Idaho foreclosures stabilize in May as banks hold back

BY ALAN ZIBEL – THE ASSOCIATED PRESS

Published: 06/10/10

The foreclosure crisis appears to be leveling off.

The number of people facing foreclosure is nearly flat from a year ago, according to the latest report from RealtyTrac Inc. A third fewer people are receiving legal warnings that they could lose their homes. And foreclosures are receding in some of the hardest-hit cities.

Still, the number of foreclosures remains extraordinarily high. Experts caution that a big reason for the stabilization is that banks are letting delinquent borrowers stay longer in their homes rather than adding to the glut of foreclosed properties on the market. New consumer protection laws have also meant borrowers can spend more time in their homes.

A new wave of foreclosures could be coming in the second half of the year, especially if the unemployment rate remains high, mortgage-assistance programs fail, and the economy doesn’t improve fast enough to lift home sales.

“It’s not anything like a recovery yet,” said Rick Sharga, a senior vice president at RealtyTrac Inc., a foreclosure listing service.

RealtyTrac reported Thursday that nearly 323,000 households, or one in every 400 homes, received a foreclosure-related notice in May. That was up 0.5 percent from a year earlier but down 3 percent from April.

But in a sign that the crisis is far from over, the number of homeowners who lost their homes to foreclosure hit a record of nearly 94,000 in May.

Among states, Nevada posted the highest foreclosure rate in May. One in every 79 households there received a foreclosure notice. However, foreclosures there are down 16 percent from a year earlier.

Idaho’s No. 7 ranking was down from No. 6 in April, when 2,833 homes – one in every 226 homes in the state – were subject to foreclosure filings, RealtyTrac said. One in 309 homes were subject to filings in May.

Read more: http://www.idahostatesman.com/2010/06/10/1224966/foreclosures-stabilize-in-may.html#ixzz0qQZw4R24

Applications for mortgages to purchase homes declined 5.7 percent last week compared to the previous week on an adjusted basis that takes into account Memorial Day, according to the Mortgage Bankers Association weekly survey.

On an unadjusted basis, the purchase index decreased 16.3 percent compared with the previous week and was down 30.4 percent from Memorial Day week last year. This is the fifth straight week mortgage applications have declined.

“Purchase applications are now 35 percent below their level of four weeks ago, as home buyers have not yet returned to the market following the expiration of the home buyer tax credit at the end of April,” says Michael Fratantoni, MBA’s vice president of research and economics.

Mortgage rates continue to be historically low:

30-year fixed-rate mortgages decreased to 4.81 percent from 4.83 percent;

15-year fixed-rate mortgages increased to 4.26 percent from 4.24 percent;

1-year ARMs decreased to 6.94 percent from 6.96 percent.

 Daily Real Estate News  |  June 9, 2010  

A report analyzing national mortgage fraud risk in the first quarter of 2010 says it has increased by 4 percent compared to the fourth quarter of 2009 and is up 11 percent from the first quarter a year ago.

Other findings from risk analytics company Interthinx included:

Arizona surpassed California as the state with the highest fraud risk. Nevada, California, Florida and Michigan rounded out the top five.

Property valuation fraud risk was the primary driver of the index.

Identity fraud risk and employment/income fraud risk both increased 10 percent from the fourth quarter of 2009.

Occupancy fraud risk is down by 11 percent compared to the fourth quarter of 2009, but analysts believe it may trend upward if shadow foreclosure inventory is released for sale.

Bank of America announced Wednesday that it was rolling out a relief program for roughly 45,000 of its most troubled borrowers that would reduce mortgage principal by as much as 30 percent.

To be eligible, homeowners must have missed at least two monthly payments and owe 20 percent or more than their home is worth. Homes must have been originally financed by Countrywide Financial Corp. under specific lending programs.

The offer is a result of an agreement with state attorneys general that settles charges over high-risk loans made by Countrywide. The federal government will pay 18 percent of the forgiven principal.

Source: The Associated Press (06/02/2010)

Q: How did you get involved with The HELP Program?

Victoria: I am a pharmacy technician and recently moved up here from California. We met online, started going out, got married, decided we wanted a house and we were looking around. We were kind of looking in the Boise area, but everything out there is kind of ridiculously priced. So, we were just looking a lot through the ads and we came across an ad in the paper that said “The HELP Program. If you make such and such amount, $45,000 a year or something like that, and are looking for a house, we can help. Call us.” So, I did and he told me a little bit about how the program works and I told my husband. He said, “Well, let’s call and see.” So we went in for an orientation and it sounded really good so we went ahead and hooked up with it and got a house. 

