California has brought its tax code up to match the federal standards when dealing with short sales, foreclosures and loan modifications. 

Under Senate Bill 401, homeowners who have or will experience one of these potentially-taxable situations can rest assured that government finally believes that if you can't afford to pay on the loan, there is certainly no way you can afford to pay taxes on $200,000 that you never made in the first place.

In order to qualify for the tax relief, the home must be a qualified principle residence (no rental properties).  Aslo, the debts must be discharged from January 1, 2009 through December 31, 2012. 

Californians who have already filed 2009 taxes, besides being much more organized than myself, can take advantage of this new law by filing a form 540x amendment.

If your situation involves a second home or rental property, you may still be exempt.  The most common exemptions are for those who are either bankrupt or otherwise insolvent. 

This bill should assist many homeowners in the San Diego area, as home values have seen major decline, some as high as 60% over the last 3 years.  Prices in many communities of Chula Vista are back down to 2002 price levels, so anyone who purchased a home in the last 8 years runs the risk of being upside-down.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage.  The full text of Senate Bill 401 is available at www.leginfo.ca.gov

Well, according to the new HAFA program rolled out earlier this week, homeowners who short sale their home can receive a "moving allowance" check of $3,000!

The new Housing Affordable Foreclosure Avoidance program, named HAFA, is here to hopefully make life for homeowners in distress a little more comfortable.   Personally, my first complaint is the acronym.  Seriously, couldn't they think of a name for the program without having to put the words out of order?  But it's government people, let's be patient with them.  Their amazing foresight had a lot to do with why we are in this mess to begin with.  But that's another topic altogether...

So yes, it is true, under the HAFA program, homeowners in distress are eligible for the following perks:

•ü  Avoid Foreclosure

•ü  If you are already in the foreclosure process, the foreclosure can be SUSPENDED

•ü  Stay in your home throughout the entire sales process

•ü  Save Your Credit

•ü  Get FULL release from your lender (no deficiency judgment)- your mortgage debt is GONE!

•ü  The bank pays for EVERYTHING, even Realtor fees.

•ü  The whole process is FREE to you

•ü  AND you get paid $3000!

Let's face it- foreclosures are devastating for everyone.  They destroy the homeowner's credit, the bank loses more money every month the property is in default and property values in the neighborhood suffer.

Well, the government finally DID something!  This program allows you to sell your home at current market value and upon the sale, you walk away without the worry of an over-bearing mortgage anymore AND the bank pays you $3000 to cooperate in the sale.  There is no money required from you to participate in this program. 

The program is referred to as HAFA or Housing Affordable Foreclosure Alternative.  So how do I know about HAFA?  I am a Certified Distressed Property Expert with RE/MAX- the number one seller of real estate IN THE WORLD!  Many agents are unaware of the many changes going on with short sales and how those changes affect you.

 As a dedicated Realtor and Associate Broker, I spend many hours in training every week to stay up-to-date on the ever-changing world of short sales.  I am taking it upon myself to make sure that you are aware of this new law and how IT WILL BENEFIT YOU!

The banks are motivated to do this because, believe it or not, it is cheaper for them to sell NOW, then wait until it is foreclosed on and THEN try to sell it.  The banks will pay all of the Realtor fees, all closing costs on your behalf, and will forgive the difference between the balance owed and what they actually get from the sale of the home. 

The short sale process is very easy for you, as a seller, but to ensure that everything is done professionally, YOU MUST USE A CERTIFIED SPECIALIST!  The biggest reason short sales fail, is because agents do not know what they are doing.  I have successfully negotiated short sales in this area and I want to help YOU! 

I am sure that your schedule is busy, so I would like only a few minutes of your time to meet in person and help you to get clarity and peace of mind.  Please call or email me at your earliest opportunity.  Time may be running out, so don't wait!

Since cynicism runs deep in my blood, I thought I would ask the ever-present question on every skeptic's mind- is this new foreclosure avoidance program REALLY going to help anybody? 

I ask this because, not only did the last government-authored homeowner-assistance program not help anyone (I exaggerate, it did help ONE person), but there are so many loopholes in the wording of the new HAFA program, that it is easy for anyone to smell what's fertilizing the lawn on the other side. 

Don't get me wrong, I WANT this program to work.  I WANT to see the housing crisis that was brought about by government mandating that risky mortgages be made be solved by the same people that created it.  True, I may be leery that this will work, but hey, as long as it makes the Big G look like they care and are actually doing something with a POSITIVE outcome, then I am all for it.

