According to DS News, the number of homeowners receiving loan modifications from HAMP is about to reach 1 million.  In other news, more than 40 states have joined in on a settlement to help homeowners in foreclosure.  Banks are beginning to help out with people in foreclosure by now offering them money to sell their properties at a lower price than what is owed.

In The News:

DS News – “HAMP Mods Approach 1M Mark” (2-6-12)

“More than 930,000 homeowners have received a permanent modification through the government’s Home Affordable Modification Program (HAMP), saving an estimated $10.5 billion in monthly mortgage payments, according to Treasury.”

Housing Wire – “Mortgage mods in 2011 down 40% from prior year” (2-7-12)

“More than 1 million American homeowners received permanent loan modifications from mortgage servicers in 2011, down 40% from 2010, Hope Now said Tuesday.”

San Francisco Chronicle – “Banks Paying Homeowners a Bonus to Avoid Foreclosures: Mortgages” (2-7-12)

“Banks, accelerating efforts to move troubled mortgages off their books, are offering as much as $35,000 or more in cash to delinquent homeowners to sell their properties for less than they owe.”

CNN Money – “Foreclosure deal has 40 states, but others balk” (2-7-12)

“More than 40 states have signed on to a draft settlement with the nation’s largest banks aimed at helping homeowners struggling with loans bigger than the value of their homes.”

Housing Wire – “Nonbank mortgage lenders required to file fraud reports” (2-7-12)

“Nonbank mortgage lenders will be required to establish anti-money laundering programs and file suspicious activity reports beginning later this year, according to rules finalized by the Financial Crimes Enforcement Network.”

Bloomberg – “States with Highest Foreclosure Rates Among Bank Deal Holdouts” (2-7-12)

California, New York, Nevada, Florida and Massachusetts are among the handful of states that haven’t signed a deal with banks over foreclosure abuses, according to state officials and two people familiar with the talks.”

Housing Wire – “Mass. House Democrats push FHFA on mortgage mods” (2-7-12)

“Three Massachusetts congressmen are asking the Federal Housing Finance Agency to reconsider options in loan modifications, saying the regulator hasn’t done enough to help homeowners.”

NAHB – “Builder Confidence for the 55+ Housing Market Ends Fourth Quarter on an Upswing” (2-7-12)

“Builder confidence in the 55+ housing market for single-family homes rose four points to 18 compared to the same period a year ago, according to the latest National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) released today.”

CNN Money – “Government expects lending fund to turn taxpayers a profit” (2-7-12)

“An Obama administration lending program set up to funnel cash to small banks was expected to cost taxpayers $1.3 billion. Instead, it will turn a profit of $80 million.”

Housing Wire – “Prepayments on Fannie and Freddie MBS decline” (2-7-12)

“Prepayments on Fannie Mae and Freddie Mac mortgage-backed securities slowed in December and January, suggesting HARP 2.0 has yet to stimulate mass-refinancing activity, analysts said Tuesday.”

Hard Money Loan Closed

San Diego, California hard money loan closed by The Norris Group private lending. Real estate investor received loan for $90,000 on a 2 bedroom, 2 bathroom home appraised for $160,000.

California Real Estate Investor Events:

The Norris Group posted a new event.  The Norris Group will be holding their monthly REO Boot Camp, February 14, 2012.

Bruce Norris of The Norris Group will be at the 2012 Kick Off Brunch on February 18, 2012.

Looking Back:

The MBA reported $110 billion in commercial and multifamily mortgages were originated in 2010. 36,500 mortgages were modified through government and proprietary programs in December 2010, according to Fitch Ratings. Altos Research announced plans to release a new, forward valuation model for real estate. S&P claimed 80% of the loan modifications that took place over the previous 3 years defaulted again within 2 years.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

According to the latest report from the U.S. Commerce Department, sales of pending existing homes increased while at the same time sales of new homes decreased all in the month of December.  According to Housing Wire, commercial and multifamily loan origination increased 13% in the fourth quarter of 2011.  NAHB reported the number of housing markets showing improvement has increased to 100.

In The News:

Bloomberg – “Foreclosure Deal Deadline Arrives” (2-5-12)

“U.S. states that balked at liability releases in a proposed $25 billion nationwide settlement over bank foreclosure practices must decide today whether its mortgage relief and reforms are worth legal claims they’ll lose.”

Housing Wire – “Multifamily mortgage originations jump 13%” (2-6-12)

“Originations of commercial and multifamily loans grew 13% year-over-year in the fourth quarter of 2011, while still declining 7% from the third quarter, an industry trade group said Monday.”

Realty Times – “Real Estate Outlook: New Home Sales and Prices Decline” (2-6-12)

“Pending existing-home sales may be up across the nation, but new home sales fell for the first the first time in three months in December. These latest figures come from the U.S. Commerce Department.”

Bloomberg – “Bernanke: Fed will protect U.S. economy from Europe” (2-6-12)

“The U.S. foreclosure crisis has risen to new heights.  Atlanta’s 55-story Bank of America Plaza, the tallest tower in the Southeast, is set to be sold at an open outcry auction on the steps of the Fulton County Courthouse tomorrow after landlord BentleyForbes missed mortgage payments.”

Mortgage Bankers Association – “MBA Forecasts $230 Billion of Commercial/Multifamily Mortgage Originations in 2012; $2.4 Trillion of Commercial/Multifamily Mortgage Debt Outstanding” (2-6-12)

“In its inaugural forecast of the commercial/multifamily real estate finance markets, the Mortgage Bankers Association (MBA) projects originations of commercial and multifamily mortgages will hit $230 billion in 2012, an increase of 17 percent from 2011 volumes, and continue to rise to $290 billion in 2015.”

NAHB – “List of Improving Housing Markets Expands to Nearly 100″ (2-6-12)

“The list of housing markets showing measurable improvement expanded by 29 metros in February to include a total of 98 entries on the National Association of Home Builders/First American Improving Markets Index (IMI), released today. Thirty-six states are now represented by at least one market on the list.”

