Archive for March, 2010

Step Right Up! $18,000 In Tax Credits! First Time Buyers Can Double Dip!

 

Claim Your $18,000!

 

Federal And State Tax Credits Combine For $18,000 Bonanza

Federal And State Tax Credits Combine For $18,000 Bonanza

 

For A Limited Time Only!  $18,000 Bonanza to California First Time Home Buyers

For two months, from May 1 to June 30, 2010, First Time Homebuyers in California will be able to qualify for both the federal and state income tax credits that add up to a whopping $18,000 in credits.

There is a very tight time frame in order to take advantage of both credits, to be able to get  both tax credits, a first-time homebuyer has to be in contract ( in escrow) for a principal residence before May 1, 2010, and that contract must close  between May 1, 2010 and June 30, 2010.

Here is ne real quick article I found from The Wall Sreet Journal that also explains the timelines.

Tuesday, we told you that the (financially troubled) state of California is poised to offer home buyers up to $10,000 to get off the fence and to the dotted line. The $200 million program, split between first-time buyers of existing homes and new units, should keep the Golden State’s sales moving along post spring-selling season.

But, it might not get off to a peaceful start on May 1: Get ready for a stampede early on as some buyers rush to overlap with the federal tax credit that’s dangling as much as $8,000 to buyers. (Yes, that’s up to $18,000 for buying a house.)

For the federal incentive, contracts must be inked by April 30, while closings have to happen by June 30. The California credit covers closings on existing or new homes on or after May 1, leaving a short window for double dipping. “We already anticipated increased contract activity in March and April due to the federal tax credit with scheduled closings in May and June,” writes Credit Suisse builder analyst Dan Oppenheim. “These buyers will now be eligible for both the federal and state credit and will likely consume a significant piece of the state credit given the first-come, first-serve allocation.”

He estimates the tax credit will benefit about 14,000 new-home buyers, lasting as long as five months. KB Home and Lennar could benefit the most given “their outsized exposure to California at 44% and 25% of ’09 revenues, respectively, vs. the 20% group average.”

Given that the state’s existing sales dwarf new sales – 2009 saw an average of 42,500 closings per month – that allotment should be snapped up in about a month. Stampede, indeed.

Authored by Forth Hoyt | Discussion: 2 Comments »

New And Improved California First-Time Homebuyers Tax Credit Signed

 
 

 

California Homebuyer Tax Credit Will Add $10,000

California Homebuyer Tax Credit Will Add $10,000

 

 

 

Californa’s Newest First Time Homebuyers Tax Credit is  for Resale Existing Homes and New Construction!

The CA first time homebuyers tax credit has been revamped, and will now allow a credit for first time home buyers looking for existing (resale) homes, as well as new construction. The passage of this bill is due in large part to CAR’s non-stop continual push in Sacramento over the last few weeks.

Homebuyers can claim 5 percent of the purchase price against their California taxes, up to $10,000.

“I have been up and down the state pushing this important housing bill that will get people off the fence and into homes while creating jobs and stimulating our economy,” CA Gov. Schwarzenegger said in a statement.

The new tax credit will provide $200 million in tax credits for home buyer tax credits, allocating $100 million for qualified first-time home buyers of existing homes, and $100 million for purchasers of new, or previously unoccupied, homes. The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, will be able to take the allowed tax credit. Again, the credit is equal to the lesser of 5 percent of the purchase price or $10,000, and willl be applied to your taxes in equal installments over three consecutive years. Under AB 183, purchasers will be required to live in the home for at least two years or forfeit the credit (i.e., repay it to the state).

You may or may not remember the last CA tax credit ran out of money and was abandoned well before it was supposed to end, so once again, it is urged that anyone thinking of purchasing a home moves forward as quickly as possible if they want to be assured of securing their $10,000.

Authored by Forth Hoyt | Discussion: No Comments »

Writing a Killer Short Sale Offer in Sacramento

 

Sacramento Short Sales have exploded!

Sac Placer ED Counties Short Sales 03 19 10
Sac Placer ED Counties Short Sales 03 19 10

If you want to buy a home in the Sacramento area; you’d better get honed up on Short Sales! In some Sacramento area neighborhoods, short sales represent way over 75% of the inventory of active homes for sale.  Short sales are getting easier to close and Short Sales are going pending much faster now too.  As our Sacramento real estate market evolves; short sales will continue to be approved faster, smoother and more efficiently.  Buying any home that represents a great deal in our market is not easy.  Well priced homes are selling with multiple, many times over asking price offers, whether it is a short sale, REO or equity sale; buyers all appreciate value and want a great deat. Sacramento real estate has become just as competitive as the hottest of sellers markets the area has ever seen.  So as Sacramento area short sales become less of a  ‘crap shoot’ and more of a legitimate, clearly defined and organized part of our market it is becoming more and more of an art form to write a  killer short sale offer.

Sacramento Short Sale sellers and their agent’s know that the final decision is being made by the bank and that there is no real reason to counter an offer when it comes in, but well priced short sales will generate multiple offers that will give the sellers and their agents the opportunity to ‘sort through’ and pick the offer most likely to close.  That’s the offer you want to write; an offer that represents the best chance to be be perceived as THE  winning offer from the seller, one that will compel the seller to believe that  are willing to hang with it and wait for an answer; even if it takes several months. Your offer should be written in a way the bank will have no reason to counter it and that will be easily accepted by the bank.

One way to be taken seriously as a buyer is to agree that your deposit be cashed and the money be held in escrow for up to ninety days.

 Here is a link to offer instructions and our custom  addendum that can be found on one of our great sister sites;            realestate-sacramento.net that helps agents writing offers on our short-sales to write the best offer for their clients;

  Forth Hoythas dedicated himself to helping distressed property owners. He has spend hundreds of hours learning from the pre-foreclosure experts and has obtained several designations in this field.  In an effort to offer his clients the best possible results with their short sale transaction…

More questions?

Contact us Today At Forth Hoyt’s Sacramento Short Sale Center

At The Hoyt Group, we have implemented the the following procedures 

 Tips How to Submit a (Good, Clean) Short Sale Offer 

 

1)      Include our customized version of the CAR Short Sale Addendum

2)      Include an As-is Addendum with your offer

3)      On page 1 of the contract

              1.D   Close of Escrow 45 days or sooner after 3rd party approval

                                 (see SS Addendum) where it ask for COE Date

              2.C (2)   Be sure and “check” FHA or VA if your buyers loan is

                                       a FHA or VA loan. 

