Real Estate News & Updates from the Monadnock Region
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What’s up With Fannie Mae? (Federal National Mortgage Corporation)

February 1st, 2013 | Posted by Dick Thackston in Mortgage News | News | Real Estate News - (0 Comments)

I had the opportunity to hear former Presidents Bill Clinton and George W. Bush speak at the annual Five Star REO Conference in Texas late last summer. (REO is an acronym for Real Estate Owned which is what foreclosures and bank owned properties are technically called.) Both Presidents Bush and Clinton spoke about the importance of housing to our economy and to the American way of life. Clinton spoke in relatively more detail about the future of Fannie Mae. He indicated that while the exact future of Fannie Mae is by no means clear, the service that it provides to both lenders and the economy in providing liquidity to home mortgage lenders is crucial to maintaining a vibrant and relatively free housing market in the United States.

In the last several years there has been much criticism of Fannie Mae, (and its sister company Freddie Mac),  for having provided too much liquidity to lenders – under pressure from Congress – and the liability it has created for the United States Government. There can be little question that Fannie Mae worked as planned and backed the entire United States housing market, and as bad as things have been the last several years in housing, the situation would have been much worse had Fannie Mae not existed.

In the fall of 2008 the United States Treasury placed both Fannie Mae and Freddie Mac under conservatorship and liquidated the Preferred Stockholder’s equity position. The majority of Preferred Stockholders were banks and pension funds, thus spreading the damage. Common stock in both Fannie Mae and Freddie Mac remained listed and traded on the New York Stock Exchange until mid 2010 when the stocks were delisted. Both stocks continue to be traded over the counter but have lost substantial value. Conservatorship does not mean the Treasury owns Fannie Mae or Freddie Mac, ownership is still vested in the common stock shareholders, however conservatorship does mean that the common stock shareholders have lost all control over the operations of these institutions; a situation that will remain until such time as the conservator, the United States Treasury, determines the best course of action to take with these institutions. At this time the ultimate status of Fannie Mae is indeterminate. Congress has considered a number of actions to take but has not reached any agreement and has no legislation pending to resolve Fannie Mae or Freddie Mac’s future. Fannie Mae and Freddie Mac remain ill-liquid and under government conservatorship at this time, bankruptcy, revocation of charter and or break-up into smaller entities have all been considered.

 

By Dick Thackston CRB, ABR, ABRM,BrokerNH, MA & VT

About Fannie Mae

Fannie Mae is a government-sponsored enterprise (GSE) chartered by Congress with a mission to provide liquidity, stability and affordability to the U.S.housing and mortgage markets.

Fannie Mae operates in the U.S.secondary mortgage market. Rather than making home loans directly to consumers, we work with mortgage bankers, brokers and other primary mortgage market partners to help ensure they have funds to lend to home buyers at affordable rates. We fund our mortgage investments primarily by issuing debt securities in the domestic and international capital markets.

Fannie Mae was established as a federal agency in 1938, and was chartered by Congress in 1968 as a private shareholder-owned company. On September 6, 2008, Director James Lockhart of the Federal Housing Finance Agency (FHFA) appointed FHFA as conservator of Fannie Mae. In September 2008, we also entered into an agreement with the U.S. Department of Treasury that was most recently amended in December 2009. Under the agreement, Treasury will provide us with capital as needed to correct any net worth deficiencies that we record in any quarter through 2012. The agreement is intended to ensure that we are able to continue providing liquidity and stability to the housing and mortgage markets.

Fannie Mae has three lines of business – Single-Family, Multifamily and Capital Markets – that provide services and products to lenders and a broad range of housing partners. Together, these businesses contribute to the company’s chartered mission to increase the amount of funds available in order to make homeownership and rental housing more available and affordable.

 

Early History
The FHA Administrator chartered Fannie Mae on February 10, 1938. The impetus for creation of Fannie Mae was twofold: the national commitment to housing and the inability or unwillingness of private lenders to ensure a reliable supply of mortgage credit throughout the country. The primary purpose of Fannie Mae was to purchase, hold, or sell FHA-insured mortgage loans that had been originated by private lenders. After World War II, Fannie Mae’s authority was expanded to include VA-guaranteed home mortgages.

