What is the fundamental issue?
The most effective remedy available to homeowners facing foreclosure to stay the foreclosure is to file for bankruptcy under Chapter 13 of the Bankruptcy Code. Today, due to the financial strain placed on families because the current economic crisis, an increasing number of borrowers, even those filing for bankruptcy under Chapter 13, are losing their homes to foreclosure because they can’t keep up with the financial demands of problematic mortgages. Bankruptcy judges do not have the authority to modify mortgages for principal residences (unlike mortgages for second homes, vacation homes, farms, etc.).
In order to assist those saddled with abusive loans and minimize the turmoil created for families, neighborhoods, communities and housing markets by the economic crisis, bankruptcy reform advocates propose giving bankruptcy judges the authority to modify mortgages for principal residences. The concept is to allow these mortgages to be bifurcated into a secured and unsecured loan and mortgage interest rates and terms to be modified by bankruptcy judges. The secured mortgage would be written down to the current value of the property.
I'm a Realtor®. What does this mean to my business? Bankruptcy reform could affect REALTORS® in a number of ways. Proposed reforms would provide homeowners and REALTORS® with additional leverage to negotiate short sales with mortgage lenders. In addition, the proposed changes could give REALTORS® attempting to help homeowners keep their houses another tool to negotiate a loan modification and avoid foreclosure.
Conversely, the housing mortgage market could be hurt by higher interest rates and potentially less liquidity in the mortgage market, making it tougher and more expensive for buyers to secure a mortgage. This could result if lender confidence is shaken by the risk of a future involuntary loan restructuring (such as rate reduction, principal reduction (also called “cram-down”), and term extension) in the course of a borrower’s bankruptcy proceeding.
NAR Policy: NAR currently has no policy applicable to the current mortgage market or the reform measures being debated. NAR’s policy from the early 1990’s that opposes “cram-downs” was adopted when loans were predominantly fixed rate mortgages; 2/28s (teaser rate mortgages) and option ARMs were not a significant part of the market until early 2004. The housing market and types of mortgages products have evolved dramatically since the last time this issue was considered by REALTORS®.
Legislative/Regulatory Status/Outlook:
On March 5, 2009, H.R. 1106, the “Helping Families Save their Homes Act of 2009” was passed by the House 234-199, and then referred to the Senate Banking, Housing and Urban Affairs committee. As of January 4, 2010, the Senate has not acted on this bill. But, during the House debate over the "Wall Street Reform and Consumer Protection Act fo 2009" (H.R. 4173), an amendment to include the language from H.R. 1106 in H.R. 4173 was soundly defeated.
Though the Obama Administration strongly backs bankruptcy reform, and Citigroup and consumer groups publicly indicated that they are onboard with it, the likelihood of enactment in 2010 is low
Saturday, December 25, 2010
Wednesday, March 10, 2010
Buyer Beware, Title Defects Plague Foreclosures and Short Sales
Agents involved in foreclosures and short sales may need to begin to disclose the possibility of serious defects in title associated with these types of lender controlled sales.
If recent court decisions are any indication, we are headed for an explosion of litigation in this area.
And now, Massachusetts Courts have revealed the possibility that unlawful foreclosures, dating back to 1989, might be invalidated and that buyers of foreclosed properties and short sales may have clouded titles.
The implications are enormous for title companies, bankruptcy attorneys, real estate agents, those facing foreclosure, and those who have lost their homes.
The problem stems from the collision of two worlds. It illustrates what can happen when the new world fails to acknowledge or understand the old. It is change that takes place without the cooperation of all affected parties.
Real property law has an ancient tradition. But, its laws and their purpose are not always apparent to those who want to change those traditions to benefit themselves.
In the case of maintaining a public chain of title to real property, it was thought to be essential and generally required by the law.
For hundreds of years, no one ever thought of any reason to change it. It was thought to be part of the public good.
That is, until Wall Street saw the money making potential in Credit Derivatives.
Credit Derivatives are packages of debts such as car loans, student loans, credit card debts, and mortgage loans to name a few. These are collected, rated according to their risk, and sold to investors around the world.
One small problem; if you are going to bundle mortgages from every county in the country, you would have to physically send someone to every county recorder’s office on multiple occasions and pay multiple recording fees. It was costly and cumbersome to those responsible for affecting the recordings.
Their solution? Stop recording the assignments in public and track them instead in an electronic data base that the major lenders would operate through a cooperative entity. Say hello to Mortgage Electronic Registration Systems, affectionately known as MERS. Not only did it save them a fortune in county fees and manpower, it turned out to be a cash cow.
Well, good for them, right? They figured out how to bring technology to the process and were handsomely rewarded. Never mind that the cost of maintaining a county recording system is paid, in part, by the recording revenue. They still have to maintain the apparatus, but now they aren’t receiving the revenue intended to maintain the system. Of course, this comes at a time when many counties are struggling to provide necessary services to their residents.
But, as with many new ideas, there are unintended consequences that are now coming to light as state after state are enforcing basic property rights.
Massachusetts
On October 14, 2009, Judge Keith Long of the Massachusetts Land Court said in his ruling, “The issues in this case are not merely problems with paperwork or a matter of dotting i’s and crossing t’s. Instead they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts legislature.”
He was referring to the industry practice of trading notes endorsed in blank, in direct violation of securities law. Here is what he said on that point; “The blank mortgage assignments they possessed transferred nothing…in Massachusetts, a mortgage is a conveyance of land. Nothing is conveyed unless and until it is validly conveyed. The various agreements between the securitization entities stating that each had a right to an assignment of the mortgage are not themselves an assignment and they are certainly not in recordable form.”
Two years earlier, Judge Rosenthal in re Schwartz, found that there was no evidence that the note itself was assigned and no evidence as to who the current holder might be.
Kansas
On August 28, 2009, Judge Eric S. Rosen of the Kansas Supreme Court likened MERS to a “straw man” and not a party of interest with the right to foreclose.
“Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of a default. The person holding only the deed of trust will never experience a default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not hold the deed of trust.”
California
On October 21, 2008, Judge Samuel L. Bufford noted in his ruling that California codified the principal in 1872 in Carpenter v. Longan: “Given that ‘the debt is the principal thing and the mortgage an accessory,’ the Supreme Court reasoned that as a corollary, ‘the mortgage can have no separate existence. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”
Nevada
On August 19th, 2008, Judge Linda B. Riegle concluded, “There is no evidence that the named nominee is entitled to enforce the note or that MERS is the agent of the note’s holder. Indeed, the evidence is to the contrary, the note has been sold, and the named nominee no longer has any interest in the note.”