Los Angeles Times – “Lawmakers push Fannie, Freddie to write-down mortgage principle” (2-6-12)

“Rep. Barney Frank and two other House Financial Services Committee Democrats on Monday pressed Edward DeMarco, the regulator of seized housing finance giants Fannie Mae and Freddie Mac, to write-down the principal on mortgages of underwater homes.”

Housing Wire – “Capital Economics: REO to rental program possibly ‘best housing fix so far’” (2-6-12)

“In a statement released Monday, Capital Economics called the REO to rental program possibly the “best housing fix so far,” calling it “possibly more significant” than President Obama’s refinancing proposals announced late last month.”

Los Angeles Times – “Consumer Confidential: Mortgage deal, Redbox service, Clint rules” (2-6-12)

“Today’s the day for state attorneys general to decide whether they want a piece of a multibillion-dollar mortgage settlement with the nation’s largest banks.”

Inman – “Texas regulator issues cease and desist order against flat-fee FSBO site” (2-6-12)

“A Texas real estate regulator is investigating a flat-fee, for-sale-by-owner site for alleged unlicensed brokerage activities in the state and has issued a cease and desist order against the company.”

Hard Money Loan Closed

San Bernardino, California hard money loan closed by The Norris Group private lending. Real estate investor received loan for $150,000 on a 3 bedroom, 2 bathroom home appraised for $250,000.

California Real Estate Investor Events:

The Norris Group will be holding their monthly REO Boot Camp, February 14, 2012.

The Norris Group posted a new event. Bruce Norris of The Norris Group will be at the 2012 Kick Off Brunch on February 18, 2012.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

The Office of Thrift Supervision reports serious delinquencies decreases in the 4th quarter of 2010. Riverside was pronounced to be the most likely city to experience further economic trouble. Commercial and multifamily mortgage originations increased 88% in the last few months of 2010. Fannie Mae’s mortgage portfolio decreased by 15% in February.

In The News:

CNN - “JPMorgan’s Dimon: No mortgage writedowns” (3-31-11)

“The head of JPMorgan Chase said Wednesday that banks would not consider writing down mortgages for homeowners who can make payments, an idea at the center of talks aimed at fixing the mortgage mess.”

Housing Wire - “Chief risk officer Bob Ryan to head up FHA” (3-31-11)

“The Department of Housing and Urban Development tapped Bob Ryan, formerly the chief risk officer at the Federal Housing Administration as its acting commissioner, replacing David Stevens. Stevens departs the FHA Thursday and will run the Mortgage Bankers Association.”

Housing Wire – “Fannie Mae’s gross mortgage portfolio drops 15.2%” (3-31-11)

“Fannie Mae said its gross mortgage portfolio fell at a compound annualized rate of 15.2% in February, while the government-sponsored enterprise’s entire book of business fell 0.7%.”

Housing Wire - “Jobless claims drop slightly for a third consecutive week” (3-31-11)

“The number of initial jobless claims filed by unemployed Americans fell to 388,000 in the week ending March 26, down from last week’s upwardly revised figure of 394,000, the Labor Department said Thursday.”

Office of Thrift Supervision – “Mortgage Performance Slightly Better in Fourth Quarter of 2010; Serious Delinquencies Drop for the Fourth Consecutive Quarter” (3-31-11)

“The quarterly report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision showed that 87.6 percent of the 32.9 million loans in the portfolio were current and performing at the end of the fourth quarter of 2010.”

Mortgage Orb – “Legislation Dismantles GSEs Piecemeal-Style” (3-30-11)

“Republicans on the House Financial Services Committee have introduced eight targeted bills that, taken together, aim to reduce the government’s involvement in housing and spark a resurgence among private capital.”

Yahoo - “Cities Where Things are Getting Worse” (3-29-11)

“Six California cities claim spots on our list of Cities Where The Economy May Get Worse. Riverside took the number one spot, thanks to a high unemployment rate (13.9%) coupled with weak job growth, a hefty number of mortgage loans 90 days or more delinquent (8.21% of all loans) and a projected migration pattern that finds 4,000 residents expected to leave the area this year.”

Housing Wire – “Commercial and multifamily mortgage originations up 88%” (3-31-11)

“Commercial and multifamily mortgage originations grew 88% in the fourth quarter of 2010 when compared to 4Q 2009, the Mortgage Bankers Association said in its Fourth Quarter Commercial Real Estate-Multifamily Finance Quarterly Report.”

Housing Wire – “Barney Frank says mortgage interest tax deduction is safe” (3-31-11)

“Rep. Barney Frank (D-Mass.) said at a House subcommittee hearing Thursday that the mortgage interest tax deduction would be safe. Currently, interest on a mortgage taken out to buy or improve a home can be fully deducted if the amount of the loan is less than $1 million for married couples and $500,000 for singles. Home equity loans taken out for anything else is limited to $100,000 for couples and $50,000 for singles.”

Housing Wire – “Freddie Mac mortgage interest rates inch up this week” (3-31-11)

“The government-sponsored enterprise said its primary mortgage market survey showed the average rate for a 30-year, fixed mortgage rose to 4.86% for the week ending Thursday from 4.81% a week earlier. The average rate for a 15-year, fixed mortgage increased to 4.09% from 4.04 the prior week, according to the Freddie Mac survey.”

Housing Wire – “Judge dismisses securities fraud case against Freddie” (3-31-11)

“A federal district court judge in New York dismissed a lawsuit filed by Southeast and Southwest Areas Pension Fund and National Elevator Industry Pension Plan — two Freddie investors, who allege Freddie mislead a class of investors after experiencing a $2 billion loss for the third quarter of 2007 by ‘materially misrepresenting Freddie’s exposure to risky mortgage products.’”

