California Foreclosures Tick Up but Remain Lower Than Last Year

Foreclosures edged up over the month of October in California but continue to remain well below year-ago levels, according to PropertyRadar.

Notices of default rose 15.3 percent, notices of trustee sales increased 4.1 percent, and foreclosure sales grew 3.9 percent over the month of October in California.

However, over the year, notices of default were down 45.2 percent, notices of trustee sale declined 59.2 percent, and foreclosure sales decreased 65.4 percent. Foreclosure sales continue to hover near record lows, according to PropertyRadar.

Foreclosure inventories in California have been “trending mostly sideways since July,” according to PropertyRadar.

“While the low level of foreclosures seems to be good news, the market is ignoring the 1.5 million underwater California homeowners at risk of default that can neither sell an existing home or buy another,” said Madeline Schnapp, PropertyRadar’s director of economic research.

“These underwater homeowners are a big drag on the California real estate market recovery and keep much needed inventory off the market,” Schnapp said.

A closer look at foreclosure sales reveals a decline in foreclosures sold to third parties and an increase in REOsales. Third party sales were down 2.1 percent over the month, while REO sales increased 7.6 percent, according to PropertyRadar.

The REO increase can be partly attributed to an adjustment period after a short interim during which banks stalled on foreclosures this summer after the Office of the Comptroller of the Currency “specified minimum standards for handling borrower files subject to foreclosure,” according to PropertyRadar.

PropertyRadar also compared California and four of its Western neighbors – Arizona, Nevada, Oregon, and Washington – in terms of foreclosure starts, sales, and inventories.

California came out ahead by volume in all three categories, and its percentage increase in foreclosure starts over the month of October was also highest at 15.7 percent.

At the other end of the spectrum, Nevada posted an 82.5 percent decline in foreclosure starts over the month.Washington experienced the greatest increase in foreclosure sales for the month with a 7.1 percent rise, while Nevada posted the most momentous decline.

While posting the greatest declines in foreclosure starts and sales, Nevada posted the highest increase in foreclosure inventory, a 4 percent rise over the month.

Oregon experienced the greatest drop in foreclosure inventory, a 2.5 percent decrease in October.

For more information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

jerryggroup@aol.com

Housing's 'Perfect Storm' Puts Homeownership out of Reach for Some

Steady gains in home prices and rising mortgage rates across the United States contributed to weakening housing affordability in the year’s third quarter.

According to the Housing Opportunity Index (HOI) published by the National Association of Home Builders(NAHB) and Wells Fargo, 64.5 percent of new and existing homes from the start of July through the end of September were considered affordable to families earning the national median income of $64,400. That share is down from 69.3 percent in the second quarter, marking the biggest HOIdecline since Q2 2004.

NAHB chairman Rick Judson said the third quarter’s drop was the result of a “‘perfect storm’ scenario.”

“With markets across the country recovering, home values are strengthening at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor,” Judson said.

David Crowe, chief economist for NAHB, added that the decline may have been amplified by the current lending environment.“Some of the decline in the affordability index could be the result of a loss in some more modest priced homes as tight underwriting standards have limited the purchases by moderate income families,” he said. “While affordability has come down from the peak in early 2012, the index still means a family earning a median income can afford 65 percent of homes recently sold.”

Indianapolis-Carmel, Indiana, and Syracuse, New York, tied as the country’s most affordable major housing markets, with 93.3 percent of transactions fitting into those areas’ median household income ($65,100 and $65,800, respectively).

Another Indiana market claimed the most affordable title among smaller metros: Kokomo, where 96.9 percent of home sales were affordable for the median income of $60,100.

At the other end of the scale, California’s San Francisco-San Mateo-Redwood City metro held the spot for least affordable major market for the fourth quarter in a row. In that market, only 16 percent of homes sold in the third quarter were affordable to families earning the median income of $101,200.

Among smaller markets, the five least affordable metros last quarter were all located in the Golden State. Santa Cruz-Watsonville was declared the least affordable, with 20.3 percent of sales being considered affordable for a household earning the median income of $73,800.

For More information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

jerryggroup@aol.com

Mortgage rates on march to 5 percent, ACT NOW!

Long Treasurys broke upward, out of the trading range of the last eight weeks. Not by much, but out, the 10-year T-note above 2.8 percent for the first time in more than two years — 2.86 percent at this moment. Mortgages are stickier, the rise negligible (investors have lost fear of another refi wave), but the march toward 5 percent is underway.

Two patterns are helpful, one 24 hours old, the other a 60-year vintage.

Before discussing those, dismiss a false lead: The 17-nation eurozone enjoyed positive gross domestic product (GDP) in the second quarter, ballyhooed in the U.S. press as an “end to recession.” A positive quarter is the technical definition of a recession’s end, but not even the Europeans believe this is anything more than a passing moment of stabilization.

Yesterday’s trading was instructive. News that should have helped long-term rates did not: Egypt’s descent into civil war; 200 points off the Dow; and zero-gain industrial production in July. News that overwhelmed all else and pushed up rates: New claims for unemployment insurance last week fell to a six-year low: 320,000.

Thursdays’ market calculus is now persistent: Jobs override all. If employment is strengthening, the Federal Reserve will taper quantitative easing to zero within six months. Thus stocks traded down on good economic news. I have never found a direct conveyor of QE cash to stocks, except running through the vacant minds of stock boosters. Whether real or imaginary, the mind prevails, but it does not say much for the investment-value underpinnings of stocks that good economic news is bad news.

The trading-desk shorthand for unemployment insurance applications is “claims.” Every U.S. recession since the big war has ended in the same pattern: Credit-sensitive housing and autos rebound as soon as the Fed cuts rates. The job market is the last to recover, often lagging housing by two years.

Jobs are the most politically sensitive element, which typically forces the Fed to be too easy during recovery for too long — and which the Fed knows as surely as sunrise. Claims have been the best leading indicator for the Fed, but when claims plunge the Fed is already too late, forcing it into catch-up mode, which many fear today.

The Fed chopped rates in late 2008, but housing did not turn until 2012. Too much distress in the market, and tight credit offset cheap rates. Today, one year into housing recovery, jobs are showing signs of life, right on schedule.

However, the job market today has headwinds even stronger than housing. For one, housing will continue to be thin until Congress and the White House take their feet off the mortgage hose. Even more important, since the early 1990s the U.S. has faced unprecedented competition from labor overseas. Median household income had been stuck near $55,000 per year from the mid-1990s until 2009 when it fell to almost $50,000, where it still is, and its purchasing power is undercut by health care racketeering.

Claims are down in part because there isn’t anybody left to fire. The drop in claims this time may not have cyclical counterparts: more jobs and higher incomes. The whole point of the Fed’s removing the punch bowl is to prevent overheating and inflation, but we can’t have either one without rising incomes. And they ain’t. And no economy anywhere ever overheated without a surge in credit. Not here, not hardly.

Another historical pattern: When the Fed appears to be turning, long-term rates always rise. And people like me always warn that the rise may abort the recovery, and it never has. This time is different in two ways (maybe). First, the panicked runup in long rates since May is not justified by Fed statements or implications, or by economic data — especially inflation. Too far too fast. Second, can it be that a still-impaired and misregulated financial system has been more dependent on QE than we or the Fed have known? Despite falling mortgage production and Treasury issuance, the Fed has been the only buyer, and rates must go much higher to find another.

Then there is the world. As U.S. markets and the Fed conspire to jack long rates, they are rising everywhere. The U.S. economy is better, but everywhere else is slowing or in trouble one way or another. Fainting elsewhere is our best chance for lower rates.

10-year T-note, Thursday’s close. 2.86 percent on Friday.

“Claims”

Bad news and goods news: Housing has a long way to go.

For more information contact

Jerry Gusman, The Gusman Group, (888) 213-4208, jerryggroup@aol.com

RealtyTrac: Price appreciation should help many homeowners avoid short sales - more-than-8-million-homeowners-are-resurfacing

Portending relief for inventory-starved housing markets in the not-so-distant future, 8.3 million homeowners, or about 18 percent of homeowners with mortgages, will gain enough equity to sell their homes in the next 15 months without resorting to short sales, according to data aggregator RealtyTrac.

