Watchout for Your Homeowners Association

Homeowner associations are foreclosing on properties to recoup the delinquent fees. They are also buying these properties at pennies on the dollar.

To hear more click here…

Be careful if you are trying to do a loan modification or a short sale. Make sure you or your Realtor is in contact with them and you are either setting up a payment plan, keeping the dues current, or negotiating a payoff at the close of escrow.

You might need my help. Feel free to call me if you have questions regarding a loan modification or doing a short sale on your home.

Are There Investment Opportunities Out There?

Yesterday I spent the whole day in a room taking care of my civic duty on Jury Duty. It was a slow day with only one group called. While on lunch I went by the court steps to watch the Trust Deed Sales taking place. A group of about 7-15 are usually present bidding on foreclosed homes. One property came up that I watched. The bidding was 1.2 million, and it went up from there. I watched as the price went to 1.225, 1.226, and finally sold for 1,226,500. Now, I had to ponder on that a bit. In order for a buyer to purchase this home they had to show the moderator cashiers checks for at least the amount of the opening bid plus any extra that they would bid over. So, are there opportunities in real estate right now? And, are there people taking advatage of these opportunities? Well, I’d have to say yes when I see money flying like that! Somebody bought a 1+ million dollar home to flip, move into, or maybe rent out.

Imagine that…

More Relief on the Way for Californian’s in Distress

The administration will be sending 699.6 million to California to be used to help distressed homeowners. The money might be used to reduce principle and to help with delinquent loans. With Notice of Defaults still at an all time high and the latest figures throughout the nation showing a 30+% drop in homes sales for the month of May, many homeowners are now getting discouraged. Strategic defaults are on the rise as homeowners decide that their homes have become a bad investment.

Short sales will still continue although they seem to be snarled by the HAFA program at this point.

Stay tuned….

Bank of America Takes the First Step to Principle Reduction

It looks like Bank of America, notorious for slow short sale approval, is taking the first step to reducing principle’s and restructuring distressed loan’s. Letters have been mailed out as part of a test program. Great news, since more and more homeowners are deciding it’s not worth a loan mod if the property has devalued so much that it would take years to gain enough equity to bring the loan/equity balance back to just even. Strategic defaults have been on the rise nationwide and this could be a great step to keeping distressed homeowner’s in their homes.

There are guidelines to this program which include the loan balance must exceed the property value by 20%. Not too hard these days.  Soon after Bank of America unveiled its plans for earned principle forgiveness modifications, the Treasury Department announced a similar principal reduction concept as an enhancement to HAMP. That piece of the federal program will become effective later this year and may be considered for a broader range of loans.

Too learn more about the program, click here…

A great start to a massive problem.

Have a great day!

Will Short Sellers be able to buy a home soon?

In recent weeks I’ve been hearing more and more information on the amount of short sales that will be coming out and the word “Strategic Defaults” pops up quite a bit. These are properties that are underwater when it comes to equity, and even though the sellers can afford their present loans, they are looking at it as a bad investment. Data is coming out stated that some areas will take 7 to 10 years to recover the equity lost in their homes.

This brings another question to mind. With all the short sales, REO’s, and loan modifications taking place, what is happening to the credit scores of the American public. People who have had good credit all their lives are ending up with low credit scores which could stop them from buying a home for somewhere between 2 to 7 years depending on which route they choose to liquidate their bad asset.

Cary Sternberg, president of Excellen REO states “Unless something is done to allow these qualified buyers back into the market sooner than 2-7 years, who is going to buy the REO, short sales and deeds-in-lieu after we go through all of the first time buyers?”

Let’s see now, we’ve supposedly overhauled our healthcare, we taken the educational loans away from the banks and turned them over to the government, so how about changing the system that allows us to borrow money? Is it time for a “Credit Overhaul?”

