Archive for June, 2010

Anyone Interested in Seconds… A look at 2nd Quarter Sales Data..

Second Quarter 2010 Single Family Home Sales Data:

County Total Sales Total # Foreclosure Total # of Short Sales Distressed Sales expressed as % of Total Sales Active listings # Sales in 1 Month Absorption Rate
Cook County 6,215 1,803 568 38% 19,288 2,521 7.65%
Lake County 1,402 351 134 35% 5,833 619 9.42%
McHenry County 604 149 89 39% 2,912 253 11.50%
Dupage County 1,538 240 123 24% 5,568 671 8.29%
Will County 1,312 319 141 35% 4,595 513 8.96%

In the second quarter of 2010, Foreclosure Sales and Short Sales together represent 24% -39% of all sales in each of the five counties researched.

There are three (3) times as many foreclosures than Short Sales in the second quarter of (April-June)  2010.

The Real Estate Market is still a buyers market.  In each of the five counties surveyed it is taking anywhere from 7 months -12 months to close on a home.

The next few quarters for the real estate market will be challenging for several reasons.

The First Time Home Owners Tax Credit Expired April 30, 2010 and fewer qualified buyers are looking to purchase a home even though Mortgage Interest Rates are at a all time low.

There is speculation of a Double Dip in the Real Estate Market as a result of more Foreclosures come on the market. Right now the “Shadow Inventory” of foreclosures is paying attention to the abosorption rates discussed above.

Written by Jack Lewitz | Discussion: No Comments »

What Me Worry?

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“What Me Worry?” was the phrase used in Mad Magazine and I think it is appropriate here.

They say bad news comes in threes:

 First, the National Association of Realtors reported existing homes sales dipped 2.2% last month.

 Second, the National Association Of Home Builders shows sales of new homes dropped a record 32.7% in May. This is the lowest level in four decades.

Finally, the Mortgage Bankers Association showed mortgage applications dropped off by 5.9% even when mortgages are at a all time low.

All three indicate the real estate market is struggling after the First Time Home Buyer Tax Credit expired April 30, 2010.

Lets hope there is a silver lining somewhere for real estate in the near future.

Written by Jack Lewitz | Discussion: No Comments »

Channel 5 News Report on Chase Bank

UNDERWATER HOMEOWNERS CALL ABANDONMENT BY MORTGAGE COMPANY
By Lisa Parker

More than 700 days after putting up for sale the home they owned for three decades, a Glen Ellyn couple says they’d received multiple offers on the home, but couldn’t get any answers from their mortgage company.

Gus and Fran Trantham owed more on their home than its market value, so they were a “short sale,” industry lingo for selling a home for less than is owed.  Bank approval is needed for this type of transaction, as the loss is shouldered or shared by the mortgage holder.

But the two year struggle put the couple on the verge of bankruptcy.

“I never dreamed I would have a house this beautiful,” Fran Trantham said of the custom-built, 4,000 square foot home she and Gus built.

They now rent a condo in Woodridge, not far from the home they say they have been trying to sell for so long, and they blame JPMorganChase for failing to offer them any assistance in their efforts to avoid foreclosure and complete a short sale.

“We had a house we thought was worth the money to carry us through,” Gus Trantham said, questioning why Chase ignored three contract offers the couple received on the home. “They are obviously making so much money… two-and-a-quarter billion in a quarter.  They are not looking down at the bottom of the feeding scale to the houses of Americans.”

The team of professionals working with the Tranthams say they were also at a loss to explain why Chase wouldn’t even answer the potential buyers’ offers.

ReMax agent Joel Adams said he and his clients never got any answers when they submitted the first three contract offers.

“Never one. Nope, not one. They never responded in any formal way. Never,” he said.

The Tranthams’ agents said it’s a lose-lose proposition and a problem that is not unique to Chase: the bank never answers and the prospective buyers almost always walk away.

“If you can imagine being a buyer, thinking you are going to buy a house and waiting four or five months for an answer, you have to go out and buy another house,” said ReMax Suburban Vice President James R. Nelson.

To try to save the deal, their lawyer Joseph Horwitz said he took a more direct route.

“It’s unbelievable, to put it mildly,” Horwitz said.  “We wrote letters begging for an answer and it never came. So the date came and went and those people finally left.”

