Merscorp Lacks Right to Transfer Mortgages, Judge Says - Bloomberg

Thought you might find this repost from Bloomberg interesting. Throws another wrench in the foreclosure process.

Merscorp Inc., operator of the electronic-registration system that contains about half of all U.S. home mortgages, has no right to transfer the mortgages under its membership rules, a judge said.

U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York, in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages.

“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal.”

Merscorp was created in 1995 to improve servicing after county offices couldn’t deal with the flood of mortgage transfers, Karmela Lejarde, a spokeswoman for MERS, said in an interview last year. The company tracks servicing rights and ownership interests in mortgage loans on its electronic registry, allowing banks to buy and sell the loans without having to record the transfer with the county. It played a major role in Wall Street’s ability to quickly bundle mortgages together in securitized trusts.

MERS was still reviewing Grossman’s decision and didn’t have an immediate comment, Lejarde said in an e-mail Feb. 11. Lejarde didn’t immediately respond to an e-mail seeking comment today.

Proper Status

“‘Don’t come around here no more,’ is basically the message to MERS,” said April Charney, a senior attorney with Jacksonville Area Legal Aid in Jacksonville, Florida. “The judge basically deconstructed MERS and said there’s no possible way in any case you can come in and show you have this appropriate proper status to transfer the note.”

“MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process,” Grossman wrote. “The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

Automatic Shield

In the case Grossman ruled on, Credit Suisse Group AG’s Select Portfolio Servicing, a mortgage servicer, sought to bypass the automatic shield against legal claims triggered by Ferrel L. Agard’s filing for personal bankruptcy in September.

Select Portfolio wanted permission to foreclose on Agard’s home in Westbury, New York, on behalf of U.S. Bancorp’s U.S. Bank unit, the trustee for the mortgage-backed trust the home loan was in. The house is worth about $350,000 and the mortgage amount was $536,921, according to the decision.

Grossman ruled in favor of Select Portfolio because he couldn’t overrule a November 2008 foreclosure judgment the servicer won in state court, he said. Without that state-court ruling, Select Portfolio wouldn’t have had the right to bring its motion, Grossman said.

He then addressed whether a mortgage transfer by MERS is valid, because “MERS’s role in the ownership and transfer of real-property notes and mortgages is at issue in dozens of cases before this court,” including those where “there have been no prior dispositive state-court decisions,” he wrote.

Original Lender

Select Portfolio argued in part that MERS’s February 2008 assignment of the mortgage to U.S. Bank was valid because Agard agreed that MERS would hold title to it for the original lender,Bank of America Corp.’s First Franklin, and for whichever banks it was further assigned to. First Franklin transferred the promissory note the mortgage secured to Lehman Brothers Holdings Inc.’s Aurora Bank and Aurora to U.S. Bank, according to the decision.

“An adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its member/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States,” Grossman wrote. “It is up to the legislative branch, if it chooses, to amend the current statutes to confer upon MERS the requisite authority to assign mortgages under its current business practices.”

MERS intervened in the case and argued that Agard’s mortgage, the terms of its membership agreement and New York state law gave it the authority to assign the mortgage. MERS says it holds title to mortgages for its members as both “nominee” and “mortgagee of record.”

Select Portfolio

Grossman said Select Portfolio had to show that U.S. Bank owned both the note and the mortgage, and there was no evidence that it held the note. The judge disagreed with Select Portfolio’s argument that U.S. Bank held the note because the note “follows” the mortgage, which it said U.S. Bank owned.

“By MERS’s own account, the note in this case was transferred among its members, while the mortgage remained in MERS’s name,” Grossman wrote. “MERS admits that the very foundation of its business model as described herein requires that the note and mortgage travel on divergent paths.”

The judge said that the membership agreement wasn’t enough to assign the mortgage and that to do so the lender would have to give power of attorney or similar authority to MERS.

MERS’s membership rules don’t create “an agency or nominee relationship” and don’t clearly grant MERS authority to take any action with respect to mortgages, including transferring them, Grossman wrote. Because the interests at issue concern “real property” -- land and buildings -- under state law, any transfer has to be in writing, which isn’t done under the MERS system, he said.

‘Nominee’ Status

“Without more, this court finds that MERS’s ‘nominee’ status and the rights bestowed upon MERS within the mortgage itself, are insufficient to empower MERS to effectuate a valid assignment of mortgage,” the judge wrote. “MERS’s position that it can be both the mortgagee and an agent of the mortgagee is absurd, at best.”

Grossman said parties coming to him to seek to lift the automatic ban on legal claims in cases involving MERS will have to show they own both the mortgage and the note.

The case is In re Agard, 10-77338, U.S. Bankruptcy Court, Eastern District of New YorkCentral Islip).

To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court attweidlich@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

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Is This Going To Be A Scary Ride?

This is a repost from Feb. 11th on the ACAR Watercooler Blog. 

January sales were 339 in Ada County, an increase of 21% over January 2010. This level of sales is what we were experiencing in 2008.

Historically, January sales are the lowest of the year. In January 2010 we started with 279 sales and marched strongly upward through the end of April. We experienced a slowing after the tax credit expired, but rallied in the fall to finish the year strongly.

