Legal Settlement in Transunion Credit Score Lawsuit

Huge settlement in a legal case originally filed 10 years ago and affecting Transunion's credit reports and 160 million Americans:

"The case being settled stems from a business operated by TransUnion that sliced and diced data from the Chicago-based company's massive credit files to generate customized lists of consumers. Retailers, lenders and other businesses would buy the lists to use in their marketing."

"Under the settlement, anyone who had any type of loan account between January 1987 and Wednesday would be able to select one of two options:

"* A basic service would provide free credit monitoring for six months. It normally retails for $59.75, according to the settlement. Those who select this service can also apply for a cash payment.

"* An enhanced service would provide nine months of free monitoring, plus use of a "mortgage simulator" that lets consumers see whether improving their credit score would affect their mortgage rates and how much they could save if it did."

See the Los Angeles Times article for an update and for link to the settlement website.

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Naples Island Home on Canal--Luxury Property

Water view: Canal frontage plus a boat dock and private inner courtyard.

Click on photo for listing information.










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At Last! Finding the Right Home by Building Your Wish List

Here is a great video by Ilyce Glink talking about establishing your "wish list" for home buying. Whether you're currently a renter, or a homeowner who needs to sell before moving on, I believe this is what everyone really needs to do very early in their planning for a new home, from the house itself to the location that will best serve them! Once this is done, it's a lot easier to start matching up your desired neighborhoods and your financing programs with what's on your list. If you're looking for assistance on more ways to make that match, please contact me! If you're interested in a property search, either take a look at the Homebuyer Market Program below for a comprehensive approach to homebuying, or go to my MLS search at http://www.juliahuntsman.com/ . Why do I say "at last!"??? Well, this may deeply surprise some of you, but in my experience I have actually met buyers who believe they will "just know" they have found the right house when they walk into it, and also in my experience, the buyers who "just know" are the ones who did their homework first.

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FNMA: California No Longer a "Declining Market"

Since last December, California was named a "declining market" by FNMA ("FannieMae"), but in the spirit of its original mission under its 1938 creation under Franklin D. Roosevelt to "help those who house America", last Friday, May 16th, it removed that designation.

So what does this mean for you? "The new national down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining...", which means that once again 3% and 5% down payment conventional loan programs will be allowed in California (and other areas). For the last several months, no matter how good your credit was, a buyer couldn't get a loan unles he/she had 10% down funds of the purchase price. So if you were making an offer on a $500,000 home, you had to have $50,000 down payment funds, and many of the first-time buyer programs that might otherwise have been able to assist you are just not available right now. The new policy goes into effect June 1, so hopefully we will be seeing those loan options returning to the local market sometime after that.

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Is April 2008 the Bottom of the U.S. Housing Market?

According to this Opinion article by Cyril Moulle-Berteaux, in the Wall Street Journal, May 6, 2008, it might be--

• "Home sales peaked in July 2005" (I can buy that. In August 2005, the time on market started stretching out longer and longer. But it was August of 2007, when the loan credit shrank, that prices started to drop.)


• "Prices got so high that people who intended to actually live in the houses they purchased...stopped buying". Yes, the speculators left the building.


• "It now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s." And due to the reduction in types of loans, first-time buyers especially are at a disadvantage.


• "When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions." So in other words, could there be a shift in supply vs demand as people start to recognize some good buys?


• "House prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market." He says we will see seven months supply by the end of 2008; currently, in many areas there is 10-11 months supply on the market.


• "Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do." Another answer is that there are a lot of cash and 50% cash buyers -- not everyone is a first-time buyer -- and the cash buyers eventually become active in the market.

What do you think? Is is time to sow new ground yet, like those civic-minded Rotary guys in the old photo (local park, by the way)? Are we close to the bottom the market? If you don't think so, or you do, just leave a comment.

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Buyer Down Payment Assistance

Many times the buyer needs extra cash to close, and many times the seller might be willing and able to contribute funds in order to sell his/her property.

The HART (Housing Action Resource Trust) down payment assistance program is one designed to do just that. Unlike certain other program geared strictly to first-time buyers, geographic or income limitations, this program does not place such requirements. Also, in most loan programs, the seller may not pay towards the buyer's down payment, however, the HART program is structured so that funds from the seller given to the HART program may be used towards the buyer's: down payment, closing costs, pre-paid taxes, or rate buy-downs.

