Foreclosure numbers are down 7 percent

121010070826-chart-foreclosure-report--story-top

According to RealtyTrac, foreclosure filings in September are down 7% from August  - that’s 16% down from September 2011, and the lowest quarterly reading since the last quarter of 2007.

These numbers include default notices, scheduled auctions, and bank repossessions.

Activity slowed down quite a bit after banks put the brakes on foreclosures because of the robo-signing debacle two years ago. Everyone expected foreclosures to flood the market once banks were able to start processing their backlogs of delinquencies, but that’s not what’s happening.

Several factors contribute, mainly preventing homeowners from falling into foreclosure through efforts like the Home Affordable Modification Program and low mortgage rates.

Freddie Mac's REO inventory down

freddie-mac

Freddie Mac reported its REO inventory is down 30% from 2010 peak levels of 75,000 homes. At 53,000 units as of last quarter, the numbers reveal a reason to be more optimistic about the housing market.

Even though REO inventory has slowed since the ban on robo-signing went into effect in the fall of 2010, the economy is also seeing home prices on the rise and a lowering unemployment rate.

Freddie Mac also attributes its decline to the company’s focus on “early intervention” with distressed borrowers.

Underwater homeowners still have some refi options

CoreLogic has estimated that 1.8 million underwater homeowners own homes that are a mere 5% less than what they owe on their mortgage. And while home prices are rising, giving many US homes back some of their equity, there are still options for those struggle to get out of being underwater. Refinancing with today’s low interest rates (3.7% for 30 years) may not be a viable option, but two programs offered by lenders may help. Under the Home Affordable Refinance Program (HARP), it’s possible to refinance to a lower rate and payment, or a shorter term. Depending on your lender, you may not have to worry about an upper limit for the loan-to-value ratio. Be sure to check with your lender to see if you qualify. Fannie Mae borrowers can visit knowyouroptions.com/loanlookup, or visit freddiemac.com/mymortgage if Freddie Mac is your lender.

FHA mortgage borrowers have the option of reducing their monthly payment (must be by at least 5%) or switching to a fixed rate. To qualify, you must have had your loan for at least 210 days and made at least six payments.

Urban Hillsides / Northeast LA Market review for July/August

The diverse communities of Northeast LA have a wide range of prices from the mid $100,000 price range to $1.5 million. This report covers the zip codes of Atwater Village, Echo Park, Eagle Rock, Glassell Park, Highland Park, Lincoln Heights, Los Feliz, Mt. Washington, and Silver Lake. Single Family: July / August

• Properties sold: 126 / 121
• Average days on market: 74 / 68
• Median price: $503,202 / $505,298
• Average cost per square foot: $320 / $349
• Avg. selling price to listing price: 80% / 75%

Residential Income (2-4 units):  July / August

• Properties sold: 33 / 21
• Median price: $454,348 / $418,952

Condo:  July / August

• Properties sold: 10 / 18
• Median Price: $295,250 / $262,217

Source: The MLS

Lenders improve the short sale process

short-sale

On November 1, 2012, Fannie Mae and Freddie Mac’s new self-imposed short sale guidelines will go into effect, rules which will make the short sale process easier and quicker for qualified borrowers.

The guidelines are a commitment to “enhancing and streamlining the process to avoid foreclosure and stabilize communities,” said FHFA director Edward DeMarco. Additionally, DeMarco also stated that the new short sale program will provide relief for underwater borrowers who need to relocate more than 50 miles for work.

Borrowers who are more than 90 days delinquent and who have a credit score lower than 620 will no longer be required to provide documentation of hardship. Government-Sponsored Enterprises (GSEs) will also waive the right to pursue deficiency judgments. Borrowers who are not yet in default will still qualify for a short sale if they are facing certain hardships, including death of co-borrower, divorce or legal separation, illness or disability, or distant employment transfer.

Rising Rents - low inventory

Home prices have been stabilizing because of low inventory, and rents are skyrocketing as renters flood the market. While a combination of the foreclosure crises and the poor economic conditions, along with high unemployment in Los Angeles, have created a steady rise in rents for the past few years, rental prices have now increased at an even faster rate. Los Angeles has always had a high transient population, but now with an increased rental pool and continued slow production of new rental stock inventory, it is getting even more constrained. The ultimate effect of this supply and demand curve means higher rents.

There are many in this pool of renters that could become purchasers of homes, but they have suffered negative effects on their credit because of a foreclosure or short sale. In addition to not being able to purchase, this also puts them in a position to pay a higher rent because of the increased risk associated with bad credit.

Production in smaller apartment complexes has picked up over the last 6 to 9 months. Also, investment in units for Northeast Los Angeles is on the rise. The rent increase is a positive sign for the overall housing market and values. Though, many renters are not happy with this trend.

If you are a current homeowner and are in distress, consider a short sale before allowing the property to be foreclosed on. The effect on your credit is significantly reduced, and with today’s guidelines, you can purchase a home again within two years.

Contact me if you would like to discuss your options.

June sales trends for Northeast LA

The diverse communities ofNortheast LAhave a wide range of prices from the mid $100,000 price range to 1.5 million.  This report covers the zip codes of 90026 (Echo Park), 90039 (Atwater Village), 90041 (Eagle Rock), 90042 (Highland Park) and 90065 (Mount Washington). Single Family: May / June

• Properties sold: 99 / 121
• Average days on market: 81 / 62
• Median price: $435,000 / $479,900
• Average cost per square foot: $299 / $323
• Average selling price to listing price: 98% / 100%

Residential Income (2-4 units):  May / June

• Properties sold: 21 / 32
• Median price:  $391,000 / $409,500

Condo:  May / June

• Properties sold: 10 / 9
• Median Price: $234,000 / $310,000