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April 21, 2010  Alejandro Lazo   Copyright 2010 Los Angeles Times

The California foreclosure crisis appears to be abating, new data show, as the federal government and big lenders step up efforts to keep troubled borrowers in their homes.

Mortgage default notices — the first step toward foreclosure — plunged 40.2% statewide in the first three months of the year compared with the same period in 2009, according to San Diego research firm MDA DataQuick.

Foreclosure sales dropped 1.7% from a year earlier and 16.1% from the last three months of 2009, DataQuick said Tuesday.

The numbers suggest that the housing market won’t be flooded by a fresh wave of bank repossessions, which had been seen as a major threat to the market’s recovery.

“It is surprisingly good news,” said Gerd-Ulf Krueger, principal economist at Housingecon.com. “There is still a lot of supply lurking out there, but at this point, it looks like it is pretty much under control.”

Stuart A. Gabriel, director of UCLA’s Ziman Center for Real Estate, said the declining foreclosure numbers are “consistent with a broad range of indicators that are suggestive of not only a healing economy but the beginning of healing in the housing market.”

Southern California home prices jumped 14% in March from the same month a year ago, to a median $285,000.

Even so, economists note that further gains statewide are jeopardized by continued high unemployment, particularly in the Inland Empire and the Central Valley.

Foreclosure activity remains concentrated in these inland areas, which suffer from above-average unemployment. DataQuick said mortgages were most likely to go into default in Merced, Stanislaus and San Joaquin counties. Defaults were least likely in the Bay Area counties of Marin, San Francisco and San Mateo.

“In coastal California, things are looking pretty decent,” said Richard Green, director of the USC Lusk Center for Real Estate. “I still think if you get into the Inland Empire, Fresno, Bakersfield, Modesto, people are really struggling because the unemployment rate is so high — so that people just need help to get out from under.”

California loan default notices peaked at 135,431 in the first quarter of 2009. Since then, the federal government has put increasing pressure on banks to work with homeowners behind on their payments. At the same time, experts say, banks have recognized that flooding the market with foreclosures weakens the value of the properties they have taken back and must resell.

By Leigh Buchanan |  Feb 10, 2010

Inc. Magazine lives in New York City. I live in the Boston suburbs. So for three years I’ve been working out of my home office with nothing to look at but the Ozark-esque compound across the road and nothing to listen to but squirrels striking the back porch when they miss the bird feeders. It gets lonely at times. My house lacks both a water cooler and peers to engage in conversation around one. I miss the random hallway conversations that unexpectedly ignite ideas or forge alliances. When I know my colleagues are staying late to close an issue, I work late too, out of solidarity. The managing editor offers to order in dinner and sends out a link to the menu. I mentally place my order.

On the whole though, working at home has been a satisfying experience. I’ve managed to remain productive, and the stress reduction from not commuting has probably added a year to my life. So, as my New York colleagues embark on their telecommuting experiment, I offer them—and others new to working from home—eight lessons for thriving away from the mother ship.

1. Language is important. Tell people you “work out of my home office” or that you “work from home.” Never say, “I work at home.” That suggests you create window treatments freelance in your spare time. “Home office” sounds more professional when you’re giving someone your phone number for work. Also, if friends and relatives believe you are less than seriously employed they will start adding you to their lists of People Who Can Easily Host a Last-Minute Book-Club Meeting or Pick Up My Child After School.

2. Some people like to dress for work, even though they never set foot outside their houses. Others like to lounge around in sweats or pajamas. It’s a matter of personal choice. But if you prefer the latter, change clothes at least once at night and once in the morning. Casual is fine. Crusty isn’t.

3. Talk to someone from the office at least once a day. Long silences are nervous-making. After three days I start to feel like a kid at camp: worried that in my absence the rest of the family has moved away without telling me. Managers are best because they know when there’s reason to panic. Their calm becomes your calm. (I find Dan Ferrara, Inc.’s deputy editor, the most soothing person to talk to. A conversation with him is like half an hour sitting in the Lotus Position.)

4. Gossiping, Web surfing, popping out to do a little shopping at lunch—those are healthy ways to decompress when you’ve spent an hour commuting and another three hours sitting in an uncomfortable chair drinking pallid coffee from the kitchenette and trying not to overhear the conversation in the next cubicle. At home, where all is relative peace and luxury, such activities seem to me Caligula-scale decadent. Still no one can work eight hours without pause. So establish some useful, non-fun things to do during work breaks that don’t induce guilt. Do your laundry or clean your gutters or catch up on your work reading. Stock your bathroom with the collected oeuvre of Peter Drucker. If you have exercise equipment, work out. Unless you enjoy working out, in which case avoid that at all costs.

