This article was posted recently by Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW.

I thought the information was very good and would be good to share with everyone who reads my blog.

SHOULD I PAY MY MORTGAGE?

This seems to be THE NUMBER ONE question I get.  Unfortunately there are several answers and which  is correct for you depends on the Circumstances.  I will address the common scenarios in this article.

Policy in my office is to never “tell” – as in “instruct” – our borrower client to pay or not to pay their mortgage.  Paying or not paying has a lot of collateral effects and the borrower needs to know what they are before making the decision.  We don’t make the decision for the borrower (our client) because the effects of paying or not paying are not going to affect me – but they will affect the client, so it is the client that must make the final decision.

Let me make one issue clear – when we are hired to help facilitate a short sale or loan modification it is far easier for us to negotiate with the lender if the payments are late, but it is almost never a requirement.  The exceptions to which will be discussed later in this article.  Additionally, internal rules change at the banks constantly.  A new client came in totally frustrated. They called their bank to help with a modification and the bank said they could not address their situation until they were at least 60 days late.  So the near perfect (800+) credit score couple stopped paying for 60 days and then called the bank back. Now the bank says that because they are 60 days late they cannot speak to them about a modification!  The point is, if you don’t have to be late then why voluntarily create a late payment credit history that will adversely affect your credit-dependent life almost immediately and for years to come? 

SO LET’S GET INTO IT – Danger – this is a long article and it covers a lot of ground!

Short Sale:

A borrower that is current and contemplating a short sale wonders if they should stop paying their (first) mortgage. They are upside down and until now they have been current.  However they are paying the mortgage at a cost of not paying other bills. (Other or different facts may be that they are paying all their bills but taking the money from savings or a pension fund to make those payments, or they are borrowing money from another equity loan).

Generally, it is not a good idea to get into debt to pay your mortgage, unless you have a solid plan to both (i) keep the mortgage current and (ii) repay the additional indebtedness you are creating.  It is not like taking from one pocket to put into another – it is more like taking from someone else’s pocket to pay your bills.  This would include credit card loans as the source of funds.  It all has to be paid back, so if you don’t have a plan to pay it back, don’t borrow it in the first place!  You are only digging a bigger hole for yourself and making it harder to get out of the hole.

If you are taking from your pension or savings money, again you better have a rock solid plan to get that money back into those accounts, or there is no sense in giving up that hard earned and usually irreplaceable retirement money, especially considering these are monies that are usually protected from creditors’ judgments including those your mortgage lender could obtain (deficiency judgment)..

Of course the “amount” of money you have “in reserve” comes into consideration.  If you have 2 million dollars in reserve and you decide to spend 10% of it to keep the loans current until you can short sale the property, that plan has a basis that the 10% is not going to make a difference in the way you run your life over the remaining time you have left as a mere mortal.

Sometimes, but rarely, we run into a lender that says they won’t approve a short sale or modification because the borrower is current with his payments.  When we have encountered this it is in most cases associated with a government backed loan, (but later on we will show you why this may be motivated by plain greed on the part of a loan servicer).   A properly compiled financial snapshot of the borrower should show why they are current and what will happen if the short sale or modification is not approved.

Your decision on how to proceed should be based on what goal you are trying to accomplish and how you plan to get to that goal (see how to determine your goal).

Mortgage Modification:

Apart for some voluntary government programs regarding (Fannie Mae or Freddie Mac) government involved mortgages, I know of no lender that absolutely will not deal with a borrower who is current with their mortgage payments. Lenders deal with all sorts of situations and “absolutely not” is just not in the vocabulary. A typical borrower calling a lender may hear that they must be late, but that is more of a “vetting” statement than an absolute policy.

