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Archive for December, 2009

California home prices and sales showed steady improvement during the typically slow month of November!

California home prices and sales showed steady improvement during the typically slow month of November, fresh data released Thursday showed, with the San Francisco area outpacing Southern California.

The state’s median home price in November was $261,000, a 1.6% increase from the month before and up 1.2% from November 2008. The statewide year-over-year increase was the first since July 2007.

The increase reflected an overall improvement in the housing market, with fewer foreclosures making up the total mix of homes for resale and an overall bounce back from the severely depressed prices seen in 2008, according to MDA DataQuick, a San Diego research firm that closely tracks California’s housing market.

“We have been in the middle of a kind of mini recovery in California,” said Gerd-Ulf Krueger, principal economist and founder of HousingEcon.com. “It looks like the housing market, at least for now, has bottomed.”

Home sales were up 11.5% statewide in November compared with a year earlier, though down 13.1% from October. A decline in sales between October and November is typical as the slower fall season kicks in. An estimated 35,860 homes were sold statewide last month, DataQuick said.

Of the previously owned homes sold in November, 40.6% had been foreclosed on during the last year. That is the lowest percentage since May 2008, when the figure was 39.8%. Foreclosure sales peaked at 58.8% in February 2008.

Many experts fear that a second wave of foreclosures could hit the market next year, putting pressure on prices. And the long-term housing picture is unclear, DataQuick President John Walsh said in a statement Thursday.

“A lot of people sense lenders are holding back and that there’s at least one more round of foreclosures lurking around the corner,” Walsh said. “Combine that with less government stimulus in 2010, and it would threaten whatever price stability we see now.”

In the San Francisco Bay Area, the median price paid for a home was $387,000 in November. That was a 10.6% increase from November 2008 but a 0.8% decline from October of this year. The year-over-year uptick was significant as it was the second month in a row that the median price paid for a home in the Bay Area increased on that basis.

The median price paid for a Southern California home increased 1.8% in November from October, to $285,000, and was flat compared with November 2008, according to a DataQuick report released Tuesday.

Walk Away News: Morgan Stanley Gives Properties Back to the Lender

From Wall Street Journal Online

Obama’s standardized short-sale plan could help troubled homeowners?

NATION’S HOUSING

Reporting from Washington – If you’re in trouble on your mortgage and can’t get a loan modification, check out the Obama administration’s standardized short-sale plan that’s scheduled to roll out in the next several months.

The program, outlined Dec. 1 by the Treasury Department, is an attempt to streamline what has traditionally been a contentious, time-consuming process by requiring lenders and others to use nationally uniform documents, timelines and financial incentives.

A short sale involves a lender or investor agreeing to collect less than the balance owed on a mortgage debt out of the proceeds of a negotiated sale of the property. Often a short sale is the last alternative to foreclosure available to distressed homeowners and banks. Say you’ve lost your job and fallen behind on mortgage payments. With little or no income, you can’t qualify for a modification program.

In this situation — grim as it is — your best move may be to see whether your lender will accept a short sale. Though the idea sounds straightforward, in practice it is not. First, the bank needs to be convinced that a short sale would yield it more money at the bottom line than a foreclosure would.

This usually means you need to bring in a real estate agent who knows the ropes and can pull together the key information needed by the bank: recent comparables on closed sales, local market trends and the likely selling price of your house.

You’ll also need a buyer for the house — one who’ll pay a price acceptable to the bank and has financing to close the deal. If you happen to have a second mortgage or home equity credit line on the property, you’ll also need to negotiate how much that lender will receive from the sale proceeds.

That can be tricky. In depressed real estate markets, the second-lien lender may be holding a note that’s worthless in a foreclosure because plummeting property values have wiped out the collateral. Yet that same bank is in a pivotal position: It has the legal power to block the short sale by refusing to sign on to the deal.

Equally troublesome in short sales is the fact that banks, mortgage servicers and bond investors often have conflicting requirements for documentation and financial yields that can complicate and drag out the haggling for months.

Enter the Obama administration’s new streamlining plan. Besides requiring lenders and servicers to use uniform documentation, pre-approved short-sale terms and accelerated turnaround times, the plan provides financial incentives for key players:

* Homeowners who successfully complete a short sale under the program receive $1,500 to defray relocation costs.

* Mortgage servicers can receive $1,000 per case.

* Investors get $1,000.

* Second-lien holders receive up to $3,000 from the sale proceeds.

Even real estate agents get something: The rules prohibit banks from forcing them to cut their commissions from the listing agreement as part of the final deal.

Sounds like a formula for encouraging a lot more short sales, right? The jury will be out on that for months, and most major lenders are still studying the fine print of the Obama program. But early reactions from big banks appear to be positive.

Dave Sunlin, a senior vice president for Bank of America Corp., said: “We’re very pleased. We welcome any effort to reach standardization for all parties” involved in short sales.

Faith Schwartz, executive director of Hope Now — a Washington-based group representing the country’s largest banks, mortgage servicers, bond investors and consumer counseling organizations — said the plan should bring “uniformity and standards” to a process usually characterized by “mayhem” among the negotiating parties.

Scott Brinkley, a senior vice president for First American Corp., a firm that provides market data for banks, said, “You’re going to see a lot of cooperation” by lenders and investors.

But there could be a major pothole: The Obama plan tilts to consumers by requiring second-lien holders to drop all financial claims against short-selling borrowers beyond the $3,000 they take out of the deal.

Travis Hamel Olsen, chief operating officer of Loan Resolution Corp., a Scottsdale, Ariz., consulting firm, says the $3,000 payment won’t be enough for many second-mortgage lenders. Today they frequently obtain additional short-sale compensation from sellers as the price of their participation — in cash or through promissory notes — far beyond $3,000.

“I’m concerned that that could limit participation” by second-lien holders, Olsen said.

Bottom line for homeowners who might benefit: Don’t have wild expectations, but definitely ask your servicer whether it plans to participate and whether the forthcoming standardized plan for short sales might work for you.

By Kenneth R. Harney