Oregon Supreme Court Decision a Game Changer

Yesterday the Oregon Supreme Court handed down its ruling on the validity of MERS participation in a property foreclosure. The high court’s opinion appears to favor the lenders and should mark a return of the lenders pursuing non-judicial foreclosures.

For those who have not followed the mortgage/distressed property scene, MERS is a entity created by some of our nation’s largest banks to assist in parsing mortgages into palatable pieces that are re-engineered into saleable securities. The issue resolved by Oregon’s highest court was whether or not MERS could act on behalf of the lenders in a foreclosure proceeding. It was contended that since MERS was not named in the original

loan documents they had no rights for pursuing a foreclosure on a distressed property. The high court has opined that MERS may not initiate the foreclosure action but they can participate in its execution.

In Oregon a lender has two methods of foreclosing on a property. Previously the most popular and least painful for all parties concerned was the non-judicial process. When the MERS issue was forced to the high court, lenders pulled out of non-judicial foreclosures at a record rate. Lenders then switched to the more lengthy and involved process of a judicial hearing to resolve the foreclosure. The foreclosure process when combined with the legislations creation of SB 1552 that allows for distressed property owners and their lender to mediate a solution was brought to a screeching halt. This in turn helped create a void in the amount of properties available for sale.  

Today there are five bank owned properties actively listed for sale in the Bend real estate market. There are another five bank owned properties that are pending sales. It will be interesting to see how long it takes the lenders to refill the pipeline. At the height of the distressed market we would have 50 -70 bank owned properties on the market. I do not expect those numbers to return but for awhile I think that it would be plausible to see 25 – 40 properties available for sale.

Another interesting affect will be if distressed property owners feel more obligated to attempting a short sale. These numbers have also dropped off dramatically with only twelve homes actively available for sale in our multiple listing service, another twenty six have offers but are accepting back up offers and a whooping sixty three that awaiting the determination of the lender to their worthiness.  

   

Considering how ineffective lenders are at moving through their processes quickly, I would not expect a big surge of distressed properties in to the active market but a more methodical and consistent filling of the pipeline. This would complement our recovering market quite nicely and add balance to our topsy turvy world.

The Duke Warner Market Trends and Bratton Reports have hit the Streets and Spring is Just Ahead…

You would never know it from today’s weather with temperatures in the mid sixty degree range. It is suppose to still be winter snowy and cold just like our friends to the east of us. There have been plenty of cyclist, runners, hikers and skiers out taking full advantage of this beautiful weather. It is days like today make you feel blessed to be in Central Oregon.

Both the Duke Warner Market Trends and Bratton Reports are available either through the link provided or you can go to my website shopbendhomes.com. The Bratton Report is showing a drop in the median price of a home in Bend for the month. Looking at this month’s Duke Warner Report we see a drop in the amount of sales in the $225,000 - $325,000 price range, this is the culprit in for the drop in the median price. I believe this to be a temporary drop as the number of pending sales in this grouping has increase by approximately the same amount that sales fell.  Overall the numbers are very similar to the month before and are very strong considering the time of year.

A problem for the next two to three months will be our lack of inventory. To help in relieving this builders have been pulling new home permits at a rate not seen until July of 2007. By early summer a good portion of these homes will hit the market and provide some relief. While consumer confidence is growing there are a good many homeowners that are not comfortable with the price their home will bring. The distressed homeowner’s property, a component that feed the market for so long, still remains on the sideline.  

There are a good number of distressed homes that have either been foreclosed on or are waiting to be processed as a foreclosed home. These homes have been missing from our inventory since last summer.  The main culprit in slowing down these homes from being processed is Oregon Senate Bill 1552. SB1552 requires lien holders to arbitrate with distressed homeowners to work out a solution/option to the foreclosure. The loan servicers have moved to the much slower judicial foreclosure process to evade the requirements of the bill.

The legislation is currently working on a revised version of SB1552 that will encompass the judicial process as well. I believe this new legislation will only continue to slow down the process. Our legislators are well intended but they are too late. Had they left the process that had been in place alone we would have a more stable inventory of homes and would be well on our way to working through the distressed inventory.

It will be interesting to see what spring brings; there are already rumblings of interest rates rising though out the summer. This might be the catalyst for bringing more homes to the market, as homeowners move off of the fence and make the decision to find that new place to call home with super low interest rates.     

 

Santa Likes These Numbers for Bend, Oregon (Duke Warner Market Trends Report)

Here’s to a happy and joyful holiday season for everyone. A warm holiday season it has been so far here in Bend, Oregon. This has not stopped Bendites from enjoying a great start to our ski season. Living in Bend has such great advantages to the daily grind, it is so nice to enjoy the snow in the morning then follow it up with an afternoon bike ride or escape the grind by heading out to the slopes for a quick hour or two.