This program now allows for funds up to $25,000.00 (updated info) to be given by the seller as agreed upon in the contract to the HART program when a homebuyer is working with a participating HART mortgage originator and the buyer is obtaining an FHA loan.

For instance, the funds could be used in all categories:

$3,000 (closing cost)
$5,000 (down payment)
$2,000 (pre-paids)
$1,000 (rate buy-downs)
Total: $11,000.

If you would like to qualify for a loan or speak to a loan representative, please contact me.

More information is available at http://www.hartprogram.com/.

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Negotiating Buydown Strategy for Sellers

Reduce the price? or Buy down the interest rate?

Here's a great buydown strategy just sent to me today:

This rate buy down strategy will help sell your listings faster and help you respond to that low ball offer. In a competitive market to get a buyer, this could be a strategy that will make you (seller or agent) shine above the rest and solidify the close of escrow.

Question: Should you reduce your sales price or should you reduce your Buyer's interest rate?

Monthly Obligation

1. Did you know that a price reduction of $20,000 on your listing will save the buyer $103.00 per month?

2. The same $20,000 in buying down the interest rate will save the buyer $541.00 per month!

Qualifying

1. Did you know a buyer of your $450,000 listing needs $96,000 in income to qualify for the loan.
2. Did you know a buyer of your reduced $439,000 listing needs $94,200 in income to qualify for the loan.
3. Did you know that if you took that same $11,000 dollar reduction and paid down the interest rate, that listing needs only $74,400 in income to qualify for the loan.

Listing Scenarios:

Listing One-Listing Price $750,000.00--DOM=120, Payment=$3,453.00.
Price Reduction to $725,000--Payment=$3338.00, DOM=130.

Listing Two-Listing Price $750,000.00 and effectively reduced with a seller interest rate buydown. (Interest Rate Buydown Cost $12,750.00 to $19,125.00) DOM-?, Payment $2,922.00 , Sold! Saving the buyer over $45,000.00 in five years.

Listing One (Reduced)-Down Payment ($108,725.00) and Loan Closing Costs ($9,000.00) = $117,750.00 at the closing table.

Listing Two - Down Payment = $112,500.00 at the closing table. Loan Cost paid by sellers.

Listing One- Income Needed- ~$98,000.00

Listing Two- Income Needed- ~$87,000.00

Listing Two, with a buy down strategy, saves the buyer over $45,000.00 in five years and over $95,000.00 in ten years.

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Decline is in Sales Volume, Then Prices

Follow the pink line to the end of the first quarter--March 31, 2008--to see the continuing trend of sales volume falling at a much steeper curve than sales prices for Long Beach.

Tighter loan guidelines and less available funds for loans keep fiinancing tight for even the most qualified buyers, giving cash buyers a distinct advantage in this market.

The median sales price for Los Angeles County is $431,950, a decrease from February's median of $477,650--this data does not include condos. (These figures are not representative of the average price of homes in all communities, but are priced on homes that actually sold.)

Per California Association of Realtors, the March data is:

Statewide, the 10 cities and communities with the highest median home prices in California during March 2008 were: Newport Beach, $1,198,500; Danville, $990,000; Santa Barbara, $977,500; Redwood City, $872,500; Mountain View, $862,000; San Clemente, $842,000; Sunnyvale, $806,500; San Ramon, $790,000; Redondo Beach, $774,000; San Francisco, $755,000.

In spite of the overall California median price for a single family detached home decreasing to $413,980, 29 percent decrease from the revised $582,930 median for March 2007, some communities have median price gains compared to one year ago: Mountain View, 25.8 percent; Sunnyvale, 15.2 percent; Redwood City 12.9 percent; Yorba Linda, 10.4 percent; San Ramon, 7.6 percent; Ridgecrest, 7.6 percent; Claremont, 6.7 percent; West Hollywood, 3.6 percent; Laguna Niguel, 3.3 percent; San Francisco, 0.7 percent.

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Orange County Sales Are Moving Up

Is 23% the critical number for Orange County sales? Yesterday I got all excited about an Orange County Register article by Jonathan Lansner entitled "Homebuying demand jumps 23%, expert says: Wave of first-time buyers causes number of properties in escrow to soar vs. a year ago" and went looking for the link online. Had a hard time finding that article online, but found this byline about LA/OC home prices by Mr. Lansner as being down 23% this year. In spite of that, here's a quote from the article,

"Demand for Orange County housing is growing, according to Steve Thomas at Re/Max Real Estate Services in Aliso Viejo. As of Thursday, 2,374 houses and condominiums had gone into escxrow in the past 30 days, a 23 percent gain vs. a year ago."

