Short Sales Get Shorter: New Deadlines to go into Effect

As part of a settlement with state attorneys general, the five largest mortgage servicers are adopting new requirements for short sales, which is expected to speed-up what has been known as a lengthy process.

Here are some of the new requirements for servicers under the settlement:

• Servicers must provide borrowers with a decision within 30 days after receiving a short sale package request.
• Servicers will be required to notify a borrower, also within 30 days, if any necessary documents are missing to process the short sale request.
• Servicers must notify a borrower immediately if a deficiency payment is needed to approve the short sale. They also must provide an estimated amount for the deficiency payment needed for the short sale.
• Servicers are also required to form an internal group to review all short sale requests.
• Banks will be considered in violation of the settlement requirements if they take longer than 30 days on more than 10 percent of the short sale requests. Violations can carry fines of up to $1 million and $5 million for repeat offenses.

“If a real estate broker can get a checklist from the bank detailing what documentation is needed, everything can be provided up front, and the bank will be required to give a thumbs-up or a thumbs-down within 30 days,” short sale specialist Chris Hanson with the Hanson Law Firm told HousingWire. “That’s not a bad deal.”

Source: “AG Settlement Starts the Clock on Short Sales,” HousingWire (March 14, 2012)

Updated March 12, 2012, 9:57 p.m. ET

Rise in Phoenix Housing Shows Path for Other Cities

By NICK TIMIRAOS

PHOENIX—As home prices continue to drop in most cities, a nascent real-estate rebound here holds lessons for the rest of the country.

This sprawling desert metropolis was one of the hardest hit housing markets during the bust. Phoenix home prices declined 55% from 2006 through the end of 2011, and Arizona’s foreclosure rate jumped to No. 3 in the nation in 2009. Hundreds of thousands of homeowners are underwater, meaning they owe more than their homes are worth.

Now real-estate economists across the country are studying an early but surprisingly broad Phoenix turnaround. The sharp drop in home prices has brought new buyers into the market. Unlike other markets where housing recoveries have been snuffed out by big overhangs of homes for sale and foreclosed properties, inventories are lean here.

“Phoenix has hit a bottom,” says Thomas Lawler, an independent housing economist who was one of the first to warn six years ago that prices in overbuilt metros were poised to fall.

The nation’s hard-hit housing markets face a tough act: engineering a housing recovery without traditional trade-up buyers, many of whom are either unwilling or unable to sell because of huge price declines.

Phoenix has found a viable formula. Low prices are igniting demand from first-time buyers and investors who are converting the homes to rentals. The local economy is on the upswing with several big employers like Amazon.com Inc. and Intel Corp. hiring again, which is further increasing demand for housing. And the region is benefiting from a surge of buyers from Canada who are using their favorable exchange rate to scoop up bargains in the desert.

Local mom-and-pop investors are also playing key roles in soaking up supply. “I’m running my Realtor ragged looking at properties,” said Robert Gerundo, who last month stood inside a two-bedroom condominium, scribbling his signature on an offer to buy the unit for $50,200, slightly above the listing price set by the bank, which recently foreclosed on the unit.

Investors are buying many Phoenix properties and renting them out.  Mr. Gerundo has bought 13 properties in Phoenix in the past two years and rents them out for as little as $950 a month. The 49-year-old, who drives around in a Jaguar with a Rutgers sticker on it, says he is making so much money as a landlord that he quit his job last year in New Jersey as a banker.

Nationally, housing demand still remains weak and bank-owned sales are expected to rise this year, putting more pressure on prices. Many economists say they expect home prices nationally could fall by another 3% or so this year before hitting a bottom next year. Most expect that prices will rise little for several years.

U.S. home prices fell another 2% in the fourth quarter on a seasonally adjusted basis, according to the Standard & Poor’s/Case-Shiller index tracking 20 cities. But prices rose by 2% in Phoenix, the biggest increase of any metro area in the country. Over the past year, prices in Phoenix are down by 1.2%, the smallest drop since its prices started falling in 2006.

