I have been waiting to get more information on the new short sales changes April 2010. According to HAFA, Home Affordable Foreclosure Alternatives, the new Short Sale Process will be crucially important in 2010.

The Treasury department has released new rules to help simplify the “short sale” process, which isn’t “short” at all. For months, the real estate community has been preparing these new changes. The purpose of HAFA guidelines is much like other failed attempts at helping the real estate industry - one is to have less foreclosures in 2010 and two, get the real estate market back in the appreciation mode.

The key short sales changes appear to be the following:

Mortgage servicers have 10 days to accept or deny a short sale request. After a sale is completed, the borrower could be completely released from debt.
Borrowers are eligible to receive a $1,500 moving allowance, if they sell their home through a short sale.
Mortgage servicers will receive $1,000 for each completed short sale.
Investors who hold first mortgages can get as much as $1,000 for allowing second lienholders to release their liens.
Second lienholders can get only as much as $3,000 in proceeds from short sale to release their liens.
The property must be the homeowner’s principal residence.
The homeowner is delinquent on the mortgage or default looks likely.
The loan was made before Jan. 1 this year and is less than $729,750
The borrowers’ total monthly mortgage payment exceeds 31 percent of their before-tax income.

The following changes only apply to banks that took TARP money (Troubled Asset Relief Program). Because they took TARP funds, the treasury will be requiring these banks to follow these new guidelines.

I will continue to update information on these short sale changes as they become more definite.

Should you have any questions, please do not hesitate to contact me at 631-831-9048. If you are behind on your mortgage and have questions about your options to avoid foreclosure, you can email me here.

(c) Copyright 2010 www.tommcgiveron.com
By Thomas McGiveron, LSA

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The stability of the Long Island real estate market rests with the performance of mortgage backed securities. I have mentioned this key point in previous articles and I think a lot more people are paying attention.

This video below will go over in simple terms, mortgage backed securities and their relation to why mortgage rates are so low right now as well as why they will start rising in the near future.

I’ve mentioned before that homeowners looking to sell must pay close attention to what’s happening in the financial markets and the most important piece of financial information is looking closely at mortgage backed securities.

On Long Island, if the rates rise dramatically (as many economists believe), home values could drop dramatically. The more expensive it is to borrow money for a potential buyer, the less home they can afford. Thus, in order to sell your home, a buyer will only be able to afford so much.

For every 1% the mortgage rate rises, home values (in order to sell the home to a buyer) will need to drop 10%.

Please re-read the above statement. I think…no I know from experience, that most homeowners do not really pay attention to me when I say that because it sounds so unbelievable. But, not just on Long Island, but all across the country, if the money needed to borrow from a bank to buy a home goes up, especially given the countries financial challenges, the amount a buyer can afford goes down.

How? Because when buying a home, the most critical item to consider is the monthly payment. The difference between a 5% mortgage interest rate and 6% is not one percent, it’s over 16% higher. Meaning from 5% to 6%, the cost of the monthly mortgage is 16% higher. So if their mortgage interest at 5% is say $1,500, at 16%, the payment for interest would be $1,740. That’s a $240 increase. In this economy…in any economy, that’s a big difference.

The point of all this is for homeowners thinking of selling to realize that there are challenges ahead. If you want/need to sell your home, pricing it aggressively now and marketing it with the right real estate agent is imperative. Otherwise, come May/June of 2010, you could easily see your home’s value drop 10%….in literally 60 days.

(c) Copyright 2010 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson
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So the question is, what is going to happen to mortgage rates in 2010? Well, have you ever heard the saying “It ain’t over til it’s over”? The Fed has told us repeatedly that their massive purchasing program of Mortgage Backed Securities is just about over - and this translates to home loan rates rising in the near future.

As you can see in the chart below, the amounts of Mortgage Backed Securities the Fed is purchasing are slowly dwindling, as the program is set to wrap up by March 31st, and are clearly trying to ration out the remaining portion. Last week, the Fed purchased $11 Billion in Mortgage Backed Securities, which leaves them with $66 Billion to spend out of their original $1.25 Trillion allotment. So about 95% of the total has already been spent and has purchased about 3 out of every 4 home loans during the past year. When such a large buyer leaves the market, it is very likely that prices will worsen.

This is very important because as the Fed has less money to last through the remaining months of the program, their ability to keep home loan rates low via their purchasing power will wane. And those who can take advantage of currently low home loan rates do not wait, as the clock on these historically low rates is ticking.

Chart: The Fed’s Purchase of MBS (By Month)

The purchasing of these MBS’s, is exactly what has kept mortgage interest rates low, as I’ve previously mentioned. Originally, I thought, as many did, that rates wouldn’t take a hit until after the complete execution of this program in March. However, the government slowing of these purchases will have an effect on the rates before March 31st!

