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Housing improves in hard-hit swing states

By Tami Luhby @CNNMoney

Housing gains may not register with voters, especially in swing states, ahead of the election.

At long last, the housing market is improving in Nevada, Florida and other important swing states that were some of the hardest hit during the downturn.

But that probably won’t win President Obama a lot of points at the election polls, according to some experts.

On the national front, home pricesand home sales are up, whileforeclosures are down. The swing states are also seeing some positive results.

In Nevada, there were just over 14,000 foreclosure filings in the second quarter, less than half the amount the year before, according to RealtyTrac. Foreclosure sales are on the decline after a state law last year cracked down on loan servicers’ practices, while short sales are on the rise. Short sales are better for neighborhoods because the homes are often maintained better and command higher prices.

Get a home in one of Money’s Best Places to Live for as much as $94,000 off.

The median price of a single family home in the Las Vegas area, by far the largest market in the state, has climbed 9% over the past year, according to the Greater Las Vegas Association of Realtors.

And in Florida, foreclosures are creeping up again as banks recover from their paperwork fiasco, which forced them to greatly slow the number of delinquent homeowners they brought to court. But it’s still down by about a third from 2010 figures.

The typical single family home is selling for 7.8% more than it did a year ago, according to Florida Realtors. Median sales prices are the highest they’ve been since 2009.

Home prices are up thanks to a rebound in employment and in the stock market, said John Tuccillo, chief economist for the Realtors group. Investors, particularly from abroad, are once again realizing the Sunshine State is a good place to buy, he said.

In Ohio, prices rose 4.9%, according to the Ohio Association of Realtors. Foreclosures, however, are on the upswing.

Related: Obama’s economy: A snapshot

But rising home prices don’t mean there aren’t any dark clouds hovering over the swing states. The good news about housing doesn’t seem to be trickling down to voters, who still view their states as being stuck in a real estate slump with little improvement.

“The housing market is starting to recover in most areas of the country, but most consumers don’t realize it,” said John Burns, head of John Burns Real Estate Consulting. “The word hasn’t gotten out that home prices are appreciating again.”

One main concern that’s dampening homeowners’ enthusiasm is the number of homes that are underwater, or worth less than the mortgage. Nearly 31% of homeowners nationwide are in this predicament, a disproportionate number of them younger than 40, according to Zillow.

That problem is amplified in some of the swing states.

In the metro Las Vegas area, more than two-thirds of borrowers are underwater. More than half of Orlando borrowers owe more than their homes are worth, while in the Miami-Fort-Lauderdale market nearly 44% do. In Cleveland and Columbus, one-third are underwater.

Also, many would-be buyers are finding it tough to get approved for mortgages, while homeowners seeking to refinance to lower interest rates are also being stymied by bank bureaucracy.

“We’re significantly better off than we were two years ago, but there are still enough problems remaining for people to be concerned about their housing situation,” Tuccillo said.

Will it be enough to sway swing state voters?

For the most part, the presidential candidates are largely ignoring the housing market.

While Obama launched a series of efforts to try to fix housing since he first took office in 2009, they were mostly viewed as ineffective. Not many new ideas have been included in his 2012 campaign either.

His challenger, Mitt Romney, does not list any housing fixes in his economic proposal. And the Republican platform unveiled last week talks only of dismantling Fannie Mae and Freddie Mac and curtailing the Federal Housing Administration.

Ultimately, many voters will tie the recovery of the housing market to the recovery of the job market, Burns said. So they will pick the candidate they think can best boost the economy.

Housing improves in hard-hit swing states

Steps to boost credit score when a mortgage is the goal

By 

Q:   Dear Credit Care,
Help! I’m getting mixed information about having multiple “store” credit cards that have a zero balance most of the time. Over the years I’ve accumulated cards for various stores to get their deals. I’d like to pay all these off to a $0 balance but am planning to buy a home in a year and need my credit score to go up by at least 50 points. I was told to use these small cards on occasion then pay them right off. Also, what about larger cards — is it going to hurt my score to pay them off and let them “sit on ice” as they say? I really need help and I feel like I need a Ph.D. to understand the way scores work. Thank you! — Katalina

 A:   Dear Katalina,
Credit scoring can be confusing, but you don’t need a doctoral degree to use them to your advantage. Your credit score is based on the information contained in your credit reports available through the three major credit reporting bureaus, Equifax, Experian and TransUnion. To fully understand what can affect your credit score, I recommend you obtain free copies of your credit reports. Visit www.annualcreditreport.com to access your credit reports online, or you can request copies by phone at 877-322-8228.

