South Tampa Homes

TORONTO – Aug. 6, 2010 – Mary and Ron Ethier long believed a getaway home in the Florida sun would remain a retirement dream, but when a recent real estate turnaround opened the border to a growing flock of snowbirds, the couple suddenly saw an opportunity too tempting to pass up.

“We just felt with the prices that were happening down there, that it was out of our reach financially,” said Mary Ethier from her home in Pembroke, Ont. “But when their real estate market basically took a big hit and the Canadian dollar came up, we thought if we’re ever going to do it, now’s the time to get off our butts and go and do it.”

The couple, too busy with their lawn-care franchise to enjoy Ontario summers, toured homes in the Fort Myers, Fla., area in the fall of 2007 and made a lowball offer, expecting to negotiate, but instead found their deal accepted.

By January, they owned a condo in a gated community, a property foreclosed upon when the U.S. housing bubble burst and home prices began to plummet and many American homeowners realized they could no longer pay their mortgages.

The loonie has since risen to hover around parity while U.S. home prices have stagnated, creating new financial incentives for Canadians to act fast and scoop up American real estate deals.

“It’s a once in a lifetime opportunity for Canadians,” says Mark Dziedzic, a Canadian Realtor with Cross Border Realty and a snowbird himself.

The Sun Belt states of Texas, Arizona, California and Florida are favorites, while there are also deals to be had in Nevada and Georgia. The average price of a home in Phoenix, Ariz., is US$144,600, compared to $432,253 in Toronto.

“People are buying $40,000 to $50,000 condos in Phoenix right now. Condos (in Toronto) are selling for $400,000 to $500,000,” Dziedzic said. Taxes, condo fees and closing costs are also generally less expensive in the U.S., he added.

Prices in most U.S. regions have steadied after falling for three years, but a high number of foreclosures persist, lowering prices, especially in Florida and Nevada, said Bank of Montreal mortgage specialist Laura Parsons.

“This is the time to buy if you’re going to,” she said.

“I think you’ve got to look at this as a long-term investment because you’re getting such a deal. You’re going to have to hang on to it for a while,” and ride out any further downturns before the market picks up again, she said.

There is a fine balance between rushing to buy and waiting for lower prices. Economists predict the U.S. housing market will remain soft, but it’s futile to make decisions based on where a currency or a housing market is going.

“I don’t think you need to rush down and get a place, but the good stuff in the lower price range … those are moving. The good ones come up and they’re sold,” Dziedzic said.

Buying real estate in the U.S. is becoming easier for Canadians as more snowbirds snap up getaway homes. But experts caution that the buying process, which takes about three to four months, is a different beast.

© The Canadian Press 2010

ORLANDO, Fla. – May 24, 2010 – Sales of existing homes in Florida rose 27 percent in April, which means that sales activity has increased in the year-to-year comparison for 20 months, according to the latest housing data released by Florida Realtors®. Another positive sign: Last month’s statewide existing-home median price of $140,100 was 1 percent higher than the statewide median price in April 2009.

Existing home sales rose 27 percent last month with a total of 16,781 homes sold statewide compared to 13,244 homes sold in April 2009, according to Florida Realtors. Statewide existing home sales last month increased nearly 3 percent over statewide sales activity in March. Meanwhile, April’s statewide existing-home median price was 2.3 percent higher than March’s statewide existing-home median price of $137,000. It marks the second month in a row that the statewide existing-home median price has increased over the previous month’s median.

“Buyers responding to the federal homebuyer tax credit before it expired helped to boost home sales across Florida,” said 2010 Florida Realtors President Wendell Davis, a broker with Watson Realty Corp. in Jacksonville. “And buying conditions remain favorable, with a variety of housing options available in local markets at attractive and affordable prices. Plus, current mortgage interest rates are at historically low levels, which gives buyers more ‘bang’ for their buck.”

Florida Realtors also reported a 55 percent increase in statewide sales of existing condos in April compared to the previous year’s sales figure; statewide existing condo sales last month rose 2 percent over the total units sold in March. Though April’s statewide existing-condo median price of $103,600 was down 3 percent compared to the year-ago figure, it was 6.9 percent higher than March’s statewide existing-condo median price.

Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in April while all but one MSA had higher condo sales. A majority of the state’s MSAs have reported increased sales for 22 consecutive months.

Florida’s median sales price for existing homes last month was $140,100; a year ago, it was $138,100 for a 1 percent gain. The median is the midpoint; half the homes sold for more, half for less.

Thenational median sales price for existing single-family homes in March 2010 was $170,700, up 0.6 percent from a year earlier, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $301,790in March; in Massachusetts, it was $280,000; in Maryland, it was $235,785; and in New York, it was $209,900.

According to NAR’s latest outlook, two trends are influencing a broader stabilization of home prices in housing markets across the nation: months of increased sales activity and lower levels of inventory. “Foreclosures have been feeding into the inventory pipeline at a fairly steady pace and are being absorbed manageably,” said NAR Chief Economist Lawrence Yun. “With home values stabilizing, a revival in homebuying confidence will likely help the housing market get back on its feet even as the tax credit impact disappears.”

In Florida’s year-to-year comparison for condos, 7,291 units sold statewide last month compared to 4,703 units in April 2009 for an increase of 55 percent. The statewide existing condo median sales price last month was $103,600; in April 2009 it was $107,200 for a 3 percent decrease. The national median existing condo price was $170,600 in March, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.10 percent in April, up from the average rate of 4.81 percent during the same month a year earlier, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s smaller markets, the Panama City MSA reported a total of 128 homes sold in April compared to 108 homes a year earlier for a 19 percent increase. The market’s existing home median sales price last month was $160,000; a year earlier it was $156,800 for an increase of 2 percent. A total of 65 condos sold in the MSA in April compared to 53 units sold the same month a year earlier for an increase of 23 percent. The existing condo median price last month was $187,100; a year earlier, it was $172,900 for an 8 percent gain.

© 2010 Florida Realtors

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RISMEDIA, April 26, 2010—If you are reading this, it means you’ve survived. Congratulations. You might be surprised to know you’re not alone.

According to the very encouraging results of RISMedia’s 22nd Annual Power Broker Survey, more than 1,200 real estate firms weighed in on their success in 2009, reporting a total $585,508,645,713 in sales volume. Although this total sales volume is down by more than $163 billion over 2008, overall transactions for 2009 have increased by more than 100,000. These numbers clearly reflect the increasing sales of distressed properties last year, a healthy step toward moving these properties off the market, reducing inventory and stabilizing prices.

So, while the market is still rife with troubles, such as short sales, foreclosures and underwater homeowners—and stands to be for the remainder of 2010—the positive signs cannot be denied and most agree that we’ve bottomed out and are beginning a slow climb back up.

2009: The Year in Review
“Last year was really rough,” said Prudential Real Estate and Relocation Services President Earl Lee at the company’s annual sales convention last month. “Real estate professionals were knocked down and pushed around but their resilience is an inspiration to all of us.”

Resilience in 2009 was demonstrated by those who were willing to embrace market realities and reorganize their businesses accordingly. As Bill Plattos, executive vice president of First Team Real Estate in Southern California, reports, 2009 revealed signs of stabilization in his market and increased business for companies that planned properly.

“We tried to read the market correctly and see where it was going and we focused on short sales,” he explains. “Plus, in our larger areas (Orange County, Riverside, Long Beach, etc.), our offices seemed to be cycling through the downturn faster than others. We developed our business plan specifically for getting the most we could out of the market that was presented to us. We also made agent training and marketing priorities.”

Even brokers in some of the country’s hardest hit areas are looking at 2009 as a positive year. Rei Mesa, president and CEO of Prudential Florida Realty, for example, describes 2009 as “an excellent year”…relatively speaking.

“Our transactions for single-family homes were up 31% and our volume was equal to 2008, which is an indication that Florida has become a very affordable state to live in,” explains Mesa. “For our other family of services, our mortgage group had a 9% increase year-over-year in loans and our title company saw a 13% increase year-over-year in the number of closed transactions, so it was an excellent year in looking at transactions as well as our bottom line. We have exceeded expectations from our business plan, based on our right-pricing approach, which is finally starting to impact our bottom line now.”

“Looking back, we had a reasonable year,” reports Dick Schlott, chairman and CEO of Gloria Nilson GMAC Real Estate in New Jersey. “We sold more houses than the company sold in 2008, but the average sales price was lower, which marks a continuation of what the market has been like the past few years. Looking back on the past year, we are pleased with how 2009 turned out, but are concerned that a majority of the activity came about because of the extended and expanded stimulus package.”

Many Power Brokers agree that government-sponsored programs helped shore up sales in the latter half of 2009. According to Georgianna Finn, broker/owner of Coach Realtors in Long Island, New York, “2009 matured throughout the year exactly as expected. No one was holding out on a realistic expectation for a return to a robust market. The last quarter of the year brought a substantial increase in business and profitability to the company, which is an encouraging sign. The increase in business came about through the government programs kicking in. Sellers decided to deal with the market instead of waiting for a miraculous change to occur.”

Those brokers who held on in 2009 were also those who wielded the red pen, cutting expenses where necessary to ensure survival.

“The fourth quarter of 2008 and first quarter of 2009 were just awful,” reports Prudential CA/NV President & CEO Ed Krafchow. “After that, it started to pick back up. There has been a lot of effort on everyone’s behalf to keep things going. By July of 2009, we were stable. That comes from cutting budgets and reorganizing.”

Operating in the New Landscape
As in any severe storm, the landscape often changes permanently in the aftermath. The real estate landscape is no different.

“We started the decade with a boom followed by a precipitous drop,” explains Lee. “The depth and speed of this decline caught everyone off guard. We knew a correction was coming but the severity and speed was not expected. But there are now positive signs for the future: home prices are no longer in a free fall and if you have good credit, you can get a mortgage—which, by the way, was the way it was always supposed to be.”

“This is the third downturn I’ve been through,” says Frank McDowell, broker/owner of Star Real Estate in Southern California. “It’s also the biggest. You have to be frugal and try not to expand too quickly. In the end, you’ll just end up cutting costs anyway as the market changes. I see between now and June to be very active.”

Succeeding in today’s market means accepting the fact that the real estate business has changed. “Today’s agents need to accept and embrace the market changes and then turn these changes to their best interest,” says Mesa. “Our successful agents have taken on REO business and figured out the appropriate process for short sales; they aren’t taking overpriced listings, they are focusing their marketing on the Internet rather than print and utilizing our family of services.”

Power Brokers are wary, however, about declines in the market this year once government programs come to a close.

“If the tax credit is not extended and if interest rates go up, I do see a slowdown,” says McDowell. “Because of this, I urge all of our agents to understand that this could happen and to take advantage of all the opportunities that are currently in front of them.”

“Once the stimulus package ends, we hope to see a pick-up in confidence in our particular market,” says Schlott. “After the stimulus package is abated, we anticipate that there will still be people buying and moving but at a more steady rate and within a higher price range over first-time buyers. As 2010 continues, we are forecasting an uptick in activity within our real estate market as well as stabilization within pricing. We are confident enough that things are going to continue to move in the right direction that we are opening two new offices in adjacent markets where we hope to get a piece of the market share.”

Planning for a Better Year, a Better Future
Like Schlott, savvy Power Brokers are well steeped in the realities of the new marketplace and honing their firms’ ability to make the most of the current and future real estate environment.

“We are continuing our business plan and focusing on short sales,” says Plattos. “We have learned and tackled every single point in short sales. In turn, our results are very good—85%-90% of the short sales close. In reading the market, it seems like the equity buyer and seller is coming back. The people who have owned a home and have a bit of equity have the opportunity to move up.”

“I don’t think the consumer confidence level has risen enough to stimulate the market. Nonetheless, well-run companies that are finely trimmed with a professional and hardworking sales force are going to be able to make it in this market,” says Finn.

Lessons learned from the current marketplace will serve Power Brokers well into the future.

“One lesson learned is to be careful of cost structure,” advises Krafchow. “Number two, if you’re not investing in the brokerage of the future you will get left behind. Number three, there’s this new generation of agents that have me fairly optimistic. I see Generations X and Y in this business and they have totally different behaviors and expectations.”

