New short sale program allows homeowners to keep their home

Oregonians living in Deschutes and Jackson Counties can now take advantage of a new and exciting government-funded program (Oregon Hardest Hit Funds Program or “OHHFP”) designed to allow you to stay in your home on an affordable
and realistic basis. If you’re struggling to make your payments or have already missed payments but you would like to stay in your home, contact me to discuss program criteria. Program funding is limited, and approvals are based upon a first come/first served basis. If you and your home qualify, OHHFP reduces your mortgage debt to reflect the current value of your home. OHHFP allows you to stay in your home, reduce the amount you owe on your mortgage, and reduce your monthly payment, all at no out-of-pocket cost to you.

Sounds to good to be true right? You’re probably wondering how this is possible. The program works like a short sale. The homeowner’s property is purchased by a company operating the program on behalf of the State of Oregon, and it’s then sold back to the homeowner, at current market value, with the purchase price financed by the State of Oregon through a 30 year, fixed rate loan.

TOTAL PROPERTY RESOURCES, a full service real estate sales brokerage company headquartered in Bend, is pleased to be one of the FIRST real estate brokerage companies in Oregon to position itself to assist homeowners in taking advantage of OHHFP, focused on the needs of homeowners in Deschutes and Jackson Counties, through the use of designated TARP funds. This program is one of the first of its kind in the nation.

The 15 Best Housing Markets For The Next 5 Years

BusinessInsider.com reported that the latest data from Fiserv Case Shiller shows that national home prices are expected to grow at an annualized rate of 3.2% between 2011 and Q2 2016. They picked the best housing markets for the next 5 years and you probably already guessed that Bend made the list. The data predicts annualized growth for Bend from 2011 – 2016 will be +11.9%. Let’s take a look at the median sales price for the past 5 years.

Year 2011     Median sales price $200,000  (down 1% from 2010)
Year 2010     Median sales price $202,000  (down 9% from 2009)
Year 2009     Median sales price $222,000  (down 26% from 2008)
Year 2008     Median sales price $299,000  (down 16% from 2007)
Year 2007     Median sales price $355,000

You can clearly see that the decline in values has slowed drastically and home values are only 1% lower than they were last year. Depending on which types of homes I include and which neighborhoods, I can even show that values didn’t decline at all. If this trend continues, we certainly could see some appreciation over the next 5 years.

Bank of America is Offering “Cooperative Short Sale”

Yes I know, it sounds like an oxymoron, however, Bank of America is one of my favorite lenders to work with on short sales and I’m really excited about this new short sale option. I’ve had really good outcomes working with Bank of America. I have always gotten deficiency rights waived without any monetary contribution from the borrower, whether it’s a primary residence or investment property. I like the Equator system and if I have any issues, I know who to call (or tweet). I just learned that it can be even easier to work with Bank of America. I received a phone call yesterday informing me that my client had been preselected for the Cooperative Short Sale Program. I was thrilled. I had heard about this new program but there didn’t seem to be any rhyme or reason to who got selected and what the criteria was for eligibility.

What makes this program so exciting? It’s very similar to HAFA but without all hurdles and red tape and prevent HAFA short sales from being successful. (I hate HAFA) In a Cooperative Short Sale, the property is listed for sale at fair market value. You have 4 months to sell the property. If the property is sold, the proceeds from the sale are used to pay off the mortgage debt, even if the proceeds are less than the amount owed on the mortgage (short sale). The borrower may be eligible to receive relocation assistance of $2,500 to help with moving, relocation and rental expenses. And best of all, Bank of America will not pursue the deficiency balance on the loan. I just faxed in the required paperwork (only 2 forms) so we’ll have to wait and see how it goes but I am optimistic.

Freddie Mac Offers Incentives to Buyers

Freddie Mac is offering a winter sales promotion on its REOs, or bank owned properties, through the Homesteps program. Freddie Mac will pay up to 3% of the final sales price towards the borrower’s closing costs. Some homes are also eligible for a two-year Home Protect limited warranty that covers electrical, plumbing, air conditioning, heating, and other major systems and appliances. (Warranties like this typically cost around $400 per year or more.) In addition, Home Protect provides discounts of up to 30% on appliance purchases.

