FORECLOSURE ALTERNATIVES PROGRAM

In May 2009, the Obama Administration announced the development of
Foreclosure Alternatives, another program of the Making Home Affordable
initiative. Under this program, borrowers and mortgage servicers are provided
incentives and documentation is standardized to help facilitate short sales or
deeds‐in‐lieu‐of‐foreclosure if short sales are not successful.
Incentives are:
• $1,000 for servicers for successful short sale or deed‐in‐lieu‐of‐foreclosure
• $1,500 for borrowers/homeowners to help with relocation expenses
• Up to $1,000 toward cost of paying junior lien holders to release liens
Features of this program include, but are not limited to:
• Depending on market conditions, 90 days up to one year to market and sell
the property
• No foreclosures may occur during the marketing period specified in the
Short Sale Agreement.
• Mortgage servicers cannot charge fees to borrowers for participating in
Foreclosure Alternatives
• Mortgage servicers cannot negotiate lower commission after an offer has
been received.

Note: If you need more details regarding refinance or modification programs go
to http://makinghomeaffordable.gov.

Fannie Mae Favors Home Owners Over Investors

Fannie Mae introduced a program on 11/24/2009 that favors homeowners by allowing only owner-occupants from making offers on foreclosed properties during the first 15 days of market time.
Other initiatives:
- reduced earnest money deposit
- extended closing timelines
- ability to reduce price for low appraised values

See more info at: http://bit.ly/FannieMae_FirstLook

"W Effect"?

The residential real estate economy saw double digit increases in the numbers of home sales with positive increases over the past 16 months.

Now, the market is heading into a normal seasonal slow-down as many people think about Thanksgiving and then Christmas and the holiday season.

There are concerns that the real estate market will experience a "W effect", so named after the behavior the economy exibited during the Great Depression:
1) fall
2) cautious recovery
3) retraction in lending which led to another fall
4) another cautious recovery

The residential real estate market has experienced a recovery spurred by record low interest rates and government tax incentives for 1st time homebuyers.
Now, lending has contracted somewhat due to 10% unemployment rates, high debt-to-income levels and/or reduced credit scores.

The federal government recognized the delicate balance the economy is in and passed an extension of the housing credits for homes closing on/before 6/30/2010. This should keep the recovery going but only time will tell.

Contract-for-Deed to Gain Traction

There are many reasons a buyer would look to a contract-for-deed rather than a traditional mortgage. To name a few:
- much lower closing costs
- short time in the home
- short-term investor
- inability to get a mortgage (recent foreclosure, bankruptcy or other credit-impacting events)

Likewise, there are many reasons a seller would consider selling contract-for-deed:
- certificates of deposit and other common investment vehicles currently offer barely 1% returns and contract-for-deed around 5%
- sellers have more control over the real estate transaction
- sellers can get a hefty downpayment and if the buyer misses a payment, the seller can easily take the house back and sell it again with another hefty downpayment

With more people again looking to real estate as an investment and with the increasing numbers of people with foreclosure-impacted credit, Contract-for-Deed terms of sale should again gain traction as they did in the 80's when interest rates rose to 15-20% levels.

You heard it here first.

Congress Extends Homebuyer Tax Credit

The Senate passed the bill earlier this week and today, Congress passed the bill extending the homebuyer credit until April 30, 2010. Now it goes to the President for signature.

Summary:
1st Time Homebuyers - can't have owned a home for 3 years, credit is up to $8,000.
Subsequent homebuyers - must have owned your home for 5 out of the past 8 years, credit is up to $6,500 for joint filers and $3,200 for separate filers.

For more details, go to: http://www.realtor.org/fedistrk.nsf/files/government_affairs_tax_credit_ext_chart_110409.pdf/$FILE/government_affairs_tax_credit_ext_chart_110409.pdf