Buyer’s Choice Realty blog

There are resources available to home owners who are falling behind in mortgage payments. A major program has been launched to help people in this situation, or those whose home value has fallen below the amount they have financed.

Visit “Making Home Affordable” to find out if you qualify to either refinance your existing loan(s) or have your lender/servicer modify your loan(s). This site also features answers to frequently asked questions and some other resources that you may find helpful.

If you are falling behind making payments or are struggling to make ends meet in Massachusetts, help is available. Visit your local city/town hall for information, ask a real estate professional, or talk to someone who may know where you can turn. Whatever you do, do not fall prey to the various mortgage protection scams wherein companies promise to rescue you from foreclosure. They simply do not work. We’re rooting for you and are here to help.

Massachusetts Attorney General Martha Coakley, together with several State Senators and Representatives, has filed two pieces of legislation aimed at reducing foreclosures and negating some of the negative effects of abandoned properties as a result of foreclosures.

What is Ms. Coakley’s hope? According to the AG website,

“We hope that this legislation can provide for Massachusetts some relief while we wait for action at the national level. The effects of the housing crisis have rippled through all sectors of our economy, and until we tackle the underlying problem of the subprime lending crisis, no bail out package, no matter how big, can appropriately stabilize our economy,” said Attorney General Coakley.

If you are interested in reading the full text of these pieces of legislation, please view the ‘press release attachments’ near the top of the page from the link above. If not, read on for a brief synopsis of each.

The first piece of legislation, titled An Act to Require Commercially Reasonable Efforts to Avoid Foreclosure, will essentially force lenders (creditors) to make loan modifications on owner-occupied primary residences. This is aimed in the right direction, and it should bring hard-working homeowners and their lenders together. It remains to be seen whether this legislation will actually reduce the number of foreclosures in the Bay State, but the initial groundwork is being laid.

The second piece of legislation, titled An Act Regarding Community Leadership, Neighborhood Revitalization and Urban Violence Protection, aims to accomplish two main tasks. First, it would create an abandoned & vacant property registry. Owners of such properties (primarily lenders and service companies) would be required to maintain these properties as they are added to the registry. The hope is that this will reduce dilapidation, building code violations, and different types of criminal activity like drug dealing, theft, and arson.

Secondly, it would establish a second-hand metal registry. Currently, thieves target abandoned and under-construction properties to steal and re-sell copper, lead, building materials, etc. Junk dealers and pawn brokers, many of whom are unlicensed, are the buyers. They would be forced to register with the state and obtain a license. With this additional monitoring, Coakley hopes to reduce such thefts. Sounds like bureaucracy in its purest form to me, but hopefully it too will work.

To get more information about these proposed pieces of legislation or learn about buying a foreclosure, feel free to call or email me.

800.25.BUYER (ask for John)

Kathleen M. Howley wrote an interesting article recently. Check it out on Bloomberg.com. Howley’s thesis, built in large part upon interviews with Nobel laureate economist Joseph Stiglitz and co-creator of the widely used Case-Shiller housing index Robert Shiller, submits that speculators are largely to blame for the current housing recession and these same flippers/professional investors will keep prices down for some time to come.

How did this happen? Flippers bought more than they could afford thanks to no-documentation loans and other risky mortgage products during the housing market bubble in the late 1990s and early 2000s. When many of these loans ultimately went into default and the homes were foreclosed on, the bubble burst. This has been happening for four years now, and prices are still rapidly dropping.

These same speculators have been buying up foreclosures at auction and directly from lenders, which has prevented the housing market from collapsing completely, but Professor Stiglitz contends that speculators may cause a double housing recession. He said, “We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve.”

The problem is huge, and banks (who own at least $11.5 billion of homes, according to the FDIC) also continue to contribute to it. How do you feel about banks, Professor Stiglitz? “…the same banks that created the problems by mismanaging their risk are mismanaging the disposal of their assets.”

There is no easy solution to this murky issue, but states will soon receive money allocated from the Housing and Economic Recovery Act of 2008 to purchase & renovate foreclosed homes, then sell them to families who intend to occupy the homes. States have 18 months to use their money or they will lose it. Hopefully this program will be run well by states and community groups so that potential buyers, mostly low-income, can occupy their own home, which will improve communities and settle the housing market. I have seen no indication that this money has been sent to states yet, but it is likely to be soon. Florida, Nevada, California, and Michigan, those most widely affected by foreclosure, need to act quickly and rationally.

