Gerard's Mortgage & R.E. Blog

Home prices decline -18% in October

The S&P/Case-Shiller index of home prices in 20 major cities declined at an annualized 18% in October, more than forecast, after dropping 17.4% in September. The gauge has fallen every month since January 2007. The October figure is a record rate of decline, since record-keeping began in 2001. “We’re seeing a shift to a housing market that is driven by a poor economy rather than a housing market that’s driven by oversupply,” said Guy Lebas, chief economist at Janney Montgomery Scott LLC in Philadelphia. “The credit problems that hit in October exacerbated the speed of it.” Economists forecast the 20-city index would fall 17.9% percent from a year earlier. Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in October, led by a 33% drop in Phoenix and a 32% decline in Las Vegas.

Gerard Ladalardo, CMPS
gerard@caloanpros.com
www.caloanpros.com

All I can say is WOW!- mortgage interest rates are historically low right now. Today's rates are spectacular.....

30 Year Fixed Conforming - 4.875%
30 Year Fixed Jumbo - 5.25%

FHA/ VA Conforming - 5%
FHA/ VA Conforming Jumbo - 5.25%

These are the LOWEST rates that I've seen in my almost 7 years in the mortgage business. Take advantage of these low rates now while they are still available. If you or someone you know is planning on purchasing a home or simply refinancing, please have them give me a call to see how I can best serve their needs.

Regards,

Gerard Ladalardo, CMPS
gerard@caloanpros.com

I am writing about a potential client that I couldn't help refinance their home becuase of their "negative equity" due to reduced property values. They have never missed any payments, but due to loss of income- they are now struggling to make ends meet to stay in their home. They want to stay in their home.

After the clients called their lender 2-3 times, Countrywide will do nothing for these people, yet they have been given Billions of $$ of relief from the Federal Government. Countrywide will basically let the home foreclose or short sale and lose alot of money with this process than work with them to keep their home. Is there anything we can do to help these people? Seems to me like the lenders need to get the heads on straight and get a system that works!!

Sincerely,

Gerard Ladalardo, CMPS
gerard@caloanpros.com

We are PROUD to support the Intrepid Fallen Heroes Fund!
The Intrepid Fallen Heroes Fund, a national leader insupporting the men and women of the United States Armed Forces and their families, is launching an important new effort to serve our military community. The Fund will design and build the National Intrepid Center of Excellence (NICoE), an advanced facility dedicated to research, diagnosis and treatment of military personnel and veterans suffering from traumatic brain injury (TBI) and psychological health issues.

Please click on the logo above to learn more and you can also donate to the heroes fund. The Intrepid Fallen Heroes Fund was voted Best Independent Charities in America! As the United States continues to suffer injuries in Iraq and Afghanistan, and as the War on Terrorism proceeds, many more military personnel and their families will need your help. Please join us in this very special effort to help support our military heroes who have sacrificed so much in service to our nation by contributing to the Intrepid Fallen Heroes Fund. 100% of donations go directly to the Fund’s programs. The Fund does not deduct any portion of contributions for administrative costs; The Fund’s Board of Trustees underwrites all administrative costs.

The Intrepid Fallen Heroes Fund is proud to have received an A+ rating by The American Institute of Philanthropy for the past two years.

Regards,

Gerard Ladalardo, CMPS
gerard@caloanpros.com

*This email content was sent to me from the California Association of Mortgage Brokers (CAMB)

The California Association of Mortgage Brokers has received many requests for information related to loan modification services in the state of California. In response to these queries, CAMB Chapters have held several instructive seminars where representatives from the California Department of Real Estate (DRE), real estate attorneys, and operating loan modification specialists have appeared. Additional events are scheduled across the state in the coming weeks, and a CAMB webcast on the subject is planned.

If you have not yet attended one of the CAMB seminars, the following will provide a brief overview of the information CAMB has accumulated concerning loan modifications.

As provided by the California Department of Real Estate:

· A California Real Estate License is required to provide loan modification services. One cannot provide modification services under a Residential Mortgage Lender (RFL) or California Finance Lender (CFL) license*.

· If a DRE licensed originator chooses to provide modification services, they need no other authorization as long as they 1) provide the service for free or 2) they do not collect any fee until all services have been completed (no advance fees).

· If a DRE licensed originator chooses to collect an advance fee, they must maintain a compliant trust account to house said fees and have their client sign an advance fee agreement that has been reviewed by the DRE and issued a letter of “no objection.”

