Monthly Archives: June 2011
Short Sale Soundoff: Short Sale Soundoff: Citigroup offering incentives to short sale home
Citigroup's mortgage servicing branch CitiMortgage is offering an average of $12,000 to borrowers who complete a short sale this year. By comparison, the mortgage servicer was offering $1,500 payments on average in 2009, and $3,000-$5,000 payments in 2010.
"Incentives will be offered to customers experiencing financial hardship who need funds to proceed with the short sale," a Citi spokesman said. "The amount, which is agreed upon up front, varies according to the borrower's individual circumstances and loan characteristics. It is disbursed to the homeowner when the sale is completed."
CitiMortgage has also reduced its short sale process from 120 days in 2009 to 83 days. The company claims this is due, in part, to the firm reaching out to borrowers in trouble, instead of just waiting for the distressed homeowner to contact the bank for short sale information.
On Tuesday, the Standard & Poor’s/Case-Shiller index, a closely watched measure of home prices, posted a rise for April, the first in eight months.
The index increased 0.7 percent, reflecting increases in prices in 13 of the 20 cities tracked. That compared with a 0.8 percent decline in March, when the index hit a new low.
But analysts said it was unclear that a sustained rebound in the housing market was under way, noting that sales were typically stronger in the spring.
Foreclosures Slow as Banks Face Backlogs
Nationwide, new foreclosure cases and repossessions have dropped by a third since last fall as banks, as greater scrutiny over banks’ foreclosure procedures and more home owners fighting back in court has slowed the pace. Banks, already facing huge backlogs of foreclosures they’ve already repossessed, also may be reluctant to add on more to their inventory, experts say.
For example, In New York, experts estimate it would take lenders 62 years at their current pace to repossess the 213,000 houses now in severe default or foreclosure, according to LPS Applied Analytics, a real estate data firm. New York boasted the longest foreclosure backlog in the nation. Following behind, in New Jersey it would take 49 years, and in Florida, Massachusetts, and Illinois it would take 10 years to handle the supply of foreclosures at the current pace.
States where courts must review each foreclosure tend to have the longest delays. But in the 27 states without that requirement, foreclosures are much quicker. For example, as comparison, in California, the foreclosure backlog is three years, and in Nevada and Colorado, it's two years.
“If you were in foreclosure four years ago, you were biting your nails, asking yourself, ‘When is the sheriff going to show up and put me on the street?’” Herb Blecher, an LPS senior vice president, told The New York Times. “Now you’re probably not losing any sleep.”
However, the banks say they is no strategy in delaying foreclosures. “Any suggestion that we have a strategy to delay foreclosures is baseless,” a spokesman for Bank of America said. Instead, one bank blamed delays in state laws governing foreclosures while others said the decline in foreclosures is the product of an improving economy.
Source: “Backlog of Foreclosures Giving Some a Reprieve,” The New York Times (June 19, 2011
Demand will grow for urban rental units by the coast and shrink for single-family homes inland, resulting in fewer construction jobs and no boom for some areas hit hard by the housing bust.
Some home owners are getting a surprise when a person shows up on their doorstep, with a lease agreement in hand, saying that he or she is renting out their home, which isn’t for rent but for sale.
Law enforcement and real estate professionals are finding a growing scam involving for-sale listings being promoted as rentals–without home owners’ consent.
Scammers are taking listing information of homes for-sale–including photos–and then reposting that information on rental sites and tweaking it to pass the home off as a rental. The scammers then use a fake lease agreement and collect rent from unsuspecting consumers.
And when the scammers don’t present keys for the property, they give the unsuspecting renter permission to call a locksmith to gain access to the home.
Les Sulgrove, president of the Des Moines Area Association of REALTORS®, recently issued a warning to association members about the scam. He suggested real estate professionals set up Google alerts for the home addresses they’re listing so they’ll learn if their clients’ information is being misused on another site.
“All it takes is cutting, pasting, and changing some key pieces of data,” Geoff Greenwood, spokesperson for the Iowa Attorney General’s office, told the Des Moines Register. “People find out the hard way what they paid for wasn’t for sale or for rent.”
Source: “Growing Online Scam Uses Legitimate for-sale Home Listings to Trick Renters,” Des Moines Register (June 5, 2011)
5 Real Estate Scams You Need to Know About
What makes a good password vs. a bad password? You undoubtedly have several passwords that you use to protect your important business information — so how do you make sure those passwords don’t become easy guesses for would-be hackers or make you a victim of cybercrime?
Here are some tips from security experts.
? Make your password 10 characters in length: Security researchers have found that a password with 10 characters would take a hacker, on average, 19.24 years at a hundred-billion-guesses-a-second rate to try every combination of those 10 characters to guess your password.
? Make sure your passwords are encrypted: If you use a password service to store all of your passwords so you can keep them straight, make sure the company does not store actual passwords but only the encrypted forms of it on the cloud. For example, the password bank LastPass only stores encrypted passwords on the Internet, and the information is only decrypted when you've retrieved it.
? Don’t use common words: Steve Gibson, a security expert and chief executive of the Gibson Research Corporation, suggests avoiding commonly used passwords as well as any words found in the dictionary. Instead, he stresses one of the strongest passwords you can make is a bunch of gibberish characters — again, at least 10 characters long.
Source: “Guard That Password (and Make Sure It’s Encrypted),” The New York Times (June 11, 2011)
A mortgage scam in which con artists send letters telling borrowers they should begin sending their mortgage payments to a fictitious company that has begun servicing their loan, is making the rounds again. Unfortunately, by the time borrowers figure out their loan has not changed servicers, they’ve already sent one or two mortgage payments to the fictitious company.
