Using the Web and social media to sell real estate

More and more major lenders have suspended the foreclosure process in several parts of the US so to have the time to review their paperwork. There have been an increasing number of cases where the original paperwork by the bank proved to be inadequate and was challenged in court by the home owner during the foreclosure process. Whenever the paperwork was found to be faulty by the judge, the foreclosure case was dismissed and the bank had to find a way to negotiate its way out by giving concessions to the owner.

Mountains of foreclosures being stopped for paper work review.

Aside from slowing down the whole foreclosure procedure, this actually led to the impossibility of actually foreclosing on a number of properties and additional loss for the bank which was unable to collect on its loan and was also unable to acquire the property that was originally provided as a security for the loan. The faulty paperwork “scandal” was the result of the automated underwriting procedures that were used during the heydays of the residential real estate bubble and also from the slicing and dicing of mortgages multiple times with external investors, messing up the paperwork trail.

Now several major banks have begun a major revision of their paperwork so to make sure they are able to foreclose “before” they actually start their foreclosure procedure. This will give more time to troubled home owners that will be able to stay in their house longer, waiting for this review process to complete. It will also reduce significantly the number of bank owned properties available on the market, causing probably a temporary recovery on prices, although it will have the long term effect of prolonging the time needed to clear the foreclosure glut.

There are three possible outcomes that are being predicted by experts:

1. The review will clear up technical flaws in the paper trail and will allow banks to proceed faster with the suspended foreclosures once the paperwork is straight.

2. The outcome will be negative and banks will be tied up for a while cleaning their paperwork, delaying the full recovery of the market.

3.  Title companies will refuse to insure foreclosed properties because of potential clouds on title and this will completely freeze the glut for a while.

For one thing, the lending process will continue to be slow and complex until these issues are completely solved and both the banks and the home buyers will have restored full confidence in the solidity of foreclosed homes’ titles and in the stability of the market.

Roberto Mazzoni

Associated Press reported yesterday that JPMorgan Chase has stopped foreclosures so that it will have the time to review loan documents for errors. Another major lender, GMAC Mortgage had done the same about ten days ago.

Less houses for sale from banks and lending institutions.

There is a growing percentage of litigations following foreclosures that often leverage on the fact that the bank doesn’t have adequate documentation to bring the cause forward and therefore it is stalled in court for quite some time.
Halting the foreclosure process before it gets to court will help these two companies in straightening out their paperwork and will generally slow the foreclosure flow, so there will be less foreclosed houses on the market and this will improve a bit prices that already seem to be increasing in some areas.
Banks and lending institutions are getting very active also in other areas: Fannie Mae and Freddie Mac are reported to have launched a project to unload 150,000 foreclosed properties: there will be low down payments and no requirement for mortgage insurance and $ 30,000 will be added to the mortgage for renovations.
Individual buyers will have a 15 day chance of submitting offers before investors can step in and Fannie and Freddie will also go the extra mile of repairing themselves any major areas, like the roof, the plumbing and electrical works. Also other banks are doing this: brokers and investors have turned into contractors and REO properties are sometimes repaired directly by the bank so to be able to then market them directly to home buyers at the best price the market can offer.

Roberto Mazzoni

A research published by CNBC shows that Florida has become in 2010 the number one state in the US for hiring qualified workforce (see the report data here). Florida has still to improve its economy and its access to capital that worsened since 2009, but has the potential of attracting companies that wish to develop their activities under the sun.

Quality of workforce is top in Florida according to CNBC.

The “workforce” indicator measures the educational level of the workforce as well as the number of available workers and the success of the state’s worker training program in placing their participants in job positions. Arizona is number #2 for workforce and Georgia is #3.

Florida now ranks in position #28 in the general assessment of States for business (the same as 2009), with Texas being in the leading position for 2010 and Virginia being #2.  Florida is now just above Wisconsin and just below Maryland and shows a positive trend for the cost of doing business (in which is gained two positions but is

The National Associaton of Realtors has just published a research paper that pinpoints ten important facts about the current US real estate market.

The US real estate market is looking better now.

1. The economy is growing, though slowly. The Gross Domestic Product has been rising for three quarters in a row.

2. The private sector is actually creating some jobs. The positive trend has begun in January 2010 and has continued without interruption through June. In April there were more than 200,000 additional jobs.

3. Consumer confidence is still low, but way off bottom. The research graph starts at 140 index in January 2000 and reaches its lowest value toward the end of 2008 with approximately 20. No we are ranging on the 60 mark and there is a steady growing trend. So consumers are three times more confident than they were 18 months ago.

4. The 30-year mortgage rate has never been lower, descending to almost 4%.

5. The national median home price is now stabilizing around the $ 180,000 mark and has been hoovering between 160,000 and 180,000 for 2 years now, after the steep descent between May 2007 and November 2008.

6. Price measurements by third party research firms are also stabilizing in the $ 140,000 range.

7. Home price-to-income ratio has finally gone back to reasonable levels, which means houses are more affordable and prices do reflect consumer buying power.

8. Economists expect the prices to slowly increase in the coming years: as little as a 0.78% increase in 2011 and then 2.43% in 2012 and so on.

9. Delinquencies are still high, but they are an heritage of the reckless lending happened in the first half of this decade. The loans originated in the recent years are performing well.

10. The median family net worth has been increasing between 2004 and 2007 (2010 data are not available yet) so there will be a growing number of renters that will be able to become bona fide home owners.

Good news, overall, which shed a positive yet conservative light on the future of the US real estate market. To read the full research, click on this
link.

Roberto Mazzoni

Between 2008 and 2009 more than 56,000 people left Florida, looking for job opportunities elsewhere or simply looking for a different place to live in. Last year instead the trend reverted and, according to the University of Florida’s Bureau of Economic and Business Research, new 21,000 resident have come in between 2009 and 2010.

A beautiful picture of Florida and its wonderful sea sceneries.

This positive trend is good news for the real estate industry, because it creates more demand, and it can be the sign that the worst stage of the crisis is now over and Florida is becoming attractive again for people from abroad or from other areas in the US.

We are still far away from the very positive growth experienced between 1950 and 2008 when an average of 125,000 new more residents were coming in every single year. Foreign immigration continues to be relatively strong and the biggest gains have been in the following counties: Miami-Dade which added 8,253 residents, Hillsborough which added 6,353 residents and Broward that added 5,834 residents.

The researchers estimate that the growth will continue slowly in the next couple of years for then raising steeply to 250,000 new residents every year.

Roberto Mazzoni