Looking Back:

One year ago, Mortgage loan application volume increased by 1.3 percent from the previous week. Vacation home sales increased by 7.9 percent in 2009.  Fannie Mae reported the percentage of seriously delinquent loans increased to 5.52% in January. FHA allowed mortgages to borrowers who sold their residence under short-sale provisions and then purchase a new home without the standard 3 year wait.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

The Commerce Department said home construction rose 14.5% in January. Mortgage delinquencies decreased 6.41% in the 4th quarter, according to TransUnion. The FOMC voted to keep rates between 0 to 0.25%.

In The News:

Mortgage Bankers Association – “Mortgage Applications Decrease in Latest MBA Weekly Survey” (2-16-11)

“The Refinance Index decreased 11.4 percent from the previous week and is the lowest Refinance Index recorded in the survey since the week ending July 3, 2009. The seasonally adjusted Purchase Index decreased 5.9 percent from one week earlier. The unadjusted Purchase Index decreased 0.9 percent compared with the previous week and was 18.2 percent lower than the same week one year ago”

CNN - “Home construction rises in January” (2-16-11)

“Housing starts, the number of new homes being built, rose 14.6% to an annual rate of 596,000 in January, up from 520,000 in December, the Commerce Department said.”

Mercury News – “Silicon Valley real estate: Foreclosure lull ends in Santa Clara County” (2-16-11)

“In Santa Clara County in January, 398 home were either repossessed or sold by lenders to third-party buyers, a nearly 70 percent jump from the month before, according to real estate information service ForeclosureRadar. San Mateo County had 160 foreclosures in January, a 75 percent jump from December. ”

Housing Wire – “Decrease in mortgage delinquencies losing momentum: TransUnion” (2-16-11)

“The ratio of borrowers 60 days of more delinquent on their mortgages dropped to 6.41% in the fourth quarter from 6.44% the quarter before. Compared to the same period in 2009, mortgages delinquencies are down about 7%, TransUnion reported. In the third quarter, the national rate tumbled 3.5%.”

Housing Wire – “HUD Secretary: Reforms will not substantially impact affordable housing” (2-16-11)

“Raising the Federal Housing Administration’s annual mortgage insurance premium 25 basis points will not have a dramatic impact on the affordability of homes in America, U.S. Department of Housing and Urban Development Secretary Shaun Donovan said Wednesday.”

Housing Wire – “FHA’s Stevens says mortgage servicers could face potential fines, claims” (2-16-11)

“Federal Housing Administration Commissioner David Stevens said mortgage servicers under review for improper foreclosures could face fines and potentially forced reimbursements, according to his testimony before a House subcommittee Wednesday.”

Housing Wire – “FOMC: High unemployment, limited construction continue to hinder recovery” (2-16-11)

“the Federal Open Market Committee voted unanimously to keep the target federal funds rate at next to nothing – 0% to 0.25% – and continue with its controversial $600 billion bond-buying plans.”

Housing Wire – “Frank proposes amendment to increase SEC funding by $131 million” (2-16-11)

“U.S. Rep. Barney Frank (D-Mass.) is pushing to increase budget funding for the Securities and Exchange Commission as House representatives debate a bill that could cut funding to the agency by $41 million.”

Looking Back:

One year ago, the median home price in Southern California decreased by 6 percent within a month. CBIA reported that home sales in new communities decreased by 15 percent from last month. John Burns estimated that 5 million houses and condominiums with delinquent mortgages would end up in foreclosure over the next few years. TransUnion reported that mortages over 60 days delinquent increased to 6.89% in quarter four of 2009.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Nancy West Marketing and Outreach Specialist, Housing and Urban Development (HUD) (Full Bio)

This week Bruce is joined by Nancy West. Nancy is a marketing and outreach specialist for the Department of Housing and Urban Development. She has been working in the mortgage industry since 1977. Nancy joined HUD in 2004, and in 2006 she accepted one of four nationwide marketing and outreach specialist positions.

Non-profit organizations have a special access to a specific list of REO properties. To be considered a non-profit organization, you must be a 501C3 classified company under the IRS. All the requirements for meeting this classification are listed at www.HUD.gov

There is also a special list of REO properties for police officers, firefighters, paramedics and school teacher. These people have the opportunity to buy a HUD REO for 50 percent of the sale value. They are required to occupy the property for 3 years. After those first 3 years, their home value is officially decreased by 50 percent. The difficulty with this program is that these people are restricted to buying in revitalization areas. Right now, there are not many revitalization areas.

Cities and Counties individually determine what they want to do with NSP money. Some cities are acquiring REOs, rehabbing them and reselling them, and others are acquiring REOs and turning them into rental opportunities.

The FBI released a report on Friday about the amount of fraud they are seeing. California, Nevada, Florida, New York and Michigan are experiencing the highest fraud rates, and those states are also experiencing the largest number of foreclosures. Nancy is not sure if these foreclosures are primarily due to consumers, loan officers or realtors. She believes that fraud was committed by many groups, and that no specific group is significantly more responsible than the other.

Loan modification programs are now open to be qualified for. To qualify for loan modification, people are now trying to commit fraud on their modification application. The problem with this strategy is that if they make their financial statement look too poor, they may not qualify for a modification. Bruce knows someone who was recently denied a loan modification due to the fact that they had the ability to make their payments, and then chose to strategically default.

The mission of HUD is to provide a decent, safe, and sanitary home, and a suitable living environment for every American. When Bruce read this, he realized that the word “ownership” was not included in HUD’s mission statement. This made him feel that HUD is now broadening their scope to include the chance that the number of renters may increase in the future. Nancy claims that HUD and FHA has not changed their mission statement. HUD’s mission is to strengthen and provide homeownership and rental properties to the under-served, first time buyers, minorities and elderly. HUD does this in a variety of ways, including Section 8 housing vouchers. FHA wants to specifically promote homeownership to those same people. FHA offers home retention opportunities through the reverse mortgage program. The mission has not changed, it has simply refocused.