Arkansas
On March 19, 2009 the Supreme Court of Arkansas found that MERS was not the beneficiary under the deed of trust, although so designated in the deed of trust, because it did not receive the payments on the underlying debt.
Ohio
On October 31, 2007, U.S. District Judge Christopher Boyko dismissed 14 foreclosure actions and delivered a strong admonishment in a footnote:
“Plaintiff’s ‘Judge, you just don’t understand how things work,’ argument reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process…There is no doubt that every decision made by a financial institution in the foreclosure is driven by money.”
When you consider the origin of this problem, it is hard to disagree. If the foreclosing entity didn’t loan the money, the original note was sold, the location of the note is unknown, and it isn’t even clear what would happen to the proceeds of the eventual sale of the property to a new owner.
Until recently, MERS had succeeded in most foreclosure actions. In non judicial foreclosure states like California, there is no judicial review of the elements of a foreclosure. Unless the borrower files for Bankruptcy or brings a law suit against MERS alleging RESPA or TILA violations, there is no opportunity for the borrower to challenge the foreclosure.
In judicial foreclosure states, there is a law suit brought by the party entitled to payment on the defaulted loan. Not the trust, but the actual possessor in due course of the original note. Its part judicial procedure, part uniform commercial code and part ancient property law.
But, the securitization business is so complicated, intentionally so, that defendants, most of their legal representation, and the judges rarely considered the consequences to the real parties in interest. This will continue until enough people understand the importance of the actual note and its relationship to the property.
Many homes have been unlawfully foreclosed by entities not entitled to anything. The former owners of these homes have rights that will need to be addressed.
People who applied for mortgage modifications and received them may have gotten approval from a bank employee with no authority to change the underlying terms of the securities in the pools.
Many people bought these homes and have potential future claims. If there is a cloud on title, the new owner is at risk of being unable to sell or encumber the property. If the foreclosure were unlawful, the borrower is entitled to their property. And, there is a very real possibility that the true holder of the actual note, once and if ever this mess is sorted out, could come forward with the actual note.
It isn’t important to only those in foreclosure. For those seeking loan modifications, potential buyers of short sales and foreclosures and those acting in a fiduciary capacity on their behalf, you may soon be demanding, “Show me the note.”
If recent court decisions are any indication, we are headed for an explosion of litigation in this area.
And now, Massachusetts Courts have revealed the possibility that unlawful foreclosures, dating back to 1989, might be invalidated and that buyers of foreclosed properties and short sales may have clouded titles.
The implications are enormous for title companies, bankruptcy attorneys, real estate agents, those facing foreclosure, and those who have lost their homes.
The problem stems from the collision of two worlds. It illustrates what can happen when the new world fails to acknowledge or understand the old. It is change that takes place without the cooperation of all affected parties.
Real property law has an ancient tradition. But, its laws and their purpose are not always apparent to those who want to change those traditions to benefit themselves.
In the case of maintaining a public chain of title to real property, it was thought to be essential and generally required by the law.
For hundreds of years, no one ever thought of any reason to change it. It was thought to be part of the public good.
That is, until Wall Street saw the money making potential in Credit Derivatives.
Credit Derivatives are packages of debts such as car loans, student loans, credit card debts, and mortgage loans to name a few. These are collected, rated according to their risk, and sold to investors around the world.
One small problem; if you are going to bundle mortgages from every county in the country, you would have to physically send someone to every county recorder’s office on multiple occasions and pay multiple recording fees. It was costly and cumbersome to those responsible for affecting the recordings.
Their solution? Stop recording the assignments in public and track them instead in an electronic data base that the major lenders would operate through a cooperative entity. Say hello to Mortgage Electronic Registration Systems, affectionately known as MERS. Not only did it save them a fortune in county fees and manpower, it turned out to be a cash cow.
Well, good for them, right? They figured out how to bring technology to the process and were handsomely rewarded. Never mind that the cost of maintaining a county recording system is paid, in part, by the recording revenue. They still have to maintain the apparatus, but now they aren’t receiving the revenue intended to maintain the system. Of course, this comes at a time when many counties are struggling to provide necessary services to their residents.
But, as with many new ideas, there are unintended consequences that are now coming to light as state after state are enforcing basic property rights.
Massachusetts
On October 14, 2009, Judge Keith Long of the Massachusetts Land Court said in his ruling, “The issues in this case are not merely problems with paperwork or a matter of dotting i’s and crossing t’s. Instead they lie at the heart of the protections given to homeowners and borrowers by the Massachusetts legislature.”
He was referring to the industry practice of trading notes endorsed in blank, in direct violation of securities law. Here is what he said on that point; “The blank mortgage assignments they possessed transferred nothing…in Massachusetts, a mortgage is a conveyance of land. Nothing is conveyed unless and until it is validly conveyed. The various agreements between the securitization entities stating that each had a right to an assignment of the mortgage are not themselves an assignment and they are certainly not in recordable form.”
Two years earlier, Judge Rosenthal in re Schwartz, found that there was no evidence that the note itself was assigned and no evidence as to who the current holder might be.
Kansas
On August 28, 2009, Judge Eric S. Rosen of the Kansas Supreme Court likened MERS to a “straw man” and not a party of interest with the right to foreclose.
“Indeed, in the event that a mortgage loan somehow separates interests of the note and the deed of trust, with the deed of trust lying with some independent entity, the mortgage may become unenforceable. The practical effect of splitting the deed of trust from the promissory note is to make it impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the agent of the holder of the note. Without the agency relationship, the person holding only the note lacks the power to foreclose in the event of a default. The person holding only the deed of trust will never experience a default because only the holder of the note is entitled to payment of the underlying obligation. The mortgage loan becomes ineffectual when the note holder did not hold the deed of trust.”
California
On October 21, 2008, Judge Samuel L. Bufford noted in his ruling that California codified the principal in 1872 in Carpenter v. Longan: “Given that ‘the debt is the principal thing and the mortgage an accessory,’ the Supreme Court reasoned that as a corollary, ‘the mortgage can have no separate existence. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”
Nevada
On August 19th, 2008, Judge Linda B. Riegle concluded, “There is no evidence that the named nominee is entitled to enforce the note or that MERS is the agent of the note’s holder. Indeed, the evidence is to the contrary, the note has been sold, and the named nominee no longer has any interest in the note.”