Making sense of the story
- According to those familiar with the scam, it typically works because most borrowers are unaware of the rules when it comes to the transfer of mortgage-servicing rights. Under the law, the current servicer is required to send a “goodbye” letter notifying the borrower that payments should be sent to a new company as of a certain date.
- A week or two later, the law says the borrower should receive a second letter, which, by law, should include a welcome missive from the new servicer with the details of the mortgage payment – a breakdown among principal, interest, and escrow. The package also is likely to include a few payment coupons, if not a brand-new coupon book, and self-addressed printed envelopes for borrowers to make payments.
- Both the goodbye and welcome letter should include the mortgage loan number. If either letter does not, or if the information included in one doesn’t match what’s in the other, borrowers should call their original servicers to inquire.
Borrowers only receiving one letter should be extra cautious. Even if everything appears to be standard procedure, borrowers are still advised to call the first company’s toll-free number just to be sure.
The handoff rip-off is so basic that it doesn't even have a fancy name among the specialists who track mortgage fraud. But then, its simplicity is what makes it so endearing to criminals — and so endless.
"It's the same kind of scam as the one from the guys in Nigeria," said Merle Sharick of the Mortgage Asset Research Institute (MARI). "It's the same stuff we've been seeing for 100 years."
It's not among the most reported types of mortgage fraud, so it is probably sliding under the radar of most law enforcement agencies. But Jennifer Butts, a coauthor of the latest LexisNexis MARI fraud case report, says her firm is seeing more of it.
The maneuver "works for maybe two months" because it takes that long for borrowers to realize they've been had, said Becky Walzak, an expert in loan-quality assurance.
When the real servicer calls to tell the borrower the first payment hasn't been received, Walzak explained, the borrower reports that he did indeed send a check, and the two parties usually let it go at that. But when the borrower gets a second call informing him that the payment is still missing or that the next month's payment hasn't been received either, the now-worried borrower tells the servicer about the letter he received a month or two earlier, and the trick is exposed.
"It works for maybe two months before it is discovered," Walzak said. "But if the bad guys are any good, they've taken in thousands of payments from thousands of people. They cash them, and they move on to the next batch of borrowers."
Distributed by United Feature Syndicate.
Within the next decade, 16 million new housing units will be needed to meet population growth and shifting demands, according to Harvard University’s Joint Center for Housing Studies in its latest annual "State of the Nation's Housing" report.
That means household growth, which has dropped drastically in recent years, will need to greatly reverse its trend to meet the forecasted spike in demand. From 2007-2010, household growth averaged about 500,000 per year–less than half the 1.2 million annual pace averaged prior from 2000-2007.
To absorb the current rate of foreclosed and distressed homes plaguing most markets, a more normal rate of household formation is critical, according to the report. However, household growth partially has stalled as young adults have delayed home ownership and immigration has slowed.
As such, in recent years, builders have drastically cut production of new homes.
"With inventories of new homes at historic lows, a turnaround in demand could quickly result in tighter markets," the report notes. "Over the longer term, the number of younger households is set to rise sharply, supporting growth in the population that fuels growth in both new renters and first-time buyers. The path of the economy and evolution of the mortgage market will determine when and if this increased demand materializes."
The report predicts a need for greater housing units for several reasons. For example, the report projects demand for 1 million new homes a year is needed to meet population growth in the coming decade. The report also predicts a surge in smaller homes, estimating that 3.8 million baby boomers will be looking to downsize their homes within the next decade. Also in adding to the increase in housing units needed, Immigration growth, the need to replace existing homes, and demand for second homes will contribute to rising demand, the report notes. Therefore, researchers conclude at least 16 million new housing units will be needed over the next decade.
Source: “Harvard: Real Estate Recovery Hinges on Return of Demand,” Inman News (June 6, 2011)
- California Market: The California median home price fell by nearly 60 percent from peak to trough, hitting bottom more than two years ago in February 2009 at $245,230. Although the median declined in February of this year to $271,320, it stood at $293,570 in April, nearly 20 percent higher than the February 2009 trough. The February 2011 median was likely the low for this year, given the seasonal behavior of home prices and the likelihood that market fundamentals will improve somewhat as the general economy continues its slow recovery.
- National Market: By comparison, the U.S. median home price fell 32 percent from peak to trough – about half of the decline experienced by the California market. However, prices nationally only hit bottom this past February at $156,900. The national median rose to $163,200 in April, and should climb as the market moves through the peak season, but it remains precariously close to this February’s trough.
Married Households No Longer the Majority
Married couples no longer make up the majority of U.S. households for the first time in U.S. history, according to the latest census data. Married couples represent 48 percent of all households, which is down from 52 percent in the last census.
Portland State University demographer Charles Rynerson says that with an aging population more people are living alone with more household members now likely to be divorced or widowed later in life. Also part of the trend, Rynerson says, is that twenty-somethings are delaying marriages. The median age for first marriages has gradually climbed since the 1960s: Men are now 28 on average and women 26 (in the 1960s, men were 23 and women were 20).
Also, more unmarried couples are making up households than they have in the past. Last year, the Census Bureau reported that opposite-sex unmarried couples living together increased 13 percent from 2009 to 7.5 million.
However, not all states were seeing a decrease in the number of married households. Sixty-one percent of households in Utah were led by married couples–the highest in the country.
Source: “Married Folks Now Outnumbered: Census Data Shows Them Leading Less Than Half of U.S. Households,” Associated Press (May 28, 2011)