Any information about the state of the real estate and mortgage industry is of interest at this site.  The following information, excerpted from an article by Anthony Napoli, was written with San Diego as the setting; however, the information is generic and can be applied nationwide.

“A few years ago, money was really easy to get if you wanted to purchase a home. Many loan applications were literally only one page long. The joke was if you had a pulse and were vertical, you qualified. Then it progressed to the point where you only had to be vertical. One loan program offered the borrower 125 percent of the purchase price with no down payment. Yes, that’s right. On a $500,000 purchase, the lender actually gave the buyer a first mortgage of $500,000 and an immediate second mortgage of $125,000. The lender assumed, along with the rest of the universe, that property price appreciation would never end. What did the borrower have to show the lender in order to get this incredibly generous loan? They showed…nothing. These types of loans were called “no doc” loans. The borrower’s income was “stated”, meaning he or she just told the bank what they earned. They didn’t have to show W-2 tax forms. Their assets were also “stated”, which meant that the borrower told the bank what they had in reserves. The lender did not check on this.”  It was the negative press that gave us the term “sub prime loans”.

“Fast forward to the present. To put it mildly, the state of the lending industry is such that many people would rather visit a proctologist than apply for a loan. A sharp stick up the nose into the brain is less painful than producing the paperwork necessary to get a mortgage. One of my clients who borrowed $8,000 dollars from her mom had to show the lender a copy of the $8,000 check, a copy of the deposit after it was deposited into her account, a copy of the bank statement showing the $8,000 in the account, a copy of the canceled check from her mother’s bank, and a copy of the mother’s bank statements pre- and post-$8,000. Whew. That’s a lot of work for a $200,000 loan. It’s as if the bank thought this lady’s mom was the head of one of Tijuana’s drug cartels and wanted to trace the money back to Columbia.”

Washington and the banking and mortgage regulators need to take a second look at the “help” they’re providing consumers.  We need a less of  ”We’re the government and we’re here to help you

With short sales available in every neighborhood, and excellent incentives offered by builders on new homes, and up to a 50% drop in values in the resale market, now is the time to purchase to own and to invest for cash flow.  ”Throw in the fact that you can get a 30-year, fixed-rate mortgage for under five percent, and you have the perfect storm. One thing that drives me bonkers is when a client hems and haws about locking in a 4.975 percent interest rate because they think it may go down to 4.875 percent. They risk not locking in a fantastic rate and chance having rates shoot up.”

Now is the time to be serious about owning a home and to build a real estate investment portfolio for cash flow.  Panicky and finicky buyers stop worrying about tenths of a percent and start jumping at the great prices and historically low interest rates.

Informative article I found on Chris McLaughlin’s site.

Freddie and Fannie Delisted!  What Does it Mean for Real Estate?

You might have missed this little item in the nightly news report; government home mortgage giants Freddie Mac and Fannie Mae are delisting from the New York Stock Exchange. Despite $145 billion in taxpayer funds spent to shore up the pair, shares have dropped so significantly they no longer qualify for inclusion on the exchange but will continue to be traded via the infamous bulletin board instead. In order to participate in the traditional exchange, shares must trade above $1…Fannie has been below that level for well over a month making delisting a legal necessity. Freddie has continued to struggle at just over the $1 level but will also be delisted given the eventual prospects. Given the difficulty of becoming profitable…much less an actual attempt to repay the government aid, it’s unlikely any serious effort to revive the failing entities will be forthcoming.

Since January of 2010, Freddie and Fannie (with some help from the Veterans Administration) have underwritten nearly all new home mortgages for the year; throw in the assumption of non-performing assets and bail-outs and the combined total for the defunct duo now accounts for nearly half of all the mortgages in the entire nation. With bank lending standards showing little sign of relief, experts are wondering what the delisting of Fannie and Freddie may mean for the future of a struggling real estate industry.

Aside from the loss of shareholder value…which is expected to be significant as neither entity has retained any level of significant value…the immediate impact is expected to be minimal. “Business as usual” is the anticipated motto for the time being. However, experts predict the long term consequences could dramatically alter the landscape of mortgage lending for years to come. There is significant support for privatizing the role of Freddie and Fannie while liquidating assets to recoup some of the anticipated $1 Trillion in losses currently shouldered by the tax payers.

But what would that really entail? According to AEI think tank guru Peter Wallison, a combination of liquidation followed by privatization is the preferred method of reform and would allow both to compete in the marketplace for securitization and the goal of providing affordable housing. Bernake is also an advocate of the privatization plan but suggests the prior operational model was unsustainable prior to the collapse but suggest the new footing would establish a firm foundation going forward. Critics argue this is a rehashing of the same trends that put us here in the first place and seek nationalization instead. Time will tell but as of this writing, it appears there is strong support for a push toward privatizing. Stay tuned for more information or sign-up for a free newsletter and Twitter updates to stay informed on the latest news you need to know in real estate.