Of our total sales in January…slightly less than 59% were distressed….down 2% from December 201. (Short sales 20% and REO’s 38%). Distressed sales continue to dominate the market as Boise was recently recognized again in the national press for our large number of foreclosures.

A bright spot is our pending sales – they jumped 25% from 575 in December to 720 in January. The percentage of pending sales in distress rose 2% from December totaling 56% overall.

The number of houses available at the end of January showed its first mild increase since a blip at the beginning of the peak selling season. We have the same number of homes for sale as we did in April 2006…2,711. We are beginning the year with 843 fewer homes for sale than in January 2010.

At the same time, the percentage of active inventory that is distressed remained essentially unchanged from December’s at 44%. In Ada County we have 6.4 months of inventory on hand. The price categories in shortest supply are equally distributed between $100K-$250, with the fewest in the $100,000 to $119,000 range.

Separating New Construction from Existing Homes and the numbers are more interesting. Existing Homes inventory is below 5 months in several price categories.

The January median home price dropped $9,500 from December, an 18% decrease from January 2010. This supports the lack of inventory in the $100-119k range, as those are the homes that were mostly sold.

New Homes median price for January 2011 was $211,000, an increase of almost 10% from January 2010. Remember you read it here first…2011 will be a good year to be selling new homes.

So where do we start this second year of recovery… We continue to “benefit” from inventory lower than national average. The bad news is a high percentage continues to be distressed property. With inventory this low, and not likely to increase quickly, prices should stabilize, but not if the number of distressed properties continue to grow.

Median home price for existing homes continues to bounce along the bottom and shows no real sign of improvement, a victim of the unusually high levels of distressed properties.

This is a repost from Feb. 11th, 2001 from the ACAR Watercooler Blog.

We seem to be at the beginning of a transition in consumer expectations in home purchase.

New Federal policies on the role of the GSE’s in the mortgage market will have a long term, and perhaps, immediate effect, likely to benefit lenders over consumers.

Banks are lobbying for higher down payments – as much as 30% – which cannot have anything but a negative impact on home buyers.

The desirability and availability of new homes that don’t carry the baggage of short sales and REOs may eclipse the historical consumer preference for existing (used) homes.

This shift in preference could also provide a secondary benefit…more jobs.

Unemployment numbers improved in the last couple of weeks. We’ve known all along that jobs will drive home sales more than any other single variable.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

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U.S. Home Foreclosures Down 17% Year-Over-Year in January

Thought you might like some good news for a change. This is repost from The Real Estate Channel. Posted by Alex Finkelstein 02/10/11.

The nation's home foreclosure Ferris wheel continues to circle, up one month, down another.


This time around, data for January 2011 showed up better than for the same 2010 month, according to Irvine, CA-based RealtyTrac. But January's numbers were still 1% higher than December 2010.


"We've now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000," said James J. Saccacio, chief executive officer of RealtyTrac.


"Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing."


RealtyTrac today released its U.S. Foreclosure Market Report™ for January 2011, which shows foreclosure filings -- default notices, scheduled auctions and bank repossessions -- were reported on 261,333 U.S. properties in January.


The report also shows one in every 497 housing units received a foreclosure filing during the month.


Foreclosure Activity by Type


A total of 75,198 U.S. properties received default notices (NOD, LIS) in January, a 1 percent decrease from the previous month and a 27 percent decrease from January 2010 -- the 12th straight month where default notices decreased on a year-over-year basis. January was also the fourth straight month where default notices decreased on a month-over-month basis, giving it the lowest monthly total for default notices since July 2007.


Default notices in states with a non-judicial foreclosure process (NOD) increased less than 1 percent from the previous month but were down 8 percent from January 2010, while default notices in states with a judicial foreclosure process (LIS) decreased 2 percent from December and were down 39 percent from January 2010.


Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 108,002 U.S. properties in January, a 4 percent decrease from the previous month and a 13 percent decrease from January 2010. It was the lowest monthly total for scheduled foreclosure auctions since February 2009.


Scheduled non-judicial foreclosure auctions (NFS) decreased 1 percent from December and were down 3 percent from January 2010, while scheduled judicial foreclosure auctions (NTS) decreased 14 percent from the previous month and were down 39 percent from January 2010.


Lenders foreclosed on 78,133 U.S. properties in January, up 12 percent from the previous month but still down 11 percent from January 2010. Bank repossessions (REO) in non-judicial foreclosure states increased 23 percent from December but were still down 9 percent from January 2010, while bank repossessions in judicial foreclosure states decreased 7 percent from the previous month and were down 16 percent from January 2010.


Nevada, Arizona, California post top state foreclosure rates


Nevada bank repossessions increased 16 percent from the previous month, helping the state maintain the nation's highest state foreclosure rate for the 49th straight month -- despite month-over-month decreases in default notices and scheduled auctions. One in every 93 Nevada housing units received a foreclosure filing in January -- more than five times the national average.


One in every 175 Arizona housing units received a foreclosure filing in January, the nation's second highest state foreclosure rate. Arizona foreclosure activity increased 16 percent from the previous month -- driven by a 54 percent month-over-month increase in REOs -- but was still down 25 percent from January 2010.


