Number of FHA Qualified HOAs Falling Drastically

This afternoon I was sent a list of FHA-approved condominium complexes for Long Beach.  They now currently number 34, with two approvals expiring in April, leaving 32 for all of Long Beach.  This is a huge reduction in number compared to a few years ago--these approvals are dropping off for two reasons: HOAs don't realize the requirements have changed or that their approval has expired and that they must renew again, or the HOA complex's financial circumstances don't currently meet FHA guidelines.  But I believe many complexes fall into the first category.

If you are an HOA member, or know someone who is, think about this: If your complex is not approved for FHA-HUD loans, you greatly reduce the number of approved buyers who can bring an offer, thus probably delaying the selling date of your property.

If you are a buyer with an FHA approved loan (especially one being used with certain buyer assistance programs), your selection is now greatly reduced because you simply will not be able to buy in a non-FHA approved condominium complex.

Property owners, you should take active steps to look into this issue.  With today's loan qualifying requirements, FHA loans are accessible for many 1st time and repeat buyers, and in the future they will become even more critical as former owners of distressed properties re-enter the market.

So you think you're going to keep living there, and it doesn't matter?  What if you would like to get a reverse mortgage?  They require your complex to be FHA approved.

Yes, there are lenders willing to qualify your association during escrow, but don't wait until then--it's a much longer process, and the buyer could decide to find another property.

Or the alternative is, if you're a buyer, be prepared to use a lender not of your choice, but one of the few who can give you a similar loan without needing to go FHA. In that case, call me, and I can send you to the right place.

But owners, remember, there are still FHA approvals required for reverse mortgages, therefore contacting your Board of Directors should be at the top of your agenda.

Positive News in the Long Beach House Market

LB market up in some areas

While it's certainly not true everywhere, the coastal area news is surprisingly up!

Comparing February 2011 to February 2012 in 90803 zip code, there's a huge increase in sales prices! and a huge decrease in the listing supply, and a (huge) increase in pending and closed sales.  Average sales and median prices comparing the two February periods increased by 63% and 41%!

And when comparing the average 90803 sales price over the entire year period, the average sales price increased from $717,997 to $724.188.

This exact same price scenario is not true in all areas, however, but in general it is true throughout Southern California and elsewhere that sales activity has increased greatly, and listing inventory has decreased.

In the 90807 area (Bixby Knolls, California Heights, etc.), the median and average sales prices have increased for the February year comparison period by 16 and 17%, but is down 5-7% when looking at the entire last 12 month period, wtih a 20% increase in closed sales. Again, listing inventory is down by 37%.

Low interest rates are helping to fuel the march towards more buyers finally getting into the act of buying.

If you know of someone thinking of selling, is now the time to start making that move?

For a similar report for your area in Long Beach, Lakewood, Cerritos, Bellflower, San Pedro, Cypress, Seal Beach, Huntington Beach and many other cities in Los Angeles and Orange Counties, just contact me via e-mail or phone!

See more news: Local Regional Market Report--March 2012 -- and check out the 1-Minute Newsletter tab above.

The 5 Best Home Improvements Projects in Southern California

It's should be no surprise that costs have gone up, but important to know is that the 9-year trend shows a downward cost-value ratio. But still, the Pacific Region in the 2011-2012 Cost vs. Value Report states, "In Pacific Region markets, the high cost of remodeling is more than offset by high values at resale, giving it the highest average cost-value ratio (71.3%) in the country."  And, overall, the report puts the top 10 projects nationwide as giving a value between 69-78%. 

Remodeling Magazine: Regional Comparison

Sellers, at this point, please take note that 1) because you put in a $40,000 bathroom remodel doesn't mean the value of your house went up $40,000, and 2) taking care of deferred maintenance projects, unless a large remodel/upgrade is the replacement, does not add a higher price tag to your home.

And, keep in mind that a low-cost re-do of $3000-$4000 can often be enough to prepare a property for sale, i.e., low-cost kitchen fix-up, vs. spending $19,000+.

Nationally, siding, window and door replacement projects were in the top 10, because certain costs have actually decreased, and also because they are under $19,000. Garage door replacement is now 6th in popularity (it was 13th in the past), and is 15% cheaper than a few years ago. Vinyl siding and vinyl window replacements are also in the top 10.  With remodel projects, adding an attic master bedroom/bath continues to rank in the top 10.  With single-story houses that were originally a two-bedroom/one bath, going up to add more living space has gotten high marks.

For the Pacific Region including California, the following are the top 5 value projects:

1. Minor kitchen remodel stands out at retaining 91% of its value ( replace: cabinet fronts with new raised-panel wood doors and drawers, including new hardware;  wall oven and cooktop with new energy-efficient models; laminate countertops; install midpriced sink and faucet. Repaint trim, add wall covering, and remove and replace resilient flooring).
2. Garage Door replacement -88%
3. Entry Door replacement - 85%
4. Deck addition - 81%
5. Window replacement - 81%

Places to look  for contractor sources may be at local tile and kitchen shops, local area classified ads, online directories, and of course, referrals from friends.