The median price of a home in Southern California was up 15.4% from April 2009 to April 2010.  Home sales in the more expensive coastal communities account for the positive, over-all gain in home price for SoCal.

Only 672,000 homes were started in April.  Once the job market rebounds, pent up demand could intersect with a shortage of supply, thus causing prices to rise once again.

Since the recession began, many home builders have closed their doors.   Builders who survive will face a new, more challenging regulatory environment and a serious problem getting loans.  According to James Gaines, a real estate investment economist with Texas A&M, “It is ironic, there is a growing consensus that there may be a new housing shortage coming.”

Brighter news – a Fed study hints that rates should remain at record lows until 2010.

…..the rest of the story, part 2, from an article by Neil Garfield concerning a homeowner who thought he had lost his home to foreclosure:

This is part I of an article by  Neil Garfield.  While this isn’t Southern California real estate housing news, it is significant for any SoCal home owners who are in default or whose home has already actually gone to foreclosure.  You should know this:

Posted on May 25, 2010 by Neil Garfield

WHOA! Florida Judge Wipes Out Homeowner’s $207,000 Mortgage! Read the Transcript: 5 25 10 fla miami transcript Bailey voids mortgage

Editor’s Note: Don’t expect this result every time but we are turning the corner. Also don’t tell the Judge you are there for a free house. Tell him or her that you want the benefit of the bargain you struck with the lender and the seller. You want to pay but you don’t want to pay someone who is not your creditor, who is not authorized to collect from you, and is not turning the money over to the creditor. Deny that any payments are due — your answer to “have you made all your payments? deny they have done a proper accounting for all receipts from all sources that should have been posted toy our account.

WHOA! Florida Judge Wipes Out Homeowner’s $207,000 Mortgage!

Today, May 25, 2010, 3 hours ago | Foreclosure Fraud [wha]t Orlando Eslava wanted from his lender was a loan modification to make his payments affordable. Instead, he got his $207,000 mortgage wiped out — and a crash course in the confusing way foreclosures are unfolding in a court system chock-a-blocked with cases.

The teacher was Miami-Dade Circuit Court Judge Jennifer Bailey, who cancelled Eslava’s debt after lender HSBC Bank USA ignored her previous order to post a $414,000 bond.

Bailey said the actions of William Huffman, HSBC’s lawyer from Tampa-based Florida Default Law Group, were “contemptuous,” according to a court hearing transcript.

SEE ATTCHED TRANSCRIPT

HSBC’s run-in with Bailey began in December 2009 when she granted the lender’s motion for the foreclosure sale of Eslava’s one-bedroom unit at El Dorado Tower in Aventura. But HSBC lost the note on Eslava’s property. So the judge ordered the lender to post a $414,000 bond to indemnify Eslava in case another lender filed a claim against the unit.

According to court records, HSBC and Florida Default did not post the bond and proceeded with an April 9 foreclosure sale that gave the lender title to the condo.

Eslava and his lawyer, Sheleen Khan, sought to overturn the sale, claiming the lender violated Bailey’s court order. At a May 6 hearing, Bailey dismissed the foreclosure case with prejudice, which prevents the lender from suing Eslava again. The judge also canceled the mortgage and ordered HSBC to return title of the condo to Eslava.

“None of us is above the law,” Khan said. “This is a landmark ruling.”

In addition to canceling the mortgage, Bailey chastised Huffman, according to a transcript of the hearing obtained by The Daily Business Review.

The rest of the story, part 2, will follow later this week.  Stay plugged in.

You can see this article in its entirety at CNNMoney.com

Freddie and Fannie won’t pay down your mortgage

By Tami Luhby, senior writerMay 14, 2010: 3:58 AM ET

NEW YORK (CNNMoney.com) — Pressure is mounting on loan servicers and investors to reduce troubled homeowners’ loan balances…but the two largest owners of mortgages aren’t getting the message.

Fannie Mae and Freddie Mac, which are controlled by the federal government, do not lower the principal on the loans they back, instead opting for interest rate reductions and term extensions when modifying loans.

But their stance is out of synch with the Obama administration, which is seeking to expand the use of principal writedowns. In late March, it announced servicers will be required to consider lowering balances in loan modifications.

And just who would tell Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) to start allowing principal reductions? The Obama administration.

Asked whether they will implement balance reductions, the companies and their regulator declined to comment. The Treasury Department also declined to comment.