To be eligible for the incentives, you must submit an offer (and have it accepted) between November 15, 2011 and January 31, 2012, with escrow closed on or before March 15, 2012. You also must plan to move into the home. The incentives are only good for owner occupied properties.

There are currently 11 properties for sale in Bend that are offering these incentives. 32 homes owned by Freddie Mac have sold in Bend this year with sales prices ranging from $65,000 – $275,000. Contact me for a list of available properties.

One nightmare HAFA experience (of many)

The Home Affordable Foreclosure Alternatives (HAFA) program sounded like it had a lot of potential when it was first announced. HAFA provides financial incentives to both borrowers and loan servicers in connection with a short sale or a deed-in-lieu of foreclosure (DIL). The program allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds). This means that before you even list your home for sale, you have a bank approved price. Fantastic! The program requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed). Also fantastic! The program isn’t working though.

Last year I was contacted by a homeowner who had received approval to do a HAFA short sale. It took him one year to get approval. First they told him he made too much money to qualify. (Really? He was seriously struggling to make his mortgage payments and stay on top of other obligations but he made too much money?) He tried again a couple of months later and was told he didn’t make enough money. (He had just been laid off and wasn’t bringing in any income. Again, really? He knows he doesn’t make enough money, that’s why he contacted you!) Finally, third times a charm, he was approved because he made just the right amount. Reminds me of the three little bears.

The approved sales price was $168,000. I’m convinced they only did a drive-by BPO when they determined the value. Had anyone stepped one foot in the door they would immediately have known that we would never find a buyer willing to pay $168,000. We put the house on the market at $168,000 and had 4 months to sell it. I heard the same feedback over and over. It’s overpriced, it needs too much work, my clients don’t want a fixer, etc. I sent new comps to the lender only to be ignored. With a foreclosure date quickly approaching, we made the decision to reduce the price to $149,000. Within one week we had an offer of $129,000. I submitted the offer along with new comps that justified the purchase price and the offer was immediately rejected with no explanation. I eventually learned that for the first 120 days of a HAFA short sale, the lender will only accept offers at the “approved” price. It didn’t matter how many times or how many different ways I explained to them that we would never find a buyer willing to pay $168,000 they weren’t willing to budge or agree to a price reduction. By the time the offer was rejected, we were nearing the end of that 120 day period and dangerously close to the foreclosure date. The only options were to roll the dice and resubmit the offer as a traditional short sale and hope that we could get the sale postponed in time, or the borrower could try for a HAFA deed-in-lieu (DIL). In fact, a HAFA short sale automatically rolls over into a HAFA DIL if it’s not successful. The borrower chose the HAFA DIL because it seemed like the most likely way to get the sale date postponed. There’s no guarantee the DIL will get approved, but at least the sale was postponed while the bank considered it. The borrower still does not have resolution.

I will likely never list another HAFA approved short sale and I can’t even suggest it to seller clients. It was the most frustrating short sale experience I’ve had. I have yet to talk to a real estate agent that has had a positive experience. Had my client just listed his home for sale at market value, I believe it would have been much more likely that we would have gotten the short sale approved and the transaction would have closed. I’ve been very successful at getting deficiency rights waived so the only HAFA perk he would have missed out on would be the $3000 incentive.

The other HAFA option is to list your home for sale, receive an offer, and then submit the offer to your lender and request a HAFA short sale. This is know as the Alternative Request for Approval of Short Sale (ARASS). This seems to be the route that more frequently leads to success. I planned to try this option with a recently ratified short sale agreement but I just learned that if Freddie Mac is the investor on the loan, you are ineligible for HAFA if you have already accepted an offer. Your only option is a traditional short sale. If your loan is backed by Freddie Mac, you have to either get approved for HAFA before listing your home or do a traditional short sale. I could do an entire post on the intricacies of Fannie and Freddie HAFA short sales. In fact, I probably will.

