John Murphy Reports

To quote presidential candidate and Senator, John Edwards, “there are two Americas, not one.”  Well of course he was referring to what he viewed as the stratification of American society between the rich and the poor.  However, his quote is very applicable to those who are so fortunate as to have a loan that is owned by the US Government – i.e. Fannie Mae or Freddie Mac.

As you may know, the Obama Administration under the lead of HUD (Housing and Urban Development) have been promoting their “Making Home Affordable” program whereby they are trying to encourage millions of property owners to try to refinance or get their loan “modified.”    One of the troubles many people were having, and continue to have is that home prices have often dropped 15,20,25,30+% since they had purchased the property and therefore it makes no sense to refi or to modify.  However, the government was quite generous by stating that you could modify your loan provided you met all of their debt to income ratios, employment verification etc., and you could get the modification at 105% loan to value.  Well now they are going to allow mods of 125% loan to value according to Bloomberg.
Can someone tell me how this is different than when people used to do cash out refi’s at 125% loan to value just 3-4 years ago?

The fact of the matter is it seems the government is trying to string out or push out foreclosures and put an even greater burden on the backs of the taxpayer.  These people getting these 125% LTV mods WILL go to foreclosure in the future and it will just be a bigger bill for the taxpayer.  Perhaps Treasury Secretary Geithner is confident the Chinese will continue to buy our debt.  He’s going to need it to be so.

Naked Capitalism does a great job detailing the program.  One of the things they note is that if home owners take the government up on its offer, the loan will go from a non-recourse loan to a recourse loan…that is to say it goes from being good for the debtor to being good for the government.  Oops.

For those of you who aren’t fortunate enough to have the US Government as the backstop or investor for your mortgage, it’s not likely you’ll be able to get the same 125% LTV offer.  Sorry.

Referencing that  same material I noted below, there have been 156 NODs published (Notice of Default) for Plymouth, MN.

There are currently 499 properties for sale in the MLS right now for Plymouth, MN.   There have been 349 closed sales so far this year.

If you’d like to subscribe to receive pre-foreclosures, foreclosures, REOs, short sales and other distressed sales in Plymouth, MN, please sign up at www.PlymouthDistressHomes.com.

I was just sorting through a list and see that there has been about 200 foreclosure notices in Maple Grove so far this year through the first 6 months of the year.  I don’t know how this compares to previous years.

So far in the first 6 months of the year, the market in Maple Grove, MN has had 437 closings according to my search this afternoon in the MLS.   There are 536 active listings for sale.

If we can expect the pace of foreclosure to at least continue with what we’ve seen so far in the first half of 2009, there should be another 200 more NODs or Notices of Default issued.  Typically the NODs are issued 6 weeks or so before the Sheriff’s sale.   The home owner then has 6 months to redeem the property – i.e. pay off the loan, late fees and attorney’s fees.   If the home owner doesn’t redeem the property, it then goes back to the bank and they eventually list it as an REO.  It typically takes another 6-7 weeks after the redemption period expires before the banks get the properties listed.

If you are interested in possibly trying to buy a pre-foreclosure property, please contact me.