Explore Blog

DISNEYLAND Fireworks Every Night

Thu, 26 Jun 2008 23:52:45 -0500

Disneyland Fireworks can be heard nightly here in Southern California. That's a good thing and helps us be taken away in our thoughts of fun and interesting times with family and friends.

My wife Christi and I live at our home in the Turtle Rock area of Irvine, South Orange County, California, about 15 miles south of Anaheim and Disneyland.

It's a beautiful time of year here. We experience some of the best weather in the world with warm sunshine during summer days and ocean breezes at night.

While writing a note here at my desk at home, I feel a bit of the pacific ocean sea breeze washing through our neighborhood. Disneyland fireworks are going off in the distance. Hearing them each night at about 9:35 PM is fun.

We are blessed to have a home and live in such a place. The comfort of our weather and variety of coastal lands some reasons why so many folks want to move and live here in South OC.

Disneyland fireworks seem to be part of that too.

Posted by Harrison K. Long, Explore Properties Group, Coldwell Banker Previews.

Get Over the 'NIMBY" Attitude When It Comes to Our Need For More Fuel and Energy

Wed, 25 Jun 2008 00:44:15 -0500

A primary challenge for us in business here in California and the US is high gas and fuel prices.

HERE IS AN IDEA TO IMPROVE THINGS FOR BUSINESS AND REAL ESTATE.

Jonathan Lanser at the Orange County Register says that people need to temper their "NIMBY" (not in my back yard) attitudes. We agree.

Our need for plentiful and cheaper fuel and energy is clear. However, many folks object to it being produced in their home towns and back yards.

Industry here in the U.S. can build clean, efficient plants that produce and transport fuel and energy. It's OK to have them near your town or home neighborhood.

It's good that some people want to protect the environment while adding energy infrastructure.

Compromises must be made. We need power plants, more nuclear power, oil refineries, oil wells, transmission and transportation hubs.

Let's help make things better for business, our economy and real estate, and improve quality of life for people along the way. We agree with Jonathan Lansner.

Posted by Harrison K. Long, Explore Properties Group
Source: Orange County Register, June 22, 2008

Labels: Ecology, Economy and Business, energy, Housing and Real Estate Outlook

It's Good For Real Estate that FHA Suspended its 90-day Rule Against Flipping

Thu, 19 Jun 2008 10:03:44 -0500

Foreclosed and abandoned homes harm neighborhoods and delay a community's recovery.

WE'RE LOOKING FOR SOMETHING GOOD TO HAPPEN IN REAL ESTATE.

In order to help facilities sale of bank-owned properties, the Federal Housing Administration (FHA) has temporarily suspended its 90-day rule against flipping of properties.

Under that anti-flipping rule, the FHA does not insure a mortgage loan if the sales contract is executed within 90 days of the seller's acquisition of the property. Effective June 9, 2008, the anti-flipping rule has been waived for one year for properties acquired by lenders, their subsidiaries, and their outside vendors.

The FHA still requires homes to be "safe, secure, and sound," which may not be the condition of certain foreclosed-upon properties.

Check out Federal Housing Administration. Also check out article about California REO Transactions at California Association of Realtors.

WE EXPECT THIS TO BE GOOD FOR REAL ESTATE, ESPECIALLY IN CALIFORNIA.

Posted by Harrison K. Long, Explore Properties Group

Labels: government, Home Ownership Economics, Housing and Real Estate Outlook, Lending

Let's Increase Drilling and the Supply of US Domestic Oil and Get Price at the Pump Down

Mon, 16 Jun 2008 23:20:42 -0500

All Business people (including Realtors and brokers) must recognize that we have a serious problem in the US with the price of oil and gas at the pump.

The Democrats in US Congress are keeping us from exploring and drilling for domestic oil. And they are helping to limit our domestic supply.

The U.S. House and its appropriations committee (lead by Democrats) refused during the week of June 11, 2008, to lift the ban on oil exploration on the outer continental shelf (at least 50 miles from American shores).

We need to get more domestic oil. We need to increase US oil production and get price at the gas pump down. Drilling for oil is a way to accomplish that.