California REO activity increased 32 percent from the previous month, and the state posted the nation's third highest state foreclosure rate, with one in every 200 housing units receiving a foreclosure filing.


Idaho posted the nation's fourth highest state foreclosure rate, with one in every 241 housing units receiving a foreclosure filing, while Utah posted the nation's fifth highest state foreclosure rate, with one in every 265 housing units receiving a foreclosure filing during the month.


Other states with foreclosure rates ranking among the top 10 in January were Michigan, Georgia, Illinois, Florida and Colorado.


Five states account for more than 50 percent of national total


With 67,072 properties receiving a foreclosure filing, California accounted for more than 25 percent of the national total in January. After hitting a 25-month low in November, California foreclosure activity has increased on a month-over-month basis for two straight months.


Florida foreclosure activity decreased on a month-over-month basis for the fourth straight month, but the state's 21,671 properties receiving a foreclosure filing in January -- a 42-month low -- was still the second highest in the nation.


Michigan foreclosure activity increased for the second straight month, and the state posted the nation's third highest total, with 16,716 properties receiving a foreclosure filing in January.


Arizona posted the nation's fourth highest total, with 15,757 properties receiving a foreclosure filing, while Texas posted the nation's fifth highest total, with 14,897 properties receiving a foreclosure filing during the month.


Other states with foreclosure activity totals among the nation's 10 highest in January were Illinois (13,164), Georgia (12,772), Nevada (12,263), Ohio (8,924) and New Jersey (5,526).


Top 10 metro rates in Nevada, California, Arizona, while Florida metros drop


With one in every 82 housing units receiving a foreclosure filing in January, the Las Vegas-Paradise, Nev., metro area maintained the nation's highest foreclosure rate among metropolitan areas with a population of 200,000 or more. Las Vegas foreclosure activity decreased nearly 13 percent from the previous month and increased less than 1 percent from January 2010.


The other Nevada metro area in the top 10 was Reno-Sparks, at No. 5 with one in every 132 housing units receiving a foreclosure filing.


Seven California metro areas posted foreclosure rates in the top 10, led by Modesto, at No. 2 with one in every 111 housing units receiving a foreclosure filing; Stockton, at No. 3 with one in every 114 housing units receiving a foreclosure filing; and Riverside-San Bernardino-Ontario, at No. 4 with one in every 120 housing units receiving a foreclosure filing.


Other California metro areas with foreclosure rates in the top 10 were Vallejo-Fairfield at No. 6 (one in 135 housing units); Bakersfield at No. 7 (one in 143); Merced at No. 9 (one in 149); and Sacramento-Arden-Arcade-Roseville at No. 10 (one in 151). Sacramento was the only California metro area in the top 10 to report increasing foreclosure activity on a month-over-month and year-over year basis.


With one in every 143 housing units receiving a foreclosure filing in January, the Phoenix-Mesa-Scottsdale metro area posted the nation's eighth highest metro foreclosure rate.


No Florida cities showed up in the top 20 metro foreclosure rates in January. In contrast the state accounted for nine of the top 20 metro foreclosure rates in 2010.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

My Profiles:     
 

MID Facts: Who's Hurt Most by Curbs?

Here's a link to an interesting video from NAR's website regarding the Mortgage Interest Deduction issue.

President Obama Silent on MID 

President Obama's January 25 State of the Union address made no mention of the mortgage interest deduction (MID). The President did express interest in pursuing reforms that would improve the competitive position of Corporate America. Those reforms would not affect the MID. While the President did reference the Deficit Commission report, he did not specifically embrace any of its recommendations. (That report recommended reducing the $1 million cap to $500,000, eliminating the MID for second homes and converting the deduction to a 12% tax credit.) Moreover, the President did not express an intent to lead a battle for individual tax reform, but rather appeared to leave the details of any individual reforms to Congress. The MID is part of the individual income tax. 

NAR's Homeownership Matters (HOM) campaign is poised to mount a campaign should formal proposals emerge that would reduce the value of the MID. 


Reposted from NAR Website


Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

My Profiles:     
 

Bieter touts Boise Whole Foods project, defends the process

Here's a repost from Kevin Richert's Blog from The Idaho Statesman on 2/3/2011

The Whole Foods and Walgreen's project will provide a "huge lift" to the east end of Downtown, Boise Mayor Dave Bieter said.

The project, first proposed in 2007, received City Council approval Tuesday. But in his weekly e-memo to constituents, Bieter bristled at criticisms about the project's timeframe.

Wrote Bieter: "Although the Whole Foods project was first proposed in 2007, the developer had put it on the back burner for economic reasons. A revised proposal was presented to the city's Planning and Zoning Commission last October. Four months from application to final approval of a project of this size and complexity is actually pretty brisk.

"And though aspects of the project failed to win approval the first time around, commissioners and city staff worked hard to find compromises to make the project work. These weren't meaningless delays; they were part of a process to ensure that every development fits the surrounding neighborhood, traffic patterns, and all of the other important factors that go into preserving and enhancing our livability."

Here's the full e-memo:

As you might have heard, the Boise City Council this week gave final approval to the Whole Foods/Walgreen's project on Broadway between Front and Myrtle.