The exceptions are some government program guides for modification.  The first step to seeing if your loan comes within this exception is to see if it is a Fannie Mae or Freddie Mac loan.  You can do this online at the Making Home Affordable site.  Many servicers and lenders whose loans are not “government backed” are now choosing to follow this government plan (known as the Home Affordable Modification plan or more affectionately called the “Obama Plan” – see below) for the simple reason that they are being compensated by the government for each successful modification they execute within its guidelines, and either the servicer or lender receive a residual bonus for the loan staying current under the modification.  In these cases we have seen non-government backed loans insist on the borrower being late to qualify for modification as well.  What is confusing on this point is that when the plan was introduced it included modifications (and compensation for such) for current loans as well.  However, we are told time and time again from the lenders directly that they must be late to qualify. There is no such rule in the guidelines.

While this is contrary to what has been published by the government about the plan, keep mind that following the plan and any of its various aspects is entirely voluntary and up to the Lender or servicer.  They can pick and chose from this plan as they see fit for their own internal reasons.  Here is a more interesting twist – a servicer that modifies a delinquent loan is paid more under this incentive plan than if the borrower were to modify while the loan is current!  If the borrower is current, the servicer can receive up to $3,500 in incentive fees from the government.  If the borrower is delinquent, the servicer can receive up to $4,000 in incentive fees from the government.  Thus it seems that it pays ($500 to)the servicer to encourage a borrower to be delinquent!

We often see a client that fits the profile for modification under this government plan.  Some of these plans are said to require that to be qualified the borrower must be late 60 days (see Guidelines page 5 at bottom).  But in fact, being late is not a requirement, but only one factor of many (see Guidelines page 16 at the top – “However, a NPV (net present value) positive result is not necessary to qualify a loan for a Home Affordable Modification“).  If the goal is to qualify under such a plan as put in place by the lender at that time, then to accomplish that qualification the borrower may need to make themselves late, but that cannot be determined in a 2 minute telephone call with a lender representative.  I cringe when we go this route because just like these “plans” came into existence, I can see them change the plan thus leaving the now 60 day late borrower with ruined credit scores that occurred needlessly.

Generally about a quarter of our modification clients never go late and still get a modification offer from the lender.  However, keep in mind that nearly all lenders put up as their first line of defense the policy that going late is a necessity to qualify.  We can only speculate this is done to deter the enormous inflow of loan modification requests from borrowers that would come in if this was NOT said to be a requirement.  It also helps address those in the most dire amount of need first.

The Pro’s and the Con’s:

The general rule of thumb we use is if you can pay your mortgage and maintain your life’s necessities, you may consider keeping the loan current, taking the points in this article into account.  However, if you need to choose between buying food or medications and paying the mortgage, the decision that should be made is clear: your life necessities take precedent.

Here are the pro’s to consider when in the short sale or modification process.  Keeping the loan CURRENT has the following benefits:

a) Your credit score is not dinged until the short sale transaction occurs (and not at all in most loan modifications) and your overall credit score reduction will be minimized, and b) You will remain in good standing with your lender without worry of penalties, fines, or a foreclosure. 

The “con’s” of keeping the loan current are that:

(a) You will be out of pocket for the monthly mortgage payment (monies which you may or may not need to survive), and

(b) Your lender may question the sincerity of your claimed hardship, and you may be spending funds that would otherwise be potentially (but rarely) forgiven by the lender.  In addition, occasionally the lenders in a short sale may require a lump sum payment above the sale amount from the borrower to forgive the debt. Coming up with that money is sometimes the difference between a deal or no-deal.  If you can put your mortgage payments aside and stockpile them, it will help you cover that potential lump sum.

A similar pro/con approach applies to GOING DELINQUENT with your mortgage.  In favor of going late is being able to keep the unspent mortgage payments in your pocket (or applied towards other necessities as the case may be) in which event your hardship may appear more sincere to the lender.  On the other hand, there are very real consequences to going late with your mortgage payment:

a) You WILL incur late fees and other penalties on the late interest.  Usually this is not a large issue as it is part of the forgiven debt in a short sale and usually forgiven in a modification, but it is something to consider,

b) Your credit score downgrade will be harder as you will compound the short sale hit with a 30 day late, 60 day late, etc, (and if this is a modification you will make a non-negative credit score event turn into a negative credit score event), and

c) You will eventually cross a threshold (typical industry standard of 90 days late) where the lender will  initiate a foreclosure action in State court.