Some Underwater Borrowers Now Eligible For Refinance Under HARP

The Federal Housing Finance Agency, with Fannie Mae and Freddie Mac (the Enterprises), today announced a series of changes to the Home Affordable Refinance Program (HARP) in an effort to attract more eligible borrowers who can benefit from refinancing their home mortgage. HARP provides borrowers, who may not otherwise qualify for refinancing because of declining home values or reduced access to mortgage insurance, the ability to refinance their mortgages into a lower interest rate and/or more stable mortgage product.

One of the biggest changes is the elimination of the loan to value ceiling for fixed rate mortgages backed by Fannie Mae or Freddie Mac. In the past, if your loan balance was more than 125% of your home’s value, you were not eligible to refinance. As an example, if your loan balance was $125,000 but your home was only worth $90,000 you were not eligible to refinance at today’s low interest rates. In addition to removing the LTV ceiling of 125%, other changes include:

• Elimination of certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
• Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model);
• Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

The way I see it, this program can benefit borrowers in two different ways. For those struggling to make their mortgage payments, refinancing at today’s lower interest rates will obviously lower the monthly payment and relieve some of the financial strain. Another option is to refinance into a shorter term mortgage, which will allow the borrower to pay down their principal faster and in some cases eliminate the problem of negative equity. The lower interest rate may provide borrowers the opportunity to shorten the term of their mortgages without much change in their monthly payments, and perhaps even a reduction in that payment since interest rates on short term mortgages are typically lower than on 30-year mortgages.

You might be eligible if:

• Your loan was sold to Fannie Mae or Freddie Mac on or before May 31, 2009. Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to:
  http://www.FannieMae.com/loanlookup/ or calling 800-7FANNIE (8 am to 8 pm ET)
  https://ww3.FreddieMac.com/corporate/or 800-FREDDIE (8 am to 8 pm ET)
• Borrowers must be current on their mortgage payments with no late payment in the past six months and no more than one late payment in the past 12 months.
• The current loan-to-value (LTV) ratio must be greater than 80%.

The Enterprises will send out instructions to lenders by November 15, 2011 and some lenders may be accepting refinance applications as soon as December 1, 2011.

Information compiled from Federal Finance Housing Agency News Release October 24, 2011.

Eco-Modern Home in NW Bend – $425,000

No doubt you’ve seen these homes if you’ve ever driven along Newport Ave. in Bend. If you love them, here’s your chance to buy one! Inspired by the clean lines of mid-century modern architecture, this Eco-Modern home exudes mindful luxury and is a model for green living. Every material was carefully selected to minimize consumption, toxins, and waste while maximizing energy efficiency and comfort. Hydronic radiant floor heating, formaldehyde-free blown-in insulation, 100% wool carpet, reclaimed black walnut & wheatboard cabinetry, and drought resistant landscaping are just some of the features that make this home both smart and beautiful.

This Earth Advantage certified home is pre-wired for roof mounted, grid-tied photovoltaic solar panels. The metal roof reflects UV radiation and keeps the home cool in the summer. The xeriscaped front yard was planted with drought tolerant and local plants.

The entire home has no VOC and low VOC paint. The heat source is hydronic radiant floor heating powered by a 96% energy-efficient boiler. This home is estimated to save about 54% in energy consumption over standard code-built homes.Formaldehyde-free blown-in insulation improves indoor air quality & provides better acoustic dampening & thermal retention.

The kitchen features Southern Oregon grown Madrone wood countertops. The cabinets throughout the home were locally made by Moon Cabinetry and consist of reclaimed black walnut cubes from Northern California and wheatboard with non-toxic adhesives and binders.

The master suite was designed so that the bed could be placed against any of the 3 walls. The thoughtfully placed windows ensure ample natural light and plenty of privacy. The master bath doesn’t leave much to be desired with cork flooring, Paperstone countertop, dual sinks, large walk-in shower, soaking tub, Caroma Caravelle dual-flush toilet, radiant floor heat, and a heated towel rack.