HUD has a few programs that most people are not aware of. Individuals who rent in Section 8 single-family dwellings are typically very successful. Many of them eventually leave the program and become home owners. Also, FHA has the Disaster Relief Mortgage Program which many people are not aware of. This program allows people to obtain a mortgage with no down payment if their home was destroyed in a natural disaster. As soon as a disaster area is declared, FHA issues a notice to lenders that a moratorium has been placed on foreclosure action. Also, HUD sends staff to assist homeowners in disaster areas.

If a consumer wants to qualify for a Section 8 rental subsidy, they must apply at their local housing authority. The housing authority will go over the qualifications with them, and see what properties are available.

Right now, the government has helped make the housing industry more fluid. When the problem first developed, lenders were still interested in lending, not collecting. They did not have the correct staff to deal with the problem. Many people who could not get a modification 3 months ago can get it now. This is because of new programs through Making Homes Affordable program and TARP programs.

FHA has always had a modification program. FHA requires lenders to provide loss mitigation help when borrowers fall 30 days delinquent. FHA also has a forbearance option and a partial claim. HAMP is also a tool that FHA can use. FHA can perform short sales with incentives, and deeds in lieu of foreclosure. There is currently no time benefit for people who take the deed-in-lieu path rather than foreclosure. However, their credit score will not be affected in the same way.

Individuals who simply cannot afford a mortgage will not be eligible for a loan modification. For example, some borrowers would require an 80 percent reduction in their loan balance to be able to afford the mortgage. This is not possible.

Non-owner occupants are currently not eligible for loan modification.

TARP’s funds are currently being used for modifications, not HUD’s. HUD is not currently able to make loans to solve lender problems. However, this kind of loan may be considered in the future.

There was once a program which allowed lenders to get 90 percent of the value of a property from a HUD loan to keep a homeowner in their property. That was either the Hope for Homeowners Program or the FHA Secure Program. When this program first developed, lenders were too optimistic about how many of the deals they would be able to fix with it. It took a lot of time before they realized that this program would not be as successful as they had hoped.

TARP funds can be used to modify principle loan balances, but FHA does not have a program for this yet.

There are some 100 dollar down payment programs for HUD REOs. These programs cannot be used in all areas. Currently all areas have a 100 dollar down payment program for owner occupants. If someone is acquiring a property using FHA financing, they have to pay for the difference between the list price and what they bid, and then another $100. The highest offer will not always win on a HUD property. What ultimately determines whether or not you will win a HUD bid is whether or not your offer will net the most profit.

HUD once had a program for veterans which included no down payment, but when the Housing and Economic Recovery Act was passed in 2008, veterans were required to put down 3.5 percent.

HUD is also in the development business. There are HUD projects that win awards. The mission of Secretary Donovan is to build these residences in an environmentally friendly way.

A new HUD plan has been formulated for 2015 which will make HUD less bureaucratic and more fluid. This will allow them to pay more attention to people in charge of departments. The first goal is to stem the foreclosure crisis. HUD needs to meet the need for quality, affordable rental homes. HUD wants to utilize housing as a platform for improving the quality of life. Home ownership is still a good opportunity. Housing provides wealth in the future by building equity. HUD wants to build inclusive and sustainable communities free of discrimination.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive..

Standard & Poor claims U.S. home prices rose 0.8 percent in April. According to the MBA, independent mortgage bankers and subsidiaries made an average profit of $1,135 on each loan they originated in 2009.  Congress is still debating over legislation that would eliminate the HVCC in 90 days if passed. The House voted 409-5 to extend the closing deadline for the tax credit to Sept. 30.

In The News:

Los Angeles Times – “Home prices rise in 20 major cities as buyers rush to obtain tax credit” (6-29-10)

“Prices rose 3.8% in April compared with April 2009 and were up 0.8% from March, when the data aren’t adjusted for seasonal fluctuations, according to the Standard & Poor’s/Case-Shiller index of 20 metropolitan areas. California cities continued to appreciate, according to the nonseasonally adjusted index, with Los Angeles and San Diego up 0.7% in April and San Francisco up 2.2%.”

Mortgage Bankers Association – “Production Profits Rebounded in 2009, According to MBA Study of Independent Mortgage Bankers and Subsidiaries” (6-29-10)

“Independent mortgage bankers and subsidiaries made an average profit of $1,135 on each loan they originated in 2009, compared to $305 per loan in 2008, according to the Mortgage Bankers Association (MBA)’s Annual 2009 Mortgage Bankers Production Survey released today.”

Housing Wire – “Senator Yanks Financial Reform Support Due to Last Minute Bank Tax Change” (6-29-10)

“Senator Brown sent a letter to sponsors Sen Christopher Dodd (D-CT) and Rep Barney Frank (D-MA) citing the addition of a $19bn bank tax included in the House, but not the Senate versions, as the reason for pulling support. The bill reconciled late last week.”

Housing Wire – “Amendment to Eliminate HVCC Still Alive in Financial Reform Bill” (6-29-10)

“An amendment to the Wall Street Reform Bill that would eliminate the Home Valuation Code of Conduct (HVCC) survived congressional debates last week, according to one representative’s office. A congressional conference last week took place to reconcile both versions of the House and Senate financial reform bills. As it stands now, the HVCC would be eliminated 90 days after the bill is signed.”

Bloomberg - “Volcker Rule May Give Goldman, Citigroup Until 2022 to Comply” (6-29-10)

“Goldman Sachs Group Inc. and Citigroup Inc. are among U.S. banks that may have as long as a dozen years to cut stakes in in-house hedge funds and private- equity units under a regulatory revamp agreed to last week. Rules curbing banks’ investments in their own funds would take effect 15 months to two years after a law is passed, according to the bill. Banks would have two years to comply, with the potential for three one-year extensions after that.”

Bloomberg - “U.S. House Extends Closing Deadline for Homebuyer Tax Credit” (6-29-10)

“The U.S. House of Representatives voted to give homebuyers who qualified for a federal tax credit more time to settle on their pending purchases. The House voted 409-5 to extend the deadline for closing home purchases to Sept. 30. The program initially required borrowers who signed contracts before April 30 to complete paperwork by July 1 to get a tax credit of as much as $8,000.”