Linked here is an early Christmas gift this month’s Duke Warner Market Trends Report.

In this month’s report we actually have seen an increase in active listings, while new listings coming to the market have declined. While most active listing categories are down but relatively equal to last month, listings in the $225,000-$325,000 range have jumped. This category saw an increase of 34 more homes actively listed. Many of these homes have come into the market to take advantage of the favorable reporting the last few weeks. The number of listings in the pending sale category also has dropped dramatically by 68 transactions. The homes that sold in Bend also dropped but this appears to be in line with the season.

Watching our daily sales trends makes me think that December will continue to be solid. One category in a pinch is with those trying to complete their short sales before year’s end. The “Mortgage Forgiveness Debt Relief Act and Debt Cancellation” for distressed homeowners expires then which could leave many successful short sale clients with enormous tax liability. While there has been intense lobbying to extend tax relief, it is being drown out by the fiscal cliff bickering. The effect this bickering has on the rest of the market remains to be seen. This bickering has cast a constant pall on the joyful holiday season and has effectively been the Grinch that is stealing Christmas and beyond. Soon Santa will come and go, as will this crisis too.

I have refused to give in to the Grinch’s his year and have asked Santa to send more referrals. I am pretty sure that Santa will not mind a little help from those of you out there that know someone in need of a hard working broker. Help keep the coal out of my stocking, I am easy to reach.

Have a great Holiday Season and spread a little joy to those known and unknown to you!!

 

Now Serving Duke Warner Market Trends Report for Bend, Oregon Residential Properties October 2012

You have heard recently many times how tight the inventory for home in Bend has become. This is best illustrated when you compare the year to year numbers. When comparing the year to year Duke Warner Market Trends Reports it appears that we maintained a relatively stable number of listings until July when Oregon Senate Bill 1552, a bill that provides distressed homeowners the opportunity for mediation with their lender was enacted. About this same time the effects of a February $25 billion settlement with the big five mortgage servicers over a lawsuit for wide spread mortgage fraud started to kick in along with a Oregon Circuit Court ruling that lenders were required to provide the trail of deed recordings for each tranching of a mortgage.


As mentioned above starting in July our inventory of active listings had dropped by 127 over the previous year. This trend has remained increasingly consistent each of the following months. This month we dropped 217 listings below last year’s number for October.

Contributing to the drop in available inventory has been our strong sales numbers this year, in every month excepting January there has been positive gains in our unit sales numbers as well as dollar volume.

The tight inventory has created is what several of my colleagues have referred to as a micro bubble. As you have heard me mention in previous blogs the current market has many homes, especially the ones that are competitively priced, receiving multiple offers driving up the price of these homes. By no means is this similar to the previous bubbles price run up of 2004-2007. It is a small recovery from a precipice fall of the previous bubble market.

What this means for you if you are a homeowner wishing to sell, strike while the iron is hot! With interest rates remaining low for the near future and well into the next year the amount of willing buyers will remain strong. Competition for the better homes that are priced well will also remain strong. I would anticipate that come late next spring we will see a return to our local real estate market of the homeowners who have sat on the sidelines waiting for the recovery to near its completion. It remains to be seen when that day will come but people are going to see opportunities to get the fairest price for their homes in quite some time and will want to move forward. As these homes return to the market look for an increase in the traditional inventory.

Bolstering the traditional inventory this coming spring will be the number of homes available through the short sale process. In a recent Bank of America seminar their representatives shared that short sales will be the big fives preferred method of disposing of distressed properties. Short selling distressed properties will help them avoid the lengthy, messy and complicated world of judicial foreclosures. At this point their strategy has yet to affect our local market as the number of actively listed homes available as short sales sits at 29, with 47 other listings having offers on them but the sellers are accepting back up offers. These numbers are way off the peak when it was not uncommon to have 60 – 100 homes available through the short sale process.

There is much to consider before jumping in to the market these days. If you are looking for a broker who can represent you in either a traditional or distressed sale, contact me I would be glad to assist you in making an informed decision on what is the best path for you.

Duke Warner Realty Market Trends Report for Bend, Oregon September 2012…

Across the board fewer is the key word for this Septembers Duke Warner Realty Market Trends Report.


The Bend market as a whole saw a dramatic decrease in the number of new listings that came into the market this past month. September dropped to 115 new listings the third fewest new listings to enter the market in the past three years. To contrast there have been upwards of 180 new properties entering the market every month since last March.