Looking towards the master suite from the 2nd and 3rd bedrooms. As you walk up the stairs from the main level, the master is on the south side of the home and the other bedrooms are on the north side. Note the abundance of natural light. The only additional light is from the chandelier, which is mostly decorative.

The owners recently hired a local artisan to design and install this fire pit and privacy fence. What a gorgeous addition. The low maintenance side yard means you’ll spend more time enjoying the space and less time on upkeep. The address is 1229 NW Newport Ave. This home features 3 bedrooms, 2.5 baths, and is 2145 sq. ft.

37% of Delinquent Borrowers Are 2 Years Behind in Payments (Or More!)

A CNN Money article posted online today states that of the roughly 2.2 million delinquent home loans,  34% of borrowers have not made a payment in 12 to 23 months while another 37% of the borrowers have not made a payment in 2 years or more. This means that nearly 3/4 of the borrowers in foreclosure have not made a house payment in over 1 year and the lender has still not foreclosed! I assume some of these borrowers are trying to sell their homes via a short sale and perhaps the lender has postponed the foreclosure. Some will be successful, therefore removing many of these homes from the foreclosure pool. How many, I do not know. However, the remainder of these borrowers are probably just waiting for the lender to record a Notice of Default or take some other action. They’re living “rent free” and biding their time. It’s reasonable to think that if a borrower is only 1 or 2 months behind, they can still catch up or be helped with a loan modification but if a borrower is 2 years behind, they’re too far gone. If they couldn’t afford their mortgage payment for the month, how are they going to come up with 24 months worth of payments?

Some experts argue that all the programs aimed at avoiding foreclosure are just delaying the inevitable and that the lenders should be accelerating foreclosures to clear the glut. Delaying foreclosure simply increases the number of delinquent homeowners who will never catch up. That’s certainly true, as many homeowners have no desire to keep a home that is underwater so they have no interest in pursuing a short sale or loan modification. Delaying the foreclosure simply allows them to remain in their home longer without making payments. I don’t know what the answer is but in my experience, the government programs like HAFA and HAMP have been dismal failures and they have not helped anyone I know avoid foreclosure.

Notices of Default Continue To Drop

Notices of Default (NOD) in Central Oregon dropped for the third straight month in July, down to 146, which is the lowest number since August 2008. NOD are down 54% compared to July 2010. In the fall of 2010, lenders halted foreclosure proceedings while they evaluated the robo-signing issue, among others. As a result, in Deschutes County, 789 foreclosures were rescinded between January – March 2011. In April 2011 following the foreclosure halt, Notices of Default in Deschutes County surged to an all time high of 581 as banks and mortgage servicing companies cleared out the backlog. After the surge, NOD have been on the decline and it appears to be a trend.

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Getting married? Register for down payment funds!

If you’re getting married and plan to buy a home, please continue reading. Rather than registering at Macy’s or Pottery Barn, you might want to consider the FHA Bridal Registry. This program allows couples to register with a lender, then funds may be deposited by friends and relatives directly into the Bridal Registry Account, or given by cash or check to the couples or individuals for deposit. The money gifts earn interest, and can be used as a down payment towards an FHA mortgage. Coming up with a down payment is one of the hardest things for young couples to do when they decide to buy a home. I have a feeling many of those couples would rather have help with a down payment than a new blender or coffee maker.

You might be wondering how to get started. Generally, couples planning to get married (and other individuals) will contact a participating lender and request that a registry account be established in their names. This account will take the guesswork out of gift selection. These gifts can be given with the assurance that the donors are providing the couples or individuals with an opportunity to purchase their first home. Bridal couples or individuals are not obligated to use the money in the Bridal Registry Account for a down payment on a home. The couples or individuals control how the funds will be used, and if their plans change, they can simply withdraw the money and use it for something else. Also, there is no requirement that the bridal couple be married prior to closing the mortgage loan. Even better, on the HUD website, it states that this registry is not just for couples about to get married. It is applicable to “other legitimate occasions where substantial gifts are typically received by an individual or individuals that may in turn be applied toward the purchase of a home.” Think civil unions, college graduation, or even baby showers.

If you could benefit from this down payment assistance, contact me and I’ll put you in touch with a participating lender.