Other markets are showing signs of life, too, as the spring buying season gets under way. Recent job gains for Detroit’s auto sector have helped rev up sales in recent months. Home prices in Washington, D.C., have fared better than in much of the country thanks to better employment prospects from government-related hiring.

Big price drops, like those in Phoenix, are another key. In Detroit, prices are down by 46% over the past six years and have fallen to levels last seen in 1994. Sales have picked up in Miami, where prices are down by 51% over the past five years.

But low prices alone haven’t been enough to so stabilize other epicenters of the housing bust where job growth still lags. In Las Vegas, where prices have tumbled 62% since 2006, including 8.9% over the past year, the local economy is heavily dependent on tourism and gambling, both industries that haven’t recovered. “A lot of markets in the country have hit a bottom, but I just don’t see them coming back the way Phoenix has,” says John Burns, a homebuilding consultant in Irvine, Calif.

The improving housing market in Phoenix isn’t much comfort to anybody who bought a home there a few years ago. More than 52% of mortgage borrowers owe more than their homes are worth, according to CoreLogic, a real-estate data company. And not everyone in Phoenix is convinced that the improvements will last, especially if the economy falters or oil prices soar.

Phoenix saw a small run-up in prices three years ago when federal tax credits spurred a buying frenzy, but prices dropped again once the credits expired. Others worry that banks have delayed foreclosures and will begin to saturate the market with more properties in the coming year. “It feels like a temporary bottom,” says Brett Barry, a real-estate agent who lists properties for Fannie Mae.

Such concerns haven’t discouraged buyers like Lloyd Sheiner from taking advantage of low prices to build an inventory of 143 homes, which he rents out to families that haven’t been able to hold on to their homes.

“The panic is over,” says Mr. Sheiner, an apartment and commercial real-estate investor who lives in Montreal and began buying 18 months ago after he concluded prices were too low.

His average renter, he says, is a family of four with parents who have jobs. “They’ve been sitting around their kitchen table with a $350,000 mortgage on a house worth $140,000,” he says. “And they’re saying to themselves, ‘Geez, what are we going to do? Do we spend the next 20 years of our life paying this down or do we start over?’ ”

His company, Living Well Homes, has built its own property-management infrastructure that allows tenants to submit work orders online and automatically deducts rent from their checking account. “We don’t go running around the valley banging on the door collecting rent,” he says.

Out-of-state buyers accounted for one-quarter of all purchases last month. One in every 25 sales went to a buyer that listed a Canadian address when registering the sale, according to the Cromford Report, a local real-estate publication. Many are flush with cash from a real-estate boom of their own in Canada and an exchange rate that has given Canadians unusual buying power.

Dean Selvey, a real-estate agent and investor who has built his business around marketing to Canadian snowbirds, last month set up a big booth at a two-day trade show in nearby Mesa called “Canadian Snowbird Extravaganza Celebration” that drew 5,000 attendees. “It’s chase the Canadians—that’s our market,” he says.\

A few days later, Jon Mirmelli, a local real-estate agent who has bought nearly a dozen foreclosures as rentals, knocked on the door of a homeowner whose home was slated for a bank foreclosure auction. After introducing himself and informing the occupant about the imminent foreclosure sale, he popped the question: “If you’re not able to keep your house, would you be interested in renting it?”

From the porch, Mr. Mirmelli’s business partner sized up the condition of the three-bedroom house, which the current owner bought for $150,000 in a short sale two years ago. At courthouse auctions, homes are sold as is, meaning the buyers may have to evict the former owner.

Nearly 29% of homes sold last month went to buyers who indicated they planned to rent out the properties, according to the Cromford Report. That figure has been on the rise over the past two years. In mid-2010, the share stood near 15%.

