Thursday, December 15, 2011

FHA suspends anti-flipping rule for another year

Below is a very interesting article from an expert in the DFW real estate investor market.  He has a plethora of knowledge and I always follow his postings on

FHA suspends anti-flipping rule for another year

posted by TimHerriage 

I will let you know when this is final:
The Federal Housing Administration will suspend its anti-flipping rule for a second year in 2011, a spokesman confirmed to HousingWire Friday.
In 2003, the Department of Housing and Urban Development issued a rule that prohibits the FHA from insuring a mortgage on home that was owned by the seller for less than 90 days. But in February, HUD lifted this ban for one year to accelerate the sale of previously foreclosed homes to investors.
The HUD spokesman said the rule was currently in the clearance process. When the FHA first lifted ban, HUD announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofits looking to clear out vacant and abandoned homes.
Not all transactions qualify for the exception. The sales must be done at arms-length, meaning there cannot be a shared interest between the buyer and the seller. The waiver does not qualify for reverse mortgages, and in cases where the sales price of the property is 20% above the seller's acquisition cost, more conditions apply.
"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," FHA Commissioner David Stevens said when the rule was first suspended. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."

Monday, December 5, 2011

Successful flip with JD Castillo at New Western Acquisitions

J.D. Castillo has been providing investment properties in and around the Metroplex for near a decade.  He is by far someone who will provide his clients with absolute honesty and integrity.  I've personally witnessed him advise an investor to NOT purchase a property from his firm because he simply thought it wasn't the right deal for the right investor.  His personal philosophy is to plug the right deal into the right investor for their success.  He believes that his success will come only after first providing success to his clients.  Click on the link to Meet JD!

Monday, November 21, 2011

Nobody is perfect!

I know this isn't related to real estate, but I found this to be absolutely hilarious! Quite often, Lee Corso is guilty of being wrong (like when stating that UCF is the best under rated team in the nation, now 4-6), but this takes the cake! I had to share it! Don't worry, I will post some insightful information about the investment real estate arena soon.... I just couldn't keep this to myself!

Tuesday, November 8, 2011

Freddie Mac Finding itself in a little more trouble

According to a request to the treasury last week from Freddie Mac, the tune of $160 billion was not enough to keep the Government Sponsored Enterprise afloat. After another recorded loss of over $4 billion last quarter, Freddie Mac is seeking another $6 billion dollars in additional supplements.

The current rate for a 30 yr. fixed note is somewhere between 3.5% to 4.5%.  When compared to the average rate of 7% and an adjustable rate at another 3%-5% (which was vastly the most popular product sold in the early to mid 2000's), it is easy to see why there would be little to no profits after a note refis into the current average rate.

An obvious assumption would be the unequivocally large amount of foreclosures in our current housing bust.  However, a surge in refi’s through the HARP program has produced a crippling effect on profit margins through the last quarter.  One refi alone averages a loss in $2,500.00 per month to Freddie Mac.  HARP also projects another 1 million refis over the next year as an attempt to contain the already massive looming shadow inventory.

So, if the treasury prints off another $6 billion to bail another GSE out of despair again, who is the gambler that is buying the bonds that will back this note?  China? Right. The more concerning issue over the failing Freddie Mac is the continuance of stretching the dollar until it is worth less than the paper it is printed on….
But, I guess that's a whole different ball of wax.


Freddie Mac Requests $6B More in Taxpayer Aid
11/03/2011BY: CARRIE BAY
Top of Form
Bottom of Form
The nation’s second largest mortgage company is asking the U.S. Treasury for another $6 billion in capital support after posting its largest quarterly loss in over a year.

