When borrowers default on second homes
Strategic defaulting – where the homeowner has the ability to pay the mortgage, but chooses to stop making payments – among affluent homeowners with second homes and investment properties is increasing.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Homeowners who strategically default are likely to find their credit will be negatively impacted and they should expect to be prevented from getting another mortgage loan for 7 to 10 years.
• Many homeowners are concerned about the possibility of the lender suing for the amount of money owed on the loan when a house goes into foreclosure.  Whether or not the lender has legal justification to do so depends largely on where the property is located.
• In “recourse” states, a lender can go after the homeowner, and usually other assets like a primary residence, for the full mortgage amount.  Examples of recourse states include Maine, New Jersey, and Hawaii.
• In “nonrecourse” states, a lender agrees to accept whatever the property fetches at a short sale, foreclosure sale, or deed-in-lieu, and generally can’t sue for the full loan amount.  Florida, Connecticut, and Arizona are among the nonrecourse states.
• California is in a third category called “single-action” or “one-action,” which allows the lender either to foreclosure on the owner or file a civil lawsuit for the full loan amount.  Other single-action states include New York and Idaho.
• Homeowners should be advised that even in a nonrecourse state, those who opt for a strategic default on a previously refinanced property may not be protected from lenders, because the mortgage in not in accordance with a first purchase.
• Although California is a single-action state, lenders can still sue homeowners for repayment of a second mortgage or home equity line of credit.
• This article is according to the California Association of Realtors.

Forecast shows employment, housing increases in 2011
The A. Gary Anderson Center for Economic Research at Chapman University released the results of its 33rd annual economic forecast for the U.S. and California this week.

According to the forecast, the economic recovery will continue at a relatively slow pace in 2011, but will be enough to generate 1.7 million net new jobs nationwide, which will cause the national unemployment rate to drop about one percent, to 8.6 percent, by year-end 2011.

Although housing affordability is at historically high levels, the forecast finds there will be no sharp rebound in housing next year. The forecast calls for housing starts to increase 7.2 percent, from 600,000 to 640,000 units. Home buyers’ concerns about unemployment and the ongoing problems in the mortgage industry, coupled with a large excess supply of vacant units on the market, will constrain production of new homes.

The forecast also calls for continuing improvement in resale housing prices in 2011, with housing prices nationwide increasing 3.3 percent. Like new housing starts, home prices will be constrained by consumer anxiety as well as the significant overhang of vacant housing units on the market.

In California, employment is forecasted to increase by 1.2 percent—167,000 net new payroll jobs, with the job recovery positively affecting housing demand. And the expected rebound in income, low mortgage rates, and lower home prices are helping to keep housing affordability at historical highs, leading to increased housing demand, particularly for first-time home buyers.

A pickup in new residential construction, high inventory of resale homes, and existing shadow inventory will mostly offset the positive factors influencing demand, according to California Association of Realtors.

I lived on Oahu for a while, worked on Ford Island and actually accidentally uncovered a couple bombs from the attack on Pearl Harbor.  We shut the jobsite down for a time to disarm and remove the ancient armament.  The house we lived in on Wheeler Air Force Base, still had bullet holes from the attack.  My son and I would ride our bikes down to the maintenance runway and imagine the carnage that happened so long ago.  I traversed the Kole Kole pass, where the Japanese fighters flew through to get to Wheeler.  My hat goes off to all of our military members for the awesome job they do to protect our freedoms and liberties!

INFO THAT HITS US WHERE WE LIVE  Last Thursday the National Association of Realtors (NAR) reported Pending Home Sales for October UP 10.4% over the month before. This index is a measure of signed purchase contracts, which bodes well for Existing Home Sales a couple of months out. The NAR’s chief economist commented, “It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011.”

While the shoppers are out in force to satisfy everyone’s holiday wishes, I’m hard at work to satisfy your real estate wishes!  Interest rates are still at historic lows and inventory is actually down.  That seems to mean the market has stablized.  Now, prices haven’t gone up and I really don’t think they will for a while.  If your looking for a short sale, which have been more standarized (see my HAFA info at the top of page) or a foreclosure (where have all the foreclosures gone?) or a regular sale, please give me a call and let’s get you looking in the right direction!Thanks!