Charlotte Real Estate, Foreclosures, Short Sales

New records are being set daily according to recent RealtyTrac reports.  Foreclosures have increased 21% from this year last year and 120% from 2 years ago. Foreclosures have come in 3 waves. The first wave consisted of originated loans with bad lending practices coupled with overvalued homes. The 2nd wave of foreclosures which we are currently in is being caused by a down economy and job loss. The 3rd wave will be led by the adjusting of option ARMs and adjustable rate mortgages on homes that are worth less than their current loan.  A great amount of option ARM loans have an above average loan amount.

Foreclosures are expected to increase greatly in 2010.  Option ARM mortgage homeowners and homeowners experiencing job loss will probably not qualify for the HAMP program, Home Affordable Modification Program due to homeowners who will default this year with adjustable rate mortgages and job loss not meeting the program's guidelines and eligibility requirements.  For more information, please view the video below.

Many home buyers have found themselves at the closing table surprised at the difference in closing costs due from what was originally quoted to them.  A Good Faith Estimate(GFE) is just that, an estimate.  Mortgage brokers and lenders provide loan applicants with these figures within three days of making an application for a home loan.   New federal rules were adopted on January 1st regarding the GFE, driven by the Department of Housing and Urban Development.  These new rules mandated the redesign of a simplified Good Faith Estimate form. 

Previously, lenders had no standardized format on how these fees were explained.  "Fees were communicated in multiple ways, which adds to the confusion when comparing costs," says Keith Gumbinger, a vice president at HSH Associates, which tracks the mortgage market. Under the new rules, lenders will all be required to use the same form for their Good Faith Estimates - a three-page document issued by HUD.

There are also new rules capping increases in costs that are disclosed on the Good Faith Estimate and guidelines so that fees listed on the initial GFE reflect the actual cost at settlement. "Those fees on the GFE at the beginning of the process will be the same on HUD-1 form [final settlement statement] at the end of the process," says Mr. Gumbinger.

Here is the summary of information on what changes to expect with the new federal rules regarding good faith estimates:

1. Fees that cannot change from the original GFE to final settlement.

2. Fees that can increase up to 10% at settlement.

3. Fees that can change without limit.

Borrowers may see an increase in the overall costs that lenders charge to originate a loan.  These new rules will cost lenders in the way of new software, new documents and new training. 

 If you would like current mortgage information, please click here for more information.

Highest Record of Home Sales Since 2007!

More and more homebuyers are taking advantage of the federal homebuyer tax credit, creating a huge surge of home sales.  November home sales rose nationally by 7.4 percent and are the highest reported level of sales in nearly three years.  51 percent of homebuyers in November used the federal homebuyer tax credit.  The $8,000 tax credit was extended for the first four months of 2010 and expanded to grant a $6,500 credit to qualified current homeowners looking to buy a new home.  

"Things are stabilizing," said Pete Flint, chief executive of real estate Web site Trulia.com. "There is a significant amount of buyer interest out there."  The national association's chief economist, Lawrence Yun, said the tax credit buyers certainly helped inflate numbers in November, but he thinks it might be just the tip of the iceberg.

"This clearly is a rush of first-time buyers not wanting to miss out on the tax credit, but there are many more potential buyers who can enter the market in the months ahead," Yun said.  He said he is hopeful that the market, which has been propped up by the federal government incentives would be self-sustaining by the second half of 2010.

Brent T. White, a University of Arizona law school professor, says that it's in the homeowners' best financial interest to stiff their lenders and that it's not immoral to do so.  White contends that upwards of 15 million homeowners within the country. 

"Homeowners should be walking away in droves," White said. "But they aren't. And it's not because the financial costs of foreclosure outweigh the benefits."  See the full video below.

According to CNN Money, homeowners in increasing numbers are walking away from their homes rather than keeping up with deteriorating assets and increased payments.  "I stopped paying my mortgage in October, after shelling out about $70,000 in interest [over 15 months]," said one borrower, David, who doesn't want his last name used. "Now, I'm just waiting for the default notice." 

This unfortunate situation is affecting homeowners across the country within all price points.  HouseBuyerNetwork.com CEO Duane LeGate says that Susan's two-bedroom condo in Sonoma County is worth $340,000, but the mortgage balance is $380,000. She can't refinance and it's difficult to sell.

And now reports are emerging of homeowners skipping out on mortgages even though they can still afford to pay them.

"Homeowners should be walking away in droves," White said. "But they aren't. And it's not because the financial costs of foreclosure outweigh the benefits."

Pending Home Sales Surge to 3-year High

As home buyers scramble to take adavantage of the tax credit that was set to expire at the end of November, the amount of signed contracts to buy previously occupied homes in the U.S. rose for the eighth straight month in September. The National Association of Realtors said that its seasonally adjusted index of sales agreements rose 6.1 percent from August to 110.1. It was the highest reading since December 2006 and more than 21 percent above a year ago. Economists surveyed by Thomson Reuters expected the index would be level at 103.8.

With foreclosures continuing to surge, "an extended and expanded tax credit would help absorb this incoming inventory," Lawrence Yun, the Realtors' chief economist, said in a statement. "We're clearly not out of the woods because an excess of homes remains on the market despite recent improvements," he said. "Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this incoming inventory."

Pending sales were up 10 percent in the West and 8 percent in the Midwest. They were up 5 percent in the South and were down 2 percent in the Northeast.

In the South, pending home sales increased 4.9 percent to an index of 109.7 and is 22.8 percent above September 2008. In the West the index jumped 10.2 percent to 143.8 and is 23.7 percent above a year ago.