Home prices in LA County and Orange County were down in March after eight straight months of gain.  Even so, the over-all news is brighter. The S&P Case-Shiller indexes show prices are up 6% above March ‘09.  Neighbor to the south, San Diego county, posts a positive 10.8% for March ‘10 over March ‘09.

This is the fifth post of six from an article written by George Mantor.  If you are a homeowner who might soon be facing default or you are currently in default and trying to work out something with your lender, this is critical information for you to know.

Predatory Mortgage Servicing Fraud – First of a SeriesRISMEDIA, April 6, 2010—

“They will try to get as much money from you as they possibly can. First as a sizable down payment, and then as high a monthly make-up payment as you’ll agree to. They take all of your cash and leave you with a payment that might be 35% to 50% higher.

In the process, you’ll be asked to sign away many of your rights and you’ll do it because they said they care.

They exploit you at your most vulnerable time because they know that most people would do anything not to lose their home. They intimidate you into suspending judgment and going along out of fear and embarrassment. And, if you put up little or no resistance, they will take you all the way to the courthouse steps.

They get paid a small fee to process payments, but when a payment is missed, they can charge whatever fees they want and keep all of the money. They are nothing more than shakedown artists operating in a largely unregulated arena who have figured out a way to wring millions of dollars out of nervous consumers and keep the perfect mix of defaults in the pools.

They get away with all of this because they can. You didn’t choose your servicing company, they chose you. They chose you because they know all about you and know that you will make a good target. You can’t fire them, quit them or take your business elsewhere. Once they begin to destroy your credit, you couldn’t get another loan to pay them back even if you wanted to. And, even if you refinance, there is no guarantee you won’t wind up back with the same servicer.

Lest you doubt their motives, it is a well known business axiom that you reward the behavior you want.

Read the remarks of the president of Ocwen Loan Servicing, Ronald M. Faris, after a $1.8 million judgment was awarded to a customer. “We make sure our employees are aligned with this effort by paying them incentive bonuses when they succeed in keeping borrowers in their homes.”

Now that sounds noble if not a bit self-serving. But, the incentive isn’t paid for keeping a borrower in their home, it’s a percentage of the money collected while stringing the borrower along. Abuse of borrowers is their business plan and the longer they keep you in default, the more money they can collect.”

More to come…….

This is the fourth post of six written in an article by George Mantor.  If you are a homeowner who might soon be facing default or you are currently in default and trying to work out something with your lender, this is critical information for you to know.

Predatory Mortgage Servicing Fraud – First of a SeriesRISMEDIA, April 6, 2010—

“All of the dialogue is finally honed and well-scripted. They will insist that they did not receive your payment, even though they did. They will say that the homeowner is without adequate insurance. They will claim they paid your property taxes, even though they cannot prove it.

Here are some of the tricks thy use to push borrowers into default.   “We take so long to process our mail it could really cost you.”

Most mortgages have a grace period of sorts. If your payment is due on the first, a late charge won’t be imposed until the fifteenth. But, your payment is technically late the day after the due date.

And, that is when the telemarketers of the servicing firm begin to call. The purpose of this call is to scare you into believing that,”due to extended internal processing times and the unpredictability of mail delivery,” you are going to incur a late fee. To avoid that hefty late charge, they suggest stopping payment on your check and allowing them to take the money directly from your bank account.

Do not be tempted. It will certainly cost you at least for the stop payment on the check, and wouldn’t you know it, the mortgage servicer can also charge you a fee for this.

“We didn’t get your payment and you can’t prove we did.”   You send your check and they cash it. But, no matter how many cancelled checks you trot in front of them, they deny receiving payment.

“Please try our easy pay program.”   This is the hi-tech version of above. Your bank statement shows the payment came out on time, but the mortgage servicer doesn’t credit the payment to your account for two weeks. Late fees begin to mount up while you send copies of your bank statements showing the withdrawals. Nonetheless, they insist you are late, and late on the late fees, and monies start to compound.

“You didn’t pay your property taxes, so we did.”   Here again, they will deny your cancelled check or credit card receipt, and without producing any documentation, will insist that they, not you, paid the property taxes and they are entitled to establish an “escrow account .”

“You do not have insurance.”   Or, you do not have enough insurance. We bought some for you. Now, they will exercise their right to open an “escrow account.”

“For your benefit, we’ve established an escrow account.”   The escrow account is where the real financial trickery takes place. No matter how many times you ask, you will never see an accurate accounting of how they arrived at the amount they claim that you owe them.

“We’re here to help in your time of need.”   And, if you do actually fall behind on your payments, they will sniff out money you didn’t even know you had and wring it out of you.”

More to follow……