1954 Charter Act
The Charter Act of 1954 provided the basic framework under which Fannie Mae operates today but did not remove it from direct federal control. The act removed government backing for borrowings used to fund Fannie Mae’s secondary market operations. It stipulated that Fannie Mae be exempt from all local taxes except property taxes, and provided for the Federal Reserve Banks to perform various services for Fannie Mae. The 1954 Charter Act also defined the path by which Fannie Mae’s secondary market operations would be transferred to the private sector: proceeds from gradual sales of common stock were to be used to retire Treasury-owned preferred stock in Fannie Mae.

1968 Charter Act
The 1968 Charter Act split Fannie Mae into two parts: Ginnie Mae and a reconstituted Fannie Mae. Ginnie Mae would continue as a federal agency and be responsible for the then-existing special assistance programs, and Fannie Mae would be transformed into a “government-sponsored private corporation” responsible for the self-supporting secondary market operations. The reconstituted Fannie Mae was to be stockholder-owned and managed. Fannie Mae retired the last of its government stock on September 30, 1968, and transformation to a government-sponsored private corporation was completed in 1970.

The 1968 Act provided the authority to issue Mortgage-Backed Securities (MBS).

The Act also established a regulatory structure to ensure Fannie Mae’s adherence to its public purpose. It provided for continuing HUD oversight of Fannie Mae, granting “general regulatory power … to insure that the purposes of this Title are accomplished.”

Emergency Home Finance Act of 1970
The Emergency Home Finance Act of 1970 created Freddie Mac and authorized it to create a secondary market for conventional mortgages. Parallel authority and limitations to deal in conventional mortgages were given to Fannie Mae.

To alleviate credit concerns raised by acquisition of conventional mortgages (that lack federal backing), several eligibility restrictions and/or risk sharing requirements were imposed on the mortgages Fannie Mae could buy.

The new law also required the HUD Secretary to provide prior approval of Fannie Mae’s “purchase” or “dealing in” conventional mortgages (later interpreted by HUD regulations in 1995 to require specific approval of new and different conventional “programs”).

Secondary Mortgage Market Enhancement Act of 1984
The Secondary Mortgage Market Enhancement Act of 1984 (“SMMEA”) clarified and modified several of HUD’s regulatory powers over Fannie Mae. It required HUD to respond within 45 days to any request for new program approval made by Fannie Mae under the Charter Act (with a 15-day extension permitted) and authorized Fannie Mae to purchase and deal in subordinate lien mortgages.

Financial Institutions Reform, Recovery, and Enforcement Act of 1989
The Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) of 1989 made regulation of Fannie Mae and Freddie Mac consistent. Until 1989, Freddie Mac was owned by the Federal Home Loan Bank System and its member thrifts and governed by the Federal Home Loan Bank Board (later reorganized into the Office of Thrift Supervision). FIRREA severed Freddie Mac’s ties to the Federal Home Loan Bank System, created an 18-member board of directors to run Freddie Mac, and subjected it to HUD oversight.

Also, the GAO and Treasury were instructed to conduct studies of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. These studies laid the foundation for comprehensive regulatory modernization for both Fannie Mae and Freddie Mac in 1992.

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992
The Federal Housing Enterprises Financial Safety and Soundness Act (“FHEFSSA”) of 1992 modernized the regulatory oversight of Fannie Mae and Freddie Mac. It created the Office of Federal Housing Enterprise Oversight (“OFHEO”) as a new regulatory office within HUD with the responsibility to “ensure that Fannie Mae and Freddie Mac are adequately capitalized and operating safely.” OFHEO is funded by assessments on Fannie Mae and Freddie Mac and is authorized to act without HUD oversight on a range of regulatory issues enumerated in the statute. FHEFSSA established risk-based and minimum capital standards for Fannie Mae and Freddie Mac. And, it established HUD-imposed housing goals for financing of affordable housing and housing in central cities and other rural and underserved areas.

The Housing and Economic Recovery Act of 2008
The Housing and Economic Recovery Act of 2008 (‘HERA’) strengthened governmental oversight of Fannie Mae and Freddie Mac. It established the Federal Housing Finance Agency (FHFA), which replaced OFHEO and HUD as Fannie Mae’s safety and soundness and mission regulator. Among other things, FHFA has broad authority to require Fannie Mae to hold capital above statutory minimum levels, regulate the size and content of our portfolio, and approve new mortgage products.