What’s your view? We would love to hear from you. Call 800.25.BUYER (ask for John) or email me.

The National Association of Realtors® reported today that their forward-looking statistic, “Pending Home Sales Index“, based on contracts signed on previously owned homes, is down nationwide. With the economy going down the drain, huge job losses in many sectors, and consumer confidence very low, this number is no surprise.

Here in the Northeast, the numbers are the worst. The index dropped 7.2 percent to 63.2 in November and is 14.6 percent below a year ago.

Is there light at the end of the tunnel? Perhaps. The NAR’s “housing affordability index”, a complicated relationship between prices, mortgage rates, and family income, is approaching record highs not seen since 1972. Housing is actually becoming affordable again.

Real estate prices in Massachusetts show few, if any, signs of increasing for the moment. That could change by the end of this year if soon-to-be President Obama and his team roll out an effective stimulus package that focuses on housing. Financing a home purchase is as cheap as it was in the 1950s & early 60s thanks to the Federal Reserve, but if foreclosure numbers do not decrease soon, prices will continue to fall.

Is now the right time to purchase real estate in Massachusetts? For a free consultation to discuss your particular situation and goals (and to answer any and all questions you may have about the home buying process), call me at 800.25.BUYER (ask for John) or email me.

Now that the holidays are over and we are into a new year, let’s take a break and look back on 2008. Assisting us today will be Stefan Swanepoel, a noted author and speaker who has been right on with his prognostications regarding real estate and the direction the industry will take.

Mr. Swanepoel (aka ‘Mr. Internet’) has not released his full annual report for this past year but he did share some of the high points in a ‘Top Ten’ list. What impacted the industry in 2008?

1. Emergency Economic Stabilization Act of 2008 (The Bailout)
2. The Presidential Election
3. In Memory Of: Countrywide, IndyMac, Washington Mutual, Wachovia, etc.
4. Facing Foreclosure Frenzy
5. Home Prices Spiral Downward
6. NAR-DOJ IDX Settlement
7. Brokers Go Bust
8. Keeping It Short (Twitter)
9. ActiveRain Explodes Past 100,000 Members
10. NAR Celebrates 100 Years

There are quite a few conversation starters in this list, and 2008, a year filled with volatility, disappointment, more than a few bankruptcies large and small, is one for the history books. I’m sure more than one of you are glad to see 2009 although many challenges face the industry that will take time to work their way through.

To chat about any of these headlines or to figure out how they may affect your prospects for purchasing a home in eastern Massachusetts this year (i.e. How can I buy a foreclosure?), please do not hesitate to call me toll-free at 800.25.BUYER (252.8937 - ask for John) or email me. Home prices are low and heading lower, so don’t miss out on a great deal in 2009!

My main man Hank Paulson, head of the HPHF, has changed his mind about spending some of the $700 billion that he hopes to soon access. As of today, Paulson has roughly $60 billion left of the initial $350 billion which has been spent buying preferred shares of banks and insurer AIG.

Remember the Troubled Asset Relief Program (TARP)? The initial plan was to buy illiquid/mis-priced mortgage securities in order to get them off the balance sheets of huge companies in order to stabilize the market/economic system. The Treasury is the only entity that could afford to hold them for a couple years in hopes that the housing market would level out and the price of these securities could return to normal/par. Well, that is not going to happen.

Hank announced today that he wants to go in a different direction. Read all about it. My favorite part of this Bloomberg article is as follows,

“Paulson’s remarks are an acknowledgment that the centerpiece of the $700 billion bailout request to lawmakers was ill-conceived.”

Anyway, Hammerin’ Hank now plans to throw money at consumer lenders so that Joe Q. Public can get a car loan, credit card, or student loan more easily. How will that happen? There is plenty of illiquidity in the consumer lending sector, and adding billions of dollars to that sector will ease pressures. Well, maybe.

So much for helping the housing market. Unfortunately, Paulson essentially has carte blanche regarding how he wishes to spend TARP money, and is not even required to announce plans for spending tax dollars.

The motto of this bailout and associated plan(s) of action? Ready, Fire, Aim…