Uncertainty dominates commercial concerns about economic recovery

WASHINGTON – Aug. 9, 2010 – Unstable market fundamentals and uncertainty over government policy are among the concerns voiced by senior real estate executives about the commercial real estate sector’s outlook for recovery, according to The Real Estate Roundtable’s 3rd Quarter 2010 Sentiment Index.

“Uncertainty reigns. Whether it is job creation, unstable capital markets or a volatile mix of current policy and the upcoming mid-term elections – investors and businesses are skittish, causing the commercial real estate outlook to be flat,” said Real Estate Roundtable President and CEO Jeffrey DeBoer. “The good news is last quarter’s view that commercial real estate markets have stopped falling has been confirmed this quarter and values for high quality assets show strength. But the overall sentiment is that the industry is in for a long slow recovery characterized by extreme caution.”

More than 110 executives from the commercial real estate sector – encompassing office buildings, shopping malls, warehouses, hotels, and apartment buildings – participated in the survey. For the first time, the survey’s current and future conditions indices merged, scoring an Overall Sentiment Index of 74 (down from 76 in the previous quarter). The score suggests a relatively positive trend and a flat trajectory.

The Overall Sentiment Index is calculated based on averages of both current and future indices measured on a scale of 1 to 100. To reach an overall Index of 100, for example, all survey respondents would have to answer that market metrics are “much better” today (current conditions) compared to one year ago, and will also be “much better” 12 months from now (future conditions).

Although 62 percent of survey participants reported conditions today as “somewhat better” than a year ago (down from 65 percent in Q2), only 19 percent said conditions are “much better” (up from 17 percent last quarter).

Looking forward, 59 percent of respondents predicted conditions one year from now will be “somewhat better” (down from 60 percent in Q2), whereas only 20 percent expect conditions one year from now to be “much better” (down from 28 percent last quarter).

However, the overall Current Conditions Index of 74 for Q3 2010 stands in stark contrast to a score of 36 for the same time period last year.

One participant’s response: “The only certain thing in the world at the moment is uncertainty. Until companies begin re-hiring and the consumer regains confidence, we will remain stuck in the ditch.”

For real estate asset values, respondents report some improvement in expectations, yet emphasize the gap between valuations for Class A assets and all others. According to a survey respondent, “The market remains very murky. The few quality assets that do come to market tend to attract rabid bidding, but there’s still general illiquidity.”

Fifty-seven percent of participating executives report asset values are “somewhat higher” than a year ago (up from 35 percent in Q2); 56 percent expect asset values will improve one year from now (the same expectation of 56 percent was reported last quarter). Seventeen percent of survey participants stated that asset values are “much higher” than one year ago (up from 11 percent in Q2); 6 percent said values will be “much higher” one year from now (up from 3 percent last quarter).

Instability of capital markets remains a significant cause of unease, although conditions have improved marginally since the previous quarter. Forty-two percent of respondents said debt capital is “somewhat better” today than one year ago (versus 38 percent last quarter); 36 percent characterized debt availability as “much better” (compared to 27 percent in Q2). On the equity side, 54 percent of participants said availability is “somewhat better” than one year ago (versus 50 percent last quarter); 24 percent characterized debt availability today as “much better” than one year ago (compared to 26 percent in Q2).

Projecting availability one year from now, 62 percent of participating executives said debt capital will be “somewhat better” (versus 69 percent last quarter); 13 percent said debt availability will be “much better” (compared to 10 percent in Q2). On the equity side, 50 percent said availability will be “somewhat better” one year from now (versus 52 percent last quarter); 17 percent said availability will be “much better” one year from now (compared to 16 percent in Q2).

A PDF of the entire Q3 Sentiment Survey Index is available online at http://www.rer.org/.

© 2010 Florida Realtors®

Refi opportunity for underwater homeowners

 

WASHINGTON – Aug. 9, 2010 – In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development (HUD) provided new details about a refinance program it announced earlier this year that helps responsible homeowners who owe more on their mortgage than the value of their property.

Starting Sept. 7, 2010, the Federal Housing Administration (FHA) will offer certain “underwater” non-FHA borrowers a new FHA-insured mortgage. To qualify, an owner must be current on his existing mortgage, and his lender must agree to write off at least 10 percent of the unpaid principal on the first mortgage.

“We’re throwing a lifeline out to those families … experiencing financial hardships because property values in their community have declined,” says FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”

Other details: A homeowner’s existing loan cannot be FHA insured, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio no more than 97.75 percent. The owner must qualify for a new loan under standard FHA underwriting requirements and have a credit score equal of 500 or higher. The property must be the homeowner’s primary residence, and the new debt must bring the borrower’s combined loan-to-value ratio to no greater than 115 percent.

Interested homeowners should contact their lenders to find out if they’re eligible, and to determine whether the lender will write down a portion of the unpaid principal. If a homeowner qualifies, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before Oct. 3, 2010.

The FHA provided complete details in a six-page mortgagee letter that can be downloaded in PDF format. To read the letter, go to: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-23ml.pdf

Welcome to Jackie’s Short Sale blog

This site has been created to provide my clients with accurate and more updated information about distressed real estate market. There are all kinds of misinformation floating around and unfortunately,  many people are being misguided. I do not claim to know everything about short sale but am committed to provide any legitimate and accurate inforamtion directly from the horses’ mouth as I obtain them. You can also get more information about short sale from my websites: www.sayNOto4closure.com and www.RealtyConnectionfl.com

Need to sell your upside down house?

If you are facing foreclosure and can no longer afford your home, you may qualify for a Short Sale—even if you don’t think you can (or haven’t been able to) sell your home.

What is a Short Sale?

A Short Sale, also known as a pre-foreclosure sale, is when you sell your home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off all (or a portion of) your mortgage balance with the proceeds. You may also be eligible for the government’s Home Affordable Foreclosure Alternatives Program (HAFA) which offers short sale and DIL options.

A short sale is an alternative to foreclosure and may be an option if:

• You are ineligible to refinance or modify your mortgage
• You are facing a long-term hardship
• You are behind on your mortgage payments
• You owe more on your home than it’s worth
• You have not been able to sell your home at a price that covers what you still owe on your mortgage
• You can no longer afford your home and are ready or need to leave

What are the benefits of a Short Sale?

• Eliminate or reduce your mortgage debt
• Avoid the negative impact of a foreclosure
• Start repairing your credit sooner than if you went through a foreclosure
• May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years)

What is the process for a Short Sale?

If you qualify for this option, the process is similar to a normal real estate sales transaction. You will work with a real estate agent to market and sell your home. However, your mortgage company will also be working with you and your real estate agent every step of the way to:

• set the sale price (based on current market value),
• collect financial information and negotiate with other lien holders (i.e., your second mortgage company) if applicable,
• review acceptable offers,
• agree to the terms of the sale once a buyer is in place, and
• work with the buyer’s real estate agent and mortgage lender to finalize the sale.

In some cases, you may be eligible to receive relocation assistance to use toward your moving expenses and to make the transition to new housing easier.

A Short Sale may take up to 120 days, but this could be shorter or longer depending upon your specific situation. If you are unable to sell your home, you may be able to transfer the ownership of your property to the owner of your mortgage (also called a Deed-in-Lieu of Foreclosure).