What the Foreclosure Freeze Means For You

Q: How have California mortgages been affected?

A: So far, BofA is the only lender with a moratorium that affects California. Other lenders, including Ally Financial and JP Morgan Chase, have halted foreclosures in the 23 states that require a court’s approval before a home can be seized. California is not one of those states. But Attorney General Brown has called for all banks to stop foreclosures until they can prove they’re complying with state law, which prohibits lenders from recording notices of default on any mortgages made from 2003 through 2007 unless the lender contacts or tries diligently to contact the borrowers to see if they qualify for a loan modification.

Q. What effect will this have on the housing market? And what does this mean to people who want to buy a foreclosed home?

A. Foreclosure sales currently account for 43 percent of the California market, according to RealtyTrac, a real estate data firm in Irvine. To the extent that these problems begin to show up in California, it could put a temporary roadblock in front of a sale. One problem: title insurance firms are shying away from any sale involving a questionable foreclosure. But real estate analysts say that as long as the problem is solved quickly - say, 60 to 90 days - it should have relatively little impact on the market. Rick Sharga, RealtyTrac's executive vice president, said he's noticed little impact from the moratoriums that have recently gone into effect.

For more information, please don't hesitate to shoot me an email or give me a quick call! I'll be happy to talk with you about what this means to you as a buyer, seller or distressed homeowner!

A New Way To Buy a Home At a Discount!

The buyer's market may have just got better for you.

To pare down their growing inventory of properties, Fannie Mae and Freddie Mac are scrambling to unload nearly 150,000 foreclosed homes. And that means 2004-esque deals – like requiring as little as 3% down, offering to pay a portion of the closing costs and arranging special financing and warranties for repairs and renovations.

It's another option for home owners who want to trade up -- and an easier way into the market for first-time home buyers, says Dean Baker, co-director of the Center for Economic and Policy Research who studies the housing market.

The downside: Angry neighbors. Many realtors say these types of listings are devaluing nearby properties. They state that in some areas where Freddie and Fannie homes are on the market, buyers could find a better deal on a nearby market-rate home that doesn't require repairs, he says.

Buying a Fannie or Freddie home can be more complex than pursuing an open-market real estate listing — or even a commercial bank foreclosed property. There’s a smaller selection of appealing and those tend to sell the fastest. And there's little room to negotiate price.

"Our goal is to recover as much as we can to offset our loss and not to be low balling properties just to move them,” says a Freddie Mac spokesman. “We absolutely have no motivation to be leading a downward spiral in home prices.”

The three best features of Fannie and Freddie foreclosures that may make digging for these deals worthwhile:

1. Small down payment

For its foreclosed properties, Fannie Mae will accept down payments as low as 3% on 30-year mortgages at the same interest rates banks are currently offering. And Fannie Mae doesn’t require private mortgage insurance. Compared to a typical bank mortgage, which requires 10% down, plus PMI for buyers with less than 20%, that’s a huge savings – an estimated $51,000 up front and upwards of $2,500 per year PMI on a $300,000 mortgage.

It's a tradeoff, though. For buyers with 20% down, mortgage payments on a 30-year mortgage loan at 5% would be $1,288 a month. With just 3% down, the buyer would need to borrow $291,000 and make a $1,562 monthly payment.

2. Help with renovations

Fannie and Freddie have fixed big flaws like leaky roofs and damaged electrical work, and they often handle small projects like replacing appliances that are broken or missing, tearing up old carpet, or fixing other damage left by former owners or vandals.

Now, to entice buyers who want to update or upgrade, many of Fannie Mae's properties come with an optional mortgage that includes extra financing up to $30,000 for repairs and improvements. But with a little down payment and the extra amount tacked on, the buyer could end up owing more than the house is worth – especially if home prices continue to drop.

3. First dibs

Buyers who plan to live in their Freddie Mac-purchased home will get to see properties for at least the first 15 days they’re on the market -- before the listing opens to would-be landlords. Many bank-owned foreclosure properties are snatched up by cash-stocked investors who can wait out the downturn to sell later at a profit.

And Fannie and Freddie homes can be seen inside and out -- unlike some regular foreclosure listings. Consider bringing along a contractor when you view the home to help spot areas that need repairs and provide pricing. (Most contractors will do this for free.)

“It gives families who want to buy a home to live in the opportunity to look and bid without competition from cash-rich investors,” says a Freddie Mac spokesman.

Taken from: How to Buy a Home at a $100,000 Discount - Personal Finance - Real Estate - SmartMoney.com Read more: http://www.smartmoney.com/personal-finance/real-estate/tips-on-buying-a-home-at-a-100-000-discount/?page=all##ixzz11VYT6DJq

First-Time Buyers! New 30-Year Mortgage From CalHFA!

If you are a first-time buyer, or if you haven't owned a home in the last three years, this may be your opportunity to shop the LOW prices in the market today!

The California Housing Finance Agency (CalHFA) announced this week the launch of a new fixed-rate, 30-year, FHA-insured mortgage program for low- and moderate-income home buyers.

CalHFA provides financing and programs for low- and moderate-income Californians. The program announced this week enables qualified, first-time homebuyers - defined under federal law as not having owned and occupied a home for the past three years - in California to receive a 30-year mortgage with a fixed interest of approximately 4 percent.

Borrowers are eligible to use the California Homebuyer’s Downpayment Assistance Program, which can provide up to 3 percent of the purchase price of the home for down payment or closing costs.

In addition to being a first-time home buyer, borrowers also must meet income limits, which vary by county and family size. Call me to see if you qualify. Borrowers also must purchase homes within FHA’s loan limit and CalHFA’s sales price limits. Mortgage loans are limited to $417,000 under FHA guidelines, while CalHFA’s sales price limits vary by county.

Additionally, borrowers must meet the minimum credit score requirements and maximum debt-to-income ratios and complete a HUD-approved home buyer education program.

For more information on whether or not this new CalHFA program can help you with your first-time home purchase, contact me!

Scam or Savior? Short Sale Negotiators

When an agent lists a property as a short sale, it involves working many long hours on very thick files. Since many agents do not know the proper protocol for handling short sales, this need was filled with a middle man: enter the "short sale negotiator." If you don't know a Certified Distressed Property Expert, how do you weed out the good from the bad?

Licensing: All negotiators need to be licensed real estate agents and their license number should be displayed. Don't let them tell you that they don't need a license to negotiate debt forgiveness, or to process paperwork. That goes for any agent who is handling your short sale.

Compensation: Your agent or negotiator should not hit you up for money before performing any services. Real estate agents get paid when the deal is closed. No close; no paycheck. If you are a buyer and a negotiator asks for compensation, say no and go look for another house. Trust me, you don't want to get into a contract like this!

MLS Issues: If you are a buyer and the listing agent of the property you want asks you to pay for the short sale negotiator, that may even be against MLS rules. I would find another property if I were you.

Track Records: It's usually a good idea, right? In this case, the short sale negotiator scammer may be very good at making up what the bank wants to hear about the sellers they represent, so their record may look impressive. Sure, they've closed a lot of deals. But are they ethical?

Short Sale Flips: I'm not against flipping. I've done a few. Buyers are happy, the contractors I hire to do repairs, carpet and paint get work, and I make a small profit. However, some bad eggs are using short sales to make big bucks. They arrange to have a "buyer" bid on the property at a very low price and do not show the seller or the bank any other real offers. The "buyer" buys at that very low price, and the negotiator and his "buyer" partner turn around and sell the property for a higher price. That stinks.

A Final Word! If you are in the distressing predicament of having to unload your property for less than you owe, the only way to be sure you are being taken care of in an ethical and legal manner is to hire a REALTOR who is also a Certified Distressed Property Expert. These professionals, of which I am one, have gone through training on how to take a seller through the process of getting their home sold so they will not have to go through the devastating effects of a foreclosure. I have personally helped many sellers in this position. Is it a lot of work? You bet. However, as long as there are sellers who need my expertise in this area, it is my mission to help all I can, despite the thick files and long hours needed to get these escrows closed satisfactorily.

