Richmond VA Real Estate Blog

Short sales are looking more attractive to many members of the real estate market, including “luxury” homeowners who have given up on trying to wait out the market. Increasingly, luxury homes are going for extremely discounted prices as the owners opt to get out rather than leave their homes on the market until they sell. For example, in expensive areas like Nassau County, New York, alone, 22 houses exceeding $1 million are listed as short sales. Richard Halloran, managing broker for Coldwell Banker’s Babylon office, believes that the holdups in foreclosure filings and proceedings are actually helping more homeowners use short sales to get their homes off the market. “With the courts at a standstill…the banks are getting better at doing short sales,” he explains.  Other numbers support Halloran’s hypothesis as well, with Home Affordable Foreclosure Alternatives (HAFA) short sales and deed-in-lieu transactions up 73.7 percent in April over March of this year. The program has received a great deal of criticism for its slow start and low incentives for servicers and investors, but more parties may be interested in “playing” now that other foreclosure routes appear hugely delayed or even closed.

Do you think that it would be a good thing for the real estate market if more short sales were completed?

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Asserting that “the men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully,” the U.S. Department of Justice reached an agreement with Bank of America and Saxon Mortgage that will require BofA to pay $20 million to resolve the lawsuit and Saxon Mortgage Services to pay $2.35 million. Both lenders will also compensate military members who were wrongfully foreclosed on during active duty and provide employees with additional SCRA training to help prevent future mistakes.

Only a federal court can authorize a foreclosure on an active duty military family serving in the Iraq/Afghanistan area. Neither lender notified the military or state courts about foreclosure actions. Both lenders will reimburse families in addition to paying fines and have promised to “inspect bank records of any other active duty military families affected by the corporations’ illegal actions.” Not surprisingly, much of BofA’s troubles in this settlement stem from Countrywide violations. BofA acquired Countrywide in late 2008.

Do you think this settlement will benefit military members or is it too little too late?

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Although April historically has a high increase in loan delinquencies, this year there were fewer new problem loans during this traditionally problematic month. According to a report released by Lender Processing Services (LPS), although April’s increase in delinquencies was, as predicted, the largest yet, the number of delinquencies was more than 25 percent less than was seen at peak in January 2010.  Furthermore, new problem loans are currently at 1.28 percent, which is a three-year low, and foreclosure starts are down nearly 31 percent over March of this year.

Also of note are changes in foreclosure timelines. At the end of April, LPS showed that the average loan in foreclosure was 567 days past due – more than two years. More than a third of loans in foreclosure have not made a payment in over two years.

Do you think that this massively extended foreclosure timeline is a problem?

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If you can’t sell it, rent it or Lease Purchase It (Rent To Own)! That is becoming the mantra of many successful real estate agents around the country who are finding that while the home sales market is a tough one with downward-spiraling commissions and buyers who just can’t finance traditionally, the rental market is starting to boom [1]. In fact, many agents are reporting that their rental clients are often prosperous people who have “one or two houses” already that they just cannot sell, but want or need to change homes without taking on the obligation of an additional mortgage. “I know we’d be selling a lot more houses if people could sell their houses in other parts of the country,” explains one agent, adding that renting will work just fine in the interim.

In Virginia, census data indicates that nearly 25 percent of properties in many areas are being rented rather than purchased by the current residents [2]. In fact, many investors are moving into that market, purchasing homes and renting to tenants who have made verbal and sometimes even contractual agreements to buy sometime in the future. People are “renting at this point to see what happens,” explains one investor, who believes that clients will buy when they think that the market has truly hit bottom and the prices won’t get any better or that they will buy when the job market improves and they are not worried about having to move for work.

Either way, the trend for investors is definitely to own cash-flowing rentals at this point in time, and for would-be buyers to “test the waters” by renting first. Are you involved in rental real estate investments?

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More real estate investors than ever are lying in order to buy houses, according to a recent Fraud Risk Report from Interthinx [1]. According to the report, occupancy fraud risk, which means that the borrower claimed to live in a home in order to get a mortgage or get better terms on a loan, was up 25 percent in the first quarter of 2011. Additionally, there was a dramatic rise in employment/income fraud risk, with five metropolitan statistical areas (MSAs) showing increases in this risk sector of more than 70 percent [2]. Employment/income fraud involves providing misleading information about one’s employment or income.

“Risk is becoming more prevalent across the board,” said Kevin Coop, Interthinx president. He advised lenders to adhere to “strict prefunding fraud detection policies…to keep fraudsters at bay” [3].

Given how important it is to get houses off the market, do you think that lenders should ease up on occupancy requirements?

Let us know what you think about occupancy fraud – is it really a problem as long as people are buying the houses? – in the space below.

[1]http://www.housingwire.com/2011/06/01/interthinx-risk-index-shows-occupancy-fraud-rose-25-in-1q

[2]http://nationalmortgageprofessional.com/news25396/occupancy-fraud-rise-nationwide-according-new-interthinx-report

[3]http://www.businesswire.com/news/home/20110601005688/en/Report-Reveals-Disturbing-Jump-Occupancy-Fraud-Risk

Thank you for reading http://www.RichmondRealEstate411.Com!

Gain access to the hottest deals in the Richmond Virginia Market at http://www.RichmondWeBuyUglyHouses.Com