Orange County Register – “O.C. brokers raking in more cash” (6-29-10)

“Dollars earned by brokers from Orange County home sales jumped 27.3% in May over broker revenues generated the same month a year ago. It was the first May in five years in which broker revenues increased from year-earlier levels, according to new data from the Southern California Multiple Listing Service.”

Orange County Register – “1 in 4 transactions a short sale” (6-29-10)

“Of the 2,778 homes sold through the MLS, 672 or 24.2% of them were so-called ‘short sales.’ By comparison, homes seized by lenders through foreclosure accounted for 13% of all May sales, or one out of every eight. Altogether, ‘distressed sales’ accounted for almost 40% of all homes sold through the MLS in May.”

Looking Back:

One year ago, the House of Representatives passed legislation that required new homes to be built 30 percent more energy efficient than mandated in the 2006 International Energy Conservation Code. The federal regulator for Fannie Mae and Freddie Mac claimed that home prices were bottoming.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Statistics from the Federal Reserve show the median borrower who ‘strategically’ defaults doesn’t walk away from the mortgage until the amount owed exceeds the value of the home by 62%. McGraw-Hill Construction reports new construction starts increased 3% in April. According to CoreLogic, more than 11 million borrowers currently owe more on their mortgage than it is worth. Experian statistics show that 19 percent of all defaults in 2009 were strategic.

In The News:

Press Enterprise – “Crash opens market for luxury apartments” (6-26-10)

“While homebuilders are aiming at a more frugal consumer by cutting frills, some apartment developments in San Bernardino and Riverside counties are going upscale with features like granite countertops and hardwood floors and rents comparable to a home mortgage. The Lewis Group of Cos., an Upland-based developer of master-planned communities and apartments, figures that partly because many people have been burned by the housing crash, there is demand from prospective tenants moving out of houses who want and can afford a house-like apartment experience.”

Chicago Tribune – “Moral bankruptcy?” (6-27-10)

“Some have struggled unsuccessfully to keep their homes, and others have just walked away. Phillips decided he wanted revenge and was willing to ruin his credit record for it. When a short sale didn’t work out as planned, the 32-year-old Chicagoan opted for Chapter 7 bankruptcy liquidation, a move that will leave Phillips with little except for the scant possessions in his one-bedroom condo. It also will leave his lender, Chase, with little except for, eventually, a condo that has lost value. Meanwhile, Phillips continues to live there, mortgage-free.”

Los Angeles Times – “Undone by their dreams” (6-26-10)

“In the last four years, according to the San Bernardino County assessor’s office, 373 of the 941 single-family homes in Mission Crest — nearly 40% — have been foreclosed on. Thirty-five have gone through foreclosure more than once. Properties that once sold for nearly $400,000 are worth less than $200,000.”

Mercury News – “Santa Clara County assessor adds Web tools to help homeowners” (6-28-10)

“More than 100,000 residents will be given access to a special website — tracking home sales by neighborhood — where they can see precisely why the assessor’s office decided to assign a particular home its worth.”

Wall Street Journal – “How Far Underwater Do Borrowers Sink Before Walking Away?” (6-28-10)

“At what point do borrowers who owe more than their homes are worth decide to stop paying the mortgage? A new study from economists at the Federal Reserve Board aims to answer that question. The research found that the median borrower who ‘strategically’ defaults doesn’t walk away from the mortgage until the amount owed exceeds the value of the home by 62%.”

Housing Wire – “Monday Morning Cup of Coffee” (6-28-10)

“The House Financial Services Committee issued a statement Sunday urging ‘bold action’ on the Dodd-Frank bill, the reconciled financial reform bill agreed to by a Congressional committee last week and named after Sen Christopher Dodd (D-CT) and Rep Barney Frank (D-MA). The final bill now travels to separate House and Senate votes and then, upon passage by Congress, to a Presidential signature into law.”

Housing Wire – “Surge in Nonresidential Building Boosts May Construction Starts” (6-28-10)

“New construction starts increased 3% from April to May, according to a monthly survey by McGraw-Hill Construction. The seasonally adjusted annual rate of total construction starts was $406.3bn in May, up 3% from $392,988bn in April. For the first five months of 2010, the unadjusted value of total construction starts was $162bn, down 2% from $165bn during the same period of 2009.”

Housing Wire – “The Slippery Slope of Short Sales” (6-28-10)

“More than 11 million borrowers currently owe more on their mortgage than it is worth, according to CoreLogic (CLGX: 18.11 +0.28%)—and this group of borrowers would love nothing more than to replace their current underwater mortgage with whatever the accepted ‘short sale price’ is deemed to be. I don’t know that such a response on the part of borrowers could be deemed irrational, either. Many will ask themselves why they have a mortgage at a higher amount, especially if the bank is willing to sell the house to another buyer for less money.”

Housing Wire – “G20 Applauds Dodd-Frank Bill in Pushing its own Global Financial Reform” (6-28-10)

“The meeting of G20 nations concluded this weekend in Toronto with communiqués reflecting a strong support for the US financial reform, called the Dodd-Frank bill. Indeed, information released from the summit show a mix of ambitious plans for growth, mixed with further calls to reduce spending, especially among countries with higher debt burdens.”

Housing Wire – “Experian Finds 19% of Mortgage Defaults in Q209 are Strategic” (6-28-10)

“Of all mortgage delinquencies in the second quarter of 2009 (Q209), nearly one in five — or 19% — were considered strategic defaults, according to the latest study of default trends by information services firm Experian.”

Bloomberg - “Commercial Mortgages Fail to Pay as Lending Increases” (6-28-10)

“Between 50 percent and 60 percent of loans on skyscrapers, hotels, shopping malls and apartment complexes failed to refinance within a few months of their maturity date this year, Bank of America Merrill Lynch analysts said in a report. That compares with 15 percent to 20 percent in 2008, according to the analysts led by Roger Lehman in New York. About $11 billion in loans, or one-third of the 2010 total, had hit their expected maturity dates through late May.”