 

http://www.fanniemae.com/about/index.html

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A Little More About – Royal Barry Wills and the Great American Cape

July 24th, 2012 | Posted by Dick Thackston in News - (0 Comments)

The architecture and style of Royal Barry Wills and its impact on real estate and housing trends in modern America is with out peer. Wills’ unique use of traditional designs and signature use of specific design elements merits our special attention.

The Cape style home traditionally is thought of as being symmetrical in design. This is particularly true of the front elevation which is expected to have a Front Door centered on the elevation balanced by two equal sized windows equally spaced on either side of the Front Door. This is the definition for most students of Cape Design of a “Full Cape”. Capes with windows only on one side of the Front Door are considered “Half Capes” and Cape style homes with un-equal numbers windows on either side of the Front Door are considered “Three Quarter Capes”.

The evolution of these three design styles, Full, Three Quarter & Half Capes, makes perfect sense when you understand the configuration of life styles and economics in New England as the region developed in the seventeenth, eighteenth and early nineteenth Centuries. As settlers moved into a region and developed homesteads it was important to establish shelter relatively quickly so Half Capes were often how home homesteads were started. While the smaller size seems intuitively to provide for quicker construction because there would be less to build, and it is, one of the major drivers in choosing a Half Cape as an initial Homestead was the cellar. Cellars were integral parts to the homestead as the provided for a secure cool comparatively dry place to store food. New England’s soil is as a rule rocky so digging a cellar hole by had can be quite time consumptive and potentially hold up a building project to a dangerous extent – remember these people were living in tents or lean-to’s until the house was finished. Extensions and additional rooms could be added later. It is very common to go into the cellar of early capes in the Monadnock Region of New Hampshire, Western Massachusetts and Vermont and see that the basement and framing of the home reflect the fact that the home was built one side then first and balanced out later.

Another feature typical of early Cape style homes is the large central chimney. Commonly these were built right behind the front door and offered one or more fireplaces in each if the first floor rooms of the home. The side with the larger Kitchen Fireplace, which often has a baking oven built in it, normally is the side of the home that was built first in the early Capes. As heating technology improved at the end of the eighteenth and beginning of the nineteenth centuries new construction moved away from large central chimneys in favor of smaller single flue chimneys inside the home’s walls to facilitate the use of interior stoves for both heating and cooking. At the same time many Capes with large interior multi-flued chimneys where either being built down into the Rumford style or, more often than not, simply blocked off to accommodate a stove pipe. (One of the most fascinating parts of early Capes is the “Indian Room” that is formed by the backs of all the fireplaces and generally accessed by a hidden panel, generally only a few square feet in area. It is less likely that these spaces were used to hide from Indians than to hide and store food.)

Progressive spacing of the clapboards on an early Cape was quite common as well. The method of spacing the clapboards nearest the ground closer together and then ever father apart also had very practical origins in the early Cape Style home. Putting the clapboards closer together at the bottom of the wall accomplished two purposes it provided slightly more insulation against the snow but more importantly it provided ever so slightly a pitch to the wall that directed snow and ice to run off away from the homes sills and preserve them in many cases for two hundred or more years. Many novice owners of old Capes have changed the original design of exterior walls and found that their sills that had been sound for centuries rotted out in a few years.

Royal Barry Wills used all these traditional aspects of the Cape in his designs and each of them are considered part of his signature: use of graduated spacing of clapboards, large central chimneys, and connecting and balancing half Capes, three quarter Capes and Full Capes together to create lovely practical and well designed homes in the mid-Twentieth Century.

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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Royal Barry Wills and the Great American Cape

July 16th, 2012 | Posted by Dick Thackston in Uncategorized - (0 Comments)

The architecture and style of Royal Barry Wills and its impact on real estate and housing trends in modern America is with out peer. Wills career and impact spanned the mid section of the twentieth Century starting in the 1920’s boom years and running into the early 1960’s. Housing trend varied widely through-out that time period due to economic and social changes all too numerous to mention through out those years but the clean simple lines of Wills designs and his focus on the traditional Cape style home and its flexible and elegant design are both consistent and unique.