The DRE will allow a broker or their attorney to draft a custom loan modification advance fee agreement or brokers are invited to use the pro forma template provided by the DRE. Whichever agreement they choose (either the custom or the template) must then be submitted to the DRE for individual broker approval. Once approved, advance fees may be collected.

Warning: If a broker chooses to draft their own agreement, or alter the template, it will need to go through an extensive and time-consuming review performed by a limited number of persons. If time is of the essence, the DRE template is the vehicle of choice.

*Note: A limited exception to the DRE license requirement is carved out for attorneys who provide theseservicesduring the normalcourse of their practice while providing representation for clients. The DRE warns that sham relationships where a modification provider and attorney work together simply to circumvent the above licensing requirements will be considered a violation of the Real Estate Law.

Regards,

Gerard Ladalardo, CMPS
gerard@caloanpros.com

Foreclosure is not a fun word yet it is reality that many homeowners across the US are facing in these tough economic times.

There are many ways that home owners find themselves in this situation due to job loss, reduction in income, mounting credit card debt, an increase in mortgage payments, a terrible illness, or divorce. There are probably many more reasons.

A home foreclosing doesn't just affect the homeowner directly. It affects everyone else that lives near the home. Foreclosures drive down property values! When you are faced with selling your home and you have to compete with the foreclosure down the street that's been marked down 20% less than market value because the bank has no desire to hold it, you will quickly realize you are part of the epidemic.

There are many home owners that don't know there are other options besides letting their home end up in foreclosure. Some are even too embarrassed to investigate their options. Sometimes they even wait too long until it’s too late to help them. This is a shame and I would like to help explain some of the things you can do including a short sale or a loan modification. The short sale and loan modification options would solve the same goal of avoiding a foreclosure but with each providing a different outcome.

The short sale is for those that absolutely need to move and get out from under their debt completely. A loan modification is for those that would really like to remain in their homes but cannot do so without assistance. It is important to remember that banks are not in the business of owning Real Estate in their portfolios and would much rather assist a homeowner than to take ownership of their home.

Here is a breakdown of how both assistance programs work.

Short sales

A short sale is a legal lender approved solution designed to assist those home owners who are financially strapped to get out from under their mortgage debt. A short sale is negotiated through the mortgage holder of an owner’s home where by the mortgage holder agrees to take less than what home owner owes on the property.

An example of a short sale would be if a home owner owes $400,000 on their current mortgage and their home is only currently worth $325,000. The lender in this example would agree to take a short fall of $75,000 at closing. In many cases the mortgage holder may completely wipe out the debt and the home owner does not have to repay the 75,000.

The home owner benefits in this situation because they get out of a sticky financial mess without going to foreclosure which can seriously damage your credit. The effect on your credit from a short sale is far less damaging than a foreclosure.

You may be thinking why would a mortgage holder want to allow a short sale? There are a number of reasons, most notably the cost involved for the lender going through a foreclosure proceeding. The mortgage holder when all is said and done can easily spend $40,000-$50,000 going through a foreclosure. This avenue can save the lender money they would otherwise lose. The average loss by a bank is about double when a foreclosure is done instead of a short sale.

Most lenders will work with a short sale option to avoid a costly foreclosure. When selling your home and you know you are going to be faced with a short sale make sure you choose to work with an experienced Realtor who has some working knowledge of short sale procedures! There are also short sale negotiating companies that work directly with the banks as well. There is a lot that goes into the process of completing a short sale. Having professionals to work with is vital when you are going through a short sale.

Loan Modification

Over the last year I have unfortunately heard a number of stories about people who have lost their homes that did not realize they had any other options. What you need to understand is that just because you missed a few mortgage payments it does not mean that a bank is not going to want to work with you! There are times in people lives where they can come under financial stress, as mentioned previously.

Banks understand that sometimes a person’s problems are not permanent and can turn around quickly. You have all the incentive to try to avoid the foreclosure process at all costs. With a foreclosure on your record you will not be able to buy a property with conventional loan financing for 5-7 years and you will be required to have at least 10% minimum down payment. So if you or someone you know is potentially facing a foreclosure because of falling behind in mortgage payments don't just sit back and let it happen. Reach out to your lender and explain your situation right away and ask for their help.

The 1st thing a lender or bank will want to know is exactly where you stand financially at the moment and what you can afford. Let us know your exact situation so we can negotiate on your behalf about your desire to remain in the home and how we can work out a payment plan that will be mutually beneficial.

