Posts Tagged ‘arizona foreclosures’

Home Affordable Modification Program Lacking Success

September 6, 2010

The government's plan to help struggling home owners seems to be a flop for many.When the Obama Administration announced the Home Affordable Modification Program, it was touted as the solution to the crisis that distressed home owners were in. It was supposed to stabilize the housing market, reduce foreclosures, and help home owners get back on their feet without losing their homes.

Here we are a year and a half after the program started and not even half a million people are currently participating in the program. It’s not that more haven’t tried; banks simply don’t want to cooperate. The program claims to have helped 1 million homeowners, but half who started in the program have dropped out, or been kicked out.

Some banks have said that the plan is unrealistic, and many just don’t want to follow more government rules than they have to. Fortunately most of the same banks have created their own solutions, which are helping far more homeowners than the government’s plan.

The foreclosure problem is still huge, though, even bigger than it was in January 2009 when the program was announced. Nearly 2 ½ million homes have been foreclosed upon since December 2007, with 900,000 of those in 2009 alone. Foreclosures in 2010 are on track to break that record and top out over 1 million. Compare that to the “normal” number of foreclosures prior to the mortgage crisis of 100,000 per year.

To be honest, many of these homes have been in trouble for years. The banks are just now getting caught up with their foreclosure paperwork. But many of these homes could be salvaged for their owners if banks were more willing to cooperate.

The Home Affordable Modification Program will probably end up helping only about 500,000 people get back on and stay on track with their mortgages. Some of this is the fault of the banks for not doing their part, some of it is the fault of the government for not creating a better plan, and some of it is the fault of the homeowners themselves. Many homeowners find themselves in increasingly worse financial situations even after altering their mortgage, and end up losing it anyway, whether due to job loss, health problems, or simply poor financial choices.

Banks have claimed that the Obama administration has pressured them to accept people who have not yet proven their qualifications. The Obama administration denies these claims. Home owners claim they have sent in the required paperwork, but the banks claim they never received it. It seems to be a nightmare of finger pointing and disorganization is to blame for much of the problem.

Whatever the cause, if you find yourself with a distressed mortgage and need immediate help to sell your home, give The Curtis Johnson Team a call. We help sellers get quick sales, and we help buyers find what they are looking for. Check out what our happy clients have had to say about The Curtis Johnson Team.

Go to www.CurtisJohnsonRealty.comor call 1-888-Curtis-J.

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From Snow-Bunnies to Sun-Lovers: More Canadians Buying Homes in Arizona

August 19, 2010

From snow boots to flip flops, more Canadians are buying in ArizonaWhether Canadians are flocking to purchase homes in Arizona because it’s a buyer’s market, or simply because they are tired of snow, the effect is the same: 1/4 of all out-of-state buyers in the Phoenix area recently are Canadian citizens!

It’s true that you don’t have to “shovel sunshine” – and this alone could be the original source of Canadians who are buying homes in Phoenix. However, as we all know, the real estate market in Arizona is struggling, the United States dollar isn’t as strong as it could be, and the fear of loss of jobs or loss of retirement income is at nearly every American’s doorstep. But Canada’s dollar is stronger, and they are not as affected by the recession.

Canada’s retirees, who may have decided another winter of shoveling several feet of snow is just not possible for their aging bodies, younger people, and even investors are looking to the struggling US real estate market for bargains. The warmer the area the better;we sure have plenty of warmth here in Phoenix!

Is this good or bad for the Phoenix area? Well, it will certainly bring non-US dollars into the area, which is a good thing for our economy. It will mean fewer foreclosures and other empty homes on the market, which will eventually increase and stabilize home prices again. Since many of the Canadian buyers are retired, it’s quite possible that these new residents will have independent sources of income, so will not decrease the pool of available jobs. Many may even increase the job market if they are small business owners or even just need to hire some domestic help -not to mention the increase in services and places to shop that will be needed with an increase in population.

This trend is not new; even before the recession we were seeing more and more Canadians heading to the sunny city of Phoenix. Now we see fewer Californians purchasing in Phoenix, a population that has traditionally been the leader in out-of-state buyers. We are also seeing an increase in buyers from northern United States regions and the Midwest.

Quite possibly, the best thing that these new buyers will bring is more stability. Those who are looking to invest and live in Phoenix these days are a population group that typically stays put for a long time.

If you are ready to trade in your snow-bunny gear for shorts and sandals, give the Curtis Johnson team a call. We know the Phoenix area and can help you find the home of your dreams or a great investment property. Contact the Curtis Johnson team, go to CurtisJohnsonRealty.com or call 1-888-Curtis-J.

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

May 24, 2010

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?

May 13, 2010

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?

April 30, 2010

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

Limited Loan Modification Success, Rising Foreclosures Mark Phoenix Real Estate Scene

April 17, 2010

Last year, President Barack Obama announced his plans for the Making Homes Affordable program–a program designed to help those on their way to foreclosure.  There was a trial period set up when this program began, and recently the number of those who made it to “permanent” status has increased. Homeowners from Phoenix were likely candidates for this program

However, the number of those who have actually made it to a permanent mortgage modification is still staggering behind those within the trial period. Why? It isn’t easy to qualify for the program in the first place; In addition, as with any “helpful” government program, those who do qualify must complete a slew of paperwork. Banks are behind  in processing the paperwork.  With the less-than-simple process toward loan modification in place, many of those who were in the process of completing the program have dropped out.

