Foreclosure info AND loan modification info for So. Cal.

The Los Angeles Times had two interesting articles about our local real estate market yesterday.  The first is titled Foreclosure activity soars in third quarter, ending lengthy lull.  No, this isn't the much discussed "shadow inventory" hitting the market.  It's just that the lending banks have stopped suspending foreclosures due to the robo-signing scandal.  Other salient facts from the article, as if you didn't know: "Defaults hit lower-cost neighborhoods harder. Areas with a median home sale price below $200,000 saw 11 default notices filed for each 1,000 homes, compared with 8.1 per 1,000 homes statewide and 2.8 per 1,000 homes in areas with a median sale price above $800,000." And people wonder about the 99% protestors.

The second article is titled Plan would allow refinancing of some underwater mortgages.  Don't get excited yet.  The article states: "The new proposal would apply to people who are underwater on their homes but making mortgage payments on time. Only mortgages owned by banks — about 20% of all mortgages — would be eligible. Most mortgages are owned by investors as part of mortgage-backed securities."  How and who is this going to help? I think the amount of mortgages owned by banks are much less than 20%.  Why not just write down the interest rates if people aren't behind (yet) on their mortgage payments? 

BofA gets foreclosed on! Way to go, homeowners!

Bank of America wrongfully forclosed on home owners who paid cash for their home.  So, as you'll see in this video, the homeowners foreclosed right back in order to get their legal fees paid.  There's a little twist at the very end of this, so you'll want to watch all the way through.  I know; I shouldn't be so gleeful, but it is the evil empire Bank of America, after all!

Why did the foreclosure we tried to buy sell for less? Courtesy of About.com

Normally, About.com's answers are a little generic for me.  Hey, you can't please all of the people all of the time. But here's a good one: Why foreclosures sell for less.  Thanks, author Elizabeth Weintraub; this answers are short, to the point, and TRUE.

Foreclosures and REOs - there is a differnce.

I'm often asked by potential property buyers if I will help them find a foreclosure. My buyer clients often think that these properties are offered for prices below market, and perhaps need just a little fixing to make them habitable. Umm, that's not quite correct.

First, there are two delicious flavors of foreclosure: plain foreclosure and REO. The differences bear repeating. A foreclosure property has not had its mortgage or other obligations paid in several months, and the lending institution is in the process of taking the home back from the owner. There are several stages to this; and the foreclosure can be "cured" at any of these stages. If the default is not cured by a certain date, the house usually goes to a trustee sale, which is often held on county courthouse steps. Very important to know: these homes are not on the multiple listing service, but you can find them on paid sites like ForeclosureRadar.com. Anybody can go and bid on a house at a trustee sale, but potential buyers will have to exceed the amounts owed to the lender on the property.

An REO stands for "real estate owned" -- by the lending institution that held the defaulted mortgage. This designation comes at the trustee sale when nobody has outbid the bank (frequently, nobody does). The lending institution now owns the property. The lending institution will eventually place the now-vacant home with a Realtor, and it will be available on the multiple listing service. And here's more bad news: once it goes on the multiple listing service, it usually goes out at market prices as well. There aren't usually deep discounts.

Yes, there are other details, and sometimes homes go for auction. (See auction.com post below.) But these are the main differences.

From today's LAT: re-fi turns foreclosure nightmare

L.A. Times columnist David Lazarus has written an excellent article today about Lana Ashford, who attempted to re-finance her home with BofA and, through no fault of her own, ended up getting foreclosed instead.  Click here for the link, the title should work too.  I promise that you'll be even more scared to deal with the big banks after reading this.

If you've read this blog before, you'll remember my BofA refinance saga.  My husband and I tried to do a simple home refinance in January 2009.  We were immediately approved, but somehow it still inexplicably took six months to go through.

Here's my question, as a bank customer and also a Realtor who deals with short sales: why, two years into the lending crisis, haven't the banks ramped up enough to service their own loans in a timely, correct manner?  Have they just not hired enough people?  Are they stalling? What's going on?

How will the election affect homes and real estate in the San Fernando Valley

Our friends at Calculated Risk have a blog post about how the election will affect the financial markets.  But how will it affect real estate in Burbank, Studio City and the San Fernando Valley? 

Here's my non-economist guess-of-an-answer: it won't affect it much.  On the federal side, Fannie Mae and Freddie Mac aren't going away any time soon, no matter what party controls Congress (it would be a major-league game-changer if they did).  The banks have all the incentives in the world to keep loaning money to people for houses, so that won't change. Of course, good financial news, such as employment going down, will have a positive effect, but I don't think just one house in one branch of government is going to be able to do much there either.  In California, there may be more government oversight of the foreclosure process, which isn't such a guess since it has started already.  The government in Sacramento will be working faster, now that a supermajority is no longer needed to pass a budget or much other spending except for tax increases.

How do you think the election will affect real estate?

2009 end of year wrap-up and list!

Hey, it’s the time for year-end lists and predictions, right? Why not from a local Realtor? So here are the most important real estate trends that I observed in 2009. Again, this is a very local, personal take, and is not necessarily in order of importance.