Rick: I work for the optical lab at the hospital and I’ve lived up here for ten years. I had a bunch of medical stuff so I ended up doing a bankruptcy, that’s kind of why we entered into the program. Otherwise we wouldn’t have been able to do it financially. So, we’re going to get our credit stuff worked out and get our score back up so we can buy the house.

Q: Tell me about the process of finding a house and getting set up with the real estate agent?

Rick: We first spoke with the General Manager.  He was great. He answered all the questions we had and really made me feel more at ease through the process.

Victoria: He is very nice to people and made us feel like he was really genuine and interested in getting us a house. He told us, “It is possible,” when we were like, “We don’t know if we can do it.”

Rick: I’ve always been thinking because of a bankruptcy I’d feel like an idiot, but he didn’t make me feel bad about it all. It was an awesome deal to go through. Especially in the position that we were in, now we’re in a house.

Q: In deciding to go through The HELP Program were there any concerns or skepticisms that crossed your mind?

Rick: I think we were both thinking it was too good to be true that somebody would actually be out there willing to help us get into a house. At first we were asking what’s the catch.  But there wasn’t one.  We are in a house.  We know exactly what our payments are and what we can buy the house for as soon as our credit scores are ready. 

Q: How effective do you feel The HELP Program has been thus far?

Rick: It got us into a house, we feel pretty good about that. We’ve gotten a lot of paperwork from the credit management people. I guess we’re just waiting to hear back about the stuff we disputed on our credit report.

Victoria: The credit repair team were really thorough in telling us about what they were going to do and how it was going to happen, what is a credit score, what affects it which we didn’t know. We went in and they told us about all that and made sure we knew what we needed to in order to make it through this program.

Rick: When I was looking at buying a house myself a year after the bankruptcy, I went in and was trying to clean up my credit and that was a pain to try and do it on your own. It was like pulling teeth. You couldn’t get anybody to respond. I got some of the stuff removed, but some of the stuff that was supposed to be removed wasn’t.

Q: What do you like best so far about your experience with HELP and is there anything you would improve?

Victoria: Well, the think I like best is that it was so easy. They are very open about when they can help us own the house. The only thing I think I would improve is a little bit more of what we do next.

Rick: Maybe a list of expectations after you put a bid on the house.

Q: If you had a friend thinking about going through HELP, what would you tell him or her?

Rick: I told one of my coworkers about it. He had a bankruptcy and some other credit issues. I told him to give you a call and I gave him a copy of the card so that he can. I would definitely recommend it to any of my friends. I have another friend that just went through some credit problems and is looking to buy a house. I’m going to talk to him about it. To me it’s worth it if you have credit issues. It’s a win-win situation. We get our credit repaired and get into the house we want and you guys make a little bit of money too. I guess that’s why it feels too good to be true because we get a house and get our credit fixed and you guys benefit too. It’s been a really good experience and we’ve been really happy with it.

Mark

Well the biggest choice I guess, was finding the house and finding the one we liked and going from there was pretty easy, painless, real simple.

When you tried to get a loan originally, tell me what they were offering you.

Emily

The interest rates were just insane. Doing it this way at least we can afford to do it now and feel confident in our house payments.

Do you remember what the offer was specifically, the interest rates they were giving you?

Emily

One of them was an 8 ½ % and the other was almost a 12%. It was an 80/20 split. And then after we started getting closer and closer and after we had finally found a house we liked they kind of backed out and said no, we are going to change our minds and do a 25/75 and then it just made it real impossible to do it.

How much money were they going to have you put down?

Mark

$6,000 down.

So how did you hear about the HELP program?

Emily

The internet actually. We were doing a rent-to-own search and found the HELP program. We were like yeah, it’s not going to work out and actually everything that said it was going to be done has been done in a very timely manner, it’s been nice.

What had been the best part about working with the HELP program so far?

Mark

It’s been pretty easy all around. It took a lot of headache out of. I know my first time home buying experience was kind of a mess. This has been really easy and painless.

Emily

I agree, I would do it again, it’s been that easy.

You have some friends that you had mentioned, tell us about that.

Emily

Well she was really excited because she is renting now and she thought she wasn’t going to be able to get into a decent nice home for her and her kids and after seeing the house that we are going to buy and the program and what they offer she is feeling really confident in doing it now.

How are you feeling in closing on the house either tomorrow or the next day?

Emily

Anxious, I can’t wait. It’s a bigger house than we ever dreamed to start basically a family with and it’s going to be an experience in itself trying to clean it.

Any advice you would give to someone who’s thinking about the HELP program but not sure that they want to do it or not.

