What Do Current Foreclosure Numbers Suggest for the Economic Future of Arizona and the Nation?

The foreclosure crisis is still with us—and it is pulling down whatever economic recovery we may have seen. The number of bank owned properties, and the actual repossessions in the last quarter, is at an all-time high. As more and more foreclosures hit the market, it drags down the overall value of homes. And when house prices drop, as we have seen in recent years, the economy drops with it.

After all, why would someone want to pay $50,000 more for house A, a regular listing, than for house B, a foreclosure? If both homes are in good condition and everything else is equal, it’s pretty much a no-brainer. The very presence of house B will force the owner of house A to drop the price just to get an offer.

According to the Mortgage Bankers Association, the number of homes in the foreclosure process was at 4.63%, an increase of 5 points over the previous quarter and up an astonishing 78 basis points from a year ago. Homes considered to be in the foreclosure process do not include simple delinquencies.

The news is not all bad though. According to the same figures, the number of homeowners beginning to be in trouble with their mortgages has declined since the last quarter and compared to a year ago.

According to RealtyTrac, Arizona moved up to 2nd place nation-wide on the list of states with the highest number of foreclosures, however the actual number of foreclosures in Arizona has dropped significantly. The spike in place was due primarily to a much larger drop in California’s foreclosure rates. Still, the number of foreclosures in Arizona is nearly double that of the nation.

Another disturbing trend is the type of mortgages going into default. While the earlier problem-mortgages were the high-risk subprime variety, today’s foreclosures are more likely to be on mortgages that were not considered to be a significant risk.

Add to the economic mix the sharp decline in mortgage applications over the past few weeks since the Home Buyer Tax Credit ended. Potential home purchases, after a surge in the fall and winter months, are now at a 13-year low.

While it is still hotly debated whether the economic improvement in recent months is a temporary spike or a long-term upward trend, there is no denying that the housing crisis is far from over. The next few quarters will show us a more realistic picture of what the economy will do, with the housing market leading the way.

Whether you are looking to buy a home or facing a troubling mortgage situation, give the Curtis Johnson team a call. The Curtis Johnson Team is helping individuals who are facing foreclosure and those who are seeking their dream homes.

Go to www.CurtisJohnson.com or call 1-888-Curtis-J.

Will Short-Term Government Help Bring Long Term Good?

Government intervention helped many eager homebuyers to buy homes in the last year and a half, promising them an $8,000 tax credit if they did. This temporarily helped revive home sales, but is it a good deal in the long run?

The Florida Association of Realtors thought so and tried to lobby to expand the credit. Others, speaking from the real estate side, and the home building side, think that the long term credit could overcorrect the mortgage industry –especially since the Federal Reserve also bought mortgage –backed securities to keep interest low. The government also bailed out Fannie Mae and Freddie Mac, the nation’s two largest mortgage lenders.

Unfortunately, it seems as though we may be on track for the government to control all aspects of the mortgage industry. If our government had a record of accomplishment for managing money wisely, this might not be such a concern. However, we all know that isn’t exactly the case.  Of course, the long term impact of the credits is not yet known.

It may not have been the best time for some families to buy, but with the government dangling a carrot of extra money, many families gave into the temptation. Hopefully, these loans will remain stable and not become foreclosure statistics.

Any good effects the credit had on residential real estate did nothing to over a million commercial real estate loans that will end between 2010 and 2014, and it is clear that we are not out the woods. Florida—and Arizona—have some of the largest commercial real estate markets, so they will probably take some of the worst from this, just as they did in the residential market.

Are you interested in buying a home for your family, even though you may have missed the government’s cut off for a tax credit? If so, call the Curtis Johnson team today. The Curtis Johnson team will be here to help you buy or sell your home, and our help does not have a deadline. Go to www.curtisjohnson.com or call 1-888-Curtis-J.

Will Short Sale Save Your Credit Score?

If you’re facing foreclosure on your Phoenix home, you may have considered selling your house in a short-sale. A real estate agent you know tells you it’s better than a foreclosure. Your co-worker did it, too, and “heard” it would be better than a foreclosure (you don’t know if he’s bothered to check his credit since doing so, however). From what you keep hearing, you’d be better off selling your home in a short-sale than taking the massive hit to your FICO credit score as a result of a foreclosure. So, what should you do?  Will a short sale save you the consequences of foreclosure?

A short sale is considered an alternative to foreclosure for good reason.  On the positive side, it can give you and your family more control over the situation. You still list your home through a Realtor for a minimum price that the lender will accept. During the sale process, you can stay in your home and protect it from the damage that can occur when a foreclosed home is left vacant.  Ideally, during this time, you will still be able to make some payment.

Lenders have not always been enthusiastic about short sales as they would prefer to collect their whole mortgage amount.  Given the current real estate climate, lenders are seeing the positives of the process: processing a short sale usually involves less cost to the bank than processing a foreclosure.  Recently, the Making Home Affordable Program mandated that banks process short sales more efficiently; major banks have countered with short sale plans of their own.  Both banks and borrowers can receive financial incentives under the federal program.

Naysayers about short sales note that a short sale isn’t any “gentler” on your credit score than a foreclosure.   CNN devised a hypothetical scenario in which two individuals with varying credit scores (680 & 780 to start) underwent similar hardships. While working with the credit scores (to see what would happen to the credit scores in various situations), it was determined that both a foreclosure and a short-sale had the same effect on a person’s credit score: both scores declined. Ironically, the person with the higher credit score took the bigger hit of about 140 points. However, many analysts would disagree with these numbers and say the credit score impact of a short sale is only about 50 points.

For most people in mortgage trouble, the impact on the credit score is not as big a concern as finding a way to either keep their home or move on with dignity.   If you are in a bad situation, the reality is that your credit is probably already on the downslide from months of being delinquent.  Not seeking the help that a short sale can offer is like telling the lifeboat driver on the Titanic that you will only take a red boat.

If you fearing foreclosure or are in over your head with your mortgage payment, a short sale could be your answer. It offers an opportunity to terminate your mortgage commitment with dignity and provide you with some cash to start planning your new life .    A HUD-approved credit counselor can help you determine the best route for you.

If you go that route, you will need the expertise of a trusted agent to list your home and follow through on the paperwork.  For more information about foreclosure alternatives or buy or sell a home in Phoenix, Mesa, Glendale, or surrounding areas, call Curtis Johnson Real Estate today to set up an appointment and get started.  The Curtis Johnson team is here to help! Go to www.curtisjohnson.com or call 1-888-Curtis – J