Going Late on Your Second Mortgage:

Often a borrower comes to us and says that they are late on the first mortgage but current on the second mortgage.  The second mortgage is almost always totally upside down with no equity left in the property to secure that financial obligation.  The borrower says they paid the second mortgage because they had the money for the smaller payment (second) mortgage but not the larger amount first mortgage. Our answer – if you don’t pay the first mortgage they are going to foreclose it and then paying the second mortgage is not going to save your house.

Lately we have seen second mortgage lenders with 90 day late mortgages skipping the foreclosure process (since if they cause a sale of the house it is sold subject to the first mortgage, and thus any buyer still has to pay the first mortgage, which usually makes no economic sense).  Instead the second mortgage lender sues the borrower on the promissory note only and gets a money judgment that they can keep for a long time (20 years in Florida).

So if a client says they are paying the second mortgage but not the first mortgage, we usually suggest they look at the common sense approach and what are they likely to gain or lose by doing so.

Effect of Non-Payment / Late Payment on Credit Score:

This is a big question and nowhere is the answer clear cut.  Definitely if you get a report on your credit that you were “late” (in mortgages that means 30 days or more late) then your credit has been “dinged” and your credit score is adversely affected.

Credit scores are used for many purposes, including the amount of credit you can get on a credit card, the interest rate you get on credit cards, car loans and mortgages, your ability and price of life and disability insurance and even car or house liability insurance, your ability to get a certain type of job, or to establish business relationships, and your ability to rent a place to live, to name a few.  So credit scores are important. If you want to better understand credit scoring you can see the Federal Reserve Board’s Report to Congress from April 2008.

How much your credit score is affected by a 30, 60 or 90 day late report depends on a lot of other factors about your financial well being, your past credit history and myriad other issues.  Generally though we have our clients reporting drops of as little as 50 points for a no late payment short sale or up to 150 points for a short sale with multiple late payment reports.  We have seen an 800 go to 720 and we have seen a 740 go to 500.  It all depends on too many uncontrollable credit issues to be able to give a formula that works for everyone. For a discussion on credit scores this our past article.

Confused?

Rightfully so.  The fact of the matter is that we are in uncharted waters and there is no industry standard for Short Sales or Loan Modifications, which makes pinning down exactly what the Lenders may do near impossible.  Pile on the fact that there are a large number of lenders out there and each have their own internal policies which change as readily as the tides.  The best anyone can hope to do is make an educated decision, set a plan, and be ready for anything.

Copyright 2009 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@Florida-Counsel.com – FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW – We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com  New Website www.Florida-Counsel.com.  See our easy to find articles at SHORT SALE AND LOAN MODIFICATION TABLE OF CONTENTS

I started the short sale process with the bank by providing them all the necessary documentation and within a couple of weeks of listing the property we had a contract on it.  I sent the bank the additonal forms, huds and documentation that they required and waited for the BPO to be ordered. 

Then the fun began…

This property was at the time of listing, vacant.  But the property manager who was involved with leasing the unit decided to put a tenant into the property even though the owners had told them the mortgage was not being paid, the property was headed to foreclosure and they were trying to sell it as a short sale.  The BPO was completed the bank started reviewing the file and after 2 months the buyer decided that it was taking too long, the values were continuing to drop and they were no longer interested in purchasing the property.

So we go back on the market to find another buyer.  This time we get an offer for 25% less than the first offer and we send everything back to the bank for new approvals.   We wait another month and finally get the negotiator to approve the file but the buyer again becomes concerned with the rental contract this time and decides that they are not willing to take on the previous managers lease and they walk away from the deal.  Since we now have an approval from the lender I tell my seller that we should be able to move this property forward quickly.