Mark

It’s pretty easy, it beats the ____ dealing with realtors and you make a couple of phone calls and meet a couple times and then they find you a house and then you’re pretty much done.

Emily

It takes the headache out of everything. Calling you and, we didn’t have to do anything. All we had to do was say yes we liked this house and it was done. It was nice. The only part that we were sitting around hoping it was going to happen was if the builder was going to approve our offer. So it was a lot easier than I had envisioned in the beginning.

Q: Tell us a little bit about your story.

Brent: I think we are pretty similar to other clients of The HELP Program. Both my wife and have been married before and through our divorces we had some credit problems arise. I was stuck paying the bills from a business my ex-wife had taken over and her ex-husband had filed bankruptcy and left the bills with her. We were living in a one bedroom apartment, not because we didn’t have the income to buy a house, but because we didn’t have the credit.

Q: How did you hear about The HELP Program?

Brent: We had been looking for a new place to rent because our lease was about to expire and we needed something bigger. My wife had been looking for months, but had not found anything suitable. Everything was either too old, in a bad location, or just not what we wanted. After a while she told me to find something, so I started looking. I looked in a few places and then I saw an advertisement in the newspaper for The HELP Program. I don’t remember what it said, but it sounded like something we should try. So I called up and talked to Stephanie and she set up a time for us to come down and learn more about it. We went and then thought about it and were kind of skeptical. We weren’t sure about the whole 15% markup on our purchase price of the house after our lease, but we figured that with the housing market increasing like it is, even at a 15% markup we would have a substantial amount of equity. Even if the market did not appreciate and we didn’t have much equity, there is no requirement to buy the house, it’s just an option. After all though, we get into the house now and get it at a decent price in the end, it’s a good deal for us and for The HELP Program. They make some money and we benefit as well.

Q: How do you feel about your home as an investment?

Brent: Our house now doesn’t have a fence or a backyard sprinkler system and a few other things, so as we invest in those things, the value of the home will go up. Our neighborhood is also still being developed very rapidly, so that means the housing market is still increasing and values are going up. Some of my relatives were telling us that new home prices were increasing as much as $50,000 every two months. Houses won’t be cheaper in a year, so our investment is a very good one.

Q: What advice would you give to someone considering The HELP Program?

Brent: Now is a great time to do it. They are here really to help you get into a home. It’s a great situation for everyone in it. Sometimes when times are hard, you get a little help from your friends. That’s what they do, they help people who have trouble otherwise.

Q: If you could change one thing about the process, what would it be?

Brent: I think better communication. Sometimes we didn’t understand what was going on with our home, why some things were taking a long time, but better communication would have helped that. I don’t think most of those problems are HELP’s fault, I think it’s because of the people in the background that didn’t do their part though.

Q: How did you hear about HELP?

Blanca: We heard about HELP from our previous landlord and we were living here, right down the street for about two years. He was trying to sell the house and we wanted to purchase it, but we were unable to because of our credit and he really needed to sell it really quick. He also wanted a big amount down, which we were unable to do. He was the one that actually told us about The HELP Program. He said, “Maybe they can help you to purchase your own home.” He told us about it a little bit and then said he would have the contact us. We agreed, but were a little bit tired of hearing, “Oh no, your credit isn’t high enough, we’re not able to help you.” So they contacted us and told us that they could help us. We were thinking, “OK, we’ll see.” Usually you only get so far and they tell you that can’t help. We finally went in and talked to them and they told us they were able to help us and how it was going to work and so here we are, into our own home.

Q: How do you like the neighborhood and the home?

Blanca: Good, we haven’t been here too long, but it’s been good. We’ve had some neighbors come over already and introduce themselves. The neighborhood is really good. There are kids all over which is good for our kids. They’re going to be running around the block. So yeah, we like the neighborhood and the town is good too.

Q: What do you think of HELP? How has the process been so far?

Blanca: They really have kept us informed with everything we need to do. They really explained it to us really well so we’re not still iffy about it. We’re actually sure about what we’re doing. We don’t have any questions and if we did, we could just call them up and it would be no problem. They’ve been really helpful with that.

Q: Would you recommend HELP to your friends?

Blanca: Yeah, I would. It depends on what their situation is though. I would recommend it because that’s what they do, they help you. They’re not pushing you into something that you don’t want or saying, “No you can’t have that house,” for so and so reason. They are actually helping you get into the home that you choose and that you’re going to get your payments for so you know what you’re getting into.

Q: What do you think about this investment and the future of it?

Blanca: I think it’s a good investment. They say that the prices of the houses are going to go up, so even if we were going to sell and move into another house this property will appreciate a lot because of the neighborhood, for one, and the size of the house.