This is a big deal — and not just to the many devoted fans of Whole Foods. It's a well-designed, mixed-use development, one that will provide a huge lift to an area at the east end of downtown that has been in the doldrums far too long. Construction of the two stores is scheduled to start by this summer, with completion sometime next year. That means more jobs, both short- and long-term, at a time when employment remains one of our most stubborn economic challenges.

Good news in every way. But I have to disagree with the way some have described this process — that Tuesday night's Council action was a "final hurdle," cleared after "months of delays."

In fact, although the Whole Foods project was first proposed in 2007, the developer had put it on the back burner for economic reasons. A revised proposal was presented to the city's Planning and Zoning Commission last October. Four months from application to final approval of a project of this size and complexity is actually pretty brisk.

And though aspects of the project failed to win approval the first time around, commissioners and city staff worked hard to find compromises to make the project work. These weren't meaningless delays; they were part of a process to ensure that every development fits the surrounding neighborhood, traffic patterns, and all of the other important factors that go into preserving and enhancing our livability.

Economic development is one of my top priorities as mayor. I've pushed our planners and inspectors hard to streamline their systems, to put customer service first, and to start with the presumption that the answer is "yes."

We still have room for improvement, but I'm pleased to see projects moving forward — not just Whole Foods, but JUMP and others that could be announced in weeks to come. Our goal is not only to do all we can to help new development happen, but also to ensure that it's high-quality, compatible development that will be an asset to the community for many years to come. With this project, we succeeded.

Our mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. We handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs. 



Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

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Realtors® Reflect on 2010; Ready for 2011

I thought this might of interest to our readers.


Repost from NAR Website

2010 has been a year of real estate contrasts. While many consumers have taken advantage of historic buying opportunities and the market has seen a gradual stabilization of sales and prices, other challenges facing the nation have led some to question the value of home ownership for families, communities, and the country.

“People are passionate about the American dream of home ownership, and this passion underscores how important home ownership is to our nation,” said National Association of REALTORS® President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “Owning a home has long-standing government support in this country because home ownership benefits individuals and families, strengthens our communities, and is integral to our economy. As we begin a new year, REALTORS® remain committed to ensuring that our public policies promote responsible, sustainable home ownership for all of our futures.”

In the first half of the year, the extended $8,000 first-time home buyer tax credit and expanded home $6,500 tax credit for repeat buyers helped encourage sales and stabilize home prices. Home buyers in 2010 have also benefited from historic affordability levels, with the combination of record low mortgage rates coupled with rising household incomes. The NAR Housing Affordability Index currently shows that a median-income family with a down payment of 20 percent has 184.2 percent of the income required to purchase a median-priced home.

“Low interest rates mean real money for today’s home buyers,” said Phipps. “Buyers who purchased a median-priced home five years ago with an FHA mortgage requiring a 3 percent down payment would have a monthly mortgage payment of $1,650. With today’s interest rates and median home prices, that same buyer would pay $1,150 per month – a $500 savings. That’s a savings of $6,000 per year.”

Despite record affordability and buyer incentives, rising foreclosure rates and concerns about proper foreclosure procedures led some to question whether owning a home was a good personal decision.

“Home ownership didn’t create the foreclosure crisis – Wall Street greed and irresponsible lending practices did,” said Phipps. “The decision to own a home is a very personal one, but over the long term, owning a home is one of the best ways to build long-term wealth, in addition to providing numerous social benefits that include reduced crime rates, improved childhood education, and increased stability. After all, a fixed-rate mortgage might last 15 to 30 years; renting is forever.”

Government support of programs and initiatives that encourage home ownership have also been called into question. The deductibility of mortgage interest is one example, with critics suggesting that the mortgage interest deduction primarily benefits the wealthy, while in fact, the MID benefits primarily middle- and lower income families – almost two-thirds of those who claim the MID are middle-income earners. Sixty-five percent of families who claim the MID earn less than $100,000 per year, and 91 percent who claim the benefit earn less than $200,000 annually.

“The ability to deduct the interest paid on a mortgage can mean significant savings at tax time,” said Phipps. “For example, a family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next year. That’s money they could use to pay down other debts, supplement their children’s college savings account, or put into savings themselves.”

Despite current economic challenges, most Americans still aspire to the dream of home ownership. According to a survey conducted earlier in the year by Bankrate.com, 90 percent of respondents said they had no regrets buying their current home. And just this month, a Fannie Mae survey found that most Americans – both those who currently own their homes and those who rent – strongly aspire to own a home and to maintain home ownership.

“We believe that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream, and looking forward, REALTORS® will continue to engage policymakers and industry leaders on behalf of consumers in pursuit of that goal,” said Phipp

 Iron Eagle Realty Team's new website. Our mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. We handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs. 

Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

My Profiles:     
 

Finding the Magic Number: Pricing strategies can help you market your listings and generate offers that turn into closed deals.

