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Act fast! Homebuyer tax credit ends soon

There's barely three months left before the $8,000 tax credit for first-time buyers ends -- and it can take that long to close on your new home.

Use any metaphor you want: the ticking clock, sands running through the hourglass or pages falling away from the calendar. The fact is, time is running out to claim the $8,000 first-time homebuyers tax credit.

Passed earlier this year as part of the economic stimulus package, the credit is good for up to $8,000, or 10% of the purchase price, and applies to people who have not owned a home in the previous three years. (There are some income restrictions.) The best part: Unlike a similar program from 2008, the credit does not have to be repaid.

The bad part: It ends on Dec. 1.

Because it usually takes time to close on a house after a contract is signed, buyers have very little time left to act. As of Thurs., Aug. 27, there were only 96 days left before the credit ends.

"Buyers have to get a home under contract very, very soon," said Tom Kunz, CEO of Century 21. "They probably should get out looking."

Sense of urgency

What they will find may surprise them: Many of the prime properties have already been snapped up. Home sales have been on the upswing, and inventories are so depleted in hot markets that first-time buyers are struggling to find homes in their price range. (Check prices in your city.)

In Whittier, Calif., for example, there are few repossessed homes for sale. Those are easy to buy because there isn't a lot of red tape and the bank wants to get rid of them as quickly as possible. Instead, most of the properties are short sales, where the sellers have to convince their lender to let them sell the house for less than they owe.

"That's why there's such a sense of urgency now," said Irma Tapper, a Century 21 real estate agent in Whittier. "The banks have to approve short sales, and they're taking three to six months to do that."

That means a first timer putting a bid on a short-sale might not get an answer form the bank until well after the Dec. 1 deadline for the tax credit. So when an actual repossession listing hits the markets, it creates a feeding frenzy.

Chuck Whitehead, who runs the Coldwell Banker agency in Temecula, Calif., said one recent listing hit the market on a Friday and by Monday there were 57 bids.

The National Association of Realtors attributes much of this activity to the first-time buyer tax credit. It estimates that 1.8 million buyers will file for the credit, and 350,000 of them wouldn't have been able to buy without it.

"It makes a big difference because most of these clients are in a lower price range," said Michelle Edmunds, an agent with Coldwell Banker in Temecula, Calf., who has closed sales for six first-time buyers. "The houses they buy need work and normally they wouldn't want to move in because of the [less than perfect] conditions the homes are in."

That is true for Wesley Forsythe. This June, the 30-year-old computer consultant and his girlfriend bought a row house in the Fishtown section of Philadelphia. Since he paid just $80,000 for the three-bedroom, two-bath place, the credit acted like a 10% discount.

"It allowed us to expand our price range and plan additional renovations," he said. "My mortgage is several hundred dollars less than what my new rent would have been."

Forsythe applied for the credit immediately after closing, filing an amended 2008 tax return. The IRS cut him a check in less than seven weeks. He's spending it now on new hardwood floors, repainting most of the interior and renovating a bathroom. He's stretching the cash by doing much of the work himself.

Cash for Clunkers effect

Of course, analysts worry that this frenzy will dry up once the tax credit expires. They argue that without the incentive, much of the pressure on homebuyers to act quickly will vanish, and the nascent housing recovery could slump.

In many ways the tax credit is similar to the Cash for Clunkers program that ended this week. Already, auto dealers are anticipating that car sales will evaporate after accelerating during the program.

"It's just like Cash for Clunkers," said Robert Dye, a senior economist for PNC Financial Services Group. "It runs the risk of a let-down as the program runs its course."

Johnny Isakson, R-Ga., who is a former real estate broker, is pushing legislation to extend the tax credit through next year, increase it to $15,000, include non-first-time homebuyers, and remove income restrictions.

The effort has drawn strong industry support.

"We need to stimulate the move-up buyer," said Century 21's Kunz, "so it works its way up the pricing food chain. That's what we need to get inventory moving again."

(CNNMoney.com)

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Consumer Confidence Soars

Sentiment reading increased to 54.1 in August, well above economists' expectations.

A key measure of consumer confidence jumped much more than predicted in August, as the job market outlook and business expectations improved, said a report released Tuesday.

The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index rose to 54.1 in August from an upwardly-revised 47.4 in July.

Economists were expecting the index to increase to 48, according to a Briefing.com consensus survey.

The measure is closely watched because consumer spending makes up two-thirds of the nation's economic activity.

(CNNMoney.com)

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South Florida home prices bottom out, Case-Shiller index shows

More evidence that home prices have hit bottom: The S&P/Case-Shiller index says South Florida home prices rose slightly from May to June, the first time since February 2007 that the measure has gone up.