Arkansas
On March 19, 2009 the Supreme Court of Arkansas found that MERS was not the beneficiary under the deed of trust, although so designated in the deed of trust, because it did not receive the payments on the underlying debt.
Ohio
On October 31, 2007, U.S. District Judge Christopher Boyko dismissed 14 foreclosure actions and delivered a strong admonishment in a footnote:
“Plaintiff’s ‘Judge, you just don’t understand how things work,’ argument reveals a condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process…There is no doubt that every decision made by a financial institution in the foreclosure is driven by money.”
When you consider the origin of this problem, it is hard to disagree. If the foreclosing entity didn’t loan the money, the original note was sold, the location of the note is unknown, and it isn’t even clear what would happen to the proceeds of the eventual sale of the property to a new owner.
Until recently, MERS had succeeded in most foreclosure actions. In non judicial foreclosure states like California, there is no judicial review of the elements of a foreclosure. Unless the borrower files for Bankruptcy or brings a law suit against MERS alleging RESPA or TILA violations, there is no opportunity for the borrower to challenge the foreclosure.
In judicial foreclosure states, there is a law suit brought by the party entitled to payment on the defaulted loan. Not the trust, but the actual possessor in due course of the original note. Its part judicial procedure, part uniform commercial code and part ancient property law.
But, the securitization business is so complicated, intentionally so, that defendants, most of their legal representation, and the judges rarely considered the consequences to the real parties in interest. This will continue until enough people understand the importance of the actual note and its relationship to the property.
Many homes have been unlawfully foreclosed by entities not entitled to anything. The former owners of these homes have rights that will need to be addressed.
People who applied for mortgage modifications and received them may have gotten approval from a bank employee with no authority to change the underlying terms of the securities in the pools.
Many people bought these homes and have potential future claims. If there is a cloud on title, the new owner is at risk of being unable to sell or encumber the property. If the foreclosure were unlawful, the borrower is entitled to their property. And, there is a very real possibility that the true holder of the actual note, once and if ever this mess is sorted out, could come forward with the actual note.
It isn’t important to only those in foreclosure. For those seeking loan modifications, potential buyers of short sales and foreclosures and those acting in a fiduciary capacity on their behalf, you may soon be demanding, “Show me the note.”
The PROBATE PROCESS
Probate is one of the most common and least understood legal proceedings. It basically comprises the settlement of all financial matters pertaining to the estate of an individual after their death. This includes paying any outstanding debts or tax liability, collecting any amounts due to the estate and, where necessary, determining the validity of the decedent’s last will and testament.
If no will is found, the probate process typically includes a fair and equitable division of assets among the heirs of the deceased person; in community property states, the entirety of the estate passes to the spouse and no probate proceedings are required. Typically an administrator is appointed to handle the legal and financial concerns of the deceased; this individual is known as the executor, and deals with all administrative concerns relating to the disposition of the estate.
The probate process is generally lengthy, lasting up to a year or more, and typically begins with the appointment of an executor or administrator. Executors are usually specified in the will of the deceased. The executor’s first act is usually to file a Petition for Probate of Will and Appointment of Executor; a hearing is then scheduled to review the will and to approve the selection of executor. Once the will has been certified as genuine, the executor is usually approved to begin the probate process. If no will exists, then an administrator is appointed by the probate court to handle the financial affairs; usually this is a family member or close friend. Both executors and administrators are paid an hourly fee for their services.
The initial stages of the probate process involve itemization, inventory, and appraisal of all assets belonging to the estate. This includes real estate, bank accounts, investments, life insurance policies, and all other items of value that constitute a financial asset. Some assets, including antiques, motor vehicles, and real estate holdings, require a professional appraisal of their value before they are added to the total worth of the estate.
Debts and liabilities are also assessed; typically, these financial responsibilities are dealt with in a predetermined order. A small allowance is sometimes paid to the immediate survivors, including the spouse and children of the deceased. After that, administrative costs are paid first, including the fees due to the executor or administrator. Funeral expenses and burial costs are dealt with next, followed by all other debts and claims. Pending lawsuits against the estate are typically paid after they are decided in court, although a settlement may be offered at any time during the probate process.
Once all outstanding and pending debts have been paid and a legally-required waiting period has elapsed, a final settlement is approved by the probate court and the remainder of the estate is distributed by the executor in accordance with the will or, if there is no will, the administrator makes distribution in accordance with the applicable state law. At this point, the assets of the estate may be directly provided to the heirs in their original form as real estate, financial securities, or other assets, or those same assets may be sold and the proceeds distributed as required by the provisions of the will or state law. This final disposition concludes the probate process and dissolves the estate as a legal entity, allowing the survivors of the deceased closure on the inheritance process.
If no will is found, the probate process typically includes a fair and equitable division of assets among the heirs of the deceased person; in community property states, the entirety of the estate passes to the spouse and no probate proceedings are required. Typically an administrator is appointed to handle the legal and financial concerns of the deceased; this individual is known as the executor, and deals with all administrative concerns relating to the disposition of the estate.
The probate process is generally lengthy, lasting up to a year or more, and typically begins with the appointment of an executor or administrator. Executors are usually specified in the will of the deceased. The executor’s first act is usually to file a Petition for Probate of Will and Appointment of Executor; a hearing is then scheduled to review the will and to approve the selection of executor. Once the will has been certified as genuine, the executor is usually approved to begin the probate process. If no will exists, then an administrator is appointed by the probate court to handle the financial affairs; usually this is a family member or close friend. Both executors and administrators are paid an hourly fee for their services.
The initial stages of the probate process involve itemization, inventory, and appraisal of all assets belonging to the estate. This includes real estate, bank accounts, investments, life insurance policies, and all other items of value that constitute a financial asset. Some assets, including antiques, motor vehicles, and real estate holdings, require a professional appraisal of their value before they are added to the total worth of the estate.
Debts and liabilities are also assessed; typically, these financial responsibilities are dealt with in a predetermined order. A small allowance is sometimes paid to the immediate survivors, including the spouse and children of the deceased. After that, administrative costs are paid first, including the fees due to the executor or administrator. Funeral expenses and burial costs are dealt with next, followed by all other debts and claims. Pending lawsuits against the estate are typically paid after they are decided in court, although a settlement may be offered at any time during the probate process.