Within a week I get another buyer who is willing to pay cash and close quickly.  I send the contract to the bank for a third time to get them to approve it.  The PMI company approves it in 1 day, but the investor is dragging their feet for over a week to get the approval done.  After daily conversations with the negotiator the investor finally approves the loan but only gives us 1 day to close the property.  Luckily when I called the buyer they were willing to make arrangements to come to the title company that same day to close the property. 

My title company played a significant role in making sure this deal got completed in time.  Having all of the documents ready to go and getting all of the paperwork to an out of state seller made the deal come together.  Finally after 3 buyers, 4 months and too many phone calls to count I was able to get the seller out of foreclosure with no penalties from the lender and no further collections.

As always, Patience & Persistence will come through for everyone again in due time.   Short sales are getting faster and easier, but they continue to wear on the market by driving prices lower and lower.

“Orlando’s housing market appears to be following a recognized healing pattern — from the bottom up — as evidenced by the greater number of sales in the lower-price categories,” explains ORRA President Les Simmonds, L.G. Simmonds Real Estate Corp. ”For example 75 percent of homes sold in April were purchased for less than $200,000, while 10 percent sold for more than $300,000. And, we expect the ratio of sales of lower-priced homes to increase exponentially as more and more first-time homebuyers seek to take advantage of the $8,000 federal tax credit.”

Sales activity in the lower-price categories gradually stimulates sales in other categories as sellers who want to become trade-up buyers are able to sell their current homes.

Forward-looking factors also indicate an improving market: REALTORS® filed 3,412 new contracts in the month of April, nearly double than the number of contracts that were filed in April 2008 (2,012), and are awaiting the closing of a record 5,818 pending sales. There were 103.90 percent more homes under contract last month than in April 2008 (2,853).

The 1,741 completed closings in April is a 41.43 percent increase compared to April 2008 (1,231) and a 0.74 percent decrease compared to last month (1,754). Year to date, there have been 42.58 percent more sales than by this time last year (5,867 to 4,115).

The median price of all Orlando homes sold in April ($132,900) decreased by 37.01 percent compared to April 2008 while the area’s average interest rate increased to 4.86 percent, up from last month’s record low of 4.67 percent.

Of the 1,741 sales in April, 49.68 percent of the homes were either bank-owned (733) or distressed (132). The median price of the bank-owned homes sold in April was $89,900, while the median price of distressed homes was $146,000. The median price for the “normal” homes (876) sold in April was $161,245.

The area’s affordability index continues to nudge the 200 percent mark, 194.01 percent to be exact. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $52,307 can qualify to purchase one of 11,233 homes in Orange and Seminole counties currently listed in the local multiple listing service (MLS) for $257,840 or less.

The first-time homebuyer affordability in Orlando is currently 137.96 percent. First-time buyers who earn the reported median income of $35,569 can qualify to purchase one of 7,027 homes in Orange and Seminole counties currently listed in the local multiple listing service (MLS) for $155,850 or less.

Homes of all types spent an average of 104 days on the market before being sold in April 2009, and the average home sold for 93.14 percent of its listing. In April 2008 those numbers were 120 and 93.18 percent, respectively.

The majority of single-family homes (153) that changed hands in April 2009 were sold in the $200,000 – $250,000 price range. Eight hundred eighty-seven homes sold for less than $200,000 in April, and 159 sold for more than $300,000. On the far ends of the scale, 12 homes were sold for $1 million or more while 102 homes sold for less than $50,000.

Inventory

There are currently 20,194 homes available for purchase through the MLS. Inventory decreased by 1,254 homes from March 2009, which means that 1,254 more homes left the market than entered the market. Compared to last year, the April 2009 inventory level is 20.60 percent lower than it was in April 2008 (25,436).

The inventory level reflects an 11.60-month supply at the current pace of sales, which is down from the 12.23-month supply recorded in March 2009 and equal to the pace during the last quarter of 2006. Altogether, inventory months-of-supply has declined 5.15 percent since January 2009.