Finding the Magic Number: Pricing strategies can help you market your listings and generate offers that turn into closed deals.

by Katherine Tarbox is a senior editor of REALTOR® Magazine

"Once you get a real estate license, you can start telling consumers what their homes are worth," says Melanie McLane, ABR, CRB, owner of the Melanie Group in Jersey Shore, Pa. She’s a certified appraiser with more than 30 years’ experience in real estate. "But I find many people aren’t prepared or haven’t done their homework to know what the market will support before giving price estimates."
And just doing your homework isn’t the end of setting a price; it’s also important to have a pricing strategy that works for your market and your clients. Here are four techniques:

Employ shock and awe. Remember Economics 101—the simple law of supply and demand? Adam Smith, the grandfather of modern economics, said when an asset is undervalued, the "invisible hand of the market" corrects the pricing to fair market value. It’s a principle that Amanda DiVito Parle, ABR, CRS, broker associate with RE/MAX Alliance of Arvada, Colo., has used to her sellers’ advantage. By drastically lowering the price on some of her luxury listings—a process she calls "shocking and awing the market"—she creates instant demand. "I listed a $1 million–plus property for $599,000, and a sales professional called and asked if it was correct," she says.

Often, properties can end up selling for more what you’d have originally listed them at. "You need to the drop the price so dramatically that buyers think it’s outrageous," she says. "They’ll determine the price. They’ll be eager to see the property and create a competitive bidding war."

Set a market-leading price. "Do your homework on the local market and price the home to lead the market, not chase the market," says Rick Lawrence, e-PRO, SFR, a sales associate with RE/MAX Professionals Select in Naperville, Ill. He recommends showing sellers virtual tours of comparables to get them on the same page about setting a price that will lead the market.

Pick an exact number. Ben Kinney, founder of the Home4Investment real estate team in Bellingham, Wash., assesses a listing’s value, setting a price to the dollar: $137,368 or $213,348, for example. "Consumers assume that even prices aren’t carefully calculated and probably just a home price thrown out for the sake of it." At least with Kinney, that notion is correct. He considers all the features of the home to reach a precise number.

Don’t get counted out. It’s not uncommon to price a house slightly under an even price point, say at $199,000 instead of $200,000, to give the home a competitive edge. The trouble is, buyers who search for homes online (and virtually all do) are typically searching a range of prices, Kinney says. So a buyer looking for a $200,000–$250,000 house wouldn’t even see your $199,000 listing. By knowing the range buyers usually use for a neighborhood, you can price your listing for maximum exposure, Kinney says.

When the offers do start rolling in, take them seriously, McLane says. Sellers sometimes make the mistake of refusing reasonable offers early in the listing period. Help your clients understand that the longer their house sits, the less desirable it may become to active house hunters.

Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Buying REO / Foreclosure Homes in the Boise Idaho Real Estate Market

The safest ways to buy foreclosures
By Bankrate

With interest rates at record lows and the stock market looking too perilous for small investors, many people are putting money in an asset they understand -- real estate.

One of the best places to invest is in foreclosures and bargain residential real estate.

The current market conditions make it a perfect time for a small investor to purchase one or more foreclosure properties for their private residence, rental or resale. During economic downturns, more upscale homes go into foreclosure, so the notion that foreclosure homes are only available in crime-ridden areas is inaccurate. Beachfront and homes in affluent areas are part of the mix of foreclosed properties available.

But anyone considering buying a foreclosed home should forget about paying pennies on the dollar.
"You can buy foreclosures for as cheap as 30% or 40% below market, but most foreclosures sell for 5% below market," said John T. Reed, editor of Real Estate Investor's Monthly, a newsletter based in Alamo, Calif.

Yet the savings may be twofold if the property is purchased from the lender who holds the mortgage that's in default. That lender may be willing to waive some closing costs, maybe even offer a break on the interest rate or the down payment.

Investment of time

A novice must learn to navigate the foreclosure process. But Todd Beitler, owner of the Real Estate Library in Boca Raton, Fla., says the time and effort can translate to savings. "If somebody spends 10 hours a week for five weeks to do research, it's worth it."

For most consumers, however, the foreclosure process can prove daunting, Reed says. Good buys are available, but they require research, preparation, patience and persistence.

The foreclosure process starts when a property owner falls behind on mortgage payments. Many owners of homes that go into foreclosure have been struggling financially for almost a year before they give up, which usually means that the house has not received needed repairs or general maintenance for a while.

This may include everything from missing light bulbs to roof leaks. Tree limbs in front yards, broken appliances and windows, and dirty carpets, floors and walls are found in even very-affluent area foreclosures.

This can be a boon -- or boondoggle -- for a buyer. Houses in poor condition might fetch bargain prices, but repairs can boost the cost again. The first rule of real estate, "location, location, location," applies in these situations. If there is trash in every room of the house, but the foreclosure is in a good area with high property resale values, hold your nose, walk through the entire house and consider making a low offer.

Reading assignments

When a lender decides to foreclose on a property, a notice of default or a lis pendens (Latin for "lawsuit pending") is filed, depending on the state. This document is a public record, and for buyers, it's the first step in locating a property in foreclosure. A buyer looking for foreclosures also can buy magazines and newsletters that list properties in default.

Once a home has been located, search public records. Look for liens on the property, since they can drive up the purchase price. Liens typically are placed on a house for unpaid property taxes. Also check assessed values and sale prices of neighboring properties.