Cape style home take their name from the Cape Code region ofMassachusettswhere these dynamic little homes first appeared as such in our country. Capes first appeared in the seventeenth century and where vaguely patterned after English farm houses but with several modification that make the quite different. Capes were and are built with low profiles which early settlers learned by experience was the best way to reduce wind damage in Cape Cod’s windy weather, much lower than a traditional English farm house. Capes while typically built with a post and beam construction like an English Farm House but were built with the timbers inside protective clapboard siding rather than with exposed beams and wattle & dub or stucco walls as in England. This is due again primarily as a result of the significant weather differences between New England and Old England. Early settlers realized immediately that their homes would both last longer and be much warmer in winter if they enclosed the structure in subsiding and clapboard. (It is interesting to note how practical early builders of Capes were in New England. Older Capes subsiding is typically straight cut lumber where you can see that the tree was not squared up but simply sliced and laid in courses reversing the direction with each board so they fit together.) The clapboard exteriors provide greater insulation than the solid stucco walls of English farm houses because of the dead air space between the exterior clapboard and subsiding and the interior split lath and plaster. (Split-lath is typically made from a sheet of walnut that is nailed and split into a “Z” pattern with plaster laid over it.) The bottom of interior walls typically had wainscoting installed to provide yet one more layer of insulation at the bottom against the often heavy winter snows.

Royal Barry Wills began his architectural career in Boston providing advice and writing newspaper columns in the Boston papers. Wills saw the efficiency and flexibility of the Cape design at that time which had long fallen out of favor with Americans as the style was viewed as an “old fashioned farmer’s house”. Wills changed this by completing designs that incorporated modern features and designs that were both modern and creative. His signature on a design was typically a large center chimney that raises the eye up and to the center of what might otherwise appear to be a rather low lying building. By adding box dormers to the front he was able to visually crenelate and break the roof line while adding light to the interior second floor rooms and by adding shed dormers to the back he was able to use the second floor space in a much more comfortable way for modern living and furniture. Hyphenating additions and garages with breezeways was another typical design technique that we take for granted today that was a Wills creation as well as his use of telescoping designs that used one or two apparent additions of increasingly smaller capes across the front that allowed the building to add space while not adding to proportions or  building mass.

 

The great American Cape as we know it today is largely a gift of Royal Barry Wills efforts to create visually appealing housing designs that are both creative and inexpensive to build that allow well proportioned interior space that draw upon traditional American home designs.

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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Is the Ice Breaking for Home Builders?

January 20th, 2012 | Posted by Dick Thackston in News | Real Estate News - (0 Comments)

The National Association of Home Builders maintains indices that measure conditions for the home building industry. There are three basic measures that the NAHB looks at as measure of were the home building industry is at: traffic visiting model homes, current sales conditions and the most subjective of the three expectations for the next six months. When you look at these numbers 50 is the benchmark number anything under 50 is poor any thing over 50 is good.

Conditions have shown improvement over the last four months.

Last month’s traffic visiting model homes increased from 18 to 21; an increase of about 20% and similar to what we have seen in the “re-sale” home market. (Keep in mind its still winter in the northeast and this is not prime home selling season- really very dramatic news!) Last month’s number for current sales conditions moved from 22 to 25 which measures factors such as availability of financing, terms, interest rates and available inventory among other things and expectations for the next six months moved from 26 to 29.

The NAHB also looks at these number by census regions rather than state by state or just the nation in aggregate. The Northeast moved the most from 14 to 23 and the Mid West moved the least from 23 to 24. It’s probably worth noting that the mid-West has been one of the least impacted regions of the country in our now five + year old real estate downturn.

The South is considered the most important number for the nation and the association because it by far the largest region for population and business in the country. The South moved from 25 to 27. The West moved from 16 to 21.

Obviously, our primary/only concern is the Northeast which includes New England, (New Hampshire, Massachusetts, Vermont, Maine, Rhode Island and Maine). Prospects remain positive and cautious on all fronts in the real estate world and the “all clear” is by no means appropriate at this time. These are not great numbers but they are significantly less bad than the numbers of the recent past and may/hopefully reflect an upward trend that will be unfolding over the next several months as weather improves and the situation becomes clearer to all on employment and other investments besides real estate.

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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The Three Es of Real Estate in 2012?

January 17th, 2012 | Posted by Dick Thackston in Mortgage News | Real Estate News - (0 Comments)

By Dick Thackston

2012 is likely to be defined, in the real estate world, by three “E’s”: Expectations, Employment and Europe/Economy. No matter what your political belief system is, no matter how much or how little money you have, these three factors will permeate American life and the economy more than any others in the next eleven and a half months.

