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Relocate America recently released its 2010 list of Top 100 Places To Live In America. The rankings are topped by some cities you may expect, and some you may not. Los Angeles did not make the list.

According to Relocate America, the rankings highlight communities “moving in the right direction”, defined as having a combination of strong leadership, job opportunities, improving real estate markets, recreational options and a good quality of life.

It’s not a bad formula and coming in at number 4 on the list of Top 10 Places To Live In America is San Diego.  San Diego was chosen for its strong economy, diverse population, great educational institutions, unsurpassed quality of life, and world-renowned location make it the ideal place to do business, to work, and to live. Because of its highly-educated workforce and mix of high-tech industry and recreational assets, a marketing consortium of high-tech industries has dubbed San Diego “Technology’s Perfect Climate.

The Top 10 cities in which to live, as selected by Relocate America are:

  1. Huntsville, AL
  2. Washington, DC
  3. Austin, TX
  4. San Diego, CA
  5. San Antonio, TX
  6. Tulsa, OK
  7. Charlotte, NC
  8. Raleigh, NC
  9. Boulder, CO
  10. Minneapolis, MN

View the complete Top 100 Places To Live In America 2010 list at the Relocate America website.

May I give you a quote today?

Mobile: (949) 456-2783
Fax: (877) 667-4153

E-Mail: e…@e…y.com

 

The national foreclosure rate is finally falling.

According to foreclosure-tracking firm RealtyTrac.com, the number of foreclosure notices dropped 2 percent between April 2009 and April 2010.

Two percent may not seem like much, but it’s the first time in the history of the RealtyTrac report that the annual foreclosure rate has dropped.

To be sure, foreclosure rates remain elevated — more than 300,000 were reported last month, but default notices appear to be approaching a plateau.

Read More....

 

Recently I’ve been receiving a number of questions asking Homeownership After Short Sale, Is It Possible. Many people who through no fault of their own had to sell were blocked from repurchasing a house for four years or longer, even though they’d rebuilt their credit, had qualifying incomes and were fully capable of handling a mortgage responsibly.

We are short selling our home, the mortgage company would not do a loan mod. Although we could not afford this house, we can afford a cheaper one – our credit scores are in the 640s. Will we be able to get another loan after the short sale closes?

There’s no one correct answer to this question or the 10 others I’ve received.  I’ll do my best to give you the best answer available as of today.  There’s some good news for people who have had to give the deed on their house back to the bank because of financial problems, or who have done a short sale to avoid foreclosure: You may not have to wait the typical four or five years to requalify for financing to buy another home.

Read more...

 

As of 05/13/2010 California has received 2,470 applications for the $10,000 tax credit for new home owners totaling $13,283,000. So it's not too late to get your application in. Remember submitting an application does not guarantee you'll get the tax credit.

For more information e-mail or call me today:

E-Mail: e...@e....com

 

 

Here's part two, another good read for all of my Realtor Partners participating in Short Sales.  Hopefully your Broker has a disclosure you can use directing your clients to the professional appropriate to their area of concern.

 

Via Drew Sygit (The Lending Edge) Real Estate Financing Expert (The Lending Edge):

Short Sale Legal Issues Affecting Real Estate Agents Part #2

The previous post in this series was on 04/23/10, click here to read it.

MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY 

This series of posts is meant to assist real estate agents in recognizing: 

  1. Legal & Tax Issues their clients are exposed to through a short sale.
  2. The legal liabilities agents may expose themselves to when representing short sale sellers. 

Agents will be dealing with more & more short sales, both on the listing and sale sides, as the Obama administration's HAFA Program gains traction and meets its goal of decreasing foreclosures by turning them into short sales.  So, you can either jump on board the "short sale train" or get run over by it. 

Now let's look at some common legal & tax issues encountered on short sale transactions.  Please share your thoughts and experiences with constructive comments for the benefit of all!
 

General Legal & Tax Issues on Short Sales

One of the biggest challenges and murkiest, is how to handle the legal and tax issues seller clients must consider on short sales.  The major concerns on just about every short sale transaction: 

  • What is the foreclosure process in the state where the property is?
  • Is the foreclosure process judicial or nonjudicial?
  • Is the mortgage debt(s) recourse or nonrecourse?
  • What are the tax ramifications of 1099's for forgiven debt?
  • How should potential deficiency judgments be addressed?
  • When should a seller client sign or not sign a Promissory Note to avoid a potential deficiency?
  • Is a short sale really the best option for a seller?
  • How will the seller's credit be impacted?
  • Should the seller file bankruptcy and if so, what type & when?
  • What happens if a Foreclosure Sale occurs during the short sale process? 