Sold and pending sales numbers for the month of September also cooled off a bit from the previous months. The $325,000 - $525,000 price range experienced a 46% decline from the previous month. This same class of properties had fewer new and active listings. This drop may be attribute to tighter underwriting standards for mortgages making it harder for folks to qualify for funding of these purchases. With the difficult time financing their next purchase, these same buyers are reluctant to put their current homes on the market.


In the still smokin’ hot $125,000 - $225,000 market there appears to be more cash buyers who are investors that do not have the same issues in funding. These cash buyers have been making it a challenge for first time home buyers to purchase due to the slower timeline of having to involve their lender. The homes in this class make a lot of sense to investors as they pencil out well for rental properties which remain in high demand.


A continued decrease in the number of available distressed properties will only add to the current inventory woes. The number of bank owned homes in Bend that have been recorded with Deschutes County is at the lowest point in the last twelve months of 73 properties. This number has been on a constant decline since January of this year. In tandem with this number is the decrease in the number of homes entering foreclosure, this while the number of rescissions for Notices of Default has doubled from the previous months. This trend may attributed to the failure of Oregon SB 1552 to gain traction with the larger lenders and recent circuit court rulings requiring lenders to document the chain of title.


Coming up in a few days will be the Bratton Report for the Bend real estate market, I would expect that that report will reflect the same trends as found here in the Duke Warner Realty Market Trends Report.

Feel free to contact me for a more thorough discussion about today’s real estate market in Bend and how it could affect your decisions to enter the market now or in the future.

Bend, Oregon Real Estate Market Summer Stays Strong…

The Duke Warner Market Trends Report for August is out and the upward sales trend has made it through the summer. As one might expect with summer being the busier selling season, the numbers for August rose slightly over the July numbers. The number of properties listed as active dropping slightly. The most active category of homes remains in the under $225,000 range followed closely by the next bracket of $225,000 -$325,000. As reported previously the competition for nice properties that are well priced in these price ranges is stout. Rarely do we submit an offer on a home in the $150,000 range and not have to compete against several other buyers. The upper reaches of the market also continue to see steady sales results which helps balance the market.


As has been the trend for the last several months the distressed property market has been dampened. Once the fuel for our newer listings this segment has now become a trickle. The newly enacted Oregon Senate Bill 1552 has effectively shut down the number of default notices being served which may have slowed down the number of homes falling into this category. The required mediation of the Senate Bill has affected the number of folks moving toward short selling their properties. Most folks in distress are waiting to see what the mediation process will bring before committing to selling their property.

From what I have observed, this segment of the market had already been in decline long before the Senate Bill was enacted. This makes for the likelihood that we are nearing the end for this episode of the housing collapse. I have no doubt that we will continue to see distressed properties on the market but the fantastic opportunities of the last few years have largely been gobbled up and finding new treasures will take more work.

If this is the end of the collapse it may be some time before we see a fully recovered market. Most folks are wary of what the next few months will bring. With the politics of an election year dominating the decision making of business owners, the lawmakers and Wall Street, it could be months before there is any clarity to where the economic markets are heading. This uncertainty continues to dampen the jobs market and saps the strength from folks who want to sell their property and move on with their lives.

Bend is showing its durability and desirability, more than once we have been presumed to be a failing community but every time our spirit shines through. The qualities that have drawn folks to Bend since long before there were saw mills and ski hills remains here today. The beauty of the river, the mountains and the dry climate will always be what endures and draws people to Central Oregon.

The March Bratton Report for Bend, Oregon…

The March 2012 Bratton Report for the Bend real estate market was released over the weekend. The report confirms much of what was covered in my previous blog detailing the Duke Warner Realty Market Trends Report.


Both reports show a good size jump in the number of properties sold last month, a trend that appears to be continuing into this April. The hot classes are properties priced between $100,000 and $150,000, closely followed by the $150,000 to $200,000 range. With such strong movement in the lower price range look for these trends trickle upward and help the mid range priced homes sell this summer.

Fueling much of the buying is the tight rental market for Bend homes, currently running at 4.2% according to annual rental report release recently by the Central Oregon Rental Association. This is leading to investors returning to the market to snap up good homes that are well priced. Many of these homes are distressed properties either being bank owned or homeowners short selling their properties.

Predictably this competition is drying up the inventory of available homes. As of this writing there are 32 bank owned and 62 short sale homes actively listed. It is expected that the short sale listings will increase as we march closer to the July 1st implementation of Oregon House Bill 1552.