Expectations: In the world of sales there is an old truism, “To live with the classes sell to the masses!” those will be the watch words for real estate this year. 2012’s real estate will almost certainly only be about first time buyers and large volumes of REO properties being sold to investors. Both first time buyers and investors have some striking similarities: both groups feel they are buying at the bottom of the market and both groups have an expectation of housing prices increasing over the next three to five years and both groups have an expectation of rents remaining and going higher. (Personally, I agree with both groups.) First time buyers not only have the family formation/nesting instinct driving them into purchasing, but they have the ever increasing cost of renting versus home ownership. Most first time home buyers are renters now and are looking at homes that will have monthly mortgage payments 15-20% below their current rent. Landlords/Investors are looking at the exact same equation from the other side and seeing that almost anything they buy now will have positive cash flow of at least 10% and often up to 20%. The group that is melting away at this time is the investors looking to buy, fix and flip, the risks are too great of carrying a vacant property or over improving and taking a hit in what is in fact a flat market, and of course move-up buyer’s remain effectively locked out of the market for the foreseeable future. Until move up buyers can sell and move there is likely to be no updraft in the real estate market, but when it does begin it will be huge.

Employment: In New Hampshirefor sure, the Northeast in general and for the nation probably, employment getting better.New Hampshire has experienced job creation. Not dramatic but some. GivenNew Hampshire’s favorable tax and business environment it’s not really surprising that it would be one of the first parts of the country to recover. New England more generally seems to be getting better although not at the same rate as New Hampshireand the nation, well let’s face it would be hard to screw things up much more – which is a perverse kind of improvement actually. So as workers become more secure in their outlook on employment, they become more confident that they can cope with a mortgage payment and the other cost associated with home ownership, and are feeling much better about leaving their apartments and Mom’s basement. This is having a very noticeable effect on stabilizing the market at the bottom.

Economy: The macro-economic environment remains dicey. I almost headed this section “Europe” as my third “E” but really it’s bigger than all that. The United Sates is no longer insulated from the rest of the world economically. I doubt that this was ever really true, but we felt it was true and we certainly acted as if it was true. The United States remains the world’s largest economy however it remains subject to outside shocks: Tsunami & nuclear disaster in Japan, economic slowdown in China and most dramatically European debit crisis – country by country bad news out of Europe send shocks through our financial system and impacts our banking sector. The largest of these in public perception is Europe which is unlikely to be resolved anytime soon and will continue to drag on the world economy. China seems to have better managed its financial affairs – easier in a totalitarian state – and seems likely to have a softer economic landing than Europe.

What’s the take away from all this? Housing is stabilizing now; sales volume is likely to increase significantly; good deals from a buyer’s perspective are likely to remain the norm for the next eight to twelve months; no real appreciation in real estate as an asset class is likely and value added efforts for renovations will remain high risk till after the end of 2012.

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R.H. Thackston & Company REALTORS with offices in Keene, Bellows Falls and Winchester announced the following personnel updates.

November 29th, 2011 | Posted by Dick Thackston in Real Estate News - (0 Comments)

Keene - R.H. Thackston & Company REALTORS with offices in Keene, Bellows Falls and Winchester announced the following personnel updates.


Dick Thackston, the company’s principal broker, received special recognition from the New Hampshire Association of REALTORS Honor Society. Earlier this year Thackston was made a lifetime member of the New Hampshire Association of REALTORS Honor Society. Every year the New Hampshire Association of REALTORS Honor Society recognizes the REALTORS within individual local REALTOR Boards for their outstanding participation in both civic and REALTOR affairs by using a points system for the various activities that individual members participates in over the course of a year. Thackston was recognized by the Honor Society as the highest number of points earned for any member of the New Hampshire Commercial Investment Board of REALTORS, (NHCIBOR) were he is a primary member. Thackston has been a member of NHCIBOR for several years; this is his first year as NHCIBOR’s high point winner for the Honor Society. Thackston is also a member of the Monadnock Region Board of REALTORS were he has also been recognized for earning the highest points in the past.  Thackston will be serving as Treasurer of the Monadnock Board of REALTORS in 2012 and is a member of the New Hampshire Association of Realtors, the National Association of REALTORS, National Council of Residential Brokers and Real Estate Buyer’s Agents Council. Thackston is an accredited real estate instructor by the New Hampshire Real Estate Commission and a licensed real estate broker in New Hampshire, Massachusetts and Vermont.

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Up to Four Million Foreclosures to be Reviewed by Government!