So what's my beef?  Well, it simply is this.  While HAFA seems to include a good number of people, the fact that individual lenders and investors can set their own parameters, unrestricted, including whether or not individual investors want to even participate, could easily cause some problems.  Now let's face it- it may not and this all may be written for naught.  Plus, I couldn't use that catchy title if there wasn't some skepticism, so I admit; there is a bias to this argument.

So seller A wants to get rid of their home.  Let's say that they meet all of the eligibility requirements, namely the following:

•1.     The loan is for a home that is their principle residence.

•2.     The first mortgage was originated on or before January 1, 2009

•3.     The mortgage is either delinquent or default is reasonably foreseeable

•4.     The current principle balance is under $729,750

•5.     And the total monthly payments exceed 31% of the borrower's gross income.

First of all, did anyone else see any grey area in the requirements? 

But I digress.  So let's say, for instance, that this loan is serviced by Bank of America.  Since they are the big player, it's easy to use them as an example.  What many people do not realize, is that the money that Bank of America uses to lend to homeowners for the mortgage may not come from Bank of America!  There are numbers of private investors who allow Bank of America to lend out their money.  In the case that the loan is owned by one of these investors, there is a reasonable chance that the investor will decline the short sale.  Or, the investor might mandate that the borrower be delinquent 60 or 90 days before they qualify.  Each investor can have their own set of guidelines that will mandate whether or not they will accept the short sale in the HAFA program.

But for argument's sake, let's just say that the investor DOES participate.  The investor can mandate that up to 31% of the borrowers gross monthly payments be made during that time the home is on the market.  This may or may not be feasible, but again, for arguments sake, let's just say that it is.

Finally, the investors, who don't live in the area or, in most instances, have a clue about local real estate markets, decide on the lowest amount they will accept for the sale of the home.  I would hope that this is at fair market value, but there is no guarantee.  And sure, agent and borrower could argue with the investor what the home is really worth and extend the whole process...

HAFA touts that it shortens the time frame of the short sale because they qualify the seller before the property is marketed.  Great idea- I thought that would have been a common sense beginning, like three years ago when short sale became prevalent.  But hey, better late than never, right?  However, the HAFA short sale process can still take up to 4 months!  Unfortunately, this IS better than many short sale right now.  But still a bit on the long side for most people.  It's not like we're dealing with hazardous or explosive objects here- they're HOUSES! 

Sure, I WANT to get excited, I WANT this program to work, I WANT to help preserve property values and neighborhoods with a pre-emptive strike against foreclosures before they happen, and I WILL work like mad to make sure that I help as many homeowners as I can...sometimes it's just hard to get excited when you know who's behind it all.

So let's work together to find someBODY to help, and make the best with the tools that are given to us.  And in the meantime, let's also work to make sure that better tools are available in the future.

The window of opportunity is closing for Californians looking to take advantage of up to $18,000 in tax credits.  Here is how it breaks down:

The federal government is chipping in the follwng funds: First time home buyers can receive a tax credit of up to $8,000 IF they are in escrow by April 30, 2010 and close no later than June 30, 2010.  If the home buyer is NOT a first-time buyer, they can still receive a tax credit of up to $6,500. 

And the wonderful state of California is giving an incentive to ALL buyers who purchase homes that have never been lived in (a long way of saying "new homes").  Funds have been set aside for this program to offer buyers up to $10,000 in tax credit for this purchase.

So if you or someone you know is actively looking at homes to buy, make sure those deadlines are met!  Always feel free to contact me for more information on this or other real estate matters.

The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)).  California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)).  Other terms and restrictions apply to both tax credits.

To help keep interest rates low, the Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac since early last year.  This week, the Fed has stated that they will no longer be purchasing these loans.  This was a planned move by the Fed, that has brought up fears that interest rates may rise 1-1.5% by the end of this year.  One person told me, "Sorry for the sarcasm, but I've heard that one before." 

True, I have heard many people "in the know" stating that rates were going up, up, up only to see a minor increase followed by another drop in rates. 

This time is expected to be different though.  And here is why. 

When loans are originated (i.e. when people purchase a home or refinance a loan), these loans are generally sold on the secondary market, referred to as "mortgage-backed securities." 

Well, if you are an investor, you want to put your money where you get the most return on investment given your risk parameters.  With the departure of Fannie Mae and Freddie Mac from the scene, private investors will once again need to be the ones to purchase these investments.  Keep in mind, these are the same types of investments that were sold a few years, causing investors all over the world to lose billions of dollars.  So there may be a little bias there...

