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WalletPop:

Filed under: Real Estate

Some real estate and mortgage experts say that the mortgage industry hasn’t hit bottom yet, because here’s what’s up next: Consumers with prime mortgages bailing out on their financial obligations. If these consumers with good credit and the ability to pay their mortgages don’t make good on their loans, there could be a whole new wave of financial problems in our economy.

California is probably in the worst shape of any state. Real estate prices surged there in recent years, but then the values of homes also fell very quickly. The California real estate market was hit hard as subprime borrowers defaulted. But there is a belief that prime borrowers will soon decide to stop paying their mortgages as they see their real estate values dropping.

This makes no sense to me, because in my world, people pay their debts regardless of whether it’s a “good deal” for them or not. Simply put, these homeowners purchased properties at prices they agreed to. They signed papers agreeing to pay back the bank for the money loaned to purchase the house. If the house has now lost value, it’s not the bank’s fault, and it doesn’t do away with the fact that the consumer promised to pay!Consumers who decide to be dishonest and ditch out on their mortgages will be happy to know that there are even companies that will help you make the most out of your planned foreclosure. They’ll advise you on how long you can still live…

WalletPop:

Filed under: Real Estate, Recession

Stupid statistics are a major pet peeve of mine. I define a stupid statistic as one that is either A.) So obvious as to be completely worthless. or B.) Not backed by any particular statistics.

As I watch real estate shows and read columns about the real estate market, I keep coming across a perfect example of a stupid statistic. You’ve probably heard this one yourself: “The number 1 reason that homes don’t sell is that they’re overpriced.” Too see a couple of examples of this claim in action, click here and here.

There are a bunch of reasons that this statistic is dumb, but here are two:

If a home is listed at $495,000 and doesn’t sell, there’s a pretty good chance it could be sold for $250. Anything will sell at the right price. So it’s obvious that a home that doesn’t sell would be more likely to sell at a lower price. Duh!
How do you quantify the “number one reason” a home didn’t sell? What I say the number one reason is that the kitchen wasn’t brand new and there was no Van Gogh original included with the living room? Double duh!

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WalletPop:

Filed under: Real Estate, Recession

As the real estate market continues its decline, the number of short sales — a sale of a home for less than the amount owned on it, with the lender forgiving the differences — are booming. The National Association Realtors estimates that short sales currently account for about 18% of all home sales nationwide.

While you might be able to find bargains in this segment of the distressed real estate, it can be a minefield full of long waits, confusion, and red tape. In a normal home sale, the buyer and the seller simply have to agree on a price. In a short sale, the institution servicing the loan must agree on the price, and sometimes takes months to approve the offer. If they approve it at all. The Wall Street Journal quotes (subscription required) Molly Kay Hamrick, president of Coldwell Banker Premier Realty in Las Vegas, as saying that 20% of short-sale offers in the area lead to completed sales, compared with 85% for traditional sales.And if waiting months for one lender to approve the deal sounds bad, try dealing with a homeowner who has multiple mortgages from multiple companies. That can quickly deteriorate into a word that starts with “cluster” and ends with a four-letter word that I can’t write on WalletPop.

But help may be on the way. The Journal reports that “Fannie Mae says that it plans to introduce a policy in the next few months under which real-estate brokers would be given an advance…