The first thing I recommend you do when you receive your credit reports is to review them for errors. With billions of pieces of information reported each month to the credit bureaus, mistakes do happen. You do not want to be penalized for someone else’s credit missteps that are erroneously reported on your credit report. Dispute any inaccurate information with the credit bureau reporting the error.

While there are many types of credit scores, lenders and other interested parties most often use two source, FICO and VantageScore. You might consider checking with the lender where you hope to secure a mortgage to learn which score they use in their lending decision process.

The widely used FICO score is calculated based on these categories and percentages:

Payment history: 35 percent
Amounts owed: 30 percent
Length of credit history: 15 percent
New credit: 10 percent
Types of credit used: 10 percent

Your VantageScore is calculated based on these categories and percentages:

Recent credit: 30 percent
Payment history: 28 percent
Percentage of credit limit used: 23 percent
Age and type of credit: 9 percent
Total of balances: 9 percent
Available credit: 1 percent

Each of your credit reports will have a section at the end that explains what actions could be taken to improve your credit score. Review your reports and follow the advice based on the contents of your credit reports to boost your score.

As for your question about balances, in general terms, it is better to have your revolving accounts at a zero balance, than to carry a balance from month to month. It should not hurt your score to pay down your bank credit cards to a zero balance.

Mortgage lenders will review your credit report(s), not just your credit score. You might consider making an appointment with your lender and take copies of your credit reports with you. Request that the lender point out to you any areas that may be of concern. One area may be the amount of credit that you have access to because of the large number of store cards and bank cards that you have open. When granting a large loan like a mortgage, you may be considered a greater risk if you have existing credit accounts that, if used, could amass debt beyond what your income will support. A remedy may be to close some of your revolving accounts.

Handle your credit with care!

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See related: VantageScores: What they are, why they matter

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Home prices rise in most major US cities

By CHRISTOPHER S. RUGABER

Home prices rose in March from February in most major U.S. cities for the first time in seven months. The increase is the latest evidence of a slow recovery taking shape in the housing market.

The Standard & Poor’s/Case-Shiller home price index shows that prices rose in 12 of the 20 cities it tracks.

Three of the weakest markets showed signs of improvement. Prices rose in Tampa and Miami. They were unchanged in Las Vegas.

The biggest month-to-month increases occurred in Phoenix, Seattle and Dallas. Prices dropped the most in Detroit, Chicago and Atlanta.

Rising prices in most cities add to other encouraging signs of a housing rebound. Sales are up, mortgage rates are at historic lows, builders are more confident and the economy is adding jobs.

Still, even though 12 of 20 cities showed gains, the weaker cities weighed on Case-Shiller’s overall price index in March. The index edged down to its lowest level since the housing bubble burst.

At the same time, price declines have slowed, and a majority of markets are rising.

“This is relatively good news,” said David Blitzer, chairman of S&P’s index committee. “We just need to see it happen in more of the cities and for many months in a row.”

In part, the increases reflect the start of the spring selling season. The month-to-month prices aren’t adjusted for seasonal factors.

The S&P/Case-Shiller monthly index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.

Over the past 12 months, prices have dropped nationally. But the declines have slowed. The 20-city index was 2.6 percent lower in March than in the same month last year. That’s better than the 3.5 percent year-over-year drop in February. And it’s the smallest annual drop since December 2010

Other measures of home prices have also improved. But the S&P/Case-Shiller index uses a three-month moving average that could take longer to signal greater improvement.

“It might be the last of the closely followed home price figures to reflect a turning point,” said Jonathan Basile, an economist at Credit Suisse.

In April, sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence in the market. They’re breaking ground on more homes and requesting more permits to build single-family homes later this year.

Long-term mortgage rates have never been lower. The average rate on the 30-year fixed mortgage fell to 3.78 percent last week, the lowest since long-term rates began in the 1950s.

The pace of home sales remains well below healthy levels. Economists say it could be years before the market is fully healed.

