Foreclosure Scams Are Abundant

Beware if it seems too good to be true…

The US Government Accountability Office (GAO) issued a report in July 2010 that states: "The current foreclosure crisis has provided persons who may perpetrate mortgage foreclosure rescue and loan modification schemes with unprecedented opportunities to profit from homeowners desperate to save their homes.”

The report states that there are two main types of foreclosure rescue and loan modification scams: advance-fee loan modification schemes and sales-leaseback schemes. Advance-fee schemes are the most prevalent. With an advance-fee scheme, the victim gets charged a fee in advance to supposedly negotiate a deal with your mortgage lender. Sometimes they will offer a money-back guarantee. Typically the result is that they take your money (the average being around $3,000), provide little or no service, and then decline to return the fee.

In a sales-leaseback scheme, the scammer convinces you to turn over your deed to them by offering to take over your payments while allowing you to pay rent while you get your affairs in order. They agree to sell the property back to you once your finances improve. This of course never happens. Frequently they’ll even take out another loan on the home or sell it out from under you.

The Federal Trade Commission tells us of a new angle on the advance-fee scam that came to light this year, a "forensic mortgage loan audit." The scammer claims they will find regulatory violations in your mortgage that will assist in avoiding foreclosure or even canceling your loan. There's no proof that anyone has ever modified their loan in this manner.

The FTC has issued some warning signs that at-risk homeowners should beware of when looking for foreclosure help. You should avoid any business that:

• guarantees to stop the foreclosure process – no matter what your circumstances

• instructs you not to contact your lender, lawyer, or credit or housing counselor

• collects a fee before providing you with any services

• accepts payment only by cashier’s check or wire transfer

• encourages you to lease your home so you can buy it back over time

• tells you to make your mortgage payments directly to it, rather than your lender

• tells you to transfer your property deed or title to it

• offers to buy your house for cash at a fixed price that is not set by the housing
market at the time of sale

• offers to fill out paperwork for you

• pressures you to sign paperwork you haven’t had a chance to read thoroughly that you don’t understand.

As always, if you have questions or concerns on these issues, don’t hesitate to contact me. I’m happy to help.

California Housing Inching Toward a Comeback?

Nationally, the housing market is in a hesitant mode. But there is an inkling of constancy starting to surface.

Property values are rising in several areas of the state. The last nine months have experienced increases of 10.4% year-over-year as of July, putting the state's median price at $315,000 – almost two times the median of $183,000 nationally.

Coastal cities are showing even better gains.

The largest gain of any U.S. city in the past year was in San Francisco, rising
14.3%. The median price there is currently over $607,000. San Diego has seen an increase of 11.2% (median price: $389,000) and L. A. had a 9.2% leap (median price: $345,000). Florida, Arizona and Nevada remain in a struggle.

Locally in Ventura County real estate, the current median price for residential sales is up to $385,000 for the last twelve months over the previous twelve month median of $365,000.

Leslie Appleton-Young, California Association of Realtors' chief economist, feels our strength is related to the speed at which prices “went down so far and so quick”. “That left a lot of people here saying, 'Wow, affordable California housing.'"

The deluge of foreclosures accompanying the mortgage meltdown stalled a rapid home price recovery. Real estate in California had out-priced itself so much that many buyers were willing to over extend themselves with exotic loan programs for fear of not ever getting into a home.

While we’re all waiting to see how the foreclosure moratorium (or absence thereof) will affect the market, California is still one of the world’s 10 biggest economies, bolstered by tourism, aerospace, finance, agriculture, software and more. The recovery of these industries will drive the demand for housing.

Plus, the California economy is picking up, albeit slowly. Even in a recession, it has remained one of the world's 10 largest economies, mainly because it is driven by every major industry -- aerospace, tech, software, finance, agriculture, tourism. So as more of those industries recover and employment picks up, demand for housing will jump.

California is seen as a trend setter so any glimmers of hope are potentially a catalyst for better times across the coast. For home sellers in other states, what's happening in California is encouraging. Trends often begin on the coast, so they're hoping the recovery will roll eastward.

Update on National First Look Program

It was announced today that there has been $1 billion earmarked by the Obama Administration to fund foreclosure torn neighborhoods.

“These grants will support local efforts to reverse the effects these foreclosed properties have on their surrounding neighborhoods,” said Donovan. “We want to make certain that we target these funds to those places with especially high foreclosure activity so we can help turn the tide in our battle against abandonment and blight. As a direct result of the leadership provided by Senator Chris Dodd and Congressman Barney Frank, who played key roles in winning approval for these funds, we will be able to make investments that will reduce blight, bolster neighboring home values, create jobs and produce affordable housing.”

These grants can be used by state and local governments to purchase property for improvement or demolition. Additionally, low to moderate income buyers can apply for funds to use for down payment or closing cost assistance. There will be a notice published soon with guidelines for the application process and program design.

Counseling will be provided to families receiving the assistance in hopes of preventing future foreclosures. Just as importantly, the lender involved will have to adhere to ethical lending practices.

For more information, visit www.hud.gov.

HUD Announces National First Look Program

The Department of Housing and Urban Development has announced a new program which includes parts of California.

The National First Look Program is the first time there has been an agreement between public and private entities (HUD and the National Community Stabilization Trust). It's purpose is to give communities participating in HUD's Neighborhood Stabilization Program an initial opportunity (or first right of refusal) to buy properties that have been foreclosed on in designated areas so the homes can be rehabilitated, rented, resold, or demolished instead of falling into disrepair.

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-187

At first blush this seems like a great idea. I have to question where the local governments would get the money from to purchase these homes since most have had to cut way back on expenditures in the last few years. I personally would rather have Station 4 in Ventura open again...

What’s Really Happening in the Housing Market?

During the Great Depression the primary means of reporting news was simply printed news and radio. Now we’re bombarded non stop (if we allow it) with a stream of news and communication from the time we wake to the time we hit the pillow.

TV, radio, laptops, Ipads, Blackberries, Facebook, Twitter and on and on. Instant and constant input is de rigueur. Times were pretty rugged back then. One has to ponder if communications were then what they are now if the entirety of our nation would have vaporized under the pressure.

Let’s face it, bad news sells. Times are tough and “they” love to talk about it. But you can look at the glass half empty or half full. We anticipated some consequences when the tax credit expired.

Realtors’ association economist Lawrence Yun has spoken of the current downturn, but presents another viewpoint as well. “Since May, after the April 30th deadline, contract signings have been notably lower,” he said, “and a pause period for home sales is likely to last through September.”

Still, Yun said, it’s anticipated that annual sales will approach five million in 2010 due to robust sales in the first part of the year. “To place that in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years.”

As a result of the tax credit, there has been stabilization in home values for 18 months, Yun said.

Additionally, recently released data from the S & P/ Case-Shiller Home Price Index showed a 3.6% increase in national home prices in the last year.
"While the numbers are upbeat, other more recent data on home sales and mortgages point to fewer gains ahead," states David M. Blitzer, chairman of the Index Committee at Standard & Poor's. "Even with concerns about near term developments, we recognize that the housing market is in better shape than this time last year."

Locally, in Ventura County, we’ve experienced some slowing since the end of the tax credit. However, there was actually an increase in closed sales sales with 4871 in the last six months over 4548 in the previous six months.

Historically low interest rates and stabilized home values make a compelling case for purchasing property at this time. The window of opportunity is there. Let me know if I can help open it!