Once all outstanding and pending debts have been paid and a legally-required waiting period has elapsed, a final settlement is approved by the probate court and the remainder of the estate is distributed by the executor in accordance with the will or, if there is no will, the administrator makes distribution in accordance with the applicable state law. At this point, the assets of the estate may be directly provided to the heirs in their original form as real estate, financial securities, or other assets, or those same assets may be sold and the proceeds distributed as required by the provisions of the will or state law. This final disposition concludes the probate process and dissolves the estate as a legal entity, allowing the survivors of the deceased closure on the inheritance process.
Forget What You Know about Short Sales - The Rules Just Changed
There’s an old saying, “It’s not always what you don’t know that hurts you, it’s what you know for sure that isn’t so.”
Agents currently working the short sale market may soon find themselves in this situation. What we’ve been taught about how to do successful short sales will soon work against us and our sellers, because the government just changed all the rules with the new Making Home Affordable (MHA) program. We must do things differently. Very differently,
The Making Home Affordable program is being managed by Treasury and Fannie Mae. It covers more than 85% of mortgage loans, including loans owned or guaranteed by Fannie Mae or Freddie Mac, FHA loans, and loans managed by about 50 of the major servicers. For these loans, the new MHA policies and processes are mandatory.
Good news and bad news
There’s good news and there’s bad news associated with the MHA changes. The good news is that it is actually an attempt to simplify and standardize the short sale process, rules and paperwork. The bad news is that there are tens of thousands of loss mitigators out there who have to be trained before the new program will be implemented in a consistent way. So right now, implementation is patchy at best.
Making sure it is implemented
To speed up the implementation, Freddie Mac has been tapped to audit servicers’ files and fine servicers who aren’t using the new MHA process. With this “big stick” and some financial incentives, the program should pick up speed.
It’s mandatory
Realtors who want to close short sales will need to learn the new MHA rules, guidelines and use the new standard forms. And, yikes! Things are really different under Making Home Affordable. There are some small differences based on whose loan it is, but in general, here are three key changes:
Some of the changes in how you’ll do business
Change #1: There are clearly defined steps which the servicer’s loss mitigator must follow in sequence when a loan is in default (or imminent default ). If attempted refinancing or a loan modification do not work -- then and only then -- will a loss mitigator consider the possibility of a short sale. This is the only time during the loss mitigation process when a short sale will be a possibility. The loss mitigator will use a specific net present value formula to determine if the lender/investor will net more from a short sale than from a foreclosure. The decision is strictly a financial one. This means the short sale attempt will be approved in advance if it is financially to the lender's advantage.
Change #2: You will continue to list with the seller, but the loss mitigator sets the price and the listing term. The listing term can range from as few as 120 days to as long as 365 days. The servicer/lender still must accept the contract which your seller has approved.
Change #3: Good news! Fannie Mae’s Servicing Guide Announcement #09-03 clearly says there is to be no negotiation of short sale commissions. “..closing of pre-foreclosure sales may not be conditioned upon a reduction of the total commission to be paid to real estate agents to the level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6% of the sales price of the property in aggregate.” In other words, if you’ve negotiated a listing fee with the seller, the servicer/lender may not ask you to reduce that fee.
Important work -- helping homeowners in distress
This should give you a quick idea of how significant the changes are for the short sale process. In short sales there is a lot more to know, so if you are helping homeowners in financial distress avoid foreclosure, you’ll want to learn all you can about the Making Home Affordable program. This is important work and I’d encourage you to -- Get Involved. Get Trained. Get to Work. America’s homeowners need you.
Editor's Note: Get up to speed on the new short sale process, better assist your clients in financial distress, and position yourself for more success through this new online course with Laurie Moore-Moore. Endorsed by Broker Agent.
Here's an update as of December 10, 2009
(Since the comment section closed in November, I'm adding an update here)
As those of you who are closely tracking the changes made to the Making Home Affordable Program already know, Treasury has reconfirmed some aspects of the Short Sale and Deed-in-lieu program and announced some updates as of November 30, 2009. You can review the full 40-plus page document at the U.S. Treasury’s official website www.hmpadmin.com/portal/docs/news/hampupdate113009.pdf
Some of the “tweaks” to the existing program will take mandatory effect with participating servicer/lenders on April 5, 2010; however, servicers may choose to incorporate the new program details sooner. For the list of Making Home Affordable participating servicer/lenders and their contact info go to makinghomeaffordable.gov/contact_servicer.html
The Home Affordable Foreclosure Alternatives Short Sales Program (with a few new “tweaks"):
Allows the borrower to receive pre-approved short sale terms from the Servicer prior to the property listing. These terms are clearly spelled out in a standard Short Sale Agreement form (SSA) provided by the Servicer and agreed to by the seller. The SSA includes the list price or identifies acceptable sale proceeds which are expressed as a net amount after subtracting allowable costs that the Servicer will agree to. The minimum net amount in the SSA may not be increased until the initial Short Sale agreement termination date is reached (this is not less than 120 days). Servicer may choose to extend the Short Sale Agreement up to a total term of 12 months.
Requires that borrowers be fully released from future liability for the first lien mortgage debt.
Uses standard processes, documents, and time frames.
Provides a $1,500 relocation allowance to the borrower following a successful short sale. Servicers and investors receive government financial incentives as well.
Within three days of receipt of an executed purchase offer, the borrower/listing agent submit to the Servicer a Request for the Approval of Short Sale (RASS) form complete with the executed sales contract and addenda, buyers documentation of funds or lender preapproval or commitment letter, information on status of negotiations with subordinate lien holders.
The Servicer must approve or disapprove the sale within ten business days by signing the RASS and mailing it to the borrower. This should speed things up!
Here’s the specific language from the new directive as it applies to commission, “The Servicer may not require, as a condition of approving a short sale, a reduction in the real estate commission below the commission stated in the SSA.” (The commission negotiated with the seller at time of listing cannot exceed 6%.)
The info above outlines some of the key things to be aware of. There's lots more to know. Read the entire document for more details. It is supplemental directive 09-09 and is available at the first link mentioned above. You’ll also find new information on the Making Home Affordable Deed-in-lieu of Foreclosure program (which has a new rental option) in the same document.
Let’s all hope that this program will result in helping more homeowners avoid foreclosure. As with any government program, it isn’t simple, but it’s at least worth a try.
NOTE: We are revising our Short Sale course online to include the latest program changes, the newest version should be ready mid-January.