             2.D   If requesting closing costs assistance please do so on

                                 these lines, in this format.  “Seller’s lender shall credit

                                 Buyer “X” dollar amount of “X” percent of sales price

                                 towards Buyer’s closing cost including but not limited to

                                 the costs of items 4.A – 4.E on page 2 of the contract.”

4)   Page 2 of the contract

                         4.A  (1) Most banks will pay for Pest Inspection, However,

                                       they will not pay for any  Section 1 repairs. 

                         4.B  (1-5) With the exception of Chase, most banks will pay for

                                           these inspections. Not Repairs.

                         4.C  (1-2) Most Banks will pay for these Government

                                           Requirements.

                         4.D  (1-2)  Please mark all closing costs as being paid for by

                                            the Buyer. (we’ll address how to ask for those

                                           appropriately on page 1 if the Buyer needs

                                           closing costs assistance)

                         4.E   (1-2)  Please mark paid by Buyer. These cost can be

                                            added into Buyers closing costs.

                         4.E   (3-4)  Most banks will pay all fees associated with

                                            HOA’s.

                         4.E   (5-6)  Do not request the bank to pay for a home

                                             warranty. If the buyer would like a home

                                            inspection, mark “Buyer to Pay”.

5)  Page 3 of the contract

                         8.B   (1-5)  Unless included in the MLS listing, all personal

                                             property items are not included in the sale.

6)  Page 6 of the contract

                         25.E   Add Short Sale Addendum and Addendum A.

 

Be the first one there, write a good, clean offer!

 

More questions?

Contact us Today At Forth Hoyt’s Sacramento Short Sale Center

Authored by Forth Hoyt | Discussion: No Comments »

Sacramento Real Estate and California Sales for February

Sacramento County has seen a huge increase in  homes that went pending in February but actually saw a decrease in the number of closed escrows both month over month and year over year.

 

Sacramento County Real Estate Report 03 19 10

Sacramento County Real Estate Report 03 19 10

Dataquick Roperts California Market Stats:

An estimated 28,111 new and resale houses and condos were sold statewide last month. That was up 0.9 percent from 27,858 in January, and down 3.8 percent from 29,225 for February 2009. California sales for the month of February have varied from a low of 20,513 in 2008 to a peak of 48,409 in 2004, while the average is 32,325. MDA DataQuick’s statistics go back to 1988.

The median price paid for a home last month was $249,000, up 0.8 percent from $247,000 in January, and up 11.2 percent from $224,000 for February a year ago. The year-over-year increase was the fourth in a row, following 27 months of year-over-year declines. The median peaked at $484,000 in early 2007 and hit a low of $221,000 last April.

Of the existing homes sold last month, 44.3 percent were properties that had been foreclosed on during the past year. That was up from a revised 43.8 percent in January and down from 58.8 percent in February a year ago, the all-time high.

The typical mortgage payment that home buyers committed themselves to paying last month was $1,068. That was up from $1,064 in January, and up from $976 for February a year ago. Adjusted for inflation, last month’s mortgage payment was 50.2 percent below the spring 1989 peak of the prior real estate cycle. It was 59.6 percent below the current cycle’s peak in June 2006.

MDA DataQuick is a division of MDA Lending Solutions, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. MDA DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

Indicators of market distress continue to move in different directions. Foreclosure activity has declined somewhat but remains high by historical standards. Financing with multiple mortgages is low, down payment sizes are stable, cash and non-owner occupied buying is up, MDA DataQuick reported.

Copyright MDA DataQuick Information Systems. All rights reserved.

Authored by Forth Hoyt | Discussion: No Comments »

A Tale of Two Markets: Sacramento Real Estate Market Trends

Sacramento real estate trends are showing a huge disparity between homes priced under $250,000 and those priced over $250,000

Check out the numbers:

under 250k over 250k 250-350k 350-450k 450-600k 600-800k 800-1mil over 1mil

It is no secret that lower priced homes sell faster.  That is true in any market and is definitely true here in Sacramento.  I was doing some research on our new Trendgraphics while getting ready for a listing appointment tonight and started moving the minimum-maximum prices around on the search tool/website and was surprised to find where our median price of homes available is her in Sacramento/Placer/El Dorado Counties.

The median price of all 6159 homes on the market in these three counties is somewhere between 250 and 300k.  Now this is  the lower half of the median price of all active homes for sale in these three counties. I thought I’d error on the conservative side and picked $250,000 for my reports: the system doesn’t have capabilities to search any closer than in 50k increments.  There are 2903 under 250k and 3256 over 250k…

I looked at the homes in the lower half of median into one statistical group.  The upper price range I took apart and went much deeper to reveal some startling trends.

This first chart is all homes who’s active price is less than 250k. This group of homes have  1.3 Months  of Inventory based on Pended sales and  2.9 months of inventory based on closed sales. This includes ALL types of sales; including Bank Owned (REO,)  Short Sale, and Equity Sale.  On the same chart, those same homes have an median price of $160,000 an average active price of 167k and an average sold price of  157k.

Sacramento  Placer El Drado Homes Under $250,000 Active Price

Sacramento Placer El Drado Homes Under $250,000 Active Price

Here is more information on this same group of homes: all under 250,000 Active Price in Sacramento, Placer, El Dorado Counties.

Date 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10
For Sale 4894 4596 3821 3384 3049 2352 2167 2125 2302 2330 2571 2797 2903
New Listing 1804 2285 1816 1795 2050 2127 1933 2013 2097 1747 1873 2100 2056
Sold 1387 1553 1564 1496 1602 1634 1418 1478 1562 1270 1459 1086 1004
Pended 1761 2112 2201 1941 1973 2127 2010 1714 1584 1357 1307 1678 2247
Months of Inventory based on Closed Sales 3.5 3.0 2.4 2.3 1.9 1.4 1.5 1.4 1.5 1.8 1.8 2.6 2.9
Months of Inventory based on Pended Sales 2.8 2.2 1.7 1.7 1.5 1.1 1.1 1.2 1.5 1.7 2.0 1.7 1.3
Absorption Rate based on Closed Sales 28.3 33.8 40.9 44.2 52.5 69.5 65.4 69.6 67.9 54.5 56.7 38.8 34.6
Absorption Rate based on Pended Sales 36.0 46.0 57.6 57.4 64.7 90.4 92.8 80.7 68.8 58.2 50.8 60.0 77.4
Avg. Active Price 154 157 160 160 161 162 165 166 167 168 165 165 167
Avg. Sld Price 141 143 141 148 154 151 155 155 157 159 157 154 157
Avg. Sq. Ft. Price 101 100 100 101 106 107 107 107 109 111 110 108 109
Sold/List Diff. % 99 99 99 99 100 101 101 101 101 101 100 100 100
Sold/Orig LP Diff. % 91 90 91 92 95 96 97 97 98 98 97 97 97
Days on Market 51 56 55 56 51 52 46 47 48 46 52 52 57
Avg CDOM 77 79 79 78 71 70 64 64 62 62 68 70 69
Median Price 142 145 140 152 159 156 160 159 160 161 160 155 160

Contrast This

This  portion of the real estate market (under 250k)  in the Sacramento Metro Area is much different from those homes that are in the higher side of the median active sale price.

