It's safe to sell your home again

(Money Magazine) -- Given everything they knew about the lackluster housing market, Meghann and Cort Battles didn't expect much when they listed their four-bedroom home in Centennial, a Denver suburb, for sale in January. So they were taken aback by the onslaught of interest.

Meghann, at home on maternity leave with their two sons, juggled 32 showings in the first month. "It's so exhausting trying to find somewhere to go for an hour two or three times a day," she says. The Battles even installed a special front-door handle to text them when buyers enter and exit so that they can return as soon as possible. "It's just crazy," she says.
Shiller: Housing market might not have turned around

No matter where you live, though -- or where you want to live next -- the strategies you employ to sell your home must change to reflect the realities of what's now a healing market.
To see how that change might play out, MONEY visited Denver, ranked by CoreLogic as the most improved of the nation's 100 largest markets.
Prices in the Mile High City and its suburbs, which didn't experience the extreme booms or busts of Phoenix or Las Vegas, rose in December. Foreclosures are ebbing. And homes are selling about 19% faster than they were a year ago.
Our tour of this recovering market reveals that the rebound is likely to creep rather than surge ahead. Yet if you know how to price and market your home properly -- which this story will lay out -- you can finally list your home with confidence that it can sell reasonably quickly and close to your asking price.
See if your town is near recovery.
Many economists predict that 2012 will be the last year overall housing prices decline, as the final wave of foreclosures from the slump hits the market. After that, prices should inch up: 2% in 2013, 3% in 2014, according to a consensus of analysts tallied by Moody's Economy.com.
Why? Against a backdrop of low mortgage rates, employment has improved slightly, and home prices have fallen long and hard enough that buyers are beginning to realize that they won't necessarily lose their shirts by purchasing real estate. To see if your neighborhood is on the verge of a rebound, you have to look for the signs.
For instance, is local employment on the upswing?
That's a critical factor for a region to get itself on the path to recovery. The improving jobs picture has led to shrinking housing stock across the country, as enough investors and bargain hunters have come on the scene to unclog the glut of foreclosures that's been blocking a recovery.

New rules will speed up short sales

NEW YORK (CNNMoney) -- The Federal Housing Finance Agency laid out new rules aimed at speeding up the short sale process, a move that could keep many homes from falling into foreclosure.

In a short sale, the bank that holds the mortgage must agree to accept a price for the home that is less than what is owed. Even though short sales are considered a better alternative to foreclosure, banks often take so long to review and approve short sales that the deal falls apart and homes get repossessed.

"Delays in approving short sale requests remain a significant challenge for realtors and consumers and often results in canceled contracts and the property going into foreclosure," said Moe Veissi, president of the National Association of Realtors.

In California, which accounts for a disproportionate number of the nation's short sales, 60% of short sale offers failed to result in a closed sale last year, according to a California Association of Realtors member survey

Flood of foreclosures coming

The organization attributed much of the closing problems to extended lender response times. Some agents said that lenders even foreclosed on the homes before a short sale could close.

To help avoid the trend from continuing, the Federal Housing Finance Agency, which oversees Fannie Mae (FNMA, Fortune 500) and Freddie Mac (FRE), laid out rules that will require lenders to review and respond to short sale requests within 30 days and make a final decision within 60 days. The lender is also required to provide weekly status updates to the borrower if the offer is still under review after 30 days.

The new guidelines, which go into effect on June 1, can prove to be beneficial for all of the parties involved.

For lenders, it could mean saving a distressed property from falling into foreclosure, saving them tens of thousands of dollars in lost property value and costs.

10 fastest growing cities

The average foreclosure during the last three months of 2012 sold for $149,686, while short sales averaged $184,221, according to RealtyTrac. And foreclosures also pile up higher expenses with lenders paying for property taxes, heating and maintenance costs.

Home sellers, too, would be better off because they often will take just aone-time hit to their credit score for a short sale rather than the multiple delinquencies associated with a foreclosure.

And buyers get homes in better condition, typically because the sellers have been living there and keeping the homes in good condition.  

Flood of foreclosures to hit the housing market

NEW YORK (CNNMoney) -- The golden age for foreclosure squatters may soon be coming to an end now that the $26 billion mortgage settlement has been approved.

The settlement, agreed to by the nation's five largest mortgage lenders, is expected to speed up the foreclosure process by providing stricter guidelines for the banks to follow when repossessing homes.

The banks involved include Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citibank (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial.

Many foreclosures have been in limbo since fall 2010 following the so-called robo-signing scandal, when banks allowed employees to sign off on thousands of foreclosure documents a month with little verification.

Lenders hit the pause button on foreclosures because they "were afraid that anything they did would be under a microscope," said Eric Higgins, a professor of business at Kansas State University.

As a result, borrowers who were seriously delinquent on their loans have been able to stay in their homes for months or even years without making a single payment. Nationwide, the average time it takes to foreclose on a home -- from the first missed payment to the final bank repossession -- stretched to 370 days during the first quarter, almost twice as long as it took five years ago, according to Daren Blomquist, the marketing director at RealtyTrac.