Although some experienced real estate agents might be able to adequately address these issues, the majority of agents engaged in short sales are really in over their heads without even being aware of it.

 

Let's look at each of these a bit closer. 

What is the foreclosure process in the state where the property is?

Keeping track of each state's foreclosure process could be overwhelming.  Most agents though, only do business in one state, sometimes two, and so only need to concern themselves with their state. 

Some states adhere to Title Theory where a Deed of Trust is used to convey the property deed to a trustee who holds the deed for the protection of the lender.  Other states follow Lien Theory, where the homeowner retains the deed to their property but allows lenders to put a lien against the property through a Mortgage.  Click here for a list of what each state uses. 

Of critical importance is knowing how long the foreclosure process takes in the state where the property is located.  Agents should also know if there's a redemption period after a foreclosure sale and how long it is.  For more information on state foreclosure laws, click here. 

Is the foreclosure process judicial or nonjudicial?

Agents should know if the lender just has to notify the homeowner and advertise the foreclosure sale or if they have to take the homeowner to court to foreclose.  This neat map of the U.S. shows which method each state uses.  Just hover over the state you're interested in. 

Is the mortgage debt(s) recourse or nonrecourse?

Homeowners need to be made aware whether or not a lender can pursue them for a deficiency judgment for the difference between what they owe and what their property sells for at foreclosure.  This is a totally separate issue from a 1099 for debt forgiveness and should not be confused with it. 

Nonrecourse States

Alaska, Arizona, California, Connecticut, Florida, Idaho, Minnesota, North Dakota, Texas, Utah, Washington


What are the tax ramifications of 1099's for 1099 forgiven debt?

The Mortgage Forgiveness Debt Relief Act, which was extended to December of 2012, exempts acquisition or home improvement debt on one's primary residence from taxation.  The limit is $1 million for single or $2 million for joint tax returns.  Many agents tell their short sale sellers not to worry about a 1099-C ("C" stand for Cancellation) without asking their client if they pulled money out of their home through a refinance and what they used the money for.  That's definitely a liability issue for the agent! 

How should potential deficiency judgments be addressed?

This is not a question an agent should discuss with their client.  You can talk about possibilities, but should refer your client to an attorney and or CPA.  If your seller receives an unexpected deficiency judgment after you sell their home, who do you think they'll sue? 

When should a seller client sign or not sign a Promissory Note to avoid a potential deficiency?

A deficiency judgment could affect a seller's credit and may lead to garnishment of bank accounts, paychecks, and even state income tax returns.  Sometimes it may make more sense to negotiate a Promissory Note instead.  Not something an agent should be doing! 

Is a short sale really the best option for a seller?

There are many internet articles complaining about agents talking sellers into a short sale when a loan modification or other option would have been in the client's better interest.  Sometimes staying in the property for as long as possible with no payments, is a homeowner's best course of action.  Other times, given FNMA's recent clarification of waiting periods for qualifying for a new mortgage, a short sale may be best.  If your client hasn't explored their options, you could be exposing yourself to a potential lawsuit if you don't properly inform them of the alternatives.

 How will the seller's credit be impacted?

A lot of real estate experts were proven wrong when Fair Isaac Company, the developer of the infamous FICO credit scoring model, revealed how short sales, deeds-in-lieu and foreclosures affect a borrower's credit scores.  Two important highlights: they all affect scores approximately the same and people with higher scores will be affected more.  Almost every agent I've ever spoken to about short sales has told me with conviction that a short sale is better for a seller's credit than a foreclosure.  I don't think "oops" is going to get them out of a lawsuit from an upset client. 

Should the seller file bankruptcy and if so, what type & when?

Often a homeowner short selling their home has lost their job or is buried in debt with no realistic hope of getting out of their situation.  Combining their situation with the probability of getting hit with a deficiency judgment may mean they'd be better off filing bankruptcy.  Agents should make sure they don't give legal advice in these situations and don't get overeager to just list a property in pursuit of a commission check. 

What happens if a Foreclosure Sale occurs during the short sale process?

Given all the various state foreclosure laws, this could be ugly.  I've witnessed more than one agent telling a seller they could push a foreclosure sale back and not to worry.  How do you spell misrepresentation?  Proper disclosure must occur - even if it costs a potential commission check.

 

Well, how am I doing so far?  Have I gotten your attention and enticed you to come back for more?  Do you even want to read more or are you just going to swear off short sales altogether?  

