Even in Buyer's Market, Homeownership Expected to Decline

Zillow expects conditions next year to be a bit friendlier to homebuyers—but that doesn’t mean we’ll necessarily see more owner-occupied housing, experts at the real estate marketplace say.

Looking at ongoing trends, Zillow made four major predictions about the course of housing over 2014.

First, home values are forecast to rise by 3 percent at the national level over the year. The prediction projects a retreat from 2012 and 2013 levels, which Zillow says were “unsustainable and well above historic norms for healthy, balanced markets.”

“This year, home value gains will slow down significantly because of higher mortgage rates, more expensive home prices, and more supply created by fewer underwater homeowners and more new construction,” said Dr. Stan Humphries, Zillow’s chief economist. “For buyers, this is welcome news, especially for those in markets where bidding wars were becoming the norm and bubble-like conditions were starting to emerge.”

Second, the company predicts mortgage rates will reach 5 percent by the end of the year—a level not seen since early 2010—as the economy improves and the Federal Reserve adapts its policies. That news may not be as bright for buyers, but Erin Lantz, director of mortgages for Zillow, says it’s important to keep perspective.

“While this will make homes more expensive to finance—the monthly payment on a $200,000 loan will rise by roughly $160—it’s important to remember that mortgage rates in the 5 percent range are still very low,” Lantz said. “Because affordability is still high in most areas relative to historic norms, rising rates won’t derail the housing recovery.”

However, Lantz noted affordability has already turned into an issue for some markets, particularly those in California.

For its third prediction, Zillow again turned to the positive, forecasting a clearer road to mortgage credit.

“The silver lining to rising interest rates is that getting a loan will be easier. Rising rates means lenders’ refinance business will dwindle, forcing them to compete for buyers by potentially loosening their lending standards,” Lantz said.

And finally, the last prediction: Homeownership rates will fall to their lowest level in nearly two decades, dipping below 65 percent for the first time since 1995.

“The housing bubble was fueled by easy lending standards and irrational expectations of home value appreciation, but it put a historically high number of American households—seven out of 10—in a home, if only temporarily,” Humphries said. “That homeownership level proved unsustainable and during the housing recession and recovery the homeownership rate has floated back down to a more normal level, and we expect it to break 65 percent for the first time since the mid-1990s.”

Zillow also combined data on unemployment, population growth, and its own Home Value Forecast to glimpse into what it believes will be the hottest markets in 2014.

The list includes a diverse set of metros spread across all regions of the United States, including: Salt Lake City, Utah; Seattle, Washington; Austin, Texas; San Jose, California; Miami, Florida; Raleigh, North Carolina; Jacksonville, Florida; San Diego, California; Portland, Oregon; and Boston, Massachusetts.

or more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

What's in Store for Housing in 2014, Part 1

BY: RICK SHARGA

Many economists and market observers have suggested the market is poised for continued growth as the recovery enters its third year, and there are positive elements in play that provide some reasons for optimism.

Recent loan vintages continue to perform at levels better than historical norms—the default rates on loans from 2011-2013 are virtually non-existent. This has essentially shut off the pipeline of distressed assets, finally allowing the industry to work through the backlog of seriously delinquent loans and loans already in the foreclosure process.

States with non-judicial foreclosure processes have had remarkable success in clearing out the inventory of distressed properties, which is one of the factors driving the housing rebound in states like California and Arizona.

Not coincidentally, foreclosure activity has been declining as well, and this is likely to continue throughout 2014. Unprecedented levels of short sales have been one of the reasons for the decline in foreclosures—every short sale represents one less REO coming to market. And the billions of dollars of non-performing loan sales have connected distressed borrowers with special servicers, who have managed to modify tens of thousands of loans, preventing more foreclosures.

Investor activity at the low end of the market has had two significant effects: first, investors have gobbled up virtually all available REO homes, and begun to purchase rental properties via short sales and trustee sales.

Second, they’ve helped accelerate home price appreciation, particularly in many of the markets that were hardest hit during the downturn. This, in turn, has dramatically reduced the number of homeowners in a negative equity position, dropping the number of homes in the so-called “shadow inventory” to much more manageable levels.

As home prices have risen, more non-distressed properties have begun to enter the market, helping to ease the inventory shortage of existing homes, and dropping the extremely high percentage of distressed home sales to more reasonable levels than we’ve seen in the past seven or eight years.