At the same time, the number of foreclosures continues to rise. Unfortunately, that cancels out any of the “good” that the president’s program has been doing. Regardless of how many people the mortgage modification program is helping, if there are still plenty of foreclosures (there are) and if that number is still increasing (it is), then it cannot  be said that this program is all that it’s cracked up to be.

Are you facing a possible foreclosure and in need of an agent to help sell your home fast? Have you been considering the mortgage modification program? Let the Curtis Johnson team help you. The Curtis Johnson Curtis Johnson Team is here to help individuals who are facing foreclosure. You don’t need to go to the government for help. Instead, go to  www.curtisjohnson.com  or call 1-888-Curtis – J.

Home Buying Trends Changing

April 11, 2010

Looking for a home in Phoenix?  Like fashion, trends in home buying and selling are changing–again. This time, though, you may have a greater chance of benefitting if you play your cards right.    

Several factors are impacting these new trends:

  • Distressed home prices are perhaps attracting more buyers, especially with the government’s home-buying incentive program. However, they’re also having a negative effect on those who are trying to sell their homes on their own. With more than 3 million homes expected to go into foreclosure this year, sellers have a lot of competition. Owners who are making purposeful decisions to walk away from their mortgages impact this trend even more.
  • Larger homes are no longer the most sought after. On the contrary, in these hard economic times, buyers are less interested in having a roomy abode and more interested in living within their means–a smart move, given the trend in foreclosures, particularly in the Phoenix area.
  • The government’s “helpful” mortgage-backing program was set to end last month. As a result, economists expect mortgage rates to rise to between 5.3% and 6% by the end of the year. This is expected to be a gradual increase, though. Anything else, and the Federal government will be back in the mortgage business.
  • It’s particularly hard to get financed for a condo or investment home. At this point, you may need a down-payment in the neighborhood of 10%, a credit score of around 720 and payments may be maxed out at no more than 31% of one’s income. Naturally, this shoves many of us out of the market for these financial investments.

What does all of this mean for you? Whether you’re in the market to buy a Phoenix home or to sell one, you’re going to need an agent to help you. If you’re of the thousands expected to go into foreclosure this year, let Curtis Johnson help you sell your home. Consider doing a short-sale to avoid the impact on your credit score that a foreclosure will have. The Curtis Johnson team is here to help you. If you’re looking to make the commitment of buying a home and want to be sure to pick a home that is within your means, call Curtis Johnson and let him help you find the right home for you!

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

Too Little, Too Late: Latest Government Housing Help Misses the Mark

April 8, 2010

foreclosuresPhoenix homes are rapidly going into foreclosure these days. Once again, the government has taken it upon itself to “remedy” this situation. This time, they are offering loans through the Federal Housing Administration that alleges to help those who owe more on their mortgage than their properties are worth. Some feel that this is a huge risk for our government, especially since they aren’t exactly known to have been frugal with our tax dollars.

There’s a catch, though. Borrowers must not be behind on their mortgage payments. The problem with this is that most who are not behind on their payments probably neither need nor want the government’s help. While no one is happy about being upside down on his or her mortgage, that’s just par for the course–it happens sometimes in this economy.

This program would likely only appeal to those who are behind and are in trouble. Unfortunately, this program won’t help them. In addition, this program should have been unveiled years ago, when the problems first began. These days, so many people are so far gone in their mortgages that a program designed to help only those who are caught up on payments won’t be of much help.

If you’re looking for some help in selling your home, perhaps because this new program won’t be of any help to you, call Curtis Johnson today! Curtis and his team will gladly help you get out from being underwater and get back on track. Curtis Johnson’s team specializes in helping buyers and sellers in the Phoenix area, and the team will gladly assist you today!

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

Out of the Shadows in Phoenix – Part 2

March 30, 2010
 
We recently discussed the specter of shadow inventory, a large supply cheap homes that could overwhelm any progress in the Phoenix housing market if released in a short time frame.  It’s a fair question as to whether this inevitable or whether the homes can released in the market in a less devastating way.

Banks can be more helpful…

shadow

Will the shadow inventory come to pass?

Currently, homeowners who want to keep their homes are applying for loan modifications, but banks are reluctant to give meaningful modifications that decrease the principle.  Many who apply do not qualify under bank proposals or federal Making Homes Affordable guidelines fall into foreclosure.  Those who succeed often fall behind again, either because the modification don’t reduce the payment enough or because of unemployment of other subsequent changes in finances.

Banks are currently more likely to process the foreclosure than come up with a workable modification plan.  If banks decide to take the hit and reduce the principle and work toward meaningful modification, many properties will remain in the hands of homeowners rather than become foreclosure statistics.