Competition from investors is frustrating for aspiring first-time buyers like Adam Brenner. “This does not feel like a buyer’s market at all,” says Mr. Brenner, a pharmacist who estimates that he has looked at 60 houses since last fall. “You hear and read about how there are so many homes for sale, but once you start looking, it’s a pretty big shock.”

Many real-estate agents have reported more bidding wars in recent weeks, and some buyers are agreeing to escalation clauses, a bubble-era provision where they agree to pay a certain price above the highest offer.

Arizona makes it easier for banks to take back properties through foreclosure without going to court. The state saw the largest decline in the share of loans that were seriously delinquent or in foreclosure during 2011, according to Lender Processing Services. So-called judicial states such as Florida, where banks must process foreclosures by going through court, have seen growing backlogs, which some fear could eventually drag down Florida markets again in the future.

Now prices are firming up because fewer homes are selling out of foreclosure. Foreclosed properties accounted for 36% of all home resales in January, down from 55% one year ago and a peak of 66% in March 2009, according to DataQuick, a real-estate data firm. Those declines have fallen, in part, because banks are also becoming more efficient at approving short sales, where it allows a sale for less than the mortgage debt owed.

Mike Orr, founder of the Cromford Report, says concerns that banks will begin to dump more foreclosures on the market are overblown, at least in Phoenix. “People think there’s a glut of homes the banks are hiding somewhere, and that may be the case in other markets, but not here,” he says.

Still, a market recovery on paper means little to hundreds of thousands of underwater homeowners. Consider the case of Gil Monti. In just two days, he received five offers for this home—four above his asking price.

But that offers little comfort: He has been forced to sell the home, which he built 34 years ago and where he raised all three of his children, in a short sale for $275,000.

Mr. Monti was one of many people who refinanced his home repeatedly during the boom, pulling out cash along the way to fund home improvements and his kids’ college educations. He paid $100,000 in construction and land costs in 1978, and the home was valued at nearly $600,000 in 2006. He sold the property last month in a short sale because his “interest only” $473,000 mortgage reset last year, requiring full interest and principal payments.

He realized the depth of his troubles last year when a neighbor sold a home for just $199,000, a third of what Mr. Monti’s home was worth at the peak.

Mr. Monti isn’t alone. “The recovery that gives people like Gil the freedom to sell their property is not going to happen, possibly ever, for a lot of people here,” says Greg Markov, his real-estate agent.

Mr. Markov also represents Mr. Gerundo, the investor who bought 13 properties as rentals. “That recovery is already here” for Mr. Gerundo, Mr. Markov says. “His investment is not going down in value.

A version of this article appeared Mar. 13, 2012, on page A1 in some U.S. editions of The Wall Street Journal, with the headline: Rise in Phoenix Housing Shows Path for Other Cities.

Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved

Gilbert, Arizona vs Paradise Valley, Arizona.  I just came across a very interesting comparison done by Sperling’s BestPlaces.  They compare the overall cost of living, housing, utilities and more.  I think the folks  living in Gilbert already know this.

Read Article

Senator Merkley talks with Dylan Ratigan on MSNBC about the current foreclosure crisis and how his plan will help prevent families from losing their homes.

Over 300,000 foreclosures have been filed against American families each month for the past 20 months. In the past year, nearly 28,000 Oregon families have been served with foreclosure filings. To learn more about Senator Merkley’s plan to address the housing crisis, go here:http://merkley.senate.gov/newsroom/press/release/?id=B46BF5B9-64E4-4A53-9BDD-…

Arizona Distressed Property Report - January 2012

Gathering intelligence on Short Sales and Foreclosures is now easier with the Distressed Property Report. This report contains three interactive maps: short sales, foreclosures and a map of all distressed properties. Each map is a snapshot of the active distressed property aggregated by ZIP Code. The December 2011 Distressed Property Report can be found here.

