Archives for April 2010

Greenspan: Housing Will Come Back

Okay, I have taken the time to summarize the latest in real estate news…. Call me with any questions, Kurt Galitski- your source in real… real estate news.


Former Federal Reserve Chair Alan Greenspan told officials in Mexico on Wednesday that he believes U.S. home prices have hit bottom. However, home owners are still unnerved by the decline in value, and until prices stabilize, the economy will remain weak.

“We will not be out of this crisis until home prices truly stabilize in the United States. They appear to have stabilized, but they are very fragile,” Greenspan said in a televised interview.

“Eventually housing will come back; it can’t get any lower,” he added.

Source: Reuters News (03/25/2010)
Housing and jobs must stabilize before we truly see our way out of our economic woes.

Markets Where Home Prices Could Rise Most
Money Magazine has released its latest home-price projections for the country’s largest metropolitan areas. Here are the 10 cities where it believes home prices will rise the most in the next year, and the 10 where it foresees the most substantial declines:

Where prices will rise:

• Santa Rosa, Calif., 6.0 percent
• Cheyenne, Wyo., 4.7 percent
• Kennewick, Wash., 4.6 percent
• Merced, Calif., 4.4 percent
• Bremerton, Wash., 4.2 percent
• Fairbanks, Alaska, 4.2 percent
• Corvallis, Ore., 4.1 percent
• Tacoma, Wash., 3.9 percent
• Anchorage, Alaska, 3.8 percent
• Bend, Ore., 3.3 percent

Where prices will decline:

• Miami, -22.5 percent
• Fort Lauderdale, Fla., -21.3 percent
• West Palm Beach, Fla., -18.5 percent
• Phoenix, -18.5 percent
• Las Vegas, -15.4 percent
• Tampa, -13.8 percent
• Pensacola, Fla., -13.6 percent
• Gainesville, Fla., -13.4 percent
• Suffolk, N.Y., -13.4 percent
• New York City, -12.9 percent

Source: Money Magazine (03/20/2010)
Nice to see some California cities on the expected to rise list. Some of the other sand States (Arizona, Nevada and Florida) have cities that are expected to continue to decline. Where is the bottom for them?

Investors to Pick Up Slack in Mortgage Backs
The Federal Reserve ends its purchase of mortgage securities this week and private investors are expected to step in.

The change probably won’t push mortgage rates up very much. Analysts expect they will rise less than a quarter of a percentage point in the next three months. That gain would increase a monthly payment on a $250,000 mortgage by $30.

In a statement released March 12, Freddie Mac predicted that mortgage rates would average 5.2 percent on a 30-year fixed loan after the Fed stops buying. Fannie Mae put the rate slightly higher at 5.13 percent.

Source: Bloomberg, Kathleen M. Howley (03/30/2010)
Keep an eye on this. My best guess would be that we will see higher rate increases then this article predicts.

Bank of America makes major step to right troubled mortgages, will reduce some loan principal
CHARLOTTE, N.C. (AP) — Bank of America is taking a major step to help some of its most troubled mortgage borrowers. The bank says it will forgive up to 30 percent of some customers’ loan principal.

The bank has said Wednesday it will start forgiving principal for homeowners who owe more than 120 percent of their home’s value. The plan, to begin in May, is among the first by a U.S. mortgage lender that takes a systematic approach to reducing mortgage principal when home values drop well below the amount owed. The effort is aimed at preventing foreclosures. Bank of America, based in Charlotte, N.C., is the largest mortgage servicer in the country. Ieva M. Augstums, AP Business Writer, On Wednesday March 24, 2010, 11:40 am EDT
Who will be the next bank to follow suite? When someone has a good idea, others like to copy it.

Wells Fargo Will Modify Second Mortgages
Wells Fargo & Co. has joined Bank of America Corp. as the first two banks to sign onto the federal government’s program to modify second mortgages.

Under the government’s plan, borrowers who have been extended loan modifications on first mortgages can now apply to reduce their second mortgages.

Analysts say banks have been reluctant to adopt this part of the government’s loan modification program because they continue to hold most second mortgages and forgiving them will be costly.