In case you have not followed Oregon HB 1552 it is intended to end the dual tracking policies of the larger lenders. With a three month implementation window from the bills inception there is much that is not known on how this bill will affect homeowners in distress. The bill calls for homeowners and lenders to participate in mediation to arrive at a solution that will allow the homeowner relief through loan modification, short sale, deed-in-lieu and lastly foreclosure.

This bill primarily directed at Oregon’s non-judicial foreclosures. Oregon allows lenders to pursue foreclosure through non-judicial and judicial proceedings. Lenders traditionally have taken the non-judicial procedure because of its simplicity and relatively quick timeline. With the new requirements placed on lenders there is a strong possibility that lenders may now pursue foreclosure through the judicial process. This will allow lenders to retain their rights to pursue any deficiency tied to the debt beyond the foreclosure. Another benefit to the lender in the judicial foreclosure is the short notification timelines, the question will be if the procedure timelines and avoiding the mediation process will be enough to offset the 180 day “Right of Redemption” period required in all judicial foreclosures.

Either way this breaks expect to see an influx of “Notices of Default” filed before the July 1st date, this in turn should create a wave of short sale listings and a bump to our inventory. The question how big will the wave be? And how far will it travel?

Duke Warner Realty Market Trends for March are out!!

There are good signs that our real estate market is stabilizing and a recovery for the region has begun. If our two larger markets Bend and Redmond remain strong it should be a matter of time before our smaller markets like Prineville and south Deschutes County follow suit.


The market for homes under $225,000 is getting more and more competitive, not just in Bend but Redmond too. Redmond is selling homes under $125,000 as fast as they come onto the market. If you are going to buy in this class you better be prepared to act quickly as most well priced homes are receiving multiple offers. If you do not have a mortgage person guiding you on this process use this link to a list of mortgage brokers that have done well for our clients in the past.

For the second month in a row the number of homes that have taken a price reduction has fallen. This trend holds sway mostly in our hot categories with homes under $325,000. The categories above $325,000 are holding relatively steady in terms of price and quantities of homes available with a slight improvement in the number of homes sold.

Overall our inventory has slipped below 400 homes actively listed for sale. At any one time there is an average of 40 bank owned properties and 60 short sales that are actively listed for sale, both of these numbers have been on a downward trend but appear to have stabilized. It will be interesting to see how the recently passed Oregon House Bill 1552 which goes into effect in late June and was design to provide relief and clarity for distressed homeowners affects our distressed sales market. There are a variety of opinions on how the lenders are going to react but there is nothing decisive to report yet.

Builders too are feeling confident in the direction of our local market, last month was had the second highest number of new home permits being issued in the past twelve months. To see the most dramatic illustration of these new homes head out to NorthWest Crossing were more than a dozen new homes are under construction.

Click on the city of your preference to see this month’s Duke Warner Market Trend Report. The Bratton report will follow once it is released.

Bend       Redmond

Bouncing Along the Bottom in Bend, Oregon... Real Estate Market Trends for October

Before you get into the holiday season you may want to check out the latest market trend reports. This is a great time to pick up property in Central Oregon.


Our local data belays what we often hear in the daily news, from the data in the reports it appears that we have stabilized for the moment. The amount of homes actively listed on the market hit a high in August and September and now is slipping back down as we head toward winter. Distressed homes have retreated as well during this period and now comprise 45% of the market with short sales being about 60% of the distressed category. As we slip back down in inventory for the winter months the overall trend has been fewer homes on the market. We are currently down sixty to one hundred actively listed homes from previous years.

Driving this stabilization trend is the continued strong interest from investors and first time home buyers in the under $250,000 class of properties. This has led to sellers receiving multiple offers on properties that represent good values and has them selling quickly. It has also been surprising to see so many cash buyers. With the tightened underwriting rules for financing properties many capable buyers are by passing today’s amazingly low interest rates and bringing cash to the table.

The investors we see coming into the market are looking at the super low vacancy rates for rental properties in the Bend area and calculating solid returns for the next few years. The other attraction is the remarkably low prices and good values on many properties. This has occurred as sellers have come back to reality of what their property is worth today and will be worth over the next few years.

The biggest hold up in the having the real estate market continue to grow is the lack of confidence that the local job market will improve and the national economy’s lingering stagnation. With the upcoming Presidential election the opportunity that our economic turmoil will turn around is slim. With housing being such a huge component of the national economy it would not be surprising to see continued new programs and new road blocks offered up by both parties to help sway voter confidence thus adding to the lack of confidence.

My take is that the market will stay the same undulating course over the next 18 months. Eventually Bend will see slight gains at first but as confidence returns so will Bends popularity. All of the things people from outside of Bend loved before are still here waiting for them and it is just a matter of time before those who hold the dream to move here act. When those who lust for Bend act on their dreams expect to see return to predictable positive gains in real estate.

