LHOP’s core program is the Financial Literacy course taught by experienced staff members. This course exposes the prospective homebuyer to all aspects of the home buying process and ownership. In concert with this is a income-qualified financial incentive of $5,000 issued to the course graduate as a non-interest bearing 2nd mortgage that doesn’t need to be repaid until the house is sold. This program has been very successful — the 2011 LHOP class schedule is posted here: http://www.lhop.org/buying-a-home/class-schedule.asp . In addition LHOP recently contracted with the county to offer a Fair Housing program that will interact with renters,owners, industry professionals and beyond (this will be the subject of another video in the near future — stay tuned!).

Of immediate note is that LHOP is sponsoring a Home Ownership Fair on Saturday, April 9th at Liberty Place in Lancaster City from 10-3. Read the full flyer here: http://yourlancasterhome.com/2011LHOPHousingFairFlyer.pdf . The Fair will feature a number of local housing process vendors (lenders, realtors, insurance, builders, housing counselors) and a comprehensive set of 30 minute seminars covering important Lancaster County PA homes information (see the itinerary below). There’s no cost for this event and any prospective buyers whether first-time or otherwise are encouraged to attend. Of course, Coldwell Banker will be there…

If you would like more information on the Homebuyer Assistance program or other programs offered by the Lancaster Housing Opportunity Partnership, or more info on the Home Ownership Fair in April, feel free to call them at 717-291-9945 or on the web at http://www.LHOP.org . As always, you can find me at jeff@yourlancasterhome.com.

2011 LHOP Home Ownership Fair SEMINAR SCHEDULE:
10:30am — 10:45am
What’s Happening in the Lancaster County Real Estate Market?

11:00am — 11:30am
The Benefits of Home Ownership

11:45am — 12:15pm
Financing Options for Homebuyers Learn how to Purchase/Renovate at the same time!

12:30pm — 1:00pm
Life as a Homeowner…

1:15pm — 1:45pm
10 Secrets Homebuyers SHOULD Know!

2:00pm — 3:00pm
Aging in Place (practical home modifications, care programs, reverse mortgages)

Visit our homepage for Lancaster PA Real Estate

(c) 2011 Jeff Geoghan

This week I again was dealing with a great-priced HUD home sale in Lancaster City ($57,000 for a 2,300 square foot home on West Walnut) that was generating a lot of buzz.  This prompted me to cut an episode talking about HUD homes in Lancaster County and how you might benefit some day from buying one.

The federal Dept. of Housing and Urban Development acquires properties through the foreclosure process of certain homeowners nationwide.  Once they have these properties, they need a vehicle to liquidate them back to the public.  This is accomplished by breaking the country down into regions and giving contracts to “asset management” companies to administer the sales in assigned regions.  For Pennsylvania and some neighboring states, there are 3 asset management companies.

Now that the asset management companies have properties to market, they hire listing brokers in different geographic areas such as cities and counties.  You can search HUD homes at http://www.HUDhomestore.com, by the way.  Once you find one you want to buy, you’ll need a registered SELLING broker to place an online bid for you.  HUD rules stipulate a 30 day “owner occupant priority” period where only buyers planning to actually live at the property may bid.  Investors (and there are many) are shut out of the process until day 31 for most sales.  HUD does accept FHA mortgage financing on qualifying homes, unlike most other foreclosure listings.

Once your online bid is accepted, the sale proceeds fairly normally to closing.  There is some extra paperwork involved, but the contract is much shorter than the standard contract and since the homes are sold “as-is” there’s no complications with inspections, etc.

Buying a HUD home has never been easier and if the property works for you, the savings may be substantial over a similar privately-offered property.  Email me if you’d like more info or have comments at jeff@yourlancasterhome.com.  Visit my Lancaster County foreclosure website at http://www.yourlancasterhome.com/lancastercountyinvestors.htm. Search Lancaster PA Homes for sale.

I’ve known Steve for a few years now, and he is one of the best analyzers of industry trends and data I know of. Great job on national TV, Steve!