I recommend you find the best & most knowledgeable real estate attorney you can in your area and take them to lunch to discuss all these issues.  From personal experience I warn you against just settling for an attorney you already know or one that claims they know what they're doing.  Many attorneys are no more experienced than you are at short sales and are learning on the fly - and may do so at you & your client's expense.  Seek out experienced attorneys or ones that are exerting a lot of effort to educate themselves quickly and are honest about it.

 

NOTE: if you're the impatient type and don't want to wait to read the series as it's published, I'll send you the complete whitepaper for the series when you do ALL of the following:

  1. Post a constructive comment on one of the posts in the series
  2. Reblog one of the posts in the series
  3. Make me an associate of yours on ActiveRain
  4. Join my Fanpage @ www.facebook.com/TheLendingEdge and send me a message there requesting the whitepaper with your email address.

If you're a Michigan agent, I'd also very much appreciate you joining a new AR group specifically for Michigan real estate professionals willing to share marketing and social media ideas with each other. 

http://activerain.com/groups/michiganmarketingideas

Thanks for reading and I hope you spread the word.

 _______________________________________________________________

If you enjoyed my blog post,
I invite you to connect with me on the social networks below & subscribe to my blog! 

facebook   linkedin   twitter   rss

"Referrals are Sending Someone You Care about, to Someone You Trust!"
So, forward this blog post to someone that'll appreciate it!

_______________________________________________________________

Drew Sygit: CMPS, CMC, CRMS, CMLO, CALO, MBA, NAMB/MAMP Instructor & Speaker
The most Certified Mortgage Expert in the Midwest

Contact him for The Lending Edge
P: 248-356-3739 • F: 866-215-3755 • dsygit@TheLendingEdge.com • www.TheLendingEdge.com

 

Drew has spent a lot of time researching the Legal Issues Realtors face when taking on a Short Sale.  This is the first in a 10 part series he plans on running Tuesdays and Fridays.  

I highly suggest all my Realtor partners follow the series.  It really is a great read and an eye opener.

Via Drew Sygit (The Lending Edge) Real Estate Financing Expert (The Lending Edge):

Short Sale Legal Issues Affecting Real Estate Agents - Part #1

This series of posts is meant to assist real estate agents in recognizing: 

  1. Legal & Tax Issues their clients are exposed to through a short sale.
  2. The legal liabilities agents may expose themselves to when representing short sale sellers.

How did I come up with this series idea? 

I do a lot of networking which leads me to meet quite a few attorneys.  Many of them seem to be getting into loan modifications and short sales and approach me for referrals.  Besides direct referrals to homeowners, they all want introductions to real estate agents.  When I ask why, almost all tell me how agents doing short sales are practicing law without a license.  Since I'm very inquisitive, I've been asking these attorneys to give me specific examples.  A surprising percentage of attorneys can't come up with specifics.  Those that do, only have a small frame of reference.  So, I started compiling a list and doing my own research - both by tracking down local legal experts and online.  

This led me to create a whitepaper on Short Sale Legal Issues Affecting Real Estate Agents to distribute to my real estate partners.  I got such great feedback that I decided to post it.  Rather than just post it once as a blog and hope everyone on ActiveRain sees it, I came up with the idea of making it a series to increase the odds of more members getting exposed to it. 

So, please read on and if you like it share it with others that you know.  Also, definitely share your thoughts and experiences with constructive comments for the benefit of all! 

 

Many real estate agents recognize the market is changing and short sales are becoming too numerous to ignore.  Agents are jumping into the short sale market in a big way and several have really focused their business models on short sales. 

Short sales will continue to increase due to the Obama administration's stated goal, through its HAFA Program, of increasing short sales to decrease foreclosures.  So, agents will be dealing with them whether they want to or not. 

To set the stage, so to speak, for the legal & tax challenges agents face on short sales, let's cover some general challenges. 

General Short Sale Challenges

Working with short sales presents many challenges to real estate agents that they don't deal with on normal listings. 

  • Sellers may be more interested in staying in the property as long as possible without making payments.  This will affect their motivation in getting you what you need to get the property sold.  To make sure sellers are serious about selling, many agents are charging sellers a nonrefundable, upfront fee.  Make sure to get your broker's approval though, if you choose to do this.
     
  • Getting all the proper paperwork together can be time consuming.  There is so much to putting together a short sale package and it all takes time.  Time is money and if an agent's not careful, they can spend too much time on a single short sale listing to the detriment of the rest of their business.
     
  • Lenders on the property seem to misplace paperwork at an alarming rate.  Often this is probably used as an excuse due to personnel being overwhelmed with volume.  An agent isn't going to win against the lenders with this.  A better strategy might be to scan the entire package and use a fax server type of program that allows the sending of a PDF via computer.
     