Source: The Associated Press (03/17/2010)
Same comment here…Who will be the next bank to follow suite? It makes sense for banks to modify instead of charging off and it going to a collection agency.

Loan Changes Could Alter Market
The FHA’s move to raise upfront mortgage insurance premiums takes effect next week, soon to be followed by a reduction in allowable seller concessions toward a borrower’s closing costs.

Speaking to a Housing Financial Services subcommittee earlier in March, MBA President John Courson expressed concern that “this could be another policy change that would have an adverse effect on the population that traditionally has sought FHA’s assistance to purchase a home.” He added that the cut in seller concessions would largely affect low-to-moderate, first-time, and minority home buyers.

Source: Memphis Daily News, Eric Smith (03/30/10)
FHA raises their Upfront Mortgage Premium from 1.75% to 2.25%. FHA loans remain a tremendous tool for buyers who can afford the mortgage payment, but don’t have much money to put towards a down payment. This should not hurt too much.

Survey Shows Frustration With HAMP
Real estate practitioners mostly gave the Obama administration’s Home Affordable Modification Program (HAMP) a thumbs-down, according to a report from Market Pulse Survey for Homes & Land.

Only 10 percent of the respondents — 51 percent of whom had been in the business for at least 10 years — believed the administration’s program had done any good. Sixty-five percent said they didn’t think the program was working; and the remaining 25 percent weren’t sure.

“Clearly respondents to our survey don’t believe this program is helping to reduce foreclosures,” says Eric Adair, business development analyst for Homes & Land.

Source: Inman News (03/03/2010)
Foreclosure inventory is increasing, see below. HAMP is not working.

Foreclosure Inventory Is Increasing
The inventory of foreclosed homes that banks are sitting on is rising, threatening to push home prices down further in some parts of the country.

Analysts at Barclays Capital estimated that banks and mortgage investors held about 645,800 foreclosed homes in January, up 4.6 percent from December. That is down significantly from the peak of 845,000 in November 2008.

States with the largest number of foreclosures are Florida, Arizona, Nevada, California, and Michigan.

Source: The Wall Street Journal, James R. Hagerty (03/19/2010)
Just how big is the shadow inventory? A recent study indicated it was over seven million units, which is well over a full year’s supply at current levels. Only five years ago, the shadow inventory level was just over one million units.

HARP Receives a One-Year Extension
The Home Affordable Refinance Program (HARP), which was supposed to expire June 10, will be extended for another year, the Federal Housing Finance Agency said in a statement.

Since HARP began last April, it has refinanced 190,180 mortgages. It is administered by Fannie Mae and Freddie Mac and aimed at borrowers with little or no equity in their homes.

This program is a sister to Home Affordable Modification Program (HAMP), which was severely criticized by Congress last week for failing to help enough struggling home owners.

Source: Reuters News, Corbett B. Daley (03/01/2010)
That’s a far cry from helping the 4-5 million homeowners that the program originally promised. Another flawed Government program.

Option-ARM Rates Could Spike
Option-ARM loans represent fewer than 2 percent of all home loans, but those loans add up to nearly $300 billion because they were written to finance pricey homes, according to research firm First American CoreLogic.

So far, rates on many option ARMs haven’t risen because overall interest rates have stayed low. But if actions by the Federal Reserve push rates up, then option ARMs will go up as well.

Unless these option ARMS are quickly restructured, a large share of these borrowers will walk away, says Paul Leonard, director of the Center for Responsible Lending’s California office.

Source: Los Angeles Times, E. Scott Reckard (03/20/2010)
$300 billion is huge money any way you slice it. If these loans are not restructured (and most will not be) more people will walk away and the 1+ year of shadow inventory mentioned above will be pushed substantially higher.

Home Equity Loans Available Again
Banks are again offering home equity loans.

Lenders are expected to make about $36 billion in new home equity loans over the next year, according to Moody’s Economy.com. That’s actually more than the $34 billion in home equity loans made in 2008.

The difference will be the way the money is spent, says Frank Nothaft, chief economist at Freddie Mac. Most of it will go for necessary home improvements. “Consumers are better at managing their own personal balance sheet as a result of the difficult recession we went through,” Nothaft says.