There are no “from” and “to” dates on the Distressed Property Report because the data is Active properties in the system on the day the report is published. The “Percentage of Actives” shows what percentage of Active listings are distressed in each ZIP Code. Each map is displayed below:

 Click link to view Arizona, Maricopa County Distressed Property Map in a new window

Housing recovery may not bring a sales spike

NEW YORK — When the real estate market improves has a lot to do with your perspective on the market, said Alex Perriello, president and CEO for Realogy Franchise Group, during a panel presentation Thursday at theReal Estate Connect conference.
“Oftentimes I’m asked, ‘When’s the market going to get better?’ It all depends on how you define the word ‘better,’ ” Perriello said during a panel presentation titled “The State of Real Estate: The Year Ahead.”
“If you define ‘better’ as ‘When will I not have to deal with foreclosures, short sales, underwater homes, people with damaged credit, (problems with appraisals), tough lending standards?’ the answer to that is ‘No time soon’ — at least for the next two or three years, and in some places, depending on where you live, it could be much longer than that.”
He added, “If you define ‘better’ as ‘When am I going to make more money in this business?’ he noted that even if real estate sales fall to 4 million this year — less than the 4.2 million in 2011, $35 billion in sales commissions are going to be earned by someone in this industry over the next 12 months.” Realogy operates company-owned offices and franchise networks under the Coldwell Banker, Century 21, Sotheby’s International Realty, and Better Homes and Gardens Real Estate brands, among others.
Diana Olick, real estate correspondent for CNBC and author of the “Realty Check” blog at CNBC.com, who also participated in the panel session, said she doesn’t expect a sharp rebound once the real estate recovery takes hold.
She said she expects that at some point in the middle of 2012 “we are going to see the price stabilization we need, then people are going to start to buy,” adding, “I don’t think we’re going to see a great surge up … we’re going to see pockets of strength in certain markets.”
The factors that she expects will keep the real estate market subdued: deflated consumer confidence, and the need to work through the stream of distressed properties.
Olick and Perriello agreed that reduction of principal for distressed homeowners has proven one of the most effective deterrents to foreclosure, and panelists generally agreed that the foreclosure process is taking far too long to run its course in many areas.
Olick said that the problem is that many homeowners appear to be “staying in their houses and gaming the system,” living in their homes without paying the mortgage for several years, in some cases. “That’s a big problem right now,” Olick said.
She also said she believes that investors will be at the forefront of the real estate recovery.
While investors — namely house-flipping speculators — have been vilified for their role in driving up prices during the boom years, Olick said that “it is the private equity, the institutional markets, coming in and taking the distress out of the markets that we need right now. That’s going to be the strength in the market this year, and that’s a good thing.”
Margaret Kelly, CEO for Re/Max LLC and a fellow panelist, said that real estate professionals “have to embrace investors,” agreeing that investors have an important role to play in working through excess inventory. Many investor-bought properties are converted to rental housing, she noted.
Kelly said she believes the short-sale process must be improved and expedited, and appraisal reform is also needed. “Appraisals have been a nightmare,” she said.
Perriello’s primary hope for the housing market: “If I could fix one thing, it would be a clear, concise national housing policy from Washington, D.C.
“If you think about the last three or four years, it’s been a mixed bag,” he said. “On the good side we’ve had government agencies buying up mortgage-backed securities, which has provided capital to the market, which has been a good thing — it’s kept interest rates low.”
The series of federal homebuyer tax credit programs have also provided some welcome relief, he said.
“On the negative side, you’ve got legislation that’s been passed — like Dodd-Frank would be a perfect example — that’s now in the hands of the regulators. And if the regulators have their way it’s going to be, I believe, very damaging for housing and it’s going to make mortgage lending even more difficult for the homebuyer to get a loan and it’s going to be more expensive.”
There have also been mixed messages over the mortgage interest tax deduction, and policy reversals over loan limits, he said.
“People are concerned, there’s doubt in the market, and whenever there’s uncertainty and doubt in the market people sit back and say, ‘I think I’ll wait,’ ” he said.

By Glenn Roberts Jr.
Inman News®