Builders have noticed the drop-off in distressed property sales and limited inventory, and housing starts for single-family homes have risen dramatically in the last months of 2013.

So…home sales are up, prices are up, inventory is improving, foreclosures are dropping, and homebuilding is awakening from its long hibernation. What’s there to be bearish about?

For those of you looking for cautionary notes going into 2014, I offer two items: jobs and loans.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

2013 in Review: The Consumer Financial Protection Bureau

Mortgage industry commentators may argue (and they certainly have) about the Consumer Financial Protection Bureau’s (CFPB) performance over the last year, but one thing is certain: The bureau knows how to command headlines.

Early this year, CFPB finally issued its long awaited Qualified Mortgage (QM) guidelines along with a slew of other finance regulations. With the future of housing finance on the line, it’s no wonder readers of DSNews.com couldn’t tear themselves away from the news.

The story started January 10, when CFPB finally released its criteria for legally and financially sound loans. Including in the provisions was the Ability to Repay rule, which established criteria for lenders to judge a borrower’s financial qualifications and their ability to meet all of their debt obligations. The QM guidelines also gave the boot to riskier loan features and limited points and fees.

CFPB’s release also set an implementation date for the changes: January 10, 2014—one year after the announcement was first made.

That wasn’t the agency’s only January announcement. In the days that followed, a number of releases came down, establishing regulations on issues ranging from high-cost mortgage practices, servicing requirements, appraisal rules, and originator compensation—each one adding another layer of complexity.

In response to industry concerns, the bureau revisited its QM rules in April, changing some of the language and expanding the definition a bit to include a wider field of loans.

As lenders, servicers, and other mortgage segments wrestled with compliance, CFPB was fighting battles of its own in Washington.

In late April, Director Richard Cordray—whose future as the head of the agency was still up for debate following his re-nomination—sat before the Senate Banking Committeeto defend the National Mortgage Database, a joint effort between CFPB and the Federal Housing Finance Agency (FHFA) to compile a comprehensive repository of borrower profiles and other loan information. Addressing complaints of possible privacy violations, Cordray maintained that personal identities would not be disclosed and insisted on the need for such a database.

“You have to have information about consumers if you’re going to understand what is going on in the consumer marketplace. There’s no two ways about this,” he testified at the time. “If we don’t have data and information … we can’t do that and we can’t do our job, and you would be upset with us and rightly so.”

Months later, Cordray got some good news: After months of debate, the Senate finally struck a deal to end legislative gridlock and move forward with executive nominations—confirming Cordray as CFPB director for the first time since his much-disputed recess appointment in 2012.

After rocking the world of housing finance in the first half of 2013, CFPB saw a fairly quiet second half, with most mortgage-related announcements dealing with disclosure requirements or regulatory enforcement actions. It’s unlikely things will stay that way, though—with the January 10 deadline only weeks away and an industry waiting anxiously (or apprehensively) to see what comes next, 2014 looks to be another big year.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

jerryggroup@aol.com

The Good, the Bad, and a Sense of Normalcy in the New Year

While maintaining that “local markets vary widely,”Realtor.com released its predictions for the national housing market in the new year. The forecast includes a few bright spots, a couple of looming clouds, and some normalcy expected to precipitate the market in the coming year.

Among the bright spots are the rising tide of positive equity and abating foreclosures.

While 2.5 million homeowners rose from underwater during the second half of this year, 7.1 million homeowners remain below water. Furthermore, 10 million homeowners have less than 20 percent equity in their homes, according to Realtor.com.

However, “[t]he good news is that prices are expected to continue rising in 2014, which will lift more homeowners into positive territory,” according to Realtor.com.

A second positive trend that will continue into the new year is declining foreclosures.

In the third quarter of this year, foreclosure starts reached their lowest level since the second quarter of 2006.

September also marked the 36th straight month of declining foreclosure activity on an annual basis, according to Realtor.com; and this movement is expected to continue in 2014.

The new year will bring a couple clouds to the market, including rising mortgage rates and declining affordability.

Mortgage rates have already risen 100 basis points this year, and when the Federal Reserve begins tapering its stimulus spending, rates are likely to spike a little higher.

Rising prices may help bring some homeowners out of a negative equity position, but they also pose a threat to affordability. The rate of price appreciation this year outpaced income growth.

Rising mortgage rates also lead to lower affordability.