Have a great Thanksgiving!!

Cheers,

Bill

Bend Oregon Market Trends...

Despite all the doom and gloom we keep hearing about the housing market Bend's inventory keeps shrinking. It has been increasingly difficult to find the types of properties our clients are looking for throughout the Bend market. The current market is a great window of opportunity for traditional sellers with a great home that they can have reasonably priced.


Reaching a peak last August of 695 active listings for homes Bend, the inventory has now shrunk to 411 active listings. The result is more competition and multiple offers for the good homes that are well priced. Buyers who still feel that they are in the driver’s seat and are unwilling to make competitive offers are missing out.

There are many theories as to why the inventory has shrunk; one would be the recent legal rulings that have slowed the process for lenders to foreclose on financially distressed properties. This has resulted in a lower number of bank owned properties entering the market with some actually being pulled from the market. Previously the number of bank owned listings had hovered between the mid-sixties to low nineties that number has dropped to 29 active listings in March.

Interestingly enough the lenders legal issues may be what has spurred a renewed effort by these same lenders to be more accommodating toward borrowers choosing to short sale their homes. This is reflected in the increase in short sale listings which are up seven percent from February. Further proof would be the amount of short sales that have made it to the finish line with a fifty percent increase in completed transactions over February of this year. As long as the lenders remain willing to work with their borrowers short sales should remain a viable option for folks in financial difficulty and provide better than average price opportunities for the buyer who can wait out the process which continues to be refined and faster.

One should not wait though, already the sands are shifting once again, lenders are figuring out how to deal with their legal issues. Last week the Deschutes County Clerk’s Office had around 100 refilling of “notices of defaults” in one day. This could lead to an increase in inventory toward the summer months but the process still is cumbersome and takes ninety days at best to reach the point of an auction. Short sales and loan modifications will slow or cause postponements of many of these auction dates. Of the properties that do make it to market, I would imagine that the lenders will maintain their previous levels of inventory and not further erode property values by flooding the market.

As folks find they want to get on with their lives, they will choose not wait for the return to previous market values. They will adjust their expectations and find a market that is starting to see pricing that is leveling out. Buyers on the other hand are going to find more competition for the best bargains and will need to well prepared to secure the property.

Click here to check out the market trend numbers for yourself.

Do not hesitate to contact me if you need assistance in navigating today's market.

Mortgage Help for some of the Hardest Hit…

As most of us know the recession has hit Oregon especially hard. Oregon is hardly unique in this suffering and is one of 17 states to receive assistance from the U.S. Treasury Department to help those in need.


Coming December 10th the Oregon Homeownership Stabilization Initiative (OHSI) is going to be offering a Mortgage Payment Assistance program. This will be the first of several assistance programs to be offered through OHSI. The program is intended to help financially troubled homeowners avoid foreclosure. In Oregon it is anticipated that 5,000 unemployed or financially distressed homeowners will receive assistance by covering their mortgage payments for one year or up to $20,000 whichever comes first.

Visit http://www.oregonhomeownerhelp.org/ to get more information and take the eligibility test for the program. To stay informed on OHSI offerings make sure that you sign up for their newsletter.

A great reminder…to block that call...

This is kind of funny coming from a sales guy but for those of us who do not care for being bothered by sales calls from telemarketers, registering on the “National Do Not Call List” is a great idea. One thing not known to many is that cell phones become fair game starting this month. For most of us that means getting billed for those unwanted incoming calls.


If you register now it will take 31 days before telemarketers are to cease calling. So just after the New Year you should be free of most annoying calls, at least from telemarketers.

There are a couple of ways to register your phones; the easiest is to call 888-382-1222 from the phone that you would like have registered. The other is to go to the National Do Not Call Registry website, there you can register you can register numerous phone numbers.

Once your number is registered it will not expire. Telephone numbers placed on the National Do Not Call Registry will remain on it permanently due to the Do-Not-Call Improvement Act of 2007, which became law in February 2008.

Incentive extended to lure buyers to distressed Fannie Mae properties...