Freddie Mac said Thursday that it recorded a net loss of $4.4 billion for the quarter ended September 30, 2011, compared to a net loss of $2.1 billion over the previous three-month period and $2.5 billion for the third quarter of 2010.
The McLean, Virginia-based GSE explained that while its latest earnings results reflect net interest income of $4.6 billion, the company shouldered a $4.8 billion loss on derivatives and a $3.6 billion provision for credit losses.
Freddie Mac’s CEO Charles E. Haldeman, Jr. pointed out that hundreds of thousands of borrowers refinanced into lower mortgage rates or shorter mortgage terms in the third quarter. Long-term interest rates declined by approximately 125 basis points in the third quarter, compared to a decrease of about 30 basis points in the second quarter.
“[T]he borrowers we helped to refinance will save an average of $2,500 in interest payments during the next year,” Haldeman said.
While the savings bode well for homeowners and should help to ensure those who were struggling to make their payments will remain current, it means less money coming in for the GSE, resulting in higher loss severity rates and thus the recorded increase in Freddie Mac’s provision for credit losses.
Such losses will likely grow over the coming quarters with the administration’s retooling of the Home Affordable Refinance Program (HARP), which is expected to allow another 1 million borrowers with loans backed by Freddie Mac and sibling Fannie Mae to take out new mortgages at today’s rock-bottom rates.
The GSEs’ are expected to issue guidance about the HARP changes to their mortgage servicers by November 15.
Freddie Mac says the increase in its third-quarter credit loss provision was also driven lower expectations for mortgage insurance recoveries, as a result of the deteriorating financial condition of certain mortgage insurers used by the company.
Freddie’s $4.4 billion loss in the third quarter combined with the $1.6 billion dividend payment it made to Treasury for past bailout money left the GSE with a $6 billion net worth deficit as of the end of September. To eliminate this deficit, the Federal Housing Finance Agency (FHFA), as conservator, is submitting a draw request to Treasury for the same amount.
The company’s Q3 draw is the largest quarterly request since the first quarter of 2010, and brings the cumulative amount of Freddie Mac’s taxpayer-supported bailout to $72.2 billion. The GSE has returned $14.9 billion to Treasury in the form of cash dividends.
Freddie Mac’s single-family serious delinquency rate was 3.51 percent as of the end of September, nearly unchanged from 3.50 percent at mid-year, but the company says its rate remains “substantially below industry benchmarks.” The GSE also stressed that new single-family business acquired after 2008 continues to demonstrate stronger credit quality.
Freddie Mac says it helped approximately 48,000 struggling borrowers avoid foreclosure in the third quarter, finding home retention solutions – including loan modifications, repayment plans, and forbearance agreements – for three out of every four. The GSE completed 11,744 short sale and deed-in-lieu transactions over the three-month period.
Freddie carried $127.9 billion in non-performing assets as of the end of September, including single-family and multifamily loans that have undergone a troubled debt restructuring, are seriously delinquent, in foreclosure, and REO. That figure represents 6.6 percent of the company’s total mortgage portfolio.
The GSE’s REO operations expense skyrocketed to $221 million in the third quarter, compared to $27 million for the second quarter. REO operations expense primarily consists of costs incurred to maintain foreclosed properties, valuation adjustments on properties, disposition gains or losses, and recoveries from credit enhancements, such as mortgage insurance.
Freddie Mac says the increase in REO operations expense last quarter was primarily driven by higher REO holding period write-downs as fair values declined during the third quarter, as well as a reduction in projected recoveries on mortgage insurance.

Wednesday, November 2, 2011

Delinquency Rate Down in Fort Worth-Arlington

As usual, The metroplex real estate market continues to shine above the national average.  Although numbers show that foreclosures are declining locally and nationally, speculation concurs that motivated sales from distressed property owners are not on the decline.  My assumption is that banks, realtors, and homeowners have other options besides filing for foreclosure.  The second article below states the increase in shortsales that are up 10% nationally from the previous year.  

Fewer Fort Worth-Arlington homeowners delinquent on mortgage payments

The Fort Worth-Arlington mortgage delinquency rate has decreased, CoreLogic research firm said today.
In August. 5 pecent of mortgage loans were at least 90 days delinquent, compared to 5.4 percent in August 2010.
In Texas, the mortgage delinquency rate fell to 4.5 percent in August, from 4.9 percent a year ago. And nationally, the rate fell to 7.1 percent, down from 7.8 percent.
The foreclosure rate, though, which measures the percentage of loans in some stage of the foreclosure process, was 1.6percent in August, up from 1.5 percent in August 2010, CoreLogic said.
In Texas, the foreclosure rate was 1.5 percent in August, up from 1.4 percent in August 2010. And nationally, the rate rose to 3.4 percent from 3.2 percent in August 2010, figures show.