Another change to the market in the new year will likely be a rise in inventory, bringing it more in line with normal levels.

“The beginning of 2013 could be characterized as the ‘year of low inventory,’” according to Realtor.com. As the year ends, inventory matches levels seen a year ago, but median age of inventory is 11 percent lower.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

Jerryggroup@aol.com

Listen To The Real Estate Insider Radio Talk Show Coming Soon! #southerncaliforniarealestate

Listen Live To The Real Estate Insider Radio Talk Show With Jerry Gusman.
Beginning January 8, 2014 from 4-5pm On AM 1510 KSPA!



For more information contact
Jerry Gusman
The Gusman Group
(888) 213-4208
jerryggroup@aol.com

6.4M Borrowers Remain Underwater Despite Rising Home Prices

Nearly 800,000 homes returned to a state of positive equity during the third quarter—leaving about 6.4 million underwater, according to the latest data fromCoreLogic.

The real estate analytics and services provider released on Tuesday a new analysis of the nation’s mortgaged homes, showing an increase of 791,000 in the number of properties with positive equity. As of the end of Q3, there were 42.6 million properties in the United States that were above water, CoreLogic reported.

The increase in equity brought the share of underwater properties down to about 13 percent from 14.7 percent in the second quarter.

Of all the states, Nevada held the highest percentage of underwater properties last quarter, reporting a negative equity rate of nearly one-third (32.2 percent).

Florida took the second spot with a rate of 28.8 percent, followed by Arizona (22.5 percent), Ohio (18.0 percent), and Georgia (17.8 percent).

Together, the top five states accounted for about 36.4 percent of negative equity in the country.

“Rising home prices continued to help homeowners regain their lost equity in the third quarter of 2013,” said Mark Fleming, chief economist for CoreLogic. “Fewer than 7 million homeowners are underwater, with a total mortgage debt of $1.6 trillion.”

Fleming said he expects negative equity to decline further in the coming quarters as housing conditions keep improving.

The numbers indicate a little more complexity in the market, however. Of the 42.6 million residential properties in positive equity, CoreLogic estimates 10 million have less than 20 percent equity, and more than 1.5 million are at less than 5 percent equity.

These “under-equitied” borrowers may have a more difficult time obtaining new financing for their homes, and those closer to the “waterline” are at risk of falling back under should home prices fall, CoreLogic explained.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

Jerryggroup@aol.com

Thinking About Selling Your Home?

Thinking About Selling Your Home?

If you have been thinking or wanting to sell your home but have been waiting for the property values to rise. Well you may want to consider taking action very soon.

Property values have risen over 30% in 2013 and have started to flatten out in the last quarter. You may want to sell now while you can still get top dollar for your home. Interest rates hav also risen and are projected to rise to 5% in the upcoming year 2014. Rising rates make home payments less affordable and the difference of being able to qualify for a 250k home instead of a 300k home previously.

To start your process you can now go to www.whatsmyhouseworthca.com and get a FREE comparative market analysis of your home delivered to you promptly. This analysis will give you an accurate evaluation of what your home is worth in today's market so you can make an educated decision on whether its time to sell or continue waiting.

Visit wwwwhatsmyhouseworthCA.com today and sell your home!!

For more information contact
Jerry Gusman
The Gusman Group
(888) 213-4208
jerryggroup@aol.com

Good news for California homeowners facing short sales

Under regular tax rules, when a lender forgives a debt — that is, relieves the borrower from having to pay it back — the amount of the debt is taxable income to the borrower.

A homeowner who has $100,000 in mortgage debt forgiven through a short sale, for example, would have to pay income tax on the $100,000.

This “cancellation of indebtedness” rule could have caused enormous financial hardship to the millions of homeowners whose homes were “underwater” during the home foreclosure crisis that began in 2007.

To prevent this, Congress enacted the Mortgage Forgiveness Debt Relief Act of 2007. This law allowed homeowners to exclude from their taxable income up to $2 million of debt forgiven on their principal residence by a lender in a short sale, mortgage restructuring, or forgiven in a foreclosure.

This law was never intended to be permanent. It was originally scheduled to expire at the end of 2009. However, it was extended for an additional four years. It will now expire at the end of 2013.

The law could be extended again, but there appears to be little urgency in Congress to do so. That means starting on Jan. 1, 2014, there is a good chance that the old rules on forgiveness of home loan debt will come back into force.