Let's tap our own US resources for oil. Otherwise, the international price of oil will rise to $250 a barrel, and we will be paying more than $10 a gallon at the pump.

Posted by Harrison K. Long, Explore Properties Group, Coldwell Banker Previews

Labels: California law, politics, Real Estate law, Realtors and Brokers

U.S. Congress Should Work To Improve Our Domestic Oil Supply & Get Decreased Prices at the Gas Pump

Thu, 12 Jun 2008 19:13:07 -0500

THE GASOLINE PRICE AT THE PUMP CRUNCH is rough for all of us.

Supply has not kept pace with demand, and so prices rise.

Many of steps taken in the U.S. for reduction of demand are being negated by increased demands for oil in foreign countries including India and China.

The best step we can take to decrease prices is to INCREASE SUPPLIES of oil here in the U.S.

U.S. Congress and Senate (both controlled by Democrats) has instead proposed legislation that would allow the U.S. to sue OPEC for suppressing oil production.

What?

We criticize other countries for curbing their oil production, and at the same time close off areas here in the U.S. known to have oil reserves and natural gas.

China is now working with Cuba to drill for oil 60 miles off the coast of Florida.

Meanwhile our Congress does nothing to increase our production and explore other U.S. oil resources.

On June 11, 2008, the U.S. Senate appropriations committee (controlled by Democrats) refused to consider a bill to allow exploration and drilling for oil by U.S. companies in international waters. Does that make sense?

We have advanced exploration technology available to allow development of oil in an environmentally-sensitive way while protecting surrounding habitats and wildlife.

Our U.S. Congress waits.

It is estimated that exploring a mere 2,000 acres of frozen tundra in the 1.5 million acre Arctic National Wildlife Refuge (ANWR) could produce 10.4 billion barrels of oil. It is also estimated that offshore drilling would yield 86 billion barrels of oil and large quantities of natural gas.

In the long term, we must find and develop alternative energy sources here in the U.S. and be less dependent on oil.

During the short-term, developing our own domestic sources of oil should take priority.

Our U.S. Congress with Republicans and Democrats working together should legislate for real solutions to increasE oil production, provide more oil for us and get gasoline prices down at the pump.

Posted by Harrison K. Long, Explore Properties Group, June 11, 2008
Source: Ken Calvert, U.S. Congress Representative, 44th District from California

Labels: Ecology, Home Ownership Economics, Patriotic, politics, Real Estate law

McCain & Obama as U.S. Presidential Candidates Different Positions on Housing and the Economy

Tue, 10 Jun 2008 19:01:49 -0500

John McCain and Barak Obama, the two U.S. Presidential candidates for election 2008 have different approaches to housing and economic issues.

Senator John McCain:

1. Proposes to spend up to $10 billion to allow some home owners to trade high-interest, adjustable-rate mortgages for fixed-rate loans.

That sounds good.

2. Proposes a suspension of the 18.4-cent federal gas tax and 24.4-cent diesel tax during the summer.

That sounds good too.

3. Supports a middle-class tax cut by doubling the personal tax exemption for dependents to $7,000.

This also will be good.

4. Calls for a simpler tax system with two tax rates and a generous standard deduction.

We agree.

5. Supports making permanent the 2001 and 2003 income tax cuts and proposes cutting the corporate tax rate to 25 percent from 35 percent and allowing businesses to immediately write off capital expenses.

We agree again.

6. Maintains that government assistance to the banking system should focus on preventing systemic risk that would endanger the financial system and the economy.

Senator Barak Obama:

1. Calls for greater government regulation of the U.S. financial system and proposes a new $30 billion economic stimulus plan to help home owners, including a $10 billion foreclosure prevention fund to help people keep their homes and $10 billion in relief for state and local governments hit hardest by the housing crisis.

Would that be socialism? Is he suggesting that we socialize the U.S. financial system?

2. Outlines six "core principles for reform" that would give the Federal Reserve supervisory authority over any financial institution to which it might make credit available and calls for reform and streamlining of financial regulatory agencies.