5. If you have children, explain that when your door is closed they should not disturb you. If they fail to comply, explain that if they continue to interrupt then you will miss your deadlines and lose your job, which will force the family to live on the streets and sell all their toys for food.

6. Larks will love working from 4 AM to 1 PM; owls from 3 PM to midnight. But remember some commitments (interviews, teleconferences etc.) will likely fall outside your preferred work hours. For the first few months I worked at home, I got up before dawn every day and put in a solid five hours before most people had arrived at the office. But often I still had people to talk to in the afternoon, and by that time I was seriously dragging. So while it’s tempting to create a routine customized for how you like to work, instead schedule yourself fresh every day based on how the world requires you to work. 

7. At our house we have three phone numbers: one for the family, one for the kids, and one for my work calls. When someone calls the family number the phone rings once. When someone calls one of the kids it rings twice in quick succession. When someone calls for me at Inc., it rings three times in quick succession. That way no one else ever accidentally picks up my work calls (“Hey Mom, it’s for you. Some guy named Steve Jobs. Can I have Julia over?”) Also, I always know whether to answer in professional mode (“This is Leigh Buchanan”) or personal mode (“Yeah, what?”)

8. Stay caffeinated. The Saeco Incanto Sirius is a totally awesome espresso maker, even if it does sound like something out of Harry Potter.

The Reality

With the current economic crisis forever worsening, no one seems to be immune to the onslaught of financial hardship. Whether wealthy or living on the fringe, people have been affected. Some are seeing what they have worked for over the last decade or more disappear right before their eyes. Some seniors have watched their annuities fade away, others have watched their retirement accounts dwindle to nearly zero. Every day hard-working folks, just like you and I, are losing jobs. Some families have seen one of their income earners laid off. Others are hardly able to make house payments, while some are slipping into foreclosure. There is no denying America and the rest of the world are deeply embedded in a catastrophic economic crisis, even those veiled in denial have changed their opinion by now.

But, now what, where do we turn?

Businesses, banks and individuals alike are all in this financial crisis together. So, we are all trying to mitigate the onslaught of financial hardship as best we can. Lenders are, for the most part, willingly modifying their customers loans; providing you can show a hardship. People ask, “What constitutes a hardship? What’s the criteria? Things are really hard for me, do I qualify?”  Based on the way many of us feel right now, we could all wave the white flag from behind the bunkers of debt, economic uncertainty and hardship. The fact is, if you can prove an economic hardship, and, your circumstances truly have affected your bottom line, that’s probably all you really need to do to qualify. Lost job, huge cut in pay, increased debt, your value has dropped, your adjustable has adjusted…the list goes on. If foreclosure has already begun, it is probably too late. Keep this in mind, if you have no way to pay the lender back, realistically, it would be hard for them to be motivated to modify your loan. But, if your present conditions are not insurmountable, but workable through reduced payments and or reduced debt, they are likely to work with you rather then see more foreclosures on their books.

Doing your own modification…

Working through the mêlée; the multiple phone calls,  layers of poor communication and dead-ends is a bloody nightmare. When you call the lender yourself, you’ll eventually speak with people that will take some of your information and promise to get back to you. After numerous attempts, you’ll finally get to someone who will actually process that information from you and seemingly start the ball rolling. Sometimes, just this part takes sixty days! Finally, if your lucky, someone will be assigned to you and eventually a deal will be worked out. The savings can be substantial or not. It’s hard to give an exact example as there are so many differing loan situations and varying hardships. But it isn’t out of the question to see your payment reduced enough to have a positive impact on your hardship. But, is that the best you could have received? Probably not!

Where the loan modification company comes in handy…

Most of us doing loan modifications are working through an attorney, consequently, your modification doesn’t remain stacked in the “lost Mitigation” department, but rather gets sent off to the legal department as it is accompanied with a cover letter from the Law office. The negotiation is usually expedited this way, improprieties and errors in the original loan docs are discovered and discussed, (quite often used as leverage) and, as a result, a better deal is negotiated.The lender really does want to help out the client. (Anything but another foreclosure).  But, they are really not well equipped to deal with the enormity of what is presently happening. If they are, they sure aren’t doing very good job of moving it along. Although, now, with the help of the attorney, the lender takes your modification a bit more seriously. Some of the deals are really quite extraordinary.  Occasionally, some debt will be forgiven, but more commonly the modification negotiated is based on interest rate and payment. It usually falls well within the range that makes it palatable for the client to remain in their home and continue making payments, allowing them to get back on their feet again. It really is a win/win for all parties.