If this does occur, it appears that the impact on underwater homeowners could vary greatly from state to state. This is because several states have enacted anti-deficiency legislation that prevents lenders from holding a homeowner personally liable and going after his or her personal or other assets if the proceeds from a foreclosure or short sale are not enough to cover the amount of the home loan

.

The California Association of Realtors has projected that even under the recovering housing market, there may be as many as 55,000 short sales in California in 2014."

California is one of these states. And, in fact, it beefed up its anti-deficiency rules in 2011 by adding a provision specifically applicable to short sales. (Calif. Code of Civil Procedure 580(f).) What does this have to do with the soon-to-come demise of the Mortgage Forgiveness Debt Relief Act of 2007? It could make it meaningless for most California homeowners.

In a Sept. 19, 2013, letter to Sen. Barbara Boxer, D-Calif., that has only recently been made public, the IRS says that “if a property owner cannot be held personally liable for the difference between the loan balance and the sales price … the owner would not treat the canceled debt as income.”

The IRS concluded that because of Section 580e, a California homeowner who goes though a short sale will not have cancellation of indebtedness income.

This is good news for California homeowners. The California Association of Realtors has projected that even under the recovering housing market, there may be as many as 55,000 short sales in California in 2014. The debt forgiven — $60,000 per short sale, on average — could have been taxable without this clarification.

However, the IRS was careful to note it its letter that it was only considering the impact of California’s anti-deficiency statute, and not that of any other state. Other states with anti-deficiency laws include Alaska, Arizona, Hawaii, Minnesota, Montana, Nevada, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, South Dakota and Washington.

These state laws are not all the same and they do not all have a provision like California’s Section 580e. The extent to which they protect against having to recognize cancellation of indebtedness income in the event of a short sale is unclear. For details on state anti-deficiency laws, see the National Consumer Law Center Foreclosure Report.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

Jerryggroup@aol.com

You may be exempt from 3.8 percent ‘Obamacare tax’ on rental income

Last week the IRS issued its final regulations governing how it will implement a new “Obamacare tax” that imposes a 3.8 percent levy on unearned income.

Taxpayers are subject to the Net Investment Income (NII) tax if their adjusted gross income (AGI) for the year exceeds $200,000 for singles, or $250,000 for marrieds filing jointly ($125,000 for marrieds filing separately).

If your AGI exceeds the applicable threshold, you’ll have to pay the NII tax on the lesser of (1) your net investment income, or (2) the amount that the your AGI exceeds the $200,000/$250,000 threshold.

“Unearned income” means income from all “passive” activities, including interest, dividends, annuities, royalties and rents. It does not include income from an actively conducted business.

However, it includes income from real estate rentals, even those that qualify as businesses, because rental income is always deemed to be passive income for tax purposes. Thus, landlords with profitable rentals whose AGI exceeds the threshold will be subject to the 3.8 percent tax on their rental income.

However, there is one lucky group of landlords who can avoid the NII tax on rental income: real estate professionals. As I explained in a prior article (“It pays for landlords to qualify as ‘real estate professional‘ “), the NII law provides a special exemption for them. They are not subject to the 3.8 percent tax on rental income if they “materially participate” in the real estate activity, and the activity qualifies as a business for tax purposes.

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IRS regulations have long provided clear guidance on what constitutes “material participation” in an activity. For example, you materially participate if you work more than 500 hours at the activity during the year, or work 100 hours and more than anyone else. However, there have never been any clear bright-line rules on when a real estate activity qualifies as a business rather than an investment.

It should go without saying that all real estate professionals who own rental properties should be keeping careful track of the time they spend dealing with their rentals and all their other real estate-related activities."

Here’s where the new regulations help real estate professionals out. They establish a “safe harbor” rule for when a rental activity conducted by a real estate professional is a business: So long as a real estate professional devotes a minimum of 500 hours per year in the rental activity, it will automatically qualify as a business for these purposes and the rental income will not be subject to the NII tax.

Alternatively, if a real estate pro has participated in rental real estate activities for more than 500 hours per year in five of the last 10 tax years, the rental activity will qualify as a business. (IRS Reg. Sec. 1.469-5T.)

If you have more than one rental property, you are allowed to group your rental activities together for these purposes. This way, you can combine the time you spend working on each rental property to satisfy the material participation and 500-hour tests. You must file an election with the IRS to group your rental activities.

