Earlier this week, the Obama administration released the guidelines which enable lenders to begin modifications of eligible mortgages under the administration’s Homeowner Affordability and Stability Plan. Here is a summary of the guidelines, direct from the Department of Treasury: http://www.treas.gov/press/releases/reports/guidelines_summary.pdf.
This “foreclosure prevention plan” (dubbed by the media as such) is estimated to help some seven to nine million homeowners make their mortgages more affordable and help to prevent the continuation of the devastation that foreclosures have caused in this country.
According to the U.S. Department of Treasury, “The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 80%. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.
“GSE lenders and servicers already have much of the borrower’s information on file, so documentation requirements are not likely to be burdensome. In addition, in some cases an appraisal will not be necessary. This flexibility will make the refinance quicker and less costly for both borrowers and lenders. The Home Affordable Refinance program ends in June 2010.
”The Home Affordable Modification program will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department today announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications. This program will work in tandem with an expanded and improved Hope for Homeowners program.
With the information now available, servicers can begin immediately to modify eligible mortgages under the Modification program so that at-risk borrowers can better afford their payments.”
Industry online magazine, RISMedia, weighed in on the plan this week and offered this insight that I thought would be helpful: http://rismedia.com/2009-03-04/how-to-help-homeowners-understand-obamas-foreclosure-plan/
I know that many clients have a lot of questions right now and we are working to gather some communication tools to help. One good option in the meantime is a consumer-friendly Q&A recently put together by the Treasury Department, the U.S. Department of Housing and Urban Development (HUD) located at http://www.financialstability.gov/makinghomeaffordable/.
Now, let’s take a look at this week in real estate:
- Boulder—Our Boulder office reports that new listings in Boulder County fell back about 30% after last week’s huge surge, but 10% of last week’s new listings went under contract within five days. Showings are holding steady. Our office is getting many requests for information about the $8,000 tax credit which is why our March Reality Check (http://www.discovercbtoday.com/DENVER/realitycheck/09MARCH/DV09MarchRC.html) is proving so helpful to so many. The Longmont office reports that showings are way up this week—in fact, 38% up! Contracts on our listings are coming in much stronger at the end of the month. Sellers are making some tough decisions on price reductions now that we are approaching the “selling season.” Buyers for short sales and foreclosures continue to be present. The increase in FHA limits by county was great news and should help buyers in more income levels. Investors are still marveling at the market.
- Conifer—The Conifer office reports increased listing inventory with two new listings during the week. One listing went under contract during the past week and had multiple offers. Showing activity continues strong with 25 showings during the week for a total of 141 for the month.
- Evergreen—The Evergreen office reported steady news in listing inventory and sales activity. We had a total of five new listings for the week, while two buyers went under contract. We had one short sale go under contract at $725,000.
- Denver Central—Our Denver Central office reports that the Agents are busy. Many Agents are having more appointments than ever. It is just taking some time to get deals to come together. We are seeing a slow down in the foreclosure market but short sales are still prevalent. Calls coming through to our floor have increased and we are experiencing more calls from people looking to make a career in real estate. We are focusing on our contracts and seeing great results.
- Devonshire—Our Devonshire office reports that this week we had a definite surge in buyer activity. It seems that buyers are "pulling the trigger" on homes that meet their needs and now the issue is that they are caught liking homes that others do also. We have at least two examples of multiple offers—one of them over $800,000. The thought that we are working off of in our office is that if buyers like a home it is better to get in an offer and avoid the competing offer scenario. We look forward to a steady and good summer season.
- Douglas County—The Southwest Metro office shares the great news that showings are continuing to increase week after week. Floor has been great this past week. We have six potential deals from floor. Our marketing of the Highlands Ranch has resulted in a $350,000 listing for one of our Agents. We did see three listings this week with multiple offers as well as nine buyers who were involved in multiple offer situations. Our mortgage rep is extremely busy taking loan applications which is a great sign for a good Spring.
- El Paso County—Our Colorado Springs office shares news that showings have been heavier on the higher end properties. An estimated 28% of all showings are on properties over $300,000. Buyers seem to be predominantly corporate officers coming from tech industries that are consolidating locations. USAA closed its Sacramento office and is relocating its department heads here. Military are returning at a steady pace but not making huge impact in the buyer’s market. The builder market is still very quiet.
- Larimer County—After increases across the board last week, our Fort Collins office reports steady news this week, though notes that the market continues to "march" forward slowly but surely. While showings were down, we did see a flurry of activity at the end of the month with closed transactions and homes receiving offers. Inquiries about the first time homebuyer tax credit is growing which points to a likely uptick in purchases for the $250,000 and under price ranges this Spring.
- Loveland—The Loveland office reports that the market continues to slowly go forward. While showings are down, we did see a flurry of activity at the end of the month with closings and homes going under contract. Inquiries about the first time home buyer tax credit are occurring frequently.
- North Metro—Our North Metro office is seeing increased buyer activity, especially since the stimulus package was signed. Many multiple offers on properties priced $250,000 and under. This has resulted in drastically reduced inventory in this category as well as reduced number of days on the market.
- Parker—Our Parker office reports that not only buyers but also sellers seem to have come off the fence with the warm weather as an increase of new listings shows. However, since the activity of sales has increased as well, some of the overpriced listings have been taken off the market and the listing inventory continues to decline. It is still too early to call it a trend, but if the current activities continue for a few more months, we believe we may see home prices stabilize soon.
- Southeast Metro—Our Southeast Metro office reports the traffic at open houses continues to escalate. We are seeing 20 plus people at most open houses within the energy areas of the city. Homes in good condition and in desirable neighborhoods are selling quickly. As the demand for some neighborhoods increases, we are also seeing sale prices increase over last year.
The news of the week is a breath of fresh air for millions of homeowners and for the real estate sector, it is just what the doctor ordered. It is imperative that we continue to move with speed to make housing more affordable and to help stop the spiral in our housing markets. I believe that this plan will encourage additional loan modifications and will ultimately reduce the foreclosure rate. In the end, this is one—and possibly the most important—way to stabilize prices and once again get us moving in the right direction. Helping families keep their homes is critical, both for the health of our economy and in neighborhoods across the country.
What I am most inspired by is the fact that I really do believe that we are headed in the right direction. On a local level, we’re already starting to feel the initial flow of these benefits. Though I can’t say it is across the board, in general, we are seeing increased floor activity, increased open house activity and buyers are finally getting off the fence and inquiring about the first time home buyer credit, increases in conforming loan limits and seeking counsel on whether or not now is the best time to buy.
I know I say this week after week and while I don’t want to sound too much like a Pollyana, I truly believe that we are well-positioned and poised for a recovery. No, it won’t happen overnight but Obama and his team have made it very clear that they can’t fix this economic crisis without fixing the housing woes and with the recent release of the second half of the TARP funds coupled with the Emergency Economic Stabilization Act and now the Homeowner Affordability and Stability Plan, the housing sector truly is in one of the best positions for a recovery.
Until next week,
Make it a great one,
Chris Mygatt
President and Chief Operating Officer
Coldwell Banker Residential Brokerage Colorado
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