It’s like anything, it can only be as effective as the weakest link in the process. It takes time, have you the time? Determne what the opportunity cost is. While you might be taken seriously by a lender doing it yourself, you know your transaction will be taken seriously when an attorney is negotiating on your behalf.  The good news is you can get a modification if you qualify. The bad news, or the reality I should say, like any benefit-it will cost you. Once again, pinpointing an exact figure is a moving target as there are so many different scenarios. Although, on the smaller conforming loans, you can expect to pay around three thousand dollars. On the bigger jumbo loans you might pay a point. And, on the super jumbo multi-million dollar loans you might pay a half point or more.

How much could it help you?

At the end of the day, let’s hope, what you pay is directly proportional to the benefits you are receiving.It is not unlike a refinance. (Sans the majority of the costs.) But, in this present interest rate environment modifications reflect the current market conditions and are the new terms for the life of loan! So, if you started out at 8% on a 1.5 million dollar loan and qualified for a modification and they consequently reduced it to 5.00%. That would reflect a payment reduction of nearly $3,000! Dropping your payment $3,000 a month is a pretty substantial example of payment relief. I’ve seen much more dramatic examples. But this gives you an idea of the willingness and benefits available for us in this present market. After all, presently, there are modifications being awarded to people, in my opinion, that are on the outer limits of financeability. If your are a hard working individual or family and they can see you’re going through a tough spot, more than likely this relief will jettison you to the other side of that dark tunnel, and, you might be able to finally grasp a bit of light at the end of that long corridor. This event alone might be the impetuous that motivates people to work a little bit harder so they don’t have to see their world toally implode. We’ve been disrupted enough already, totally loosing it all is really disruptive.

I have heard of some folks negotiating fairly decent deals directly with their lenders. (Unfortunately, the best examples are attorneys doing their own mods.) Now working with someone, a loan modification company, might shorten the process, it will certainly cost more, but, most importantly, it will increase the probability of better results. In the end, I suppose you get what you pay for.

http://www.msnbc.msn.com/id/28658811

http://www.msnbc.msn.com/id/28642344

http://www.msnbc.msn.com/id/28846944

After all, you might be in your home for a long time. Getting the best deal you can makes a lot of economic sense.

Contact Malcolm Scott for questions on Loan Modifications

310-245-2608

There are communities around the United States that are practically abandoned due to the recent wrath of foreclosures.

Real Estate Development deals have been stopped for lack of construction financing when nearly 90% complete. Businesses that need loans for equipment and expansion are being turned down that once had no problems getting financed. Mezzanine financing on large commercial real estate deals has almost completely dried up. And, the lenders that are still lending more resemble hard money shysters, yielding the kind of fees and interest rates that most would call usurious. Not to mention, the deals are now contingent upon the lender becoming an equity partner too. Thanks for the due diligence, we love being your partner. Surprise!

http://realestate.msn.com/article.aspx?cp-documentid=16831437&GT1=35000

The last couple of years probably can’t end quick enough for most of us in the mortgage industry. The same could be said for those of us in real estate. I’m sure there are some securities brokers that wished the windows opened in some of those big office buildings. Most of them didn’t leap, although, there are a few that I would have liked to push out! I mean that in a nurturing and loving way. I’m sorry, after I’m finished standing in the bread line I’ll go see my therapist to suppress this festering resentment I have! Speed-bump?

The times have certainly changed

and with that the lending guidelines have adjusted to our new, not so, “Brave New World.” That isn’t necessarily a bad thing, seeing some folks were giving out loans to pretty much anyone that could fog a mirror. We knew the house of cards was destine to fall sooner or later. When a mortgage back security is leveraged out 38 times or so, a lot was depending on those questionable folks making payments. Of course times got tough, jobs were lost, rates adjusted, home values finally plummeted and here we all are in a heap sorting through the ashes of what we once knew. I could use a hug.

Change is good, right?

Well, as long is it is someone else suffering through the change. Unfortunately, we’re all adjusting to the new reality, and we as turn each blind corner we are really not sure what we are going to see lurking there. There are people that have been in the lending business for twenty years that are saying: “Gosh, I feel like I’ve never worked in this industry before!” Well, it’s because the whole lending landscape has changed. Quite frankly, not all for the better. The usual, ‘better get it fixed quick’ over-reactions have taken place. The pointing of fingers has happened and the shotgun blast of blame has left its mark on the usual suspects; the appraisers, the mortgage lenders and brokers, and the Banks as well as the government agencies that regulate all that stuff.