Read more:

Number of short sales on the rise

Short sales — when lenders allow financially strapped borrowers to sell homes for less than their unpaid mortgage — accounted for 12% of home sales nationwide in the second quarter. That's up from 10% in the same period last year, says researcher RealtyTrac.
The increases were sharper in some states, including California, Nevada, Michigan, Georgia and Colorado, the data show.
In Colorado, short sales were 17% of all sales in the second quarter, up from 10% a year earlier. In California, they made up 25% of sales, vs. 18%.
Bank of America, the largest home mortgage servicer, expects to complete more than 100,000 short sales this year — more than double what it did in 2009, the bank says.
Wells Fargo Senior Vice President J.K. Huey says short sales have been "steady to slightly" up in recent months, partly because there are fewer bank-owned houses for sale in some markets, and that has forced buyers to pursue more short-sale properties.
Short-sale homes, which often remain occupied until sold, tend to retain values better than those that go through foreclosure. That helps values of neighboring homes.
In the second quarter, short-sale homes sold at a 21% discount to non-foreclosure homes, while bank-owned homes went at a 40% discount, RealtyTrac says. Short sales may also reduce losses for loan owners because they avoid full foreclosure costs. Borrowers may qualify for new mortgages sooner after a short sale than after a foreclosure.
"Short sales are a very positive solution," says BofA Vice President Dave Sunlin.
Short sales peaked at 16% of the market in early 2009, RealtyTrac says. Realtors say there should be more short sales and that they should get done faster.
"We lose buyers constantly because short sales take too long," says Beth Peerce, president of the California Association of Realtors. Short sales completed in the second quarter took 245 days, on average, RealtyTrac says. In a June survey, 77% of California Realtors called short sales difficult or extremely difficult; 15% said clients were foreclosed on while pursuing short sales.
Many short-sale efforts fail because homeowners aren't eligible because they can still make payments, or purchase offers are too low, says Wells Fargo's Huey. Loan owners may not agree on sale prices, either, she says. In most states, lenders can try to recoup short-sale losses from homeowners unless balances are forgiven. At BofA, Sunlin says balances are forgiven more than half the time.

Read more here:

Wednesday, October 26, 2011

Looking to invest in real estate? Do your homework first…

With a vast and seemingly unending amount of knowledge at the simplicity of our fingertips, making an educated decision about nearly anything can be as easy as typing www.  Now a days, almost everyone googles whatever is unknown to them.  I am guilty of internet searching even with friends at dinner when no one seems to have an answer for the trivia being discussed.  When it comes to any type of investing, researching an investment vehicle is everyone’s first step to making an educated decision on what to invest in and how to go about doing so. 

When it comes to investing in real estate, one thing is certain…. What you are purchasing is not going anywhere, literally.  The great aspect of buying real estate is that you have a tangible asset. While values may change increasingly or decreasingly, the asset will always be there.  The key to a solid investment is to know about the variables that will affect the asset you are acquiring.  There are many variables that directly and indirectly influence the marketability of a property.  Some to consider are school districts, access to highways, convenience to shopping, vicinity to recreational accommodations, and proximity to health care facilities.   

To most, the aforementioned variables are elementary to the avid investor.  There are so many other demographics that most fail to research that can greatly impact the success of an investment besides the typical guidelines. 

A great place to begin your research is a website called This website should be stored in your favorites bar if you are a real estate investor.  Everything there is to learn about a state, county, city and subdivision can be examined here.  

Here is an example:

You can type in a search for Euless, TX.  If you are a landlord and are looking for a great are to buy long term income generating property, this would be a great area to consider.  On city-data, it states that “Euless is above the state average for rentals vs. homeowners.”  Also, city-data shows that the main 2 types of occupational industries are transportation and manufacturing (indicating a high index of blue collar workers who are typically renters).  Another indicator that this area would be a great location to consider owning rental property is the fact that every 3 out of 4 home loan is denied.  The population growth rate is 16% over the last 10 years. With this information it is safe to assume that many people want to live here, but few are able to purchase a home.  This makes for a perfect storm if you are a landlord.  Below is a link with more information about the city of Euless.