Research local state foreclosure laws, since they differ. Some states -- such as Florida, New York, Ohio and Pennsylvania -- require the lender to sue the borrower and get a court order for the sale of the property, a process known as judicial foreclosure. Other states -- including California and Texas -- follow the non-judicial foreclosure process, which doesn't require a lawsuit.

For novice investors, buying from the lender is the safest way to buy. Most foreclosures are taken back by the bank during auction, Beitler says. While well-located homes in good shape generally don't sell for deep discounts, rundown properties can be sold more cheaply.

Often, the banks hire a real estate agent and sell foreclosed homes in the traditional manner, Reed says. But sometimes buyers can succeed by pestering bank loan officers with low offers.

Buyers might try low-balling the lender's REO (for "real estate owned") officer shortly before the nonperforming assets have to be reported to supervisors, Beitler says.

The safest deals


Bank-owned properties offer the safest deal for inexperienced foreclosure buyers, Beitler says: "There's no risk. There are no taxes, no liens, no tenants to evict."

A lender that's eager to sell might be willing to offer attractive terms, says George Tribble, broker of record at Jetstream Mortgage in Oakland, Calif., and past president of the California Association of Mortgage Brokers.

The lender might offer to finance the property at a below-market rate or with a lower-than-usual down payment. Because the bank already has done an appraisal, the buyer might not have to pay an appraisal fee, Tribble says. And lender deals typically include title insurance, which removes much of the risk that accompanies buying homes earlier in the foreclosure process.

Hidden foreclosures


Not all foreclosures are previously owned homes. Some foreclosed homes are new. These homes are not as easy to identify and rarely appear on national lists. In some areas, the slow economy has left many builders of new midscale and upscale homes at the end of their construction-loan periods without finding buyers for their homes.

In these cases, the banks that issued the construction loans take possession of the homes and attempt to sell them, using real-estate agents to handle the deals.

These, too, are foreclosures. They are "hidden" foreclosures because no one associated with the sale of these properties will refer to them as foreclosed homes.

More daring investors can find other points in the process to buy homes, like just before foreclosure. The buyer finds a homeowner about to go into default. The homeowner doesn't want to lose all of the equity in the property, so accepts a portion of the difference between the equity and the home's market value.

Pre-foreclosure buys offer bargains but demand persistence. That's because creditors are often hounding owners at this stage. "Trying to get through to the homeowner is virtually impossible," Beitler says.

If the homeowner is contacted, the buyer could be in for a surprise, Reed adds. Homeowners in default might not have phones or electricity, and they might have a variety of personal and legal problems. What's more, they probably need somewhere to live before they can move out of the property the buyer wants.

This is a high-risk, high-reward proposition, and it's not for first-time foreclosure buyers, Beitler says.

The auctioneer


Most auctions take place at the county courthouse steps, and they pose disadvantages: Buyers might not be able to inspect the property, and they'll have to put up the entire purchase price the same day.
The U.S. Department of Housing and Urban Development also runs auctions to unload homes it has acquired through defaults on federally backed mortgages. There aren't a lot of steals in this process, according to a study by Tim Allen, a real estate professor at Florida Atlantic University.

Allen tracked sales at a HUD auction in Florida in 1998; he found that buyers paid prices very close to assessed value. Beitler agrees that there's a "frenzy" at HUD auctions that can push prices to unreasonable levels.

The cost of getting started

With good credit, many banks will loan the full price of the foreclosure or more. If the home is to be used as a rental, many banks will require only a 10% down payment.

Individuals with a large amount of equity in another home may get a line of credit from their bank to purchase a foreclosure. When they convert the line of credit to a mortgage, no down payment may be required.

Foreclosure homes bought in good areas at below market values that appreciate annually can be a sound investment strategy for many investors. The appreciation of the homes is tax-exempt until the home is sold. If the home is a primary residence, the appreciation may be tax-free.

Homes used as rental properties give most investors valuable tax deductions while the house increases in value and builds equity. With many stock portfolios down, foreclosure real estate investing may be the alternative many people are seeking.


Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

ACAR's 2010 Review: Yes Virginia...there is a Santa Claus...and other reasons to give thanks.

ACAR's 2010 Review:  Yes Virginia...there is a Santa Claus...and other reasons to give thanks.

December sales in Ada County were 518. That’s an increase from December ’09 of 19%. This is the first year over year increase since June; and is the highest number of unit sales since the same month! Year-To-Date ’10 is now 5,891; an increase of 7.7% over 2009. I told you we could do it!

Just in case you forgot the impact of real estate sales on our economy…through the end of December we are nearly $1.1 billion in total sales. That’s $23 million more than we sold in all of 2009; with a 8% decrease in median sales price.

Historically, sales volume in December is less than November…not this time. December was up compared to November ’10 by almost 20%! (In case you’re counting, that’s three exclamation points in two paragraphs.)

Of our total sales in November…61% were distressed….up 9% from last month. (Short sales 21% and REO’s 39%). This is as high as it was last spring…clearly the highest levels of distress we’ve seen this year.

Pending sales dropped 17% to 575 from the 690 we had at the end of November.

The percentage of pending sales in distress rose 2% from November to 54% overall.

The number of houses available at the end of December fell to its lowest levels since early 2006. As of the end of the year there were 2,641 homes available. At the end of the year we had 25% fewer homes available than in January. At the same time, the percentage of active inventory that is distressed, increased 2% from November to 45%.