These are historic times in real estate and I feel that many people who want to really buy, are going to miss out on an opportunity to have a 5% 30 year fixed interest rate…because they just kept waiting and waiting….and waiting.

Now is absolutely the time to buy. Prices are down over 35% in almost every area throughout Long Island. If you’ve been paying attention to certain homes on the market through your home search, you know that home is on the market now (it may not be there 3 months from now). And right now, you can obtain an historically low interest rate.

I had a closing the other day and my buyer client, with buying down his rate, got a 30 year fixed loan for 4.25%.

4.25% for 30 years. In 3 months, that will most likely be 6.25%…with buying down the rate…

The clock is ticking.

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So the question I recently asked myself is how many homes are in foreclosure in Suffolk County, New York. Immediately, I went to work and found out that there are over 190 homes that are bank-owned in Suffolk County…under $300,000. Foreclosures in Suffolk County priced over $300,000 numbers around 50.

So to be fairly accurate, it is okay to say that there are currently 250 homes in Suffolk County that are currently bank-owned…and on the Multiple Listing Service of Long Island. This 250 number does not include all the homes that are not listed yet, in the process of foreclosure, or currently in contract.

If I were to make an educated guess, based on my experience as a BPO agent (an agent who performs broker price opinions for banks to price out homes on their books), I would that there are over 10,000 homes in Suffolk County, that are somewhere in the process of foreclosure.

I complete about 50 BPO’s per month on average. And my competition in this business (other real estate agents doing just as much or more), leads me to believe that not just Suffolk county, but all over Long Island will be facing very difficult times in 2010 and well into 2011.

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Well 2009 is in the books and I want to put a stamp on exactly how the Long Island real estate market faired throughout the course of the year. The Long Island real estate statistics for 2009 may surprise many people. There’s one very clear message from the stats that I want to share right away and that is, we are in “the trough”.

As the downward trend has dropped, these statistics which I’m sharing here, demonstrate that we are in the low point of the Long Island real estate market. It doesn’t mean that things are miraculously going to turn around and homes are going to start appreciating, but it does mean that we are almost certainly at the low point and we could “skip along” here at this level for quite sometime and even dip down a little.

I’ve talked alot over the past 3 years about supply and demand. Supply is still very high, but little by little, it is decreasing and more homes are being sold so demand is catching up with supply. Ask any real estate agent on Long Island and they will tell you, when a property for sale is priced right, it sells quick and usually receives multiple offers. So buyers are out there and more importantly, they’re buying.

Now before moving forward I need to preface this information with the following challenges our market faces. One, unemployment is high and inflation may hit the country in 2010, which most economists say it will. Two, foreclosures are rising due mainly to unemployment with prime buyers being the hardest hit (now we’re in the second phase of this foreclosure crisis) - see previous article here. Regarding the foreclosure crisis, you can see the article in Newsday’s Sunday, January 17th paper online about foreclosures on Long Island.

The state of the Long Island real estate market for December 2009 is broken down into a comparison between December 2008 and also a slight comparison to April 2009 (the last time I did this graph).

What you’ll see is not just one or two anomolies but many areas having increased sales prices or very slight declines over December 2008 and April 2009. Long Island is broken down into zones. For information on where you live and what zone you’re located in, please contact me directly at 631-831-9048.

For the above Long Island real estate market information, it actually surprised me to see the dramatic improvements from the April, 2009 report. One of the main themes throughout the statistics was, that the market is leveling off. Units sold from December 2008 were basically doubled in December 2009. And with over 11 out of 17 zones, actually seeing an increase in sales price averages, that represents an improvement of 65% of the overall Long Island market.

Again, I’m not saying that values are “going up”. What this data suggests is that more homes are selling and many of those homes that sold, sold for more money than they did in just April of 2009.

Now for a closer look at where we are in the Long Island market, we need to look at the amount of homes that are for sale and how many are selling. The graph below demonstrates very simply that while the market has made great strides in the right direction (less inventory), we still have a long way to go until demand evens out with supply.

For buyers, these are clear signs that if you want to buy a home, now is the time to seriously do what you must to purchase a home at the lowest rates in our history. I continually hear prospective buyers tell me they’re waiting…and I’m thinking in my head, “…for what, cows to fly?”

Five percent interest rates are not here to stay. And once they go up, chances are we will never see rates like that, on 30 year loans, for a very long time, if ever again in our lifetimes. Rates are historically low and the Long Island real estate market is down nearly 37% (and more in some areas)…and let us not forget about the $8,000 tax credit (which is money in your pocket).