Many people are having difficulty qualifying for loans. Or they can’t afford larger down payments required by banks. Some would-be buyers are holding off because they fear prices could keep falling.

A better job market has made more people at least open to buying. Employers have added 1 million jobs in the past five months, though the gains slowed in April and March. The unemployment has dropped a full percentage point since August, from 9.1 percent to 8.1 percent in April.

Economists estimate that employers will have added 160,000 jobs this month. The government will issue the May jobs report on Friday.

Home prices rise in most major US cities

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Court approves $26 billion foreclosure settlement

By Les Christie

A federal judge approved the $26 billion settlement deal reached between the nation’s five largest mortgage lenders and the attorneys general of 49 states and the District of Columbia over foreclosure processing abuses.

Judge Rosemary Collyer in the U.S. District Court for the District of Columbia approved consent judgments with Bank of America (BAC,Fortune 500), Citibank (CFortune 500), JPMorgan Chase (JPM,Fortune 500), Wells Fargo (WFCFortune 500), and Ally Financial (the former GMAC) late Thursday.

The approval clears the way for the banks to compensate homeowners who may have been impacted by the so-called robo-signing scandal, in which bank employees signed hundreds of documents a day attesting to facts that they had little or no knowledge of.

Under the settlement, the banks committed at least $17 billion toward modifying mortgages for delinquent borrowers. The modifications will include large principal reductions of as much as $100,000 or more for roughly one million homeowners who are underwater on their mortgages and behind on payments.

The $26 billion crapshoot

Another $3.7 billion will go toward refinancing mortgages for borrowers who are current on their payments. This is supposed to help some 750,000 borrowers take advantage of historic low interest rates.

The banks will also pay $5 billion in fines to the states and the federal government, the only hard money involved in the deal. Out of that fund will come payments of $1,500 to $2,000 to homeowners who lost their homes to foreclosure. Those payments will total $1.5 billion, according to the consent agreement. Other funds will be paid to legal aid and homeowner advocacy organizations to help individuals facing foreclosure or experiencing servicer abuses.

Housing chief: Put out foreclosure fire: Watch Video Here:

The judge’s approval capped more than a year of hard negotiations between the banks and the states attorneys general as well as the U.S. Department of Housing and Urban Development, said Amy Bonitatibus, a spokeswoman for Chase.

“The settlement includes far-reaching relief that will help many of our customers and complement our already extensive efforts to improve our borrower assistance efforts and servicing processes,” she said.

As a result of the settlement, banks will get immunity from future claims by the state governments as long as they abide by the terms of the settlement, although homeowners may still pursue individual claims. The states can also press criminal charges, if they’re merited.

Only one state attorney general, Oklahoma’s E. Scott Pruitt, declined to participate in the agreement. The state reached a separate $18.6 million settlement with the five lenders in early February.

Homeowners on settlement: ‘This stinks’

The banks have also agreed to adhere to a strict standard of foreclosure processing, one that does not allow for robo-signing and other abusive practices.

Now that the settlement has been approved, the banks are now free to identify and reach out to delinquent borrowers to offer them more affordable mortgage terms. Bank of America has already compiled a list of 200,000 potential beneficiaries of its principal reduction modifications.

Chase said it is currently reviewing anyone who applied for a mortgage modification to see if the borrower qualifies under the settlement.

Wells Fargo began accepting applications on March 1, and will start to reach out to customers by mail in a matter of days, according to spokeswoman Vickee Adams.

When the settlement was first announced, it triggered a flow of both optimism and outrage among mortgage borrowers.

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Bank of America Getting Into the Landlord Business

By: Diana Olick

Bank of America, the nation’s second-largest lender, is launching a pilot program this week that will offer a limited number of customers behind on their mortgages to transition from owner to renter.

The bank, which was saddled with thousands of delinquent loans when it took over mortgage giant Countrywide, says that beginning this week “in targeted hard-hit markets,” it will offer a limited number of mortgage customers who are facing foreclosure an opportunity to remain in their homes, and transition to tenant status. The program is called “Mortgage to Lease.”

“This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support,” said Ron Sturzenegger, Legacy Asset Servicing executive at Bank of America in a statement. “This program may have the potential to further round out the broad set of solutions we offer our customers in need of assistance.”

