How Much Should You put Down?

Like most questions, the answer is “it depends”. Today, I thought I’d give you some things to consider.

Let’s begin the discussion with loans that don’t require Mortgage Insurance. The suggestion is to borrow as much as you can afford. As an example, borrowing $310,000, as opposed to $300,000, will increase your mortgage payment by about $51 at 4.5%. Recognize that by doing so, you will have $10,000 in the bank. It is my experience that it is easier to find $50 more every month than it is to save $10,000. Even if you had the discipline to set aside the $50 monthly, it would take you 200 months to re-accumulate the $10,000 in principal (longer with lost interest).

Understand too, that the interest paid on the extra money borrowed is tax-deductible. In a 25% tax bracket the $51 additional has a real cost of about $38!

Having the $10,000 liquid has other potential advantages as well:

1. If rates go up in the future, you could potentially make more interest than you are spending.
2. If you can avoid using credit cards for furniture, home improvements, etc., you can save a bundle on those non-tax deductible interest rate costs.
3. In a world where home values have declined, the more you borrow, the less you have at risk. You transfer the risk of the future value of the home to the lender.

Now, many borrowers today will need some sort of Mortgage Insurance, whether it’s a Conventional Loan with less than 20% down or an FHA Mortgage. These borrowers should sit with their loan officer and run the numbers because the cost of the Mortgage Insurance can vary based on loan-to-value and other factors. Examine the costs and the relative benefits.

reprinted with permission by KCM

Money to purchase and renovate your home!

Whether you’re looking at a foreclosed home, bank REO, a Short Sale or really any home, you need to be aware of the FHA 203K Program. The general condition of real estate has taken a dip over the past few years, as homeowners are not sprucing up their home as they have in the past.

(Pssst…there’s a recession going on…people are afraid of losing jobs…and they believe they won’t “get back” the money they spend by renovating upon sale).

The 203K loan can be used for small repairs (with a minimum of $5000 of work) such as a new roof or replacing the boiler. It can go all the way up to practically rebuilding the home and anything in between. Maybe you love a home, the neighborhood, etc., but you hate the kitchen cabinets. The 203K may be for you. As long as the existing foundation stays intact, we can talk about any type of repair, upgrade, modernization or expansion.

With one closing, we will give borrowers money to satisfy their contract with the seller AND establish a Rehab Escrow Account to fund the agreed renovations. The Rehab Escrow Account is managed like a Construction Loan. Money is released after work is completed, the property is inspected by the lender and the title is updated.

Like all FHA loans, the property must be owner occupied and loan approval requires full documentation of income, assets and credit worthiness. At the same time, underwriting guidelines have some flexibility built in. (In theory, we can lend up to 110% of the After-Improved Value of the home for example.)

Loans are processed in the same fashion as any other loan (in terms of income, asset and credit) with the exception of the appraisal. Appraisers work in conjunction with the home improvement contractor and a HUD Approved Pre-Planner to determine: “As-Is” Value, “After-Improved” Value, costs of construction and the draw schedule of the renovation portion of the loan. This work typically adds about a week to the approval process, largely because it should be done BEFORE contracts are signed.

SOME UNIQUE FEATURES OF THE 203K

• Mixed-Use Properties may be eligible! As long as the commercial space is no more than the allowable square footage based on the number of floors in the building and none of the renovation monies are used for a commercial renovation, the 203K gives tremendous interest rates for Mixed-Use Properties.
• The loan can be used to change property usage (when appropriate municipality approval)…..converting a 1 Family Home to a 2 Family or a 4 Family to a 3 Family or any variation that stays within the 1-4 Family boundaries works.
• On major renovations we will finance up to six months payments into the loan. In these cases,the house will not be habitable until after the work is completed.
• There is a Streamline 203K for projects that require less than $35,000 of repairs. Typically, we like to see only one or two items of work that can be done quickly (with one inspection).

It is recommended that you work with an experienced loan officer when exploring the 203K Program, as there are many details that need to be considered (from selecting a qualified contractor to the inner workings of the draw schedule and preparing for different contingencies). While the program is more intricate, with the right education ahead of time, it is extremely manageable.

posted with permission from KCM

Short Sales are a better choice

Last week, RealtyTrac released its Q2 2011 U.S. Foreclosure Sales Report. The report confirmed what we are hearing in the marketplace – banks are beginning to look more favorably on short sales as option to foreclosure.