Market absorption time is reportedly 6.55 months at the current rate if all properties currently in escrow are sold, a much shorter period of time than 10-11 months inventory supply in other markets.

If anyone finds the online article, please let me know!

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The Terms in Your Offer to Purchase

In a 10-page contract, there are quite a few terms and conditions to cover with a buyer when they're writing one with the agent, or with sellers when they receive one from an interested buyer. If using a Realtor as your agent, then you should be using the standards forms with the California Association of Realtors logo imprinted at the top and which are used statewide in residential transactions (logo at right). This post won't answer all questions, by the way, your own case will be individual to your concerns and interests.

• Expect to take some time meeting with your agent the day you make an offer. It's pretty hard to do in five minutes (as I've had some people actually expect). You need to understand buyer contingencies; you should have already contacted a loan officer and bring a letter or certificate or pre-approval with you to the meeting; and be prepared to write a check for the deposit money, which will be held in trust by your agent until submission to escrow.



• The Loan: While funding the loan could remain a contingency throughout the escrow (it's negotiable with the seller), obtaining your down payment and costs of the loan is not, and the contract says "buyer shall act in good faith to obtain the designated loans"--which means that even if one source in this volatile market may no longer be able to help you, you have to do your very best to find another loan in order to honor your agreement with the sellers. After all, you said you would buy the house from them, they've made their arrangement to move one, they may in contract themselves with another purchase they worked hard to find and negotiate, and they're counting on you to perform. Also, you should have already worked out what monthly payment you're comfortable with, because if your agent does not write in a maximum interest rate for your loan on the contract, you could be legally obligated to pay any interest rate, no matter how high.


• Escrow Time: This is another negotiated item, both the provider and the length of time. The usual time is 30 days, but what if the buyer has to give notice, or sell, or what if the seller needs more time to move out, or has a contingency to buy a new home; or what if the buyer's loan is FHA which typically takes a little longer for cosing ... then 30 days might mean 45-60 days. AND, if you decided to purchase a "short pay" property, your escrow time would more likely be 60-90 days because most banks aren't working that quickly on those approvals ... so then if you're financing that property, your interest rate environment could change in that period of time. Be prepared.


• The Appraisal: The appraiser is sent out by the lender to appriase the property, and often the contract requires the buyer to remove that contingency within 17 days. The seller wants to move one, and the buyer wants to know the selling price and appraisal are in agreement. This is just one of several areas where if there is no agreement, the buyer may cancel (not will, "may"). Appraisal reviews are more common, take up additional time in escrow, and even if they don't delay the close, nerves could be frayed over this issue.


• Buyer Inspection(s): This is a major contract contingency, so on the day the buyer has his/her physical inspection, you should be able to follow the inspector around as much as possible and ask questions, or certainly at the end, and most certainly when you get your report, which also the seller receives. Because the buyer has only so many visits to the property before it closes, it's tempting to use that time for home decorating ideas and measuring for furniture. But later on, if an issue comes up, you the buyer might wish you had paid more attention to that inspector while he/she was there, and whom you paid for the inspection.


• Are tenants currently living on the property? Make sure your contract covers their departure or their continuing occupancy.


• Seller Disclosures: The contract spells out the timeline and the nature of these disclosures, and the buyer right to cancel. Carefully look at the Transfer Disclosure Statement, and if you still have questions, take the time to follow up with your agent. The seller is supposed to disclose known defects, but the sellers don't always know absolutely everything about their property. Buyers must do their "due diligence", which is the buyer is given 17 days and a separate buyer inspection form to let them know all the issues to look into if necessary. There are other numerous documents to sign, including the natural hazard report, California tax report, lead-based paint, water heater, smoke detector, and other required or recommended forms, as much as 17-18.


• Taking Title: You need to instruct the escrow officer , and if necessary, get legal advice about how to do this, whether you're single, divorced, married, have a trust, etc. Are you taking joint tenancy, community property with right of survivorship, sole proprietor? How title is taken can affect future legal rights.

These are just a few of the basics of dealing with an offer, other issues include dealing with homeowner associations, liquidated damages and arbitration/mediation. Buying or selling a home is a significant event for most people, it's important to set aside the right amount of time for it. The more you prepare yourself in advance the less chance you will have buyer or seller remorse about how your transaction was handled. Dian Hymer's "Starting Out" is a good publication for buyers.

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