According to Lee, pent-up demand and low levels of building will soon result in reduced inventory.

“If history is any guide, the housing markets will rebound in advance of the labor markets and will help spark economic recovery,” says Lee. “Real estate is the locomotive that pulls the economy along. The biggest successes come out of the toughest times. You have choices. Choices you make will determine your destiny.”

As Prudential Americana CEO & Owner, Mark Stark says, the biggest lesson to walk away with for the future is to expect the unexpected.

“The things you think can never happen can happen,” explains Stark, whose company is based in Las Vegas. “While we couldn’t have planned for most of what has happened within the market recently, we have stayed ahead of the market. We haven’t lied to ourselves about what is happening—instead, we have been realistic and moved forward aggressively and quickly in order to protect our organization in the long term. No matter what happened within our marketplace, we were always prepared for it.”

“Even though there was a plethora of bad news, buying and selling of homes continues because families that couldn’t buy or sell over the last four years are able to now because of the low prices and interest rates,” says Schlott. “The market is certainly slower than it was four to five years ago, but we are entering the recovery phase now. While it is going to take a long time for prices to fully recover, this recovery period will bring prices back to 2003 levels and people are beginning to realize that now is an incredible time to buy or sell a home.”

- Stephanie Andre and Paige Tepping contributed to this article.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Government urges short sales, but experts aren’t sure they will help

PHILADELPHIA – March 12, 2010 – With the highly touted federal mortgage-modification program falling short of its target numbers, the government has looked into alternatives to foreclosure and come up with a possible, though not original, solution: The short sale, a transaction in which the lender accepts less than the balance owed on the mortgage.

Beginning April 5, under new Treasury Department rules, short sales will be presented as the potential next step for homeowners who are rejected by or fail to make the grade for the federal Home Affordable Modification Program (HAMP).

RealtyTrac chief economist Rick Sharga suggested that offering the short-sale program is the administration’s acknowledgment that its current mortgage-modification effort “can’t solve the foreclosure problem by itself.”

Kevin Gillen, vice president of Econsult of Philadelphia, said there was both statistical and anecdotal evidence that lenders have been holding off on foreclosure proceedings. “No doubt that part of this is due to staff shortages relative to the volume of delinquencies, but it’s also due to uncertainty over near-term government policy,” he said.

Sharga sees positive elements in the new guidelines: Both homeowners and mortgage servicers will have financial incentive to participate in short sales; there are limited payouts for second lienholders, “and paperwork is standardized, which makes it easier for everyone to comply.”

The new Home Affordable Foreclosure Alternative program will run until Dec. 31, 2012. Among its provisions:

• The lender must offer a short sale in writing to the borrower within 30 days after the borrower either is ruled ineligible for mortgage modification under the HAMP program or has been ruled unable to sustain payments under a trial plan.

• A borrower may receive up to $1,500 to assist with relocation expenses.

• Incentives of $1,000 will be offered to lenders for each completed short sale. For each deed in lieu of foreclosure, in which the borrower voluntarily transfers the property to the lender, $1,000 will be paid to the lender.

• A lender with a second lien on the property will get up to $3,000 of the short-sale proceeds, or can pursue a short sale outside the program if it doesn’t agree to share.

• The lender will not be permitted to reduce the real estate agent’s commission after an offer on a property has been received.

Currently, short sales don’t make up a big piece of the real estate market, either regionally or nationwide, for a variety of reasons. One is they tend to be difficult and time-consuming.

“I handled a short sale of a condo in Bensalem (Pa.) that took a year,” said real estate broker Christopher J. Artur. Typically, there is “so much aggravation and red tape involved that some buyers get so fed up they walk away.”

Nationally, just 14 percent of all existing-home transactions in January were short sales, the National Association of Realtors says. In the Philadelphia region, they made up 6.9 percent of total homes for sale at the end of January, said Art Herling, regional vice president at Long & Foster Real Estate.

“I call short sales ‘organized chaos,’ “ said Noelle Barbone, office manager of Weichert Realtors’ Media office. Each lender works short sales differently, “at their own pace, and it depends on how behind (the homeowners) are on mortgage payments, if the house is worth less than they owe, and whether or not foreclosure paperwork has been filed.”