There are 14,472 single-family homes currently listed in the MLS, a number that is 4,579 (24.04 percent) less than this time last year. As usual, most (1,755) are listed in the $200,000 – $250,000 price range. Condos currently make up 3,928 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,794. Most condos (622) are priced below $50,000; the majority of duplexes/town homes/villas (273) are listed in the $120,000 – $140,000 price category.

Condos and Town Homes/Duplexes/Villas

The sales of condos in the Orlando area have increased by 167.52 percent (down from last month’s massive increase of 252.22 percent). A total of 313 condos changed hands in April of this year compared to 117 in April 2008. Nine hundred eighty-three condos have sold to date this year, a 138.01 percent increase over last year’s 413.

The most (148) condos in a single price category that changed hands were in the $1 – $50,000 price range, again nearly three times the number (49) that were sold in the next most populated category ($50,000 – $60,000).
Orlando homebuyers purchased 148 duplexes, town homes, and villas in April 2009, which is a 23.33 percent increase from April 2008 when 120 of these alternative housing types were purchased. The majority (29) of duplexes, town homes, and villas sold in April 2009 fell into the $100,000 – $120,000 price category.

MSA Numbers

Sales of existing homes within the Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in April were up by 48.26 percent when compared to April of last year. Throughout the entire MSA, 2,178 homes were sold in April 2009 compared with 1,469 in April 2008.

Each county’s year-to-date sales comparisons are as follows:

Lake: 24.67 percent above 2008 (1,142 homes sold to date in 2009 compared to 916 in 2008);
Orange: 64.37 percent above 2008 (3,889 homes sold to date in 2009 compared to 2,366 in 2008);
Osceola: 105.54 percent above 2008 (1,410 homes sold to date in 2009 compared to 686 in 2008); and
Seminole: 6.74 percent above 2008 (1,030 sold to date in 2009 compared to 965 in 2008).

For detailed statistical reports, please visit www.orlrealtor.com and click on Housing Statistics on the top menu bar. This representation is based in whole or in part on data supplied by the Orlando Regional Realtor® Association or its Multiple Listing Service (MLS). Neither the Association nor its MLS guarantees or is in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the market. Due to late closings, an adjustment is necessary to record those closings posted after our reporting date.

ORRA Realtor® sales, referred to as the core market, represent all sales by members of the Orlando Regional Realtor® Association, not necessarily those sales strictly in Orange and Seminole counties. Note that statistics released each month may be revised in the future as new data is received.

Orlando MSA numbers reflect sales of homes located in Orange, Seminole, Osceola, and Lake counties by members of any Realtor® association, not just members of ORRA.

Statistics on the sales of area homes that are sold without the assistance of a Realtor® are available in the Real Estate Index, a report produced jointly by ORRA and the Real Estate Attorney’s Fund.

Copyright © 2009 Orlando Regional Realtor® Association.
All rights reserved.

In addition, Orlando REALTORS® filed 76.06 percent more contracts in the month of March (2,956) than in March 2008 (1,679). Overall, pending sales — considered by housing economists to be a reliable indicator of future sales — continued its upward trend in March to 4,906. There were more than twice as many homes under contract in March 2009 compared to March 2008 (2,398).

“Orlando homebuyers are getting back into the market and taking advantage of the improved affordability,” says ORRA President Les Simmonds, L.G. Simmonds Real Estate Corp. “Lower prices, record low interest rates, and a vast selection of homes give homebuyers increased buying power, making it an excellent time to buy a home. This is especially true for first-time buyers who are eligible for the $8,000 first-time homebuyer tax credit.”

The median price of all Orlando homes sold in March ($137,000) decreased by 37.73 percent compared to March 2008 while the area’s average interest rate dropped yet again to 4.67 percent, its lowest point on record.