In an effort to reduce their distressed property inventory Fannie Mae announced today that it will be extending its buyer incentive program. The program offers a 3.5% rebate to those who purchase and close on a Fannie Mae owned home by June 30th. The rebate may be used toward the closing costs of the transaction, select Whirlpool appliances or a combination of the two. The program which was launched this past January was designed to help spur the sale of distressed properties reacquired by Fannie Mae. The program is offered to both first time and move up home buyers who will need to be owner occupants to qualify.
In the Bend there are currently 25 homes listed by Fannie Mae for sale, with more to come. Prices on these homes range from $39,900 to $355,000. Many of these homes will also qualify for HomePath mortgage financing or renovation financing. The HomePath mortgage program allows for down payments as low as 3 without having to incur mortgage insurance. You may use gifts, grants, loans from employers, the government or non profits to fund your down payment. Offered with reduced credit guidelines both owner occupied and investors may qualify for the mortgages but only owner occupied homes will qualify for the purchase incentive program. Fixed rate, adjustable rate and interest only loans are available through the mortgage program. Mortgage financing which includes funds for light renovation is available with the same guidelines and benefits to those properties which will be owner occupied.

This is a great opportunity if the program fits your needs and you do not procrastinate on selecting a home.

Could this be a step in the right direction….

Bank of America announced a new program that will forgive up to 30% of the principal for those owing more than 120% of the value of their home. The program is slated to start this May is in response to a settlement reached with the commonwealth of Massachusetts regarding the type of loan modifications Bank of America could make on their Countrywide portfolio. And it may be a preemptive move to the Washington State suit that Bank of America is not doing enough to modify underwater loans.


While principal reduction has been practiced sparingly on a case to case basis by other large lenders, the Bank of America program will be more wide spread, yet focused to one group of its client base. Applying to only borrowers who have loans generated by Countrywide Financial will be eligible. Of those borrowers only the riskiest loans will be considered. You know the breed; option adjustable-rate, subprime and prime loans with a low initial fixed rate then annual increases. Bank representatives say there are approximately 45,000 loans in the portfolio that qualify. The average reduction will be in the $62,000 range.

Other qualifications are similar to those for a standard loan modification, you also must have missed at least two consecutive payments and be able to demonstrate that you are in financial hardship. Ones loan must have a balance of 120% of the estimated home value.

Once you qualify the program will reduce the principal balance and place the determined amount in an interest free account. For every five year period that you make your payments the bank will forgive a little more of the principal balance until the balance has reached the 100% loan to value ratio. To protect Bank of Americas interests should the homes price recover in the fourth or fifth year to the loan balance the forgiveness to the interest free account would stop and would have to be paid off when the home is sold or the home is refinanced.

Now before you run out and call your Bank of America representative you should know that it will be Bank of America that will reach out to you should you qualify for this program. While this is not ideal it could be a step in the right direction in providing relief that makes sense.

Help is coming for distressed property owners…

Are you one of the legions who for a myriad of reasons need to sell your home and have found that your equity has evaporated? Has your lender sent a notice letting you know that foreclosure may be in your future? Have you explored your options and determined that a short sale is your best avenue of retreat? Have you dreaded the long drawn out and uncertain process of the short sale? Help could be right around the corner, that is if your loans are backed by Fannie Mae or Freddie Mac and your lender is one of those who have volunteered for the program.


The federal government’s Home Affordable Foreclosure Alternative program (or HAFA) is set to start providing relief to qualifying homeowners starting April 5 running through December 31, 2012. HAFA establishes short sale rules and incentivizes borrowers and lenders to work together to avoid foreclosure. The new guidelines will have the borrowers receiving preapproved short sale terms from their lenders before they put the home on the market. The predefined steps will make the process easier to understand for all involved in the sale.

The first step is to determine your loan is backed by either Fannie or Freddie. This can be done by going to http://loanlookup.fanniemae.com/loanlookup/ or https://ww3.freddiemac.com/corporate/. If you have a loan back by either you can then apply for a home loan modification through the Home Affordable Modification Program (HAMP) http://www.makinghomeaffordable.gov/. If you are backed and you do not qualify for a home loan modification or you have started the loan modification process and have missed a payment during the trial modification period you will qualify for the HAFA program.

A few more stumbling blocks include:

• That you are delinquent or you will be defaulting in the near future,

• You can demonstrate that you have a hardship,

• The home is your principal residence,

• Your mortgage was originated before January 1, 2009,

• Your monthly housing payments exceed 31% of your gross income,

With the new HAFA rules, if you do not qualify for a home loan modification your lenders will have to offer you a short sale within thirty days. You the borrower will then have fourteen days to respond to the lenders short sale agreement.

Once an offer to purchase has been made you and your broker will have three days to submit the offer to the lender along with the buyers’ mortgage pre-approval letter. Should there be any other liens on the property you will need to include the status of negotiations with those lien holders. Once all has been submitted the lender will have ten days to approve or deny the offer.

