The volume of notices of default to San Diego homeowners was down 39% in the first quarter of 2010 compared to the same period last year.
If the trend continues, this potentially bodes well for local home prices. We’ll have to wait and see. We still want to see a large decrease in the numbers of foreclosed-on homes.
A comparison of foreclosed-on properties for the two periods shows relatively no change.
When a homeowner is “upside-down” or owes more than their property is worth and they don’t want to or can’t find a way to continue owning the property, they and the bank have three options:
- Short sale. Bank approves a sale for less than what is owed.
- Foreclosure. Bank goes through the courts and takes the home away.
- Deed-in-lieu. Owner gives the property back to the bank in a simpler transaction.
For the past few years, short sales and foreclosures have been the banks’ solutions of choice. Now many large banks are gearing up to take the deed-in-lieu route.
Deeds-in-lieu can sometimes be a better solution for troubled homeowners and the banks. They can be less expensive for the banks and less stressful for the homeowner. Bank of America is even offering cash payments of $3,000+ to some homeowners to as an enticement to take this route.
How does this affect the market? Expect less short sales on the market and probably more bank-owned properties again. Also I’m hoping this means that the banks are ready to move their inventory, which would result in fewer abandoned-looking, scrappy-yarded homes in our neighborhoods. That would surely be a benefit to neighborhood values.
Many friends and clients have asked me what they can do to lower their monthly mortgage payments. In the past, I usually told them they needed to be behind in their payments to get their banks to even consider loan modifications. Now there are several programs that may help some who are either current or behind on their payments. Some of the programs apply to homeowners who are “upside-down” on their mortgage balances.
Below is a summary of three important federal programs.
HOME AFFORDABLE MODIFICATIONS
If you can no longer afford to make your monthly loan payments, you may qualify for a loan modification to make your monthly mortgage payment more affordable. Millions of borrowers who are current, but having difficulty making their payments and borrowers who have already missed one or more payments may be eligible.
HOME AFFORDABLE REFINANCE
If you are a homeowner who is current on your mortgage payments but unable to refinance to a lower interest rate because your home value has decreased, you may be able to refinance.
HOME AFFORDABLE FORECLOSURE ALTERNATIVES (HAFA) PROGRAM
Under HAFA, a homeowner leaves their home to transition to more affordable housing and alleviate the mortgage debt they owe.
Check out the MAKING HOME AFFORDABLE WEBSITE for more info on each of these programs and a really good FAQ.
Which is your best option?
The number one step whether you are current or behind in your mortgage payments and you want to modify your loan is to contact a HUD mortgage counselor.
Find a HUD Counselor here.
If you are delinquent on your loan payments and need immediate assistance call 1-888-995-HOPE (4673)
Note that approved counselors are always free.
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EXTRA HELP FOR CALIFORNIANS - coming up.
California has been approved to receive $700 million in new federal funding through the U.S. Treasury’s Housing Finance Agency Innovation Fund. This money will fund CalHFA’s programs - scheduled to kick in on November 1, 2010.
More info on CalHFA Mortgage Assistance.
July 1 UPDATE
Last night Congress passed a bill extending the Homebuyer Tax Credit closing deadline to September 30, 2010. The extension applies only to transactions that had ratified contracts in place as of April 30, 2010, and have not yet close
—– Margot
Congress is considering and will likely extend the first-time homebuyer ($8000) credit.
Apparently the extension would only apply to buyers who are currently in escrow on transactions that were opened before April 30, 2010.
The credit currently applies to qualified buyers who opened escrow prior to April 30, 2010 who close before the end of June.
More info on this as I get it.
2010 California Tax Credit for New Home / First-Time Buyer
How to apply (Updated 04/28/10)
Within two weeks (14 calendar days) after the close of escrow:
o The seller must complete Parts II, III, and also Part IV (if the home has never been occupied) of Form 3549-A, Application for New Home / First-Time Buyer Credit, and provide a copy to the buyer or escrow person.
o The buyer will complete Parts I, V & VI of Form 3549-A.
o Fax the completed Form 3549-A and the final settlement statement (generally the buyer’s HUD-1 statement) to FTB at 916.855.5577.
For further details please click on link: http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml
For a short period of time, homebuyers may qualify two tax credits, totaling up to $18,000.
Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.
More info on the CA Buyer Credit
More info on the Federal Buyer Credit
Governor signs home tax credit bill
- First-time buyers
- $10,000 credit (max)
- May - December 2010
Governor Schwarzenegger today signed AB 183 providing $200 million for home buyer tax credits. The bill allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.
Eligible taxpayers who close escrow on qualified principal residences between May 1, 2010 and December, 31, 2010, or who close escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit. This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under the bill, purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state). Buyers also must be at least 18 years old and be unrelated to the seller. First-time buyers are defined as those who have not owned a home in the past three years.
To learn more about the California Home Buyer Tax Credit, click here.
from RealtyTrac
Feb 2010 Quick stats:
California foreclosure activity change from Jan 2010 -4.53%
California foreclosure activity change from Feb 2009 -15.12%
As the federal homebuyer tax credits are set to expire, California, first-time buyer credits will likely become available.
Governor Schwarzenegger is expected to sign a bill this week that would allocate $200 million to qualified, first-time homebuyers. If the legislation passes, buyers who enter into purchase agreements between May 1, 2010 and December 31, 2010 may be eligible for the credit up to $10,000.
The existing first-time buyer credit offered by the federal government is set to expire on April 30, 2010.
Frequently Asked Questions
About the $8,000 First-Time Home Buyer Tax Credit
Frequently Asked Questions
About the $6,500 Move-Up/Repeat Home Buyer Tax Credit