The report dissected the sales of distressed properties in the second quarter of 2011. Here are several of their findings:

• Sales of homes that were in some stage of foreclosure or bank owned accounted for 31 percent of all U.S. residential sales in the second quarter of 2011, down from nearly 36 percent of all sales in the first quarter.
• A total of 102,407 pre-foreclosure homes (short sales) sold in the second quarter, an increase of 19 percent from the previous quarter.
• A total of 162,680 REO homes (foreclosures) sold in the second quarter, virtually unchanged from the first quarter.
• Short sales on average sold for a discount of 21 percent below the average sales price of non-foreclosure homes.
• REOs on average sold at a discount of nearly 40 percent below the average sales price of non-foreclosure homes.

This could be a great sign that banks are finally realizing the advantages of short sales over foreclosures.

Bloomberg.com quoted Rick Sharga, senior vice president of RealtyTrac, in an article covering the report:

“This is a glimmer of hope that lenders are getting more realistic. It’s a win for borrowers who avoid foreclosure, buyers who get a house in better condition and banks that lose less money, which is also a win for taxpayers.”

posted with permission from KCM

What banks are looking for...

When lenders evaluate mortgage borrowers, they look at four things: income (the ability to repay), credit (the willingness to repay), collateral(appraised value and property condition) and assets (cash in the deal and cash reserves after closing, mostly). Of the “four legs of the table”, assets are the least discussed, and yet may be the most important.

What do we mean when we talk about assets?

• Monies needed for the down payment (the difference between the purchase price and the loan amount which may or may not be the same as the money deposit at contract signing)
• Monies needed for closing costs (fees to the lender and third parties for things like appraisals, title insurance, settlement services, and so on)
• Monies needed for Pre-Paids (homeowners insurance, flood insurance, real estate taxes, etc.) and establishing escrow accounts for future payments
• Monies for Reserves- the money you still have left after closing. Monies that would be available, if a problem were to arise

Why do we care about assets?

• Assets may be the truest reflection of a borrower’s fiscal strength. Their ability to save and properly budget could be a significant indicator to their future paying habits
• The source of the assets is important. Savings? Gift or inheritance? Lottery victory? Insurance settlement? Sale of a baseball card collection? Each reflects differently on the borrower.
• Many people don’t show all their income on their tax returns (it’s just a fact). Undocumented income can’t be used to qualify; however, often assets become a truer representation of a borrower ability to pay than their 1040s.
• Reserves are an issue. A client with $50 in the bank after closing is riskier than one with $50,000. Also, clients who have money in the bank but have some sporadic lates on their credit are looked at differently than those who didn’t have the money to make the payments.

Common Asset Issues in Mortgage Packages:

• Large deposits (defined as those which are excessive for the income level) raise an underwriter’s eyebrows. Where did the money come from? Maybe the borrower took a loan that doesn’t yet show up on their credit report.
• Cash deposits are another red flag. In this day and age, people keep their money in the bank, not under their mattress. Where did the cash come from?
• Gift monies and seller’s concessions, while considered as borrowers assets when doing calculations, will give an underwriter pause when assessing the borrower’s real ability to replay.

Guidelines have tightened. When borrowers are paying off credit cards to get their ratios in line, lenders are asking where that money came from now. That act has nothing to do with the home purchase, but may be a sign of something fragile in the borrower’s financial make up.

The best advice is to consult a loan professional to discuss the proper way to position your assets and the timing of it that will put you in the most favorable light.

posted with permission from KCM

This is the time to put your house on the market! Every day you wait is a missed opportunity for buyers to see your house....and buy someone else's

Selling Your House? Waiting May Not Make Sense

There have been some bright spots in the residential real estate market over the last couple of months. Several price indices have reported a stabilization of prices and some regions have even shown small levels of appreciation. This has led some to believe that we may have reached a bottom for home values. We must realize that what we are actually experiencing is a ‘window of opportunity’ as the banks are delayed in bringing certain inventories of distressed properties to the market. Let’s look at what others are reporting:

Bloomberg Businessweek

“The crux of Simon’s analysis is that the loose lending practices seen during the housing bubble allowed 5 million renters to become homeowners, and that the market is in the protracted process of evicting this group. He believes housing prices will decline 6 percent to 8 percent nationally, with 6 million to 7 million more foreclosures yet to come.”

Yahoo Finance

“The problem with the real estate market remains excess inventory. Based on Shilling’s research, there are 2 million to 2.5 million excess homes in the country — a supply that will take 4-5 years to work-off. The result: Housing prices will fall another 20% and underwater mortgages will balloon from 23% to 40%, he says.”