Please understand, this is really no big surprise; we all know the higher priced homes take longer to sell. My big AHA!! was how many of these there are…

Sacramento Placer El Dorado County Real Estate Trends and Statistics

Sacramento Placer El Dorado County Real Estate Trends and Statistics

As you can see below, these homes have an inventory of 6.1 months, and their median price is only 321k!

Date 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10
For Sale 4961 4827 4689 4604 4406 4128 4045 3928 3726 3474 3175 3148 3256
New Listing 1398 1524 1512 1481 1457 1603 1406 1409 1307 1023 962 1361 1383
Sold 627 753 774 829 884 947 830 816 895 737 819 557 538
Pended 785 1054 1091 1031 1070 1101 1013 948 887 712 654 859 1141
Months of Inventory based on Closed Sales 7.9 6.4 6.1 5.6 5.0 4.4 4.9 4.8 4.2 4.7 3.9 5.7 6.1
Months of Inventory based on Pended Sales 6.3 4.6 4.3 4.5 4.1 3.7 4.0 4.1 4.2 4.9 4.9 3.7 2.9
Absorption Rate based on Closed Sales 12.6 15.6 16.5 18.0 20.1 22.9 20.5 20.8 24.0 21.2 25.8 17.7 16.5
Absorption Rate based on Pended Sales 15.8 21.8 23.3 22.4 24.3 26.7 25.0 24.1 23.8 20.5 20.6 27.3 35.0
Avg. Active Price 543 551 561 568 581 592 594 586 579 567 553 544 539
Avg. Sld Price 373 369 380 388 388 383 369 375 373 389 383 388 365
Avg. Sq. Ft. Price 150 149 150 154 156 154 150 152 149 152 149 149 145
Sold/List Diff. % 98 97 97 97 98 98 98 98 98 98 97 97 97
Sold/Orig LP Diff. % 91 91 91 92 92 92 93 93 93 92 92 91 93
Days on Market 67 71 71 65 65 64 58 63 64 65 71 78 69
Avg CDOM 90 97 102 89 94 88 81 84 82 86 93 99 93
Median Price 335 329 332 330 341 336 330 328 330 340 335 330 321

I took this portion of the market apart even more and did $100,000  and $250,000″traunches” for  a closer look of the inventory and days on the market of our upper median priced homes and into the Luxury Home prices here in the Sacramento area. More Surpises…

250-350k

Sac Placer Eld 250-350k

Sac Placer Eld 250-350k

Thes Homes are flying off the shelf

Date 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10
For Sale 1885 1783 1649 1551 1415 1259 1243 1258 1294 1295 1239 1258 1321
New Listing 609 685 627 628 637 740 679 693 666 537 533 639 700
Sold 350 435 424 450 459 522 481 466 498 392 454 311 335
Pended 435 582 574 548 570 606 585 510 465 384 374 487 654
Months of Inventory based on Closed Sales 5.4 4.1 3.9 3.4 3.1 2.4 2.6 2.7 2.6 3.3 2.7 4.0 3.9
Months of Inventory based on Pended Sales 4.3 3.1 2.9 2.8 2.5 2.1 2.1 2.5 2.8 3.4 3.3 2.6 2.0
Absorption Rate based on Closed Sales 18.6 24.4 25.7 29.0 32.4 41.5 38.7 37.0 38.5 30.3 36.6 24.7 25.4
Absorption Rate based on Pended Sales 23.1 32.6 34.8 35.3 40.3 48.1 47.1 40.5 35.9 29.7 30.2 38.7 49.5
Avg. Active Price 294 295 295 296 297 298 298 298 298 297 298 298 296
Avg. Sld Price 292 288 289 289 288 291 290 288 289 291 290 288 292
Avg. Sq. Ft. Price 134 134 131 132 135 135 135 137 135 135 132 129 134
Sold/List Diff. % 99 98 98 99 99 99 99 99 99 99 99 98 99
Sold/Orig LP Diff. % 94 92 93 94 94 94 95 95 95 95 95 95 96
Days on Market 58 68 65 58 59 59 51 56 60 56 66 65 61
Avg CDOM 81 95 93 81 84 82 68 71 73 74 82 82 75
Median Price 289 282 287 287 285 288 288 285 286 290 285 285 290

350-450k

Sac Placer ED County Homes Active Price 350-450k

Sac Placer ED County Homes Active Price 350-450k


Inventory really starting to slow down in this price range- over six months of inventory makes this the first pricerange that is truly a buyer’s maket!

Date 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10
For Sale 1073 1061 1023 1021 1003 961 943 893 805 738 675 681 680
New Listing 347 364 369 371 367 390 337 334 294 232 225 355 306
Sold 162 190 199 214 225 199 210 191 233 186 195 133 113
Pended 196 253 284 253 254 259 234 246 224 162 165 209 260
Months of Inventory based on Closed Sales 6.6 5.6 5.1 4.8 4.5 4.8 4.5 4.7 3.5 4.0 3.5 5.1 6.0
Months of Inventory based on Pended Sales 5.5 4.2 3.6 4.0 3.9 3.7 4.0 3.6 3.6 4.6 4.1 3.3 2.6
Absorption Rate based on Closed Sales 15.1 17.9 19.5 21.0 22.4 20.7 22.3 21.4 28.9 25.2 28.9 19.5 16.6
Absorption Rate based on Pended Sales 18.3 23.8 27.8 24.8 25.3 27.0 24.8 27.5 27.8 22.0 24.4 30.7 38.2
Avg. Active Price 394 395 395 396 397 398 397 396 395 396 394 396 396
Avg. Sld Price 392 392 388 391 391 390 390 388 390 392 389 391 389
Avg. Sq. Ft. Price 154 149 151 154 158 159 147 151 149 149 145 154 147
Sold/List Diff. % 98 97 97 98 98 98 98 98 98 98 98 98 97
Sold/Orig LP Diff. % 90 92 92 92 93 93 95 94 93 95 93 94 95
Days on Market 76 70 73 67 66 62 50 71 69 53 69 84 67
Avg CDOM 98 93 99 88 94 87 62 89 90 74 83 105 111
Median Price 393 390 385 388 390 388 385 385 387 390 387 389 388

450-600K

It’s getting slower! And more painful! One of the most glaring satistics, and ond that would give some insight into the frustration these sellersare going through: in this pricerange, These homes are on the market for an aerage of 139 days and have a 9% sold price/original list price ratio- in this price range that’s $40,000 to $55,000 Lower than their original List price! And they waited over 4 and a half months to sell!