You can see more of his work at www.keepingcurrentmatters.com and http://kcmblog.com

The basic idea is that the buyer and seller write up a contract that allows the buyer to rent the property for a specified period of time, after which the renter/buyer would qualify for a mortgage and close on the home.  During the rental period a portion of their rent payments may be allocated towards reducing the ultimate purchase price.

Positives for a potential home buyer are that they get the home they want now, and have the critical time needed to improve their credit and gather down money.  Positives for the seller are that they get their home “off the market” and can move on with their life.

Negatives – there are unfortunately a lot.  Just a couple I will mention:  The buyer is trusting that the seller won’t go into foreclosure or keep their upfront down money for some reason.  The seller is trusting that the buyer won’t trash the house (or any other rental nightmare scenario) during the rental period, then disappear before the purchase phase.  There can be a LOT of assumptions made in a lease purchase  (or “rent to own”) situation: the challenge is to get them all ironed out ahead of time!  I would almost recommend that a seller hire an attorney for review of the proposed contract, just to make sure as many possibilities are covered in the document.

If you are a potential Lancaster County Lease Purchase or “Rent to Own” customer, feel free to ask me a question at jeff@yourlancasterhome.com.  I’ll see what I can do to help you in your specific financial situation.  Thanks!

Today we take a look about the mailings coming into our homes around the area from mortgage sellers that bear a striking resemblance to an official government mailing, and that purport to offer solutions to homeowners. Don’t be deceived…if you have seen any of these or have comments feel free to comment here or email me at jeff@yourlancasterhome.com.

Got a call from a customer asking about Lancaster County Sheriff Sales – she and her husband want to buy an adjoining property that’s become blighted and is going to sale next month.  I explain how the process works and what the role is of the Lancaster County Sheriff Sale in the foreclosure process.  If you want more detailed info on Lancaster PA foreclosures check out my special foreclosure webpages at http://www.yourlancasterhome.com/lancastercountyinvestors.  Email me at jeff@yourlancasterhome.com if you have any questions.

Regarding a recent customer letter about Sheriff Sales, I thought I’d post my reply for the edification of the deal-hunters in training out there. These are my opinions & observations – give me a call for more detail if you’re interested!

1. Homes at the Sheriff Sale that have value will be sought after by professionals, of which there are about 4-5 at every sale. A good value consists of low outstanding loan balances, good location and acceptable condition. Those houses get bid up pretty high, and it’s absolutely critical to know your margin to a fine degree. The pros bring laptops with each auction detailed with estimated resale, top bid and other notes to help keep everything straight during the sale. You should try to attend the next one to see how things flow. One other thing – you’ll need to research and have at least 5 properties you want to invest in – because at least 2 of those will get pulled just before the sale date (due to a stay issued by the judge) and the pros will get at least 2 others from you…

2. Under a Sheriff or Tax Lien (public) sale all responsibility rests upon the purchaser to handle everything. If there’s a hidden lein or if someone needs evicted, or if there are huge water bills owed, the purchaser gets to deal with it. There’s no help from anyone in a public sale situation.

Bottom line - Public sales are very risky for first-time investors, and should only be undertaken with tremendous prior preparation and thorough funding. Only a very few of my customers ever go this direction in the end. Depending on your business goals, I’d recommend that you try to purchase either:

1) An open-market foreclosure (there are lots more out there these days – I can email you daily updates if you wish). These sales have had the title cleaned by the lender before being re-offered to the public. I sell a lot of these to investors, and the key is to be able to jump on a good one the same day. If the seller decides that there might be some more money to be milked out of a buyer, they’ll immediately announce what’s called a “highest and best” deadline for all interested parties. Again, you need to really know your numbers, be it resale or rental income vs. expenses.

2) HUD resales - every Friday watch www.hooksvanholm.com, which is the PA outlet for gov’t foreclosure sales. Not as much inventory, but the titles are clean and they make it easy. The competition can be fierce because everyone knows about this but once in a long while you can catch an opening and get a deal. The bidding is all done sealed online through an authorized broker (which I am one). Investors have to wait a week to bid but it gives you a few days to do your numbers before placing your bid – a rare convenience in this game.

Hope this helps – let me know what you’d like to go after! I can meet you for coffee some time if you’d like to go over your business plan in more detail.