The 500-hour rule is a safe harbor, not a minimum requirement. Thus, you don’t absolutely have to work a minimum of 500 hours per year at your rental activity for it to qualify as a business. You can work less hours and still qualify as a business.

But, in the event of an IRS audit, whether you qualify will require a judgment call by the IRS after looking at all the circumstances involved. However, the preamble to the new regulations provides that ownership of even a single rental unit can qualify as a business. But, again, this depends on the circumstances — for example, the type of property, number of units, and the day-to-day involvement of the owner or its agent.

It should go without saying that all real estate professionals who own rental properties should be keeping careful track of the time they spend dealing with their rentals and all their other real estate-related activities.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

Jerryggroup@aol.com

Time to say goodbye to these popular tax deductions in 2014?

It now seems certain that dozens of tax provisions will be allowed to expire on Jan. 1, 2014. Among these are some very popular real estate-related deductions and tax breaks, including those for mortgage insurance premiums and the exclusion from income of the amount of debt forgiven by home mortgage lenders in short sales and mortgage restructurings.

Also expiring are 50 percent bonus depreciation and the extremely generous $500,000 annual limit for writing off business property in one year under IRC Section 179. For details, see my column “Tax breaks real estate pros and their clients should be prepared to do without in 2014.”

It’s possible that some or all of these deductions and breaks will be retroactively extended by Congress in 2014, but no one can confidently predict what will happen. The situation is further complicated by the fact that Congress and the Obama administration want to accomplish major tax reform in 2014 (see below).

Will there really be tax reform?

Both the House and Senate tax-writing committees have been hard at work on far-reaching income tax reform. Everyone agrees that reform is needed, but agreement on how such reform should take form is hard to come by. The real estate industry is anxious that Congress could reduce or eliminate subsidies for homeownership like the mortgage interest deduction and the capital gains exclusion for principal residences.

Other proposed reforms include wholesale reductions in long-standing deductions for depreciation, advertising and other expenses in return for lower corporate income tax rates. Many businesses are up in arms over these proposed changes and will fight them tooth and nail. Don’t count on anything major getting accomplished in 2014.

IRS regulations on deducting business property take effect

In September 2013, the IRS issued its final regulations governing how businesses may deduct the costs of acquiring or creating tangible personal business property. They go into effect on Jan. 1, 2014. For details, see my column “IRS finally provides guidance on building repairs vs. improvements.”

Overall, this should be good for business, providing a degree of certainty where none existed before. Among other things, under these regulations you can safely deduct in one year costs for any tangible property you buy for your business that cost $200 or less (see “Save big bucks on your taxes by deducting all sorts of weird odds and ends”). Rental building owners can also safely deduct each year as much as $10,000 in building improvements (see “Good news for owners of smaller residential rental properties”).

Some higher taxes and lower deductions

Among the tax changes that go into effect in 2014 are a higher wage base for Social Security taxes — increased to $117,000 from $113,700 in 2013. This means that self-employed individuals who have at least $117,000 in net self-employment income in 2014 will pay an additional $409 in Social Security taxes.

Another unwelcome change for 2014 is a one-half-cent reduction in the standard mileage rate deduction for business-related driving. The rate was 56.5 cents per mile in 2013. For 2014, it’s been reduced to 56 cents per mile. If you drive 20,000 miles for business in 2014, this reduction will cost you $100 in mileage deductions if you use the standard mileage method.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

Jerryggroup@aol.com

Rising home prices a ‘double-edged sword’ in California #californiarealestate

Double-digit home price increases and higher interest rates have made homes less affordable in California, leading to a drop in sales for the fourth straight month, the California Association of Realtors reported today.

“Improving home prices are a double-edged sword for the housing market. While welcomed news for homeowners and prospective sellers, diminished affordability is squeezing out many buyers and dampening their enthusiasm for home purchasing,” said 2014 CAR President Kevin Brown in a statement.

“Buyers are playing the waiting game and putting their home search on hold until prices stabilize and more inventory becomes available in the market.”

Closed sales of existing, single-family detached homes in the Golden State declined 3.4 percent month to month and 12 percent year over year in November, to a seasonally adjusted annualized rate of 387,520. That’s the lowest number of sales since July 2010, CAR said. The median home price rose 22.2 percent year over year last month, to $422,210. That was the 17th straight month of double-digit annual price gains.

