The WeBuyTucsonHomes Blog

The same scam artist story is repeating itself over and over again.  If you are in foreclosure and need help there are plenty of places to go.  WeBuyTucsonHomes will be glad to help answer any question you may have regarding the process, how to delay or even stop the foreclosure, or assist you in finding a reputable place for a loan modification.  One thing any reputable company will never do is charge an upfront fee.  Your scam alarm should be going off if someone is offering to stop or delay your foreclosure but they want hefty upfront fees.  Many times a company will receive money from the bank for helping to modify the loan, also there are plenty of government sponsored entities that will assist you with no fees.  It sickens me to see the scams so prevalent in the area.

Arizona republic reports

Foreclosure-rescue scams have shot up 30 percent in Arizona during the past few months.

Arizona Attorney General Terry Goddard delivered that startling statistic last week at the Arizona Foreclosure Prevention Task Force meeting. It was the right crowd to engage about the growing problem.

“Firms are contacting homeowners on the verge of foreclosure, offering help and instead taking the money the homeowner has,” Goddard said. “We have a real obligation to find these people and prosecute them.”

The latest foreclosure-rescue scam involves loan modifications, the program that’s the backbone of the federal housing plan announced in February. In a loan modification, a lender and homeowner work out a deal to cut interest rates and even principal on mortgages of homes in danger of foreclosure.

Free counselors, certified by the U.S. Department of Housing and Urban Development, are available to help homeowners work with lenders. Arizona homeowners can call the state’s foreclosure hotline at 877-448-1211 to find a counselor. There also are reputable private firms, run by attorneys, mortgage brokers and real-estate agents, offering loan-modification help.

But a growing number of scam artists that have joined the scene, promising help, taking hefty upfront fees and then leaving homeowners on their own.

Data released last week shows mortgage companies have made more than 55,000 offers to modify loans since the program was launched in March. There are 14 companies, which service about 75 percent of all U.S. mortgages, signed up to do loan modifications.

The federal program was expanded to help people who can’t afford their mortgages and don’t qualify for a loan modification. They may be able to still avoid foreclosure by using new streamlined processes for short sales or deeds in lieu. Like with modifications, lenders and borrowers can get $1,000 or more to work out deals to avoid foreclosure.

The different federal housing programs continue to confuse many homeowners and servicers at lenders agreeing to participate, slowing the process.

“What is needed is a coordination of policies between all lenders on both the modification and refinancing programs,” said Jay Luber, Galaxy Lending president.

One week after allowing the new $8,000 tax credit to be used in helping with a down payment for first time home buyers, Federal officials reversed course and declared the tax credit could not be monetized.  The Arizona Republic reports

Federal officials on Monday reversed an earlier decision to allow first-time home buyers to use an $8,000 tax credit to borrow the down payment on a home.

A week earlier, U.S. Department of Housing and Urban Development Secretary Shaun Donovan had told the National Association of Home Builders that HUD would let banks and local governments offer short-term “bridge loans” to cover the down payment for first-time buyers eligible for the tax credit. The loans would have been available to applicants for federally insured mortgages such as Federal Housing Administration loans.

Lenders, home builders and real- estate agents had reacted favorably to the bridge-loan proposal, saying it would open up the housing market to more first-time buyers.

However, not everyone was in favor of using the tax credit as collateral on a down-payment loan.

“That tax credit should be savings, not debt,” said Patricia Garcia-Duarte, executive director of Neighborhood Housing Services in Phoenix.

Garcia-Duarte said the proposal too closely resembled a now-illegal practice known as seller-funded down-payment assistance, which allowed a home’s seller to “gift” the down payment to a specific buyer through a non-profit organization.

Phoenix loan originator Dean Wegner was among the housing-industry professionals who had expressed enthusiasm about the bridge-loan plan.

Wegner said the program would have boosted local home sales, but he added that the bridge loans likely would have come with a high interest rate.

The loans also could have created income-tax issues, according to the IRS officials who shot down HUD’s plan.

Still, Wegner remains optimistic that the government will seek other means to circumvent the FHA’s required 3.5 percent down payment.

“They will probably come out with a zero-down FHA loan starting January 1, once the $8,000 goes away,” he said.

