The FHFA Foreclosure Prevention Program Expanded

The Obama administration announced Monday it is making a number of changes to its Home Affordable Refinance Program to help more struggling homeowners avoid foreclosure.

So far, eligibility requirements for HARP have been limited to homeowners who have been making on-time mortgage payments but have been unable to refinance at a lower rate due to declining home values. Under the new plan, the Federal Housing Finance Agency would expand eligibility requirements so homeowners with little to no equity in their homes would be eligible to switch to a lower rate.

More specifically, the plan would eliminate the current 125 percent loan-to-value ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac; waive certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie and Freddie; eliminate the need for new property appraisals in some refinancing transactions; and extend the end-date for the program from June 2012 to Dec. 31, 2013.

The exact pricing details of the change will not be published until mid-November, and refinancing under the new terms will not start until December at the earliest. Homeowners with loans that exceed the current limit of 125 percent of the property’s value will not be eligible to refinance until early 2012.

The administration says the changes will help several million more families while helping to strengthen the economy.

I have also heard that Federal Reserve Chairman Ben Bernanke is expected to submit a list of legislative recommendations to Congress as early as this week on possible fixes to the housing market.

HOPE Now Nears 5 million Loan Modification Mark

HOPE Now, which was the first program initiated to deal with the mounting foreclosure problem in 2007, has reached a level of 4.86 million loan modifications. HOPE is a voluntary private sector alliance of mortgage servicers, investors, private mortgage insurers and non-profit housing and debt counselors.

HOPE reports there were 56,000 permanent modifications of proprietary loans during August,  unchanged from the July rate. This brings the total of proprietary modifications since 2007 to 4.06 million. An additional 791,399 modifications were completed up to the end of July through the Home Affordable Modification Program (HAMP), a joint initiative of the Departments of the Treasury and Housing and Urban Development.

To date this year HOPE has completed 690,000 permanent loan modifications.  An estimated 478,000 of these were proprietary and 211,749 were completed under HAMP with August HAMP totals not yet tabulated.

Completed foreclosure sales increased in August from 65,000 to 68,000 (+5 percent) and foreclosure starts increased 18 percent from 185,000 in July to 218,000 in August. Sixty plus day delinquencies were up only slight from July figures at 2.81 million.

Reduced principal and interest payments accounted for approximately 83 percent of modifications in August and 38,000 loans were modified with reductions in principal and interest payments of more than 10 percent.  Eight-three percent of proprietary modifications in August were fixed-rate with initial periods of five years or more.

Faith Schwartz, Executive Director, reports, “HOPE NOW’s servicing partners continue to complete permanent loan modifications at a rate consistent with past months – in spite of tremendous negative impact of the continued housing and unemployment crisis. And, in cases where modifications are not possible, the industry is working hard to educate at-risk homeowners about the options available to them.”

Related articles

• HAMP Loan Modifications Performing Well (youngenvied.com)
• Freddie Mac Finalizes New Modification Option (michael-mcdevitt.com)

5 Tips For Real Estate Pro’s To Get To Icon Status

As you can tell this post is geared towards those already in the field and I wanted to cover something that is asked time and time again by employees, affiliates and colleagues. As a real estate agent, you may not automatically think of yourself as an entrepreneur, but really, that’s what you are!  You’re building your brand, clientele and entire livelihood from the ground up.  While your business is similar to others in the real estate field, it’s up to you to establish yourself as a legit business and bring growth and success; and that’s a large task!

So, what are some of the key steps you can take to really set yourself up as a solid business, a real estate expert or even an icon in the field?

Now, you may think, “Okay, I can see myself as an entrepreneur, but an icon?  I’m not so sure…”  We’re all aware that to have a dynamic business means to constantly be pushing yourself to continual growth; so aiming for the status of icon in your real estate market or even on a national level can be just the thing to urge you to constantly strive for more.

Does this seem overwhelming yet?  Well, take a deep breath.  Becoming an icon doesn’t happen overnight and will take consistency and a daily committment to provide the best and most innovative service to your clients.

Recently, entrepreneur.com gave five great tips that will help boost you to that iconic level.  Of course, I’ve modified them to make them real estate specific, so take a few minutes to review how you can take your business to the next level!

1. Start blogging- Blogging is a great way to establish yourself as an expert.  You can easily provide pertinent information about your real estate market, your listings, home buying or selling tips and even community events.  Giving people the information they want about the real estate market, their home and the community will keep them coming back for more.  The more you blog on a consistent basis, the more people will begin to see you as a trusted expert in your field and in your community.