For more information contact
Jerry Gusman
The Gusman Group

(888) 213-4208

Jerryggroup@aol.com

West Is Best for Healthiest Housing Markets

According to Zillow’s October Market Health Index, the healthiest housing markets are in California and other areas in the western United States.

The top five markets with the healthiest index readings were San Jose (Index of 9), San Francisco (8.9), Los Angeles (8.6), San Diego (8.4), and Denver (8.1). The next five markets were Boston, Pittsburgh, Portland, New York, and Sacramento.

The study reveals home values in the leading market, San Jose, have increased 19.6 percent compared to one year ago, with a median selling price of $731,500. Home values in San Francisco, the second healthiest market, actually increased 24.1 percent.

Zillow’s chief economist Dr. Stan Humphries explained the benefits of the robust situation in these areas, and added a bit of caution: “Rapid home value appreciation in the West, particularly California, is currently having a very positive effect on a number of other factors, including negative equity, foreclosure activity, and the overall financial health of local homeowners. But that same rapid

appreciation may cause affordability issues in the future in these markets, leading to potentially unhealthy conditions,” he said.

“The housing market is complex, and while individual statistics can be useful in describing a single aspect of a given market, one number on its own can’t tell the full story,” Humphries continued. “As markets continue to evolve and recover, the Market Health Index will reflect these changing trends, offering consumers a valuable tool on which to base their decisions.”

Zillow’s Market Health Index measures different metrics on a scale from 0 to 10. Its purpose is to illustrate the current health of a region’s housing market compared to similar markets nationwide. It is calculated monthly to compare market trends by ZIP code, neighborhood, city, county, metro, and state levels. The findings include all single-family residences, condominiums and cooperatives.

Among the 10 categories Zillow measures are:

• Changes in home values
• How long homes stay on the market
• Foreclosures
• Delinquencies
• Negative equity

A low Market Health Index score does not necessarily mean a market is performing poorly across all categories, but simply that other markets are performing a bit better in terms of increasing home values or fewer foreclosures.

For more information, visit Zillow’s newly re-designed local information pages, offering users easy access to more data. Zillow operates one of the largest Internet and mobile-based home-related marketplaces, helping people find timely information about homes and connect with local professionals.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

jerryggroup@aol.com

Home for the Holidays Thanks to Fannie Mae #foreclosure

Fannie Mae won’t be a Grinch over the holidays. The company announced that it will issue an eviction moratorium for the holidays, as it has done in previous years.

The GSE will suspend evictions of foreclosed single-family and 2-4 unit properties from December 18, 2013 through and including January 3, 2014. During this period, legal

and administrative proceedings for evictions may continue, but families living in foreclosed properties will be allowed to remain in the home.

“The holiday season is meant for quality time with family and we want to relieve anyone of the anxiety of leaving their home during this season,” said Terry Edwards, COOfor Fannie Mae. “We encourage any homeowner who is having difficulty making their mortgage payment to reach out for help right away. Fannie Mae will continue to help borrowers avoid foreclosure whenever possible.”

This year, Fannie Mae continued its efforts to keep homeowners in their homes by introducing the Streamlined Modification, which is available once someone experiences a hardship that causes them to be 90 days late with their mortgage payment.

Homeowners with Fannie Mae-owned loans can visit knowyouroptions.com or call Fannie Mae’s Mortgage Help Center at 866.442.8575 for information and resources on foreclosure prevention options.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

jerryggroup@aol.com

Los Angeles Sues Nation's Largest Banks

The city of Los Angeles launched a series of lawsuits against three of the nation’s largest banks alleging they persisted in discriminatory lending practices that contributed to more than 200,000 foreclosures between 2008 and 2012 that cost the city more than $1.2 billion.

The city filed lawsuits against Citigroup and Wells Fargo last Thursday and a suit against Bank of America Friday.

“Today we begin to address the devastating consequences of the foreclosure crisis in America’s second largest city,” Mike Feuer, Los Angeles city attorney, said in a press statement coinciding with last week’s filings in U.S. Federal Court.

“These lawsuits send the firm message that we will use every tool at our disposal to fight for all Los Angeles taxpayers and neighborhoods,” Feuer said.

Feuer alleges in the lawsuits that the banks “engaged in a continuous pattern and practice of mortgage discrimination in Los Angeles since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis.”

The lawsuits charge all three banks with redlining and reverse redlining.