Another great website to check out is the Texas A&M website at There is a plethora of information with projections of population growth, long term civil engineering plans for highways and high impact zoned projects.  Here you can learn of highway expansions such as 377 and the impact it is going to place on areas such as Granbury and Stephenville.  This type of research can lead to making a sound decision on where to buy land.

There is an unending amount of information available to make a smart decision every time you look for tips on investing.  If what is found seems to be overwhelming, always seek the guidance of professional service.  There are investment real estate specialists in nearly every metropolitan area that are more than willing to assist and educate.   

Wednesday, October 19, 2011

Default Service Departments of Ocwen, GMAC, and CITIMortgage far outperform larger entities

This is a great article below regarding the productivity and performance for the default servicing companies  of non performing loans. It seems to be a direct correlation as to the limitations its competitors possess as a stronghold against who may purchase and how these bad assets may be purchased.
Banks that are under performing to servicers such as Ocwen, GMAC, and CitiMortgage are Bank of America and Fannie Mae.  There is evidence pointing to strict guidelines aimed at preventing fraudulent transactions occurring on the resale of the property from investors as the cause to the decreased production of their REO department.
While intentions may be good, these limitations are deferring investors, the only purchasers capable and willing to buy properties in a distressed state, with cash.
Such limitations from Fannie Mae include a 15 day wait period for investors to present offers and a limitation of a re-sale price of more than 120% after the first 90 days of purchase.  While investors struggle with the adjustment of Fannie Mae, They are presented with more stonewalling from Bank of America.  BofA has completely limited the transfer of deed for all foreclosures for 90 days, period.  This has got to be the exact reason for decreased productivity for BofA's REO re-sale department.  
For now, investors are paying more attention to Banks with less restrictions and will continue to do so.  It would be in the best interest of other banks to follow suit and release such outlandish restrictions before they are left with more shadow inventory creating a larger bubble ultimately causing an out of control downward spiral of bottoming out values of homes.......

Amid a challenging environment for servicers, CitiMortgage, GMAC, and Ocwen have outperformed major competitors – Bank of America and Chase – with regards to loss mitigation and foreclosure timelines, according to a recent report from Moody’s.
Moody’s Investor Service’s Servicer Dashboard for the second quarter of 2011 rates major servicers for their performance over the year from June 2010 to June 2011.
Bank of America’s and Chase’s performances were affected by large servicing acquisitions and foreclosure moratoria resulting from robo-signing investigations, according to Moody’s.
Moody’s Current to Worse Roll Rate measures the percentage of loans that start the year in current status and end the year delinquent, in default, or in foreclosure.
At 4.3 percent, CitiMortgage ranked best for Current to Worse Roll Rate for jumbo loans, a sign of their “working with imminently defaulting borrowers prior to delinquency and their use of short-term loss mitigation programs for borrowers in early stages of delinquency,” according to the report.
GMAC ranked first for both ALT-A and subprime loans, and Wells Fargo ranked second in Current to Worse Roll Rate for jumbo, ALT-A, and subprime loans.
“Wells has strong staffing ratios, allowing them to manage large volumes of loans and reduce the number of current loans that slip into distress,” states the report.
BofA ranked fourth for all three loan types, and Chase fell into last place for all three. The Current to Worse rates were highest for subprime loans – 25.8 percent of Chase’s current subprime loans were delinquent, in default, or in foreclosure, while 21.7 percent of BofA’s subprime loans fell into one of these categories by year-end.
Moody’s attributes these rankings to both bank’s servicing portfolio acquisitions.
In terms of curing default, Citi, GMAC, and Ocwen performed well. Moody’s notes that Citi and Ocwen both have their own default servicing systems with modification programs, which allow them to modify loans for more borrowers.
Moody’s also points to Ocwen’s and GMAC’s low modification re-default rates, which it attributes to the fact that these banks have consistently verified borrowers’ financial information before allowing them to enter trial modification periods.
As with Current to Worse rates, Chase and BofA showed a weak performance in loss mitigation.
Moody’s was not the first to note shortcomings in BofA’s and Chase’s loss mitigation efforts. When the Treasury scored servicers for their HAMP performance, the only two servicers categorized as needing “Substantial Improvement” for both the first and second quarters of this year were Chase and BofA.