There Ought To Be A(nother) Law

Short sales have been here and are here in large numbers for quite a while into the future. Many lenders are getting better in certain respects about speeding up their responses, even if it's not a HAFA program which does have numerous requirements, in their regular short sales. There can be many aspects and issues in a short sale depending on the bank or servicing company involved, if a notice of default has been filed, if a notice of sale date is already set, if the HOA dues are delinquent, how many lienholders there are, to name a few.

But what is one thing that's going on a lot? Second position mortgage lienholders who are refusing to accept the payoff from the first, and decide instead they would rather have their investors get nothing rather than something. So typically these 2nd lien negotiators, who are probably looking at a computer screen bearing instructions from their bosses, are allowing the entire property to go into foreclosure over a failure of $5,000-$10,000. Many do not want to deal with the HAFA program, due to the few thousand dollars obtainable under that program, nor even 10% payoff offers from the first, so their response is to say they will take nothing rather than something, and let it go into foreclosure, presumably under the belief they will be able to come back and get it later. What many servicers may not understand is that in certain states, such as California, they have no deficiency rights after foreclosusre when the loan was original purchase money mortgage on a principal residence.

And so what do we need? I know we have plenty of laws, but we need another one. We need another law that prevents junior lienholders from obstructing the successful completion of a short sale:

"...passing legislation barring junior lien holders from preventing a short sale and forcing a foreclosure would be wildly beneficial to the heart of America. It would keep homes occupied, free up capital, curb the slide in property values and it wouldn’t cost the taxpayers, or anyone else, a dime."

Also, as Lawrence Belland says on Foreclosure Radar:

"... in 37 other states the investor could accept the offer and still have the right to pursue the deficiency. That’s why forcing the foreclosure doesn’t make sense to me; it defies logic."

Second lienholders always knew they were just that, in second position. They were all too willing to make loans, and others have been very willing to buy them up, based on the continuing inflation in the subprime market. They just don't like to face reality now.
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Interest Rates at Mostly Lowest of Historic Lows--This is Money In Your Pocket

One perspective many buyers and sellers (who are able to sell now) could benefit from right now is the long-term historical perspective to realize just what this point in time can mean for them. While many articles may directly address buyers, the flip side is for the sellers who are looking for the right buyer, and the more buyers that fit in a seller's net, the greater chance each party has for a successful catch . . . I mean, sale!
I could hardly say the following points better, so I'm just going to give you Pat Zaby's post on buying,

You Can Afford to Buy and Haven't...Are You Crazy?

This may be the best buyer's market that we'll see in our lifetimes. There are lots of legitimate reasons why a person should be taking advantage of this market if they are able.
Obviously, if a person doesn't have the down payment or credit score, they won't be able to seize this opportunity. If a person is concerned about losing their job, that would be a valid reason for not buying now. If you are planning on relocating in the next year or two, maybe now isn't the time to buy.

On the other hand, if a person doesn't own a home, has good credit and job stability, they should seriously consider capitalizing on this unique combination of opportunities. A qualified real estate professional can explain all of the reasons and even suggest some very interesting financing alternatives.

Top Ten Reasons to Buy a Home NOW

Interest rates incredibly low – the rates are hovering at near historic lows. Interest rates play a huge part in the cost of housing together with the price and shouldn't be overlooked. The average mortgage interest rates for the past four decades were: 1970's 8.9%; 1980's 12.7%; 1990's 8.1%; 2000's 6.3%. Most experts agree that they're going to rise this year.

Lower Prices - Recent price adjustments have made good values that haven’t been available in some situations for years. Current buyers are able to take advantage of the discounted prices.

Selection is good – In a seller's market, buyers sometimes have to accept a home that may not meet their needs completely because of short supply. Inventories in most markets and certain price ranges are higher which allow buyers better choices.

Negotiate financing concessions – FHA, VA, and Conventional allow the seller to contribute towards financing concessions for the buyer. The money can be used for buyer's closing costs, pre-paid items or interest rate buy down.

Costs for FHA loan going up – Currently, a seller can pay up to 6% of the sales price in financing concessions but the number will be reduced to 3% later this year; the date has not been announced yet. The annual MIP for FHA loans will also probably be going up this year which will increase the monthly payment. Buyers who get in now will pay the lower fees.

Interest and property tax deduction – the U.S. is one of the few countries in the world that allow an interest and property tax deduction for homeowner/taxpayers.

Source of funds with deductible interest - a homeowner can borrow up to $100,000 above their acquisition debt and deduct the interest regardless of what purpose the money is used. This is a great opportunity to consolidate debt at a lower interest rate and be able to make the interest deductible that otherwise may not have been.

Capital gain exclusion – the U.S. allows qualified homeowners to make a profit on their home without having to pay tax on the gain.

Borrowing against equity is non-taxable event – taking money out of the equity in your home does not require recognizing capital gains income.

The combination of reasons to buy a home may never be stronger than now.

Interest rates are going up; it is just a matter of when. Inventories are starting to be absorbed by current demand. New home construction is down considerably which could lead to higher prices due to not enough annual housing units to keep up with the population. Prices have started to climb in some markets; others will surely follow.

A basic rule of investing is to buy low and sell high. There will be some buyers who take advantage of the current opportunities and will look back and remark how fortunate they were to act when they did. There will be others who look back on these conditions and say "We should have bought then." Hindsight is always 20/20. Evaluating the present and acting takes equally clear vision. The help of a trusted professional can make the difference. (reprinted with permission by Pat Zaby; emphases in bold and italics are mine)

In the meantime, the federal tax credit for $8000 is over, and the California tax credit is almost gone, the FHA seller negotiation cap will be reduced soon, but right now, a buyer with good credit will probably get an interest rate under 5% and even 4.5% in some cases, meaning over the life of a 30-year loan, you can save thousands of dollars.

And, most Americans just don't realize this, but this country is one of the few that allows a 30-year loan, most other countries require payment in 1/3 to 1/2 that time.
To easily find properties on the market, go to http://www.juliahuntsman.com/, "Find Properties".

Long Beach Has Several Farmers Markets, Find One Here

Sunday  from 9 a.m to 2 p.m. is a great time for visiting the Long Beach Farmer's Market at the Marina. Held weekly in the parking lot on Sundays, it's got vegetables, hot cooked food, orchids, fresh cut flowers, baked goods, and animal adoption opportunities too. To name a few. Plenty of parking as well. Farmers/vendors come from as far as Riverside and Bakersfield to set up booth every week. Prices are sometimes no cheaper (in my opinion) for some food items than the grocery store, but are a lot fresher and direct to the buyer, and one of the really great benefits is having a great variety of food to choose from.

This particular market is adjacent to the ongoing 2nd+PCH project still being planned and negotiated, so someday the landscape here might look very different with new development, especially across the street. Take advantage of this now and check other farmers markets at Bixby Knolls, Downtown and one at Marina Park on Wednesday afternoons (not on the link), and in the city of Cerritos. And it's BYOB, Bring Your Own Bag.
And, haven't we become so used to foods flown in from foreign countries that we might have forgotten our local growing seasons? See this crop calendar for California.

Long Beach Single Family Houses in May Are in Demand

Single family homes in Long Beach seem to be the one property type showing some consistency in price and numbers of sales recently. At the end of May, the median price of houses currently on the market was up 5% over last May, going from $375,000 to $395,000; while the median price of sold properties was up 28% compared to May 2009. The peak for sold price was in November, not surprisingly, as the initial homebuyer tax credit was scheduled to expire in December. The trend dropped in December, but the median list price and sold price has trended upward since then. Time will tell if the current tax credit extended to April 1, and the extended period to close until September 30, will show a similar peak, or will there continue to be activity?
I keep saying this, but many buyers, especially first-timers, don't realize that low mortgage rates (currently as low as 4.5% paying one point) is actually a price drop on your home. And for condo buyers who are seeing higher HOA fees compared to 5-8 years ago, a lower mortgage rate can make up for higher monthly fees. Plus, the borrower pays much less on the total loan over a 30-year period. See the entire May single family report.
Condos seem to see more peaks and valleys in the last year, with the median price of currently listed condos being down 2%, to $235,000 from $239,000 in May 2009, and the median price of solds is up10%, $200,000 to $220,000, since May 2009, with the overall supply of condo inventory now trending down for the last several months.

Price and Value -- It's Increasing for Southern California Lately

The buyers' tax credit had an effect: There were more sales. And the low mortgage rates are helping (below 5% with paying one point). Per Dataquick, May sales of houses and condos in Southern California were the highest since May 2006: "...what we saw in May was partly driven by government stimulus".  May's typical monthly mortgage on new purchases was approximately $1293 -- do you remember when it was about $2200?--but that's still an increase from 2 years ago. Home flipping is trending higher--current rules require an investor to wait 90 days. Sales volume is up in Los Angeles and Orange Counties in this category, and so is the median price: $345,000 and $450,000. Although houses and condos cannot be compared across the board in all ways, nor can all geographic areas, this seems to be an overall general trend in price and sales. And, buyers who paid all cash account for over 24% of May sales. That's 10% higher than the 23-year monthly average.  This is not news to those buyers who have submitted offer after offer and continually lose out in the median price range. Will this trend hold, and how much had to do with the tax credit, which ended April 30th?
California Association of Realtors reports that April sales (May's report not out yet) for single family homes statewide increased 21% over previous April, to $306,230, but sales volume decreased statewide by 8.1% from prior April for SFRs. From C.A.R. on May 24th, "Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for April may be exaggerated due to compositional changes in housing demand." So, in other words, real estate is local.

Just Listed: Three-unit Property in a Long Beach Historic District

This 1920's vintage triplex is located just inside the Hellman Street Craftsman Historic District at 761 Walnut Ave. The front building has two side-by-side townhome-style units with hardwood floors and Arts and Crafts era tiled faux fireplaces with original built-in bookcases, natural wood. One unit has an updated kitchen. Rear unit is a one-bedroom over garage, laundry room (currently not used) at rear of garage. Very charming private rear yard with patio and gazebo, partially fenced.

Current asking price is $405,000.
Please contact me for more information on this property.