Watch Video Here!

Borrowers will not be able to apply for the program, rather it is through “invitation” only, and the pilot will be less than 1,000 customers. It will be tested in Arizona, Nevada, and New York.

Sell your Home By Owner and Save Thousands!

“Pilot participants will transfer title to their properties to the bank and have their outstanding mortgage debt forgiven. In exchange, they may lease their home for up to three years at or below the current market rental rate,” according to a statement. The rent will be less than the mortgage payment and the (former) homeowner will have no financial obligations to the property, like taxes and insurance.

Bank of America [BAC] will work through property management companies to handle the pilot. This announcement comes just after FHFA, the regulator of Fannie Mae and Freddie Mac, last month launched a pilot program for investors to buy Fannie Mae properties in bulk, as long as they rent them for a number of years.

A Bank of America spokesman tells CNBC, “We’ll own the properties only in the pilot and only initially. If a decision is made to roll out a full program, Bank of America would not be in the ownership position at all.”

Bank of America Getting Into the Landlord Business

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BofA to slash mortgage balances by $100,000 or more

By Les Christie

Bank of America will significantly slash mortgage balances for as many as 200,000 borrowers.

Part of the $26 billion settlement reached between the five major mortgage servicers, the federal government and the attorneys general of 49 states and District of Columbia last month, Bank of America (BAC, Fortune 500) customers who qualify could see their mortgages reduced by an average of $100,000 or more, according bank spokesman Rick Simon.

Those principal reductions are much deeper than the ones originally announced as part of the robo-signing settlement deal.

When the settlement was first announced, the average principal reduction was expected to reduce mortgage balances by an average of about $20,000. Among the five biggest lenders, the reductions are expected to help roughly 1 million homeowners who owe more on their home than it is worth.

Multi-million dollar foreclosures

The other four major lenders are expected to reduce qualified borrowers’ principal to between 115% and 125% of the value of their home. Meanwhile, Bank of America is aiming to reduce the principal all the way down to the current value of the home.

Bank of America’s deal applies to the mortgages it owns and some that it services for private investors. Loans backed by government-controlled agencies like Fannie Mae (FNMA, Fortune 500), Freddie Mac (FMCC, Fortune 500) or insured by the Federal Housing Administration are not eligible for the program.

“Watch Video Here”

As part of the settlement, the bank also agreed not to pursue foreclosures against any delinquent borrowers who might be eligible for a mortgage modification. It will also reform its foreclosure processing to avoid repeating robo-signing abuses, in which bank employees signed hundreds of documents a day, testifying to statements they had no knowledge of.

The deal is one of a series of government-led initiatives aimed at tackling the foreclosure crisis. The latest effort came on Tuesday when the Obama administration announced a plan to reduce refinancing costs for FHA-insured loans.

Million-dollar foreclosures rise as rich walk away

The U.S. Department of Housing and Urban Development (HUD) advises borrowers who believe they were subjected to foreclosure abuse and may be eligible for a mortgage modification under the settlement to call their servicers and ask for a review of their cases.

HUD said once the agreement was submitted to a court for approval, which was expected to happen on Friday, it would hold a press conference to go over the details.

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BofA to slash mortgage balances by $100,000 or more

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Foreclosures: Stories behind the numbers

By Stephanie Hoops

Danny Ludy and his girlfriend, Carrie Purgason, and her son, Tyler (not pictured) moved to Moorpark after they were evicted from a house they were renting in Camarillo that went into foreclosure.

One day in the future, the foreclosure crisis will be a dark memory that elders will urge new generations to remember in American history, and when that day comes, Mark Lunn hopes he’ll have some wisdom to impart on young people.

“Is it wise to buy a home?” he asks, rhetorically. “What do we tell them now?”

These are questions that Lunn, Ventura County’s clerk and recorder, doesn’t recall hearing as he grew up, having been raised with the notion that homeownership is an American aspiration.

From Lunn’s vantage point at the hub of local foreclosure activity, documents stream through at a steady pace and he tries not to lose sight of what they represent — likely the death of a family’s biggest lifetime investment.

“How excited they were to have the American dream,” he says, trying to imagine the day the family was handed the keys to the home. “And now their life has been turned around. These are devastating things.”