Laurie Moore-Moore is CEO of The Institute for Luxury Home Marketing and co-founder of its new division, The Center for Asset Preservation. For information on the industry’s first and only comprehensive training (live and online) on Short Sales under the new Making Home Affordable program, click here. For information on luxury home training and the Certified Luxury Home Marketing Specialist designation, click here.
Agents currently working the short sale market may soon find themselves in this situation. What we’ve been taught about how to do successful short sales will soon work against us and our sellers, because the government just changed all the rules with the new Making Home Affordable (MHA) program. We must do things differently. Very differently,
The Making Home Affordable program is being managed by Treasury and Fannie Mae. It covers more than 85% of mortgage loans, including loans owned or guaranteed by Fannie Mae or Freddie Mac, FHA loans, and loans managed by about 50 of the major servicers. For these loans, the new MHA policies and processes are mandatory.
Good news and bad news
There’s good news and there’s bad news associated with the MHA changes. The good news is that it is actually an attempt to simplify and standardize the short sale process, rules and paperwork. The bad news is that there are tens of thousands of loss mitigators out there who have to be trained before the new program will be implemented in a consistent way. So right now, implementation is patchy at best.
Making sure it is implemented
To speed up the implementation, Freddie Mac has been tapped to audit servicers’ files and fine servicers who aren’t using the new MHA process. With this “big stick” and some financial incentives, the program should pick up speed.
It’s mandatory
Realtors who want to close short sales will need to learn the new MHA rules, guidelines and use the new standard forms. And, yikes! Things are really different under Making Home Affordable. There are some small differences based on whose loan it is, but in general, here are three key changes:
Some of the changes in how you’ll do business
Change #1: There are clearly defined steps which the servicer’s loss mitigator must follow in sequence when a loan is in default (or imminent default ). If attempted refinancing or a loan modification do not work -- then and only then -- will a loss mitigator consider the possibility of a short sale. This is the only time during the loss mitigation process when a short sale will be a possibility. The loss mitigator will use a specific net present value formula to determine if the lender/investor will net more from a short sale than from a foreclosure. The decision is strictly a financial one. This means the short sale attempt will be approved in advance if it is financially to the lender's advantage.
Change #2: You will continue to list with the seller, but the loss mitigator sets the price and the listing term. The listing term can range from as few as 120 days to as long as 365 days. The servicer/lender still must accept the contract which your seller has approved.
Change #3: Good news! Fannie Mae’s Servicing Guide Announcement #09-03 clearly says there is to be no negotiation of short sale commissions. “..closing of pre-foreclosure sales may not be conditioned upon a reduction of the total commission to be paid to real estate agents to the level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6% of the sales price of the property in aggregate.” In other words, if you’ve negotiated a listing fee with the seller, the servicer/lender may not ask you to reduce that fee.
Important work -- helping homeowners in distress
This should give you a quick idea of how significant the changes are for the short sale process. In short sales there is a lot more to know, so if you are helping homeowners in financial distress avoid foreclosure, you’ll want to learn all you can about the Making Home Affordable program. This is important work and I’d encourage you to -- Get Involved. Get Trained. Get to Work. America’s homeowners need you.
Editor's Note: Get up to speed on the new short sale process, better assist your clients in financial distress, and position yourself for more success through this new online course with Laurie Moore-Moore. Endorsed by Broker Agent.
Here's an update as of December 10, 2009
(Since the comment section closed in November, I'm adding an update here)
As those of you who are closely tracking the changes made to the Making Home Affordable Program already know, Treasury has reconfirmed some aspects of the Short Sale and Deed-in-lieu program and announced some updates as of November 30, 2009. You can review the full 40-plus page document at the U.S. Treasury’s official website www.hmpadmin.com/portal/docs/news/hampupdate113009.pdf
Some of the “tweaks” to the existing program will take mandatory effect with participating servicer/lenders on April 5, 2010; however, servicers may choose to incorporate the new program details sooner. For the list of Making Home Affordable participating servicer/lenders and their contact info go to makinghomeaffordable.gov/contact_servicer.html
The Home Affordable Foreclosure Alternatives Short Sales Program (with a few new “tweaks"):
Allows the borrower to receive pre-approved short sale terms from the Servicer prior to the property listing. These terms are clearly spelled out in a standard Short Sale Agreement form (SSA) provided by the Servicer and agreed to by the seller. The SSA includes the list price or identifies acceptable sale proceeds which are expressed as a net amount after subtracting allowable costs that the Servicer will agree to. The minimum net amount in the SSA may not be increased until the initial Short Sale agreement termination date is reached (this is not less than 120 days). Servicer may choose to extend the Short Sale Agreement up to a total term of 12 months.
Requires that borrowers be fully released from future liability for the first lien mortgage debt.
Uses standard processes, documents, and time frames.
Provides a $1,500 relocation allowance to the borrower following a successful short sale. Servicers and investors receive government financial incentives as well.
Within three days of receipt of an executed purchase offer, the borrower/listing agent submit to the Servicer a Request for the Approval of Short Sale (RASS) form complete with the executed sales contract and addenda, buyers documentation of funds or lender preapproval or commitment letter, information on status of negotiations with subordinate lien holders.
The Servicer must approve or disapprove the sale within ten business days by signing the RASS and mailing it to the borrower. This should speed things up!
Here’s the specific language from the new directive as it applies to commission, “The Servicer may not require, as a condition of approving a short sale, a reduction in the real estate commission below the commission stated in the SSA.” (The commission negotiated with the seller at time of listing cannot exceed 6%.)
The info above outlines some of the key things to be aware of. There's lots more to know. Read the entire document for more details. It is supplemental directive 09-09 and is available at the first link mentioned above. You’ll also find new information on the Making Home Affordable Deed-in-lieu of Foreclosure program (which has a new rental option) in the same document.
Let’s all hope that this program will result in helping more homeowners avoid foreclosure. As with any government program, it isn’t simple, but it’s at least worth a try.
NOTE: We are revising our Short Sale course online to include the latest program changes, the newest version should be ready mid-January.
Laurie Moore-Moore is CEO of The Institute for Luxury Home Marketing and co-founder of its new division, The Center for Asset Preservation. For information on the industry’s first and only comprehensive training (live and online) on Short Sales under the new Making Home Affordable program, click here. For information on luxury home training and the Certified Luxury Home Marketing Specialist designation, click here.
Agents Have No Duty to Submit Short Sale Offers – Surprised?
