Most San Jose neighborhood values will continue to perform well in 2011 and into 2012 even with the recent negative news about Bank of America unleashing a slew of new foreclosures into California in the coming months.
Foreclosure levels will remain the same in 2012
That’s a pretty bold statement on my behalf but having just retuned from a national foreclosure convention I stand in pretty good company including the likes of Freddy Mac economists and various other national asset diposition companies who are all waiting for the foreclosure activity to increase.
The challenge over the last year has been the slow and methodical process of making sure banks are staying within the legal boundaries of the foreclosure process all brought on by the ROBO signing lawsuits. As a result the anticipated levels of foreclosiure activites are expected to stay at current levels through 2012.
What does this mean for San Jose Neighborhoods?
Neighborhoods like Willow Glen, Rose Garden, Almaden Valley, and Santana Row to name a few should continue to maintained their values while Downtown, Central San Jose, South San Jose, and the east valley will feel the affects of foreclosure activity.
Should I wait for the market to turn?
Experts at the foreclosure convention are now saying that we will continue to see the current real estate market through 2016. You have plenty of time to buy before the market sees a significant change and until then buyers will continue to find opportunities in those neighborhoods affected by foreclosures.
Pilot could open the door for more
The thought of a bank or investor willing to write off a portion of your mortgage can be very attractive but it does come with it’s challenges. Over the past four years there have been attempts to have principal reduction included in modifications and up to now there have been a few clients that I am aware of to have received this opportunity.
Most have had loan amounts under the conforming amount of $417,000. My concern with this decision by Bank of America is for homeowners who have made payments on time. How are they going to feel knowing their neighbor received a principal write down? The taxpayer is most likely going to carry the burden of this move towards principal reduction. This may also be the beginning for future programs but will they make a significant impact in our community?
Santa Clara County may not have an opportunity
The conforming loan amount makes it easy for Fannie Mae or Freddy Mac to offer this in most cases. Bank of America is a servicer, they don’t own the paper on the loans they service. Fannie and Freddy inventory is primarily located in areas where homes sold under the conforming loan amount. Santa Clara County would most likely not see much activity from this pilot program.
“The program will be funded from the $699.6 million the California Housing Finance Agency received from Treasury Department’s Hardest Hit Fund last year. A spokesperson for the CalHFA said there is no set amount of loans BofA is targeting, but the bank will be soliciting eligible homeowners soon.”
Related Article: Bank of America set to write down principal on California mortgages (Housingwire)
Wachovia has announced they will no longer postpone a foreclosure sale date once it has been set. This directly affects our ability to assist our clients if they decide to short sale in lieu of foreclosure.
What this means to sellers
Procrastination will have dire consequences on sellers who wait until the last minute(less than two weeks) to put their house on the market as a short sale. We obviously understand that sellers want to exhaust all options before considering a short sale including a modification. Sellers should make a decision to sell no later than the filing of a notice of default on their home if the want to have the best chance of a successful short sale.
What this means to buyers
Buyers must be ready to close fast. In a recent listing I had ten offers on a home, a third of the offers were using a loan product that required a forty five day escrow. On the other hand there were other offers that were all cash or conventional(5% down payment or more). If you are considering buying a short sale you should look at the possibility that you may be asked to close in less than thirty days otherwise your chances of the seller accepting your offer are slim. Sellers are under extreme pressure to perform and as such are looking for a quick close from a committed buyer.
Other lenders are following this trend
My sources tell me we are seeing a trend and there is rumor that Bank of America is considering eliminating short sale extensions. I experienced this with Household Finance(HFC), my negotiator emphasised that there would be no extension on a short sale approval and that a sale date was set for the day after the expiration of the sort sale approval. Our seller decided to accept an offer form a buyer who was able to close in twenty one days.
Adjust your expectations or they will be adjusted for you
Short sales continue to evolve and we continue to see changes to the way servicers and investors manage properties in default. It’s clear we are witnessing a shift in the flexibility we will receive when it comes to negotiating with servicers and investors and it appears as though they are now willing to cut there losses and move on.
Today the banks who signed on for HAMP in 2009 have agreed to increase their participation in HAFA(Housing Affordable Foreclosure Alternatives) an extension of HAMP that provides incentives for banks and servicers to streamline the Short Sale process.
Banks and HAFA
Bank of America for instance partnered with equator.com in November to decrease the short sale approval timelines from 6 months to 45 days to conform to the HAFA guidelines. Other lenders Like Wells Fargo are able to approve 23% of the Short Sales they service in 10 days.
What is HAFA?
HAFA will continue to evolve as banks and servicers adopt and implement HAFA rules and guidelines. In the mean time home owners can visit www.whatishafa.org to determine if they qualify for HAFA.
I week ago I attended the California Association of REALTOR meetings in Indian Wells and attended an open committee meeting with high level managers from Bank of America and Wells Fargo. I added a video describing these changes to my Youtube Channel.
Click on the video below to see my report from the Indian Wells Resort.
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