The new program is unlikely to make short sales easier, even as an alternative to foreclosure. “What one needs in a short sale is time,” Barbone said.

But these days, as buyers race to meet the April 30 agreement-of-sale deadline for the federal tax credit, time is money.

“I had first-time buyers this weekend with 20 percent down, and we found two houses they liked,” said Cheryl Miller of Long & Foster’s Blue Bell office. Both were short sales, however, and neither the seller nor the agent could give a definite timeline for even seeing an executed agreement of sale, she said.

“Timing is pretty critical for the first-time buyer, and viable houses that are short sales are remaining unsold” as a result, Miller said.

Sharga doesn’t think the new short-sale program will be the answer the government seeks. “While we’ll likely see an increase in the number of short sales, I doubt that the reality will live up to the hype.”

Copyright © 2010 The Philadelphia Inquirer; distributed by McClatchy-Tribune Information Services. All rights reserved.

Lots of bargains? Not so, Fla. homebuyers say

WEST PALM BEACH, Fla. – Feb. 12, 2010 – Think there are all kinds of crazy deals to be had in today’s real estate market?

That’s what 31-year-old Jason Bellak thought, too – a year ago. He’s been searching that long for something in the $150,000 price range in Palm Beach County. Short sale, condo, townhouse, foreclosure – he’s looked at them all, made offers on several, but is still living with his parents in Royal Palm Beach.

Despite a perception that three-bedroom, two-bath beauties with granite countertops and good schools can be yours for a song – or at least for 20 percent down – it’s not a market reality, say frustrated homebuyers and their Realtors.

Cash investors, sluggish banks and thorny financing are limiting the options for your average homebuyer, who, by the way, is sick of hearing, “It’s a buyers’ market.”

“I was like most people, thinking there were a lot of deals out there,” Bellak said. “But it quickly became apparent that it wasn’t going to be such an easy process.”

Competition is highest now in the $150,000 to $250,000 price range, said market analyst Jack McCabe of McCabe Research and Consulting in Deerfield Beach.

The median single-family home in Palm Beach County sold for $238,000 in January – 9 percent higher than in 2009, according to the Realtors Association of the Palm Beaches. Inventory in January was down to eight months, less than half of what it was in January 2009.

“Most people still think we’re in this terrible market, but the inventory tells a different story,” said Realtor Scott Smith, who has clients struggling to find homes in the Jupiter and Palm Beach Gardens area even though they’re willing to spend between $350,000 and $400,000.

Bellak can’t even recall the details of all the offers he’s made on homes in the past year. He bid on a three-bedroom townhouse in foreclosure but lost. He made an offer on a short sale condo – meeting the $141,000 asking price – waited three months, but then couldn’t get financing because the homeowners association had too many delinquent accounts.

In most cases, for a buyer to get a Federal Housing Administration-backed loan for a condominium, no more than 15 percent of the units can be more than 30 days past due on association fees.

Now Bellak has his heart set on a two-bedroom Jupiter townhouse.

“I think if this one doesn’t go through, I may hold off for now,” said Bellak, who has been working with Realtor Craig Fialkowski of Herman Group Real Estate in Palm Beach Gardens.

Realtors say part of the problem is that people hear the hype about the down market and expect to find a steal in a great neighborhood.

Last year, more than 500,000 Florida homes received some type of foreclosure notice, according to the Irvine, Calif.-based company RealtyTrac.

But while foreclosures are usually priced low, they’re not always good deals. They could be tagged with liens, have missing appliances or be in general disrepair.

“It’s not like everything just became half-price overnight with no repercussions,” said Realtor Shannon Brink of Re/Max Prestige Realty in downtown West Palm Beach. “Plus, many banks still sell homes off at auction or to capital investors, so not everything even hits the open market.”

Crystal Paul and her fiancé, Antonio Hester, both 25, have been working with Brink since December to find a home for about $150,000.

They’ve looked at a dozen or more properties and have made some offers. But they’ve lost out to investors with ready cash, which is more attractive to banks.

“You find a house you think you can live in, but then you lose it,” Paul said. “The cash investors have the upper hand and here we are just trying to get started.”

