"Banks don’t want your house; they want your money. They want to work with you so you can keep your house. With the market like it is, lenders don’t want to foreclose on you."

    If this were genuinely the case, why is there such an onslaught of REO homes nowadays?  I think it’s a genuine sentiment, but the current mortgage problems like this are occurring anyways, and people, particularly those at risk of foreclosure, need to understand this!

    I cannot stress enough how important constant communication with your lender is when you are facing a risk of foreclosure.  Banks are becoming more and more flexible with homeowners (finally), but the reality is that if there’s ANY possibility of getting the note renegotiated, or getting the house sold before foreclosure, why WOULDN’T you try?

    Banks ARE negotiating on a case by case basis, and it’s worth the attempt.  As the Washington Post article noted, the banks are likely to take a loss once they’ve foreclosed, so why not negotiate NOW to help minimize their loss AND avoid the credit damage and humiliation involved with being forcibly evicted from your home through foreclosure?

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Waldorf and Southern Maryland Real Estate
www.teambenya.com

    Here’s what was announced on the AP News Wire:

Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under an initiative the Bush administration announced Tuesday.

Dubbed "Project Lifeline," the program will be available to people who have taken out all types of mortgages, not just the high-cost sub-prime loans that have been the focus of previous relief efforts.

The program was put together by six of the nation’s largest financial institutions, which service almost 50 percent of the nation’s mortgages.

These lenders say they will contact homeowners who are 90 or more days overdue on their monthly mortgage payments. The homeowners will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders try to work out a way to make the mortgage more affordable to homeowners.

"Project Lifeline is a valuable response, literally a lifeline, for people on the brink of the final steps in foreclosure," Housing and Urban Development Secretary Alphonso Jackson said at a joint news conference with Treasury Secretary Henry Paulson.

In coming days, lenders will begin sending letters to homeowners who might qualify for the new program. Homeowners won’t qualify if they have entered bankruptcy, if they already have a foreclosure date within 30 days, or if the home loan was taken out to cover an investment property or a vacation home.

   
Ah, there it is…. the stipulations!  Remember the issues with "Hope Now"?  Well, we’ve got the same problems here.  Are you less than 30 days behind?  Don’t bother calling, you’re not in enough trouble yet as far as they’re concerned. 

    Is your foreclosure date less than 30 days away?  OOPS, tough luck for you, too!  If the home is Vacant, Secondary, or Investment, you can’t use this program, either.  Oh, and it’s only a partnership with 6 different financial institutions, so what happens if they’re not the ones holding the note?

    So let’s say you do meet the criteria, what the heck can this program actually do for you?!?  Well, it gives them the chance to "freeze" the foreclosure for 30 days while you try to work with the lender to make the mortgage more affordable.

    Let’s see here…..  You’re 90+ days late on your mortgage, you credit score is getting tanked by the lender, and they’re going to hold off on taking your home for 30 days to help you refinance into an affordable note?!?  It seems to me that anyone in this situation is going to have a tough time trying to refi because the foreclosure is beating up their credit score and debt to income ratio (DTI)!

    It sounds to me like this is another crappy plan with a very limited scope.  It feels like lenders and the government are rolling out initiatives like this one and Hope Now to improve their poor public image.  If you want to help consumers, great, but DO IT!  Don’t keep rolling out plans that are so limited and complicated that makes the plan so difficult to use. 

    I don’t like the idea of spending time and money to craft complicated programs that won’t make a significant impact.  That money could be far better spent help people avoid falling behind in the first place, but nobody’s managed to roll out that plan yet.  On second thought, if a plan were to be developed to help prevent delinquency, the eligibility requirements would probably be just as limited as the current plans.  Maybe the next plan should be for Red-headed lefties between 5’10" and 6’2" and a slight lisp!  You might just be able to get more people to qualify that way!

~Jonathan Benya
Century 21 New Millennium
9405-A Chesapeake St
La Plata, MD 20646
301-609-9000
301-653-8116
Waldorf and Southern Maryland Real Estate
Southern Maryland Real Estate Blog

At any rate, another Realtor has just made my list of Loony News Stories,  This time from Miami.  Turns out getting a deal to the closing table there is harder than the DC area!  The story goes something like this:

Realtor X is trying get a house sold, and in walks Realtor Z with a contract on the same property.  Realtor Z gets the house sold, and Realtor X makes no commission, which apparently upsets him.  A LOT.

Realtor X then supposedly decides that working on putting another transaction together to bring home the bacon doesn’t make sense.  Instead, he decides that revenge makes more sense, and what better way to get revenge than to post Realtor Z’s phone # on Craigslist as part of a phone Escort Service.

Realtor Z gets TON’s of phone calls, nearly has a nervous breakdown, and calls the cops.  The cops, who apparently do not look lightly on these sort of shenanigans, track down the ISP address of the lister, and it traces back to Realtor X, who is then arrested.

It wasn’t enough to post just one ad, though.  No, there were 26 different ads posted on-line, all with Realtor Z’s #, so both her and her 11 year old daughter had a field day taking calls from perverts looking for a good time.