A precursor to the Great Recession, which began in late 2007, the housing slump is evident in the numbers. Ventura County foreclosures skyrocketed from 39 in 2004 to a peak of 4,296 in 2008 as people who had adjustable-rate mortgages saw them reset at higher interest levels and began defaulting. From 2004 to 2011, the county recorded a total 12,195 foreclosures filed.

But the numbers don’t tell the whole story. Havoc has been wreaked on lives across Ventura County, and the wreckage thus far includes desperate and angry people, increases in crime and homelessness and abandoned animals.

In February, federal and state officials announced 49 states, including California, had joined a $25 billion settlement with five of the nation’s private mortgage lenders to provide relief to victims of foreclosure abuses. Consumer advocates and some locals were skeptical that it would assist enough people, and the details on how it might come to benefit Ventura County remain unclear.

Empty homes

At Re/Max Gold Coast in Camarillo, real estate broker John Heard is on the front lines of the crisis, primarily selling bank-owned properties. While bankers are sometimes removed from face-to-face interaction with homeowners who default on their loans, Heard deals with them. Banks pay Heard to see who the residents are and remove them, do a title search, investigate for tax liens, secure the property and clean it up for sale.

It takes a moment of thought, but Heard has stories to tell about his work. For starters, he recalls seeing a lot of property damage caused by residents whose emotions clearly got the best of them when they learned they had to go.

“I went up to a house in Oxnard that I had listed,” he said. “I could hear water running and went up to the front door and I could see, like, water kind of trickling and I opened the front door and whoosh! Just a flood of water came out.”

The former residents had left all the faucets turned on and broken the toilets so they would keep running. What remained was a pool of water that climbed nearly half a foot up the wall, almost to the electrical outlets.

Heard also has encountered people who make his heart ache, like a family he recently had to relocate. They were cooperative and “very nice people,” he said. The father had lost his job, the mother was sick and their child had a broken arm.

“There are cases where the people have done everything they can to save the house and they really have nowhere else to go, and I feel for them,” he said. “I really do.”

At a large foreclosed house in Ojai, Heard was stunned to see the family had abandoned everything, from the furniture to their toothbrushes and three dogs. He fed the dogs until a neighbor took two in and the other could go to the animal shelter.

He has taken many animals to the shelter over the past few years, including a German shepherd and poodle found at a property in Thousand Oaks, a horse from Ojai and a miniature pinscher he found at a house in Santa Paula.

“She was so sweet with big, brown eyes,” he said of the pinscher. He left her food and water, and she was so thrilled to see him every time he returned that he eventually took her home. She’s now named Cleo.

The housing collapse has been “horrible” for animals, said Jolene Hoffman, shelter director with the Humane Society of Ventura County.

“We had so many calls every day,” she said. “It was constant.”

When neighbors of foreclosed homeowners called, Hoffman said, the Humane Society’s hands were tied because it can’t enter houses without permission. So animal control officers had to come.

“It’s been really tough times,” Hoffman said. “Some of the girls were getting five to 10 calls a day each that people had lost their homes, lost everything and couldn’t keep their animals, and it’s usually the animals that go first, before the furniture.”

Vehicles have been abandoned about as often as animals, Realtors say. Heard typically pushes them onto the street so the city will tow them for a violation.

Homelessness and desperation

Foreclosures have contributed to the county’s homeless population, according to Cathy Brudnicki, executive director of the Ventura County Homeless & Housing Coalition. Homelessness rose 3 percent in 2011, with 1,872 people being homeless on a given day, compared with 1,815 in 2010.

On the street are not just borrowers who defaulted but also renters whose landlords lost houses.

Daniel Ludy and his fiancé, Carrie Purgason, were homeless for a short time because of the foreclosure crisis.

They learned over the holidays that a bank was foreclosing on the Camarillo house they’d been renting for a year. They had to be out by Jan. 1, so they packed up and spent Christmas surrounded by boxes and stress.

“Thank God we made it through,” Ludy said. “I just kept having faith. Everybody told us it was going to work out. It didn’t seem like there was a light at the end of the tunnel. We didn’t sleep. It was terrifying.”

It was a struggle to find a place in the right school district for Purgason’s 12-year-old son, and the couple were homeless before a church and county workers helped them find a one-bedroom rental in the hills of Moorpark.