When a short sale off Military Trail popped up last week for $139,900, Paul and Hester made an offer that the homeowner accepted. But he owes more than $230,000 on the house, and in the end it’s up to the bank to OK the sale.

Brink said banks will sometimes set a low asking price on a short sale to attract buyers, but with no plans to actually settle for that price.

While short sales have traditionally taken months to settle, new federal guidelines that go into effect in April require banks to respond to short sale offers within 10 days.

More good news for buyers this year is the prediction of an increase in foreclosures that could further reduce prices.

G. Stacy Sirmans, a real estate professor at Florida State University, said the market hasn’t hit bottom and won’t for at least another year.

“It’s definitely a buyers’ market,” Sirmans said.

Copyright © 2010 The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.

South Tampa homes continue to be available at deeply discounted prices. Whether you are a first time homebuyer, or and investor looking for either a flip or a buy, rent and hold strategy, there are plenty of homes on the market to suit your goals. The first time homebuyer tax credit of $8000 along with the step up credit of $6500 are both still available, but time is running out on you. Short Sales are virtually out of the question if you are trying to capitalize on the credits unless they are bank approved. Bank owned foreclosures are great to go after, but the competition to purchase these properties is getting fierce, and selling prices are going above asking price in many situations.

Here are a few tips to assist you in making sure you are doing everything to capitalize on the current deals available:

• Utilize a full time Realtor with a focus on your area, i.e. South Tampa
• Use a Realtor that has experience with short sales and foreclosures
• Get yourself pre-approved so you are ready to submit your offer when the time is right

Hopefully these tips will help you in finding the perfect home and capitalizing on the credits available. With interest rates as low as they’ve been in 50 years, prices being as low as they’ve been in 5+ years and the tax credits available, we are truly witnessing the perfect storm to purchase a home, especially in South Tampa. If you would like to view South Tampa homes for sale, please visit my website at www.SouthTampaSpecialist.com.

I’ve been seeing some great deals in South Tampa under $100K. Most that I see are being bought within a few days of being listed, but it’s a great opportunity for a buy, rent and hold strategy. The rental market is very strong in South Tampa w/ MacDill AFB and the University of Tampa. The homes my buyers are purchasing usually need around $10-$15K in repairs to get them “rent ready”. If you would like to be included in the emails I send out with these homes, please visit my site to see South Tampa Homes for Sale and let me know what you are looking to purchase.

Obama administration expands housing plan

WASHINGTON – May 15, 2009 – The Obama administration expanded its $50 billion mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a foreclosure if they don’t qualify for other assistance.

The initiatives are intended to streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner’s credit score, but less than a foreclosure.

Since the program, called Making Home Affordable, was launched in March, Mortgage companies have made more than 55,000 offers to modify borrowers’ loans.

“We’re seeing a lot of progress in a very short period of time,” Treasury Secretary Timothy Geithner said.

Officials estimate up to 4 million borrowers will get their loans modified, but housing experts like Mark Zandi of Moody’s Economy.com expect the number will be less than half of that.

And while the number of success stories is growing, it pales compared with the rate of new foreclosures, and many housing counselors across the country are complaining that the program has been slow getting off the ground.

“Our experience at the ground level has been, so far, frustrating,” said Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group. Entry-level employees at mortgage companies, he said, are either steering borrowers away from the plan or are entirely unaware of it.

There are, of course, lucky homeowners like Daniel Iturriaga, 45, a warehouse worker from Compton, Calif. Working with a counselor from Springboard, a nonprofit counseling group, Iturriaga was able to get JPMorgan Chase & Co. and mortgage finance company Fannie Mae to modify his home loan.

He’s going from a monthly payment of about $2,300 to about $1,275. After a three-month trial period, it should be final in mid-June.

“It’s a long process, but I still have a little hope to stay in my home,” said Iturriaga, who bought his home for about $400,000 in 2005 and has seen houses on the same block sell for about half as much. “I’m pretty happy.”

Nevertheless, Guy Cecala, publisher of trade publication Inside Mortgage Finance, doesn’t expect to see large volumes of loan modifications before July or August. “The basic problem is that the program is very complicated and involved to set up,” Cecala said.

