Visionary Home Builders of California

As far as the real estate market and industry goes dismal is the word to describe it. David Crowe, chief economist for the National Association of Home Builders spoke at the International Builders Show in Las Vegas earlier this week and said that housing statistics and indicators will continue to drop in 2009 and that new home sales will drop another 14%. Although the market is expected to drop, Crowe stated that 2009 will likely be the “bottoming out” year for the housing industry, he expects the market to hit bottom around mid 2009 and begin a slight upswing by the end of the year. Contributing to the declining forecast in the housing market is also the nation’s dismal employment outlook. Economists at Freddie Mac expect unemployment to jump to from the current 7.2% to 8.7% by the end of the year. These same economists attribute a rise in defaults and foreclosure as a direct result of increased job losses, in fact they consider it to be the single most important factor.

What this dismal outlook also means is that there will be more desperate homeowners looking for help and scheming “industry professionals” looking to take advantage of an already dismal situation. In an earlier blog post I briefly touched on the loan modification organizations and how they may potentially be illegitimate and illegal. Apparently my analysis and predictions were true as there are now many of these organizations nationwide that have scammed desperate homeowners. Last year the Federal Trade Commission brought lawsuits against five companies that were representing over 20,000 consumers. In addition Angela Rosenau, deputy attorney general in California cited over 300 complaints against such organizations.

A recent article from the New York Times (1/15/2009) highlights the growing problem by documenting the case of Stockton resident Maria Martinez who was facing trouble with her mortgage last summer and was subsequently scammed by a so-called foreclosure consultant who did absolutely nothing but take her money. Today Maria continues to live in the foreclosed home and is simply waiting for the Sherriff to show up and evict her. Maria’s case while tragic is not unique, in fact the same article mentions that many times the defrauders are the same individuals who were aggressively hawking subprime loans and are now taking advantage of desperate homeowners’ who become frustrated or panic after dealing directly with lenders who are often indifferent to their situation. What is important to keep in mind is that in California “mortgage consultants” are prohibited from collecting payments until after they complete their service

Although the effects of the housing crisis are for the most part negative, one good thing that has arisen as a result of the crisis is greater and more affordable opportunities for first time buyers. Currently interest rates are at historic lows and home prices are also extremely low creating an opportunity for first time buyers to enter the market. The drop in prices is in part attributed to the glut of foreclosed and abandoned homes, which makes many buyers wonder how they should go about purchasing one of these homes. Two common scenarios in which these types of homes are purchased are either through short sales or REO purchases. While there are differences between the two they also share a key similarity as far as the purchasing process goes. In both cases one deals with the lender, while a short sale may seem like a straight forward means of purchasing directly from a homeowner it can actually become difficult if the primary and junior lean holders do not agree to the short sale, which would then require substantial negotiations. With REO bank owned properties one is dealing with a lender’s REO department, which in many cases is overwhelmed. In both cases one should expect to be patient however the rewards can be substantial because often times both types of properties are listed below market price, with short sales being slightly more expensive than REO’s.