In Ada County we have 5.6 months of inventory on hand…down one full month from the end of November. The price categories in shortest supply are equally distributed between $100K-$250.

Median home price ended the year at $155,000. Compared to year-end 2009 we are down 8%. We are essentially back to late spring home values.

New Homes median price ended the year at $177,875. This is an increase from the 2009 year-end median of $169,990. Mark my words…2011 will be a good year to be selling new homes.

So now we enter year two of our “official” recovery. I know that you are ready. I an promise you that ACAR is ready to assist you in every professional way, to make 2011 a year that we look back on fondly. Heck…it beats the stuffing out of the last couple.

Looking back at 2010 here’s what we’ve got…

Home sales volume is picking up – lagging the national average, but still on the rise
Inventory continues to fall
Median prices are trying to stabilize
Distressed properties (sold, pending and percentage of inventory) as as igh as they have ever been

What does this tell us?

Contrary to most of the rest of the country, we’ve already “burned through” the “glut” of inventory. With inventory this low, and not likely to grow that quickly, prices should stabilize.

But, median home price (for existing homes) continues to bounce along the bottom. Its likely the victim of the unusually high levels of distressed properties.

Our state legislature went into session this week. The Governor said in his state of the state address yesterday that we have to look at thing differently (as far as expecting services from government) from here on out.

The same is true for housing. We seem to be at the beginning of a transition in consumer expectations in home purchase. The desirability and availability of new homes (that don’t carry the baggage of short sales and REOs) may eclipse the historical consumer preference for existing (used) homes.

This shift in preference could also provide a secondary benefit…more jobs.

Construction increases. Construction jobs start to come back. And…well you know the story goes after that.


Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Selling Your Home in the Boise Idaho Real Estate Market - Now's The Time

Activity is picking up in the real estate market in Boise Idaho and surrounding areas such as Eagle, Meridian, Nampa and Caldwell. Our marketplace is seasonal and most real estate buying activity takes place from late winter to late spring and early summer with activity peaking in the April/May time frame. For example, here's the statistics for homes sold in Ada County for 2010. You will notice that the activity peaks in April, May and June.

If you are looking to sell your home in today's market, you must be competitively priced and start the marketing no later than mid to late February. You want to sell into strength as the activity climbs rather than sell into weakness when the majority of buyers have already found homes and are in contract.

Yes, the equity seller will continue to compete with REO's and short sales. However, we are noticing that buyers are pulling out of short sale contracts and looking at REO's and equity sales. They are tired of waiting and not knowing whether or not they will close on the property. Therefore, for the equity seller, there may be a "non-distressed" premium in some cases.

Please call or email us if you have any questions about selling your home.


Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Foreclosure Process: How State Laws Vary

Foreclosure Process: How State Laws Vary

By: Barbara Eisner Bayer
Published: August 2, 2010

Foreclosure is a complicated, multi-step process—and each states handles it differently.

Foreclosure is not a universal, single situation. Each state has its own complex rules and timelines for how foreclosures are handled, and even within each state there may be more than one type of foreclosure. You need to know the steps of foreclosure, whether your state has judicial or non-judicial foreclosures, your state’s quirks, and any possible loopholes.

Know the steps of foreclosure

Although there are variations, your foreclosure will go through five stages, which gives you some time to adjust to the idea that you need to leave your house and take steps to ensure as smooth a transition as possible:

1. Payment default. Your agreement with your lender will stipulate how many missed payments put you in default.
2. Notice of default. Your lender sends this after a fixed amount of time, depending on your mortgage agreement. According to Wayne Greenwald, a New York-based attorney, this is when you must aggressively pursue ways to fend off the worst outcome. In New York, for example, you have the right to contest the foreclosure. Start by demanding to see the paperwork. Since so many mortgages are repeatedly sold, every so often the actual paperwork gets lost in the shuffle, and you’ll reap the benefits: your foreclosure will be delayed until it’s found.
3. Property put up for auction. Property that has been foreclosed is placed for public auction. In some states, you may have rights for redemption or reinstatement, which basically give you some final opportunities to reach an agreement with the lender.
4. Property sold at auction. If the auction fails to find a buyer, the bank will take ownership and attempt to sell property, often with a real estate agent’s assistance.
5. Eviction. You’ll receive eviction notice, advising you to vacate premises immediately.
Understand judicial vs. non-judicial foreclosures

When you bought your house, you were handed piles of pages in fine print you almost certainly didn’t read. Foreclosure is where these pages come into play! You need to understand some terms before you can understand your foreclosure:

A mortgage is actually not the loan you received, but a document that was issued at closing. It is an agreement between you and the bank that is lending you the money.

A deed of trust serves the same purpose as a mortgage, but it involves three parties: you, the bank, and a trustee that holds the title until you’ve paid off the loan. This trustee is typically a title company, but in some places it can also be an attorney.

You probably don’t remember choosing one over the other—because you didn’t. Your state’s law determined which instrument would be used. And in fact, for the average homeowner, there’s virtually no difference between the two. However, these instruments affect the kind of foreclosure you will likely face:

Judicial foreclosure. Typical in mortgage states, it requires the lender to go to court to proceed with foreclosure.