What?

3. Wants to repeal a provision in the bankruptcy law so ordinary families can modify terms of home mortgages.

What are "ordinary families"? What does he mean by "modify terms"?

4. Proposes a 10 percent mortgage tax credit for middle-class Americans.

What are "middle class Americans"?

Posted by Harrison K. Long, Explore Properties Group, Coldwell Banker Previews, June 10, 2008.
Source: Reuters News Service

Labels: Home Ownership Economics, Housing and Real Estate Outlook, politics, taxation

California Sales Tax Should Not Be Expanded to Include That For Services

Tue, 10 Jun 2008 09:58:36 -0500

The State of California and legislature and Board of Equalization is considering sales tax expansion to include that on services, such as fees for real estate agents, physicians, dentists, lawyers, accountants, architects, gardeners, landscapers, babysitters, and so many others.

There is an obscure rule of the Board of Equalization, the state's tax collecting agency, that would allow such consideration. This elected board is itself governed by 3 Democrats and 2 Republicans.

We recognize that the state of California is in financial trouble with estimated budget deficit of $17 billion.

The state should focus on reducing its mammoth payroll and pension obligations, stop giving away money so much money through entitlement programs, increased welfare benefit payments, and that involving medical care for illegal immigrants.

Democrats don't want to cut services. Republicans don't want to raise taxes, and we agree.

The California sales tax currently only applies to goods that you can touch, like motor vehicles, household items, golf clubs, clothing, office supplies, computers, telephones, and digital recorders.

Our sales tax does not now apply to services, like that of a real estate agent, physician, lawyer, dentist, accountant, architect, and labor for an auto mechanic.

The State board of Equalization without permission from the legislature and governor could change this system to include sales taxes on services.

What a mistake that would be and get us tied up in court of years on constitutional issues, which would require further use of the state's precious money.

The possibility of expansion of sales tax to include services should be opposed and rejected by every California business person.

The board's chairwoman, Judy Chu, has already during April 2008 proposed a 5 percent sales tax on services and argued that the board has such authority to make this determination on its own.

Our California State Board of Equalization and the Democrat controlled legislature should not be allowed to expand sales tax in California to include that for services.

Posted by Harrison K. Long, Explore Properties Group, June 9, 2008
Source: Orange County Register

Labels: California law, Ethics and business practices, Home Ownership Economics, taxation

Challenges for Real Estate Investors In This Declining Home Value Market

Fri, 06 Jun 2008 09:50:42 -0500

Some losers in this residential real estate declining market are buyers of second homes, investors who are now involved with income tax debt challenge.

Some of these people will lose their properties through short sale or foreclosure and make it to bankruptcy under the weight of a income tax bill.

While U.S. Congress has granted some tax relief to people who lose their primary homes, there is no such aid for investors who fall behind on payments on 2nd homes.

If a person buys an investment home, and it they are unable to make payments and forced to short sale that property, or if they lose it in foreclosure, the difference between the amount they borrowed and the rental home's sale price in short sale or foreclosure will ultimately be considered by the IRS to be taxable income as forgiven debt.

Under the U.S. Mortgage Forgiveness Debt Relief Act, which is effective from Jan. 1, 2007, through Dec. 31, 2009, a homeowner does not have to pay ioncome tax on debt forgiven by a lender, as long as the loan is backed by the property the homeowner lives in.

According to the National Association of Realtors, there are about 7.5 million vacation homes in the country, about 10 percent of the number of owner-occupied homes. From 2002 to 2007, the number of vacation homes rose 18 percent, more than three times the growth in the number of owner-occupied homes and the growth in investor-owned units.

For investment property owners with a potential income tax bill, there is one possible way to minimize the damage. Negotiating with a lender could prove to be good. The lender needs to agree that foreclosure fully satisfies all obligations under the loan. With that statement, there could possibly be no outstanding unpaid debt reported by the bank that the Internal Revenue Service could treat as income. However, it is still unknown whether that tactic will work with the IRS and the US tax courts.