So X’s gets booked, posts bond, and his lawyer expects the charges to be "significantly reduced".  Sounds like an incredibly sad situation, and an embarrassment to Realtor’s everywhere.  Here’s hoping a swift resolution (and a swift kick in the pants!) is coming soon.

~Jonathan Benya
Website
Blogsite

    Yesterday, President Bush signed H.R. 3648, The Mortgage Forgiveness Act of 2007, into law, sparing homeowners the tax burden associated with canceled mortgage debt.

    Prior to this
action, forgiven mortgage debt due to foreclosure, short sale, or deed
in lieu of foreclosure, was considered taxable income. The new law,
however, temporarily waives these taxes for debts forgiven (as high as
35%) from the beginning of 2007 to the end of 2009. The bill also
extends the tax deduction for mortgage insurance premiums through 2014.

    "This is going to
make a happy holiday for many homeowners," President Bush said
yesterday before signing the bill in to law. During the press
conference he added the following:

     "When you’re
worried about making your payments, higher taxes are the last thing you
need to worry about. So this bill will create a three-year window for
homeowners to refinance their mortgage and pay no taxes on any debt
forgiveness that they receive. And it’s a really good piece of
legislation. The provision will increase the incentive for borrowers
and lenders to work together to refinance loans – and it will allow
American families to secure lower mortgage payments without facing
higher taxes."

    "There’s more
work to be done," Bush added, saying that Congress needs to pass
legislation to strengthen Freddie Mac and Fannie Mae, to modernize FHA,
and to allow the government to issue tax-exempt bonds for refinancing
existing home loans.

    It’s still anyone’s guess as to how much tax relief this is going to provide nationally, but the tax debt relief is definitely going to be huge.  not only that, this may provide people with more room to negotiate on trying to get out from under than mortgage before the bank takes their home.

Here’s the back story:  Vick sold the home for $450,000 to a real estate investor shortly after pleading guilty
to dog fighting charges.  The investor, Wilbur Ray Todd Jr., spent roughly $50,000 according to his estimates on repairs related to vandals and looters, and then placed the home up for sale at auction, hoping that the property’s notoriety would fuel bidding.

So….. $500,000 invested, plus taxes, title, recording fees, commission, etc. and when the home comes up to auction, the bidding stops at $747,000, which just happened to be the tax assessed value of the home.  Turns out that the price wasn’t enough to buy it, and the house was not sold.

This means that a profit of close to $250,000 minus the prior fees was not enough.  Mr. Todd said that 1915 Moonlight Rd. is the most famous address in America right now (Funny, I thought that distinction was held by 1600 Pennsylvania Avenue…), but really the sale (or lack thereof) of this property brings up an interesting property concern.  Stigmatization.

Obviously, there are individuals who were willing to pay up to $747,000 for the home.  The estimated value of the property is somewhere in the million dollar range, but would you want to live in a home with a past such as this one?  It’s an easy answer for me, but what about for you?  Would you be willing to live in a home that has had so much media attention, where a major dog fighting enterprise existed (and evidence of it still remains), and where dogs were willfully executed?

It seems that young Ms. Isabelle Johnston, age 7, was premiering on stage in her first performance with the ballet that night, and her father, Marine Lt. Col. Frank Johnston, was not in attendance on her big night because he is currently in Iraq, serving our country.

Lt. Col. Johnston contacted TWB and asked if there was any way they could tape the performance so that he would be able to watch the performance at some point.  In response, TWB got in touch with NBC-4 and arranged to have the performance taped live, and then the footage is being transferred for world-wide broadcast on the pentagon channel so that our armed forces stationed around the globe can see Washington’s patriotic take on the classic production(as well as enjoy Ms. Johnston’s stage debut!).

As Mr. Weber made the announcement to the audience, he read a letter written by Lt. Col. Johnston:

"I am eternally grateful for the opportunity to see a new ‘first’ in the life of my daughter, Isabelle, while deployed overseas," says Lt. Col. Johnston. "Thank you, DC, for bringing a piece of America to me and my fellow service members deployed during the holidays. I will watch this show as a father but also as a representative for all the other fathers and mothers deployed overseas this Christmas season that will miss many other firsts — the first birth of a son or daughter, first steps of a newborn, the first tooth of a growing child. The price of duty and service to our country is indeed great, especially during the holidays. Thank you all, each and every one of you, for the incredible support you are providing to us overseas. It is reassuring to know America has not forgotten those deployed in harm’s way."

Congratulations to young Ms. Johnston on her wonderful debut performance, Her family on their dedication and perseverance, and The Washington Ballet for helping a father enjoy a pivotal moment in his daughters life.

As a side note, thank you to Lt. Col. Frank Johnston for defending this great nation that we call home, our nation owes you the deepest gratitude for the sacrifices you make to keep our country safe.

~Jonathan Benya

Century 21 New Millennium Team Benya

Website

Blogsite

LINK TO PLAYBILL ARTICLE

LINK TO WASHINGTON POST ARTICLE

    The New York Times has a good article discussing the widely varying views concerning the new proposal.  Let me first give a brief description of the plan Bush announced to help bailout homeowners.  This proposal will only work for homeowners who:

•     Took out their loan between January 2005 and July 2007 and whose rates are set to increase between January of 2008 and July of 2010
• Have less than 3% equity in their homes
• Are current on their payments (or no more than 60 days behind)
• Are able to handle their current lower rate, but will not be able to handle a higher payment.