While all real estate law is subject to individual State legislation and interpretation, and while several areas of law come into play in the course of a real estate transaction (e.g.: contract law, agency law, etc.) there are general principals and practices that can be said to apply. Generally speaking, the laws work like this:
The listing agent for a property owes their fiduciary duties (care, confidentiality, obedience, accountability, loyalty, and disclosure) to the principal/client, who is virtually always the OWNER of the property.
ALL offers must be presented to the OWNER of the property.
The OWNER decides which offer(s) to accept, reject, or counter, based solely on the OWNER'S personal criteria, which may, or may not be price (e.g.: A fast sale may be more important to the owner than a top dollar sale. Similarly, a cash, "as-is" offer may be perceived by the owner to be a better bet than a higher priced offer that has to go through financing and inspection approvals).
For some reason, I find that a very large number of practitioners treat Short Sale transactions as if they were already REO transactions. Such confusion leads to wrong decisions with respect to the presentation of offers, and complicates and prolongs an all too often already complicated and time consuming process. Given these general principals, and in order to answer the question of whether all offers must be presented to a short sale lender, let’s explore the differences between Short Sale and REO/Bank Owned transactions
In an REO transaction the lender has already foreclosed on the property, which means that the LENDER is the OWNER of the property. If we apply the three general principals outlined above to an REO transaction we see that:
The listing agent for the property owes their fiduciary duties to the LENDER.
ALL offers must be presented to the LENDER.
The LENDER decides which offer(s) to accept, reject, or counter, based on the LENDER'S own criteria.
In a Short Sale transaction, while the lender may have initiated the foreclosure process, the BORROWER is still the OWNER of the property. If we apply the three general principals outlined above to a Short Sale transaction we see that:
The listing agent for the property owes their fiduciary duties to the BORROWER (not the lender).
ALL offers must be presented to the BORROWER (not the lender).
The BORROWER (not the lender) decides which offer(s) to accept, reject, or counter, based solely on the BORROWER'S personal criteria, which may, or may not be price (e.g.: In the case of a short sale situation, where interest, fees, and legal costs continue to accrue until the property is sold, a fast sale may be more important to the borrower than a top dollar sale. Similarly, a cash, "as-is" offer may be perceived by the borrower to be a better bet than a higher priced offer that has to go through financing and inspection approvals).
Clearly, in the case of a Short Sale, the agent works for the borrower and the borrower makes the decisions as to which offer(s) to accept, reject, or counter. Once a decision to accept an offer is made by the BORROWER, only then is the offer forwarded to the lender. The transaction proceeds as does any other with respect to subsequent offers that may come in – once an offer is accepted, the borrower is "under contract" (subject to third party approval by the lender) and they do not continue to entertain offers. Yes, they may accept an offer as a "back-up," but a back-up offer only comes into play when/if the initially accepted offer falls apart, and only then would it be forwarded to the lender.
The lender is merely a third party "approver" of the transaction – they are not "a party to" the transaction. This is an important distinction! The lender simply has the right to reject, or accept the offers that the borrower chooses to forward. You must remember that a short sale is a completely voluntary attempt by a borrower to avoid a foreclosure -- a borrower does not have to opt for a short sale. That being the case, if a borrower is under no obligation to even attempt a short sale, how in the world could it be said that a lender has a right to be presented an offer?
Now that you understand the borrower’s obligation to present offers vis-à-vis the lender, let’s shift gears and specifically focus on the short sale listing agent by first asking some questions about the general obligations of real estate agents to their clients, and then extrapolating the answers to short sale agents specifically.
Generally speaking, would it ever be tolerated for the agent of a client to act AGAINST the best interests of that client? Would it ever be tolerated for the agent of a client to act on behalf of a party who was acting expressly AGAINST the interests of their client? The answers of course are that, "Such acts would never be tolerated!"
That said, how could it be possible for the agent of a borrower to be compelled to work for the lender? Isn’t the lender working for THEIR OWN best interests, and not those of the borrower?
Clearly, the lender is working for their own best interests, which are directly adverse to the borrower’s interests (after all, the lender is either in the process of, or threatening to foreclose on the borrower’s property, which is about as adverse a situation as there is). Given the nature of an agent’s fiduciary duties to their clients, the agent for a borrower MUST do all that is legally within the scope of their representation to PROTECT the borrower from the lender and to advocate on behalf of the BORROWER’S position, not the position of the lender. There is nothing wrong with this – this is exactly what an agent is hired to do!
Now that it’s been explained to you, doesn’t it make sense?
Do you see how you have been mistaken if you thought that all short sale offers had to be presented to the lender? If you are a listing agent, do you see how presenting all short sale offers to the lenders could constitute a breech of your fiduciary duties to your clients? If you are a buyer’s agent, do you see that you have absolutely no right whatsoever to DEMAND that your buyers’ short sale offers be presented to lenders?
The bottom line is this: A borrower has no obligation to present all short sale offers to a lender, which means that a borrower’s agent has no obligation to present all short sale offers to a lender, which means that a buyer’s agent has no right to demand their short sale offer be presented to the lender. To transact under any other premise is to misunderstand the process completely.
Interested in short sale and pre-foreclosure investing -- check out my pre-foreclosure investing challenge. If you're interested in learning what the top short sale investors are doing to generate monthly profits visit: http://ShortSalesChampion.com
The listing agent for a property owes their fiduciary duties (care, confidentiality, obedience, accountability, loyalty, and disclosure) to the principal/client, who is virtually always the OWNER of the property.
ALL offers must be presented to the OWNER of the property.
The OWNER decides which offer(s) to accept, reject, or counter, based solely on the OWNER'S personal criteria, which may, or may not be price (e.g.: A fast sale may be more important to the owner than a top dollar sale. Similarly, a cash, "as-is" offer may be perceived by the owner to be a better bet than a higher priced offer that has to go through financing and inspection approvals).
For some reason, I find that a very large number of practitioners treat Short Sale transactions as if they were already REO transactions. Such confusion leads to wrong decisions with respect to the presentation of offers, and complicates and prolongs an all too often already complicated and time consuming process. Given these general principals, and in order to answer the question of whether all offers must be presented to a short sale lender, let’s explore the differences between Short Sale and REO/Bank Owned transactions
In an REO transaction the lender has already foreclosed on the property, which means that the LENDER is the OWNER of the property. If we apply the three general principals outlined above to an REO transaction we see that:
The listing agent for the property owes their fiduciary duties to the LENDER.