Bend’s Best Buys – $139,900 in Old Mill District

This darling house was updated recently with new flooring, paint, windows, and kitchen.  It’s located on the west side of Bend close to the Old Mill District, several parks, and the river. The lot is huge – about 0.3 acre (13,504 SF). The home is 1048 sq. ft. with 3 bedrooms/1 bath. The address is 1045 SW Hill St.

Bend’s Best Buys – $424,900 Riverfront Home in NW Bend

This riverfront home is located in the coveted Rimrock West neighborhood in NW Bend, off of Archie Briggs. The home is 1950 sq. ft. with 4 bedrooms/2.75 baths and sits at the end of a cul-de-sac. The home has lots of windows facing the river and about 800 sq. ft. of decking to enjoy the view from. Truth be told, I think the price of this bank owned home is still a bit high because the home is very dated (built in 1980) and practically every surface is covered with pine siding (maybe a slight exaggeration, but there is a LOT of wood). I would not suggest waiting until the price is reduced though. I’ve seen this happen over and over. Buyers wait for a price reduction and then there’s a frenzy with multiple offers. If you have any interest in a riverfront home in Bend with huge potential, give me a call or email me and we can talk about values for your offer. FYI, an updated riverfront home next door with 2352 sq. ft. is on the market for $925,000. The address is 611 NW Silver Buckle.

(SOLD) Cantilevered Contemporary Home in NW Bend $475,000

(Sold for $475,000 on 8/19/11) Every now and then I like to blog about a house for no reason other than I love it. I love this house. It’s cantilevered over a hillside in the West Hills of NW Bend. What’s not to love about that? The home was designed and oriented on the lot so that you get a view of Mt. Bachelor from just about every room in the house. They used a lot of glass, steel, and wood in the design and finishes and they all blend together beautifully. This home has 3 bedrooms/2 baths and is 2333 sq. ft. The current list price is $475,000. This spectacular home is located at 767 NW Roanoke Ave.

Bend’s Best Buys – 852 NW Columbia $94,000

Location, location, location, just one block from the river! This 1 bedroom/1 bath, 748 SF cottage hit the market yesterday and already has 7 offers. My clients wrote a cash offer for $115,000 and when I called the listing agent to find out where to send the offer, she said “$115,000? Don’t even waste your time.” I knew they would get multiple offers and it would end up selling for more than list price but  since when is 20% over list price a waste of time? That’s just crazy. We’re going to submit the offer anyway because we can’t rely on her word. I’m dying to see what it sells for. I initially thought it would go for $125,000 but now it sounds like it might be even higher. I’ll keep you posted. (Update 1:30pm on 6/27/11 – they now have 12 offers!!!)

It’s a Great Time to Buy Rental Properties

Total Property Resources now offers Property Management as part of its full service real estate services. For the last few weeks I’ve been getting emails from the property management team asking if any of my seller clients would be interested in renting out their homes. There are renters out there in need of properties but none available it seems. Obviously there are vacancies but a very small selection of decent rental properties.

Some clients have a rental property in Foxborough. Their tenant gave notice that she’d be moving out at the end of May and they asked me to keep them in mind if I ran across anyone needing a rental. I asked the property management team and that same day, a renter signed a 1-year lease for the house sight unseen. She could afford $1000/month and had been waiting for a nice home to come available. My clients are now getting $50 more per month in rent. That’s right, they just increased their rental rate.

KTVZ recently ran a story on this very thing. Regan Scott with Deschutes Property Management said “our vacancy factor is the lowest it’s every been in the history of our company.” Regan went on to say “Virtually every tenant that’s given us a 30 day notice right now, there’s somebody waiting for that property, so it’s already full.”

I believe this is largely due to the fact that so many people have lost their homes to foreclosure or have done short sales and they now have to rent. There are numerous homes for sale under $125,000 that could fetch $900-$1000/month in rent. With a down payment, that easily pencils. If you’re in a position to purchase investment real estate, I think now is a great time. These are my top picks for rental properties under $125,000: Rental properties