One of the great benefits of the program is the requirement that the lenders release you from any further obligation to repay the difference between the balance of the loan and the sale amount. The ability of the lenders to pursue deficiency judgments has been a black cloud over many a short sale. Lenders (or the collection agencies that they sell the bad debt to) have the ability to pursue a deficiency judgment for up to ten years and in some cases up to twenty years. They can do this because in a short sale the terms of the loan have been modified and the foreclosure process is avoided. No foreclosure means no protect by state foreclosure statues (a discussion for another time).

To get more lenders on board HAFA provides incentives for second mortgages lien holders, up to $3000. While this may not seem like much when tens of thousands may be owed on a note it is far better than the big goose egg they would have received previously. Not forgetting the role that loan servicers play in moving the short sale process along HAFA offers them up to $1000. HAFA also offers the mortgage investors who agree to share the short sale proceeds with the second lien holder up to $1000. And last but not least HAFA provides up to $1500 to assist the homeowner in relocating.

If sounds like a good fix for you and you would like help in navigating this process, call or email me. I would love to provide you with some relief.

Will your lender be seeking a deficiency judgment against you ….

The other day I was interviewing with a prospective client about their distressed property and the options available to them. After researching their options on the internet they were confused about whether a lender has the right to pursue a deficiency judgment against them if they were to short sell their home. Not wanting to go through the ordeal of selling their home only to have the unresolved debt stall their fresh start they asked for my take on the subject.


The first recommendation was that they seek professional counsel from a qualified real estate attorney and CPA. I then shared some of the research that the Oregon Realtors legal hotline had recently provided its members. The hotline offered that currently in Oregon since the short sale of a property is a voluntary modification of terms of the loan agreement, the new agreement can contain any terms the parties agree to. In a voluntary modification like a short sale the deficiency is the unpaid balance of the note. A note holder can sue in court for the unpaid balance of the note unless the maker of the note bargains for and gets “full satisfaction” of the note. Should the borrower get only the note holders verbal agreement to waive their lien and not foreclose that would leave the borrower exposed for the unpaid balance.

To get “full satisfaction” the borrower needs to ask for it!! Otherwise the lender is allowed to waive their lien on the property, forego foreclosure and continue to hold the note as an unsecured debt. Since the note is no longer secured by the property and has become a personal debt, the lender is no longer bound by the foreclosure laws of Oregon. The lender is now free to pursue a judicial judgment for the unsecured debt. In Oregon the statue of limitations for pursuing a judgment is ten years, with the possibility of an extension for another ten years. Just when you thought you would be rebuilding your credit in the next two to four years this dog could be following you around for the next ten years if you do not ask for and receive in writing “full satisfaction” to your lien.

You like the home but wish it had newer kitchen, larger bedrooms or a newer roof….

You have been searching and have found a property you really like but it needs a little love or maybe the rooms are too small and you want to expand them to make it the home you desire. Since 1978 HUD has provide a program design specifically for the buyer who is has found a home they like but needs some immediate attention. The program is designed to help provide a loan package for you to purchase and rehabilitate a home that has been completed for at least one year. The beauty of the program is that it rolls both the purchase price and renovation costs into one loan with a down payment as low as 3.5%.


There are two versions of this program available 203(k) and the 203(k) streamline. Both offer a loan to value rate maximum of 96.5% on the purchase and 110% on the renovation. The streamline program offers fewer restrictions, in this program there is no minimum renovation expense but it does have a capped at $35,000. All properties must be appraised prior to the loan and a value must be determined for the work to be performed. All work done must start within thirty days of closing and be completed within six months of closing. If you can keep your costs down to $15,000 no inspection of the completed work is required.

There are limits to the scope of work that can performed, slab granite counter tops won’t make the grade but a new roof, new appliances, upgrades to heating/cooling systems, flooring, new windows and much more are acceptable.

Ask your mortgage broker to explain the full benefits of how this program can benefit you! If your broker is unfamiliar with the program contact me and I would be glad refer you to a mortgage specialist who is familiar with all aspects of this great program.

Up Coming Dates to Consider

Larry Wallace over at True North Mortgage sent out an email this morning highlighting some important dates some important dates for homebuyers.

March 31st: The Fed is scheduled to stop subsidizing home loan interest rates.
It is entirely possible that they will extend the subsidy, should they choose not to extend look for higher interest rates and higher monthly payments.

April 30th: Tax credit for purchasing a home. The home has to be “in contract”, (i.e. accept offer to purchase) or lose the credit.

June 31st: Tax credit for home purchase must close escrow or lose the credit.

Spring/Summer: FHA mortgage insurance will become more expensive. The effective date is still pending.

Spring/Summer: FHA to reduce allowed seller paid closing costs from 6% to 3%. This will mean the buyer needs to provide more cash at closing. The effective date is still pending.

