Home > Blogs > Patty's Real Estate Principles
3,424 views

Patty's Real Estate Principles

"Consider it Sold"

By Patty Ballard | Agent in Danville, CA
  • Bank of America to forgive 150,000 second liens

    Posted Under: Home Buying, Home Selling, Financing  |  October 2, 2012 11:08 AM  |  189 views  |  No comments

    Bank of America is erasing the debt on 150,000 second liens for mortgage borrowers in financial difficulty, the lender has announced.

    The move completely extinguishes the unpaid balance on second lien debt for qualified homeowners, who are being informed of their eligibility by mail. Mailings to eligible customers began in July.

    Customers chosen for the offer will typically be those who are currently in default on their second liens. Bank of America said it is undertaking the measure in order to help eligible homeowners get back on track financially with their primary mortgages and avoid foreclosure.

    A small number who are current on their second liens but in difficulty with their primary mortgages will also receive the offer to have their debt erased.

    The initiative is one of the customer relief programs Bank of America is initiating in partial fulfillment of its obligations under the $25 billion foreclosure abuses settlement reached by Bank of America and four other major mortgage lenders with federal authorities and state attorneys general.

    Second liens will be automatically eliminated for borrowers receiving the offer unless they contact Bank of America within 30 days to opt out. Some borrowers may choose to opt out because there could be tax implications, with the forgiven debt counted as income for tax purposes.

    Extinguished second liens will be reported as paid in full and closed, so there should not be any negative effects on borrower’s credit ratings, according to Bank of America.

    Borrowers will not be able to apply on their own to have second liens extinguished; only those contacted by Bank of America will be eligible. In addition, the program only applies to second liens serviced or held by Bank of America. Read More >>

  • How Homeowners’ Tax Rates Could Go Down, but Their Tax Bills Go Up

    Posted Under: Market Conditions, Financing  |  September 25, 2012 12:11 PM  |  86 views  |  No comments

    NAHB has published a new paper analyzing the mortgage interest deduction (MID). The MID has been in the news a lot recently, as the talk heats up of possible tax hikes in 2013 

    The new research adds to NAHB’s existing tax policy analysis by providing a means to examine the possible impacts of future comprehensive tax reform proposals. Analysis of “winners” and “losers” of tax reform requires data on an individual’s complete set of tax characteristics. In this vein, using IRS data we estimated tax profiles of typical MID beneficiaries (single, married, married filing separately, and head of household). These profiles provide average values of other major tax values, such as deductions and credits, for taxpayers benefitting from the MID. Read More>>

  • Monday Morning Cup of Coffee: BofA slowest to solve delinquent mortgages

    Posted Under: Market Conditions, Financing  |  September 17, 2012 8:35 AM  |  111 views  |  No comments
    Loans serviced by Bank of America tend to remain in the 90-plus-delinquency state for significantly longer than loans serviced by other big banks, analysts at Barclays Capital find. The length of time that a loan is in the 90-plus delinquency bucket, they say, is driven by the credit quality of the borrower, its geographic location, and especially, by the servicer processing the loan. 

    Washington, Alabama, and Mississippi are among the sloweststates in processing delinquencies, while Iowa, New Mexico, and Minnesota are among the fastest, Barclays says. The five slowest states in processing delinquencies are all non-judicial foreclosure states, while four of the five fastest states are judicial foreclosure states.

    “Servicers tend to process 90-plus delinquent loans more quickly in judicial states, potentially because they want to speed up the overall liquidation timeline as much as possible,” analysts say.

    In terms of processing foreclosures, four of the five slowest states are judicial foreclosure states, and not surprisingly, New Jersey, New York, and Florida lead the country in foreclosure timelines. Meanwhile, the five states with the shortest foreclosure timelines are all non-judicial states: California, Arizona, Alabama, Missouri and Utah. Read More>>

  • Baltimore: The city that sues the banks

    Posted Under: Market Conditions, Financing  |  August 30, 2012 7:47 PM  |  99 views  |  No comments

    The Libor scandal plays out in an unlikely place - the streets of Charm City.

    FORTUNE -- It has been a year since Baltimore sued the big banks -- Bank of America (BAC), Barclays (BCS), Citibank (C), HSBC (HBC), J.P. Morgan (JPM), Lloyds (LYG), UBS (UBS), and WestLB -- the first of many lawsuits to claim that those institutions illegally manipulated the London interbank offer rate, or Libor. It was esoteric stuff until recently, when Libor became an international scandal that spilled beyond the business pages. Regulators now allege that for years several banks may have lied about the interest rates they paid to borrow money from one another. The falsely low rates affected just about everyone, since the interest on trillions of dollars in consumer and municipal loans is set against Libor. Read More>>

  • BofA lags in modifying loans under settlement

    Posted Under: Market Conditions, Financing, Home Ownership  |  August 29, 2012 4:02 PM  |  123 views  |  No comments

    (Reuters) - Bank of America Corp is lagging other banks in meeting its requirements to reduce customers' mortgage balances under a $25 billion foreclosure settlement with the U.S. government, according to a report released on Wednesday. 