Looking for Work and Behind on Your Mortgage?

California Housing Finance Agency (CalHFA) to the rescue!

The U.S. Treasury Dept. announced that it’s providing additional funding to a California program to help homeowners struggling to make their mortgage payments due to unemployment. The program will assist struggling borrowers make up to six months of mortgage payments. Lenders will be asked to match the government contribution.

KEEP THIS IN MIND

• The program aims to help 19,000 unemployed borrowers in California between its November launch and next July. An additional 23,000 borrowers will receive help over the next two years, according to CalHFA estimates.

• To qualify for the program, borrowers must be unemployed and eligible for unemployment benefits, and live in the home tied to the mortgage. Borrowers must be fewer than 90 days behind on mortgage payments and meet low- and moderate-income guidelines. Income requirements can be found at http://keepyourhomecalifornia.com/income.pdf.

• CalHFA is focusing on providing aid to unemployed borrowers struggling with purchase loans, excluding refinanced loans. According to CalHFA officials, it is too difficult to decide who “cashed out for a good reason and who didn’t.”

• More information about the CalHFA program, including eligibility, program summary, income requirements, and frequently asked questions, can be found at http://keepyourhomecalifornia.com.

Be sure to call me if you have any questions!

To read the full story go to: http://www.sacbee.com/2010/08/12/2953229/42000-of-californias-jobless-will.html

Part 2: Ask Yourself: Rent or Buy? Can You Really Afford This House?

In my last post, we saw that owning a home is generally a good thing for individual finances in the long run, even if only slightly. As a homeowner myself, there is also the relative security of knowing my landlord won't up and sell my home out from under me or raise the rent! Though homeownership carries more responsibility, for myself, it just feels good to have my home be .... well, my home!

To be sure, the recession illustrates that renters need to consider not just their desires, but also their financial realities before purchasing a home. Buying a home is a big financial responsibility - the biggest one you will ever make - and one that protects you against those rent increases. A home represents stability, the place where you want to settle down for at least five to seven years and raise your family, if you are inclined. Bottom line: You don't want to take on more square footage than you can maintain and enjoy.

Still not sure? This simple online survey (www.bankrate.com/calculators/mortgages/rent-or-buy-home.aspx) can help and so can your financial planner.

And when you are ready, of course, seek me out, Your Personal Realtor!

www.car.org/newsstand/crem/current-issue thank you to Paula Hess, senior editor of California Real Estate Magazine.

Ask Yourself: Rent or Buy? Part 1

Sixty-five percent of Americans prefer owning a home versus renting. Is this just some leftover remnant of "the American dream?" Is it a romantic notion, or can it make financial sense, as well? Is the time right for your family?

With all of the foreclosures, fragile economy and fear about where to put one's investment dollars, the question about whether it is good for your pocketbook is more important than ever.

You've heard "there may never be a better time to buy," what with home prices and mortgage rates at near historic lows. But the reason to buy should have more to do with you and your family's situation than with the market. Yes, prices are low - really low, but tighter lending requirements have made it harder to qualify for a home loan. Bottom line: You'll need a larger down payment and a higher FICO score.

Interestingly, declining home prices have made the differential between buying and renting - significant in years past - minimal in some regions. However, with a cash downpayment, buyers may be able to save an average of $100 per month paying a mortgage over rent for a comparable property.

Of course, homeowners qualify for tax breaks, most notably the mortgage interest and property tax deductions. A general tax benefit-analysis reveals that a buyer purchasing a median-priced home with 20% down and a 30-year conventional mortgage looks to save over $500 per year on taxes. Not a huge amount to be sure, but homeowners will take it, along with the knowledge that their payments can be building equity and not just going into the pocket of a landlord!

In Part 2, we'll look at the second consideration: Can you really afford this house?