The Case-Shiller index groups Palm Beach, Broward and Miami-Dade together. The index for South Florida rose from 144.59 in May to 145.37 in June, an increase of 0.5 percent.

The Case-Shiller numbers mirror a trend identified by the Florida Association of Realtors, whose stats show the median price of an existing single-family house in Palm Beach County has ticked up in recent months.

Nationally, the S&P/Case-Shiller index fell 15.4 percent from a year earlier, the smallest drop since April 2008, and rose from the previous month by the most in four years.

“The sharp freefall in prices is over,” Michelle Meyer, an economist at Barclays Capital Inc., tells Bloomberg News. “People are entering the market and that is starting to normalize prices. It’s a clear positive.”

by Jeff Ostrowski, Palm Beach Post writer

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Crist to Realtors: Florida economy is improving behind housing market

The Florida economy has begun to improve, Gov. Charlie Crist said this morning in a speech to the Florida Association of Realtors.

The stock market and housing market seemed on the verge of collapse earlier this year but now have strengthened, Crist said.

"You can feel it getting better," he said. "We were afraid the economy was going to fall off a cliff. It doesn't feel like that any more."

He pointed to falling property tax bills and rising numbers of home sales. Statewide, sales of existing homes were up 23 percent from the second quarter of 2008 to the second quarter of 2009, while condo sales spiked 29 percent.

"That's a far sight better than this time last year," Crist said.

Crist also noted that homeowners insurance rates have fallen by 17 percent since he signed an insurance reform package in 2007.

Since then, 47 new carriers have entered the state, Crist said, although he didn't mention that Florida's largest private insurer, State Farm, plans to leave the property market over the next two years.

By JEFF OSTROWSKI, lm Beach Post Staff Writer

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Fast growing foreclosure defense strategy - Produce the Note

A growing number of homeowners around the country are using a foreclosure defense that may help them retain their homes called "Produce the Note." When a lender can't produce the original note, allowing a foreclosure to proceed puts the homeowner at risk of owing that debt again to another party in the future.

What if Your Lender CAN'T Produce the Note?

If a lender wants to foreclose, it has to show that it is, in fact, the appropriate party to whom the money is owed. That right to foreclose belongs ONLY to the party who has legitimate POSSESSION OF THE ORIGINAL NOTE - not a copy, not an electronic entry, but the original note itself with the original signature of the person(s) who allegedly owes the money along with appropriate raised notary seal and signature. So, any homeowner faced with foreclosure has every right to demand the lender first prove to the Court that they have the legal right do to so by proving they have legal possession of the original promissory note.

What the Lender Must Do

Often the lender claims it has lost or destroyed the original note. If the lender is making such a claim, the law requires them to prove all of the following under the "Uniform Commercial Code." The UCC contains a specific provision on this subject (Section 3-309) which states a lender can enforce a promissory note without having the original, BUT only under certain limited circumstances.

1. The lender has to swear and attest that it no longer has the original note;
2. The lender has to prove that it was properly in possession of the note and was entitled to enforce it WHEN it lost possession of the note;
3. The lender has to prove it didn't "lose" possession simply because it transferred the note to someone else (i.e., it's not really lost); and
4. The lender has to prove that it cannot produce the original note because the instrument was destroyed or its whereabouts cannot be determined or it was stolen by someone who had no right to it.

All of these matters have to be definitively proven by the lender. It is not the obligation of the borrower to prove or disprove anything. The borrower can challenge the right of the lender and demand proof.

The Court's Important Role

It is up to the Court to determine whether the lender has satisfactorily proven why it no longer can produce the original note. The Court also has to be satisfied that when the original note was lost, the lender had legal possession of it at the time it was lost. Until the Court has been satisfied of all of this, the foreclosure cannot proceed.

It is also important for the Court itself to understand that this issue is not merely a "technicality" and the judge should not be satisfied with anything less than full proof of this issue. The Court itself needs to appreciate that if it should agree that an original note has been legitimately lost (and allows the foreclosure to proceed) it is the borrower who is still at risk.

Incredibly, even if a Court has found that the original note is lost and the foreclosure sale is finalized, if someone later turns up with the original note and proves that it is the proper holder of the note, and not the lender who foreclosed on the property, the original borrower is STILL LIABLE.

Your lender took back your home and the Court allowed it because it believed they proved the note was lost and it was the proper party. Then someone legitimate shows up with the actual note and you still owe that person the money even though your property was taken with the blessing of the Court. This is a very serious issue regarding post foreclosures and post pre-foreclosure short-sales.