    Five financial institutions that are part of the settlement provided $10.6 billion in consumer relief from March 1 to June 30, with $8.7 billion in the form of short sales in which customers sell their homes for less than the mortgage's value.

    The report is the first update on how the five banks are doing in meeting the terms of the March settlement with federal agencies and state attorneys general. The settlement was meant to resolve allegations that they mishandled foreclosures, and the banks have three years to meet the requirements or face penalties.

    Unlike its competitors, Bank of America did not modify any first-lien mortgages to reduce the amount of money the borrower owes, and it also did not complete any refinancings by June 30, according to the first report by Joseph Smith, the official monitoring the agreement. Read More>>

  • High-end homeowners rushing to beat 2013 tax increase?

    Posted Under: Market Conditions, Home Selling, Financing  |  August 13, 2012 11:12 AM  |  111 views  |  No comments
    Some well-heeled homeowners are reportedly scrambling to offload luxury properties by the end of the year or else risk having a serious bite taken out of their bottom lines. That's because if the Bush-era capital-gains tax cuts expire in January, as they are expected to, those homeowners would be shelling out a lot more on sales. Read More>>
  • How will the LIBOR Scandal impact Real Estate?

    Posted Under: Market Conditions, Home Buying, Financing  |  July 17, 2012 10:38 PM  |  189 views  |  No comments

    LIBOR: The Big Fix

    On July 13, 2012, in Breaking News, Economics, by Brian Summerfield

    Perhaps you’ve just noticed the headlines emerging around Libor, or maybe you haven’t even seen them yet. Either way, this story, which has been in the European press for a few weeks now and is just now starting to get picked up on our side of the Atlantic, has big implications for real estate and mortgage finance. Here’s a quick rundown of what it is and how it could affect you.

    Q: OK, let’s start with the basics. What’s Libor?

    A: Libor is an acronym that stands for the London interbank offered rate (not the Long Island Board of REALTORS®, at least not in this case). That’s the average interest rate banks around the world use to lend money to each other. The rate is set (as the name indicates) in London by financial data services firm Thomson Reuters and overseen by the British Bankers Association (BBA). It’s theoretically calculated by major member banks independently submitting to the BBA their best estimates of the interest rates other banks would charge them to borrow money. When you remove the top four and bottom four estimates, then average out the remaining ones, you get Libor.

    Q: Why is Libor a big deal? I’ve never heard of it until recently.

    A: Libor impacts the rates used for credit card, mortgage, and student loan debt. There’s no precise figure, but at least $300 trillion — and quite possibly more than double that amount — worth of financial products are affected by it. To put it another way, that’s more than four times the economic output of the entire world over a four-year period. So, even a tiny rate change can mean millions or even billions of dollars gained or lost. This infographic provides a good breakdown how Libor impacts the financial ecosystem.

    Q: Why is this in the news now?

    A: About two weeks ago, London-headquartered Barclays bank paid nearly half a billion dollars to resolve investigations conducted by U.S. and U.K. financial regulators into the company’s manipulation of the Libor and the Euro interbank offered rate. While not technically an admission of guilt, the settlement shows that Barclays was culpable for improperly influencing the rate.

    Q: Oh. But that’s just a rare case of misconduct, right?

    A: It’s not quite clear how often it happens. However, several banks are currently being investigated by the same organizations that were looking into Barclays’ manipulation of Libor, and similar deals are expected to be reached in the coming weeks. It’s safe to say this isn’t an isolated case, and educated insiders say the banks were actually communicating rates to each other before submitting their estimates to the BBA. That’s illegal collusion.

    Q: That all sounds bad. But how will that impact real estate?

    A: Well, the Libor influences rates for many home loans, particularly adjustable-rate mortgages (ARMs). If the banks manipulate Libor upward, that means people with ARMs will pay more. Of course, they’ll pay less if the banks push it downward, which is good for their mortgage payment, but bad if they’re a saver or investor. Either way, their payments are being determined not by the natural, market-determined rate but rather by the banks’ whims.

    Even more problematic is the potential financial fallout from all this. Lenders are already skittish due to the uncertain regulatory environment. A far-reaching scandal that exposes more systemic problems in the global finance system could contract credit even more. That could threaten the real estate turnaround that’s already vulnerable thanks to a sluggish improvement in employment conditions.

    We’ll be following this story closely over the next few weeks. It could have big implications for your business.


« Read older posts
 
Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer