On April 30, the Tax Credit will be gone. Banks seem to be holding ’shadow’ REO inventory that has been reported in the 4-8 million range. Interest rates are set to go higher because of all of the government debt that has been added to the books trying to avert all this.

However, the real scary issue is relayed in a recent Charlie Rose interview with housing expert Robert Shiller:

Charlie Rose: You’ve said that 90% of the housing market is supported by the government.
Robert Shiller: Well, it’s 80% or 90%. Really almost the whole market now is government. And we know this can’t last.

Rose: And that means prices are being artificially inflated?
Shiller: It seems to. Government support is especially prominent in sales of existing homes, which shot up to over 6 million on an annual rate in November 2009, the month that the home buyer tax credit initially was supposed to expire.

Fannie Mae has reported the rate of serious delinquencies (90 Days overdue) for conventional loans in its single-family guarantee business jolted to to 5.52% in January from 5.38% in December. This is a 100% increase since January 2009. But look at the chart below and explain to me how we are anywhere near an end to this housing crisis!

It is our stance that we still have some real issues to work thru before we can claim “an end to the housing crisis”.

Jason Roberts

Founder & CEO

www.SellMyHouse.com

Bank Owned · fannie mae · Foreclosures · Freddie Mac · Home Prices · housing market · Pending Home Sales · sell my house · sellmyhouse.com · short sale · stop foreclosure

The White House will announce today new steps to fight the foreclosure crisis. They may require lenders to temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed.

Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower’s income, which would typically be the amount of unemployment insurance, for three to six months. In some cases lenders may allow a borrower to skip payments altogether.

Haven’t we been through this already with the loan modification programs of the past year? Less than 200,000 permanent loan modifications have been secured since the program was enacted.

The new wrinkle will be the administrations push to deal directly with the massive number of mortgages that are ‘underwater’. They could offer financial incentives for the first time to lenders to cut the loan balances of such distressed homeowners. Those who are still current on their mortgages could get the chance to refinance on better terms into loans backed by the FHA.

I do think this could help stop people from walking away just because it is underwater who can actually afford their house payment. However, as a general thought, it feels a lot like just one more government attempt to help boost numbers thru the remainder of the year so that we can get past the elections.

Lets be honest, government attempts to resolve the housing crisis have been a miserable failure. More importantly, it has strapped the tax payer with a debt level that has never been seen in this country’s history. That will have a much longer negative effect on the housing market than the false boost we have been given from the tax credit offered.  Despite billions of dollars in government incentives, home sales and new construction totals are sinking, not expanding. 

The truth, as hard is it may be to accept, is that this is a supply and demand issue. Until supply is worked thru, the housing market will not recover substantially. The foreclosure inventory has to be taken out of the system. New home builds will not recover until ‘cheap’ houses are not an option to purchase. Who in their right mind would pay $300,000 for a new house when they can buy a similar house with more square footage that is only a few years old for half of that total?

Existing house values rise as a direct result of new home construction. New housing construction has also proven to be a leading indicator for an overall economic recovery.

To me it is pretty simple, we fix the problem by expediting the foreclosure inventory thru the system as quickly as possible. Until that excess inventory is removed from the system, the housing market will not recover. HAMP and other government programs will just drag out the inevitable supply and demand issue.

I wrote an article last fall discussing my ideas on how to fix the problem. I’ve been in countless board room and conference call discussions with industry leaders about this very thing. I’m still convinced to this day that dealing with supply will ultimately resolve the demand issue, and event he economic problems we face.

Jason K Roberts

CEO

www.SellMyHouse.com

Bank Owned · Foreclosures · Home Prices · housing market · sell my house · sellmyhouse.com · short sale · stop foreclosure

According to a recent AP report , HAMP (Home Affordable Modification Program) has revealled that your credit score will probably be lowered soon after you apply for help.

For borrowers who are making their payments on time but are on the verge of default, the Obama administration’s loan modification program can reduce their credit score as much as 100 points. That makes it harder to get a loan and can present a problem when applying for a new job.

Housing counselors say it’s unfair, especially because the news often comes as a surprise to homeowners.

“Why should people’s credit be hurt even worse when they’re trying to do the right thing?” said Eileen Anderson, senior vice president at Community Development Corp. of Long Island, a housing counseling group in New York.

And many homeowners are angry that a program designed to help carries such a penalty, said Kathy Conley, a housing counselor with GreenPath Inc., a nonprofit group in Farmington Hills, Mich.

“It’s a feeling of being duped,” she said.

The Treasury Department guidelines require that mortgage companies notify credit bureaus of the loan modification process.

Worse yet, we have heard multiple cases where homeowners are not getting their trial loan modifications made permanent. So not only are you struggling to stay current on your payment while taking a beating on your credit, there is no real way to know of the bank will actually allow you to continue on the new payment plan. Many times you are just paying a lower monthly payment over 40 years. Trust us, you arent paying less over time if this is the case.

www.SellMyHouse.com

Staff Writer

sell my house · sellmyhouse.com

We have been screaming for 2 years to these short sale departments that they need to get out of their own way and let the market help solve the problem. Short sales to this point have been a miserable failure, primarly because most banks take way to long to negotiate or accept an offer.

That means for the most part, retail buyers wont buy short sales leaving only investors. Investors do not pay retail prices of course, and banks dont want to accept wholesale offers. You get the paradox here??  

Here are the considerations being discussed:

1. Homeowners get $1500 to sell and move. The bank servicing the first mortgage gets $1000 and the second mortgage bank get $1000 to forgive the balance. The first mortgage holder gets the proceeds from the sale.
2. Realtors will determine the value of the home.
3. The homeowner will not be told the valuation.
4. Banks will be required to accept all offers that meet or exceed the predetermined value.

Our main question is will any of this actually speed up the process of getting a deal approved and closed. If it doesnt, well at least in our view, it is political jockeying for the next election cycle that begins in a few months.

What do you think?

www.SellMyHouse.com

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I read an article recently that discussed the obstacles facing the housing market which suggested we still may be a full 2 years away from a bottom in the housing market.

Here at www.sellmyhouse.comwe know all to well that there is a lot of pain right now in the housing market. Almost 25% of homeowners owe more on their house than it is worth and figuring out how to help these people when the short sale process is so bogged down right now is definitly a challenge. The psycholigical effects of this can be devistating, but that is not what we are discussing in this post.

What are the specific challenges that our economy is facing that might make this true:

1. Jobs have not started to return. The real unemployment number is alot closer to 15% than the 9.7% rate offered up by the governments report. It doesn not inlcude folks that have given up on finding a job or those that are working part time because they cant get full time work. We’ve heard runblings from our wall street buddies that this number will approach 20% before it is all said and done. No housing boom in history has every occured without outright job creation, much less a slowing of job losses.
2. Foreclosures for the most part have been put off for a year because of TARP and all of the government foreclosure incentives. We have heard that almost 5 million houses are on the verge of foreclosure. If that is true, then that means there is almost 1 full year of inventory waiting on the sidelines.
3. Money is very tight. Banks are not lending, and moreover, seem to be looking for reasons not to lend. I read a report that said it isnt that they dont want to lend, it is they just dont have the money to lend right now. Their money is out, and it is out on properties that have lost value. The rest of their money is being horded in case the economy does not get better.
4. The government stimulous, which has done a good job of getting potential buyers off the fence to date, is set to end this spring. Will they renew it? Time will tell.
5. People are scared of the future. ‘Main street’ America is still struggling mightely with lost hours at work, higher heating bills from this winter, and  the economy is on the verge of collapse again.

Those are all very goood reasons why it is possible that we may not see a housing bottom until 2012. Scary thought, especially if you make your living from this industry.

Jason Roberts

Founder & CEO

www.SellMyHouse.com

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