What to Know about the Mortgage Settlement with 5 Major Servicers

The Road to Solutions

The $25 billion proposed settlement with five major banks/servicers has not yet been approved by a judge. However, assuming it is as proposed, Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial will agree to stop the practice of robo-signing, to change their loan modification procedures, and to not foreclose on borrowers who are being considered for a loan modification. A single point of contact and adequate staff to handle consumers are also to be established by each bank. Approximately $20 billion is to go to those facing foreclosure--principal loan reduction and refinance--and $5 billion goes towards settling with consumers who lost their homes due to improper foreclosures between 2008 and 2011. Part of the settlement agreement will result in new requirements for short sales, which is supposed to speed them up and eliminate the often lengthy delays. A fact sheet describes cash payments to borrowers who went through foreclosure.

This settlement is not yet finally approved by a judge--a 4-page executive summary describes key points of the current proposed settlement.

It's important to know that FNMA and Freddie Mac loans are not included in this settlement, and that over half the loans in California in recent years are held by them.  To find out, go to their respective websites and use the Loan Lookup Tool.

California's Attorney General obtained $18 billion specific to California for benefits, and amounts allocated to counties.

It will probably take another 6-9 months for banks to reach out to owners they believe fit into this settlement, and the banks are given 3 years to fully execute the settlement.  As of March 16, Katherine Porter, a UCI Law professor, has been appointed to oversee the California settlement.

Borrowers may call the contact numbers below, but be aware information right now may be incomplete because the administration of this program has not yet begun.

• Ally/GMAC: 800-766-4622
• Bank of America: 877-488-7814
• Citi: 866-272-4749
• JPMorgan Chase: 866-372-6901
• Wells Fargo: 800-288-3212

If you or someone you know is unsure of your best option, the first thing to understand is that a refinance, loan modification, short sale, deed-in-lieu or foreclosure is a "waterfall" to be taken in sequence.  The borrower, to be successful, must spend the considerable time required and be prepared to gather the necessary documentation regardless of which option you work with--this cannot be stressed enough.  While contacting banks was a very frustrating and confusing process just 2 years ago, major servicers are much more streamlined, and now with this Settlement, face even more requirements to help borrowers.  Each servicer now has information on their websites about short sales, deeds-in-lieu and foreclosure, and a very informative and useful one is found at www.bankofamerica.com/hometransition .  Think twice before choosing the ultimate option of foreclosure without checking out the others first, and do this at the earliest possible date.  Additional resources are at http://www.juliahuntsman.com/homeowner-property-assistance.html

The borrower is also strongly advised to reach out to an experienced Realtor professional, legal and/or tax advisor, to reduce the time spent in this process and to have an important resource to guide them.

Website on the Settlement:  http://www.nationalmortgagesettlement.com/help

Which is Better, A Longer or Shorter Turnaround Time For the Distressed Owner? Or, Buying. After a Short. Sale

Do you picture yourself here someday? or someplace like this?

I can't guarantee anything, but the likelihood that your life will turn better faster might be greater if you consider how quickly you (or someone you know) can shorten the time it takes to obtain a loan in the future.

Many people have friends and family members struggling with their situation, and all too often, they think foreclosure and/or bankruptcy are their best avenues--when they haven't really gotten all the information they could yet.  If you know someone like this, please share these guidelines with them because they can make a big difference for them in the future for the next several years:

• FHA loan -- After a foreclosure, pre-foreclosure, short sale, or a deed-in-lieu, a homebuyer may obtain an FHA loan 3 years after the date of the event. The FICO score requirement today is about 620-640. (There may be exceptions to this time period, if you can prove the default was beyond your control.)
• VA loan--After a bankruptcy, foreclosure, deed-in-lieu or short sale, a homebuyer may be able to obtain a VA loan 2 years later, with re-established credit.
• FHA loan & Bankruptcy--After a Chapter 7 bankruptcy, a buyer may be able to obtain an FHA loan 2 years later, with re-established credit. Chapter 13 requires 1 year of payout and court approval for a mortgage.
• Conventional loan -- After a pre-foreclosure sale/short sale or deed in lieu, a conventional loan requires 2 years from the completion date to get a 20% down loan, 4 years from completion to get a 10% down loan, and 7 years to obtain maximum financing loans. 
• Conventional loan and foreclosure--It takes 7 years to obtain a conventional loan, and re-established credit.
• Conventional loan & Bankruptcy--Chapter 7 requires 4 years, and re-established credit; Chapter 13 requires 2 years with a discharged BK, and 4 years with a dismissed BK. There can be no 30-day lates in previous 12 months.

Finally, a foreclosure stays on the credit report for 10 years, for all employers, insurance companies and others investigating your credit worthiness to see, regardless of how you've moved on.  A short sale's impact on your credit rating may be considerably less severe over a shorter period of time due to type of entry made, short sale negotation with the bank and depending on the policy of the servicer/investor.

Not all short sale situations succeed, unfortunately, and there are many reasons for this. However, banks would still prefer to do a short sale than a foreclosure: they don't want REO inventory, and they almost always recoup more money doing a short sale.

The banks come out ahead, and so do you, if you can do a short sale.  Doesn't it make sense to choose the option that would allow you to become a homeowner faster in the future, as well as the option that would have less impact on your long-term credit? And then someday you could be back here again--sooner.