Sacramento Placer El Dorado County Real Estate Statistics for 450-600K

Sacramento Placer El Dorado County Real Estate Statistics for 450-600K

Date 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10
For Sale 843 812 832 818 785 756 719 709 648 582 524 500 561
New Listing 220 216 260 227 220 231 207 212 198 138 117 208 212
Sold 87 80 86 93 129 152 94 100 103 100 114 60 57
Pended 99 127 142 143 147 146 131 113 118 105 74 106 135
Months of Inventory based on Closed Sales 9.7 10.2 9.7 8.8 6.1 5.0 7.6 7.1 6.3 5.8 4.6 8.3 9.8
Months of Inventory based on Pended Sales 8.5 6.4 5.9 5.7 5.3 5.2 5.5 6.3 5.5 5.5 7.1 4.7 4.2
Absorption Rate based on Closed Sales 10.3 9.9 10.3 11.4 16.4 20.1 13.1 14.1 15.9 17.2 21.8 12.0 10.2
Absorption Rate based on Pended Sales 11.7 15.6 17.1 17.5 18.7 19.3 18.2 15.9 18.2 18.0 14.1 21.2 24.1
Avg. Active Price 522 523 525 524 524 523 525 522 521 523 522 523 524
Avg. Sld Price 509 512 503 506 505 509 505 505 515 519 500 516 495
Avg. Sq. Ft. Price 158 164 161 168 171 165 167 172 159 163 170 157 151
Sold/List Diff. % 96 96 98 96 97 97 97 97 98 97 97 97 97
Sold/Orig LP Diff. % 88 90 91 90 91 92 91 92 95 89 90 93 91
Days on Market 78 73 84 77 84 75 81 67 61 87 86 69 98
Avg CDOM 96 92 108 104 114 92 124 101 84 109 116 85 139
Median Price 500 515 499 500 497 510 498 500 510 518 500 516 485

600-800k

Slowing even more… but definately still selling!

Sacramento Placer El Dorado County Real Estate Statistics for Homes 600-800k

Sacramento Placer El Dorado County Real Estate Statistics for Homes 600-800k

The Averae days on Mkt are all over the board, but these monsters are still selling great! these homes actually enjoy a hightr % (94%) retio of original active list price to sale price.

Date 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10
For Sale 524 531 543 537 512 488 477 457 390 351 300 289 290
New Listing 106 117 141 120 120 124 95 88 63 69 46 77 87
Sold 16 36 44 46 44 57 29 41 43 36 35 34 20
Pended 38 54 52 60 64 60 39 47 51 34 21 34 54
Months of Inventory based on Closed Sales 32.8 14.8 12.3 11.7 11.6 8.6 16.4 11.1 9.1 9.8 8.6 8.5 14.5
Months of Inventory based on Pended Sales 13.8 9.8 10.4 9.0 8.0 8.1 12.2 9.7 7.6 10.3 14.3 8.5 5.4
Absorption Rate based on Closed Sales 3.1 6.8 8.1 8.6 8.6 11.7 6.1 9.0 11.0 10.3 11.7 11.8 6.9
Absorption Rate based on Pended Sales 7.3 10.2 9.6 11.2 12.5 12.3 8.2 10.3 13.1 9.7 7.0 11.8 18.6
Avg. Active Price 699 701 701 700 701 700 701 700 698 698 699 698 703
Avg. Sld Price 671 672 689 678 673 674 689 678 660 663 688 680 665
Avg. Sq. Ft. Price 196 193 191 192 194 193 198 176 186 186 182 178 173
Sold/List Diff. % 98 96 97 96 96 96 97 97 94 95 95 94 98
Sold/Orig LP Diff. % 87 88 85 89 92 89 85 92 88 85 89 88 94
Days on Market 76 92 100 96 84 70 119 75 81 126 87 133 61
Avg CDOM 88 131 163 140 131 121 199 126 111 152 109 186 102
Median Price 671 665 675 655 653 665 680 670 650 650 685 668 650

This is part of the Big Surprise!!  There are still lots of pople with money out there! and thet are buying Big Houses!!

These are 800k to 1 mil.

Sacramento  Placer El Dorado Counties Real Estate Statistics 800k-1m

Sacramento Placer El Dorado Counties Real Estate Statistics 800k-1mActually Less days on the market and lessactive litings! There are Luxury Home Buyers in the Sacramento Metro Area Buying!Date2/093/094/095/096/097/098/099/0910/0911/0912/091/102/10For Sale233224239264270259268242243195173170150New Listing48525670395340403318293630Sold66131415569111213109Pended9221815151412181417121522Months of Inventory based on Closed Sales38.837.318.418.918.051.844.726.922.116.313.317.016.7Months of Inventory based on Pended Sales25.910.213.317.618.018.522.313.417.411.514.411.36.8Absorption Rate based on Closed Sales2.62.75.45.35.61.92.23.74.56.27.55.96.0Absorption Rate based on Pended Sales3.99.87.55.75.65.44.57.45.88.76.98.814.7Avg. Active Price912912912910909909908912908904906908910Avg. Sld Price853916866866867895877890865886888867845Avg. Sq. Ft. Price246238207194217214219203219213181187220Sold/List Diff. %94939294969796959595989894Sold/Orig LP Diff. %88887885938092898577919184Days on Market117699685511814111711519394132139Avg CDOM166692019512521578192157193291199139Median Price825910855866850950865873860878885848825 Over 1 mil and more surprises Sacramento Placer El Dorado County Real Estate Statistics 1 mil and up

Why are these homes dead in the water? they are only 300koverth median price of teh last goup, yet they have 53 months if inventory!!