ALL offers must be presented to the LENDER.
The LENDER decides which offer(s) to accept, reject, or counter, based on the LENDER'S own criteria.
In a Short Sale transaction, while the lender may have initiated the foreclosure process, the BORROWER is still the OWNER of the property. If we apply the three general principals outlined above to a Short Sale transaction we see that:
The listing agent for the property owes their fiduciary duties to the BORROWER (not the lender).
ALL offers must be presented to the BORROWER (not the lender).
The BORROWER (not the lender) decides which offer(s) to accept, reject, or counter, based solely on the BORROWER'S personal criteria, which may, or may not be price (e.g.: In the case of a short sale situation, where interest, fees, and legal costs continue to accrue until the property is sold, a fast sale may be more important to the borrower than a top dollar sale. Similarly, a cash, "as-is" offer may be perceived by the borrower to be a better bet than a higher priced offer that has to go through financing and inspection approvals).
Clearly, in the case of a Short Sale, the agent works for the borrower and the borrower makes the decisions as to which offer(s) to accept, reject, or counter. Once a decision to accept an offer is made by the BORROWER, only then is the offer forwarded to the lender. The transaction proceeds as does any other with respect to subsequent offers that may come in – once an offer is accepted, the borrower is "under contract" (subject to third party approval by the lender) and they do not continue to entertain offers. Yes, they may accept an offer as a "back-up," but a back-up offer only comes into play when/if the initially accepted offer falls apart, and only then would it be forwarded to the lender.
The lender is merely a third party "approver" of the transaction – they are not "a party to" the transaction. This is an important distinction! The lender simply has the right to reject, or accept the offers that the borrower chooses to forward. You must remember that a short sale is a completely voluntary attempt by a borrower to avoid a foreclosure -- a borrower does not have to opt for a short sale. That being the case, if a borrower is under no obligation to even attempt a short sale, how in the world could it be said that a lender has a right to be presented an offer?
Now that you understand the borrower’s obligation to present offers vis-à-vis the lender, let’s shift gears and specifically focus on the short sale listing agent by first asking some questions about the general obligations of real estate agents to their clients, and then extrapolating the answers to short sale agents specifically.
Generally speaking, would it ever be tolerated for the agent of a client to act AGAINST the best interests of that client? Would it ever be tolerated for the agent of a client to act on behalf of a party who was acting expressly AGAINST the interests of their client? The answers of course are that, "Such acts would never be tolerated!"
That said, how could it be possible for the agent of a borrower to be compelled to work for the lender? Isn’t the lender working for THEIR OWN best interests, and not those of the borrower?
Clearly, the lender is working for their own best interests, which are directly adverse to the borrower’s interests (after all, the lender is either in the process of, or threatening to foreclose on the borrower’s property, which is about as adverse a situation as there is). Given the nature of an agent’s fiduciary duties to their clients, the agent for a borrower MUST do all that is legally within the scope of their representation to PROTECT the borrower from the lender and to advocate on behalf of the BORROWER’S position, not the position of the lender. There is nothing wrong with this – this is exactly what an agent is hired to do!
Now that it’s been explained to you, doesn’t it make sense?
Do you see how you have been mistaken if you thought that all short sale offers had to be presented to the lender? If you are a listing agent, do you see how presenting all short sale offers to the lenders could constitute a breech of your fiduciary duties to your clients? If you are a buyer’s agent, do you see that you have absolutely no right whatsoever to DEMAND that your buyers’ short sale offers be presented to lenders?
The bottom line is this: A borrower has no obligation to present all short sale offers to a lender, which means that a borrower’s agent has no obligation to present all short sale offers to a lender, which means that a buyer’s agent has no right to demand their short sale offer be presented to the lender. To transact under any other premise is to misunderstand the process completely.
Interested in short sale and pre-foreclosure investing -- check out my pre-foreclosure investing challenge. If you're interested in learning what the top short sale investors are doing to generate monthly profits visit: http://ShortSalesChampion.com
Tuesday, June 30, 2009
Shingletown 3 bed 2 ba home 6+ alpine acres
An absolutely beautiful property located just outside Shingletown. 3 bedrooms and 2 bathrooms. Great kitchen with all natural maple cabinets, includes all appliances, pantry, and laundry area off the kitchen. A hot tub spa is all set up and ready to go outside. Separate shop with RV parking. Separate studio. Detached single car garage. A fenced area for dogs, heated dog house. Garden areas, picnic areas. 6.7 acres of land with loads of pines and cedars. Truly an alpine paradise. Ready for your family and friends or retire here and enjoy the good life.
Friday, June 19, 2009
Builders Conference Has Gloomy Mood
Their industry shrinking, their projects on hold, their access to capital choked off, a subdued and sparse group of home builders gathered at San Francisco's Moscone Center this week for the annual PCBC show, formerly called the Pacific Coast Builders Conference.
"California's home building industry is in the worst shape ever," said Horace Hogan, chairman of the California Building Industry Association, the trade group that puts on PCBC, and president of Brehm Communities, a Carlsbad (San Diego County) home builder, speaking at a news conference. "Every builder I know has laid off most of their staff, and contractors and suppliers we've done business with for years have folded up shop."
The show reflected that contraction. At the peak of the housing boom in 2006, it drew 35,000 attendees. Last year there were about 19,000. This year only 14,000 people came to Moscone. Even with a smaller exhibit floor, the aisles were noticeably underpopulated. "It's like a ghost town," said Andy Mihaylo, president of the Christane Co., a Laguna Niguel (Orange County) firm that works in real estate financing.
Hogan had a variety of grim statistics to tick off. Although the 65,000 housing starts in California in 2008 were the lowest ever recorded, "As bad as last year was, right now 2009 looks like it might even be worse," he said, citing projections of only 40,000 housing units this year. That sluggish pace means the loss of more than 360,000 jobs and $50 billion from the state's economy, he said.
California's $10,000 tax credit for people who buy a new home is something the builders would dearly like to see extended. They say not only does it help their industry, but it generates state and local taxes, creates jobs and stimulates the economy.
Sam Chandan, president and chief economist of New York's Real Estate Econometrics, had more downbeat news at a session on the economic outlook, predicting a huge wave of defaults in commercial mortgages.
"About $300 billion in commercial mortgages will come due between now and the end of 2009, and the same in 2010," he said. "We lack the capacity to refinance them. This will lead to a significant increase in defaults and delinquency rates for commercial mortgages."