“Steadily rising home prices are lifting all boats in this housing market and should spill over into more inventory of homes for sale in the coming months,” said Daren Blomquist, vice president at RealtyTrac.

“Homeowners who already have ample equity are quickly building on that equity, while the 8.3 million homeowners on the fence with little or no equity are on track to regain enough equity to sell before 2015 if home prices continue to increase at the rate of 1.33 percent per month that they have since bottoming out in March 2012.”

The 8.3 million “resurfacing” homeowners currently have anywhere from 10 percent negative equity to 10 percent positive equity, according to RealtyTrac’s September report on home equity.

Though a homeowner with low equity is not technically underwater, that borrower still typically faces more difficulty in selling a home than a homeowner with more equity because the proceeds of a low-equity sale may not be enough to adequately contribute to sales-related costs and a down payment on a new home.

But even as a giant swath of homeowners are expected to resurface, an even larger segment reportedly won’t come up for air anytime soon. Some 10.7 million homes have at least 25 percent negative equity or more, representing 23 percent of properties with a mortgage, according to RealtyTrac.

For more information contact

Jerry Gusman, The Gusman GRoup (888) 213-4208 jerryggroup@aol.com

Key federal mortgage foregiveness debt relief tax aid for homeowners in danger of expiration

Congress carved out a special exception for owner-occupied housing for five years, and that exception was later extended through Dec. 31. What happens if it expires? (Paul Sakuma / AP)

By Kenneth R. Harney

November 17, 2013, 5:00 a.m.

WASHINGTON — Haven't we seen this movie before? On Capitol Hill for the second year in a row, key federal tax assistance for homeowners is heading for expiration within weeks. And there's no sign that Congress plans — or has the minimal political will — to do anything about it.

In fact, the prospects for extension of popular mortgage-forgiveness debt relief and deductions for mortgage insurance payments and home energy efficiency improvements appear to be more dire than they were last year at this time, when at least there was a formal bill pending to extend them.

This year there is none at the moment. The House and Senate are trying to figure out a budget but are also considering overhauling the entire federal tax system, which could mean that a long list of special-interest tax preferences — including for housing — might be sucked into the tax overhaul vortex and not revived if they expire as scheduled Dec. 31.

Robert Dietz, vice president for tax policy issues at the National Assn. of Home Builders, says the name of the movie is "Groundhog Day" — the Bill Murray classic about deja vu all over again. Remember last year's New Year's Eve "fiscal cliff" game of chicken that wasn't resolved until the wee hours of Jan. 1? The tax benefits for homeowners were ultimately extended, but only for a year. Whether that's possible again in late December is in doubt.

What's at stake here? Begin with tax treatment of mortgage debt relief. Before Congress changed the law in 2007, any borrower who had a debt canceled by a creditor would have to report the amount forgiven as ordinary income, subject to federal taxation. If a mortgage lender chose to reduce a homeowner's principal balance as part of a loan modification — say by cutting $50,000 off the mortgage balance — theIRS would treat that $50,000 as fully taxable income.

That's despite the fact that the owner never actually received $50,000 in cash, and despite the fact that it was highly likely the owner was already in distress on the loan, facing financial challenges that made payments on the previous balance difficult.

Congress carved out a special exception for owner-occupied housing for five years, and that exception was later extended through Dec. 31. What happens if it expires? It would mean that thousands of people who are in the process of doing short sales on their homes but won't close until 2014 may be subject to income taxes on the amounts their lenders cancel as part of the transaction. Underwater owners who sign up for short sales in 2014 — or owners who receive cancellation of debt as part of loan modifications — would all be subject to harsh taxes on their phantom "income."

In California, however, owners waiting for short sales to close appear to be in the clear.

A recent advice letter from the IRS clarified that California homeowners who sell their houses in lender-approved short sales won't be subject to a tax bill on the canceled mortgage debt even after the Congressional exemption ends. That's because of a 2011 California law that exempts forgiven mortgage debt in a short sale from being counted as income in the state.