Date 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10
For Sale 505 514 505 527 537 515 503 475 451 392 334 326 318
New Listing 88 115 79 96 89 85 62 60 62 35 26 57 56
Sold 7 10 11 16 16 15 12 13 8 16 12 11 6
Pended 9 26 26 18 26 21 17 20 18 18 11 13 24
Months of Inventory based on Closed Sales 72.1 51.4 45.9 32.9 33.6 34.3 41.9 36.5 56.4 24.5 27.8 29.6 53.0
Months of Inventory based on Pended Sales 56.1 19.8 19.4 29.3 20.7 24.5 29.6 23.8 25.1 21.8 30.4 25.1 13.3
Absorption Rate based on Closed Sales 1.4 1.9 2.2 3.0 3.0 2.9 2.4 2.7 1.8 4.1 3.6 3.4 1.9
Absorption Rate based on Pended Sales 1.8 5.1 5.1 3.4 4.8 4.1 3.4 4.2 4.0 4.6 3.3 4.0 7.5
Avg. Active Price 1580 1574 1586 1554 1566 1593 1602 1613 1606 1639 1638 1606 1638
Avg. Sld Price 1297 1098 1157 1321 1181 1067 1153 1181 1174 1149 1439 1229 1237
Avg. Sq. Ft. Price 272 235 254 270 230 218 261 233 224 256 239 234 229
Sold/List Diff. % 91 95 92 91 94 91 92 91 99 94 89 83 80
Sold/Orig LP Diff. % 80 84 81 88 87 80 80 83 85 86 81 64 68
Days on Market 80 92 77 62 65 127 129 87 98 81 128 197 233
Avg CDOM 221 149 177 96 78 182 287 176 115 135 330 221 260
Median Price 1150 1025 1027 1350 1100 1050 1045 1140 1095 1078 1138 1050 1120

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Pending Home Sales Drop 7.6% Nationally, But Greatly Increase Sacramento Metro Market

 

 

 

Sacramento Real Estate Market Stats For January
All Sac Placer ED Counties All January Sales

All Sac Placer ED Counties All January Sales

 

 

 Sacramento Real Estate Pending Sales Are up 23%

It always happens this time year that pending sales start to increase, but what is so different about this year is the fact that available homes, or active listings have significantly reduced from last year.

The chart above goes a long way in explaining our market her in the Sacramento area and explaining the indset of the buyers we are working with.

Frustration that it is so hard to buy a home in a market that is so affordable.  The frustration actually comes becouse of all the inventory available, only about 20% of it is priced right and in a condition to be able to pass inspections and get a mortgage on it…

Who do you kow that is struggling with a mortgage right now?

Contact the Sacramento Short Sale Center for a Sacramento Short Sale Specialist at wereheretohelp.org

National Pending home sales drop 7.6%

According to the National Association of Realtors (NAR), its Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, dropped 7.6% to 90.4 from a reading of 97.8 in December, and is 12.3% higher than January 2009 when it was 80.5. NAR said the harsh winter hampered home sales. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit,” said NAR chief economistLawrence Yun. “Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the US, hampered shopping activity in February.” Analysts say extension of tax credit is doing little to boost pending home sales, and given that the Federal Reserve will end purchase of mortgage backed securities this month, the housing recovery is going to take time. “When you take away all the support from the housing market, the und
erlying demand for housing is a lot weaker than we thought,” said Mark Vitner, an economist at Wells Fargo Securities. “We clearly pushed some demand forward, and there wasn’t that much demand to pull forward anyway. The housing recovery is going to be very, very slow.” On a regional basis, the pending home sales index dropped 8.7% to 71.3 in the Northeast, dropped 13.2% to 102.9 in the West, dropped 8.9% to 81.2 in the Midwest, and dropped 2.1% to 98.1 in the South.

 

Courtesy Chris Mcglaughlin

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CAR says 67 Percent of California Sellers Sold Becouse of Mortgage Woes

California Association Of Realtors

California Association Of Realtors

C.A.R. releases “2009-2010 Survey of California Home Sellers”
Report finds 67 percent of California sellers sold their homes due to inability to meet mortgage obligation

LOS ANGELES (Feb. 25) –Changes in family and employment status as well as adjustments to monthly mortgage obligations played significant roles in California’s homeowners’ decisions to sell their homes in 2009, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2009-2010 Survey of California Home Sellers.” According to the report, 67 percent of all sellers in California did so as a result of difficulties related to meeting their mortgage obligation.

“Tighter underwriting standards and a decline in equity continued to impact the market in 2009,” said C.A.R. President Steve Goddard. “Many homeowners chose to sell last year because their adjustable-rate mortgage reset at the same time home prices were experiencing an unprecedented decline, leaving them with little equity and difficulty in qualifying for a refinance.”
“Sellers responded to the challenges of the housing market in 2009 by choosing to work with REALTORS® for guidance and assistance in navigating the complex market,” added Goddard.

Recognizing the value of working with a real estate professional, 99 percent of sellers chose to work with a REALTOR®, according to the survey. Of those, 72 percent cited the ability of an agent to sell the home at a higher price point as the primary reason. Other reasons included better marketing and exposure (38 percent), while 28 percent reported it was too difficult to sell the home independently.

On average, homes sold for $20,958 less than the original asking price in 2009. The median difference between the selling and listing price was $32,315; the list-to-sold-price ratio was significantly larger between first-time sellers ($30,000 below list price) and sellers who had previously sold a home ($8,000 below list price).

The percentage of first-time sellers grew to nearly half of all sellers (44 percent) in 2009, a 33 percent increase from 2008, and nearly three times the 2007 percentage of 15 percent.

Sellers in 2009 cited difficulty meeting the monthly mortgage obligations (30 percent); job loss (18 percent); and “mortgage payment increased” (15 percent) as primary motivation to sell. By comparison, in 2008, one in five sellers cited the ability to meet their mortgage payment obligation; while 11 percent sold due to financial difficulties.

Financing challenges also extended to home buyers and impacted sellers’ confidence in buyers’ ability to secure a home loan. Nearly three-fourths of sellers reported this as a concern, an increase from 54 percent in 2008.

Financial difficulties also impacted the ability of sales to close on time, with 63 percent of homes falling out of escrow prior to closing. Nearly 70 percent of sellers cited “buyer could not get an acceptable mortgage;” and more than 60 percent said “buyer backed out,” as the primary reasons the home fell out of escrow. Other reasons included: Buyer’s remorse (26 percent); “lender withdrew and did not fund” (24 percent); and “home prices continued to decline” (18 percent). Once the home did sell, 50 percent of sellers reported escrow did not close on time in 2009, compared with 36 percent in 2008.

