| Appraisal Dramas | August 7th, 2009 |
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There are fresh reports each day about how a low appraisal throws a monkey wrench into a deal. Here’s one published yesterday in “Credit.com.” |
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The real estate market is facing challenges because of new laws and guidelines affecting how properties are appraised. Across the nation sellers and buyers who go into contract are faced with low appraisals that can’s support their agreed upon price. When that happens, a transaction can fall apart because the lender won’t lend the buyer enough money to close. Our industry is working hard to get the appraisal process back on track so that all buyers can buy the property they want, and all sellers can sell for their property’s true value. For more information on how new laws are creating flawed appraisals, you can Google “HVCC” and get the full scoop.| How to Find the Best Lender for a San Francisco Home Purchase | July 27th, 2009 |
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I’m particularly leery of lenders my buyers find online. Generally speaking, these lenders are located outside of the Bay Area and usually even outside of California. |
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During the height of the real estate market, most borrowers who applied for a mortgage received one. However, in today’s lending environment, consumers should be more cautious about where they apply for a loan and from which Web sites they receive quotes.| How Can I Improve My Credit?? | July 21st, 2009 |
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1) Pay down your credit cards. |
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| San Francisco: A Pricey City That Pays Off | July 9th, 2009 |
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Albouy maintains that people are willing to pay a fortune for assets which have ‘amenity value.’ Assets with high amenity values deliver more satisfaction to their owners. According to Buoy, San Francisco ranks #1 when it comes to high amenity and productivity value. A big amenity value tied to a home relates directly to quality of life. Good weather, cultural amenities, proximity to the coast, recreation opportunities all factor heavily into a location’s amenity value and explains why a home in the Bay Area costs so much more than a home in Boise. A city’s amenity value is also tied to its productivity. For this amenity, we become heavy hitters with strong biotech, hi-tech and financial sectors and universities that produce an educated workforce. These advantages draw new businesses which create new employment, increased incomes and consequently higher home prices. . . . |
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I love it when an opinion-maker makes my case for me explains why people are willing to pay so darn much to live here. In this case, I’ve got University of Michigan economist David Albouy on my side, as per his report in the Global Property Guide, an online real estate investor’s guide.| Is It Just Me Or Is The Market Picking Up? | July 7th, 2009 |
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Just before the July 4th weekend, I showed properties to two different sets of clients. One was a pied-a-terre buyer prepared to go up to the high 600s. The other was an investor buyer looking for a condo/loft near Yerba Buena or the 2nd Street Corridor for under $500K. My pied-a-terre buyer was quite taken with a sweet set of TICs on Russian Hill. Two of the units, listed in the high 600s were definite possibilities. He also liked a condo in South Beach right near the ball park, listed for just under $700K. My investor buyer liked a little condo directly across from the Yerba Buena Center that could be had for under $450K. Both parties wanted the weekend to think about it. Yesterday I came into the office and called the listing agents to verify availability on all the properties. One of the TIC’s had gone into contract, but the other one remained. The South Beach condo agent had word that a party was planning to make an offer. The condo opposite Yerba Buena Center was expecting an offer last night. Bottom line: the strategy of looking for a great place, finding a great place, then waiting to write an offer will not always work anymore. Browsers need to become buyers if they are serious about making a purchase this year. |
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| Another Reason to Buy– Mortgage Protection Insurance | April 11th, 2009 |
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Another reason I’m withholding your hall pass to rent forever instead of buying is the new Mortgage Protection Insurance– provided by the California Association of Realtors Housing Affordability Fund (aka C.A.R.H.A.F—let’s call if ‘CAR-HALF’ for fun). If you qualify for CAR-HALF, you can receive up to $1,500 per month for up to six months to help make your mortgage payments. Other program benefits also include coverage for accidental disability and a $10,000 death benefit. More details on who qualifies and how to apply for CAR-HALF are on my Examiner website. |