The government program requires numerous changes to how the mortgage industry does business. To get a loan modification, borrowers must provide proof of their income and send in a letter stating why they need help.

Since the program involves taxpayer dollars, the lending industry needs to make sure it sets up the program correctly, said Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis. “This is a very well-thought out plan,” she said. “People have to be a little bit patient.”

But Rose Inman is out of patience and out of time. Aurora Loan Services is set to foreclose on her home overlooking Seattle’s Puget Sound on Friday.

Inman, 58, has lost two jobs, one with a manufacturing company, the other with the City of Seattle. Since then, she’s been working as a human resources consultant, but making much less money.

Despite numerous calls, e-mails and letters, she says she’s only been able to have one phone conversation with a company representative.

“It’s like this huge, concrete thick wall that you cannot get through,” she said.

Last week, Aurora joined the Obama administration’s loan modification program. The Colorado-based company is in line for nearly $800 million in government incentives to modify borrowers’ home loans.

“We offer a wide range of foreclosure prevention options to our customers,” Deborah Munies, an Aurora spokesman, said in an e-mail, while declining to comment on Inman’s case. “In cases where the customer has the ability and willingness to make a reasonable monthly payment, we make every effort to avoid foreclosure. Foreclosure is pursued only when a variety of other workout options have not been successful.”

So far, 14 companies that serve about three quarters of the mortgage market have signed up and will be paid for each loan they modify.

The initiatives announced Thursday are aimed at ineligible homeowners. For borrowers who are unemployed or owe significantly more than their homes are worth, there are generally two options to avoid foreclosure.

The homeowner can sign the property title over to the lender in what is known as a deed in lieu of foreclosure. Or, with the lender’s permission, the homeowner can sell the property for less than the value of the loan a so-called “short sale.”

Mortgage companies would get up to $1,000 and borrowers would get up to $1,500 in relocation costs.

For months, real estate agents have complained that it’s difficult to get lenders to agree to a short sale, and the process takes so long that many deals fall apart.

“They do not have their institutions staffed properly, that’s the problem, “said Lisa Gregory, a real estate agent with Prudential California Realty in Del Mar, Calif. “I don’t think encouraging these processors with an extra $1,000 will help because they aren’t motivated,” she said, but added that “this certainly sounds better than nothing.”

Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP Real Estate Reporter J.W. Elphinstone contributed to this report from New York.

Senate moves toward easing mortgage terms

WASHINGTON – May 7, 2009 – Trying to curb home foreclosures, the Senate voted on Wednesday to make it easier for homeowners with risky credit to switch to a lower-cost mortgage backed by the government.

The bill, passed 91-5, also would give banks a break by reducing fees they must pay for the government to insure deposits.

While both steps put taxpayer money on the line, lawmakers say the legislation is needed to prevent the economy from getting worse.

“Given the size and scope of the struggles too many Nevadans and Americans endure, it will take more time before housing normalizes again,” said Senate Majority Leader Harry Reid, D-Nev. “But with this bill, we are working to hasten that day so that no family will ever accept losing its home as the way it is.”

Also on Wednesday, Democratic leaders in the House and Senate hashed out a plan to establish a $5 million, independent commission that would investigate the cause of the financial crisis and chart a path forward.

The Senate bill would expand an existing $300 billion program called “Hope for Homeowners,” which encourages lenders to write down an individual’s mortgage if the homeowner agrees to pay an insurance premium. The program, which is set to expire in 2011, is intended to swap out a homeowner’s high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration.

So far, the program has been a dud.

When it was established last year, Congress envisioned helping some 400,000 troubled homeowners. But because eligibility requirements were so strict, one borrower has completed the refinancing process and only 51 more are in the works, according to statistics released last week.

The program also has been stymied by high fees, complex regulations and a requirement that banks volunteering to participate absorb large losses. The Obama administration supports easing restrictions.

Republicans also have swung behind the latest proposal to expand the program using $2 billion from the $700 billion Wall Street bailout fund. Sen. Richard Shelby of Alabama, the top Republican on the Banking Committee, co-sponsored the bill with panel chairman Sen. Chris Dodd, D-Conn.