The government should not allow this tax credit to be monetized in the form of a loan. From above - “the credit was to be monetized via a short term loan from the local banks and governments;” offering short term loans with the promise of repayment coming from next years tax return sounds like many of the “Pay Day Loan” centers business plans.  Banks are already struggling with loans that homeowners and consumers can not repay, allowing this credit to be monetized would only allow new homeowners to struggle with more debt with exhorbinant interest rates.  One can only imagine the surprise when expecting large tax returns(read vacations) for the next few years only to have it swiped away by the bank or local government as repayment for a loan.

Edit: The AZ republic has posted a note stating the credit can still be applied directly toward home purchase costs when using an FHA-insured mortgage. However the person will still have to come up with a 3.5% down payment.

The past week saw little change in the number of foreclosures for the first week of December.  The past month large banks, Freddie and Fannie Mae released press statements announcing a hold on foreclosures until the end of January and sometimes later.  Here in Pima County the number of defaults filed hasn’t changed substantially, but it could be they are postponing all foreclosures that are already slated between now and the end of January.

To the chart!

195 notice of defaults were filed Dec. 1-7th.  The leading zip code was 85742 which happens to be because a luxury builder has struggled to make payments, and sell property.  If you are looking for some great luxury deals this might be for you.  If you would like to know the address or the builder just shoot me an email at caleb@webuytucsonhomes.com.  The properties in 85742 range low end $121,000 to $2,000,000.

The next zip code was 85746, and 85706 with 16 and 14 defaults respectively.  85746 has remained high on the notice of default list and I expect this will continue with the high number of homes for sale along with the bank sales in that zip code.  I have talked with many sellers in that area and it is still very tough to negotiate with the banks to have them accept a substantial short sale.  I remain pessimistic on the neighborhoods in the new communities and think it will take many years for them to recover.

If you wish to discuss anything from the graphs please post a comment or shoot me an email.

18 NODs in Pima County

The Tucson La Paloma Resort & Spa and Westin Hilton Head Island Resort & Spa in South Carolina, financed via a $209 million loan from JPMorgan & Chase, is near default according to Standard & Poor’s. The loans were based on rising revenue. The harsh economic times have reduced revenues and rising cancellations have pushed the two resorts on the brink of default.

La Paloma could be on the brink of default

BAD NEWS FIRST

30 Reasons for the Next Great Depression

Homebuilders Index is at an all time low.
Guess that is what happens when you overbuild, ask the telephone companies from the dot come bubble.

GOOD NEWS
HUD relaxes requirements for Hope for HomeOwners

Mortgage rates are going down

Freddie Mac and Fannie Mae suspend all foreclosures until after the holidays!

Via nytimes.com The New York Times ran an article with an interactive map displaying the United States and what percentage of the homes are worth less than the mortgages on them.  Arizona currently stands with 29% of homes  worth less than the mortgages on them.   Roughly 375,469 homes have negative equity, and most homes have an average debt to value ration of 76%.

Later today the Fed is set to present a loan modification program for Fannie and Freddie!

The banks are starting to see that adjusting rates, reducing the principle balance, and extending the term of the loan; maybe favorable opposed to foreclosing on the home, holding the house for a year and then trying to resell.

Caleb

This past week Pima County listed 185 Notice of Sales filed for the week of November 2-7. The first mortgage on the properties totaled roughly 34.4 million vs property values according to Zillow of 34.7 million.  Now remember this is only the first mortgage position and all most all of the properties list 2nd and sometimes 3rd positions. The second position can vary anywhere from 5% all the way up to 40%. Take a low end average 20% and the liens against the properties increase to over 41.2 million. This puts almost all the properties 19% “underwater.” Now factor in that Zillow maybe overestimating housing prices and some home owners could be even further underwater!

Looking at the chart we see 85706 again led the way with 24 notices filed. 85746 was second with 19 and 85711 was third with 14. Some interesting things to note were a few large real estate investing companies, both national and local are seeing notices filed against properties they own. Why do I mention this? They were speculators in some instances, as the filings were on very new and high priced homes, and also to show that the financing crunch paired with the downturn in housing is hitting everyone hard.

Here is the chart with 185 Notice of Sales for November 2-7, 2008

From CNN Business

NEW YORK (CNNMoney.com) — The Dow has shed thousands of points and the global economy is in crisis.

So who wants to buys a house right now? Not many people, it turns out.

