FDIC Hurting Homeowners: Case 1

FDIC Hurting Homeowners: Case 1

In my previous blog post, FDIC Hurting Distressed Homeowners, I discussed some current FDIC actions that are hurting distressed homeowners. Based on this information and other information posted on my blog (see Our Phony Real Estate Market), I believe that the recent government actions (shared-loss agreements with banks that take over failed banks, bank bailouts, FASB accounting rule changes which allow financial institutions (banks) to hide losses, homebuyer tax credits, increased mortgage loan purchasing by Fannie Mae, Freddie Mac and Ginnie Mae, the US Treasury's $1.25 trillion mortgage security purchasing program, expanded FHA, Making Home Affordable, etc.) are actually harming distressed homeowners, new home buyers, existing homeowners and the real estate market in general. The harm is usually caused due to the unintended consequences of the government meddling in the market. Below is my first live case study of such adverse consequences.

FDIC Hurting Homeowners: Case Study #1

In response to my blog post FDIC Hurting Distressed Homeowners, I received an email from a homeowner who is a victim of the FDIC's shared-loss agreement with OneWest Bank which took over the now defunct IndyMac Bank.  OneWest Bank is owned by George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire). Therefore, the US Government via the FDIC is using taxpayer money to make the super rich even richer. This disgusts me.

The homeowner is fighting to save their home from foreclosure.  In doing so they sent the letter below to "every member of congress in my state along with the media."  Therefore, they gave me permission to publish their letter on my blog.  In the interest of disclosure, the letter is exactly as I received it except for some formatting changes and some spelling corrections.  As you can see this is a very disturbing situation where the actions of the government have enabled and government enriched company to push a financially distressed homeowner around.  The result of this will be increased foreclosures, which are harmful to homeowners and neighborhoods and reduced numbers of loan modifications and short sales, which are better for distressed homeowners and neighborhoods.  In the interest of getting this message out to the public please feel free to repost this information on your blog, or to email this post to other people.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

23% of Homeowners Underwater

23% of Homeowners Underwater

According to this Wall Street Journal article, One in Four Borrowers Is Underwater, First American CoreLogic, a real-estate information company based in Santa Ana, Calif, reports that 23% of US homeowners who have mortgages owe more than their homes are worth (i.e. underwater). See below for the state by state analysis of underwater home owners.



As you can see, according to the map above (click on it to see the stats), 13.2% of Tennessee homeowners with mortgages are underwater with an additional 7.0% being almost nearly underwater (Defined as properties within 5% of being in a negative equity position). While better than the 23% figure stated in the article title, it is fact still a fairly large number which will lead to more problems. According to the article, "These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market. Economists from J.P. Morgan Chase & Co. said Monday they didn't expect U.S. home prices to hit bottom until early 2011, citing the prospect of oversupply. Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American."

The article quotes Mark Fleming, chief economist of First American Core Logic, as saying negative equity "is an outstanding risk hanging over the mortgage market. It lowers homeowners' mobility because they can't sell, even if they want to move to get a new job." The article mentions that Fleming believes that borrowers who owe more than 120% of their home's value were more likely to default. This is proving to be significant since according to the article, "Mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay -- more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman." I cover this topic in my blog post Underwater Homeowners Walking Away From Their Homes.

Without going on an on with this post, I will end it with the comment that the increase in the number of underwater homeowners will lead to an increase in short sales and foreclosures (as homeowners give up on regaining their lost equity) and this will in turn put additional downward pressure on home prices.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Housing Will Decline In 2010

Housing Will Decline In 2010

According to this CNBC article, Housing Slump May Worsen Next Year, Not Get Better, in 2010 the housing market will get worse, not better. Their premise is that due to the first time home buyer tax credit (and the recent extension and expansion), "Sales of existing homes will peak in the final quarter of 2009, then begin a year-long slide, which is likely to be a sharp one, according to some estimates."

The article quotes Global Insight economist Patrick Newport as saying "Most of it [the tax credit] is simply shifting sales from one period to another. "It doesn’t get rid of the fundamental problem; there's still a glut of houses. At the end of 2010, you’re still going to have that glut." That is why I have been saying that new home construction does not need to slow - it needs to stop completely. According to Newport, single-family home sales will reach an annual rate of 5.88 million units in the 4th quarter of 2009 (vs. 5.30 in the third quarter). In 2010 he predicts that home sales will decline to 5.65 million units in the 1st quarter of 2010 and average around 4.75 million units in the second half of 2010. That indeed is a large decline.

According to the article, even David Crowe, chief economist at the National Association of Home Builders (NAHB), agrees with the sales shifting premise when he said "We expect a little stall in 2010. I agree, you do advance demand, so you steal it for (from?) the future. The economy and the job market didn't pick up as people expected in '09 and as a consequence that is rolling it in 2010." According to the article, NAHB has predicts a homes sales situation similar to that above with single family home sales reaching a peak of 5.60 million units in the 1st quarter 2010 and declining to about 4.50 million units in the 3rd quarter of 2010, for a 2010 home sales average of 5.15 million units.

According to the article, supporters of the tax credit (and the recent extension and $6,500 expansion to repeat home buyers) did believe that the tax credit would prompt some people to purchase a home sooner than they originally intended, thus reducing the future buyer pool, but those lost future purchases would eventually be replaced by another group of home buyers brought into the real estate market by the improving economy and job market. However, now there is doubt that the $6,500 credit for repeat buyers will help the housing market at all due to the original tax credit not being enough to help new home sales.