Meanwhile, the couple said the price of their home, along with the market, kept dropping.

With so many homeowners in the same boat — owing more than their home is worth — the Obama Administration recently offered incentives to get banks to complete more short sales.  But is anyone keeping track on whether the banks are actually doing that?

After repeated requests for information, a spokesperson for the US Department of Treasury, which oversees foreclosure alternative programs, said the agency is tracking the number of short sales completed by banks. But, he said, it is too early for the department to report those numbers.

For its part, Chase also won’t say how many short sales it has completed in recent months, but a spokeswoman said that last year the company was focused on loan modifications and keeping families in their homes.

Spokeswoman Christine Holevas said the company is now turning more attention, and adding more staffing, to short sale transactions.  She said Chase does not keep transcripts of conversation with its customers, but that its internal notes do indicate Chase representatives responded to the early offers on the Trantham home.

She said the notes indicate the offers were too low and that the bank countered.  The Tranthams, their lawyer and their realtor all dispute that. 

Eight days after NBC Chicago’s call to Chase to raise the Tranthams’ questions, their short sale offer was approved.

Gus, 79, Fran, 78, said they had very different plans in mind for their golden years and are hoping for a new beginning.  But say they had to wait for at Chase to say the word.

“It’s just an unbelievable situation. The system isn’t working. This should have been taken care of a year ago,” said Gus Trantham.

Source: http://www.nbcchicago.com/news/business/Chasing-Chase-96513319.html#ixzz0r5RrfJBW

Written by Jack Lewitz | Discussion: 4 Comments »

Fannie Mae and Freddie Mac Shares to Be Pulled Off NYSE

The NYSE plans to delist the shares of Fannie Mae and Freddie Mac.  This means Fannie and Freddie Mac will no longer be traded on the New York Stock Exchange.

 As of June 15, 2009, one share of Fannie Mae stock was selling at .92 cents while Freddie Mac shares were at $1.22.

In September of 2008 the Government took over both Fannie and Freddie when the housing bubble collapsed. So far taxpayers have poured $145 billion dollars into Fannie and Freddie to keep them afloat during the housing crisis and now they are being pulled from the NYSE.

What does this mean to you and I?

Well it means to date there is no confidence in our government running these two agencies and no market to sell these guaranteed mortgage back securities to private investors.

Remember Fannie and Freddie were created by Congress to buy mortgages from banks and then package them into bonds and sell them into the open market as mortgaged backed securities to investors.  When the rating system of these mortgages collapsed and loans started to go into default then the market lost all confidence.

Today 31 million home loans worth $5.5 trillion dollars or half of all mortgages are guaranteed by Fannie and Freddie Mac.

When you see Congress debating over financial reform they are really debating over how to fix Fannie and Freddie as they are crucial to the success or failure of our housing market and banking markets.

Written by Jack Lewitz | Discussion: No Comments »

Where are all the Foreclosures? Only the Shadow Knows ….

shadow18  How many foreclosures are out there?  As far as I can tell “Only the Shadow Knows”.

The new buzz is there is a large shadow inventory of foreclosures yet to hit the housing market.

Keeping this inventory of homes off  market helps to stabalize prices of homes in the short term.

Imagine all these homes coming on the market at one time. There would not be enough buyers to absorb the number of homes for sale and this would  cause home prices to tumble.

But lets say we hold onto the homes and keep them off market. 

The result would be a steady flow of homes for sale and a more steady market and this would be good for the real estate market.

Why because the ratio between home buyers and homes for sale is an important number. This is called the Absorbtion Rate.

If there are more homes for sale than buyers this is called a buyers market. In a buyers market home prices will be lower.

If there are more buyers than homes this is called a sellers market. In a sellers market home prices will be higher.

So the logical thing for banks to do right now is to keep homes off the market until there are fewer homes  than buyers. By keeping homes off the market banks feel the homes will be worth more. 

 In math we were taught the theory of  “two negatives equal a positive”. 

 I am not sure this is the right position for the bank because we are talking about money here and the value of money does not remain stable over time.

We can see that now in the stock market and in the Euro Zone, and  Greece. What was worth a dollar today may not be worth that in the future. So if the bank holds on to a bad asset too long it might be actually worth less. This is a gamble the banks are taking.

Written by Jack Lewitz | Discussion: 1 Comment »

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