Oct. 18, 2011
-- The roller-coaster ride continues. This week, it seems likely that European Union countries will come up with a way to assist Greece in meeting its current debt obligations. But two to three weeks ago, the outlook appeared dismal, which caused a significant drop in interest rates. Globally, we see a tension between government intervention and “letting the market run its course.” Consider the following. Quoting a Standard & Poor‟s Rating Service Report, the California Association of Realtors noted that the inventory of distressed properties (short sales and REOs) waiting to be sold, “has declined every quarter since mid-2010.” Often I write about this “shadow inventory:” properties that banks are holding that they have not yet listed for sale. Amazingly, despite the declines the supply of distressed properties is now estimated at “47 months” according to CAR.
However, CAR concludes that “despite the improvement, distressed loans continue to loom over the housing market and threaten to further depress home prices.”
Enter government intervention. The Obama Administration recently spoke of new policy changes to make refinancing easier. We do not have details on this plan yet, but let‟s consider the pitfalls that my clients are seeing and that Kelly Evans wrote about in her online Bloomberg article “Refinancing „Stimulus‟
is no Slam Dunk.” A frequent problem exacerbated by foreclosure and short sales is that property values have declined leaving many homeowners “underwater.”
Some programs exist to help homeowners refinance, but there are many people who are un-served by such programs. As Evans notes, “the taxpayer, through Fannie and Freddie, would also take an upfront hit,” because tax dollars would clearly be involved in any assistance programs. As we ride the peaks and valleys of this market, you can rely on CPK Mortgage to keep you abreast of programs that will serve your best interests: we maintain constant vigilance to protect our clients.
In other news, owners in condo complexes often find it annoying to refinance because their HOA may charge numerous fees to complete bank-required documents. According to a California Association of Realtors report, to address this Governor Brown recently signed AB 771, “a bill that prevents homeowners in common interest developments (CIDs). . . from being charged excess document fees.” CPK Mortgage is proud to be a member of CAR: an organization that advocates for our clients‟ best interests.