Underwater homeowners can stay put…

Troubled homeowners may have less control over their circumstances, but today, many underwater homeowners decide to walk away when they owe more than the home is worth rather than pay their mortgage.  (This is less true for people who owe up to 20% more than the home is worth who tend to ride out the housing cycle unless they need to sell.)  Some with excessive negative equity debate the morality of strategic default, but the idea is now discussed openly in mainstream circles. 

Widespread foreclosure is not the only possible outcome.   Fewer people would think of sending jingle email to their banks if there were better options to refinance or have some of the principle decreased.  A new plan just released by the government on March 26, 2010 addresses underwater homeowners by doing just that cutting principal.

Investors don’t rush to sell…

Investors are another wildcard.  Phoenix could be in trouble if a large number of investors decide to sell this year.  At the moment, housing analyst Mike Orr’s Cromford Report claims that there are about 42,500 homes on the market in metro Phoenix, 2,500 more than in December.  Prices have fallen to a median price of $127,000 since mid 2009, when the median stood at $130,000.  An influx of cheap “shadow inventory homes” could further drop prices.

Since many investors paid bargain prices in cash, they might be happy to keep renting until they can foresee selling for a better profit.  Current statistics show rental prices are falling, which could be incentive to see.  However, since loans are harder to get for prospective buyers these days, investors may capitalize on a captive rental market. 

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.  One call will convince you that Curtis’s proven techniques will work for you.

Underwater Arizona Slotted for HFA Hardest Hit Housing Funds

March 29, 2010

housing, hit

Arizona will gain dollars from the Hardest Hit Fund

Ever since the current administration tried to “fix housing first,” critics have screamed that programs did not met the needs of Arizona and other states where underwater mortgage rates far exceed the national average of 20%.  Currently, 11 million U.S. homeowners in Phoenix and elsewhere are at greater risk of foreclosure when their loan-to-value (LTV) ratio gets much beyond 20%.  Most homeowners do not qualify for mortgage modification programs which usually stretch out the payments without reducing principle.  In Arizona, 51% of home loans are underwater.

Recently, Arizona has been singled out for special help as one of the five hardest hit states in hopes of spurring recovery.  Working through Housing Finance Agencies (HFA’s), the Obama Administration will direct $1.5 billion to Florida, Nevada, California, Arizona, and Michigan to try some creative approaches to overcome the problems of underwater mortgages, foreclosures, delinquency, and unemployment. The goal is to protect home values, while preserving home ownership and economic growth in a fiscally responsible way.  The HFA’s will have proposals submitted by April 16 to address special concerns in each state and then be able to tap the resources of the (“HFA Hardest-Hit Fund“).

States like Arizona were singled out for help in the new program based on housing price decline from the peak price in the area, unemployment figures, and the number of delinquent loans.  Arizona showed a 36.8% decline, along with 9.1% unemployed, and an 8.8% delinquency rate on loans.  Arizona will receive $125.1 million in special help – along with California ($699.6 M), Florida (418 M) Michigan ($154.5 M), Nevada ($102.8 M.)

It may seem odd that Arizona doesn’t qualify for even more help, given its percentages of underwater loan.  Arizona is second behind Nevada (70%), followed by Florida (48%), Michigan (39%) and California (35%). With the lowest rate of loan delinquency and the lowest unemployment rate, loans for underwater homeowners are not as much of a risk as in the other states. 

Banks these days fear that homeowners will fall into foreclosure due to unemployment, lost income, or hikes in the payment due to interest rate adjustments OR decide to strategically default – walk away from their homes if the LTV rate is too low.  Some mortgage experts like Martin Feldstein, Harvard professor and former chairman of the Council of Economic Advisors under President Reagan, believe that once a person is more than 10-20% underwater, he is likely to consider bolting from the loan and renting or buying elsewhere. Below that, assuming he can make the payments, he is likely to ride out the crisis until housing values have recovered a bit.

The Hardest Hit Fund approach will address these issues by going beyond tools such as mortgage modifications and short sales/ deed in lieu of foreclosure already in use to try creative new approaches.  These tactics might include:

•    Mortgage modifications with principal forbearance

•    Principle reduction for borrowers with sever negative equity

•    Unemployment programs

•    Second lien relief

Given the amount of money available vs. the number of underwater mortgages in Arizona, the plan will not help everyone but the approaches might be tried elsewhere.  Already the Federal Deposit Insurance Corporation (FDIC) has crafted a program that would reward those who could have defaulted but didn’t with principle reduction.  This program aims at preventing strategic default and is aimed a very small number of homeowners whose lending banks were seized by the FDIC. 

I am a huge believer of hands off Government, letting the private sector work through the market swings. With that said, if the Government has decided they are seriously interested in being the answer, then hopefully, pilot programs like this will grow to address the needs of more homeowners.  If the Hardest Hit fund programs operate as planned, they will hatch a variety of new approaches to help those who cannot swim through the maze of their underwater mortgages, as well as those who are hijacking the lifeboats and abandoning their mortgages on principle.  As a matter of fact, the Treasury Department is hoping that programs developed in this program provide data that prove them workable on a broader scale.

For more detail on the HFA Hardest Hit Fund, download the Proposal Guidelines or the Frequently Asked Questions (FAQ).