“It took a landlord that was willing to work with us,” Ludy said. “A lot of landlords don’t understand that houses are being foreclosed left and right and you know a lot of people are like, ‘Well if you’re in this position, we don’t want to deal with you.’ ”

During the last few years, a complaint heard often came from people desperate to modify their loans who became exacerbated trying to navigate deals with banks.

Margaret Ann Barnes-Morales’ story is like that of many others. She had such trouble getting a loan modification recently that she gave up trying, deciding she’d be better off selling the Moorpark house she inherited from her sister, who died June 19.

Barnes-Morales said her sister was not behind on her payments. The last one she made was on June 15, four days before she died. She left the house to Barnes-Morales, who traveled to Moorpark from her home in Greensboro, N.C., to take care of her sister’s affairs. When she realized she couldn’t afford to make the payments on the house, she tried to get the bank to accept loan modification paperwork she repeatedly submitted.

“It’s unbelievable what they make you do and the hurdles they make you go through, and I had done everything — dotted every I, crossed every T,” she said.

She eventually became convinced she was getting the runaround when she was told she would need her dead sister’s signature on a document.

“That was the craziest thing I’d ever heard,” she said. “I don’t know what these people are about. You do your best to keep your calm and cool to talk to them because you can’t get irate. But, honey, it does take toll on an individual.”

Banks maintain that they try to work with people seeking loan modifications. Wells Fargo, for example, indicates it is committed to assisting struggling homeowners and has helped about three-quarters of customers who are 60 days or more past due avoid foreclosure.

But Realtor Monique Bryher, publisher of the California Real Estate Fraud Report, believes some of the inefficiency is intentional.

“If somebody’s living in it, the property’s usually being maintained to an extent,” she said. “Whereas if it’s vacant, there’s a problem with squatters and vandalism.”

Bryher also believes banks have no financial motivation to modify loans because they are protected by mortgage insurance. Mortgage insurance compensates lenders or investors for losses in the event of a default on a mortgage loan.

In Bryher’s opinion, it’s the mortgage insurers who are getting hit hard, and she calls it “blarney” to think banks are losing on short sales.

More to come

Financial fraud also has been an issue.

Real estate fraud has been most prevalent in Oxnard, according to Deputy Ventura County District Attorney Dominic Kardum, who works in the real estate fraud unit of the DA’s Office. Those targeted tend to be elderly or Spanish-speaking people who don’t understand the documents they sign.

“We saw a lot of equity theft crimes because people had a lot of artificial equity in their homes,” Kardum said.

Equity fraud schemes involve offers to help a person stay in a home if he or she signs ownership over to a con artist. The perpetrator then uses the equity in the property as collateral to borrow money, makes no payments and the true owner faces foreclosure.

As home values dropped, equity dwindled and a decline in opportunity prompted a shift in schemes to loan modification fraud, Kardum said.

Loan modification fraud happens when a perpetrator offers to resolve a distressed homeowner’s mortgage woes. For an upfront fee they offer to help the homeowner get a loan modification, but it never happens.

“And they tell people, ‘Don’t pay the bank, pay me,’ ” Kardum said. “To me, it’s despicable.”

Kardum has seen people in Ventura County taken advantage of in these schemes who ultimately lost their homes.

“The outcome’s not good,” he said. “I can tell you that.”

While local foreclosure numbers fell 36 percent last year from their peak in 2008, economists suspect the housing market is not yet healthy because banks are sitting on shadow inventory, properties they could sell but haven’t yet.

There are a number of reasons banks may hold on to shadow inventory. Economists and real estate experts believe it would be unwise to flood the market all at once, driving down prices further. Also, banks may find it cost-prohibitive to process so much distressed inventory quickly.

A few weeks ago, real estate broker Heard was approved to handle business for three more banks.

“I think this is going to keep coming,” he said.

Back at the County Clerk and Recorder’s office, operations manager David Valenzuela said he won’t soon forget the fraud and how it forced people to move to worse situations during the mortgage crisis.

When County Clerk and Recorder Lunn looks back, he’ll recall a grim time in Ventura County’s history.

“A lot of empty homes, a lot of for-sale signs and a lot of tragedy,” he said. “And that’s what I’m going to remember.”

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