But mortgage debt relief is hardly the only real estate tax benefit set to disappear at the end of December. Also scheduled to terminate unless extended:

•The 10% credit currently allowable for energy-saving improvements you make to your house, including qualified insulation, high-performance windows, doors and roofs. The credits have a lifetime cap of $500.

•The $2,000 credit for newly constructed homes that meet federal standards for energy efficiency.

•The mortgage insurance premium write-off for anyone who takes out a home loan with a down payment below 20%. This includes conventional Fannie Mae-Freddie Mac loans, Federal Housing Administration-insured loans and VA guaranty fees. This may be particularly important next year for new buyers who use FHA loans because that agency has recently raised its insurance premiums significantly and withdrawn its previous rule that allowed borrowers to cancel their insurance premiums, as is standard in private mortgage insurance.

Best advice for anyone counting on one or more of these tax benefits in early 2014: Don't. This time around, it's possible that some of them may not come back

For more information contact

Jerry Gusman

The Gusman GRoup

(888) 213-4208

jerryggroup@aol.com.

17155 Barbee St, Fontana, CA | Powered by Postlets

17155 Barbee St, Fontana, CA | Powered by Postlets

Distressed California Homeowners May Qualify for California's Keep Your Home California Transition Assistance Program (TAP)

If your financially distressed California clients can no longer afford their homes and are pursuing a short sale or a deed in lieu of foreclosure, they may be eligible for financial help with their relocation to alternative housing.

The funds come from the Transition Assistance Program (TAP), part of the Keep Your Home California Program.

The state of California is providing up to $5,000 in transition assistance to qualified homeowners who can no longer afford to stay in their homes.  You can help by advising your distressed clients that they must: 

• Apply for the funds through their state's website or by calling 1.888.954.5337.
   
• Maintain their property until their house is sold or returned to the lender via a negotiated deed in lieu of foreclosure.

For qualified homeowners, these state funds may be used in addition to any other transition assistance that the homeowner may receive by participating in the Federal Home Affordable Foreclosure Alternatives (HAFA) program or in any other pre-offer short sale program.

For More information contact

Jerry Gusman

The Gusman Group

(888) 213-4208

jerryggroup@aol.com

The Real Estate Market Is Making A Change??

I am reading many new stories and blogs from Real Estate professionals and economists talking about how the market is changing.

Really, are they just noticing this? You're darn right it is changing.....better yet it has already changed. Here in southern California its changed big time. With the new homeowners Bill of Rights that went into effect on January 1. 2013, inventory levels dropped due to less distressed homes coming on the market. This caused values to rise much quicker because buyers were trying to purchase and were over paying for home just to get one.

But in mid year interest rates rose almost 1% setting back many buyers. The rise in rates made payments less affordable and many buyers fell out of the market or had to scale bake on price. This changed the market. With less buyers the inventory started to grow. More properties became available and today many are sitting on the market much much longer. In the first half of the year properties sold in less that 30 day and in many cases in a week. Not the case any more!

Many economists and real estate professionals are predicting a fall in values in 2014. I dont think they values will fall, but I do believe they will flatten out. A good things is the buyers that stayed in the market can now have a chance at securing a home and at a realistic price, they dont have to over pay anymore. I for one laughed at the many lead generation companies calling me wanting me to pay enormous monthly fees to recieve buyers leads in my area. I explained to these representative that why should I pay you hundreds of dollars for leads from people that are interested in buying a home when I cant get them one. I would be crazy to throw away my money.

But, YES today the market has changed! There is more inventory. Buyers have a much better chance of securing a home at a fair price. Typically the fall is the slowest time of year for real estate sales. People just dont want to move during the holidays. This fact along with the market change leaves a huge opportunity for buyers to get the home they have been looking for now.

Take advantage of today's market! Step up your home search before the new year. This is the best time to Buy!!!

For more information contact.

Jerry Gusman
The Gusman Group
888-213-4208
jerryggroup@aol.com