November 3rd, 2011 | Posted by Dick Thackston in Mortgage News | News | Real Estate News - (0 Comments)

By Dick Thackston CRB, ABRM, ABR

The Office of the Comptroller of the Currency has begun sending out letters to borrowers who have faced foreclosure since 2009. It is estimated that approximately four million borrowers foreclosures may have been mishandled between January 1, 2009 and December 31, 2010. Federal regulators and most of the nation’s largest home mortgage servicers announced earlier this week.

Cases will be reviewed by Federal Regulators as a result of an agreement established in April of this year in which the nation’s fourteen top mortgage servicers agreed with regulators to hire independent consultants to evaluate foreclosure processes and determine if borrowers had experienced financial injury as a result of errors or abuses by servicers. It will be up to the independent consultants to evaluate cases and determine compensation if any due to borrowers.

The Comptroller of the Currency as well as the Federal Reserve will be sending mails between now and the end of the year to notify potential victims of their rights. A mass media campaign is planned as well to direct borrowers to the website www.IndependentForeclosureReview.com or the toll free number 888.952.9105. All requests for review must be submitted by April 30, 2012.

The mortgage servicers and the government agreed that the servicers would pay all the expenses associated of setting up the program. Under government supervision they have hired eight independent consultants that have designed the program to be at no cost to the borrowers. The consultants have set up the website and call center noted above. The program is designed to encourage borrowers from all lenders to use one portal and there is uniform branding and product design to be clearer in the public mind than a number of different sites would be to the public.

There are several basic patterns that the consultants will be looking at to determine wrongdoing and these include miscalculation of fees, a foreclosure that happened while a borrower was under bankruptcy court protection and the most common one in my experience a foreclosure that was done while a borrower was waiting for a response on a loan modification.

This program is a direct result of last year’s robo signing scandal and the investigations that followed. About a year ago it came to public light that many mortgage servicers were cutting corners on due process when foreclosing on properties and either not properly executing documents or simply faking documents to expedite the large number of foreclosures they had on their hands.

This program is a good solution to an unfortunate situation. Objectively, most of these borrowers were in fact behind and many if not most were ready and willingly left their properties to begin over, however that does justify short cutting the legal protection of property rights built into our system of property ownership over the last thousand years from Common Law to Current Law.

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Homes Sales Reported to Drop 3% Last Month What Does that Mean to Me?

October 24th, 2011 | Posted by Dick Thackston in Buying Tips | Mortgage News | News | Selling Tips - (0 Comments)

By Dick Thackston CRB, ABRM, ABR

The actual answer to the question in our title is very little.

From the street level- were you and I both are as buyers, sellers and REALTORS – mostly what it tells us is it’s not our imagination the people who make up these statistics only give a portion of the story or leave large parts of the story out.

I have absolutely no doubt that Home Sales Dropped 3%! In fact I’m sure of it!

But here’s what I think happened. The majority of sales at this point are in fact bank owned properties and Short Sales. For the last several months a large percentage of REO’s have been tied up either with Title Problems and/or litigation. The stream of buyers in the market while not as large as it once was seems constant at this point. Since early this summer there has been a decline in available REO inventory for these two reasons. Value Conscious Home Buyers have been out looking but have not been able to find satisfactory properties or the properties they have found have been snarled up with Title Problems.

Why, you may ask, did these buyers just not buy regular retail properties on the market from non-REO sources? The simple answer is they are waiting. They are waiting for REO inventory to become available, they know it’s coming and they are VERY PRICE CONCIOUS. The majority of retail home sellers and their agents still have an unrealistic expectation about pricing and many have had their properties on and off the market at the same or very nearly the same price for several years. It’s just not going to happen. Home Buyers in this market have lots of information, most of it good, some of it bad, but it’s more information than any other group of Home Buyers has had in history before making a decision to purchase, and Home Buyers are not betting the market changes anytime soon.

The good news is that as the litigation and Title Problems now seem to be clearing more inventory is coming on the market and lenders have started to embrace the short sale process rather than fight it so Short Sales are becoming more far more viable then they were even a year or so ago. To be sure lenders are not going to leave money on the table or sell for less than current fair market value but the approach they are taking now seems like a good thing for everybody and that doesn’t get picked up in the statistics.

Bottom line is the viability of the inventory is improving and buyers are responding even though we are likely years out from an actual fix in the housing market.