Long story short, to be competitive with other investment vehicles, the loans need to have a higher return on investment for the investor, which translates to a higher interest rate to the borrower.

 (the remainer of this is taken from www.CAR.org)

MAKING SENSE OF THE STORY FOR CONSUMERS

• Interest rates have hovered at or near historic lows for much of the past 18 months, resulting in lower payments for many borrowers.  With the Fed discontinuing its purchase program, some analysts believe a rise in interest rates could range from 0.25 percent to as much as 1 percent by the end of 2010.
• The federal tax credit for home buyers also is scheduled to end April 30.  The tax credit combined with the expectation interest rates will increase has created a sense of urgency for many home buyers.  In fact, 23 percent of California home buyers purchased a home in 2009 due to the perception that interest rates will rise and they would be priced out of the market, according to C.A.R.'s 2009 Survey of California Home Buyers.
• Rising interest rates will have an effect on home buyers.  For example, a qualified couple with a combined pretax income of $100,000 per year and debt obligations (excluding mortgage) of $500 who receive a mortgage rate of 5 percent could qualify for a loan of up to $590,000, assuming a 20 percent down payment.  If the interest rate were to rise to 6 percent, as analysts at Barclays Capital predict, the same couple could only qualify for a mortgage of $540,000.

So if you want to get the lower rates, be sure to act quickly- my crystal ball does not see any decrease in rates, but an increase is very possible on the horizon.

Copied from ForeclosureRadar.com.  Check out up-to-date foreclosures EVERYWHERE in the US at http://www.bobcarlseen.com/mx/Foreclosure/index.cfm?

Updated California Foreclosure Report: 

After reaching the lowest level in a year last month, Notice of Defaults, the start of the foreclosure process, increased by 19.7 percent in February. The number of properties scheduled for foreclosure sale remained near record levels, yet foreclosure sales, either Back to Bank or Sold to 3rd Parties, dropped by 11.9 percent total.

"The disconnect between delinquencies, and foreclosure sales continues to widen," says Sean O'Toole, Founder and CEO of ForeclosureRadar.com. "While efforts to slow foreclosures are clearly working, it remains unclear that anything has yet addressed the core problem of excess household mortgage debt."

After four consecutive months of decline, Notice of Default filings bounced up by 19.7 percent to 31,004 filings. Filings of Notices of Trustee Sale, which sets the date and time of the foreclosure auction, increased slightly as well, rising 3.6 percent to 28,195 filings.

Foreclosure sales are the last step in the foreclosure process and result in the property being transferred from the homeowner either back to the bank, or to a 3rd party, typically an investor. Foreclosure sales decreased 11.9 percent in February, with the portion going Back to Bank dropping by 14.3 percent and the portion to 3rd Parties dropping by 2.7 percent. Despite our prediction that we may see a wave of Cancellations as the Administration pushed to make trial loan modification permanent, Cancellations remained flat, likely indicating that the Home Affordable Modification Program conversion drive is failing.

Despite the increase in Notice of Default filings in February, our estimated number of properties in Preforeclosure dropped 8.0 percent due to the relatively high number of Notice of Trustee Sale filings. Properties exiting the foreclosure process nearly matched the number of new Notice of Trustee Sale filings, leaving the number of properties Scheduled for Sale in February flat compared to January. Year-over-year, the increase in properties Scheduled for Sale is a dramatic 126.3 percent, as more and more homeowners have found themselves on the brink of foreclosure. Banks continue to resell their Bank Owned (REO) property in a timely manner, with their inventories also flat from January to February.

 The courthouse steps remain highly competitive with discounts to market value dropping from 17.5 percent in January to 15.2 percent in February. Despite fewer foreclosure sales overall in February, as well as smaller discounts due to competitive bidding, 3rd party investors purchased more foreclosures, at 23.2 percent, than at any other time since we began tracking trustee sales in September 2006.

While the Time to Foreclose appears to have leveled off, the Time to Resell has increased in recent months. It is not unusual for home sales to slow in the winter months, which would naturally impact Time to Resell. This will be an important metric to track as we move into the Spring selling season as further increases could indicate housing market weakness.

     Every real estate market, no matter the time or place, is bound to be influenced in some way or another by "distressed" properties.  In a "healthy" market, anywhere from 1-3% of the homes are generally distressed sales. 

     So what qualifies as a distressed sale?  A distressed property will fit into at least one of these four categories:

1. Property that is in poor condition
2. Property that is or will soon be in the foreclosure process
3. Property owned by someone who is experiencing financial problems
4. Property on which the mortgage and lien amounts exceed the value of the property AND an owner must sell.