  • Agents are often pushed to list a property at a price to cover what's owed versus a realistic market price.  The standard position of many lenders is that a property should be initially listed at a price equal to the mortgage balance.  This can put an agent in a legal quandary as they have a fiduciary responsibility to their client seller not the lender.  If a high starting list price leads to the property going to foreclosure sale before a buyer can be found, an agent could potentially be held liable if they didn't take proper measures to protect themselves.  An agent should check with an attorney about a waiver to use to address this situation.
     
  • Getting price reductions approved can be tedious.  Again if the seller is not serious or getting bad advice from their lender, the listing can turn into a waste of time.  Agents may be able to have a seller sign a pre-agreed upon price reduction timeline to avoid this.  An agent should check with their broker or an attorney to be sure this is legal in their state.
     
  • Once an agent secures an offer from a buyer, it can take months for the lender(s) to approve it.  See number 3 above about "lost" faxes.  It also seems to take lenders quite some time to get Broker Price Opinions scheduled and to run their Net Present Value analysis.

  • Second mortgages usually complicate matters greatly.  The two (or more) lenders compete for the dollars available through a short sale.  Even though the junior lienholders are aware they'll probably recover nothing if the property goes to foreclosure, they're also aware that the first lender will receive less in a foreclosure.  They use this to leverage what they can recover on a short sale.  The HAFA Program addresses this issue and it's hoped it will reduce the frequency of this delay.

  • Agents have to work with title companies to prepare mock HUD-1 settlement statements to accompany every offer submitted to the lender(s).  This task is best left to a title company as they have the software to execute this and account for transfer taxes, pro-rated taxes and the like.

Need I go on? 

Can you see how a short sale can take up a significant amount of an agent's time? 

Please comment on other issues that you've encountered that are NOT legal or tax issues. 

By the way, here's a teaser or cliff hanger, for the next post of the series: 

                      •-  What are the tax ramifications of 1099's for forgiven debt?
 

SHORTCUT NOTE: if you're the impatient type and don't want to wait to read the series as it's published, I'll send you the complete whitepaper for the series when you do all of the following: 

  1. Post a constructive comment on one of the posts in the series
  2. Reblog one of the posts in the series
  3. Make me an associate of yours on ActiveRain: www.ActiveRain.com/dsygit
  4. Join my Facebook Fanpage @ www.facebook.com/TheLendingEdge and send me a message requesting the whitepaper. 

If you're a Michigan agent, I'd also very much appreciate you joining a new AR group specifically for Michigan real estate professionals willing to share marketing and social media ideas with each other. 

http://activerain.com/groups/michiganmarketingideas

Thanks for reading and I hope you'll spread the word.

 _______________________________________________________________

If you enjoyed my blog post,
I invite you to connect with me on the social networks below & subscribe to my blog! 

facebook   linkedin   twitter   rss

"Referrals are Sending Someone You Care about, to Someone You Trust!"
So, forward this blog post to someone that'll appreciate it!

_______________________________________________________________

Drew Sygit: CMPS, CMC, CRMS, CMLO, CALO, MBA, NAMB/MAMP Instructor & Speaker
The most Certified Mortgage Expert in the Midwest

Contact him for The Lending Edge
P: 248-356-3739 • F: 866-215-3755 • dsygit@TheLendingEdge.com • www.TheLendingEdge.com

 
First-time homebuyers in Southern California are facing a deadline. Time is running out on the $8,000 tax credit. To receive the $8,000, first-time buyers will need to be under contract by April 30th of this year.

If you had plans on taking advantage of this credit, you should already be seriously shopping for a home. It is tough times out there for buyers. Inventory is at incredibly low levels and the better homes, that are priced appropriately, have multiple offers. There is also a strong possibility that the home you find will be either a short sale or REO (foreclosure). Negotiations for these homes can be expected to last from a week to months to complete. So now is the time to get the process started!

Read More....

 

Nick Pakulla has a great post up asking Realtors what they look for in a Loan Officer or Mortgage Broker, I like to dedicated this post to those Realtors who have piped up with the ability to close the loan as a quality they'd like to see.

You've all, or maybe I should say most of you have worked short sales, you've experienced the bank decline a good strong offer resulting in the foreclosure of the home.  You then see the home listed for much less than the offer your client submitted during the short sale period. While banks are trying to protect their assets they're also shooting themselves in the foot at the same time. I've seen several short sales get good offers only to go to foreclosure and close for 20-30k less. 

 

Everyone wants to work with a loan officer who can close loans, unfortunately unlike years past this is now out of our hands.  Until moving to a Direct Mortgage Banker I've had loans go to the close of escrow only to have Well Fargo, B of A and others pull approval at the last minute.