C.A.R.’s “2009-2010 Survey of California Home Sellers” is available for purchase for $49.95 in electronic format at http://www.rebsonline.com/product/1311/2009-Survey-of-California-Home-Sellers-%28PDF-Electronic-Download%29. The survey no longer is available in hard-copy format. Journalists who would like a complimentary copy of the report should e-mail [email protected] or call (213) 739-8363.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with nearly 175,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

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Buffett Says U.S. Housing Will Recover by Next Year

 

 Although his view is nationally, and not locally, Warren Buffett is usually not too far off when it comes to projecting economic cycles- Came across this great article from Business Week and thought I would share it here…

March 1 (Bloomberg) — Billionaire Warren Buffett said the U.S. residential real estate slump will end by about 2011, predicting that’s how long it will take demand for homes to catch up with the supply.

“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote Feb. 27 in his annual letter to shareholders of his Berkshire Hathaway Inc. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.”

The worst housing decline since the Great Depression has left one in five U.S. mortgage holders owing more than their houses are worth. Record foreclosures last year flooded a real estate market already glutted with unsold property, causing new construction to fall to the lowest in at least 50 years. The fall in homebuilding is the only fix unless the U.S. decides to “blow up a lot of houses,” Buffett joked.

“People thought it was good news a few years back when housing starts — the supply side of the picture — were running about two million annually,” said Buffett, the chairman and chief executive officer of Omaha, Nebraska-based Berkshire. “But household formations — the demand side –only amounted to about 1.2 million.”

Berkshire, which owns a real-estate brokerage, a business that constructs pre-fabricated houses and units that make products used in homebuilding, has suffered amid the slump. Profit at Clayton Homes, the pre-fab housing business, fell about 9 percent to $187 million before taxes, while earnings at carpet manufacturer Shaw Industries fell 30 percent.

‘Deeply Invested’

“High-value houses and those in certain localities where overbuilding was particularly egregious” will take longer to recover, he wrote.

“He’s very deeply invested in this,” said Tom Russo, partner at Gardner Russo & Gardner, which holds Berkshire stock. “Across his industrial companies, he’s massively poised to gain” from a housing recovery, Russo said.

Buffett joked that curbing home construction was the best of three ways to reduce supply. The other two, he said, would be to explode homes in a “tactic similar to the destruction of autos that occurred with the ‘cash-for-clunkers’ program” or “speed up householder formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers.”

Baseball, Wall Street

Buffett’s annual communications with shareholders have won him a following of professional money managers and the moniker “the Oracle of Omaha.” He’s written passages in past years that compare investing to baseball, derivatives to venereal disease, and Wall Street bankers to Pied Pipers. The letters have been compiled into a book for those who want to study his pronouncements.

Buffett, 79, built Berkshire into a $198 billion company through investments in firms he believes have superior management and lasting competitive advantages. His deals transformed Berkshire from a failing textile mill into an enterprise that makes candy, produces power and sells flight time on private jets. The shares traded at about $15 when he took control in 1965; the Class A stock last closed at $119,800.

Still, he and Vice Chairman Charlie Munger passed up opportunities when they weren’t able to evaluate the future of a business, even in a compelling industry, he said. That strategy has allowed the company to perform better than the benchmark Standard & Poor’s 500 in every year when both Berkshire and the index have fallen.

Playing Defense

“In other words, our defense has been better than our offense,” Buffett wrote. Last year, he said, Berkshire should have made more purchases of corporate and municipal bonds because they were “ridiculously cheap” when compared with U.S. Treasuries.

“When it’s raining gold, reach for a bucket, not a thimble,” he said. Corporate bonds returned 26 percent in 2009, compared with negative 11 percent in 2008, according to data compiled by Bank of America Corp. Merrill Lynch. State and local government bonds yielded 14 percent last year, compared with negative 4 percent in 2008.

Berkshire did extend financing to companies including Goldman Sachs Group Inc., General Electric Co. and Dow Chemical Co. during the credit crisis as other investors were withholding funds. The private deals pay dividends and interest of $2.1 billion annually, Berkshire said in a filing disclosing 2009 results. Berkshire’s net income of $8.06 billion rose 61 percent from 2008.

‘Climate of Fear’

“We’ve put a lot of money to work during the chaos of the last two years,” Buffett wrote. “It’s been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance.”

Buffett has used past letters to discuss plans for his successor, praise Berkshire managers and confess his failings. He admitted this year to a “very expensive business fiasco” with his move to issue credit cards to policyholders at his company’s Geico Corp. auto-insurance subsidiary. Last year, he said the U.S. economy was “in shambles” after reckless lending caused the worst financial “freefall” he ever saw.

He chastised the media in the new letter for “terrible journalism” in seizing on that comment from the prior year without also reporting that he made no predictions about the direction of the stock market.

CEO Responsibility

Buffett said this year that the CEOs and boards of companies that failed during the credit crisis shouldn’t be allowed to pass blame to underlings. Boards should insist on CEOs taking full responsibility for the risk of collapse, he said. “If he’s incapable of handling that job, he should look for other employment,” Buffett wrote.

Shareholders weren’t responsible for the botched operations at some of the country’s largest financial institutions, Buffett said, “yet they have borne the burden with 90 percent or more” of their holdings wiped out in cases of failure.

Still, he said, using year-to-year stock prices to evaluate a company’s progress can be an “extraordinarily erratic” measure. Even a decade can fail to give the proper picture, as Microsoft Corp. CEO Steve Ballmer and GE’s Jeffrey Immelt found when they took over with their shares at “nosebleed” prices.

Immelt, Ballmer

GE shares have dropped about 60 percent since Immelt took over in September 2001; Microsoft has fallen about 47 percent under Ballmer’s tenure. Berkshire shares have risen more than 160 percent in the past decade, compared with the 17 percent decline in the S&P 500. Buffett’s company joined that index last month when it completed the largest deal of his 40-year tenure, the $27 billion takeover of railroad Burlington Northern Santa Fe Corp.

Berkshire owned about 23 percent of the railroad’s stock before the acquisition, and will book a first-quarter gain of about $1.1 billion tied to the increase in the value of those shares on the takeover, the company said.

Berkshire had $30.6 billion in cash and so-called near cash like U.S. Treasuries as of Dec. 31, compared with $26.9 billion three months earlier, after Buffett sold stock to add to the company’s cash cushion in advance of the rail deal. Buffett used about $8 billion of that cash to help fund the acquisition.

“We pay a steep price to maintain our premier financial strength,” Buffett wrote. “The $20 billion-plus of cash- equivalent assets that we customarily hold is earning a pittance at present. But we sleep well.”

–With assistance from Jamie McGee, Hugh Son and Rick Levinson in New York. Editors: Erik Holm, Dan Reichl.