Housing Wire

“Both warmer weather and the drop in distressed sales percentage have contributed to recent home price improvements. However, given the disappointing pace in housing demand recovery, both factors may turn against us in the coming winter and push home prices lower again…

This supply-demand imbalance affirmed JPMorgan analysts’ estimate of a further 4% drop in home prices from the first quarter of 2011 to a new bottom next year.”

DS News

“Home prices have gotten a little bit of a boost in recent months thanks to a seasonal uptick in market activity. Most analysts, however, expect further declines to characterize the later part of the year and possibly extend into next year, largely because of the huge supply of foreclosures on the market.”

Bottom Line

If you are thinking of selling in the next twelve months, you would probably do much better if you sold your house sooner rather than later.

shared with permission from KCM Blog

Why a Buyer should use a Realtor

There are many obvious reasons as to why an agent or broker would be necessary when you are selling your property. From market knowledge to pricing to marketing, an agent is a good friend to have when selling your home.

But what about the buyers side?

Does a buyer really need an agent to represent them? Well, being a broker I would have to say yes. But I will back up my claim with some very important reasoning.

First of all buyer representation is something that is really not all that old, but came about due to a lot of buyers being taken advantage of at the closing table. There are things that a normal buyer really isn’t privy to nor should they have to be. That is where a good agent representing the buyer earns their share. They are there to protect the interests of the buyer and negotiate the best possible price for the property being purchased.

A good buyer agent will walk their buyers through the entire process and make sure that they understand the ins and outs of what is going on and why. They are there to make sure that the correct inspections are requested and completed, they are there to make sure that any repairs that need to be done are done, and they are there to make sure that when the keys are handed over, both parties are walking away feeling good about the deal.

A buyer’s agent should be able to let their clients worry about other things rather than all the technical aspects of purchasing a home. Buying a home should be fun and exciting, rather than stressful and unpleasant.

A good buyers agent will always work for their clients best interests, negotiate the best price and terms of a contract, see that all inspections and repairs are requested and completed on time, and will make sure that there is a smooth transition at the closing table.

posted with permission by Tim Brown

A Window of Opportunity for House Sellers

There has been much confusion as to where housing prices are headed. We have actually blogged on the issue recently. Today, we want to give our opinion on this subject for the short term. We believe sellers have a window of opportunity for the next 90-120 days in which to sell their homes for maximum price. We believe there will be increased downward pressure on home prices later this year and the first half of 2012.

Why renewed downward pressure?

Any item’s price is determined by ‘supply and demand’. In many parts of the country existing housing inventory is already high and actually increasing. In addition, an inventory of distressed properties (foreclosures and short sales) will be coming to market later this year. This inventory has been delayed for the last several months because of faulty paperwork by the banks when they originally attempted foreclosure proceedings on these homes.

Celia Chen, of Moody’s Analytics explains:

“Foreclosures are weighing on the outlook for U.S. house prices, and the slow resolution of issues surrounding the so-called robo-signing scandal is keeping distressed homes off the market”.

The New York Times also recently reported on this issue. They looked at the delays in certain states. As an example, this is what they found in New York:

“Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure, according to LPS. The average over the last six months: 286. That is far lower than at any point since the recession began.”

Banks are now correcting these errors.

There is evidence that the banks are getting their documentation in order and about to again increase their foreclosure repossessions. Housing Wire reported:

“Since major lenders delayed foreclosures to fix a broken process late last year, the amount of filings declined, but in May signs emerged the effect might be wearing off.”

They went on to quote RealtyTrac CEO James Saccacio:

“…lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory… Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask.”

What will this mean to home prices?

As this inventory comes to market, it will impact prices in two ways:

1. It will provide discounted competition for buyers
2. It will impact the appraisal values of all homes in the area

Again, we quote Celia Chen:

“It is quite possible that house prices will pick up slightly in the second or third quarter of this year, as foreclosure sales remain depressed while nondistress sales pick up…By the fourth quarter of this year, however, the distress share will rise, sending the house price index back down…

House prices will founder until early next year and start rising in earnest at the end of 2012.”

Bottom Line

There is a window of opportunity currently which sellers should take advantage of. Waiting until later this year or until next year will not guarantee a higher sales price. If anything, it probably guarantees the exact opposite.

posted with permission from KCM

Making the museum a fun place for the entire family

It can be difficult to convince your family that they would all enjoy going to the museum, but the Norton Museum of Art in West Palm Beach has an exhibit that is quite entertaining for people of all ages.