Of the 1,653 homes sales in March, 49.06 percent of the homes were either bank-owned (700) or distressed (111) homes. The median price of the bank-owned homes sold in March was $95,000, while the median price of distressed homes was $143,500. The median price for the “normal” homes (842) sold in March was $174,995.

The decrease in median price drove the area’s affordability index to yet another record high of 192.17 percent. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $52,250 can qualify to purchase one of 12,185 homes in Orange and Seminole counties currently listed in the local multiple listing service (MLS) for $263,270 or less.

The first-time homebuyer affordability has increased to 136.65 percent. First-time buyers who earn the reported median income of $26,000 can qualify to purchase one of 7,366 homes in Orange and Seminole counties currently listed in the local multiple listing service (MLS) for $159,132 or less.

Homes of all types spent an average of 104 days on the market before being sold in March 2009, and the average home sold for 92.66 percent of its listing. In March 2008 those numbers were 128 and 93.12 percent, respectively.

The majority of single-family homes (181) that changed hands in March 2009 were sold in the $200,000 – $250,000 price range. Eight hundred twenty-four homes sold for less than $200,000 in November, and 144 sold for more than $300,000. On the far ends of the scale, 9 homes were sold for $1 million or more while 98 homes sold for less than $50,000.

Inventory

There are currently 21,448 homes available for purchase through the MLS. Inventory decreased by 720 homes from February 2009, which means that 720 more homes left the market than entered the market. Compared to last year, the March 2009 inventory level is 15.80 percent lower than it was in March 2008 (25,472).

The inventory level reflects a 12.98-month supply at the current pace of sales, which is down from the 16.77-month supply recorded in February 2009. Altogether, inventory months-of-supply has declined 39.74 percent since January 2009.

There are 15,407 single-family homes currently listed in the MLS, a number that is 3,790 (19.74 percent) less than this time last year. As usual, most (1,967) are listed in the $200,000 – $250,000 price range. Condos currently make up 4,111 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,930. Most condos (591) are priced below $50,000; the majority of duplexes/town homes/villas (279) are listed in the $120,000 – $140,000 price category.

Condos and Town Homes/Duplexes/Villas

The sales of condos in the Orlando area have increased by 227.78 percent. A total of 295 condos changed hands in March of this year compared to 90 in March 2008. The most (120) condos in a single price category that changed hands were in the $1 – $50,000 price range, nearly three times the number (44) that were sold in the next most populated category ($50,000 – $60,000).

Orlando homebuyers purchased 119 duplexes, town homes, and villas in March 2009, which is an 8.18 percent increase from March 2008 when 110 of these alternative housing types were purchased. The majority (21) of duplexes, town homes, and villas sold in March 2009 fell into the $120,000 – $140,000 price category.

MSA Numbers

Sales of existing homes within the Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in March were up by 57.98 percent when compared to March of last year. Throughout the entire MSA, 2,139 homes were sold in March 2009 compared with 1,354 in March 2008.

Each county’s year-to-date sales comparisons are as follows:

Lake: 21.46 percent above 2008 (798 homes sold to date in 2009 compared to 657 in 2008);
Orange: 60.83 percent above 2008 (2,681 homes sold to date in 2009 compared to 1,667 in 2008);
Osceola: 112.23 percent above 2008 (989 homes sold to date in 2009 compared to 466 in 2008); and
Seminole: 5.79 percent above 2008 (713 sold to date in 2009 compared to 679 in 2008).

For detailed statistical reports, please visit www.orlrealtor.com and click on Housing Statistics on the top menu bar. This representation is based in whole or in part on data supplied by the Orlando Regional REALTOR® Association or its Multiple Listing Service (MLS). Neither the Association nor its MLS guarantees or is in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the market. Due to late closings, an adjustment is necessary to record those closings posted after our reporting date.

ORRA Realtor® sales, referred to as the core market, represent all sales by members of the Orlando Regional REALTOR® Association, not necessarily those sales strictly in Orange and Seminole counties. Note that statistics released each month may be revised in the future as new data is received.