Non-judicial foreclosure. Typical in deed of trust states, the trustee can usually proceed with foreclosure without involving the courts.

Many states allow both judicial and non-judicial foreclosures, depending on specific terms in the loan documents. Non-judicial foreclosures are usually—but by no means always—quicker than judicial foreclosures.

Learn your state’s quirks

Each state has its own specific ways of handling foreclosures—you can’t even assume that all judicial or non-judicial states will be the same.

If you live in Georgia, for example, you will probably go through a non-judicial foreclosure. The lender will attempt to notify you that foreclosure is imminent, and then place a “notice of foreclosure” in the local legal newspaper for four consecutive weeks. After that, the lender’s attorney can sell your home to the highest cash bidder. Lenders on Georgia homes can often complete the repossession process in as little as six weeks.

On the other hand, if you live in Connecticut, you will definitely proceed through a judicial foreclosure. The judge presiding over the case has the option to grant either a “strict foreclosure,” where the deed is forfeited immediately, or a “foreclosure by sale.” Your lender must send you a letter at least 60 days before the foreclosure action, after which time the foreclosure can begin, typically taking up to four months.

Compare that state to New York: It’s also a judicial-only state—but the process typically takes more than a year.

Review the loopholes

Although nothing replaces professional help, researching your state’s rules is a good place to start. Even beyond the usual regulations, some states have recently created special rules to ease borrowers through the foreclosure process. Qualified local help can help you with such programs as:
Maine’s borrower-friendly foreclosure diversion program. It creates stays of proceedings and requires lenders to participate in good-faith foreclosure discussions. Lenders who don’t participate can find their lawsuits dismissed.

New York’s new rules that add loans secured by borrowers’ homes in its mandatory settlement conference law, essentially requiring lenders to meet with borrowers to discuss settlement.
The more you understand your state’s laws, the more likely you will be able to move through your foreclosure process with a minimum of bumps—or even avoid it altogether.

Barbara Eisner Bayer has written about mortgages and personal finance for the past 16 years for the Motley Fool, the Daily Plan-It, and Nursevillage.com, and has been the Managing Editor for CompleteGrowth.com. Mortgageloan.com, and Credit-land.com. She’s grateful that she now knows where to turn if she ever struggles to meet her mortgage payment.


Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

New Listing in Meridian - Home on One Acre with In Laws Quarters

Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

6 Questions Foreclosure Buyers Should Ask

6 Questions Foreclosure Buyers Should Ask

There are questions that buyers in any market should be asking before they make an offer on a property in foreclosure.

Source: James J. Saccacio, CEO, RealtyTrac

Is now a good time to buy a foreclosure?

This is a very common question from both real estate professionals and prospective buyers. Obviously, because local market conditions vary, the answer is different from market to market. But there are questions that buyers in any market should be asking before they make an offer on a property in foreclosure.

What’s the first step buyers need to take?

Require buyers you work with to be preapproved for a loan before you help them shop for a foreclosure. If they’re thinking of buying a foreclosure as an investment or second home, they need to understand that financing the home will be more difficult and more expensive than financing a primary residence. Lenders typically charge higher interest rates and require a larger down payment for investment or second homes.

How can you tell a bad foreclosure from a good one?

Certainly there are great deals in many markets for both investors and buyers looking for a primary residence. But making a sound deal can be tricky. Buyers need to be wary of unpaid liens, including mortgage debt, taxes, construction loans, home equity lines of credit, and possibly a second or third mortgage. Any or all of these financial obligations could become your clients’ responsibility when they purchase a property in foreclosure. Unless the property goes through a foreclosure auction and becomes a bank-owned REO, the outstanding foreclosure liens and fees could be simply transferred to the new owner—your clients. Don’t let them fall into the same financial trap as the previous owner.

If I’m a qualifying borrower, can I appeal to banks for better loan terms?

Lenders are drowning in defaults—particularly in hard-hit real estate markets such as Arizona, California, Florida, Michigan, Nevada, and Ohio—so they may be motivated to cut a deal. If your clients have a good credit score, many banks will offer them a below-market-rate loan on a bank-owned home. Unlike paying down with points, this doesn’t cost anything in fees, and it gives them the ability to spend more for the home.

What are the costs of buying a foreclosure?

It takes money to make money. The best opportunities are for buyers with cash. If your clients are planning to rent out the property or even resell it for a quick profit, make sure they consider the carrying costs, including sales commissions, marketing costs, vacancies, taxes, insurance, and maintenance costs. Once you’ve calculated all the expenses, add on another 10 percent to 15 percent. If they don’t build in a "surprise fund," your clients might be the next foreclosure statistic.

How does choice of neighborhood affect foreclosure investments?

Clients looking for a good investment should generally avoid neighborhoods overrun with foreclosures, particularly newer subdivisions in overbuilt exurban areas. Investors will be tempted to buy foreclosures in these areas because they offer the steepest discounts—but they also carry the most risk of further depreciation. Look in well established neighborhoods with good schools and transportation. If you’re in a market where prices are still falling, encourage your clients to factor falling prices into any offer they submit on a foreclosed property.


Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com