Home Buyers Pointers

Changes at Fannie May & Freddie Mac

There were some changes announced today by the Federal Housing Finance Agency (FHFA) that will align guidelines for Fannie Mae and Freddie Mac short sales and allow lenders and servicers to quickly and more easily qualify borrowers for a short sale. 

Here are some specific changes that are effective Nov. 1, 2012:

• Eliminates current Fannie Mae and Freddie Mac short sale programs and creates a single standard short sale process for both entities (Fannie and Freddie HAFA programs will expire at the end of the year).

• Enables servicers to quickly and easily qualify certain borrowers who are current on their mortgages for short sales without waiting for an approval from Fannie Mae or Freddie Mac

• Offers special treatment for military personnel with Permanent Change of Station (PCS) orders.

• Standardizes and clarifies foreclosure suspensions on a property with an approved short sale.

• May pay borrowers up to $3,000 in relocation assistance.

• Fannie Mae and Freddie Mac will offer up to $6,000 to subordinate lien holders to expedite a short sale.

Additionally, FHFA clarified that a borrower experiencing a hardship must wait at least two years before becoming eligible for a new Fannie Mae or Freddie Mac loan.

These changes follow FHFA’s announcement in June that established strict timelines for servicers to respond to short sales within 30 days of receipt of a short sale offer, provide weekly status updates to the borrower, and communicate a final decision to the borrower within 60 days of receipt of the offer.

For details of Fannie Mae’s new short sale guidelines.

For details of Freddie Mac’s new short sale guidelines.

Single Family Home for RENT

Avoid Real Estate Fraud

Contact the Santa Clara County Real Estate Fraud office at 408-808-3754.

Foreclosures & Short Sales Explained

This is thought provoking.

The Home Buying Process Infographic

Oregon Senator Steps Up with Plan for Underwater Borrowers

By Gino Blefari

President & CEO

Intero Real Estate Services, Inc.

A new rescue plan is on the table for underwater borrowers. Oregon Senator Jeff Merkley submitted a new plan last week for the government to buy up to 8 million underwater mortgages and refinance them into lower interest rates.

Merkley says that the lack of a robust program that enables large numbers of American families who are trapped in high-interest loans to refinance hurts not only the individual borrowers, but also the communities and economy at large.

In a paper announcing the plan, the Senator details how a Rebuilding American Homeownership Trust could be built under either the Federal Housing Administration, the Federal Reserve or the Federal Home Loan Banks system. He says this trust would sell bonds and use the proceeds to purchase mortgages from originators.

Merkley says the RAH program is "designed to be a modern version of President Franklin D. Roosevelt's Home Owners' Loan Corp." Qualifying homeowners who are current on their mortgages would have three options for new mortgages: one that helps to speed the rebuilding of equity; one that lowers monthly payments; and one that provides even more flexibility through a two-part "soft second" mortgage.

Merkley's plan would not require use of taxpayer dollars – an appealing proposition no matter what side of the political debate you sit on. In fact, as laid out, Merkley explains how the plan would actually turn a profit in the future. I'm not going to get too far into the details here, but suggest checking out the full plan as laid out in the paper at this link (scroll to the bottom for the link to download the full paper).

All politics aside, I do think Merkley is onto something here. The fact that one-fifth of American homeowners is underwater has a lot of implications for the future of the market. Without equity, these homeowners can't refinance under the current system. With negative equity, they can't even sell. Their options are to try to sell short, strategically default, or stay put and bear the punishment of being caught up in a housing market that seemed to defy reality.

Negative equity is bad for the housing market and economy as a whole. It's definitely bad for individual communities where it's rampant. Imagine a market where either no one is selling because they can't, or in which every sale is either short or a foreclosure. How can that possibly be better than what Merkley is proposing?

Not sure I could even say this better myself, but in his paper, Merkley states: "America moved boldly and generously to rescue Wall Street and the auto industry. Let's move boldly to restore the wealth-building power of homeownership for America's families!"

What do you think?

3 Big Predictions for Real Estate

Here's a link to an article generated as a result of a panel discussion that kicked off Inman's Real Estate Connect event yesterday morning in San Francisco. The session, moderated by Inman News founder Brad Inman, featured experts from the worlds of real estate and finance. Here were some of the most important forecasts for the real estate industry:  3 Big Predictions for Real Estate.

Infographic: California Median Home Prices by County



Housing Roundup: Home Values Up; Investors Eye Residential Real Estate

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

A lot of positive statistics about housing were released this past week, including stronger prices and values. In addition, two unrelated reports showed some other interesting happenings in real estate: foreign buyers seem to be showing a loss in appetite for U.S. homes, while Wall Street investors are hungrier than ever.

Sales fall with tight supply
Total existing home sales declined 5.4% in June from May, but were 4.5% higher than in June a year ago, according to stats from the National Association of Realtors. Lower inventory has likely caused some of the decline, NAR said.

Home prices and values rise
While sales fell in June from May, the good news is that home prices were up. The national median existing-home price was $189,400 in June, up 7.9% from a year ago, according to NAR. This marks four monthly price increases from a year earlier, and June's gain was the strongest since February 2006 when the median price rose 8.7% from the previous year.

Zillow's home value report released this week also showed its first annual increase in nearly five years. U.S. home values rose 0.2% in the second quarter this year from the same quarter a year ago, Zillow said. Median home values rose for four consecutive months, causing Zillow to declare a bottom in values.

Foreign buyers lose interest
Trulia reports this week that online searches for U.S. homes from buyers abroad fell nearly 10% in the past year. Miami topped the list of most searched cities by foreigners, though traffic from abroad for that city fell to 15.7% during the second quarter of this year from 16.3% the same period last year.

Wall Street invests in foreclosures
A Fortune report reveals that, in the past six months, a number of investment firms, hedge funds, private equity partnerships and real estate investors have been snapping up single-family foreclosure homes as part of their portfolios.

Private equity firm Blackstone Group now owns 2,000 single-family homes, totaling about $300 million in value. It's a small slice compared to the mega-firm's overall real estate portfolio of about $50 billion, but it's one of the largest pools of homes every intentionally put together by an institutional investor, according to the Fortune report. (Note: Banks and Fannie and Freddie have a much larger pool, of course, but that's a different situation.)

Fortune notes there are likely more and even larger investment portfolios of residential real estate out there.

This latest housing investment discovery is noteworthy because it's unusual. Normally, investors of residential real estate tend to be smaller mom-and-pop shops or single investors who then fix up and manage the properties themselves. Institutional investors like Blackstone historically have focused on apartment buildings and commercial properties like office parks and malls.

Yes, the times they are a-changing.