So what can we expect this year,

as we all ponder which spa membership would most likely catapult us into that svelte body we wish for in 2009? Well, seeing ‘yours truly’ got an “A” in economics, and seeing the big-shot economic geniuses are still trying to determine if we’re in a recession, I suddenly feel qualified to predict with the same ‘extreme uncertainty’ as the best of them! My answer: Probably a bit more of the same. (Where’s Chancey Gardener when you need him?)

Compared to what we had before, it seems our choices on loans are, well, a bit limited to say the least. But, lets examine just what’s out there. Wait, it’s easier to say what isn’t out there. For the most part option arms are gone. At least the stated income version of those products. You pretty much used to be able to put 20% down based on good credit and reserves and get an 80% loan. In some instances up to a couple of million dollars. There are a few stated income lenders left. Although, as I write this, they may have changed their lending guidelines. Definitely a thing of the past. Although, I’m sure they’ll return after the taste has been flushed from their proverbial mouths and spreadsheets.

You can still get big loans. Loans over one million, two million or so, but…you need to qualify with recent tax returns, show great reserves and, oh yeah, you actually have to have a job or a regular source of income that supports the debt payments. I know, it’s a lot to ask, but seeing the financial markets have gone down the toilet, something had to change. Perhaps the worst news of all this change is there isn’t a market out there for jumbo products. In other words, no one will buy jumbo loans yet so the rates are still off compared to what is going on ‘in’ the market and compared to the conforming products. Try pricing out a 30 year fixed rate product on a million dollar loan. Not a 30 year amortization on an adjustable, a straight 30 year fixed. Before you do this clear the room of the children so you don’t spew naughty language while on the phone.

Now the good news is, there are still competitive jumbo loans out there, at the time of this writing, some jumbo stuff was in the mid-5’s. But that would be on five year fixed rate products. Now the real good pricing is on the conforming products. There has been a lot of discussion that the Feds were going to reduce the interest rates to 4.5% on 30 year loans. That’s pretty exciting to me. So far it’s only discussion. A bunch of yappin’. But for fun let’s do the math. On a $400,000 loan your payment would be around $2,027 a month. Not too shabby. The only bummer is, you have to have a job. I’m sorry, I don’t want to sound, well, so presumptuous.

So the trick to obtaining financing right now is:

• Save money (you need reserves & down payment money)
• You must have a good credit score, over 730 is great!
• Have a job, It’s a necessary evil. Bummer.
• Keep your debt down (you want a house or an $800 a month car payment?)

I personally feel we’re on the brink of another huge refinance boom in the coming months. I feel the rates are going to come down more, and, it will be just simply be hard to ignore. (That rhymes) Now some people won’t be able to do anything because their loan to value will be all out of whack. For those of you that qualify, look into loan modifications. Whatever you do, take advantage of this low interest rate environment. Rates will be down for a while- don’t miss the boat.

Another thing I see happening right now; the lenders are squeezing out the brokerage community. Setting themselves up to eventually monopolize the mortgage lending environment completely. After all, there are only a few big banks left that run it all. Is that a good thing? You be the judge.

As far as buying is concerned…

I’m seeing deals that are pretty awesome already. All around the country there are amazing real estate deals. Some areas will continue to get further depressed, but, for the most part the Los Angeles area already has deals that are hard to ignore.A lot of areas around Los Angeles have already seen a reduction in value of 30%. Some more than that. The higher end coastal properties have come down as well and my guess is they have further to go. Seeing you can’t really plan to buy at the bottom. (The bottom is always a retrospective vision.) So when deals get hard to ignore, buy! It truly depends what your buying needs are. In this coming year, while there might be a bit more of the same, I’m hoping that there will be a tad more optimism then we witnessed last year. Last year was a shock to even the wealthiest. For most of the year people were wandering around resembling a scene from “Night of the Living Dead.” Even those ghouls had more spunk then most of us. If there was one good thing that came of it, people seem more involved , more engaged and more of a community. So as we embark on another year, if you need to, steal some light from some perky individual that hasn’t been affected. (Probably someone that doesn’t own anything). And remember; It’s just a cycle. Just keep repeating, it’s just a cycle. Perhaps what we all should do is ponder on what we personally could have done differently. I’ll let you savor that thought privately (seeing I’m just out of slapping range) while I graciously bid you a good day. Cheers.

http://articles.moneycentral.msn.com/Banking/HomeFinancing/whats-ahead-for-mortgages-in-2009.aspx

Contact us if you are planning to buy in the Los Angeles area and we’ll provide you with the current trends in a specific area we handle.