Posted by Harrison K. Long, Explore Properties Group, June 6, 2008
Source: California Association of Realtors, National Assoc. of Realtors

Labels: foreclosures, Home Ownership Economics, income tax, short sales

NAR Approves New Model Rules For MLS About "Short Sales"

Thu, 05 Jun 2008 12:31:43 -0500

The National Association of Realtors (NAR) board of directors has recently adopted new policy for disclosure of short sale listings in a multiple listing service.

The NAR directors "approved new model rules for Multiple Listing Services (MLSs) that would enable practitioners to alert one another to potential short sales and put them on notice about the sharing of any reduction in gross listing commission required by a lender. MLSs are given the authority to decide whether or not their participants have to disclose reasonablyknown short sales."

All MLSs must provide their members with the means to disclose that a given listing is a short sale.

For purposes of the new rule, short sales are defined as "a transaction where title transfers; where the sale price is insufficient to pay the total of all liens and costs of sale; and where the seller does not bring sufficient liquid assets to the closing to cure all deciencies."

Agents for buyers in short sales should advise the buyer clients that a proposed short sale price accepted by the seller might not be approved by the lender. Buyers should be careful and not get too excited about a possible bargain at short sale.

It's not the easy road for a real buyer.

Posted by Harrison K. Long, Explore Properties Group, June 5, 2008
Source: Bob Hunt.

Labels: Multiple Listing Service, Realtors and Brokers, short sales

What Does the NAR v. DOJ Case Settlement Mean?

Wed, 04 Jun 2008 01:03:25 -0500

The U.S. Lawsuit vs. the National Association of Realtors Online Listing Policy Is Being Settled as of May 27, 2008, which calls for the adoption of a new online listings policy.

Source: settlement proposal (United States v. National Association of Realtors, May 27, 2008)

The lawsuit had challenged the NAR policies governing the online sharing and display of property listings, including Virtual Office Web site (VOW) and Internet Listings Display (ILD) policies.

The biggest win for NAR was the DOJ's concession that MLS members must be actively engaged in real estate transactions, which is defined broadly include brokers who make an effort to be engaged in real estate transactions, but fail to close any deals over an extended period of time.

Another NAR win is a registration requirement that will restrict access to VOWs and enable brokers to keep records of VOW-registered e-mail addresses. Those must be confirmed before the registrant can access the VOW.

Other data-sharing policies for multiple listing services and participants, known as Internet Data Exchange (IDX) policies, were not challenged in the lawsuit and are not affected by the proposed settlement.

The proposed settlement provides that the display of listing information on a VOW site does not require separate permission from the participant whose listings will be available on the VOW. However, it does provide that individual sellers can choose to block information about their home from display on the Internet.

The proposed settlement is not yet final. It will be published in the Federal Register and is subject to a 60-day comment period and a 30-day review by a judge. NAR must adopt the modified VOW policy within five business days of the final judgment on the settlement agreement.

Posted by Harrison K. Long, Explore Properties Group, May 28, 2008
Source: settlement proposal (United States v. National Association of Realtors, May 27, 2008)

Labels: Multiple Listing Service, Real Estate law, Realtors and Brokers

An Old Fashioned Way of Determining Value of a Home

Mon, 02 Jun 2008 01:42:37 -0500

Value of housing has many variants. The value of a certain home is determined by lots of factors specific to that property. It's difficult to asign economic value to each of these factors. This is especially true when buyers and sellers do not not have complete information about each factor.

Some web sites (like S&P and Case-Shiller) use mathematical weighting formulas to come up with opinion on home value.

However, these sites don't consider whether buyers have actually seen or previewed the houses and the neighborhoods. These sites and indexes are incapable to accurately determine economic value or price of a home.

Lenders don't look to computer-generated models to make decisions. They instead rely on old fashioned buyer and seller factors, such as comparable sales to determine how much to loan on a given property.

Buyers count on such things as appearance of the home, character and neutrality of improvements, landscaping, what kind of light the interior of the home is exposed to, character of the town and neighborhood, schools, whether others homes on the street have been improved, positive activities in the area. Another factor important in some communities is strength of the homeowner association and its management.