Still, some Republicans warned that increasing the burden of the government to insure risky mortgages – even if it saves people from foreclosure – could backfire. Sen. David Vitter, R-La., who called the Federal Housing Administration a potential “ticking time bomb,” proposed letting the administration suspend any programs that threaten its solvency.

His effort was defeated 36-56.

Another issue is whether Hope for Homeowners will be enough to keep people in their homes, considering other voluntary efforts haven’t worked that well. According to a report released last month by federal regulators, fewer than half of the loan modifications made by lenders at the end of last year reduced payments by more than 10 percent.

Without a guaranteed steep discount, homeowners are still considered at risk of defaulting.

Instead, the Senate bill focuses on expanding eligibility. For example, the program currently bans participants who intentionally defaulted on a mortgage or other substantial debt. The Senate bill would narrow that prohibition to defaults within the last five years.

The government also could waive the requirement that the home be an individual’s primary residence. And, the bill allows for the homeowner to pay lower insurance premiums associated with the modified loan.

The bill also would permanently increase the borrowing authority for the Federal Deposit Insurance Corporation from $30 billion to $100 billion. Increasing the FDIC’s credit would allow the agency to reduce large new premiums it has begun charging banks to insure deposits.

Lawmakers also want to soothe investor fears by keeping an increase in government insurance for bank deposits. Under the Senate bill, deposits up to $250,000 would be insured by the Federal Deposit Insurance Corporation through 2013.

The House in March had approved a similar version of the bill; the two chambers will have to work out their differences before a final bill is sent to the president to sign.

HUD releases $5 billion in foreclosure aid and workforce housing funds

WASHINGTON – May 5, 2009 – The Department of Housing and Urban Development (HUD) yesterday announced a $5 billion program, in conjunction with the Department of the Treasury, to spur the development of affordable housing units; and a separate $2 billion HUD program to combat local problems resulting from foreclosures. Funded through the American Recovery and Reinvestment Act (The Recovery Act), the programs together provide approximately $5 billion to states for the acquisition and construction of affordable housing for working families.

Low Income Housing Tax Credit (LITC)

Through the Recovery Act, the Treasury Department will, for the first time, give state housing agencies funds that they, in turn, will grant to developers of qualified affordable housing developments to fill the Low Income Housing Tax Credit (LITC) gap. The program will increase the supply of newly constructed or recently renovated affordable housing units for families that otherwise may not have come to market due under current economic conditions.

“With this new program, we are not only creating new jobs through new construction, we are ensuring the availability of affordable housing, which is good for the nation’s economic stability and the economic security of millions of American families,” says Treasury Secretary Timothy Geithner.

A by-product of the economic crisis has been a freeze of the investment in Low Income Housing Tax Credit, the federal government’s program for the development of affordable rental housing. Tax credits provide an incentive for investors to participate in the program, which in turn provides equity to developers to build multi-family rental housing for moderate and low income families. Developers depend on the equity to fill project financing gaps. In the current financial crisis, credit is tight, and as a number of traditional equity investors left the market, the value of tax credits have plummeted. Currently, up to 1,000 projects containing nearly 150,000 units across the country are on hold.

Tax Credit Assistance Program (TCAP)

In addition to Treasury’s new program, HUD will be awarding $2.25 billion in grants to state housing credit agencies through the Tax Credit Assistance Program (TCAP) so they may complete construction of qualified housing developments. The TCAP program will ultimately provide affordable housing to an estimated 35,000 low-income households.

Neighborhood Stabilization Program (NSP)

HUD Secretary Shaun Donovan also announced that HUD is soliciting grant applications under the Department’s Neighborhood Stabilization Program (NSP) to make nearly $2 billion available to states, local governments and non-profit housing developers to combat the problem of home foreclosures. Applications for NSP funds are due by July 17, 2009.

Funded under the American Recovery and Reinvestment Act of 2009, this round of NSP funding will award grants to applicants who target the areas with a lot of abandoned and foreclosed homes. HUD is also offering up to $50 million in technical assistance grants to help NSP grantees manage the inventory of foreclosed homes they purchase under the Neighborhood Stabilization Program.

© 2009 FLORIDA ASSOCIATION OF REALTORS®