Missing these dates will make a home purchase much more expensive, it could even leave priced out of buying a home!!

You can contact Larry at larryw@bendbroadband.com or at his office 541-323-8783

I’ve fallen, can you help me find my way!

Are you like many of my clients where the last few years have not been kind to your finances? Do you owe more on your home than what it would sell for in today’s market? Have you been exploring your options; loan modification, deed-in-lieu, short sale, foreclosure or gutting it out and wait for the market value to return? With such a dizzying array of choices, all with serious repercussions, where should you start?

Seeking the wisdom of professionals well versed in today’s ever changing real estate landscape is your best chance to make the best of an unfortunate situation. Real estate agents/brokers are on frontline in this battle and can help provide direction and insight to current market conditions but few are licensed to practice law or give financial advice. The advice of a real estate attorney and a certified public accountant is essential to mapping out a strategy that could affect your finances for the next twenty years.

While most folks who find themselves in this ever evolving nightmare cannot begin to afford a $275 an hour attorney or accountant, there is alternative help available. Here are a few contacts to start with; Legal Aid Services of Oregon, LASO, 541-385-6944 for the Bend office or visit their web site at http://www.lasoregon.org/. Another option is Free Legal Aid at http://www.usattorneylegalservices.com/; this website will refer you to LASO, but also has a lot of good resources that will help depending on what path you take. The Free Legal Aid site has good examples of a sample hardship letter, debt settlement letter and more. Last but not least there is Neighbor Impact their mission is to help the economically disadvantaged in our area. Neighbor Impact offers mortgage default counseling amongst several other financial counseling programs. They can be reached at 541-548-2380 or visit their website at http://www.neighborimpact.org/.

No matter the path you chose, start your journey by collecting and organizing your financial information. Being prepared to provide the most intimate details of your finances will lessen the stress involved in discussing and planning your exit strategy.

You will need to collect a list of your income, assets and liabilities. Two months is the standard for providing pay stubs, bank, mortgage and other monthly statements. Have complete tax returns for the last two years at the ready. In your packet include all correspondence from your lender(s) pertaining to foreclosure of your property; if you have received a Notice of Default include it too. Rounding out your information packet, draft a letter that describes why you are in financial hardship. To say that your house is no longer of the value it once was will not suffice as a reason for your hardship, though it may be a large contributor to your situation.

Mentally prepare yourself for journey of twist and turns that will take months and possibly years to complete. Be strong as all things do pass and life will get better.

Weathers Changing and so is the Market!!

Fall has quickly come upon us this week in Bend with dramatically cooler weather and trees that are beginning to change their colors. Just two days ago we were water skiing at Crescent Lake in swim shorts and ski vests. Today it's mountain biking with fleece tops and leggings. Yesterday brought some of the first snows of the season to the higher elevations surrounding Bend tantalizing all those who pray to the snow Gods for an early ski season.

As fall is changing our recreational opportunities the housing market is also changing. Last month our office posted the busiest month since 2007. At the heart of the activity is the influx of first time home buyers and investors swooping up some exceptional values in today's market. Many of the better priced properties are receiving multiple offers within days of being listed on the MLS.

With the first time home buyers rebate slated to expire on November 30th there is a rush to find the perfect property for those clients. It will be a tight fit for them to be guided through the process of finding the home they desire, obtaining financing, home inspections, appraisals and closing on the property before the deadline. Those who select the wrong property, wait to long or think that the rebate program will be extended most likely will find themselves left out of the party.

For investors it's finding affordable properties that will bring a good return over the years. The current market has some exceptional properties at prices that pencil out to provide great rental income. Currently bank owned properties offer some of the best values with excellent closing times. Properties in a short sale situation often appear to be great values but often come with lots of frustration in long lead times and poor communication from the third party lenders.

Adding to the mix are the return of normal home sellers who desire to sell their home with out all the drama of the distressed property sale. Many believing that we are near or at the bottom of the real estate markets free fall. While most do not see their home value returning to the illusionary numbers of 2005/06, they feel now is as good a time as any coming up in the near future to sell their home. Upon selling many are taking advantage to buy up taking advantage of the markets tumble.

If you are on the fence about getting into today's market keep in mind that the interest rates of today will not last much longer. Most all of the mortgage professionals that we work with are telling us that by the end of October we will see interest rates begin to rise and will continue to do so well into the new year if not longer.

Fall has so many great opportunities, get out there enjoy all that you can.


Bill Panton
Broker, Duke Warner Realty
1033 NW Newport Ave.
Bend, Oregon 97701
bpanton@dukewarner.com
cell 541-420-6545
office 541-382-8262
fax 541-385-3272