Real Estate Journal Online

More people are opting to rent instead of own their homes than ever before, but that does not mean that the “American Dream” of home ownership is dead. Would-be homeowners are just looking for a different path to that end, according to a recent survey conducted by a San Jose-based real estate company [1]. The company used a series of keyword-based ads and surveyed respondents. “The ratio of prospective tenants who are interested in lease-to-own programs versus rental are eight to one,” the firm reported.

Although any number of experts are predicting that traditional home ownership will continue to decline for years thanks to credit damage, hits to savings and general unease about home ownership [2], these results indicate that interest in home ownership has not necessarily declined. Would-be homeowners simply are looking for other routes since for many, conventional financing, for example, is out of the question.

Would you consider doing lease-option agreements with your tenants, or do you prefer to keep your rental properties as cash-flow investments?

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Let us know what you think of lease-options in the space below.

[1]http://www.prlog.org/11515358-real-investor-tips-experiment-shows-high-demand-for-long-term-lease-to-own-from-renters.html
[2]http://www.eastvalleytribune.com/money/article_a6531ff6-8be1-11e0-a550-001cc4c03286.html

More real estate investors than ever are lying in order to buy houses, according to a recent Fraud Risk Report from Interthinx [1]. According to the report, occupancy fraud risk, which means that the borrower claimed to live in a home in order to get a mortgage or get better terms on a loan, was up 25 percent in the first quarter of 2011. Additionally, there was a dramatic rise in employment/income fraud risk, with five metropolitan statistical areas (MSAs) showing increases in this risk sector of more than 70 percent [2]. Employment/income fraud involves providing misleading information about one’s employment or income.

“Risk is becoming more prevalent across the board,” said Kevin Coop, Interthinx president. He advised lenders to adhere to “strict prefunding fraud detection policies…to keep fraudsters at bay” [3].

Given how important it is to get houses off the market, do you think that lenders should ease up on occupancy requirements?

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Let us know what you think about occupancy fraud – is it really a problem as long as people are buying the houses? – in the space below.

[1]http://www.housingwire.com/2011/06/01/interthinx-risk-index-shows-occupancy-fraud-rose-25-in-1q
[2]http://nationalmortgageprofessional.com/news25396/occupancy-fraud-rise-nationwide-according-new-interthinx-report
[3]http://www.businesswire.com/news/home/20110601005688/en/Report-Reveals-Disturbing-Jump-Occupancy-Fraud-Risk

If you can’t sell it, rent it! That is becoming the mantra of many successful real estate agents around the country who are finding that while the home sales market is a tough one with downward-spiraling commissions and buyers who just can’t finance traditionally, the rental market is starting to boom [1]. In fact, many agents are reporting that their rental clients are often prosperous people who have “one or two houses” already that they just cannot sell, but want or need to change homes without taking on the obligation of an additional mortgage. “I know we’d be selling a lot more houses if people could sell their houses in other parts of the country,” explains one agent, adding that renting will work just fine in the interim.

In Florida, census data indicates that nearly 25 percent of properties in many areas are being rented rather than purchased by the current residents [2]. In fact, many investors are moving into that market, purchasing homes and renting to tenants who have made verbal and sometimes even contractual agreements to buy sometime in the future. People are “renting at this point to see what happens,” explains one investor, who believes that clients will buy when they think that the market has truly hit bottom and the prices won’t get any better or that they will buy when the job market improves and they are not worried about having to move for work.

Either way, the trend for investors is definitely to own cash-flowing rentals at this point in time, and for would-be buyers to “test the waters” by renting first. Are you involved in rental real estate investments?

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Let us know what you think of renting first, buying later in the space below.

[1]http://www.nwcn.com/home/?fId=122913293&fPath=/news/local&fDomain=10222
[2]http://www.wptv.com/dpp/news/region_c_palm_beach_county/west_palm_beach/rental-market-much-more-appealing-to-potential-buyers

Asserting that “the men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully,” the U.S. Department of Justice reached an agreement with Bank of America and Saxon Mortgage that will require BofA to pay $20 million to resolve the lawsuit and Saxon Mortgage Services to pay $2.35 million [1]. Both lenders will also compensate military members who were wrongfully foreclosed on during active duty and provide employees with additional SCRA training to help prevent future mistakes.

Only a federal court can authorize a foreclosure on an active duty military family serving in the Iraq/Afghanistan area [2]. Neither lender notified the military or state courts about foreclosure actions. Both lenders will reimburse families in addition to paying fines and have promised to “inspect bank records of any other active duty military families affected by the corporations’ illegal actions.” Not surprisingly, much of BofA’s troubles in this settlement stem from Countrywide violations. BofA acquired Countrywide in late 2008.

Do you think this settlement will benefit military members or is it too little too late?

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Let us know what you think of this ongoing saga of Countrywide-related troubles for BofA in the space below.

[1]http://www.dsnews.com/articles/justice-department-settles-with-servicers-over-wrongful-military-foreclosures-2011-05-31
[2]http://newslincolncounty.com/?p=25245

Although April historically has a high increase in loan delinquencies, this year there were fewer new problem loans during this traditionally problematic month [1]. According to a report released by Lender Processing Services (LPS), although April’s increase in delinquencies was, as predicted, the largest yet, the number of delinquencies was more than 25 percent less than was seen at peak in January 2010. Furthermore, new problem loans are currently at 1.28 percent, which is a three-year low, and foreclosure starts are down nearly 31 percent over March of this year.

Also of note are changes in foreclosure timelines. At the end of April, LPS showed that the average loan in foreclosure was 567 days past due – more than two years [2]. More than a third of loans in foreclosure have not made a payment in over two years.

Do you think that this massively extended foreclosure timeline is a problem?

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Let us know what you think about April’s numbers in the space below.

[1]http://nationalmortgageprofessional.com/news25372/lps-report-finds-season-increase-delinquencies?
[2]http://www.cuinsight.com/456/medianews/lps_mortgage_monitor_report_shows_seasonal_increase__in_april_delinquencies.html