Surely the FICO score system is something we all understand, right? I do know that if a seller goes through a short sale they do get dinged hard on their credit. Not as hard as a Foreclosure, but it will stop them from buying another home for at least a couple of years. Maybe it’s time that the banks look at their system and revamp it. Unless we can allow people to purchase homes in a normal “qualifying” fashion, we will not see home prices climb.

As with my property management division, we now look at FICO scores to see what went on prior to the loss of a home. Most applications coming in have very low credit scores. But instead of just looking at the numbers, we look at the history of payments. Were their payments on time prior to the foreclosure? Was the car payment paid, utilities paid, credit cards paid? And if the only bad credit had to do we a loss of a home whether a short sale or foreclosure, we will accept the renter. Maybe underwriters will have to start looking at the big picture again instead of just the 3 scores.

Thinking of Remodeling Your Home This Year

Some people through all the turmoil in the market are actually looking to do some remodeling on their home this year. If you are one of those take note, the current administration wants to help you. There are various and many tax credits available if you are doing any kind of energy-efficient upgrades. I would advise you to take a look and take part in this. Here is a list of the upgrades that are considered energy-efficient and qualify. Click here…

As always, consult with your tax accountant to make sure your are getting full advantage of these credits.

Have a great day….

New FHA Guidelines coming soon…

If you’re a homebuyer that is looking to purchase a home using an FHA loan, and many are, you better move quickly. There are new guidelines that will be taking place in the next few months that could drastically change your buying power.

“FHA said Wednesday that it is raising homebuyers up-front costs for mortgage insurance, tripling down payment requirements for borrowers with low credit scores, and cutting seller concessions in half.” Click here for more details…

FHA is also changing the down payment requirements for buyers with a low credit score. The normal 3.5% down is going to jump to 10% down for borrowers with credit scores below 580. This guideline will begin in early summer.

If you are looking to purchase a home this year you might be best served by getting out and starting to look as you will want to take advantage of the present guidelines before they change.

Tax Credit Extended! Also Move Up Buyers

The Obama administration has extended the $8000 tax credit. Great news for first time buyers and now some move up buyers. Some changes have been made to income limits but for the most part it will provide the $8000 credit to first time buyers through April 30, 2010. As long as you are under contract the before the April 30 deadline you will have until July 1, 2010 to close escrow.

The other tax credit that was added is a $6500 credit to move up buyers which also ends on April 30,2010.

I have attached a easy to understand form from the NAR showing the income limits and more regarding the credit. Click Here…

To know how this credit will effect your situation I always encourage you to call your tax attorney or CPA. Everybody’s financial situation is different.

Have a great day…

Sell Short Sale, Buy a Home?

I recently have heard of a few lenders that are giving loans to sellers that are selling their home by means of a short sale and then buying a new home concurrent on their sale. Never heard of, but starting to happen. The main requirement in this is that the seller remained current on their mortgage payments through the short sale. Of course there are other stipulations. I remarked on earlier blogs that the question comes up when I do short sales regarding continuing to pay the mortgage. A couple of years ago lenders would not talk to sellers if they were current on their payments. But things have changed. They will do short sales on properties even though the seller is current on their payments. As long as a hardship exists, usually meaning that at some point down the road, the payments will likely stop due to the hardship.

This could be the start of many lenders allowing  borrowers to sell short sale and then buy again. This would help them financially get in tune with their new income limits and still retain homeownership.

Let’s keep our fingers crossed….

California SB 306 Misinterpreted Regarding Short Sales

Recent Legislation SB 306 was enacted which requires the beneficiary of a note to respond to the demand in 21 days regarding a short sale. The new California law, which addresses certain escrow procedures, has been mischaracterized by some practitioners as landmark legislation calling for a 21-day turnaround for short sale approvals.

The new law inserts a short payoff amount request into the existing payoff demand law which generally requires a lender to respond to a request for a payoff demand statement within 21 days from when it is requested, typically by escrow.  The new law essentially requires, after a short sale has already been approved, for the lender to respond to a request for a short-pay demand statement within 21 days.

You can read the entire bill here.