2. Market yourself- In being your own brand, marketing is key to your success.  While you may not feel comfortable with self-promotion; it’s really the only way to market your business since you are your business.  Marketing your services, your field of expertise, even your awards or recognitions allows others to get to know you, your values and what you will be able to do for them.  This is just another way to establish yourself as an expert and give an open door to becoming an icon.  Exposure brings recognition, which breeds familiarity and establishes trust.  It’s just how our minds work!

A great way for real estate agents to do this is through a one sheet marketing approach.  We’ve created this for a few of our clients and its been a huge success!  A one sheet is simply a sheet of paper that gives a brief synopsis of who you are, your certifications, area of service, expertise or anything else you want to highlight about you and your business.  They’re perfect for leaving at an open house, giving to potential clients and handing out with your marketing presentation.

3. Create Compelling Content- Whether you’re blogging, writing a buyer or seller page for your website or creating your print marketing material; your content should be compelling.  That means sentence structure and grammar should be impeccable and the topics or advice you are presenting should be up to date and interesting.  Visitors to your website or blog will know when something’s just been thrown on a page, and that will send the message that you are okay with doing the minimum just to get it done.  Why not show how much you care about your business and your customer service ethics through great content?  It will help set the tone for your entire business.

4. Create Products- Did you know that real estate agents can have products too?  While you’re not trying to sell them to make a profit, having products or tools to provide for your clients can help set you apart. Giving your client or potential clients something extra is unexpected, sets you apart and establishes yourself even more as an expert.

5. Take it to the Next Level– Now that you’re seen as an expert in your community, boost yourself to icon by taking it up a notch.  If you’re passionate about selling homes or helping people avoid foreclosure; do all you can to grow in your area of expertise.  Begin to register yourself as an expert on real estate sites or other marketing avenues and network, network, network! Credibility is a key component to being viewed as a leader and expert. Real estate conventions are always looking for speakers in a specific field and the more you put yourself out there, the more likely you are to have opportunities on a national level. Imagine how sought after you’ll be in your community after receiving national recognition!

I know this may seem like a lot to take in and a lot of hard work; and it is!  Reaching your goals will take time, dedication and a focus on the end results.  Remember, taking it a day at a time is key!  You won’t become an icon, or even seen as a real estate expert overnight, but you’ll be encouraged by those daily “wins” and as you see your business begin to grow.

There are certain actions that can be taken and if interested, contact me, I recently launched a mentorship program limited to only a handful of individuals and I can guarantee recognition in basically any syndication including FOX, CNBC, ABC, MarketWatch, The Wall Street Journal, Newsweek, and the list goes on. Credibility is a key component to being viewed as a leader and expert. As in doing anything, there is a process to it. Just like there is a process to become a doctor or lawyer. This will give you a head start, but I can show you exactly how to be one of the leading experts in your area, guaranteed. Just contact me for details. Be blessed and make it a productive day!

Freddie Mac Finalizes New Modification Option

Freddie Mac finalized requirements for a new modification option that will be made available to qualified borrowers on Oct. 1.

Mortgage servicers must evaluate borrowers deemed ineligible for the larger Home Affordable Modification Program for the new “Standard Modification” beginning in January. Trial period plans can begin in October. Through the new program the borrower‘s principal and interest payments drop at least 10%, according to Freddie.

Since March 2009, servicers granted roughly 791,000 permanent HAMP modifications and extended more than 1.6 million trials through the national program. But servicers canceled more than 763,000 trials because of redefault, not enough documentation or the borrower did not meet the requirements.

In order for a borrower to qualify for a standard modification, he or she must be at least 60 days delinquent. If they’ve missed fewer payments or are current, he or she must be an owner-occupant, in imminent default and provide a hardship document.

The borrower must have already been evaluated for HAMP within 12 months of the Standard Modification. Mortgages on homes without an owner-occupant can be eligible, even vacant homes that cannot be condemned.

The loan-to-value ratio of the mortgage must also be greater than 80%.

Servicers will receive $1,600 for each modification completed before the loan slips into 120-day delinquency. They get $1,200 for a modified mortgage between 120- and 210-days behind. For standard modifications completed after 210 days of missed payments, the servicer gets $400 from Freddie.

The standard modification program will fall under the joint servicing alignment initiative launched in April.

To Build Or Not To Build? How A Strategic Return To The Sector Could Yield Huge Returns For The Savvy Investor.