The dismal theme extended to conference sessions with titles like "Crisis of Confidence," "After the Downturn," "How to Support a Development Company When There Is No Development," and "So You Can't Flip It ... Now What?"
At a session on the capital markets called "Meet the Money," the moderator joked: "This isn't 'Meet the Money'; this is 'Need the Money.' "
On the show floor, the beautifully constructed booths hawking all manner of building supplies generally had more salespeople than prospective customers.
Wearing matching polo shirts, four hopeful salesmen were lined up in Century Shower Door's booth with little to do but arrange the abundant display of tchotchke giveaways.
"This used to be the kind of show where we'd have six or seven people in the booth and they would all be busy at once all the time," said Adam Slutske, owner of the Hayward company. "Now it's quiet, very quiet."
Many attendees said that same sense of mutedness extends to their own businesses.
"Until financing frees up and the market fires up, we can't do anything," said Ron Colton, senior vice president for Seastar Communities, a Sacramento home builder that he described as "not active at the moment."
Colton had his own way to characterize his new status.
"I'm a home not-builder," he said.
"California's home building industry is in the worst shape ever," said Horace Hogan, chairman of the California Building Industry Association, the trade group that puts on PCBC, and president of Brehm Communities, a Carlsbad (San Diego County) home builder, speaking at a news conference. "Every builder I know has laid off most of their staff, and contractors and suppliers we've done business with for years have folded up shop."
The show reflected that contraction. At the peak of the housing boom in 2006, it drew 35,000 attendees. Last year there were about 19,000. This year only 14,000 people came to Moscone. Even with a smaller exhibit floor, the aisles were noticeably underpopulated. "It's like a ghost town," said Andy Mihaylo, president of the Christane Co., a Laguna Niguel (Orange County) firm that works in real estate financing.
Hogan had a variety of grim statistics to tick off. Although the 65,000 housing starts in California in 2008 were the lowest ever recorded, "As bad as last year was, right now 2009 looks like it might even be worse," he said, citing projections of only 40,000 housing units this year. That sluggish pace means the loss of more than 360,000 jobs and $50 billion from the state's economy, he said.
California's $10,000 tax credit for people who buy a new home is something the builders would dearly like to see extended. They say not only does it help their industry, but it generates state and local taxes, creates jobs and stimulates the economy.
Sam Chandan, president and chief economist of New York's Real Estate Econometrics, had more downbeat news at a session on the economic outlook, predicting a huge wave of defaults in commercial mortgages.
"About $300 billion in commercial mortgages will come due between now and the end of 2009, and the same in 2010," he said. "We lack the capacity to refinance them. This will lead to a significant increase in defaults and delinquency rates for commercial mortgages."
The dismal theme extended to conference sessions with titles like "Crisis of Confidence," "After the Downturn," "How to Support a Development Company When There Is No Development," and "So You Can't Flip It ... Now What?"
At a session on the capital markets called "Meet the Money," the moderator joked: "This isn't 'Meet the Money'; this is 'Need the Money.' "
On the show floor, the beautifully constructed booths hawking all manner of building supplies generally had more salespeople than prospective customers.
Wearing matching polo shirts, four hopeful salesmen were lined up in Century Shower Door's booth with little to do but arrange the abundant display of tchotchke giveaways.
"This used to be the kind of show where we'd have six or seven people in the booth and they would all be busy at once all the time," said Adam Slutske, owner of the Hayward company. "Now it's quiet, very quiet."
Many attendees said that same sense of mutedness extends to their own businesses.
"Until financing frees up and the market fires up, we can't do anything," said Ron Colton, senior vice president for Seastar Communities, a Sacramento home builder that he described as "not active at the moment."
Colton had his own way to characterize his new status.
"I'm a home not-builder," he said.
Mortgage Rates Fell
Mortgage rates fell this week after price reports suggested inflation remains at bay, Freddie Mac said in releasing results of its Primary Mortgage Market Survey.
The 30-year fixed-rate mortgage (FRM) averaged 5.38 percent with an average 0.7 point for the week ending June 18, down from 5.59 percent last week and 6.42 percent a year ago.
The 15-year FRM averaged 4.89 percent with an average 0.7 point, down from 5.06 percent last week and 6.02 percent a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.97 percent with an average 0.6 point, down from 5.17 percent last week and 5.89 percent a year ago.
One-year Treasury-indexed ARMs averaged 4.95 percent with an average 0.6 point, down from 5.04 percent last week and 5.19 percent a year ago.
Reports of benign inflation figures reversed the upward trend seen in mortgage rates in recent weeks, Freddie Mac Chief Economist Frank Nothaft said in a statement.
The producer price index rose only 0.2 percent in May, a third less than forecast, and the consumer price index increased by just 0.1 percent.
A 5 percent drop in producer prices from a year ago was the largest since 1949, and a 1.3 percent yearly decrease in consumer prices was the biggest since 1950
The 30-year fixed-rate mortgage (FRM) averaged 5.38 percent with an average 0.7 point for the week ending June 18, down from 5.59 percent last week and 6.42 percent a year ago.
The 15-year FRM averaged 4.89 percent with an average 0.7 point, down from 5.06 percent last week and 6.02 percent a year ago.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.97 percent with an average 0.6 point, down from 5.17 percent last week and 5.89 percent a year ago.
One-year Treasury-indexed ARMs averaged 4.95 percent with an average 0.6 point, down from 5.04 percent last week and 5.19 percent a year ago.
Reports of benign inflation figures reversed the upward trend seen in mortgage rates in recent weeks, Freddie Mac Chief Economist Frank Nothaft said in a statement.
The producer price index rose only 0.2 percent in May, a third less than forecast, and the consumer price index increased by just 0.1 percent.
A 5 percent drop in producer prices from a year ago was the largest since 1949, and a 1.3 percent yearly decrease in consumer prices was the biggest since 1950
Tuesday, May 19, 2009
Saturday, May 16, 2009
Laytonville 40 acres
Dont miss this golden opportunity to own 40 plus acres in 2 parcels on the east side of Hwy 101 with the most incredible views of the mountains and valleys ofthe coast range. Easily accessible as the property fronts Bell Springs Rd. The terrain is rolling and open. There is a seasonal creek that cuts through the farside of the parcel and an active spring about 200 yards from the shared driveway. The terrain provides many potential spots for a pond and many potential building sites with fabulous views.
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