Michelle Millikin

In the  fall of 2011 many banks were exposed for a scandal commonly referred to as “Robo-signing.”  Essentially the foreclosure epidemic was causing banks to have their employees sign as many as 50-200 documents per day to meet the demands of the flood of foreclosures, not allowing enough time nor resources for the employee to verify the documents prior to signing.  Some admit to only verifying the date, nothing more.  This calls into question the legitimacy of the foreclosures on a basic level – a bank has to prove it actually has the right to foreclose – that it owns the note and accompanying mortgage.

Unfortunately for the bank, the securitization of mortgages and the changes in property-ownership documentation that accompanied such deals can make it hard for the banks to establish clean chains of title and produce original documents.

Now these banks are having a difficult time restarting the foreclosure process and the once booming market for foreclosed homes has come to a drastic slow-down as a result.  Properties coming to auction in the states hit the most hard, such as Arizona, California and Nevada, have dropped 30%.  Many investors absorbing and rejuvenating these properties have simply stopped looking.  Why?

The risk of acquiring a property which has not been properly foreclosed is a huge risk.  Simply said, a buyer may not actually own what they paid for, and are investing in the renovation of, because the seller never had the right to transfer the property in the first place.  Investors of such properties put out the cash, want a quick return and do not want to wait for the attorneys to hash out the details.

And buyers are not flooding in to negotiate short sales like before either.  The theory is that homeowners think the bank will have a tough time kicking them out in this environment so they can live free for awhile, pay off other debts and build up their nest eggs.

End result:  The banks need to promise the full review of all cases but this is slow-going, tedious and time consuming.  In the meantime, lack of buyer confidence in an already weak market leads to further distress on the market.

Yet a properly handled transaction with a trained professional Realtor can help a buyer take advantage of this market.  Call me today to learn how I can help.

People frequently ask me “When do you think the housing market will improve?” Well, my crystal ball has been on the fritz lately but experts indicate that the answer is an unfortunate “Not for some time.” According to Fiserv, a financial analytics company, home values are expected to fall another 3.6 percent by next June, pushing them to a new low of 35 percent below the peak reached in early 2006 and marking a “triple dip” in prices.

The first post-bubble bottom was in 2009 where prices fell 31 percent below peak. The second dip was last winter when prices were down 33 percent. Shortly thereafter there was a surge in the market but it was artificially generated by the robo-signing scandal where loan servicers were rapidly signing foreclosures without proper screening. Banks were brought to a screeching halt upon this discovery.

Now that the scandal has been resolved, lenders are speeding more cases through the foreclosure process, putting more homes on the market, weighing on home prices, yet again.

And we have yet to see the “shadow inventory” of foreclosures that have yet to be released on the market. Some experts estimate the number of homes currently in shadow inventory to be 6 million homes.

Nationwide, Fiserv is projecting home prices will climb a modest 2.4 percent between June 2012 to June 2013.

For our Wausau area local market we may not see the decline predicted for Naples,Las Vegas or Miami nor the increase predicted for Madera, California or Yuma, Arizona but are expected to stagger at our depressed market values for yet another year. Some of the factors working against the market in the near future are the increase in foreclosures and sustained unemployment.

This continues to be an excellent time to purchase for the credit-worthy, residentiaslly and commercially. Please call me to discuss how you can take advantage of the current market conditions.

At a campaign stop in Nevada on Monday, President Obama announced an expansion of the HARP (Home Affordable Refinance Program) which would eliminate the current maximum LTV of 125%. The initiative is being looked at as a way to reward those homeowners who have been good payers of theirmortgages but, because of declining home values, they could not take advantage of today’s lower interest rates.

While the actual details on the program will not be released until next month, here’s the buzz: * It will only pertain to loans currently being serviced by Fannie Mae or Freddie Mac* Because of the removal of the LTV cap, appraisals may not be required* With the only qualifying criteria announced being that the last six payments be on time, it is possible that income documentation may bestreamlined and credit scores might be more forgiving* Fees allegedly will be reduced* Incentives may be offered to people who shorten their repayment time* It also sounds that the banks may be given some incentive by not holding them liable for the underwater portion of the new loan (a major incentive for sure).

The government is on the hook for these loans already. By lowering the payments (by offering lower rates), they will likely help these loans to continue to perform and make it less likely for the underwater homeowner to walk away.

The original HARP was expected to help 5 million families. After two years, it has yet to reach 900,000; therefore, estimates ranging from 800,000 to 1.6 million borrowers who may benefit need to be taken with a grain of salt.

Whether the Administration is looking for purely political rhetoric points or not, my advice to underwater homeowners is too keep an eye out for the final guidelines because you just might be able to lower your payments.

As you are aware, there are an abundance of bank-owned properties within our local inventory. Many buyers cannot comprehend how they can afford to obtain financing for the home and still afford how to make the necessary repairs. There is a loan offered by the Federal Housing Administration (FHA) called the 203(k) Renovation Loan Program that may be the answer to this dilemma.
In a nutshell, the program allows for the benefits of FHA financing and provides funds for the needed rehabilitation. The loan is based upon the value of the property once the work has been completed. As with any program associated with the government, it can be cumbersome and requires some patience but has the potential to pay off. There are guidelines of mortgage calculation and mortgage limits for the market area, minimum of $5000 in improvements (but may include up to a virtual reconstruction) and limitations as to what the improvements should be. The renovations should be geared toward bringing the property up to building code standards, modernization or the improvement of the health and safety of the occupants.
The Dept of Housing and Urban Development requires that these properties meet basic energy efficiency and structural standards. A property owner may also be able to receive income tax benefits in conjunction with the program with some of the completed improvements.
I am a strong proponent of community revitalization and am hopeful that there may be buyers considering the incentives of taking a closer look at this lending opportunity. I have faith in many of our local lenders that they can help us through the process, which in the end is a win-win for everyone. A buyer gets a home at a great price, receives a great mortgage package and another abandoned home in ill-repair gets the renovation needed, helping the community.
Give me a call today to discuss how this may be an Home Purchase Option for you!

Wisconsin’s definition of “wetland” includes “areas where water is at, near, or above the land surface long enough to be capable of supporting aquatic or hydrophytic (water-loving) vegetation and which has soils indicative of wet conditions.” In other words, they are not necessarily readily-identifiable pools of standing water – a wetland can be a small depression on land with no standing water, or areas that have certain soil types.

Because wetlands are difficult to identify, many property owners are unaware that there may be wetlands on their property until they prepare to develop or build on the property. Property owners are instructed not to do anything that could harm the wetland and to apply for a permit from the Department of Natural Resources which is very difficult to obtain.

What can they do?

Wisconsin had developed a Wetland Mitigation Program which allows new wetlands to be restored, enhanced or created to compensate for the filling in of other wetlands. In other words, the property owner is allowed to alter their wetlands (property development) is exchange for new wetlands (environmental protection).

The property owner must first demonstrate that the damage to the wetland is unavoidable (no other practicable alternatives) and that every effort has been made to minimize the project’s impact on the wetland. Needless to say, the Mitigation Program is good in theory but next-to-impossible to utilize.

Therefore, it is very important to purchase property/land through an experienced Realtor, who will help you determine the development opportunities or restrictions BEFORE you purchase the property – protecting your best interests and your investment.

Call me today to learn more about the proper steps (and pitfalls) of purchasing