Everyone out there probably knows somebody who is behind on their mortgage payments, looking for alternatives and likely also just finding out that their home’s value has dipped below what their loan amount is. I know some within my own personal circles. It’s a tough situation for me to advise them as a professional because it’s such a personal challenge to their pride and self-worth, not to mention their plans and dreams for the family. The question we’re asking is “when is this going to stop and where are we heading?”

I’m going to put up a few graphs that show the trends nationally with regards to mortgage delinquincies:

This chart is by quarter – Single-family mortgages set a new record delinquency rate in the second quarter of 2009, according to a quarterly survey by the Mortgage Bankers Association. Those of us in the real estate business see the foreclosure process (just visit the local Sheriff Sale docket to see the current numbers) but the looming delinqency-to-foreclosure issue is far, far larger.

The Wall Street Journal on 8/3/09 reported the following quote: “While subprime mortgages sparked the first round of housing problems two years ago, now “troubles are lurking further up the food chain,” says Joshua Shapiro, chief U.S. economist at MFR Inc. White-collar job losses have accelerated while more adjustable-rate loans to prime borrowers are resetting to higher payments. ‘You put all that together, it leads me to believe that the next leg down on home prices is going to come from the top,’ he says.”

The first objection someone may have would be to say “yes, but historically those who are delinqent usually get their act together and come current on the mortgage after a while”. That WAS true, but not anymore! We call that the “Cure Rate”, that is the rate of delinquencies that go back to current. The Wall Street Journal reported on 8/24/09 about a Fitch analysis that found that the Cure Rate from 2000-2006 was 45% (which means about half of people fix their delinquency). However, as of July 2009 the rate had dropped to just 6.6%! That means that over 90% of delinquent customers are going to foreclosure. Take a look again at the above chart…

The next thing someone will say is “well, that’s the ’sand states’ and not my area”. Here’s the chart for all 50 states showing the same breakdown of delinquencies and foreclosures. Guess what – most states have a significant problem, especially compared to historical figures.

Now the next thing someone may say is “aren’t those loans going to get ‘fixed’ by a loan modification?” I know several people right now who are applying for a Lancaster County loan modification but are waiting and waiting. I hope it works out for them…

In reality, loan modifications are hardly making a dent. To me, that’s a burning question. Why arent banks being more aggressive in giving customers the option to extend their loan and/or reset to a lower rate? Why are they being SO difficult? The people I know don’t want to be foreclosed. They CAN make payments. They just need the terms redrawn to allow them to catch & keep up. Loan modifications are not helping us get this crisis under control.

What are the causes of all these delinquencies? Here’s a chart that is enlightening:

We hear a lot about adjustable rate mortgages being the culprit, but the reality is that it’s the loss of jobs and the tanking real estate market that’s the perfect storm. See my previous post on unemployment in the nation, the state and Lancaster County.

Keep in mind, this post is not intended to give us “good news”. You may be experiencing good things in your market and that’s great. My intent is to get us thinking about the challenges that aren’t going away and how we’re going to address them as homeowners, agents and professionals. I’d love to hear your ideas!

Overall, we had a good month!  Pendings and Closed home numbers are way up.  New listings held steady, which we really needed to keep the supply down as long as possible while sales crawl back up.  I’m particularly happy to the see the prices coming down (correcting slowly).  After many months of higher average days on market for sold homes, the number came sharply down to 2008 levels.  All good!

I tried to highlight the same timeframes for the last 2 years so you can see the curves.  For example, last year the sales were already tailing off after peaking in June 2008 (pink line).  This year, although far off 2007 levels, the home sales numbers are behaving more “normally”.  The big question is “what will happen in the fall?” when the bottom fell out last year…

My two little bubbles show my thoughts on the average new listing an ultimate sales prices – the Seasonally-adjusted numbers (12 months rolling average) are both on the decline, in my opinion nicely correcting downwards.  Overall, countywide, we’ve only seen less than 10% average price declines in sold homes.

Let’s look to see how September shapes up – I’ll be posting that one pretty soon since I’m interested to see what happened!

On another note, Sheriff Sales in Lancaster County are up 20% over 2008 (as of the already-posted November sale).  Where will that go?