Tuesday, May 31, 2011

The Housing Double Dip Fudge

In December, I posted a note about how I like chocolate ice cream.  I like it in a cone, double dip and I eat it with spoon.  Well, really, the post was about the economy and housing in particular.  I had friends that were bullish on the stock market, jobs, the economy, housing, you name it, they said buy it.  A lot of that braggadocio in regard to economy came from individual's fear of things going sideways.  It certainly didn't help that trusted sources like the Wall Street Journal were salivating over futures makets and Ben Bernanke was imputed with indicating that he didn't expect a double dip recession

Information from the Federal Reserve and the futures markets seemed to indicate that the recovery was going to happen in 2011, 2012 at the latest (see the video on the WSJ link.)  This morning, CNBC, not my most common source of news because it tends to push a rosy view of the economy, came out and said this morning that a "Double-Dip" in housing prices is even worse than expected. It would seem, that Mr. Bernanke likes a little fudge on his double-dip. In all fairness, I couldn't find a single quote from Bernanke saying there was not going to be a double dip, but he did make indications that there wouldn't be, with caveats. He should have been a lawyer.

So what is the driver in this "unexpected" double dip in the housing market.  Well, first of all, it isn't or shouldn't have been unexpected.  The amount of foreclosed/ bank owned properties on the market or yet to be available in the market is enormous.  The US housing market on average will sell about 4 million units.  The banks are holding nearly 8 million units and foreclosures are ramping up.  Though the data is not yet in for April/May 2011 in Washington, I expect Realty Trac to make an announcement of nearly a quarter to half increase over the previous quarter in new foreclosures for the state.

This has partly to do with the new Foreclosure Fairness Law, okay, scratch that.  It has almost everything to do with the new Foreclosure Fairness act.  So, if your house was worth X in February, the number of new foreclosures happening will likely place downward pressure on your price, no later than August meaning your house will be worth X-Y.  Additionally, Washington is already on pace to see more nonjudicial foreclosures this year than last year according to the congressional fact finding for the Foreclosure Fairness Act.

The article in CNBC said that the US average drop this year has been 3.5% which is more than what I had reported as being 1% per month and there are a lot of foreclosures to come.  State specific data on Washington showed a loss of 4.15% since December, well ahead of the US average.  Surprisingly, Seattle remained even from February to March, one of only two cities on the S&P/Case Shiller index to do so.

This double dip leaves this question to be asked:  What do I do about it?  If you purchased/refinanced your home between 2003 and now so you locked into the height of the housing market, how long will it take you to recover your house value?

This is a serious discussion that you have to have with your self and your financial advisers.  The average family has lost over $125,000 of value since 2008 and the greatest asset of most families is the home.  Can you afford to loose more over the course of the next two years? 

It is time that you sat down with a lawyer trained in foreclosure law and find out what your rights are in regard to your home.  I am not saying that your house is a stock and that it should be dumped, but when analogized, it can help make better economic decisions.  Let's head down to the local ice cream shop, get a real double dip, and see what you can do about avoiding the economic double-dip finally being reported by the media.  I like mine with some cinnamon bears on it and your paying.

Thursday, May 19, 2011

Pre-Foreclosure Options Letter - Foreclosure Fairness Act

So this morning, I got this wonderful call on my new HTC Evo.  I love my new phone.  Anyway, the meeting was with Rick Torrance and Valerie Grigg Devis from the Public Safety Unit of the Department of Commerce.  I know, your saying, "who?!? why?!?, what the..."  Well, the new law signed by Governor Gregoire that implements HB 1362 on July 22, 2011 is being administered, at least in part by the Department of Commerce.  The Department of Commerce, or COM as they like to call it has the unenviable duty of manufacturing a number of notices which will be used by attorneys and housing counselors to access the new provisions which will be codified in RCW 61.24.

The first notice, and this is the one the banks have been asking for specifically, is the newly minted Pre-Foreclosure Options Letter.  We have to thank Mr. Bruce Neas for the snazzy title and really, he should be thanked for much of the product that is the Foreclosure Fairness Act.  This is the first notice included under section 16 of the new act and it specifically requires that notice be given in English and Spanish from the lender notifying the homeowner of its options, including mediation.

This letter is being developed with model language and should be approved by the AG's office next week when it will be sent out for translation into Spanish.  You must note, that the banks were unwilling to foot the cost in translating this item.  They would rather that the tax payers eat the cost of translation.  I guess they will still need make sure they have a Spanish speaking attorney available to verify that COM got it right.  So, here is to job creation!

This notice will be sent to homeowners and will contain most of what we find in section 5(c) of the law which will amend RCW 61.24.031.  The Notice will say you have 30 days to contact the beneficiary (bank) and request mediation, I mean options.  You will note, in Section 8, the bill allows you to request mediation on or after July 22 as long as you have received a notice of default.  So you won't be left out.

Though this Pre-Foreclosure Notice is the top priority for COM, it is not the one of the most interest to me.  COM has until June 22nd to post and provide the Notice for Referral which will detail what must happen prior to an attorney making a referral to mediation.  This notice is also detailed in section 16 and refers to new section 7 which states in part, "[An] attorney referring a borrower to mediation shal send a notice to the borrower and the department, statement that mediation is appropriate."  The only thing that I did not get out my conversation this morning is what the heck does "appropriate" mean?

This form is also in production and I was told it will be posted early next month but as of this time, the forms are still unavailable for public perusal.  There are four additional notices which are produced either by COM or the mediator which the homeowner has little or no control over.  Those will also be available but of much less interest.

There does seem to be a rush by the banks to get NODs out before July 22nd.  However, that rush really is to avoid the recording costs, not to avoid the law, well maybe it is to avoid the law, but section 8 puts them squarely in it.  The issue is going to be this, if you have a sale date set for July 22nd (which ironically is a Friday and the day the law goes into effect) and my office faxes a referral to mediation to COM before the sale, does the Trustee have to push off the sale and the bank set up the mediation?  I believe the answer to this question is YES, YES, and YES!!! if you didn't hear me.

So, I am going to be holding a Midnight party at my offices on July 21st to send off mediation referrals for anyone that would like one.  Once 12:01am hits, the fax will be a humming.  I am kidding...or am I.  I guess maybe you should give me a call on my new EVO before Thursday, July21st. 425-314-6737.