I had one in Laguna Beach a 17 million dollar property, client put down 16 million, loan docs where signed and we were sitting at the escrow closing when the call came in from Wells Fargo that they were pulling the approval because of $175 negative on an income property.  Now the client is golden tons of reserves A1 credit, it just didn't make sense.  Walked his file over to a friend at the company I work with now and we had a close in 5 days.

Luckily we had Sellers that understood and a Buyer who was willing to pony up the additional $1 million if the Sellers didn't want to delay the close.

I agree with everything Nick listed as great qualities, but some of those qualities are controlled by third parties and are out of the LO's hands.

  1. Timely response to all requests from clients and agents (This is a two street the client and Realtor must be timely in their response for conditions, reports and other information)
  2. Upfront about fees and expectations (should be provided on a preliminary HUD 1, if it's not I say run and run fast)
  3. Accessibility of underwriting and processing staff (If the loan is brokered out to a 3rd party this becomes an issue, have you tried contacting a B of A underwriter or processor?  It can be days before you hear back from them. All our staff is in house, so if they don't answer their phone I can walk over to their desk.)
  4. Ability to connect with clients and provide a high level of service
  5. Specific subject knowledge and expertise about the loan process and programs
  6. Competitive interest rates
  7. Delivery of loan package early 
  8. Unique loan programs to meet certain clients’ criteria
  9. Ability to make business decisions on loans that don’t fit the exact mold (we approve, underwrite and fund in-house)
  10. LAST: The very best interest rates
What I'm trying to say here is you have to know a lot about your mortgage partner, are they a Mortgage Broker or a Mortgage Banker?

A Mortgage Broker is an independent contractor working with (on average) as many as 40 lenders at any one time.

A Mortgage Banker also commonly referred to as a Direct Banker, not only approve and underwrite their own loans but close and fund mortgage loans.

I'll have more on the difference coming in a future post.

 

Nigerian home rental scams plaguing Craigs List at an alarming rate, I urge everyone who is in the rental market to remember this one piece of advice.  If it’s too good to be true it probably isn’t true.

I’m in the market to rent a home in Palm Springs, California, I’ve been searching Craigs List regularly and working with a Realtor friend in an attempt to find just the right place at a reasonable rent.  Unfortunately the rates for rentals in Palm Springs and the surrounding areas are all over the place, so trying to weed through the Nigerian scams is a little tough.

This morning while weeding through the new postings on Craigs List I came across one of those too good to be true listings complete with photos, property address and contact e-mail.

read more...

 

 

I'm sitting here minding my own business when the phone rings, Sally Shopper is on the other end.  Sally want's to refinance her current 30 year fixed 5% mortgage to take out $100,000 to purchase an investment property.

Sally would like to remain at a 5% fixed rate and not pay any points, and also purchase her investment property with the same 5% fixed rate.  After asking all the obligatory questions, I get around to qouting Sally rates.

Sally:  Ed I know there are 5% 30 year fixed loans available because I have one, are they just all sold out?
Me: No, Sally they're not all sold out they're just not available at this time.

Sally: Ed, I understand they're not available at this time but, can I refinance my current home at the higher rate then, grab up the 5% rate that becomes available for my new purchase.
Me: No Sally, interest rates have gone up, a 5% interest rate is no longer available.

Sally: I don't understand Ed, if I refinance my current 5% fixed rate then it should be made available for use on another loan.  Ed, if I buy the last sweater at Macy's and later return it someone else can buy that sweater.  I'm returning my 5% so, it should be available to me for my investment property.
Ed: Sally, it doesn't work that way interest rates are up therefore, 5% is no longer available.

Sally: Well, what can I do?  I've called 7 people today and they're all telling me the 5% loan is sold out.  How many people have to return the 5% loan before it's made available again?

By this time my eyes are rolling and I'm trying not to laugh at this woman.  I try to calmly explain to her how interest rates are determined, etc.  She continues on with the same line of shopping and returning, when will I be getting more 5% loans in, etc.  By now I'm looking at the clock wondering if 11:30am is too early to have a sit down with my good friend Jack Daniels when she hits me with, Ed I really like you, you're very up front and honest, I'm going to call you back every couple of days to see if any of your clients have returned their 5% loan.

Anyone want a California Referral?

 
  

Ed Brophy - REALTOR® - DRE #01344385

Palm Springs, CA

More about me…

Ed Brophy, REALTOR®

Address: Rancho Mirage, CA, 92270

Office Phone: (760) 844-3736

Email Me

A place to learn about mortgages, interest rates, credit and ask the guestions you've been wondering about.

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