We believe the old fashioned way of determining home value will be making a comeback.

Posted by Harrison K. Long, Explore Properties Group, June 1, 2008

Labels: Home Ownership Economics, home value

U.S. Lawsuit vs. National Association of Realtors Online Listing Policy Is Being Settled (5-27-08)

Wed, 28 May 2008 17:07:56 -0500

The U.S. antitrust lawsuit filed against the National Association of Realtors in 2005 and parties involved have reached a proposed settlement as of May 27, 2008. The settlement calls for the adoption of a new online listings policy.

The lawsuit had challenged the NAR policies governing the online sharing and display of property listings, including Virtual Office Web site (VOW) and Internet Listings Display (ILD) policies.

Other data-sharing policies for multiple listing services and participants, known as Internet Data Exchange (IDX) policies, were not challenged in the lawsuit and are not affected by the proposed settlement.

The Justice Department had alleged that NAR's policies could restrict competition and consumer choice in real estate services, that those policies would discourage low-cost services.

The DOJ had challenged the NAR requirement that multiple listing services permit brokers to selectively withhold property listings from companies that operate VOW-based search sites that feature a collection of property listings from MLS members.

The proposed settlement provides that the display of listing information on a VOW site does not require separate permission from the participant whose listings will be available on the VOW. However, it does provide that individual sellers can choose to block information about their home from display on the Internet.

The DOJ said that the MLSs that had adopted policies in violation of the settlement proposal must rescind those rules. The DOJ reports that under the new policy, brokers participating in a NAR-affiliated MLS will not be permitted to withhold their listings from brokers who serve their customers through virtual office Web sites.

Another rule challenged by Justice Department related to restrictions in using VOW sites as a source of referral fees from other brokers. The proposed settlement provides that an MLS may not prohibit, restrict, or impede a participant from referring registrants to any person or from obtaining a fee for such referral.

The NAR position is that all members of MLS must be actively engaged in the act of real estate buying and selling, which prevents MLS members from joining an MLS specifically to "scrape" property listings from other members.

The proposed settlement is not yet final. It will be published in the Federal Register and is subject to a 60-day comment period and a 30-day review by a judge. NAR must adopt the modified VOW policy within five business days of the final judgment on the settlement agreement.

Posted by Harrison K. Long, Explore Properties Group, May 28, 2008
Source: settlement proposal (United States v. National Association of Realtors, May 27, 2008); Associated Press.

Labels: Multiple Listing Service, Real Estate law, Realtors and Brokers

US Congress and Senate Should Pass Permanent Federal Housing Administration Reform Legislation

Tue, 27 May 2008 17:53:08 -0500

Our U.S. Congress and Senate Should Pass Permanent Federal Housing Administration Reform Legislation.

The time is now for the US Congress and Senate to pass permanent Federal Housing Administration reform legislation if we are to give American homebuyers and homeowners the peace of mind they need.

While new loan limits were recently enacted as part of the Economic Stimulus package, they will expire at the end of 2008 even though they have brought relief to more than 325,000 families so far this year.

Reducing these limits, or letting them expire by doing nothing, could cause further turmoil in our fragile housing market.

Realistic loan limits in high cost areas of the country are needed to bring stability to the marketplace.

So are lowered FHA downpayment requirements and options for buyers to obtain qualified mortgages for the purchase of condominiums as well as single family homes.

It is important for FHA reform legislation to be enacted during 2008 in order to create safe and affordable mortgage options for homebuyers and those wanting and needing to refinance home mortgages.

Posted by Harrison K. Long, Explore Properties Group, May 27, 2008

Labels: Housing and Real Estate Outlook, legislation, Mortgage financing

Vote YES on CA Proposition 98 in June 2008 Election

Sat, 24 May 2008 13:03:36 -0500

Vote YES on CA Proposition 98 in June 2008 Election

Vote YES on Proposition 98 and NO on Proposition 99 in the June, 2008, election.

Proposition 98 will limit the ability of local governments to use eminent domain to seize private property and give it to other private entities.