To contact the reporter on this story: Andrew Frye in New York at [email protected]

To contact the editor responsible for this story: Dan Kraut at [email protected]

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Sacramento Real Estate: Loan Mods Would Stop Many Sacramento Foreclosures

 

Loan Mods Would Stop Many Foreclosures

Loan Mods Would Stop Many Foreclosures

The loan mod question:  What’s wrong with this picture? Why aren’t they working?

 I talk to families all the time who are struggling making payments on a home here in our Sacramento area that may be  30, 40, maybe even 50%  or more upside-down… inevitably, they ask “instead of making us foreclose or do a short sale; why wont the the bank just ‘re-sell’ it to us and let us stay here?”

That would come in the form of a loan modification or a short refinance

Most of the time, the homeowners have either already tried to do a loan modification and could not qualify, or actually have qualified, gone through the 90 day HAMP trial program and received a final long term modification offer from the servicer that just didn’t make sense.

One lady last week, had a loan dification where the payment INCREASED $180.00 per month!

So what is really going on here? Why the heck wouldn’t the bank, servicer, investor and everyone involved just get with the program and help these people?

 Good question.  

Makes absolute sense. 

I have wondered that for a couple of years now myself, and thought I had a good answer for that; I was under the impression it had something to do with  the fact that the investor or note holder or owner of the mortgage would rather have a big influx of cash, and have the opportunity to go re-invest somewhere else. (*yeah, but where?)

For instance, instead of agreeing to write off  $100,000 and also agree to a new loan from the existing home owner for a subsequently lower monthly payment, the note owner would rather get a big influx of cash by doing a short sale or foreclosure and go invest what’s left of his money somewhere else.  I mean; why else would they be disallowing and not providing more loan modifications for good, creditworthy and very qualified homeowners. Most of these people have just had a reduction in income; by furlough days, reduction in overtime etc. and are just struggling… just having a hard time making a payment that is two or three times the amount of rent they would be paying to rent the same house.

These people are still good credit risks, still making payments, just absolutely struggling and looking for help; with today’s standards though, they need to get behind on payments usually in order to do a loan mod or be approved for a short sale…

In my daily reading I came across this great article by Ocwen’s Paul A. Koches.  Mr. Koches is Executive Vice President and General Counsel of Ocwen since May 2008. Koches oversees the legal affairs of the company as well as its government, community, and media relations.

In the article, Mr.Koches talks about The National Consumer Law Center and their October report, “Why Servicers Foreclose When They Should Modify and Other Puzzles of Servicer Behavior: Servicer Compensation and Its ConsequencesI have included the entire text here but also a link to DSNews.

No Matter How Ocwen Looks at It, Loan Modifications Are Better Business for Servicers Than Foreclosures

The National Consumer Law Center (NCLC), Inc., is an effective, concerned organization that works to advance justice and fair treatment for consumers, especially those who are economically disadvantaged.

So it is natural—and, of course, very helpful—that NCLC has been researching the mortgage crisis and speaking out on behalf of homeowners. Recently, NCLC explored important and troubling questions. If mortgage modifications—now advocated and incentivized by the Obama administration—are the key solution to the crisis, why have relatively few occurred, and at a slow pace, while foreclosures continue at an unprecedented, damaging clip?

NCLC’s October report, “Why Servicers Foreclose When They Should Modify and Other Puzzles of Servicer Behavior: Servicer Compensation and Its Consequences,” underscores some important points:

– The pace of loan modifications by the servicing industry is generally too slow;

– The national foreclosure rate is still way too high; and

– Any successful attempts to redress the foreclosure crisis will, of necessity, involve loan modifications.

INCORRECT TO THE CORE

In exploring the conundrum of high foreclosure rates and relatively sluggish modification rates, the NCLC report takes loan servicers to task. That’s certainly a reasonable approach as servicers are the entities responsible for modifications. The NCLC analysis of servicers, however, is based on some incorrect core assumptions. It says servicersmake more money with foreclosures, so therefore, they have no real financial incentive to pursue sustainable, lasting modifications.

That simply isn’t true. Servicers rarely, if ever, make money when there’s a foreclosure. They’re expensive, time consuming, and draining. REO, in this real estate market, just isn’t a good business. On the other hand, modifications are good business—and make financial sense for servicers—when they’re done prudently and carefully. The fact is, in most cases, a modified loan, even one in which the principal has been adjusted, generates more income for a servicer than a foreclosure.

OPERATIONS NOT UP TO SPEED

Perhaps the real reason for the generally slow start to modifications is more operational than financial. Servicers, at this time, simply do not have sufficient know-how, capacity, and experience to communicate withtheir customers to design and effect sustainable modifications on scale with the problem—and they’re not turning to the outside resources that do have the platform and capacity to help.

It’s worth noting that at Ocwen modifications are a key part of the business and operational strategy, and the company has led the industry in the rate of permanent modifications under the Home Affordable Modification Program (HAMP). Ocwenis in this position because it has traditionally worked almost exclusively with high-risk—i.e., subprime—loans and has invested $150 million in R&D for scalable loss mitigation technology and analytics to accommodate significant numbers of modifications. Major players are recognizing Ocwen’s capabilities and are increasingly turning to it to reduce delinquencies and losses and for modification assistance. Recently, large financial institutions have sent Ocwen approximately $15 billion in their mortgages for special servicing and rehabilitation.

Ocwen believes that modifications are good for investors, good business for its company, good for distressed homeowners, good for communities, and good for the housing market overall. Doing good is, more often than not, good business.

FORECLOSURES NOT WALLET-FRIENDLY

The first misguided assumption on NCLC’s part is that servicers usually make money on foreclosures. The reality is that servicers make money when delinquent loans become reperforming. Servicers collect the most servicing fees and incur the lowest costs when this is the case. Foreclosures, in contrast, are costly—and it is simply not true that the servicer always recovers its expenses in foreclosures. Foreclosure is not only a tragedy for a homeowner, but given the all-time-high loss severity rates in the current market, it’s a major loss as well for loan investors (i.e., the owners of the loans). Servicers doing their jobs properly will and should seek alternatives such as modifications to mitigate losses for their clients.

The NCLC grossly underestimates the impact of the loss of monthly servicing fees when there’s a foreclosure. Those fees, which resume when there’s a sustainable modification, are really the lifeblood of a servicing business. Losing them, in an environment where there are no new mortgage securitizations on which to bid for servicing rights, is damaging.

Similarly, NCLC trivializes the servicer incentive and success fees provided for permanent modifications pursuant to the government’s HAMP program. The NCLC report asserts these fees aren’t enough to induce servicers to modify, but the reality is these additional incentives are meaningful and revenue-generating.

