who has a strong motivation to sell, do you try to sell now or hold on for a better market? First consider where you want to be in 10 years. How do you envision your lifestyle? Is your current home too big, too small, or in the wrong location?

Homeowner’s who intend to move from one house to another can take advantage of low interest rates, if they are able to sell their current home. It is true you will probably sell for less than you would have several years ago, but then again you may get a deal on the home you buy. Of course this all depends on where in the country you sell and where you buy. However, if you don’t plan on living in your next home for the next eight to 10 years, this might not be a good time to make a move.

For sellers who purchased in recent years, selling requires a huge readjustment in their expectations. Many will probably sell for less than they paid; in some cases, a lot less. If they highly leveraged the purchase, or refinanced and pulled out equity, they may need to contribute cash to close the deal. Sellers who have no cash reserves and need to sell for less than the amount of the loans secured against the property will need lender approval to complete a sale. This is called a short sale. In this case, or with a foreclosure, sellers don’t have the option of buying another home until their credit is restored, which takes about two to three years for a short sale and five years for a foreclosure.

It may not be the best time to sell, but it might not be the worst either. Recent economic forecasts suggest that the housing recovery could take years. As a seller who has a strong motivation to sell, do you try to sell now or hold on for a better market? Again, this depends on how long you plan to live in your new home, keeping in mind that many people find that because of unforeseen circumstances they need to sell sooner than they had originally planned. Will you be financially able to handle the unknown? If you don’t plan on living in your next home for the next eight to 10 years, this might not be a good time to make a move.

Some listings in prime, high-demand markets come on the market and sell quickly, leaving other sellers in the area perplexed. Why isn’t their home selling? Why aren’t they receiving bids from multiple buyers? Listings that sell quickly are priced right for the market. They are homes that will work long term for the buyers, which means 10 or more years. They don’t need updating; they’re in move-in condition. And, they are usually located in high-demand, low-inventory neighborhoods. Buyers are waiting for these prime listings and will move quickly when they come along.

It’s very frustrating for sellers whose listings don’t receive an overwhelmingly positive response, especially if they put time and money into fixing them up for sale, and they thought they priced right for the market. Motivated sellers will need to accept the probability of a longer marketing period and a lower price. Expect low offers if your home has been on the market for awhile. It’s natural for buyers to try to buy a home as inexpensively as possible to cover for the possibility of a further downturn in the market. Don’t take it personally; counter any offer from financially qualified buyers who make a clean offer that’s not encumbered with complicated contingencies.

It may take several offers and failed attempts to find the right buyer. It isn’t easy for most sellers to reach a successful closing in this market. But those who stick it out can reach their goal. Waiting to sell could net you more for your home. But it’s impossible to know when that better time will arrive. The market will be volatile for the foreseeable future and good economic news will trigger a pickup in the market just as bad news will cause buyers to pull back. To take advantage of a pickup in the market, your home needs to be on the market or ready to go on a moment’s notice. For more information about market conditions contact David Ormonde at 209 832-0679 or email david@GoTracy.com.

How are property values doing in the Tracy/Central Valley area?

Sunday, March 14, 2010

David Ormonde’s Real Estate and Dinner Blog for the Central Valley and Tracy

Contrary to popular beleif, the average price per square foot for Tracy CA dropped - Currently at $119, a decrease of 1.7% compared to the same period last year. The median sales price for homes in Tracy CA for Dec 09 to Feb 10 was $234,000 based on 630 home sales. Compared to the same period one year ago, the median home sales price increased 0.4%, or $1,000, and the number of home sales decreased 27.5%.

There are approximately 286 resale and new homes in Tracy, including 1,095 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The average listing price for homes for sale in Tracy CA was $302,839 for the week ending Mar 10, which represents a decrease of 0.9%, or $2,738, compared to the prior week.

Here is what that looks like graphically according to Trulia: