Short Sale Sellers and Sellers with 2nds, Take Heed

Some sellers of short sale properties could be feeling the impact well into the future. Some lenders have been selling unpaid second mortgages and home equity lines to collection agencies, to later go after the borrowers with repayment plans. Many of these are part of the "80/20" zero down loans, where the second was a huge chunk of the original equity, and now could very well be gone as a $500,000 house value has shrunk to $400,000. A seller should obtain a written release of full satisfaction when short pay approval has been granted, which a knowledgeable negotiator, whether it's your Realtor or another licensed individual, can obtain. California has certain protections already concerning purchase money mortgages, however, second liens may be a future problem.

But, even if you did sell short sale and obtained release and satisfaction, every seller of a short sale should now know that California has previously followed federal law concerning the Mortgage Debt Relief, but this year that relief is threatened due to certain unrelated provisions in a tax bill currently under consideration which Gov. Schwarzeneggar has said he will veto, thereby eliminating tax protections for those whose properties were "underwater" in a short sale. If this bill is not signed, short sale sellers will be on the hook for their California tax for a short sale come April 15th. This is the time to contact your California legislative representatives.

Yet another California Senate Bill 1178 (Corbin), if passed, would protect holders of second mortgages who refinance and stay in their homes, against future collections by banks which could be attempting to regain their lost funds. And, a new Obama Administration program which takes effect on April 5th also aims to protect owners with second mortgages by requiring lenders to send notice to short sale borrowers that partial sale proceeds were used in full satisfaction to pay off the second lien holders. This release, however, only applies to sales conducted under the Home Affordable Foreclosure Alternatives program, or HAFA, the program taking effect April 5th. It is complex and lengthy, demonstrated by the 43 pages in the link, and servicers participating can be found at this HAFA participant servicers link. A HAFA short sales fact sheet outlines the basics.

Home Buyer's Fair, a Southern California Consumer Opportunity!

This weekend is the time to use your free time for your future advantage! Attend the free 3rd Annual Homebuyer Fair this weekend, March 13th and 14th at the Los Angeles Convention Center, sponsored by the Los Angeles Times and the CALIFORNIA ASSOCIATION OF REALTORS®. With more than 50 educational seminars and 65 booths, there will be many many opportunities to learn about navigating the home purchase process and the market.

This is for all buyers--first timers and investors alike, as well as homeowners, so the attendee will find information on home insurance, buying foreclosures and short sales, how to plan for your first purchase, finding a Realtor and finding a mortgage lender, how to negotiate your loan modification, and tax credits. Many seminars are also presented in Spanish.

See seminars at http://www.homebuyersfair.com/seminars and general information, including parking ($12) at http://www.homebuyersfair.com.

See exhibitors at http://www.homebuyersfair.com/exhibitors
Find me at Pacific West Association of Realtors Saturday afternoon after 2 pm!

Dear Buyer, Are You Ready to Own?

Dear Buyer,

Many of us have heard all our lives that owning your own home is the American Dream, and that's what our goal should be. To be sure, we (still--but you might have to fight to keep them, see person to the right) have our tax deductions on mortgage interest and property taxes, among other things, so there are ways we are helped when owning property. And, to be sure, many people are paying more in rent, or nearly so, than they would be in after tax savings on a mortgage.

But there's another factor the first time buyer should consider strongly: Are you really ready to own? Because the truth is, there are certain responsibilities that come with ownership, and you will benefit greatly by thinking of these in advance, before you start going to open houses and getting excited, before you talk to anyone about buying anything.

Do you have a budget? Are you used to living under a financial plan, if not on paper, at least in your head? All the loan disclosures and property disclosures on earth will not help you if you are not prepared for life after you close escrow.

Create a long-term budget to help estimate all the costs of homeownership. Items such as property taxes (estimate at 1.25% of your current California sales price), your personal insurance, utilities, closing costs, appraisal fees, escrow fees, homeowner association dues, other home maintenance costs (roof, painting, plumbing), homeowner’s insurance fees, and moving costs should be included in the budget. Have you really estimated what you might have left over at the end of the month after your usual monthly expenses, and, assuming your lender qualified you for it, are you comfortable with that? And, besides financial ability and readiness, there is what I call "emotional readiness": the desire to own and the willingness to handle the commitment to ownership.

You will probably be better able to outlast temporary short term financial challenges if you have given some time and preparation towards the above, plus other homebuyer education with your Realtor. By doing so, I predict you will find both the home search process (another topic) and the entire buying process a better experience overall.

You may find a helpful free site at HouseLogic.com, where you can explore all these issues and more. This site is for both new buyers and current property owners to help estimate costs, explain maintenance and insurance issues and home improvement programs, types of financing, budgeting, costs, market trends, tax deductions and tax incentives, and much more!

Love, Your Realtor

P.S. There are many free online budget programs, or if you would like one of mine, I would be happy to e-mail it to you (this offer is open to anyone).

Is This the Shift in the Down Cycle?

After three years of shrinking equity and, at the same time, the expansion of the number of homeowners underwater in home value, the Federal Reserve economists, who conduct "massive research" into mortgage balances and home value changes, have some better news. According to their "flow of funds" survey, "homeowners' net equity grew by nearly $1 trillion" from 1st through 3rd quarter of 2009, and in the 3rd quarter of 2009, net equity increased by $418 billion. The down cycle could be shifting, per this article in the Washington Post (see link).

According to Zillow, the percentage of homeowners with negative equity is on the decline in many housing markets including Los Angeles. Riverside, heavily impacted by foreclosures, also saw improvement.

The median Southern California price for houses and condos in January, per Dataquick, was $271,500, up 8.6% from one year earlier, and buyers who paid all cash accounted for almost 29% of January sales, the highest such figure since 1988. FHA loans accounted for almost 37% of all home purchases. Loans over $417,000 accounted for only 14% of all home loans in January.

In Long Beach, probably thanks to the first time buyer tax credit (which expires in April), and to growing recognition that current prices are the best real estate opportunity in years, properties in escrow (up 36%) and median sales price (up 6%) have both risen overall in the period since one year ago.

Is Purchasing a Probate Property a Good Way to Buy?

This article by Online Ed makes some good points:

Why is Probate sometimes a good way to find property? The probate process involves the creation of an inventory of all assets of an estate, followed by the distribution of assets necessary to pay off all remaining debts the estate may owe. Often times the heirs to an estate will have to liquidate some of these assets in order to satisfy the debts and liabilities of the estate. Houses are frequently the largest repository of value in an estate and often need to be liquidated in order to settle the estate.

Even if the home doesn't need to be sold to cover liabilities, the heirs will frequently sell the property in order to distribute the proceeds to multiple individuals. If the property needs maintenance or repair before it can sold at fair market value, that usually means someone is going to have to invest time and money to make those repairs themselves or hire someone else to do so. All too often, it takes family members more time and money than was ever anticipated. If the heirs live some distance away, or in another part of the country, the process of renovating and preparing a house for sale becomes even more demanding. Faced with those options and the potential windfall of cash from an immediate sale, most people will opt to sell – and will be willing to do so at a substantial discount. Remember, holding on to a vacant house in order to realize a bit more profit is not without cost or risks. There’s insurance, utilities, yard maintenance, and the ever-present risk of break-in or vandalism.

In addition, the heirs to the estate may be willing to finance the property with very favorable terms in order to make the deal work. This is especially true if the property has no mortgage and is owned free and clear.

In Long Beach, since 2009, out of all 1-4 unit residential properties, there are currently a total of 74 properties in the probate category that are active, in escrow, or sold, in the SoCalMLS. Considering that since 1/1/2009, in the same 1-4 unit category, there were 3505 properties sold in Long Beach, per the MLS, the probate properties are thus a small category of property. But then why should the buyer be concerned about these? Because it may pay to be prepared, just as it pays to be prepared for a short sale, an REO bid, a property under a timeline because it has a notice of default on it and may soon go into bankruptcy, and other categories which may require court approval, or even auction.

And, in some areas, it may be best to assume that a strong market price will be negotiated (many heirs study area sales too) , but the opportunity for the buyer may be that other buyers may choose to not buy a fixer, or take an as-is sale with no repairs by the seller.

It pays to know what you the buyer might be capable of doing in this market.

Another First for Buying: California Mortgage Protection Program

It's so hard to not be helped right now, especially if you're a first time buyer. On top of the $8000 tax credit available right now, California Association of Realtors is also offering a mortgage protection program. More security can be yours if you fit the bill:

Did you know? Through the California Association of Realtors' Housing Affordability Fund qualifying buyers can receive up to $1,500 a month for up to six months in the event of job loss, a qualified co-buyer can also receive a $750 benefit for up to six months to help pay the mortgage. This program began in April of 2009 and continues through the end of 2010. Another great program for first time buyers that adds additional security to their home buying experience! So if you, or someone you know is, are a first time buyer, this program will last until the funds are depleted, or 12/31/2010. This program actually began in April, 2009, and will last until the end of this year, or until funds have been depleted prior to that time. Qualifying buyers can receive up to $1,500 a month for up to six months in the event of job loss, a qualified co-buyer can also receive a $750 benefit for up to six months.

TO QUALIFY FOR THE MORTGAGE PROTECTION PROGRAM APPLICANTS MUST:

• Be a first-time home buyer or co-buyer – someone who has not owned property in the last three years
• Open escrow April 2, 2009, or later, and close on or before December 31, 2010 .
• Use a California REALTOR® in the transaction (fee for referral does not qualify) ·
• Purchase the property in California
• Be a W-2 employee (cannot be self-employed)

Applications are available--don't miss this opportunity for another benefit of buying at this time.

http://www.juliahuntsman.com/ for a property search, information on buying residential property.

Time Is Moving Along for First Time and Repeat Buyers

The Southern California Home Buyer's Fair will be taking place March 13 and 14 at the Los Angeles Convention Center. It's a great start for the keys to homeownership, if you're free to go that weekend. However, the $8000 tax credit for 1st time buyers will be ending in April 2010, and will be extended only to complete your escrow if you have signed a contract at that point in time. Per the IRS site, the credit

• Applies only to homes used as a taxpayer's principal residence.


• Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.


• Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

And, although this new proposal by Gov. Schwarzenegger is still "up in the air", to continue encouraging homeownership among Californians, the Governor will propose to extend and expand the $10,000 homebuyer tax credit to include the purchase of existing homes in addition to new residences for first-time homebuyers. The buyer must not be a dependant and must be purchasing a home that does not belong to a relative. Under the Governor’s proposal, the Franchise Tax Board will extend the credit to buyers who purchase homes until $200 million dollars in tax credits have been granted.

PLEASE, if you're thinking of buying this year, do not assume that the $8000 tax credit will once again be extended as it was at the end of 2009. Many Congressional members were not in favor of this extension for various reasons. Californians may benefit from the additional proposal, however, that is unknown as of yet.

If you want to buy, start taking action now. If you need loan options, I will be happy to refer you. Remember, for purposes of these programs, a 1st time buyer is one who has not owned property in the last 3 years.

Please contact me if you are ready to proceed--remember, rates are still low.

For more information on buyer programs, go to http://www.juliahuntsman.com/.

Quick Fact: More Single People Buy Real Estate

Many developments have taken place in just the last 10 years:

According to National Association of Realtors in Dec. 2009, the percentage of U.S. homes bought by married couples has declined in the last decade.
Married couples bought 60% of homes last year, down from 68% in 1999. Single women purchased 21%, up from 15% in 1999, and single men bought 10%, up from 7%.

Fewer people are buying detached single family homes, but more people are buying in the suburban neighborhoods.

Today, 90% of the buyers are searching online first--up from 37% 10 years ago.

But, unchanged is the median age for homebuyers--it's still 39 (did Jack Benny do this survey?) And neighborhood qualify, affordability and convenience to work location are still the top buyer priorities. And 8 out of 10 surveyed consumers believe owning a home is an investment in their future.

Foreclosure Timeline in California

If your loan was obtained between 2003 and 2007, and you meet certain other guidelines, your timeline (for a non-judicial foreclosure, the most common in California) from the first day of the pre-foreclosure period up through the Notice of Sale, will be about 152 days.

The Notice of Default may be filed 30 days after the lender contacts the borrower to explore options avoiding foreclosure for the borrower.

Three months after the NOD is filed, the Notice of Trustee's Sale may be recorded and then published over a period of 3 weeks. The borrower has 5 days prior to the sale to cure the default, which means catching up on the entire debt, and all other interests and costs. On Day 152 of this timeline, the lender may sell the property to the highest bidder at public auction.

If the seller is contemplating selling, there is a minimum of 4 months at the time the NOD has been filed. Since many sellers are in a short sale position and would need to list their property, find an eligible buyer, submit their entire financial package to the lender and obtain the lender's approval, 4 months is not enough time since the standard bank approval time is still around 90 days.

If the homeowner is experiencing financial distress and is now starting to not pay the mortgage, they need to immediately recognize their situation and allow for 6 to 8 months in which to get their property listed and sold, if that is to be the course of action. Most people do not want to sell, and make the mistake of hanging on too long until they lose the house through foreclosure. This is usually the worst course of events from which it takes longer to recover in terms of credit eligibility and future mortgage eligibility. Credit is checked for rental applications, insurance, and employment, so the distressed homeowner may be affected in many other ways.

If an owner is in bankruptcy, or has surrendered the property, the initial 30-day notice requirement does not apply.

For other owners not in the 2003-2007 loan origination period, the original foreclosure timeline applies, which is about 121 days total.

A First Time Buyer Story in Surf City USA

The City of Huntington Beach did not seem like a likely place to find an affordable first time buyer program. During the high point of the market, it was tough to find a single family home there under $600,000. The home of the Seacliff and other high end developments located within a stone's throw from the coastline were not within reach of the average buyer needing down payment assistance. But that's all changed. Huntington Beach is now offering a program giving up to 20% of the purchase price, not exceeding $100,000, as down payment assistance in the form of a silent second mortgage loan at zero percent interest.

As of August 2009, the maximum purchase price is $515,000, a minimum 3% contribution from the borrower, and annual income limits apply: Between $72,300 maximum for one person up to $136,350 for a family of 8 persons in one household. This and similar programs are for buyers who intend to occupy the property as their principal residence.

So how many houses or condos currently on the market might work for this program? There are currently 124 houses and condos in this price range in Huntington Beach. One of them might be for you and your family, if you fit the qualifications of this program. A 20% down payment at zero interest is an opportunity not to be overlooked. If you have the 3%, or $15,450, for your contribution, plus meet the lender's other loan requirements, please call me for more details on this program and finding a lender who can carry out this program.