Finally, NCLC advances the incorrect perception that servicers do well by shunning modifications because they make a lot of money from late fees. That just isn’t true. The reality is that late fees, which are rarely collected in a foreclosure-bound situation, don’t come close to covering the cost of financing advances that servicers must make to investors in case of delinquent loans.

A WINNING HAND

Now for the real story: The bottom line at many servicing shops, including Ocwen, is that the overriding financial incentive comes from adhering to contractual obligations to service the loans, and resolve delinquencies, in the best interest of the investors. So, when a servicer’s metrics indicate a higher investor net present value for a modification than a foreclosure—which is often the case in this environment—the servicer is required to modify the loan.

In short, the financial cards are not stacked against modifications arranged by servicers.

So where is the disconnect? Why are modifications happening so slowly in the industry?

PRE-EXISTING CONDITIONS

The root cause is not insufficient servicer incentives; it is instead the pre-existing shortage of industry infrastructure and capacity combined with the time lag needed to effectively expand the same. The real call to action should be for the industry to redouble its effort to ramp up in terms of technology, know-how, and analytics—or at a minimum to find the right modification partners who can help support the effort.

Anticipating an uptick in delinquencies, Ocwen beefed up its loss mitigation staff by 50 percent in 2007. No one, however, could have predicted the tsunami wave of defaults that was about to hit.

At the same time, many large banks had diversified their traditional prime loan origination business by expanding into subprime lending and servicing, often through acquisitions. But successfully integrating a subprimemortgage operation into a prime culture is difficult—they are entirely different worlds. Prime delinquency and foreclosure rates have always been a small fraction of subprime’s; servicing the latter effectively requires many more “high-touch” processes and procedures. It’s not surprising, then, that the big banks were overwhelmed with the unprecedented spikes in subprime delinquencies brought on by the mortgage crisis and continue to struggle to prevent foreclosures even now.

SUSTAINABILITY AND SCALABILITY ARE KEY

Even with the advantage of decades of subprime servicing experience and specialized technology, Ocwen was scrambling at the outset of the mortgage crisis to get defaults in its portfolio under control. Ocwen increased staff by another 30 percent in early 2008. More important, Ocwen decided its basic loss mitigation approach needed to be elevated to the next level—and fast. The forbearance plans and the other techniques that enabled the company to lead the industry in containing losses by avoiding foreclosures would no longer be enough. Nonperforming loans now needed to be fundamentally re-underwritten if there would be any hope of arresting delinquencies.

Ocwenknew full well, however, that the success of any loan modification program would be measured on two essential metrics. It would need to be both sustainable in providing reduced monthly payments that homeowners can truly afford and to which they will commit long term, as well as sufficiently scalable to meet the high number of homeowners in distress. Of course, as a third-party servicer, Ocwen also needed to ensure that its modifications were NPV positive for the owner trusts.

So from the outset of the pre-HAMP modification program, and now under HAMP, Ocwen has been working hard to make modifications stick. Ocwen’s technology utilizes advanced optimization models t0 evaluate the best resolution alternatives. Ocwenalso provides one-on-one financial counseling to the homeowner, aided by interactive scripting engines incorporating behavioral science research for more effective communication with distressed borrowers and more lasting resolutions.

PICKING THE RIGHT PEOPLE PAYS OFF

Ocwen’s behavioral science department has also confirmed—through research, testing, and six sigma analytics—the optimal personality traits and cognitive ability to guide the successful hiring and training of its customer care staff. With these tools, Ocwen can bring on high-performing home retention consultants in 90 days or less. Psychology has thus become an integral part of an overall loss mitigation technology platform that is robust, scaleable, and enables Ocwen not only to cure and control delinquencies in its own portfolio, but also to ramp up quickly to deploy additional capacity for third parties.

The effort and investment are paying off. Ocwen modifications’ re-default rate of 25 percent is far lower than the industry average of 50 percent, as reported by the OCC/OTS. According to a mid-2009 Bank of America Mortgage Credit Research Report, Ocwen has the highest industry average of modifying fixed-rate and adjustable-rate subprime mortgages more than 90 days’ delinquent into current, performing loans.

The Ocwen approach has been especially effective within the Treasury Department program. As noted by Professor Alan White, oft-quoted expert on foreclosure prevention and the HAMP program, “Ocwen . . . has converted 89 percent of borrowers who were on temporary modifications in August to permanent mods by November,” while the conversion rate for large banks for the same period ranged from 11 percent to fewer than 1 percent. Ocwen’s pull through of permanent modifications continues to outpace industry by a wide margin according to Treasury’s most recent monthly HAMP report card.

TIGHTENING COMMUNITY TIES

In addition to raising the bar on analytics, capacity, and technology, there are other ways to add scale and sustainability in the servicer-based loan modification process. One is for servicersto work closely withcommunity groups. They can help reach out to distressed homeowners and help them stabilize their finances and communicate with servicers in candid, productive ways. Community and grassroots groups are also good brainstorm partners and allies for servicers when it’s time to call for government action.

Ocwen recently convened more than 30 representatives of grassroots and national housing advocacy organizations for a roundtable discussion to share new ideas and insights related to preventing foreclosures and helping homeowners. The Ocwen and community group representatives agreed upon a number of imperatives that could streamline and accelerate the loan modification drive. The imperatives include:

– Working closely with Treasury to arrive at more flexible guidelines, so more distressed homeowners qualify for mortgage modifications under HAMP;

– Developing a national HAMP awareness and information campaign to increase homeowner outreach;

– Focusing more intensely on homeowners who are unemployed or under-employed and thus need state or federal assistance to qualify for mortgage modifications; and

– Encouraging greater collaboration between servicers and grassroots groups in providing real-time solutions for homeowners, including being more proactive about helping borrowers early on, before they face the prospect of foreclosure.

The National Consumer Law Center underscored an important issue by looking into why foreclosures continue at too rapid a rate and why the loan modification movement seems slow in taking hold. Contrary to its thesis, however, financial incentives do not favor foreclosures over modifications. Modifications, in this environment, are actually good for the servicing business, as well as good for homeowners, communities, and the property market. But servicers must do their part to build the capacity and expertise—or look outside for help.

About the Author:
Paul A. Koches is EVP, general counsel, and secretary of Ocwen Financial Corporation. Koches oversees the legal affairs of the company as well as its government, community, and media relations. Prior to joining Ocwen in 2002, Koches practiced law in Washington, D.C., for over 20 years, most recently as a partner in Arent Fox, LLP. To learn more about Ocwen Financial Corporation, please visit Ocwen.com

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