This State of The Long Island Real Estate Market tells me what I need to know and that is, convince buyers to buy, rather than sit around and wait. The bottom is here and the market might stay down in this area for a good amount of time, but interest rates of 5% and $8,000 will not.

For sellers, your motivation for selling is paramount. If you’re highly motivated, it’s so important that you hire a real estate agent who can prove to you that he or she can sell your home for the most amount of money in the shortest period of time. Selling before May 1st, 2010 is extremely important. Call me if you don’t know why.

631-831-9048

(c) Copyright 2010 www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson

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Recent guidelines impacting loan originators disclosure of closing costs have been set up by HUD in order to bring all lenders up to the same standard of excellence in reporting closing costs to consumers. The estimates provided by loan originators must be realistic fees that a buyer should expect to pay at closing with no last minute surprises.

Some of the important facts you should be aware of as a homebuyer are:

• All fees paid to the lender/broker are to be consolidated in one line, including processing fees, origination fees, etc. These charges cannot change from the original estimate without a material change to the loan requested.
• In the event fees are being charged to obtain a lower rate, these are to be broken out and itemized for the borrower’s ease of comparison to other loan programs.
• Estimates for fees from government recording charges and third party settlement providers we suggest are to be itemized and the lender is held to a tolerance of 10% for their accuracy. In the event the estimated charges exceed the amount listed by the allowable tolerance, the lender will be responsible for making up the difference.
• Estimates for services that the buyer can shop for and do choose can change at settlement without the lender being held accountable. This can include title charges, homeowner’s insurance, and initial deposits for an escrow account.

Please be sure to make note of these items when you’re looking for a mortgage lender. This information was provided courtesy of Tony Auffant, Senior Mortgage Planner with Continental Home Loans. Tony can be reached at 631-241-4366 or email him tauffant AT cccmtg.com (use the @ sybol in your email).

(c) Copyright 2010, www.tommcgiveron.com
By Thomas McGiveron, Licensed Real Estate Salesperson

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These videos will explain what’s behind the impact of foreclosures in 2010. The unemployment rate is staggering and is the new challenge for the real estate market. While the Long Island real estate market has seen some improvements (small steps toward recovery), foreclosures and other distressed sales will be the topic of 2010.

For the website with the report on the impact of foreclosures throughout New York, you can visit http://data.newyorkfed.org/creditconditions.

Should you have any questions you can reach me at 631-587-1700, ext. 51.

(c) Copyright 2009, www.tommcgiveron.com
By Thomas McGiveron, LSA

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In New York, it’s important to understand what exactly is in store for the real estate market. Buyer demand is extremely important to keeping home values from dropping further. The higher demand is for home purchases, the more valuable homes will be.

One of the things that is helping real estate market sales is the tax credit for home buyers. Right now through April, 30th, 2010, buyer activity will continue to be higher because home buyers have access to up to $8000 in tax credits. This tax credit is helping homes maintain some value continuity.

From the graphic you can see that after the tax credit ends, there is nothing to help the real estate market maintain value or slow decline. Right now, buyers are looking. This is very important to remember.

Now note the graphic that shows what’s in store for price rebounds throughout the country.

As a homeowner myself, I could easily shrug my shoulders and think that a graphic is meaningless, and think that the real estate market is on the rebound already. I wish that were the case. But wishful thinking isn’t what helps people understand what’s happening with the market. Insightful analysis is what will help a seller make an educated decision about selling their home.

For more information on the Long Island real estate market, click here.

You can reach me at 631-831-9048.

(c) Copyright, 2009 www.tommcgiveron.com
By Thomas McGiveron, LSA

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So this is an article about the future of mortgage interest rates. It’s a video article (and my first).

Part I

Part II

You can reach me at 631-587-1700, Ext. 51 or you can EMAIL ME HERE.

By Thomas McGiveron, Licensed Real Estate Salesperson
(c) Copyright 2009 www.tommcgiveron.com

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Here’s an outline for the home-buying process for first-time buyers.

First thing’s first, relax. I know how you feel. I bought 2 homes before I became a real estate agent. I look back and if I could say one thing to myself then, I would say, “Relax and enjoy this. Have fun!” So in the process of buying a home, remember, relaxing and taking things one day at a time is paramount!

Here’s the “nuts and bolts” of the process. Remember, first thing is…R E L A X. Now I will take you through the rest of the typical process. I’m going to just focus on when you make an offer and go from there. However, before any of this, you must do three things. One, determine how much you can afford on a monthly basis (write down your monthly income and write down your expenses, including some for savings), this will give you what you can afford to manage the home (Principal, Interst, Taxes, Insurance, Heat, Electric).