     Well, if you've driven around the San Diego area, you will notice some neighborhoods with obscene amounts of homes for sale (i.e. it seems like every other home on the street has a "For Sale" sign in front), while other neighborhoods have been minimally affected by housing market.

     I spoke with an agent from Seattle the other day, who informed me that there were a few short sales and foreclosures, but that those prices did not detract much from the "normal sales."  Well, here in Chula Vista, the distressed properties comprise 90% or more of the properties on the market in Chula Vista!

     This results in more poorly-maintained properties, more neighborhood eyesores, potential safety problems with vacant homes, disgruntled neighbors, an overall bad vibe in the area, the list could go on.  Also important to mention, is the fact that condo associations could lose their ability to have VA and FHA loans written on purchases in their complexes, resulting in a downward spiral of decreased demand, increasing inventory and plummeting property values.

     Another important point, is that homeowners who are not paying their mortgage, are probably not paying their property taxes either.  This results in lower revenues for the municipalities in which the people reside, throwing off revenues received and creating problems with local, county and state budgets.  This can affect everyone.

     Despite egregiously high levels of taxpayer dollars, we have not yet seen a major shift in the way banks are handling the hundreds of thousands of impending foreclosure properties.  Without a major change in protocol, it is likely that we will continue to see housing prices decline despite low inventories of homes and large numbers of buyers.

     As a Certified Distressed Property Expert, I ensure that homeowners who are trying to short sale their property are successful.  Foreclosure carries with it many unforeseen problems.  The truth is, with the right representation, homeowners who have a legitimate reason for short selling their homes should be able to avoid foreclosure.  This will help to keep our friends, our family and ourselves, happier and better able to cope with the other "issues" that life brings. 

     Wondering about the foreclosure levels in your neighborhood?  Get up-to-date information on foreclosures and pre-foreclosures at http://www.foreclosureradar.com/flx.php?id=48ee5897d7070.

When it comes to great loan ooprtunites, VA definitely seems to be the way to go for anyone who qualifies.  Well, just when I thought it couldn't get any better, it did!  VA loan limits have now increased to $625,500 effective now! 

Here are just a few reasons why buyers choose to go VA:

• Generous loan limits (now $625,500)
• Zero-down loan options
• No private mortgage insurance payments (a BIG savings!)
• Fixed and Adjustable rate programs availalbe
• Flexible income, employment and savings requirements

And just in case you are curious about monthly payments, here are a few purchase scenarios to whet your appetite!  (payments are principal & interest based on interest rate of 5.25%)

• $200,000 purchase, 0-down, for only $1104/month!
• $300,000 purchase, 0-down, for only $1657/month!
• $400,000 purchase, 0-down, for only $2209/month!

Now is an amazing time to buy, so be sure to call or email me right away for the best information on your next dream home!

Search the enitre MLS and get real-time foreclosure property information at http://www.HottestHomeBuys.com

When it comes to great loan ooprtunites, VA definitely seems to be the way to go for anyone who qualifies.  Well, just when I thought it couldn't get any better, it did!  VA loan limits have now increased to $625,500 effective now! 

Here are just a few reasons why buyers choose to go VA:

• Generous loan limits (now $625,500)
• Zero-down loan options
• No private mortgage insurance payments (a BIG savings!)
• Fixed and Adjustable rate programs availalbe
• Flexible income, employment and savings requirements

And just in case you are curious about monthly payments, here are a few purchase scenarios to whet your appetite!  (payments are principal & interest based on current rate of 5.25%)

• $200,000 purchase, 0-down, for only $1104/month!
• $300,000 purchase, 0-down, for only $1657/month!
• $400,000 purchase, 0-down, for only $2209/month!

Now is an amazing time to buy, so be sure to call or email me right away for the best information on your next dream home!

Good news for first-time home buyers that are looking at new homes in California!

As many people are now aware, there is an $8,000 tax credit for first time buyers, thanks to the "stimulus" package that was recently signed.

In addition to this however, the state of California is also offering a $10,000 tax credit to people buying new construction homes.  There is a healthy amount of paperwork to fill out, and "standard operating procedures" have yet to be established, so the best bet is to apply early before the money runs out.

The state has a budget of $100 million for this tax credit.

For more information, please visit: http://www.ftb.ca.gov/individuals/New_Home_Credit.shtml

For information on new homes that qualify for this tax credit, please be sure to contact me as soon as possible!  Don't miss out!