An overwhelming percentage of mortgages granted over the last 3 to 5 years have been packaged into securities and re-sold and re-assigned numerous times since the inception of the borrower's original note and mortgage. In some states, homeowners have better than a 50/50 chance of being successful in defending themselves against a completed foreclosure.

Housing starts, building permits dip

Permits also decline in government report, but single-family construction shows signs of strength.

Initial construction of U.S. homes edged lower in July following a surge in the previous month, according to government figures released Tuesday.

The report had some modest indications of stabilization. "A mixed bag this time around," said Mike Larson, real estate and interest rate analyst at Weiss Research, in a research note.

Housing starts fell to a seasonally adjusted annual rate of 581,000, down 1% from a revised 587,000 in June, the Commerce Department said.

Economists were expecting housing starts to increase to an annual rate of 599,000 units, according to a consensus estimate gathered by Briefing.com.

Shiller on home price uptick The recession has cut deeply into consumer demand and access to financing. Housing starts for July were 37.7% lower than the July 2008 rate of 933,000.

Meanwhile, applications for building permits, an indication of future construction activity, dipped 1.8% to a seasonally adjusted annual rate of 560,000 in July. Economists were looking for the forward-looking measure to increase to an annual rate of 577,000 units.

Building permits were 39.4% below the July 2008 rate of 924,000.

"Construction activity remains low, historically speaking," said Larson. "But evidence continues to mount that the worst of the declines for this cycle are behind us."

Single-family strength: One indication of strength was single-family housing starts, considered the core of the housing market, which managed to gain 1.7% in July after rising sharply the previous month. Single-family building permits rose 5.8% in July.

As the single-family segment showed signs of improvement, however, the multi-family segment continued to get hit hard, pulling topline numbers lower.

Going forward, Larson predicts the construction market will continue to struggle because of the oversupply of foreclosed properties available at bargain basement prices.

"Buyers still have plenty of homes to choose from, and distressed and foreclosed properties will continue to flood the market well into 2010," said Larson.

Regionally, the Midwest was the only part of the country with an increase in the rate of new homes being constructed, posting a 12.9% gain from June.

The Northeast suffered the most severe pullback, with housing starts down 16.3%. Starts dipped 1.4% in the South and 1.6% in the West.

NEW YORK (CNNMoney.com)

Home sales rise from 1st quarter to 2nd

U.S. home sales grew in the second quarter in 39 states, another sign that the ailing housing market is finally coming to life.

Total quarterly sales rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million, from 4.58 million in the first quarter, but were still about 3 percent below a year ago, the National Association of Realtors said Wednesday.

Sales posted quarterly gains of 20 percent or more in Idaho, Hawaii, New York, Wisconsin and Nebraska. But Alaska, Wyoming, California, Colorado and Michigan dropped by at least 6 percent.

Prices, however, were still down from a year ago in 129 out of 155 metropolitan areas the group tracks. The median sales price in the quarter was $174,100, almost 16 percent below a year ago.

The biggest drop, of nearly 53 percent, was in Fort Myers, Fla. Prices also fell 35 percent or more in Phoenix, Riverside, Calif. and Las Vegas. The biggest price gain, of nearly 31 percent, was in Davenport, Iowa, followed by Cumberland, Md., at nearly 22 percent.

Nationwide, foreclosures and distressed sales made up more than a third of all sales in the second quarter.

Many economists now say that the worst of the housing recession is over, though foreclosures are expected to rise over the next year.

Lawrence Yun, the trade group's chief economist, called the sales increase "a hopeful sign for the economy."

By ALAN ZIBEL AP Real Estate Writer

Foreclosure bargains are disappearing

Buyers of foreclosure have to be quick these days. Some houses go under contract fewer than 90 minutes after they are put on the market, says Brad Geisen, founder of Foreclosure.com.

“For every listing that comes out, we have 10 buyers,” says Cesar Dias, an associate with Approved Real Estate Group in Stockton, Calif. Dias had 15 minutes of fame after introducing foreclosure sales tours last year.

Now the tours are defunct because there are not enough homes to show.“We had a lot of inventory last summer. Now we’re down to 1,500 listings – from more than 5,000,” Dias says.

In Florida, real-estate investment companies, buying in bulk and paying cash, face competition.

Even in the hard-hit Detroit area, bargains are disappearing. “For a good house that’s not too beat up in a good neighborhood, there’s no lack of buyers in this market,” says Andy Sakmar, founder of Century 21 Sakmar in Rochester, 20 miles north of the city.