    Why this plan makes sense:

• An estimated 250,000-360,000 homeowners may now be able to avoid foreclosure
• It is being industry-led, not government mandated, meaning each lender can set their own criteria for approval
• Bank losses are estimated to be 40%-50% on a foreclosure, this should help reduce their red-ink margins

    Why this plan doesn’t make sense:

• People deemed to be hopelessly in debt may not be qualified by their lender
• People with higher credit scores may be deemed ineligible because of their higher credit rating
• The plan is seen by many as a type of reward to people who spent beyond their means, and could encourage reckless spending
• Investors are unhappy with increased income returns being frozen
• The plan is voluntary rather than government mandated, meaning investors can choose to not participate in the program.

I’m sure there’s going to be plenty of debate for weeks to come on this plan, but until we have a better idea of how many people will be affected, it’s very hard to say how good this is for the homeowners and how bad it is for the investors.  I admit I’m a bit of a bleeding heart, and right or wrong, I think any help like this to homeowners is a positive step.

P.S.-  To Mr. George Bush, who made the lender announcement publicly in an attempt to improve his administration’s image;  Get your facts right before you announce a new initiative like this!

     Wow, this has been an incredibly difficult year to try selling a home!  As I’ve mentioned in previous blogs, Countrywide Home Loans was the first to take action to help ease consumer strain and keep people from being foreclosed on.  It may be to early to tell, but it looks like we’re starting to see signs of stabilization in the local market, hopefully other lenders will contribute further and help ensure market stability.

What Looks Good:

     The average number of days on market (DOM) in Charles County, MD has actually declined!  DOM actually fell from 118 days to 115 days.  This doesn’t mean that houses are moving any better on the marketplace, however, simply that the average time on market until it is sold/rented/withdrawn has been reduced.

     The number of homes available for sale on the market in Charles County, MD has gone down!  Traditionally the coming of the holiday season means a gross reduction in the number of people who are trying to sell as well as looking to buy.  Often times shopping for a home around Christmas means that there is a strong potential to get a better deal, but moving when there is snow on the ground is difficult and inconvenient, so many people opt to wait for better weather.

     Number of sales for October did not see significant decline! This is very important.  Month after month we have seen a decline in the number of sales locally.  The fact that we are seeing a possibility of leveling out may indicate a trend towards improvement, but don’t expect to see significant improvement before May ’08, and definitely not to the robust sales and gains we saw from 2003-2006!

    Number of pending sales for the month of October have increased!  This is the first increase in pending sales that we’ve seen since February!  Traditionally from February on through July/August, real estate pending sales trend upwards and then downwards in the fall.  It’s too early to tell what the impact will be, but seeing a rise in pending transactions right now is very good news.

What Needs Improvement:

     Sales are currently at their lowest point in the past six years. Meanwhile, we
haven’t seen the direct holiday season impact yet (December is usually
the worst month of the year for real estate sales)!  What is promising about this is that pending sales are up, contrary to traditional market trends.  At best right now I think we’re hoping to see the market remain like this until the spring, but I suspect that we’re going to see further decline through the holidays, which is going to further frustrate homeowners and further depress housing prices.

Wrap-up- What Does This Mean?

     Essentially, it means that the market is still in very rough shape and is going to need time to work itself out.  We’re not looking at a 3 month or 6 month turnaround here, and we’re not going to see another big boom like we were in for a very long time, possibly decades. 

     For Homeowners, I suspect you are going to find that the market continues to decline, perhaps as low as 15% from 2006 sales values once all is said and done. If you’re trying to sell your home right now, I highly recommend you actually go out, view your competition, and try to assess the value of the other homes your potential buyers will be seeing. 

     Also, make sure that your agent is being aggressive in trying to get your home sold!  Agents are having a very hard time, our marketing costs have easily tripled because we’re fighting to make sure our listings are actually seen!  Part-Time agents and small-volume agents are hit especially hard because there’s so much less selling right now, so choose your agent carefully.

    For Home Buyers, if you’re waiting for the market to bottom out before you jump in, be very cautious about how you do it.  Yes, Values are down 8%-10%, and they may go as low as 14%-15%, or the may not.  Also, rates are very low, and they may or may not go down as well, but keep in mind that the last time the rates dropped, the lending criteria went up, making it harder to get the same deal on your loan despite a drop in prime rates!

     Lenders are more cautious now, as they should be, but you don’t want to hold out to save another $10,000 on the price of the home if the monthly payment is going to be the same (or higher) due to more stringent lending criteria.  There’s simply no sense in paying the lender more because you waited until the homeowner took that extra $10,000 discount off his home.

Jonathan, Marsha, & Thomas Benya
~Team Benya
Century 21 New Millennium
301-653-8116
Website

Please feel free to contact us with any questions, concerns, thoughts, etc.  If you are considering buying or selling a home, remember that at Team Benya, you’re getting 3 agents for the price of 1;  It just makes sense.