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| Is It Really Cheaper to Buy than Rent? | April 10th, 2009 |
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Is it Really Cheaper to Buy Instead of Rent??? It’s true! It’s true! The papers even say so! The Rent vs Buy equation really is coming more into balance. To see how, you can use this excellent online calculator provided by RPM mortgage which measures the cost of rent against the after-tax cost of buying. For further proof here’s a sample pdf analysis that compares a $2600 rent payment to a $650,000 home purchase with 20% down at a 5.25% interest rate with 1 point. I know not everyone is fortunate enough to have 20% on hand—and that not everyone can afford a $2600 monthly payment. But the calculator can be used for lower price points and lower monthly payments, and could help you analyze your costs should you decide to shop neighborhoods with less expensive housing or go for a lower downpayment (FHA loans can require as little as 3% down). |
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| Short Sale or Foreclosure - Who Owes the HOA Fees? | March 24th, 2009 |
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I recently had a client interested in a condo listed as a short sale. In addition to owing a first mortgage against the home, the owner had also failed to pay HOA fees for many months. I wondered if my clients would be responsible for the HOA fees after they took possession of the property. Shortly after hearing about this additional lien against the property, I got clarification on who owes HOA fees from our legal department. Here is what I learned: In a normal sale, the HOA’s late fees must be paid off at Close of Escrow. If the HOA has recorded a formal lien against the property, the buyer’s lender will almost always require it before making the loan. If the HOA has not recorded a lien, then the HOA still has an unsecured debt which they can attempt to collect against the prior owner – but not the new owner. In a short sale, if the HOA has recorded a lien, then it needs to be paid as a part of the short sale. Most banks will eat this cost and pay the HOA all the late fees. Some banks, however, will try to push this back on the seller to come up with the money. If this is the case, the buyer should be sure to wait until this issue is cleared up before allowing the property to close. In almost every case, if the HOA has recorded a lien and then the seller’s lender forecloses, the foreclosure will wipe out the HOA lien. Once the bank owns the property, the bank becomes responsible for payment of the HOA dues from the time they take title until the day they transfer title to the next buyer/owner. However, REO bank/owners are notorious for not paying HOA dues during the time they own the property. They pay up past dues at the time they sell the property to the new owner, but in the meantime many HOA’s are suffering cash flow problems. Occasionally an HOA, usually out of ignorance, may attempt to collect the unpaid dues from the new owner. If this occurs, the new owner may have to fight with the HOA to straighten out the record. If the HOA puts up a fight, the new owner may even have to hire a lawyer to clear up the matter. A good agent will check with the HOA about unpaid dues prior to close. And they will make sure that all unpaid fees and late charges are taken care of at close of escrow. |
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| Tax Credit — If You’re Buying a New Home or Condo, then it is REALLY REALLY Important that you read this. | March 6th, 2009 |
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Attention new home buyers. Below is detailed information on the California new-home tax credit and the very specific application process to apply for it. The below information comes from this CA government webpage: http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml After consultation with our legal department and clarification from Sacramento, this credit DOES apply to condos as well as houses. Tax Credit for New Home Purchase This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date. We will accept applications for allocation of credit by fax only (916.845.9754), starting March 1, 2009; however, we will not send notifications of credit allocation until we have developed procedures. Once we begin processing allocation applications, credits will be allocated on a first-come, first-served basis. We will update this page as soon as we begin mailing credit allocation letters. Tax credit amounts California allows qualified new home buyers a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased. How to apply Requirements of the Credit Any credit that reduced tax on a tax return must be repaid if the buyer does not occupy the home for at least two years immediately following the purchase date.FTB may request documentation to ensure buyers have complied with the requirements of the credit.Claiming the Credit The credit is not refundable. Definitions: Contact us |