. . . . a tough question in light of today’s stubborn economic recovery.  Even though we’ve spotted a few bright spots on the economic horizon (a shrinking foreclosure rate, a growing cash-investor class taking advantage of bargain distressed property prices, rising values of existing commercial properties), tepid job growth and an inventory of unsold REOs seem to negate any optimism. Arguably, the building industry has suffered as much as any other sector. Construction of new homes, one key indicator of economic health, posted its largest decline in the past few decades and finds itself struggling with rising material costs in an environment not conducive to raising prices to cover costs. While conventional wisdom suggests that investors should distance themselves from the building and construction industry, first impressions could be misleading. A strategic return to the sector could yield great returns for the smart investor. The secret lies in pinpointing specific demand and if enough demand exists to drive growth. UCLA’s Anderson School of Business’ recent findings echo findings from a number of other sources indicating a consumer “shift” is occurring to affordable rental units from the traditional single family home. Higher down payment requirements, tight credit and other factors make renting a more practical choice for current homeowners and the growing segment of “Echo Boomers” – defined as children of Baby Boomers born between 1975 and 2000. Fannie Mae estimates that the currently available 15.2 million rental units will not meet the growing demand for affordable housing for this group in the future. Similarly, on retail and office market fronts, analysts predict shortages in retail office spaces as businesses expand. While the fate of the traditional single-family home may be unclear at the present time, the need for affordable apartments and commercial square footage is increasing. Demand exists. The economic downturn crippled the construction industry. The credit vacuum created by the voluntary exit of lenders and the FDIC shutdown of banks with non-performing construction loans brought building to a virtual halt. New project starts diminished and ongoing developments that lost financing stalled. These factors combined to stymie the supply of units brought to market. Now that demand is showing signs of returning, some mothballed projects may begin to make sense at today’s prices. The initial infrastructure work leading up to construction (permits, environmental studies, plans, etc.) that comprise the up-front costs and take years to complete, new investors can now obtain for pennies on the dollar. Private equity funds and large banks are once again injecting new capital into projects. Activity is increasing at construction sites nationwide to meet projected demand, providing much-needed jobs to their immediate communities. We recently completed a development project that was able to sell at attractive current levels based on the fact that we saved on both the land cost as well as benefited from existing infrastructure. This in addition to the short time frame from investment to repayment, made the difference. The key factor is to begin in the areas that were located within good markets and avoid those areas that were on the outer rim of the growth pattern.  If the project is well located it should achieve a fair return using very conservative projections. Is it time to build again? The answer depends on finding the right location at the right price at the right time when land is cheap and the up-front costs have already been absorbed by previous investors. The heavily discounted infrastructure and approvals, in my opinion, are the key elements.

Related articles

• The 25 Highest-Yielding REITs (fool.com)

How And Why Commercial Loan Modifications Are Completely Attainable By Real Experts

It’s entirely possible for struggling commercial-property owners to obtain a loan modification, Capital Mitigation Group is a commercial-foreclosure-prevention firm that specializes in modifying rates, terms and amortization schedules. They employ a vareity of Seasoned Commercial Mortgage Pro’s including bankers/brokers, asset managers, negotiators, mitigators, certified auditors, underwriters and attorneys displaying an ecleptic group on a mission. 

The problem is that most commercial-mortgage borrowers don’t know the proper way to ask, I don’t think that it’s not the borrowers’ fault, think about it. Did the clients faciliatate their own loan? No, of course not, they use a professional, so it only makes sense to do the same in attempting to modify. I say this because Commercial is very different than Residential, with Residential you have these huge conglomerates called Fannie Mae and Freddie Mac that basically own all the paper on conforming loans. Commercial loans on the other hand are usually the banks own money.

The point I’m tyring to make is the borrower discloses their Personal Financial information, if it is disclosed innacurately I’m going to have a hard time trying to convince the underwriters at the bank how and why your financials are unusually different from when you applied 4 months ago. If someone sued you would you represent yourself in court?  If you have very complex financials would you file your own taxes? No, lawyers speak a different landguage and certain CPA’s understand Tax Strategy and know how to disclsoe income and expense information in a manner that allows their clients to pay the least amount of money,  We do the same thing.

Obtaining a loan modification can be difficult, especially if the loan is what’s known as a commercial mortgage-backed securities loan, or CMBS loan. CMBS loans are often tricky to modify, because the original issuer of the loan is no longer involved and the beneficiaries are individual and institutional investors, often scattered across the globe.