Mega-Listers of REOs/Foreclosures. Lots of foreclosures seem to be concentrating in the hands of a very few Realtors. Just try to buy one of these. Heck, just try to find out information on these. If you’re a mega-lister, please hire more staff and train them to answer questions, please. And please don’t pretend something is available when you’ve already sold it yourself. Deplorable.

The experts were wrong. Who was it that said, “Nobody knows anything”? How many times were we told by experts and statisticians that the market was crashing, it would have lost 50% of its value by this time, it would never come back, etc, etc? Yes, I know that there are regions that are in far more dire straits than ours. And the “foreclosure crisis” may not be over. But it appears, in spite of expert predictions and bubble market blogs, the local real estate market bottom has come and gone. To quote Elvis Costello, I used to be disgusted, now I’m really just amused.

Real estate marketing is more and more on line and less and less in print. This trend has been occurring for quite some time but it has become more evident this year. I can’t remember when I last placed a print ad in L.A. Times, for example. And the LAT doesn’t seem to care -- it doesn’t even have a real estate blog anymore, let alone a real estate section. I’m surprised, however, at how few Realtors really take advantage of all of the internet outlets out there. Not really surprising.

People still want to buy houses. Again, many buyers were scared off by bubble predictors and experts (see above). Many, however, still feel that a house is a worthwhile thing to own, even if one is not making money from it. Hey, we all need roofs over our heads, right? And with such low interest rates… Encouraging.

More and more properties are difficult to show. Realtors, most notably foreclosure listers, seem to be getting away from the call-first-then-use-the-supra-lockbox form of showing property (in fairness, this has never been big on the Westside or with high-end listings). Instead, it’s been “call for code” but your calls are returned, or “text for code” and good luck with that. Last weekend, for example, I placed calls to 17 Realtors for codes. Only two ever called back. See my mega-listers comments above. Frustrating.

Flippers are back. Many property flippers lost their shirts in 2007, 2008 and parts of 2009. I think it was because it looked easy, and many amateurs got into the flip business and didn’t realize the time and effort it took. Thanks for nothing, HGtv. But now, the pros are back – they seem to be buying up properties in bulk at court sales. The results have been mixed. I had a very good experience with a pro flipper on a NoHo house this summer – the house was well priced and well remodeled. I also just had a very bad flip experience just recently in Pacoima. Overpriced and NOT well-done. Mixed.

The bloom is off the lofts. Loft living in an urban area is really fun if you’re young, single, and have lots of money for your mortgage (these places aren’t cheap). But the loft concept trend/fad seems to be over – or is it just that there are too many lofts and condos out there fore sale? Predictable.

Multiple offers and deliberate underpricing. See past posts for more details. Who knew we’d ever see multiple offers again in our lifetimes? And as for underpricing, I don’t think it gets a sale made any faster than proper pricing (for example, see my listings on Birmingham, Lincoln and Chandler. Priced at what they’d likely sell for and sold fast). It just creates a lot of excitement, and heartbreak for buyers who would never be able to afford the house anyway. Frustrating.

Okay, this should be the part where I predict what’s going to happen in our local market in 2010. But I truly don’t know – and after the wild 2009 ride, I think I’d be crazy to predict!

A Burbank foreclosure for only $294,030!?

1913 Niagra (also spelled Niagara) has just listed in Burbank. It's a 3+2, 1150+ sf and is a foreclosure. It needs to sell all-cash, as one bathroom's fixtures have been removed and that makes it extra-hard, if not impossible, to get a loan. It is listed for $294,030, which must be the lowest per-square-foot price in Burbank. The listing agent's assistant tells me that there is already one offer in, and clients of mine want to make an offer early next week. Do I think that it will sell for $294,030? Nope. I predict it will sell in the mid-$300's.

REOs are not that bad! Really!

I just closed an REO, which is a property that has gone through the foreclosure process and is now owned by the bank. It was much easier than I expected. The house (pictured) at 1101 N. Catalina in Burbank, was owed by Wells Fargo. It listed for $500,000 and my buyers, knowing that there were other offers, came in at $501,000 -- just as the bank accepted another offer. During that escrow, we kept checking back with the listing agent re the status. Sure enough, it fell out of escrow at the last minute and the bank accepted our offer. Escrow was a little bit slow to open. The seller/bank agreed to credit my buyers $2,000 towards repairs and had already done all pest work. Great!-- we were not expecting that. There was a last-minute glitch regarding the home warranty company, but we still closed escrow right at 30 days. Of course, it helped to have very heads-up, proactive buyers and a great lender (thanks, Dana).

From ICanHasCheezburger.com

Update June 12: This little guy/lady (or someone that looked just like him/her) was scampering across the top of my patio fence last night. I love urban wildlife.

Is, or isn't, the real estate sky falling?

The national media, after convincing us that the real estate sky has been falling, is now beginning to question that assumption. Link to LaLand's story here. Apparently, not that many people are walking away from their homes unless they're in serious financial trouble. I, too, have bought into the Chicken-Little-End-Of-Life-As-We-Know-It, only to find that it doesn't accurately represent the areas where I work. Yes, foreclosures are rampant in Palmdale and the outlying areas. But as a percentage of homes here in SFV, it's still quite a small number. Hmm.