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Short Sale Success Stories

October 19th, 2011 | Posted by Dick Thackston in Buying Tips | Mortgage News | News | Real Estate News | Selling Tips - (0 Comments)

By Dick Thackston CRB, ABRM, ABR

Since the down turn started in the third quarter of 2005, (yes that’s right it’s actually been over six years if your benchmark is real estate brokerage), and the economic seizures started happening almost daily after November 2008, I’ve actually had some excellent experiences helping sellers and lenders work out a short sale.

Initially mortgage lenders were less likely to work out a short sale for a number of reasons: they didn’t believe the property was upside down, mortgage insurance would cover their losses if it went to foreclosure and/or they were simply too overwhelmed with the volume of business collapse that they couldn’t function efficiently and make decisions.

In 2007 I began the process of helping people work out a Short Sales on their homes if they were over mortgaged. One of the most successful short sales I’ve done was a house inKeene,New Hampshire. The owner had purchased the home about twenty years before he called me. He had tried selling the home himself and tried a Virtual Real Estate brokerage from outside the area with no local support. All the time he tried this, his home was sinking in value.

Why, one might wonder, if he had owned this home for over twenty years would he owe more than he paid? Well, actually what he had done was borrow money incrementally over the years to put his children through collage and purchase each of them cars when they graduated. He literally used his home as a savings account.

The biggest hurdle in the transaction was the owner, he just couldn’t believe that his home would be worth the loan balances plus and additional ten thousand dollars so that he could start his life over again someplace else. Once I was able to get him to understand that the value just wasn’t there, and he agreed to price the house to the market comparable prices in his neighborhood at the time, we got some OK sales traffic and ultimately an offer. I presented the offer to both the owner and his lender. I obtained the owners detailed financial information and the bank agreed to accept the short sale. Little or no emotion, very rational, and very efficient successful transaction.

The entire transaction from day of listing to day of closing the short sale, including negotiating with lender, was about five months or one hundred fifty days to closing.

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How I got Started Doing Short Sales.

October 17th, 2011 | Posted by Dick Thackston in Buying Tips | Real Estate News | Selling Tips - (0 Comments)

By Dick Thackston CRB, ABRM, ABR

Short Sale Success Story:

Short sales have become a major part of my companys business.

In 2007 I realized that more and more of the owners I interviewed during listing appointments were helplessly under water on the loan on their home.

During the Savings & Loan crisis of the late 80s and early 90s I first experienced short sales. Back then, it was mostly small business owners who had second business loans against their home and as the economy slowed, their businesses slowed or failed, and the bank came after their houses. This is where I learned to do short sales. Up until then, personally, I had never even imagined not being able to sell a house and not clear the loan balances and I had been in the business over ten years at that point.

So I learned to negotiate with lenders to help them understand Fair Market Value and accept the reality of the situation – not the ideal for anyone, but half a loaf is better than none.

So when I started to see homeowners under water again four years ago I felt it would be important to start trying to negotiate short sales – again. Unfortunately both home owners and lenders were still stubbornly unrealistic about the situation at that time. Many of the homeowners I initially advised to consider a short sale ultimately lost the property singing the “I need, I own, I won’t” chorus regardless of market realities, or they spent valuable months and years following the market down. Needlessly doing needless damage to their credit by loosing their home to foreclosure, most had they followed my initial advice would have in fact walked away from a sales with some money, less than they had expected but some money – far better than a short sale or total loss through foreclosure.

Some of the short sales I initially proposed to banks wound up going to foreclosure as well. Costing the lender $50,000 to $100,000 in equity that could have preserved for their company, however banks had a problem too because many had just done refinances or made new loans they would say something like “we have an appraisal that is only six months old” not recognizing how quickly the market was changing in those days. What a tragedy! What a tragedy for all parties!

So now Short Sales are commonly accepted as better than foreclosure and few, if any, lenders are waiting for the market to recover. The biggest issue with Short Sales remains sellers that are too slow to take action. I got a call today from a seller that is schedule for foreclosure sale in ten days. He turned down a short sale about a year and a half ago and now he wants to try and find a buyer and complete a short sale negotiation in ten days? Not going to happen. I suggested that he simply needs to plan on the foreclosure and arrange to move out of the house. Banks at this point are far more realistic than sellers and far more prone to look realistically upon a short sale and work on it realistically. Bank of America and Citibank have made tremendous improvements in their systems for handling short sales. In both cases they have gotten to be the best in the business to deal with, when a few years ago I really don’t think they allocated any serious resources to the Short Sale process.

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