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| Obama Wants To Help You Reduce Your Rate. . . | March 1st, 2009 |
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Although the final operational guidelines of the Obama administration’s foreclosure-avoidance programs won’t be released until Wednesday, key details have begun surfacing on the extraordinary refinancing opportunities that will be available to an estimated 4 million to 5 million homeowners whose mortgages are owned or guaranteed by Fannie Mae and Freddie Mac. Under the Obama plan, borrowers who have made their monthly payments on time but are saddled with interest rates well above current prevailing levels in the low 5 percent range may be eligible to refinance - despite decreases in their property values. Neither Fannie Mae nor Freddie Mac typically can refinance mortgages where the loan-to-value ratio exceeds 80 percent without some form of credit insurance. That insurance can be difficult or impossible to obtain in many parts of the country that insurers have labeled “declining” markets, with high risks of further deterioration in values. In effect, large numbers of people who bought houses several years ago with 6.5 percent or higher 30-year fixed rates cannot qualify for refinancings because their LTVs exceed Fannie’s and Freddie’s limits. Using an example supplied by the White House, say you bought a home for $475,000 in 2006 with a $350,000 mortgage at 6.5 percent that was eventually acquired by Fannie Mae. In the three years following your purchase, the market value of the house has dropped to $400,000, and you’ve paid down the principal to $337,460. If you applied for a refinancing to take advantage of today’s 5 percent rates - which would save you several hundred dollars a month in payments - you’d have difficulty because your LTV, currently at 84 percent, exceeds Fannie’s 80 percent ceiling. But under the Obama refi plan, Fannie would essentially waive that rule - even for LTVs as high as 105 percent. In this example, you’d be able to qualify for a refinancing of roughly $344,000 - your present balance plus closing costs and fees - at a rate just above 5 percent. In a letter to private mortgage insurers Feb. 20, Fannie and Freddie’s top regulator confirmed that there would be no requirement for refinancers to buy new mortgage insurance, despite exceeding the 80 percent LTV threshold. James B. Lockhart III, director of the Federal Housing Finance Agency, described the new refinancing opportunity as “akin to a loan modification” that creates “an avenue for the borrower to reap the benefit of lower mortgage rates in the market.” Lockhart spelled out several key restrictions on those refinancings: – No “cash outs” will be permitted. This means the new loan balance can only total the previous balance, plus settlement costs, insurance, property taxes and association fees. – Loans that already had mortgage insurance will likely continue to have coverage under the existing amounts and terms, thereby limiting Fannie’s and Freddie’s exposure to loss. But loans where borrowers originally made down payments of 20 percent or higher will not require new insurance for the refi, despite current LTVs over the 80 percent limit. – The cutoff date for the entire program is June 10, 2010. Lockhart said that although Fannie and Freddie would be refinancing portions of their portfolios into lower interest-rate, higher LTV loans, he expects their exposure to financial loss should actually decline. “In fact,” he said, “credit risk would be reduced because, after the refinance, the borrower would have a lower monthly mortgage payment and/or a more stable mortgage payment.” This, in turn, would lower the probability of loss-generating defaults and foreclosures by those borrowers. Since Fannie and Freddie both operate under direct federal control - technically known as “conservatorship” - any additional losses to the companies would inevitably be borne by taxpayers. How it all works out may well depend on whether the Obama administration’s broader efforts to stabilize housing prices, reduce foreclosures and push the economy out of recession are successful. If large numbers of beneficiaries of these special refinancings ultimately cannot afford to pay even their cut-rate replacement rates and go into foreclosure, red ink could flow in rivers from Fannie and Freddie. But because that’s an unknown and the refi program is an immediate, here-and-now money-saving reality, homeowners ought to make the most of it. If you know that Fannie or Freddie owns or guarantees your mortgage - your loan servicer can tell you - and you’ve got an on-time payment record and an interest rate above today’s prevailing levels, start assembling your financial records and get ready to refi. |
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Following is an article by Ken Harney in today’s Chronicle. You can find out if you have a Fannie Mae/Freddie Mac loan by calling your lender. Please keep in mind that if your loan was above the conforming loan amount at the time you bought it is probably NOT a Fannie Mae/Freddie Mac loan.