Two, meet with a mortgage professional and get pre-approved for a mortgage. Without this, you are driving blind, because you have no idea which direction you should be going. Without knowing what you’re qualified for, how do you know what price range you should be looking in? The mortgage pre-approval is the foundation of your entire search.

Three, discuss your needs and preferences for the home and neighborhood you’d like to buy. Be realistic. Remember, this is a starter home most likely and over 70% of home buyers move after 7.5 years. Things change, families grow, money is greater, etc, so people “upgrade” or just move to another area.

Okay so we’ve got those basic items out of the way. Now you find the home (easier said than done…). You make an offer.
Once the offer is accepted, your offer will most likely be contingent on an engineer inspection of the property. To this point, no money is put down and you are not in contract. The purpose of the engineer inspection is to allow you to have a professional look at the home before going into contract.

Normally, any issues that are noticed during the inspection, are discussed up front, before the seller’s attorney sends your attorney a contract of sale. This allows for a smooth transition for the lawyers to execute a contract.

Once the inspection process is completed and any issues are addressed, you will be meeting with your attorney to sign a contract. Just a few notes here are needed.

One, the purpose of an engineer inspection is not to renegotiate the offering price. During your time of viewing the home before the inspection and before the offer, it’s important to pre-inspect the property the best you can and make notes of any little items that may need attention such as a leaky faucet or old water heater that needs replacement. All this should be taken into account before you make your initial offer. The purpose of an engineer inspection is to review electrical, plumbing, heating, and foundation/structural components of the home and not for a running toilet or a sliding glass door that’s hard to close.

Secondly, understand that during this process where your offer has been accepted by the seller and you move to get an inspection and work things out with your contract, that the home could still be sold to another party. You are not in contract until you (the buyer) and the seller(s) have signed a complete contract that is agreeable to both parties. So moving somewhat swiftly is adviseable.

In moving on, once you’re ready to sign the contract, your attorney will review items in the contract and protect you legally. Both the seller and you, the buyer, have to be represented equally. Things like certificate of occupancy, survey, title work, mortgage contingencies, etc. will all be worked out in this contract.

As a Licensed Real Estate Salesperson, I only show homes and help people buy and sell them. I do not render legal advise, so it’s important that you hire an attorney you are comfortable with, who can handle your legal representation to your satisfaction.

Once you’re in fully executed contract, where both you and the seller(s) have signed an agreeable contract, you will then move to acquire an appraisal of the home you’re purchasing. This is required by you bank, to establish the value of the home. The appraised value usually always comes in very close to the agreed upon sales price. However, with changes to Home Valuation Code of Conduct (HVCC’s), there has been an increasing number of homes that have received low appraisals (a symptom of the tightening in the industry). Something I am well aware (lucky for my clients).

Once you’ve gotten this completed, it’s very important that you follow up with your lender to assure that you receive your mortgage committment in a timely fashion. It’s also very important that your attorney do his/her part in ordering the title work and seeing to it that it is acceptable and that there are no issues to be addressed in the last minute. Being prepared and on the ball is the key.

Last minute items that you will need to address will be your money at closing and your home insurance. You should get quotes from companies ahead of time, during the beginning stages of your contract period. This way, in the last two weeks before your closing, you know exactly who to contact to get your proof of insurance.

Things to prepare yourself for include the need for a new survey. Sometimes, a survey on a home can be old or not acceptable due to any number of issues. So at times, you will have to pay for a new survey or an updated one from the company that did the original survey (if they’re still in business). This can be an unexpected cost, but in my opinion, a good expense. I believe every buyer should pay for a brand new survey of their land. But that’s my opinion.

Now in a worst case scenario, your lender may be laxed in underwriting your loan. This is where things can get very uncomfortable and tense. It’s important that you not focus solely on the “best rate”, but rather focus on a the “best bank”. What do I mean by “best bank”, give me a call and we can discuss that further. But I’ll give you a hint, a bank that underwrites its own loans and has comprehensive services (not just basic qualification of your credit and work history) is the bank to seriously consider.

On the day of the closing, you will have hopefully gotten “the numbers” from your attorney and you will get any money you need for closing in a certified check from your personal bank. You will bring that along with your check book and some cash to the closing. The cash is for the title agent at the closing, as it is common to tip them.

It is an exciting experience and with a good team of professionals helping you (real estate agent, attorney, lending institution), the process of buying your first home should be both a little “terrifying” and mostly fun! Good luck!

If you are looking for a home to buy and want a professional salesperson like myself and our team to help you, feel free to call us at 631-587-1700, ext. 51.

(c) Copyright 2009
By Thomas McGiveron, Licensed Real Estate Salesperson