Realtor Coaching & Training: real estate training
This article cites the increasing unemployment rate as the primary culprit for the projected increase in foreclosures later this year…
We suggest that is only part of the picture.
The real drivers in the seemingly never ending foreclosures are:
1) Higher end homes unable to sell because the move up buyers can’t move up…because their homes are upside down.
2) Virtually not financing available for non FHA qualifying mortgages.
3) Massive number of ARMs adjusting and those owners can’t refinance. Why? They are upside down and no programs exist to help them…
As the biggest driver for new foreclosures in 2010:
4) Strategic Defaults. Homeowners making the economic decision to strategically default vs keeping their underwater home. With the advent of the HAFA Guidelines starting in April, expect even more homeowners to bail on their homes….HREU Students, remember…2010 IS the year of the short sale.
Source: LATimes.com
Reporting from Washington – Experts fear that a new wave of foreclosures will hit this year as prolonged unemployment makes it difficult for millions of homeowners to pay their mortgages — and many of them aren’t likely to get much help from a federal program aimed at keeping them in their houses.
Banks participating in the Home Affordable Modification Program, announced a year ago this week by President Obama, have been slow to turn temporarily reduced mortgage payments into permanent ones.
“The overarching sense is that the mortgage modification process has not worked that well,” said Bert Ely, an independent banking consultant.
Obama administration officials acknowledge that the $75-billion program, which offers banks cash incentives to reduce payments, has had growing pains, and they said they were considering revisions to make it more effective.
Still, the program is expected to show continued progress when data from January are released Wednesday after a strong push by Treasury Department officials to get banks to make more of the modifications permanent.
For example, Bank of America Corp., the nation’s largest servicer of mortgages, said Tuesday that it had increased the number of permanent mortgage modifications to 12,700 last month from 3,200 in December. BofA said an additional 13,700 permanent modifications were in their final stage.
But that’s a drop in the bucket considering that BofA holds about 1 million mortgages that are at least 60 days delinquent. About 4 million homeowners nationwide are 90 days or more delinquent on their mortgages or in foreclosure proceedings, according to Moody’s Economy.com, which analyzes data from credit reporting company Equifax Inc.
Trial modifications and other delays have kept many of those mortgages out of foreclosure, but by the end of this year, 2.4 million borrowers are expected to lose their homes, said Celia Chen, a housing economist at Economy.com.
OK, Full stop! Read that number again….2.4 million short sales and foreclosures in 2010. There are expected to be less than 5 million total home sales….that is staggering.
As an agent you simply must know how to do short sales. When this much of the market is dominated by short sales…what choice do you have. Do this, watch the FREE HREU CDPD (Certified Distressed Property Designation) Agent Short Sale Secrets video…then grab the FREE Short Sale Secrets book. <———Go NOW.
That would be up from 2.1 million foreclosures and short sales last year and five times the annual numbers earlier in the decade.
It’s unclear when those distressed properties would hit the market, but their large numbers are likely to push home prices back down this year, to a bottom in the fourth quarter, Chen said. And that would make things worse for the 25% of homeowners who already owe more on their mortgages than their houses are worth.
We have been predicting that 50% of all homes in the US with mortgages would be upside by mod 2010…..and that prediction appears to be coming true.
The biggest blows will be felt in California, Florida, Nevada and other states where home prices have dropped the most and the ranks of struggling homeowners have swelled.
As of December, 11.4% of California homeowners were 90 days or more late on their loans, according to First American CoreLogic, a Santa Ana real estate data firm. That compares with a delinquency rate of 8.4% nationwide.
Despite an increasing number of foreclosure-prevention efforts, lawmakers and community advocates say they haven’t seen enough improvement.
A report last week by Moody’s Investors Service called the Obama administration modification program’s effect “underwhelming.” But administration officials said the program was on track to reduce payments for 3 million to 4 million homeowners through 2012.
As of Dec. 31, the program had helped get 787,231 home loans modified for three months and had helped make an additional 66,465 modifications permanent.
Officials noted that not all homeowners are eligible — the program is only for owner-occupied homes, and excludes a variety of mortgages, including jumbo loans. And the administration continues to make changes, including a requirement added last month that homeowners document their income before a trial modification is granted.
But the program continues to draw criticism. Banks have complained they’ve had trouble getting homeowners to provide the necessary documents. Frustrated homeowners have complained of bureaucratic runarounds from their servicers. Federal watchdog agencies have criticized the program. And last month the chairman of the House Oversight and Government Reform Committee announced an investigation.
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Join us for this week’s FREE Friday Superstar Interview…
The topic is: DISC Personality Styles.