Cited in the court filing is a study by the Alliance of Californians for Community Empowerment, which estimates the more than 200,000 foreclosures in Los Angeles during the foreclosure crisis resulted in $78 billion in decreased home values, $481 million in lost tax revenue, and $1.2 billion in additional services to maintain vacant and foreclosed properties.

The banks deny the allegations of discriminatory lending.

A spokesperson for Bank of America told DS News, “Our record demonstrates there is no basis for the city’s claims.” The spokesperson stated the institution “has deep ties to this community” and said Bank of America has “a firm commitment and strong track record for fair lending.”Citi responded similarly, claiming the lawsuit is “without merit” and saying, “We are disappointed that the LA attorney does not recognize our deep commitment to fair lending. Citi considers each applicant by the same objective criteria, which are blind to race, ethnicity, gender and any other prohibited basis,” a Citi spokesperson said.

Wells Fargo could not be reached for comment, but the bank reportedly told the Los Angeles Times it maintains a record “as a fair and responsible lender.”

In the lawsuit against Wells Fargo, Feuer mentions that the bank has already faced similar lawsuits from the city of Baltimore, the city of Memphis, the Department of Justice, and the Federal Reserve Bank. Wells Fargo’s 2011 legal battle with the Federal Reserve resulted in an $84 million penalty, the largest the Fed has ever claimed in a consumer protection case.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

jerryggroup@aol.com

The national foreclosure crisis is reaching its end as many markets work their way toward normalcy, according to the latest U.S. Foreclosure Market Reportfrom RealtyTrac. As major evidence of this trend,RealtyTrac reports foreclosure starts reached a 95-month low in November.

At the same time, overall foreclosure activity across the nation declined by 15 percent from October to November, while year-over-year, activity was down 37 percent, RealtyTrac found. The company says the monthly decrease is the largest on record since November 2010, and that decline of 21 percent three years ago took place alongside what RealtyTrac calls the “revelation of the so-called robo-signing scandal,” which derailed foreclosure processes for many large banks.

A total of 113,454 homes received foreclosure filings last month, accounting for one in every 1,155 homes in the country, RealtyTrac reports.

While conceding that some of November’s decline could be seasonal, Daren Blomquist, RealtyTrac VP, said “the depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed.”

With foreclosures nationwide declining at such a significant rate, some real estate professionals are beginning to see a return to “normalcy” in their local markets.

“Foreclosures continue to decline and it’s beginning to feel like a ‘normal’ housing market again,” Steve Roney, CEOof Prudential Utah Real Estate in Salt Lake City and Park City, told RealtyTrac.

Similarly, Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty in Oklahoma City and Tulsa, said, “There will always be defaults, but it’s clear that we are working our way back towards a normal housing market.”

Some markets, however, continue to struggle with an extensive backlog of foreclosures. For example, despite four consecutive months of declining activity, Florida continues to outrank all other states in foreclosure activity. One in every 392 homes in the state received a foreclosure filing in November, even though activity was down 15 percent over the month and 23 percent annually.

Furthermore, eight of the 10 metro areas with the highest foreclosure rates last month are located in Florida, RealtyTrac says. Like the state overall, these metros ranked high despite annual declines in foreclosure activity.

Throughout the state of Florida, foreclosure starts were down 46 percent during the 12 months ending in November, and bank repossessions were down 16 percent. Scheduled foreclosure auctions, however, have been on the rise for the past 11 months and increased 2 percent year-over-year in November.

The metro area with the highest foreclosure rate in the state and nation was Jacksonville, Florida, where one in every 288 homes had a foreclosure filing in November. Miami followed with one in every 307 homes receiving a filing, and Port St. Lucie ranked third with a rate of one in every 341 homes.

The only two metros in RealtyTrac’s top-10 list located outside of Florida were Rockford, Illinois, and Charleston, South Carolina, which ranked No. 5 and No. 7, respectively.

At the state level, the state with the second-highest foreclosure rate in November earned its ranking after drastic increases in foreclosures over both the month and the year. Delaware’s foreclosure activity was up 56 percent on a monthly basis and 141 percent on an annual basis. One in every 480 homes in the state received a foreclosure filing last month, according to RealtyTrac’s assessment.

Following Florida and Delaware on the company’s top-10 list were Maryland, South Carolina, Illinois, Ohio, Connecticut, Nevada, Iowa, and Utah.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

jerryggroup@aol.com