The bank is going to want to know what has caused you to become financially strapped. You can plan on being asked to put this in writing. This is known as a "hardship letter". In the letter you will be asked to explain the circumstances behind your missed payments and an understanding of why you believe you will be able to continue to make payments under the modified terms. You will be asked to provide documentation to prove your case. Documents that the bank will ask for most likely will include pay stubs, bank and brokerage accounts, W-2's, income tax returns, and a list of your current expenses including things like insurance, utilities, taxes, food and other typical expenses.

The bank has the option to try to keep you in the home in a number of ways including an extension of the length of the mortgage, the interest rate, or a reduction in principal. It potentially could be some combination of all three. Remember the goal is to keep you in the home and the bank is working with you!

One other option that can help those home owners who are under water where the value of their home is less than the mortgage balance is the new bill put into law in October known as the Home Owner Recovery Act of 2008. This new bill will allow a qualified home owner with the lenders approval, to refinance their home at 90% of the homes newly appraised value to keep the homeowner in their home!

Above all else remember there is help available!

Gerard Ladalardo, CMPS
gerard@caloanpros.com

FHA REOs Properties

HUD offers various incentives in conjunction with HUD properties acquired through foreclosure. The incentives for HUD REO properties may included, but are not limited to the following:

-FHA financing using $100 downpayment

-Standard FHA underwriting guidelines apply

-The FHA good neighbor Next Door program: allows eligible police officers, teachers, firefighters & EMTs to purchase select HUD owned homes in revitalization areas at 50% off list price.

Please contact me directly for more information on these programs and locations.

Gerard Ladalardo, CMPS
gerard@caloanpros.com

Household spending in 2009 projected at lowest level since Pearl Harbor.
Household spending will drop 1% in 2009, according to economists in a Bloomberg survey. This represents the biggest decline since after the attack on Pearl Harbor, and will put the U.S. on track for a record 4 consecutive quarters of contraction. “That sounds scary enough to me,” said Harvard’s Jeffrey Frankel, a member of the group that determined the start of the recession. “Consumers have carried the weight of expanding demand for a long time at the expense of a serious deterioration of their balance sheets.” James O’Sullivan, senior economist at UBS said “It’s a serious recession, and there’s a good chance it will break the 16-month record since the Depression. We’re at the stage where the weakness is feeding on itself. The next few months look pretty rough.” The National Bureau of Economic Research last week announced the U.S. contraction began in December 2007. The longest economic slumps since 1945 were the 16-month downturns that ended in March 1975 and November 1982. The Great Depression lasted 43 months, from August 1929 to March 1933. A report from the Commerce Department today showed wholesale inventories fell 1.1 percent in October, the most in seven years, as a record 4.1 percent drop in sales caused companies to scale back.

*Report taken from the Bloomburg website

Gerard Ladalardo, CMPS
Gerard@caloanpros.com

The government's decision to support the credit markets by spending hundreds of billions of dollars to purchase Fannie Mae and Freddie Mac mortgage-backed securities helped to put some needed “faith” back into the US financial markets to lower mortgage interest rates significantly. Where rates will settle is a guess at best, but for now we have a situation that could boost the desperately needed housing markets quickly.

Lower rates help the housing market by making ownership more affordable for consumers. As a matter of fact, coupled with lower housing prices and LOW mortgage rates, housing should be more affordable now than at any time in the past several years. This will attract more investors and first-time buyers into the markets. This could start a cycle in which the markets gain more confidence in purchasing mortgages because housing prices stop falling and the rate of defaults slow down. For now, these lower rates are great news and anyone who has been thinking about buying or obtaining a lower rate on their current loan should act quickly while the opportunity is available.

Regards,

Gerard Ladalardo, CMPS
www.caloanpros.com

I just recieved an email that Expedia is currently having a huge fair on airfares! Prices starting at $46.00 each way. You must book your trip prior to 12/11/08 and travel by 3/11/09. Hopefully some of you can take advantage of this sale and save some money over the holidays. Here's a couple of airfares listed in the email;

Atlanta to Charlotte from $46+

New York (LGA) to Orlando from $86+

Chicago (MDW) to West Palm Beach from $96+

Washington, DC to San Francisco from $146+

Los Angeles to New York (LGA) from $156+

Gerard Ladalardo, CMPS