“There are a lot fewer of these properties than a year ago, and the super buys get multiple offers.”

Buy foreclosures now - before it's too late.

In many markets, if you want to buy a repossessed property, you better come with your best offer first -- and fast.

You've heard of speed dating? It's got nothin' on foreclosure buying these days. In many places, anyone who wants to buy a foreclosure better act fast, or they're going to come away with bupkus.

REOs, the industry term for homes repossessed by lenders and put back on the market, are often selling in a day -- sometimes in less.

"We're seeing REOs go very quickly. Offers come in immediately after the listing comes on the market, within 24 hours," said Brad Geisen, founder of Foreclosure.com. Some homes have been put into contract in less than 90 minutes.

Foreclosures: How bad is your city?

In Stockton, Calif., foreclosure ground zero, the market has changed radically. There are too few REOs.

"For every listing that comes out, we have 10 buyers," said Dias, an agent with Approved Real Estate Group. "We had a lot of inventory last summer. Now we're down to 1,500 listings -- from more than 5,000."

San Diego buyers face the same trend. "Agents have one or two REO listings now, compared with 15 or 20 a year ago," said realtor Adrianna Delgado of the Delgado Group.

And there's almost no negotiating, no back-and-forth, after the initial bid. "We don't get a counteroffer," said Delgado. "The sellers just ask for your highest and best bid. If you're not prepared to send in your best bid the first day, you may as well stop looking."

In Florida there are so many buyers for foreclosure listings that real-estate investment companies, which had been snapping up properties, are now facing stiff competition, said Vanessa Grout, VP for acquisitions at New Valley, a real estate investment fund.

Even in distressed Detroit, REOs are still in high demand. "For a good house that's not too beat up, in a good neighborhood, there's no lack of buyers in this market," said Andy Sakmar, founder of Century 21 Sakmar in the Motor City suburb of Rochester. "There are a lot fewer of these properties than a year ago, and the super buys get multiple offers."

Priced for speed

The biggest factor in the feeding frenzy is, of course, rock-bottom prices. Banks are pricing homes to move.

Sakmar tells of an REO that recently went on sale in a community of mostly $300,000 homes. It was in good shape and should have sold for $200,000, in Sakmar's opinion. Instead, the bank listed it for $129,000.

"It drew thirteen offers in two days," he said.

That kind of cut-rate pricing is very common, according to Foreclosure.com's Geisen. Instead of holding onto REOs for the best prices -- and paying the property taxes and maintenance and heating costs -- banks are selling the homes as quickly as possible.

"In this market, if they can liquidate them fast, it makes more sense to get them off the books," he said.

The trend is causing intense agita for buyers. "People feel like they're getting left out," said Dias, the agent in Stockton. "We show a house on the weekend and it's gone by Monday."

"There are plenty of buyers ready to move," added Mark Brandemuehl, a spokesman for Movoto, a California real estate broker that specializes in foreclosures. "They tell their agents to make bids right away, as soon as they see something suitable come on the market."
Bubble markets

The hot spots for this fast-paced foreclosure activity are former bubble markets where foreclosures soared -- places like California cities Sacramento, Riverside and San Bernardino.
In Sacramento, for example, the inventory is down to less than 30 days, making it a cut-throat market. The agents specializing in REOs "have nothing to sell," said Brandemuehl.

On average, inventories of California homes under $300,000, the most popular price point for foreclosure buyers, have shrunk drastically, from a nearly 10-month supply a year ago to less than three and a half-month supply today, according to the California Association of Realtors.
Nationally, the number of bank-owned properties diminished by 26% from June 2008 to June 2009.

The industry attributes the drop in inventories to foreclosure prevention efforts by President Obama and various state governments. In particular, they cite moratorium programs that, at the very least, postponed foreclosures.

The bad news is that as the moratoriums lapse, more REOs will likely hit the market. That's because these efforts tend to delay foreclosure rather than stop it.

"Every lender I talk to has been telling me there's every indication that a tsunami of new properties coming to the market later this fall," Sakmar said.

Geisen sees the same flood, but he attributes it to consumers failing out of Obama's foreclosure-prevention program, Making Home Affordable. He believes that many of the modified loans will fall back into foreclosure -- especially if the economy doesn't perk up soon.

In fact, last year the U.S. Comptroller of the Currency found that 53% of loans that were modified in the first half of 2008 fell back into arrears. Although, that was before Making Home Affordable standardized the terms and qualification process.

Still, Geisen said, "There'll be another wave of foreclosures. The wave that Obama stopped -- temporarily."

source: CNNMoney