“Out of this World: Extraordinary Costumes from Film and Television” is on display from June 4 through September 4. The exhibit includes original costumes and accessories from movies such as: Blade Runner, Star Wars, Indiana Jones, Batman & Robin, The Terminator. TV show costumes are included from Star Trek, Star Trek: Voyager and Battlestar Galactica as well as a few special effects models and prop accessories, all from the Paul G. Allen Family Collection. Allen, who co-founded Microsoft with Bill Gates, is a huge sci-fi fan. His collection includes Captain Kirk’s commander chair from the original “Star Trek” series.

Highlights include the outfit Jim Carey wore at The Riddler in Batman Forever; a bullet-ridden leather jacket from Arnold Schwarzenegger’s The Terminator and the Adrian-designed hat worn by Margaret Hamilton as the Wicked Witch of the West in The Wizard of Oz.

There are a number of events scheduled to accompany the exhibition – from movie screenings to family programs – throughout June and July. For a description and schedule, visit Norton.org.

IF YOU GO: The Norton Museum is open Tuesday, Wednesday, Friday and Saturday from 10 a.m. to 5 p.m. On Thursday the museum is open from 10 a.m. to 9 p.m. On Sunday it is open 11 a.m. to 5 p.m. General admission is $12 for adults, $5 for visitors ages 13-21 and free for members and children under 13. West Palm beach residents receive free admission every Saturday with proof of residency. Palm Beach County residents receive free admission the first Saturday of each month with proof of residency. For additional information, call 561-832-5196 or visit Norton.org.

What About the Cost of Delaying Your Dreams?

Whether a family is thinking of buying or selling a home, price seems to have become all important. I’m not sure why that has occurred. I realize, whenever anyone sells or buys anything, making sure you get a ‘good deal’ is a crucial part of the transaction. However, in real estate today, it now seems that price has become the ONLY THING!

Yet, appreciation or depreciation is not usually the first thing that matters when the average family decides to buy or sell a home.

People move for numerous reasons. Here are a few examples:

• to create a better lifestyle for themselves and their children
• to be closer to family in other regions of the country
• to be closer to necessary healthcare
• to take advantage of a promotion or a new job
• to downsize and lower long term financial obligations

Most voluntary moves help families achieve their goals and/or dreams.

Bottom Line

Which is more important: waiting to get a few more dollars for your home, sitting on the sideline hoping prices drop just a little bit lower before you buy or moving on with the rest of your life? Only you can decide.

printer with permission from KCM Blog

Financial News Icons Say Now Is the Time to BUY!

We received some tough news on housing last week. Prices are still softening. There was a lot of negativity surrounding these reports. The news caused more consumers to be concerned. However, the real question is what this means to you and your family. This could actually be great news if you are buying (either as a move-up buyer or a first-time buyer).

We don’t want you to take our word for this. Instead, here are excerpts from articles published last week by two of the country’s iconic financial publications: The Wall Street Journal and Forbes Magazine.

The Wall Street Journal: Why It’s Time to Buy

“Despite all the gloom, there are growing indications that it is a good time to buy… The long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.”

Forbes Magazine: 9 Reasons to Buy a House Now

“If you’re planning to buy a house right now, the next few months may be the best time to buy… With a convergence of the factors (mentioned in the article) all of which are favorable to the prospective home buyer, there may not be a better time to buy than right now. It’s a buyer’s market, but like everything else in life, the bargain deals won’t last.”

Bottom Line

When the Wall Street Journal and Forbes have articles saying now is the time to buy, maybe it’s time to buy

shared with permission by the KCM BLog

List of required repairs for FHA loans

The following is a list of items will not meet FHA’s Minimum Property Requirements.

**This information has been provided by HUD, 2005-ML-48

Exterior

¨ No railings on stairs of front porch or rear patio (Typical for homes that are elevated or have a crawl space)

¨ Visible damage to roof covering (Large portion of missing shingles, tile, etc..)

¨ Evidence of structural problems or settlement

¨ Defective paint surfaces on homes constructed pre – 1978

¨ Cracked/ damaged windows or doors that allow access from exterior of property

¨ Window bars with no emergency release latches (Emergency release latches cannot be locked by key)

¨ Crawl space with no access for inspection, cleaning, etc….

¨ Visible evidence of hazards or pollutants (Car oil in yard, storage of toxic chemicals of any kind, etc…)

¨ If property has a septic tank inspection is required to determine adequate function

¨ If property has a well/ individual water supply an inspection will be required to determine the water is of adequate quality and the well can support the needs of the property.