The article quotes Andrew Jakobovics, associate director for housing and economics at the Center for American Progress, as saying "I don’t know if the expansion is really going to get anyone else into the market, if you think about what the transaction costs (are). The people who are going to take advantage of it [the tax credit] were going to move anyway. A lot of the new households will be renters or stay renters." I agree in that the marginal effect of the tax credit extension/expansion will be much smaller than NAHB and NAR want. The article states "Most economists see the jobless rate—now 10.3 percent—peaking around 11 percent sometime in early to mid 2010 and then creeping down to around 10 percent by the end of the year. That's too high to make much of a dent in the current glut. Inventory levels are now at an 8-9-month supply--Down from the 10-11-month levels of early 2009, but still above the 6-7-month goal. Another casualty of the job market is household creation, which has meant a steady stream of buyers in the past, helping keep inventories at a healthy level. In 2008, for the first time in years, household creation fell—and sharply, too. At the same time, the number of young adults living at home and average marriage ages increased. More recently, there has been a flattening." As a result the less than desired tax credit effects, continuing high unemployment, and declining and/or flattening of household formation, the housing market will still be in poor shape near the end of 2010. Add in the expiration of the tax credit, the coming end of the government mortgage buying programs and the failing FHA (due to record defaults) - see my blog posts: Housing Faces Upcoming Challenges and Our Phony Real Estate Market - the housing market could be substantially worse in 2010. In fact, short sales and foreclosures will likely increase in 2010 and the result will continued downward pressure on housing prices.

As always, the article mentions that Lawrence Yun, NAR's chief ecomonist, as being bullish on real estate with a prediction that home prices will increase by 4% in 2010. As a homeowner I would like to believe this, but it just defies common sense.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Housing Faces Upcoming Challenges

Housing Faces Upcoming Challenges

According to this Real Estate Economy Watch article, The Last Days of the Homebuyer Tax Credit, there are 2 upcoming issues that will hurt housing.

1. Permanent Expiration of the Housing Tax Credit - According to the article, "This is it. No more extensions. When April 30 comes and goes, the tax credit for everyone is over and buyers have only until June 30 to close. With the prospect of getting more than they bargained for in the short term, the housing lobby agreed." In essence lawmakers made representatives of the National Association of REALTORS (NAR) promise that they would not come back and ask for another extension of the housing tax credit.  Therefore, buyers have until April 30, 2010 to sign a contract to buy a home and June 30, 2010 to close in order to get the tax credit.  That's it.
2. Government Mortgage Purchasing Will Decrease Dramatically - According to the article, "About the same time the credit goes away, something more serious will hit the housing markets, the end of the Federal Reserve’s programs to buy up $1.25 trillion of mortgage-backed securities and to lend as much as $175 billion to Fannie Mae and Freddie Mac to do the same. Mortgage-backed securities are sold to investors and the better the market for them, the lower the interests that consumers pay. These government programs to buy mortgage securities have helped to prop up the mortgage-backed securities markets and keep mortgage rates at record low levels for nearly a year. The Fed announced two weeks ago that both are going away April 10."

In my opinion, the effectiveness of the tax credit will wane much sooner than April 30, 2010.  After the first group of buyers took advantage of the tax credit, most of the buyers that did not do so were probably not interested in buying.  I will agree that some simply simply were not ready to buy the tax credit extension may spur some of them to buy now, but I believe that a majority simply felt that $8,000 was not enough.  The tax credit would have to be larger to get this next group of first time buyers off the fence.  Since the tax credit was not increased I predict a lesser tax credit effect this 2nd time around.  I believe that you will see an initial surge of tax credit buyers followed by a long lull followed by a surge near the end as procrastinators try to close before June 30, 1010.  The overall results will be disappointing.

The upcoming decrease in government mortgage is a much bigger problem.  Per my previous blog post, Our Phony Real Estate Market, right now the housing market is almost entirely being supported by artificial government intervention.  When that government intervention ends the housing market will have to survive based on the fundamentals (think jobs and income).  Therefore, it will be a difficult time for housing if unemployment is still around 10% or worse and all these government housing subsidies expire.  This does not even factor in the coming wave of Option ARM foreclosures caused by a large number of Option ARM mortgages resetting starting in the spring of 2010.  Because of these issues I predict another decline in housing beginning in 2010. The gist of the matter is that there will be more short sales and foreclosures and this will drive the price of homes down further. Some areas will be harder hit than others, but the effects will be felt nearly everywhere.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

SHORT SALE - Spring Hill TN Single

SHORT SALE - Spring Hill TN Single

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	Address: 2981 Augusta Trace Dr Type: Residential Style: Single Story Bedrooms: 3 Bathrooms: 2 Suite: No Living Area: 1,840 square feet Year Built: 1999 More Details

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	SHORT SALE. Nice smaller single in Augusta Place. Williamson County Schools. Newer roof (3 yrs). Newer HVAC/Heat Pump (1 yr). Bonus Rm over garage. Stone patio & deck. 12x12 storage bldg w/electric. Ext wired w/220V box for hot tub install. More Description

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If you are a home buyer or real estate investor in Middle Tennessee who is interested in purchasing a Fannie Mae foreclosure, a Freddie Mac foreclosure, bank foreclosure or REO, a short sale, or other distressed real estate in order to get a great home or investment property at an attractive price without dealing with the difficult REO/foreclosure listing agents and you want aggressive and professional buyer representation, please contact me, or visit my website Search the Middle Tennessee MLS - Find Middle TN Short Sales, Pre-foreclosures, Foreclosures & REO's so that you can find foreclosures, short sales and other distressed real estate and homes in Middle TN. I help home buyers in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.