Proposition 98's opponents have circulated a great deal of misinformation.
Set the record straight & know the truth about 98:

Myth 1: Opponents claim that tenants currently in rent controlled units will be summarily evicted.

Truth: Tenants currently in rent controlled units cannot be summarily evicted. Prop 98 only lifts rent controls AFTER a tenant: (1) vacates the unit voluntarily or (2) has been removed for a just cause, which is defined by local rent control ordinances.

Myth 2: Critics of reform claim that Prop 98 threatens the construction of state water projects.

Truth: Prop 98 will NOT limit the construction of state water projects. This view has been rejected by independent legal authorities such as the Institute for Justice, the organization that litigated the Kelo case, as well as a prominent water attorney that represents numerous California water agencies. Experts have affirmed Prop 98's intent to protect government's use of eminent domain for legitimate public use - state water projects are OBVIOUSLY a legitimate public use. Additionally, the state Legislative Analyst's Office did not cite any impact on water projects in their report to the Attorney General's office.

Myth 3: Opponents claim that Prop 98 prevents local governments from using eminent domain to obtain property for PUBLIC purposes, like schools, libraries, etc.

Truth: Prop 98 only prevents eminent domain from being used to seize private property to give to other PRIVATE entities. The state Legislative Analyst's Office says this: "Under the measure, government could continue to take property for facilities that it would own and use, such as new schools, roads, parks, and public facilities."

Posted by Harrison K. Long, Explore Properties Group, May 24, 2008
For more information go to www.yesprop98.org

Labels: California law, politics

Are We Starting to Experience Some Home Sales Stability in OC, California?

Thu, 22 May 2008 17:54:18 -0500

Some people say we are starting to experience some home sales stability.

DataQuick Information Systems released its report on May 19, 2008, and said sales units in OC, California, totaled 2,166 in April, 2008, the first time they were above 2,000 homes a month since the market crisis started.

During April, 2008, buying activity was 19 percent below April, 2007, and 46 percent below the average April since 1988, and was the slowest April in DataQuick's 21-year sales recording history.

However, unit of sales improvement in April, 2008, was driven partly by bargain hunters looking at the low end of price.

The number of houses that sold for $500,000 or less increased 55 percent, and the number selling below $400,000 doubled.

Almost thirty percent of homes sold in Orange County during April, 2008, had been in foreclosure during the prior year (DataQuick).

That's amazing. Perhaps it's the start of the home sale market clearing out the foreclosures. That would be a good thing.

Posted by Harrison K. Long, Explore Properties Group, May 22, 2008
Source: Orange County Register, May 20, 2008

Labels: foreclosures, Housing and Real Estate Outlook

How To Manage Your HELOC Loan With Rising Rates?

Thu, 22 May 2008 00:58:04 -0500

Most HELOC loans (home equity line of credit) are indexed to the bank prime loan rate. When the prime rate changes, the rate on your HELOC will change also.

When prime increases 100 basis points (one full percent) the home equity line of credit borrower pays more in interest costs.

If you make monthly payments according to a fixed schedule, the rise in rates also means less of each payment goes towards reducing principal. So it will take longer to pay off the loan balance.

How to manage your HELOC loan?

One possibility is 0% Balance Transfer Offers. If you have good credit and are careful, transferring some or all of your HELOC debt to a 0% credit card can be a workable strategy.

You can ride the 0% offer until it expires. You can pay off the balance with a HELOC check (effectively transferring the balance back to the HELOC). However, there are limitations.

Be careful with this. It can be complicated. We recommend that you consult with a qualified Realtor or tax specialist in your area or jurisdiction.

Posted by Harrison K. Long, Explore Properties Group, May 21, 2008

Labels: Home Mortgage Rates, Lending, Mortgage financing

Property Owners & Buyers Should Oppose CA State-mandated Energy Audits At Time Of Sale

Thu, 15 May 2008 10:30:28 -0500

Property Owners, Sellers, Buyers, and Realtors, should fight against any proposed California state-mandated audit law requiring time-of-sale energy efficiency audits.