The National Association of Home Builders, for instance, has seen its contract cancellations spike recently to as high as 30%, compared with an average rate of about 20%. During the housing boom, as few as 5% of sales were cancelled.

“The events of the past couple of weeks have people’s heads spinning,” said Steve Melman, NAHB’s director of economic surveys.

The National Association of Realtors estimates that about 25% of the clients its members are working with are staying on the sidelines. They’re looking at homes and intend to buy at some point, but right now they’re worried about their jobs, their declining investments and falling housing prices.

“You have to have a lot of confidence to make this kind of big-ticket purchase in the current environment,” said NAR spokesman Walter Molony.

If your house is for sale currently you might have thought it was going to sell only to fall out later. If you decide to sell you home to us at WeBuyTucsonHomes.com you won’t have to worry about the sale being canceled. We are committed to purchasing you home once we write a contract. Call us today to receive a free offer on your home!

~Caleb

Mr. Mortgage mentions GetGreenCredit.com as a viable mortgage modification company that may help you reduce your principal balance, and lower your interest rate to 2-3%. I haven’t heard of GetGreenCredit.com and I don’t endorse the company, but if you owe more on your house than its worth (if you purchased or refinanced in the last few years, the chances are high your loan is more than what your house is worth.) it might be worth your time to contact them. Be sure to research the company, and maybe even contact other debt settlement companies to compare their offerings.

Here is the Mr. Mortgage video. It runs 10 minutes and he speaks about GetGreenCredit.com starting at the 7 minute mark.

As always if you need to sell your house quickly contact WeBuyTucsonHomes.com today and we will answer all of your questions.

Caleb

Many mortgage companies have started programs to outline what type of risk a home mortgage contains dependent on the zip code.  This translates to home buyers having to pay an extra 5% or more on their down payment.  For some home buyers this will keep them on the sidelines as an extra 5% of a $200,000 home is $10,000.  With tightening lending standards this could mean buyers may need to come up with 25% or more!

These new standards can be attributed to the declining market conditions, the multiple month supply of homes on the market, and many home owners ready to walk away from their homes.  As banks try to avoid getting caught with a mortgage balance more than the value of the home, these lending practices become a self fulfilling prophecy.  Many want to be homebuyers do not have the additional 5% down payment so they will sit on the sidelines.  The homeowners trying to sell their homes have no buyers so they will be forced to lower their prices, thus bringing down the average home selling price and turning many homeowners upside down on their mortgages. 

In another note, the National Association of Realtors has changed their prediction of prices being flat in 2008, to a slight decline of 1.2%  This is still the most optimistic prediction of several investment firms.  Merrill Lynch has a 15% drop in home prices this coming year, while many others think 15% will be a minimum drop.  This could leave even more homeowners with mortgage balances exceeding their home values. 

It’s not a pretty market out there, but if you need to sell your home and if you believe you are upside down in the market, then we can help you.  WeBuyTucsonHomes.com is an investment company that specializes in helping homeowners that need to sell their home quickly.  We have multiple years experience in dealing with banks and homeowners who are in a situation that calls for them to sell quickly.

Country wide maintains a list “Soft Market County Index.”

On this list a 5 is a very soft market and more stringent lending standards maybe in place.  Pima County is the top county ranked a 4, while Pinal and Maricopa are both ranked a 5.  In comparison Laramie, Wyoming is ranked as the safest county.

Homeowners are walking away from their homes

CBS did a nice segment on the subprime mortgage crisis, and how some owners are just ready to walk away from their homes.  The video segment focuses on Stockton, California “the foreclosure capital of the world” but it is representative of the foreclosure markets across the country.  The question is how long will the subprime mortgage crisis last?

Joe Consumer Web Blog article paints a black picture of Mortgage Brokers

A quote from the article: ‘He summarizes it nicely: “The reason is to basically make as much money as you possibly can, while you can, and get away with it!’  This article demonstrates some of the thought processes going on during the housing boom.  Everyone wanted to get their piece of millions being made, and at any cost, no matter who it would hurt.

Arizona is averaging 15 in 1000 houses being foreclosed on!

The subprime mortgage mess is starting to affect people with high credit scores getting a loan.

“About 55% of banks responded that they had tightened their lending standards on prime mortgages.”