Foreclosure free ride: 3 years, no mortgage payment

In some states, delinquent borrowers have been squatting in their homes much longer. In Florida, the average time was 861 days, and in New York it was 1,056 days -- close to three years.

"Perhaps a million foreclosures could have been pursued last year but weren't," said Rick Sharga, executive vice president for real estate investment company, Carrington Holdings.

But that's all about to change, he said. "We're going to see an increase in the speed of foreclosures and a higher number of foreclosure starts."

In fact, there are indications that the pace of foreclosures are already starting to pick up.

While overall foreclosure activity was down during the first quarter, filings were up 10% in the 26 states where foreclosures must undergo court scrutiny, according to RealtyTrac.

It was in these judicial states that the processing of foreclosures slowed the most following news of the robo-signing scandal, said Blomquist.

Many banks in these states stopped filing foreclosures unless they were extremely confident it would pass muster in the court. (In non-judicial states, foreclosures are reviewed by a trustee, which is a third party such as a title company and less likely to parse every legal document).

But now lenders can move more confidently, said Brandon Moore, RealtyTrac's CEO.

In the judicial state of Indiana, for example, foreclosure filings were up 45% year-over year. And in Florida, they were up by almost 26%, according to RealtyTrac.

The $26 billion crapshoot

"The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen -- both in terms of new foreclosure activity and new short sale activity," Moore said in a statement.

The resulting flood could bring home prices down even further -- yet another impetus for the banks to clear out their foreclosure pipeline as quickly as possible, said Kansas State's Higgins.

Then, industry thinking is, the housing market would be able to get back to normal and home prices could eventually find their true value. Some industry analysts, such as the chief economist for listing site Zillow, Stan Humphries, are predicting that could happen as soon as the end of the year.

Zillow estimates that home values nationwide will fall another 3.7% by the end of 2012, and that price will likely bottom out by early 2013.

Foreclosures: America's hardest hit neighborhoods

Should home prices hit a bottom then stabilize, it would push many potential buyers off the fence, according to Mike Fratantoni, a vice president at the Mortgage Bankers Association. House hunters would no longer be afraid of investing in assets that were losing money.

"The market is already on the verge of turning the corner on prices and this will help," said Fratantoni.

Have you tried to qualify for a principal reduction or a modification under the foreclosure settlement? We want to hear from you. Send your story and contact information to Leslie Christie and you could be featured in an upcoming article on CNNMoney. 

FHA to reject borrowers in minor credit disputes

NEW YORK (CNNMoney) -- The Federal Housing Administration is about to make it even tougher to borrow money from Uncle Sam to buy a home.
Starting April 1, borrowers in ongoing disputes with creditors over debts of $1,000 or more may no longer qualify for FHA-insured loans. Even borrowers with perfect credit scores can be denied over a single $1,000 problem charge.
Before this, individual lenders decided whether debt disputes constituted grounds for denial. You could be fighting a charge, say a hospital bill, and your lender might still decide that your credit history merited an approval. Now, a lender will have to justify the approval to the FHA and back its decision with documentation.
The change is part of the agency's effort to reduce its risk as it grapples with a depleted reserve fund that has fallen below legally-mandated levels. The FHA insures mortgages which are originated by private lenders. To help bolster its capital reserves, FHA will also hike the insurance premiums it charges borrowers beginning in April.

Lowball appraisal: Mortgage denied

The requirements are for the homebuyer's own good, said Tiffany Thomas Smith, deputy press secretary for the U.S. Department of Housing and Urban Development, FHA's parent agency.
"It's a way of protecting consumers from getting into loans they ultimately can't afford," she said.
The new rule requires borrowers with loans in collection that add up to at least $1,000 to either pay off the debt, prove they're making payments on the disputed loans or explain why the disputed loan is somehow wrong -- and document their case -- before they can close on a FHA loan.
Disputed accounts going back more than two years, along with those related to fraud or identity theft, will not count against borrowers, according to the FHA, but lenders must get evidence, such as police reports, that document client claims of identity thefts or fraud charges.
Such prohibitions could slow the housing market recovery if fewer borrowers can secure FHA mortgages.
The loans are one of the few products available for homebuyers needing low down payment mortgages at competitive terms. Most FHA borrowers put down only about 3.5% of the purchase price.
Since the housing bust, FHA loans have at times exceeded 20% of all purchase loans and is still running at about 15%.

Housing chief: Why the settlement is a fair deal

Lenders that are underwriting the FHA loans will get final say on whether the loans go through. If the borrower's explanation of an outstanding debt and supporting documentation satisfy the bank, it can decide to issue the loan --but they run the risk of FHA rejecting it.
Lenders likely won't do that very often, however, according to Steve Habetz, a loan officer with Darien Rowayton Bank in Connecticut, unless the documentation strongly supports the borrower's view on the disputed charge.
"Any error made is going to be on the side of caution," he said. "Few lenders will approve the loan. They don't want to hold a 96.5% mortgage held on their own books if the FHA rejects it."