Bloomberg - “Fannie Mae, Freddie Mac Should ‘Unwind’ Portfolios, Pimco Says” (6-28-10)

“Fannie Mae and Freddie Mac, the housing-finance companies supported by U.S. taxpayers, should take advantage of demand for government-backed mortgage debt and sell their holdings, according to Pacific Investment Management Co. ‘Since the government’s going to want to unwind them at some point anyway, why not do it at the best levels ever?’ Scott Simon, the mortgage-bond head at Newport Beach, California-based Pimco, manager of the world’s biggest fixed- income fund, said in a telephone interview.”

Inman - “Top 10 states for pending tax credit closings” (6-28-10)

“NAR estimates as many as 180,000 homebuyers who were under contract by April 30 may miss the June 30 closing deadline. To prod lawmakers into find a way to extend the deadline, NAR released a breakdown of how many home purchases are affected in each state.”

Looking Back:

One year ago, Freddie Mac estimated that sales of new and existing homes might increase to an annual pace of 5.1 million in the 3rd quarter. Real Capital Analytics forecasted that $16 billion of office transactions would be completed by the end of 2009. The number of Orange County property owners disputing their taxes jumped 23% near last year’s deadline.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Nancy West Marketing and Outreach Specialist, Housing and Urban Development (HUD) (Full Bio)

This week Bruce is joined by Nancy West. Nancy is a marketing and outreach specialist for the Department of Housing and Urban Development. She has been working in the mortgage industry since 1977. Nancy joined in 2004, and in 2006 she accepted one of four nationwide marketing and outreach specialist positions.

Nancy works primarily on educating industry partners to utilize FHA programs. She also explains the finer details of FHA programs to congressional leaders. She participates in many industry conventions, and she also outreaches to consumers through foreclosure and loss mitigation workshops.

Nancy said someone could have worked in the mortgage industry from 2002 to 2007 and never worked with an FHA loan. This was because of the loan limits at that time. The FHA loan limit at that time was $362,790, and the average sale price was over $500,000. Consumers didn’t want to put down over $200,000 to cover the deference between the purchase price and FHA insured loan limits.

Nancy spent a good portion of her career underwriting loans for Fannie Mae, Freddie Mac, FHA, VA, and stated income option ARMs. Nancy noticed many of stated income loans she was receiving appeared to have over-stated income. She turned down many loans as an underwriter, but some lenders were not concerned with quality control.

People can make income documents look very real now because of technology. However, if you used your with, you could search incomes for certain job positions within specific areas. The average income amount you found for the borrower’s job would give you a good idea of whether or not someone was committing fraud on their stated income.

Nancy works in California, Arizona, Nevada, Washington, Oregon, Nevada, Alaska, Hawaii, and Idaho. Arizona, Nevada, and California are three of the most damaged states.

FHA was not a big participant when subprime loans were booming. This prevented HUD from taking the same level of losses. Bruce would imagine that HUD has had some delinquencies from 2008 and 2009. Nancy claims that this is not true. In California, HUD’s delinquency rate for 2008 and 2009 is only at 2.7 percent. Bruce considers that very healthy. FHA never had a stated income program. Over the last two years, FHA has insured over 500,000 loans.

Regardless of the down payment, you always have to qualify for a mortgage. An effort was recently made to raise the FHA down payment limit, but it did not pass. A new bill is passing through congress which would increase down payment requirements according to FICO scores. Right now, FHA is looking to stabilize the market, and FHA is weighing risks and not sure if increasing the downpayment will help in stabilizing the market.

The loan limit in California is $729,760. This will last through December 31, 2010, but we are not sure if this will be extended. There is some legislation out right now which can increase the loan limit for high priced areas.

The down payment percentage does not increase as the price increases. In California, you can go up to 4 units, and you could then get a loan limit of $1,403,400. As long as you are owner occupied the down payment would remain at 3.5 percent.

The higher loan balance has changed who borrows money. The average FICO score for borrowers has increased from 660 to 680. There are a lot of refinances being made right now.

When someone is buying an owner occupied residence, a 100 percent gift fund is allowed to family members, employers and a HUD approved non-profit organizations.

Non-owner occupant loans are only allowed if the individual is buying a HUD REO with 25 percent down. It is also okay for non-owner occupants to streamline refinance on a home that is already owned.

If a borrower has had a bankruptcy, they must wait a minimum of 2 years before being considered. For foreclosures, short sales, or deeds-in-lieu, they must wait 3 years. However, there are exceptions for documented, extenuating circumstances. For example, if there is a death of a child, and the borrower could not pay for expensive medical bills, then they may be considered an exception. For these people, they may only have to wait 1 year.

Sometimes lenders are not aligned with the policies of FHA. FHA’s guidelines are considered minimum guidelines. Almost every lender has extended guidelines. FHA does not have a FICO score requirement, but most lenders have a minimum of 580 FICO score. There are various reasons for lender’s adding overlays to FHA guidelines.  Stating that to protect themselves from their own mistakes does not give the full picture of what I said or meant.  That is only one of the possible reasons, others include examination of own portfolio to determine risks associated with certain types of borrowers and programs, as well as what the investors purchasing these loans in the market want as added layers of protection.

FHA does not actually make loans, it only insures the mortgage. The difference between FHA and private mortgage insurance companies is that FHA insures 100 percent of loans. Because of this, the lender does not have to worry about suffering from a loss. The reason for extended lending guidelines is to protect themselves from their own mistakes.

FHA audits a portion of all their mortgages up front. FHA audits 100 percent of all reverse mortgages, because they are very protective of senior citizens. If fraud is found on a mortgage, then they can ask for an indemnification. If a pattern of fraud is found, then they will remove the lender. FHA has stepped up its auditing of lenders. It now has the ability to pursue lenders more quickly than in the past.