Source: Bloomberg, Kathleen M. Howley, Prashant Gopal, John Gittelsohn (03/11/2010)
Yeah! Some good news. Banks are offering HELOCs again and look for them to start offering them in first position soon.

Interest Rate Update
Mortgage Type         Interest Rate             APR
30 Year Fixed         4.750%                    4.969%
15 Year Fixed         4.125%                    4.499%
5/1 LIBOR ARM      3.375%                3.577%

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Navigating Short Sales:

What to Do When the Sale Price Leaves You Short

If you’re thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won’t cover your total mortgage obligation and closing costs, and you don’t have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as:

• Refinancing your loan at a lower interest rate
• Providing a different payment plan to help you get caught up
• Providing a forbearance period if your situation is temporary

When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if

• Your property is worth less than the total mortgage you owe on it.
• You have a financial hardship, such as a job loss or major medical bills.
• You have contacted your lender and it is willing to entertain a short sale.

2. Hire a qualified team like The Kurt Real Estate Group. The first step to a short sale is to hire a qualified real estate professional like Kurt Galitski and The Kurt Real Estate Group and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won’t try to take advantage of your situation or pressure you to do something that isn’t in your best interest. Kurt is California Certified in Distressed Sales.

Kurt and his highly trained team at The Kurt Real Estate Group will:

• Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
• Help you set an appropriate listing price for your home, market the home, and get it sold.
• Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
• Ease the process of working with your lender or lenders.
• Negotiate the contract with the buyers.
• Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

3. Kurt will help you with gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include

• A hardship letter detailing your financial situation and why you need the short sale
• A copy of the purchase contract and listing agreement
• Proof of your income and assets
• Copies of your federal income tax returns for the past two years

4. Kurt will prepare buyers for a lengthy waiting period. Even if you’re well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take several weeks to months. Some experts say:

• If you have only one mortgage, the review can take about two months.
• With a first and second mortgage with the same lender, the review can take about three months.
• With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

5. Don’t expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

• You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can’t pay back the balance, talk with your real estate attorney about your options.

• Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.

• Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

For more information and a priority consultation with Kurt Galitski please call him today.

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New Mesa Verde Listing Open House Today and Saturday

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1st Annual Free Costa Mesa Shred Day a Huge Success!

Kurt Galitski of the Kurt Real Estate Group and Weichaman Associates-Realtors Held their First Annual

Free Shred Day Today. It was a huge success! Not only were there 100’s of past, present and future clients

waiting in line a 8:30am to shred their personal documents, and protect their identity, but we also processed

and saved over four tons of paper from going to the dump! We are already working on planning next year’s

event and how to make it even better. Special thanks to all my past clients for taking part. Looking forward

to seeing you at next year’s event.

Kurt Helps to Load 4 tons of Documents   for 100’s of past clients who show up.

On your team,

Kurt Galitski

The Kurt Real Estate Group

Orange County Distressed Properties

Vice President, Weichman Associates- Realtors

714-957-6677

Ca Broker- 01348644

Posted via email from The Kurt Real Estate Group

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Free Shred Day!

Free Shred Day!
Go Green. Cut the clutter. Prevent Identity Theft.
9 am – 11 am, April 17, 2010
1525 Mesa Verde Dr. East, Costa Mesa
Sponsored by: Weichman Associates-Realtors in
Association with Costa Mesa Chamber of Commerce
and Mesa Verde Plaza
A free service for our friends, colleagues and neighbors in Costa Mesa

Bring your old files, documents, bank statements or any confidential material which needs to be securely shredded to our Community Sred Day. We will have a mobile, self-contained, state-of-the-art shredding truck parked at Weichman Realtors parking lot in Costa Mesa. You may bring the materials in any sort of bag, box or container. Only the contents will be shredded. There is no need to remove staples, rubber bands or paper clips. Shredding is done automatically, inside the truck, and the entire process is protected. A Certificate of Destruction will be provided. The destroyed materials are safely recycled.

On your team,

Kurt Galitski

The Kurt Real Estate Group

Orange County Distressed Properties

Vice President, Weichman Associates- Realtors

714-957-6677

Ca Broker- 01348644

Posted via email from The Kurt Real Estate Group

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