Q: If you could change anything with your experience so far with HELP, what would it be?

Blanca: Everything has been pretty good. We haven’t had a problem contacting them or having them call us back. Maybe be a little more into the purchase of the home because they just do and it’s done and there you go. Maybe be a little more involved in that part.

How did you get started with the HELP Program?

What was your original situation?
Well, the original situation was that we both went through credit issues. We were in a lease option with an individual landlord and she got divorced and wanted the house back. So we got to looking and didn’t really want to throw rent money away and we weren’t really in a position quite yet to be able to qualify to buy it out right. So we got to looking at programs and I found you guys in the paper actually and after talking to you guys it just sounded really good, almost one of those too good to be true situations. And the way it has all worked out, I mean, it is all working out great because if we would have and set on trying to save money and sat on stuff we probably wouldn’t be able to afford the house we are in, in a year. So it worked out to our advantage to do it this way. I think a lot of people would benefit from it that way, just because you can get into it you are locked into it. My husband was about 30 points away from being able to qualify both scores to buy it outright right now. And to wait six months or a year we would have been paying $30,000-$40,000 more. It just didn’t make sense to wait.

Although it seems like a good decision now that you are in the home, did you have a lot of worry over the monthly payments?

I went over everything–our budget, our income—hundreds of times in my sleep, asking myself is this really doable? The house we’ were renting was $854 per month and going through this program we are basically doubling our house payment. I’m one of these people that does a lot of research before I jump into something. And I got to researching prices of houses out there and comparable prices because I didn’t know if that was part of you jack up the price of the house so you are basically buying $100,000 for triple its price, and that wasn’t the case. It was everything right and with everybody else and its like ok, what else is there. To me it worked out great, it helped us get into a house now and worked through the snags and stuff we were dealing with. We actually feel like the HELP Program isn’t treating us like we are some low life because we have had some issues in the past. To me that is huge.

What are your plans for the house? Is that somewhere that you will stay for a long time or do you think you will take your equity in the home and cash out?

Actually the plan is, stay there until the kids are gone. We have two teenagers, one is a freshman and one is a sophomore. So we only have three or four more years and then my little one is 10 so several years left for him. My husband works for the state and he’s got 20 years before he can retire. So basically I think, unless we get a wild hair at least for the next 10 years we will have this house. Once he gets to the point of retiring and then we will probably get rid of it and travel. I told him I’m not moving again, I like the area, I like the place, I like everything. It is exactly where I wanted it, location, things like that they all fell into place.

How much equity do you have in the home right now?
We met a few of our neighbors a couple weekends ago and the one down the street said they bought their house last year and in a year’s time it went up $100,000. The neighbors next to us are actually selling theirs and building a bigger house in Hidden Springs. That’s just the thing a year ago when we were looking at lease option programs things like that, we were looking at $150,000, $130,000, $140,000, $120,000 mark and that was the going for pretty much all of them and now it’s $240,000, $250,000 and next year it is going to be even more.
The purchase option for you home is set for $249,000. What is it worth right now?
The house across the street sold for $270,000 and it is about the same size as ours–same garage, same square footage.

How much equity would you guess was in the house already?
Well, it’s not even finished yet, they still have to finish the fence but with all the mud you know I honestly have no idea. I guess we are looking at the next door house selling for $270,000 right now and we are buying the house for $249,000 you could turn around tomorrow and sell it for $260,000—and we still have over six months left before we have to purchase the home.

So what would you say to me if I were considering the HELP program but I am a little concerned about home prices?
I would say if you are interesting in doing any kind of program the lease option program, there seems to be a ton of them out there because I probably researched them all, I’ve probably done them all.
As far as the programs go this one seems to give you the most for your money. The other program that we looked into like I said, it had a $1000 up front that you had up front that you basically lost, you never got back and there was so much per month and none of that went towards closing nothing, you ended up having to pay closing at the end. With the other program you have to fix the credit stuff on your own.
I actually had a mortgage guy that we had in line that was going to help us but they wouldn’t lock into a price. So now it is worth $205,00 and it was a 1,556 sq/ft and they wanted $205,000 as if Oct of last year so now who knows. So next year at 97% close to 280, 290 so it is basically money you have lost. That is the way I look at it is money that you have lost because you are now paying more for the same house that you would have a year ago plus all the fees that you lose plus all the things like that.
And to me this the houses that they had available weren’t as fancy, didn’t have as many upgrades, a fireplace, the crown molding on the doors it didn’t have the nicer doors, the three car garage, it was just your basic house. With this one we seemed to have gotten more of the upgrades.
I still pinch myself everyday and my husband asks me, “Can you believe this is our house?”