People have a misconception about the home conditions required for FHA. FHA only demands that a house be safe, sound, secure, and free of health issues. FHA does not mandate termite or septic reports.

FHA does not require the use of appraisal management companies, but the lender may require use of such company as it is their right to add overlays and require it. These appraisers are approved by taking a test online, and if they are successful then they are made an FHA appraiser.

All homes repossessed through HUD are listed online. There is a place called Statistics where you can check on what bids have been made on which houses, so you can feel comfortable with the process. Owner occupants are given a ten day priority bidding period for buying HUD REOs. Investors can participate in the bidding process after ten days. In the future, HUD may allow investors to bid on these properties in less than 10 days depending on the condition of the property, but this has not happened yet.

An investor is not eligible to buy an investment property and use FHA 203K loans under current guidelines. However, 203K loans have never gone away for investors on HUD REOs. Bruce did not know this. Unfortunately, investors are still required to put down 25 percent.

When Bruce talked to Nancy two years ago, investors were still required to wait 90 days to resell their houses. There are cases where flipping houses can encourage fraud, but for the most part, investors involved in flipping are doing honest business. However, it should be noted that if a property resells within 90 days and is resold for more than 20% of the investor’s purchase price at auction, there are added requirements and may perhaps not be eligible for FHA financing.

Bruce and Nancy will cover more on HUD approved non-profit agencies next session.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

According to DataQuick, 41,837 new and resale houses and condos were sold statewide in December. New York’s Federal Reserve bought $12 billion of MBS from Fannie Mae and Freddie Mac. First American CoreLogic reports that national home prices decreased by 5.7% from November 2008 to November 2009. A proposal from President Barack Obama to limit bets made by banks with their own capital may encourage banks to sell some private-equity businesses and to stop investing in buyouts.

In The News:

DQNews - “California December Home Sales” (1-21-10)

“An estimated 41,837 new and resale houses and condos were sold statewide last month. That was up 16.7 percent from 35,860 in November, and up 10.6 percent from 37,836 for December 2008. An increase in sales from November to December is normal for the season. California sales for the month of December have varied from a low of 25,585 in 2007 to a peak of 65,793 in 2004, the average is 44,708. MDA DataQuick’s statistics go back to 1988.”

Housing Wire – “Fed Buys Another $12bn of Agency MBS” (1-22-10)

“The Federal Reserve Bank of New York bought $12bn of mortgage-backed securities (MBS) from mortgage giants Freddie Mac (FRE: 1.17 -10.69%), Fannie Mae (FNM: 0.99 -7.48%) and Ginnie Mae in the week ending January 20. Gross purchases totaled $16.36bn — $1.3bn of Freddie MBS and $12.8bn of Fannie MBS — before $2.25bn of MBS sales during the same time frame, according to details released Thursday by the NY Fed.”

Housing Wire – “First American Home Price Index Down 5.7%” (1-22-10)

“National home prices declined 5.7% year-over-year in November, according to First American CoreLogic’s LoanPerformance Home Price Index (HPI). That’s an improvement from October’s year-over-year decline of 7.6%, but prices also declined 0.2% in November compared to October. Excluding distressed sales, prices declined 5.1% year-over-year in November, compared to a 5.7% decline in non-distressed sales prices in October.”

Housing Wire – “FHA Opens HAMP for Borrowers at Default’s Door” (1-22-10)

“The Federal Housing Administration will provide early loss mitigation assistance for borrowers before they fall behind on their mortgage payments. According to the Helping Families Save Their Home Act of 2009, the FHA has the authority to use loss mitigation tools for delinquent borrowers facing ‘imminent default.’”

Housing Wire – “Frank Says Committee to Recommend ‘Abolishing’ Fannie, Freddie” (1-22-10)

“House Financial Services Committee Chairman Barney Frank (D-Mass.) called for the abolition of the government-sponsored enterprises (GSEs) Fannie Mae (FNM: 0.99 -7.48%) and Freddie Mac (FRE: 1.17 -10.69%) during a committee hearing Friday.”

Housing Wire – “SunTrust Boosts Reserve for Mortgage Repurchases, Posts Q409 Loss” (1-22-10)

“SunTrust Banks (STI: 24.55 +0.08%) posted a net loss of $316.4mfor the fourth quarter of 2009, and a full-year net loss of $1.73bn, compared with $741m of net income in the previous year. Loss expectations in the mortgage unit drove the results, as the company bolsters its reserve for expected mortgage loan repurchases.”

Bloomberg - “Obama Proposal May Force Banks to Sell Buyout Units” (1-22-10)

“JPMorgan Chase & Co. and Goldman Sachs Group Inc. may have to sell some private-equity businesses and stop investing in buyouts under a proposal by President Barack Obama to limit bets made by banks with their own capital. Obama asked Congress yesterday to prohibit banks from owning or making investments in private-equity and hedge funds that ‘are unrelated to serving customers.’ While financial institutions could still manage the assets on behalf of clients, they wouldn’t be able to invest in their own funds or those run by firms such as Blackstone Group LP and KKR & Co.”

Inman - “2010: a time of stabilization” (1-22-10)

“Pat Lashinsky, CEO and president of national real estate brokerage company ZipRealty, said he expects some stabilization and ‘a little bit of rebounding’ in the housing market compared to last year.”

Inman - “Mortgage fraud reports level off” (1-22-10)

“After six years of double-digit growth, reports of suspected cases of mortgage fraud by lenders leveled off in the first half of 2009 but remained at a historically high level, acccording to a government report released today. The Financial Crimes Enforcement Network (FinCEN) said depository institutions reported 32,926 cases of suspected mortgage fraud in the first half of 2009, an increase of less than 1 percent from the same period in 2008.”

Looking Back:

One year ago, DQNews reported that 37,836 new and resale houses and condos were sold statewide during December 2008. The MBA’s weekly survey showed that mortgage application volume had decreased by 17.6 percent from November to January. The Commerce Department reported that home and apartment construction decreased by 15.5 percent in December 2008.