¨ Evidence of Termites or Wood Destroying Organisms (If evidence or termites is observed treatment will be required, this is usually triggered by the appraisal report)

¨ Pool is empty, has green water, is missing pump or any other systems needed for it to operate.

¨ Missing A/C compressor

¨ Duplex, Triplex, and Fourplex properties must have individual meters for each unit.

Interior

¨ Visible damage to kitchen cabinets, countertops, drywall, flooring, and/or ceiling

¨ Evidence of moisture or leakage in ceiling

¨ Water and electricity is not working (Needs to be turned on for appraisal inspection)

¨ Bathrooms missing bathtub, sink, toilet, and/or any other fixtures

¨ Exposed wires due to missing lighting fixtures, fans, etc….

¨ Inadequate division of the property and/ or illegal efficiency (Converted Garage’s are ok as long as it does not have a kitchen)

¨ Each bedroom must have access to the exterior of the property via a window, sliding glass door, etc…

¨ Plumbing systems must operate properly

¨ Missing a sink, stove, countertops, kitchen cabinets - note – no stove is ok if it nota part of a built-in with cabinets

*The basic rule that FHA abides by is that the property must be habitable and safe for the occupants. The FHA no longer requires many repairs that they used to. They have standardized their appraisal requirements to include that only conditions that affect the structural soundness of a property and the safety of the occupants be repaired. In the state of Florida the FHA prefers that all single family residences have a termite inspection completed, if the property has a well or septic tank an inspection will be required to determine that they are in operable condition.

I

Falling Prices, low mortgage rates put record number of South Floridians within grasp

You could call it the upside of the downturn: Housing affordability in Palm Beach County hit a new high during the first three months of the year.

Thanks to plunging home prices, resilient incomes and low mortgage rates, 77.5 percent of homes sold in the first quarter were within reach of a median-income family, according to an affordability index released this week by the National Association of Home Builders.

That's based on a median home price of $120,000 for houses and condos, and a median family income of $67,600. The last time Palm Beach County homes were this affordable was in early 1999, when 77.4 percent of families could afford the median-priced home.

During the real estate boom, the affordability index showed that fewer than 30 percent of Palm Beach County homes were within reach of typical families. That led to concerns that teachers, nurses, firefighters and other middle-income workers no longer would be able to afford to live here.

Plunging prices are a painful but necessary part of any housing ecovery, economists say.

"At least one piece of the puzzle has returned," Wells Fargo economist Mark Vitner said. "Affordability is in place."

Although sales of homes have picked up, the favorable affordability numbers haven't created boom-like conditions.

"Everything is aligned in a straight line to make housing unbelievably affordable," said Douglas Rill, who owns Century 21 America's Choice in West Palm Beach. "You might think that with that kind of affordability, there'd be a line in front of real estate offices. But sadly, that's not happening."

The hangover from the housing party continues to slow sales. Nearly half of homeowners in South Florida owe more than their homes are worth, according to real estate website Zillow.com. And many lenders now require 20 percent down payments from mortgage borrowers.

"Unfortunately, even though homes are affordable, a lot of folks still owe more on their mortgage than their home is worth," Vitner said. "And credit is still severely impaired."

Homes are even more affordable in the Treasure Coast, where 84.9 percent of homes sold in the first quarter were in reach of the typical family, which made $59,600. The affordability index for the Treasure Coast reached 87.8 percent last year.

Florida's return to affordability helps employers attract people to the state, said Tony Villamil, an economist and dean of the business school at St. Thomas University in Miami Gardens.

"On the positive side, it's good for the business climate," Villamil said. "On the downside, that reflects a very weak housing market."

The national Housing Opportunity Index reached a record level of 74.6 percent in the first quarter, the National Association of Home Builders said. That meant that nearly three-quarters of new and existing homes sold in those three months were affordable to families earning the national median income of $64,400. Until 2009, the index rarely topped 65 percent.omeownership is within reach of more households than it has been for more than two decades," Bob Nielsen, chairman of the national association, said in a prepared statement. "While this is good news for consumers, home buyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales."

The nation's most affordable housing market is Kokomo, Ind., where 98.6 percent of homes are within reach of a typical family. New York's index of 24.1 percent made it the nation's least affordable market.

~ jeff_ostrowski@pbpost.com

Should you get a second opinion?

Buying and/or financing a home are major decisions for anyone. We all look for referrals from friends, family and co-workers who have gone through the process successfully. But we wonder…

“Are there geographical differences?”