Here is the information for your schedule:
EVENT: Super Star Interview
DATE & TIME: Friday, February 12th at 9:00am Pacific/ 12nn Eastern
FORMAT: Simulcast! (Attend via Phone or Webcast — it’s your choice)
TO ATTEND THIS EVENT, CLICK THIS LINK NOW…
http://AttendThisEvent.com/?eventid=10734474
What is the DISC Personality Profile:
The assessments classify four aspects of behavior by testing a person’s preferences in word associations (compare with Myers-Briggs Type Indicator). DISC is an acronym for:
- Dominance – relating to control, power and assertiveness
- Influence – relating to social situations and communication
- Steadiness (submission in Marston’s time) – relating to patience, persistence, and thoughtfulness
- Conscientiousness (or caution, compliance in Marston’s time) – relating to structure and organization
These four dimensions can be grouped in a grid with D and I sharing the top row and representing extroverted aspects of the personality, and C and S below representing introverted aspects. D and C then share the left column and represent task-focused aspects, and I and S share the right column and represent social aspects. In this matrix, the vertical dimension represents a factor of “Assertive” or “Passive”, while the horizontal represents “Open” vs. “Guarded”.
- Dominance: People who score high in the intensity of the “D” styles factor are very active in dealing with problems and challenges, while low “D” scores are people who want to do more research before committing to a decision. High “D” people are described as demanding, forceful, egocentric, strong willed, driving, determined, ambitious, aggressive, and pioneering. Low D scores describe those who are conservative, low keyed, cooperative, calculating, undemanding, cautious, mild, agreeable, modest and peaceful.
- Influence: People with high “I” scores influence others through talking and activity and tend to be emotional. They are described as convincing, magnetic, political, enthusiastic, persuasive, warm, demonstrative, trusting, and optimistic. Those with low “I” scores influence more by data and facts, and not with feelings. They are described as reflective, factual, calculating, skeptical, logical, suspicious, matter of fact, pessimistic, and critical.
- Steadiness: People with high “S” styles scores want a steady pace, security, and do not like sudden change. High “S” individuals are calm, relaxed, patient, possessive, predictable, deliberate, stable, consistent, and tend to be unemotional and poker faced. Low “S” intensity scores are those who like change and variety. People with low “S” scores are described as restless, demonstrative, impatient, eager, or even impulsive.
- Conscientious: People with high “C” styles adhere to rules, regulations, and structure. They like to do quality work and do it right the first time. High “C” people are careful, cautious, exacting, neat, systematic, diplomatic, accurate, and tactful. Those with low “C” scores challenge the rules and want independence and are described as self-willed, stubborn, opinionated, unsystematic, arbitrary, and careless with details.
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Seth Wheeler, Senior Advisor to the Treasury Department discussing the Obama Administration’s Home Affordable Modification Program, which isn’t working at the level needed or intended, indicated that the Obama Administration may be shifting focus from modifications to another program which simply gets troubled borrowers out of their homes as quickly and cleanly as possible.
In other words, Short Sales are the solution.
Wheeler told ASF members and guests, “Short sales, deeds in lieu are other ways to prevent foreclosures to help achieve stability [in housing],” “Modifications are only for a certain subset of distressed homeowners.” Translation: not many want to mod their loans or can mod their loans.
As you will recall last November the Treasury launched the Home Affordable Foreclosure Alternatives program which specifically targets short sales and deeds in lieu of foreclosure.
Watch the video about HAFA Now.
So, here is how it works….’troubled borrowers’ are sent to the HAMP program first. In other words, the first thing the lenders will do is offer mortgage loan modification. Next, if the borrower can’t or won’t do a loan mod…then…they are directed to the HAFA program. Here are the details of this process:
Servicers must consider possible HAMP eligible borrowers for HAFA within 30 calendar days of the date the borrower:
- Does not qualify for a Trial Period Plan;
- Does not successfully complete a Trial Period Plan;
- Is delinquent on a HAMP modification by missing at least two consecutive payments; or
- Requests a short sale or DIL. This last point is interesting. You need to be aware that when your client calls their lender and the lender attempts to ‘force’ them to their loan mod department under these new guidelines the borrower can request to go directly to the short sale department. Kind-a confusing but, you get the idea.
Here is what you need to know about HAFA. Remember, the video that we created for you last year about HAFA is HERE.
- The HAFA program offers incentives in this program “upon successful completion of the short sale” or Deed in Lieu.
- Borrower receives relocation assistance of $1500.
- Servicer incentive of $1000 to cover administrative and processing costs and investor reimbursement of $1000 for subordinate lien releases. That’s when the investor allows up to $3000 in short sale proceeds to go to subordinate lien holders.
- Participating lenders can NOT pursue a deficiency judgment post short sale (or DIL) closing. This will be the end to all the mickey-mouse lenders try to get borrowers to agree to post closing. Like, paybacks.