A CMBS loan, usually in default, is regularly managed by a loss-mitigation specialist known as a special servicer. It’s easy for commercial-property owners to get discouraged when trying to obtain a loan modification from a special servicer, because the negotiation process can resemble talking to a wall.

With my experience in the commercial finance industry, special servicers were essentially limited to accepting or rejecting the borrower’s offer. They usually are prohibited from making a counteroffer or disclose why a borrower’s offer was rejected. As a result, I’ve experienced first hand that borrowers have often given up after a couple of rejected offers.

CMBS loans, which total about $36.5 billion, was issued in Arizona with little improvement in the value of commercial real estate, Arizona could be headed for more serious problems economically if a high percentage of CMBS loan defaults end with foreclosure. Currently, about $3.5 billion of CMBS loans in AZ have already filed Notice of Defaults.

The value of outstanding CMBS loans is $800 billion Nationwide. More than 60 percent of those loans were issued between 2005 and 2007, when commercial real estate was heavily overvalued. Most commercial-mortgage loans don’t face a serious risk of foreclosure until they reach maturity, usually after 10 years… usually. The meaning behind this is that foreclosures seen so far among commercial properties barely scratch the surface of the problem.

There is no question in my mind that the worst has yet to come in Commercial Real Estate. The situation isn’t hopeless, Capital Mitigation Group specializes, for a fee, the structuring of a loan-modification proposal based on deals special servicers have accepted in the past.

While Capital Mitigation Group has a business model that is relatively unique, it isn’t the only company in this business that has successfully prevented a CMBS loan from being wiped out by foreclosure.

A landmark case decided in 2010, a Maricopa County Superior Court judge held that a receiving commercial investment company could sell seven Arizona apartment complexes formerly owned by the by a “investor group” based in California, without requiring the assigned special servicer to foreclose on the properties.

An “investor group” financed the purchase of the seven apartment properties with a $164.5 million CMBS loan in 2007 and subsequently defaulted on the loan. By allowing a new buyer to assume the CMBS loan, rather than wiping out the debt and forcing the buyer to pay cash, the court protected bond holders connected with the loan and prevented the seven apartment properties from losing at least $50 million in combined value, so I’ve read.

Since Capital Mitigation Group has opened millions in CMBS loan restructures / modifications and are using a variety of methods which include term extensions, discounted payoffs, interest-rate reductions, forbearance agreements and extension of adjustable rates to fixed rates for underwater properties.

Unless more commercial-building owners can work out deals with their lenders to avoid foreclosure, the real-estate and lending crises are likely to continue for years to come and Capital Mitigaiton Group is a provider that ensures success.

Investment funds and pension plans, too, will suffer if more CMBS loans cannot be modified. Because of its early successes with obtaining commercial loan modifications, Capital Mitigaiton Group has expanded.  Capital Mitigation Group intends on expanding and being very selected in candidates. CMG also offers, for a fee, the opportunity to be a Net Branch and leverage and use ALL of our Marketing Platforms, Customer Database Management / CRM, Forms and Tools, and a variety of very useful training.

For more information send me a message.

Mortgage Fraud Down, But Still At Elevated Risk

National mortgage fraud risk is down 2.3% from a year ago and is 1% lower than the previous quarter, but is still at an elevated risk, Interthinx said in its latest Mortgage Fraud Risk Report.

According to the Agoura Hills, Calif.-based firm, the changes coincide with lender reports that borrower quality has greatly improved.

For the fifth consecutive quarter, Nevada and Arizona are the two most risky states for fraud. California, which contains five of the ten most risky MSAs, is now the third highest state for fraud risk after holding the fifth spot last quarter. Florida and Colorado, which jumped eight spots in the report, round out the top five states.

The ten states with the lowest fraud risk include West Virginia, Kansas, Iowa, Maine, Kentucky, New Mexico, Nebraska, Wyoming, Mississippi and Montana.

The report also found a shift in fraud risk for local zip codes. Two zip codes in Chicago had the highest fraud risk for the last four quarters, but as of this report, the Chicago area does not appear in any of the top 20 fraud indices—identity, occupancy, property valuation and employment/income—the firm tracks.

The recent decrease in mortgage fraud risk in the Chicago zip codes was as dramatic as it was sudden as the city has been drawing attention for a year,” said Kevin Coop, president of Interthinx. “It suggests that when the industry has actionable intelligence and increases its scrutiny of an area, word gets out and the fraudsters move on.”