“Has the market changed since they did their transaction?”

“How has the ever-changing technology impacted real estate since their closing?”

“Are my personal circumstances (income, assets, and credit) the same as the person who is giving the referral?”

So, how do you know if the agent and/or loan officer you are working with (regardless of how you found them) is a “keeper”? It’s got to be more than a personality match in the current environment. It’s about effectiveness and leadership. I believe that you need to judge them by three criteria:

1. Are they an EXPERT?

Do they know everything about the home, the neighborhood, the other available homes, the pricing trends, the loan product and qualification thresholds, etc.? Are they able to target a likely buyer, if you are selling? Are they certified or have specific designations? What formal training have they had (say, in the art of negotiating, as an example). Do they know anything about quality of construction or when you are likely to need to replace a roof or boiler?

2. Are they looking to serve?

Unfortunately, many sales people operate in their personal best interests. Today, more than ever, you need someone who puts your needs ahead of their own. Whether you are looking to sell quickly or for the most money, you need an agent who acts in the best ways to help you achieve those objectives. Likewise, when looking to buy, is your agent asking you the right questions and listening, so that they can streamline your search?

3. Do they have creative solutions to your challenges?

Are their presentations to you basically the same as every other agent? Do their print ads, postcards, open house plans, and promises of fifty websites sing as monotonous? You need an agent with unique approaches though marketing plans that are comprehensive with online and offline components that speaks to a targeted buyer pool (Gen X, Gen Y, Baby Boomers, certain employment groups, particular cultural components, and so on).

If you believe you are working with a great agent and/or loan officer, thank your lucky stars and be loyal to them because they are worth their weight in gold. On the other hand, if you’re concerned that you have a run-of-the-mill person, don’t settle! Go on a search for excellence. It’s too important not to. shared with permission from KCMcrew

Foreclosures: Bringing Clarity to the Confusion P

Headlines created by the numerous foreclosure reports often contradict each other. One headline announces foreclosures are rising while the next talks about the decrease in foreclosure numbers. This has led to tremendous confusion regarding the issue. Let’s bring some clarity to the data. There are five individual stages of the foreclosure process that are reported:

1.) 90+ Day Delinquencies

Once a homeowner falls three months behind on their payments, most financial institutions count them in their foreclosure numbers. Why? Less than 2% of those who fall that far behind ever catch up in their payments. The other 98% will end up as a distressed property (foreclosure or short sale). Homeowners in this category don’t always receive a foreclosure notice immediately. In some cases, homeowners who have not paid their mortgage in 12 months have not yet received a notice of foreclosure.

2.) Homes in the foreclosure process

These homes have received a formal notice which officially starts the foreclosure process. In different states, because of court procedures, it takes varying time frames to complete this process.

3.) Homes repossessed by the bank

These homes have finished the foreclosure process and are now owned by the bank. These homes are known as REOs (Real Estate Owned).

4.) REOs placed on the market

These are the REOs that banks bring to market. Many come to market quickly. Others must be refurbished before being put up for sale.

5.) REOs Sold

Obviously, these are the REOs that actually sell.

This seems very straight forward. Why is there so much confusion?

Here’s an example. Just a few weeks ago the major daily newspaper on Long Island, NY had a headline that announced delinquencies were up to over 10% of all homes. One-in-ten homes on Long Island were 90+ days delinquent. That was a major increase from the year before. Exactly seven days later, the same newspaper headlined a story that foreclosures on Long Island were down dramatically. That seems a contradiction. Though both headlines were accurate, they led to confusion.

Let’s dig a little deeper into the data. Yes, the percentage of homes being foreclosed on has decreased. Why? The court systems in NY are now taking almost a year to process a foreclosure. There are not less homes eligible for foreclosure. They are just caught in a slow moving pipeline. Likewise, there are not a growing number of delinquencies. These homes are just not working their way through the process. The delinquency numbers would be much lower if there wasn’t a logjam in the court systems.

Bottom Line

To truly understand the distressed property situation in your market and what impact it may have on prices, contact a local real estate professional. They should be able to simply and effectively explain with the use of strong visuals (charts & graphs) what is happening in your area and how it impacts you.

from the KCM Blog posted: 22 Apr 2011 04:00 AM PDT

Come discover Florida!

The newspaper verified what we Floridians know.... More people relocate to Florida after bad winters..... to all my northern friends, let's plan your trip down here now to take advantage of the great prices and fantastic selection of homes on the market.