A government report shows that the Federal Reserve and the U.S. Treasury spent $1.2 trillion dollars on the U.S. mortgage market in fiscal 2009. The Department of Labor announced that the weekly unemployment claims decreased by 33,000.  Statistics from Freddie Mac show that mortgage rates for 30-year fixed U.S. home loans fell to 4.87 percent from 4.94 percent last week. Trulia reports that U.S. home sellers reduced their price by a total of $28.4 billion.

In The News:

Mortgage Orb – “Fed Proposes Changes To TALF Collateral Assessments” (10-6-09)

“The board has proposed a rule that would establish criteria for the Federal Reserve Bank of New York to determine the Nationally Recognized Statistical Rating Organizations (NRSROs) whose ratings are accepted for determining the eligibility of ABS to be pledged as collateral at the TALF.”

Mortgage Orb – “Frank To Propose Loan Plan For Unemployed Borrower” (10-6-09)

“With the unemployment rate having reached a 26-year high of 9.8% in September, Rep. Barney Frank, D-Mass., asserts that Troubled Asset Relief Program funds repaid by banks should be used to help unemployed borrowers avoid foreclosure.”

DSNews - “Community Mortgage Banks Organize to Temper Re-regulation Efforts” (10-8-09)

“Community banks complain that the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 imposes burdensome requirements on non-deposit-taking lenders, while exempting federally regulated deposit institutions. The community banks are also concerned that the proposed Consumer Financial Protection Agency will end up imposing new regulations that will disadvantage smaller institutions.”

DSNews - “White House Won’t Commit to Homebuyer Tax Credit; Economists Remain Split” (10-7-09)

“The tax benefit for first-time purchasers – an emergency measure that was approved as part of the federal government’s stimulus to the ailing residential housing sector – is set to expire on Nov. 30. But despite appeals by trade advocacy groups to extend the credit, the White House said this week that it hadn’t made a decision on the matter.”

DSNews - “Feds Spent $1.2 Trillion to Keep Fannie, Freddie, Others Afloat in FY 2009″ (10-7-09)

“The U.S. Treasury and Federal Reserve pumped a total of $1.2 trillion in investments into the U.S. mortgage market in fiscal 2009, according to a report by the government last week.”

Department of Labor – “UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT” (10-8-09)

“In the week ending Oct. 3, the advance figure for seasonally adjusted initial claims was 521,000, a decrease of 33,000 from the previous week’s revised figure of 554,000. The 4-week moving average was 539,750, a decrease of 9,000 from the previous week’s revised average of 548,750. The advance seasonally adjusted insured unemployment rate was 4.5 percent for the week ending Sept. 26, a decrease of 0.1 percentage point from the prior week’s unrevised rate of 4.6 percent.”

Inman - “The right time for bulk buyers?” (10-8-09)

“According to Chris Wiley, co-founder of REOLynx, the most aggressive bulk-package bidders he’s seen are typically local and regional investors whose bids have been 35 percent to 45 percent less than the average sales price or listing price of the development’s units.”

Bloomberg - “Corus May Be Model as Investors Seek Troubled Assets” (10-8-09)

“Starwood Capital Group LLC and TPG’s agreement to buy $4.5 billion of Corus Bankshares Inc.’s real estate assets shows investors are ready to bet on distressed property — as long as the U.S. helps finance the deals.”

Bloomberg - “Mortgage Rates in U.S. Fall to 4.87%, Freddie Says” (10-8-09)

“Mortgage rates for 30-year fixed U.S. home loans fell for the second consecutive week, pushing borrowing costs to near record lows. The average U.S. 30-year rate dropped to 4.87 percent from 4.94 percent last week. The 15-year rate was 4.33 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement.”

Bloomberg - “U.S. Retail Center Vacancies Rise to 17-Year High, Reis Says” (10-8-09)

“Vacancies at U.S. shopping centers rose in the third quarter to a 17-year high as unemployment climbed, consumers cut spending and stores closed, real estate research company Reis Inc. said.”

Bloomberg - “Home Sellers in U.S. Cut Prices by $28.4 Billion, Trulia Says” (10-8-09)

“U.S. home sellers cut their asking prices by a total of $28.4 billion to attract buyers as the real estate recovery stalled, Trulia Inc. said. The average discount was 10 percent as of Oct. 1, the San Francisco-based real estate data provider said today. Homes listed for more than $2 million were cut the most, with owners taking an average of 14 percent off the original price. Luxury homes accounted for 25 percent of all of the reductions.”

Bloomberg - “Marriott Reports Loss for Third Quarter on Timeshares” (10-8-09)

“Marriott International Inc., the biggest U.S. hotel chain, reported a third-quarter loss after a $752 million pretax charge for its timeshare business. The net loss in the 12 weeks ended Sept. 11 was $466 million, or $1.31 a share, compared with a profit of $94 million, or 25 cents, a year earlier, the Bethesda, Maryland- based company said in a statement today.”

Housing Wire – “Moody’s Projects Default Rates to Fall in 2010″ (10-8-09)

“The US speculative-grade default rate swelled in Q309 as the economy continued to work its way through recession, unemployment remained high and loan performance remained weak, but analysts expect a sharp decline by this time next year, according to a report from Moody’s Investment Services. Moody’s analysts project the default rate of issuers reached 12.9% in Q309 on varying types of loan collateral from mortgages to automobiles. The quarterly US default rate rose from 11.5% in the previous quarter and spiked from 3.2% at this time last year, according to the report.”

Housing Wire – “Buyer Discount Off Listing Price Drops in August, Says Zillow” (10-8-09)

“Buyers paid a median of 3% below the last listing price for properties in August. While that amounts to $6,525 in savings for homebuyers, it’s less than the median 3.3% — $7,018 — buyers paid below asking price in July, according to the latest Zillow Real Estate Market Report.”