San Diego Real Estate Blog

In another sign of the times (crazy as they may be) on April 5, 2010, in an effort to end the foreclosure crisis, the Obama administration will start paying troubled homeowners to “Shortsale” their home. This latest program, which is still being fine tuned, will allow owners to sell for less than they owe and will give them a little cash to speed them on their way. Reports show more than five million households are behind on their mortgages and risk foreclosure. Only a small percentage of homeowners have been helped by the government’s $75 billion mortgage modification plan. The administrations biggest concern (as it should be) is that millions of foreclosures could delay or even reverse the economy’s tentative recovery. I think if you look at history, there is little doubt getting our country back on track will come.

The plan calls for  the servicing bank and second position (if there is one) to get $1,000. And now the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.” through the housing industry. Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure. For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

Whether this plan works or not time will tell. I guess it’s good the administration is going to give the money directly to the people instead of lining the pockets of their cronies at the banks who give huge amounts of monies to both parties election campaigns.

Copy the address below and place in your browser to be taken to NSDCAR’s complete report on housing trends, median prices etc. Very detailed and informative report.

http://www.nsdcar.com/homedex/current_homedex/2009_yearend_homedex_030910.pdf

Economic data was the primary force driving mortgage rates this week. Generally weaker than expected data resulted in modest improvement in rates for most of the week. This was completely offset by an increase in rates on Friday due to stronger than expected Employment data, however, leaving mortgage rates nearly unchanged from last week.

Against a consensus forecast for a decline of -50K jobs, the economy lost -36K jobs in February, and the revisions from prior months showed more jobs than previously reported. The Unemployment Rate remained unchanged from January at 9.7%, which was lower than expected. The payrolls figures and the unemployment rate are calculated from two separate sets of data. The payrolls report focuses on larger companies, while the unemployment survey covers all companies. The more volatile unemployment survey surprisingly showed an increase of 308K jobs in February, indicating that smaller companies were a source of job gains.

This week’s housing data was weaker than expected. January Pending Home Sales fell 7.6%, far below the consensus forecast for a small increase. They were still 12% higher than one year ago, however. The expected surge in sales from the extended homebuyer tax credit has failed to materialize so far. The chief economist of the National Association of Realtors (NAR) suggested that unusually harsh weather “hampered shopping activity” in many regions, so a pickup in sales still may be seen as buyers take advantage of the tax credit before the April 30 deadline.

To learn more about news impacting interest rates and mortgage markets, go to www.mbsquoteline.com

Home buyers hoping to snag a really good deal on a foreclosed home are finding it increasingly difficult because supply is shrinking. The number of foreclosures that are available for sale nationwide fell to 617,000 in December, down from 845,000 in November 2008, reports Barclays Capital.Not only have attractive homes in popular neighborhoods already been snapped up, but also government help for distressed buyers is delaying more foreclosures.

Demand is driving up prices. Investors say typical prices have climbed from 75 percent of appraised value to 85 percent or higher when there are bidding wars.

Source: The Wall Street Journal, James R. Hagerty (02/23/2010