Orlando MSA numbers reflect sales of homes located in Orange, Seminole, Osceola, and Lake counties by members of any REALTOR® association, not just members of ORRA.

Statistics on the sales of area homes that are sold without the assistance of a REALTOR® are available in the Real Estate Index, a report produced jointly by ORRA and the Real Estate Attorney’s Fund.

Copyright © 2009 Orlando Regional Realtor® Association.
All rights reserved.

During the hour-long panel discussion, Richard stated that while the Obama administration has focused on the foreclosure issue, the solution to the problem is on the demand side. Smith demonstrated Realogy’s leadership by explaining how the government could take stronger action by lowering mortgage interest rates and expanding tax credits from first-time buyers to all homebuyers. Both of those actions would spur home sales activity and thus create a positive overall impact on the economy. The panel was moderated by Fox Business News anchor Brian Sullivan.

Richard’s points during this debate were directly aligned with Realogy’s overall position regarding the economy today, specifically:

Ø Foreclosure mitigation may be the politically/socially correct answer, but the Treasury Department’s own stats show an alarming rate of failure for mortgage loan modifications, with re-default rates on loan modifications approaching 60%. The government’s approach is not working and it is not helping stimulate the economy.

Ø Housing and housing related services are 21% of the U.S. Gross Domestic Product (GDP). Our government needs to address the economy by focusing on housing first with stimulus actions aimed at the demand side.

Ø First-time homebuyer tax credit is having a positive impact, although it is limited. For a true stimulus for housing and the economy, the government needs to broaden the first-time homebuyer tax credit to ALL qualified home buyers AND increase the tax credit to $15,000 from $8,000 (this was in the Senate bill but didn’t make it into law in February). We would also like to see income limits removed from eligibility standards and want this to remain as a refundable credit. Apply the tax credit more broadly to a larger segment of the home-buying population and increase the incentive and we believe this would stimulate home sales.

Ø Need to address the volatility in the mortgage/housing marketplace with a government-sponsored program to fix 30-year mortgage rates at 4.5% or lower for a limited period of time (e.g., 12 months). A government guarantee of a fixed rate ceiling would create a sense of urgency among qualified buyers under today’s more stringent lending standards and get buyers off the fence and into the market. The fixed rate program wouldn’t really impact prices -– affordability is expected to remain at current high levels until inventory comes down significantly -– but it would impact home sales in a positive manner.

Ø A housing recovery would have a positive “waterfall” effect on the overall economy: NAR estimates that each individual sale of an existing home at the median price generates approximately $63,000 of economic impact.

Ø Taken together, we believe these steps would help increase consumer confidence – establishing a degree of certainty in mortgage rates will go a long way toward unleashing pent-up demand for housing

Ø Bottom line, the housing issue is of utmost importance to fixing the economy.

I know you have heard it from me before, but I can not overstate the importance of making the effort to contact your local governmental representatives to get these viewpoints across. While these opinions may strike some as self-serving, taking these steps is essential to the accelerated recovery of the economy. That is a goal that serves everyone.

The good news in that: It may be another sign that Central Florida’s housing downturn is leveling off,
 

to see the rest of the story click here: http://www.orlandosentinel.com/business/orl-bk-new-homes-orlando-043009,0,1105078.story

The Feelings from the Sellers was to be EXCITED at first – hey we have an OFFER! and then nervous – did we price it to low? To a feeling of CALM when they recognized that they did the right thing in this market and priced their house where it needed to be priced to get sold. CONGRATULATIONS to our Smart & Saavy Sellers!

In FLORIDA, 60% of homeowners who have a subprime ARM are at least one payment behind and one in five of all mortgage holders are not current on their loans.

ORANGE COUNTY FLORIDA FORECLOSURE FILINGS

2006………………..5057
2007………………..11,351
2008………………..26,131

source: Orange County records

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Short Sale Information