Bottom line, expect the HAFA program to be front and center starting this April once the new guidelines are in full effect. Its our believe that these new guidelines will usher in what we have been advocating for years…the streamlined short sale! Agents, 2010 IS the year of the short sale. Watch the FREE Harris Real Estate University Agent Short Sale Secrets CDPD video and download the FREE book NOW.
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2010 Mega Trends in real estate that you need to pay attention to…..
1) Short Sales becoming the preferred ’solution’ to stave off the never ending increases in foreclosures…in most markets short sales will dominate. Agents who have learned how to do short sales will be what we term..the New Mega Agent. Agents, Learn the right way to do short sales…right now. Watch the FREE Agent Short Sale Secrets video and download the FREE Agent Short Sale Secrets book <–Click Here.
2) MORE government programs, policies, intervention (meddling) that will result in the existing real estate industry losing its traditional dominant control over housing..
3) Vastly more people leaving the real estate industry vs new people becoming agents. In California, unlike previous recessions where people became agents when they lost their jobs..in other words higher unemployment = more new agents. Now the trend is the exact opposite. Agents leaving and fewer people wanting to become agents. What will this mean going forward in terms of the influence the NAR has in D.C.? Fewer agents means less income…less lobbying….less influence.
4) Mega Brokers becoming Mega Virtual Brokers. We expect that there will be several national real estate brands that turn away from the traditional real estate ‘body shops’ where the goal was more (and more) agents. Replaced with 100% virtual offices where the agents will be held to higher standards.
5) The long standing American ethos of…owning a home…is gone. More people will reject that their brand of the American Dream must include home ownership.
6) The death of the McMansion. Demographics simply don’t bode well for home owners with McMansions. Bottom line, there is a massive over supply of these types of homes. Evidence of this changing trend is…
7) Jumbo Delinquencies. Sure, some homeowners with these McMansions are missing payments due to hardship. However, studies have proven that the more educated, the more ‘wealthy’ someone is the more likely they are to do a strategic short sale (or foreclosure). As you will learn in this video, 9.6% of ALL Jumbo Mortgages were delinquent in December. Its predicted that 10% of all Jumbo Mortgages will be delinquent in January!
Watch this great CNBC video for more proof that the day and age of the McMansion are over….
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Harris Real Estate University students…you need to pay attention to what is being said in this excellent CNBC (Thanks Diana Olick) video:
Know that the topics discussed in this video will have a direct effect on our industry and your income:
You need to pay very close attention to these emerging topics: Abolishing the GSE’s and Principal Mortgage Writedowns.
This video will give you a clear indication of what the government is considering. You need to ask yourself what will happen if there is a new program to reduce principal mortgage balances and if at the same time the GSE’s are abolished. (Assume that if Fannie and Freddie are killed off that rates, terms and qualification standards will be dramatically altered).
These are epic…rule changers for our industry. Pay attention.
1) Fannie Mae and Freddie Mac are on a path of destruction. Many are calling for the GSE’s to be abolished!
2) NOW, the GSE’s are providing 75% of all new mortgages.
3) 3 proposed options: Nationalization of the GSEs, Improved GSE structure or turn them over to the private sector.
4) Combined with FHA Fannie and Freddie ARE the mortgage market. Private banks are not lending…no GSE’s….no mortgages.
5) Get this…112 BILLION that has been spent..that will never be paid back…and they are expecting another 112 BILLION in upcoming losses! (anyone out there still think we are near bottom?)
6) Principal mortgage writedowns are gaining momentum…10% off all mortgages 25% upside down…and 25% of all mortgages 10% upside down. In the US roughly HALF of all homes are owned…no mortgage. Of the other half…35% are now upside down.
Agents, if you aren’t listing and selling REOs now…what the heck are you waiting for? Watch the FREE Agent REO Secrets video and download the FREE Agent REO Secrets book NOW.
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Here is an interesting perspective on housing for 2010…
Focusing on builders.
They are living in fear of the inevitable waves of REOs hitting the market.
Builders are lowering their prices, offering less doo-dads. Makes sense. They need to be priced in line with what the buyers are willing…and can afford to…pay.
In 2010 resell homes are going to suffer more significant price drops….especially higher end homes. We have been warning all of you about this for months. Later this year will see the start of the 3rd wave of foreclosures. This next wave will be in the higher end homes as they experience mortgage resets and lack of refinance options.
Lets talk about demand? Is there pent up demand for new construction homes? According to this interview, no. She thinks existing demand is ‘tepid’ at best.
Should the government pull out of housing…what happens if the government stimulus were to stop..as its scheduled to early this year?
Watch this CNBC video:
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Harris Real Estate University students (and future students) meet Elizabeth Warren…
How bad will it get…is our economy going to ‘bounce back’ ?
Watch this video as she explains what is happening now and what may happen next:
| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c | |||
| Elizabeth Warren | ||||
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