CA Assembly bill 2678 was introduced in Feb. 2008, has been passed out of committee. This bill would require California Energy Commission to develop requirements for time-of-sale energy efficiency audits for residential and commercial buildings.

If this passes, owners will be required to submit for state audits and then be required to meet new retrofit standards.

If passed, this bill will add time to the home and commercial building selling process. This will also add costs for sellers, which would eventually be born by the buyers and slow the market down even further.

We and the California Association of Realtors strongly oppose this legislation.

This bill would would impose requirements at time of sale, and only at time of sale. If you are not selling your home, this would not require you to do anything.

This bill is aimed at the property owners who will be selling, is against the real estate industry as a whole, and should be opposed.

Posted by Harrison K. Long, Explore Properties Group, May 15, 2008
Source: Orange County Register, May 10, 2008

Labels: California law, Home Ownership Economics, Real Estate law

Banks & Lenders Are Taking Less Than What's Owed At Trustee Sales After Foreclosure

Wed, 14 May 2008 20:23:22 -0500

It's interesting that in Orange County, California, during April, 2008, buyers took foreclosure homes off the bank and lender hands at trustee sales for 21.5% less than the amount owed.

One year ago during April, 2007, the banks and lenders weren't so interested in discounting at trustee sales.

Perhaps the banks are getting smart.

It was reported that 84 percent of properties sold at the OC, California, at trustee's sales during April, 2008, were offered at a discount.

Posted by Harrison K. Long, Explore Properties Group, May 14, 2008
Source: Orange County Register, May 14, 2008

Labels: foreclosures, Home Ownership Economics, lenders, Lending

It's Good that NAR Will Consider New Rules for Listing & Advertising of Short Sales

Thu, 08 May 2008 10:45:04 -0500

The good news during April 2008 from the National Assoc. of Realtors is that it is considering new rules for listing and advertising of short sale and distressed properties.

It's about time.

Rules must be made and followed regarding listing of these properties with the MLS services. The rules should bind owners and sellers, listing agents, and lenders, through the short sale process.

The health of our real estate market is dependent upon buyers having sufficient and accurage information on which they can rely for truth about the properties.

Regarding distressed properties, the market and folks who buy need MLS listings to identify whether there is lender approval of offers on short-sale.

The market needs to have MLS rules on advertising of commission offered by the owner and lender to the broker Realtors for the buyers. Buyers and their agents are dependent upon accuracy of information provided to them in order to make informed decisions and protect value.

The market and buyers deserve to know from the MLS whether the property will be tied up in a lengthy process of lender determination of eligibility, whether there is non-judicial foreclosure in the works, and what is exactly being offered.

After the rules are established, the NAR, California Association of Realtors, and local MLS groups, must enforce those rules, and not allow listings that don't comply.

Banks, lenders, and holders of notes, must not be allowed to set rules and information to be provided in the MLS listings.

Posted by Harrison K. Long, Explore Group, Realtor and Broker, Irvine, CA, May 8, 2008.

Labels: Ethics and business practices, marketing, Realtors and Brokers, short sales

What To Do If You Are Upside Down and Unable to Make Payment on Notes Secured by First and Second Deeds of Trust on Your Home

Thu, 08 May 2008 01:04:22 -0500

You might owe more on your notes secured by a first deed of trust and on the note secured by the second on your home.

What do you do?

Here in California we have the ONE ACTION RULE, the law preventing lenders from both foreclosing and suing you on the note. If the lender chooses the non-judicial foreclosure process, he is then prevented from suing you on the note itself. However, if the lender fails or declines to foreclose on the note, he retains the right to file and prosecute a civil lawsuit and get monetary judgment against you.

This could happen to you. It is more common these days.

If you are here in California and upside down on both the note secured by the first and that secured by the second on your home, always make all payments on the first if possible. Do whatever it takes to prevent the first from foreclosing. If you are unable to make payments on the second note, always force that note holder to foreclose. Once the holder of the second starts non-judicial foreclosure, he chooses that route and is prevented from filing a separate lawsuit for monetary judgment.

What is happening here in California is that some folks with note obligations secured by a first and a second on their home decline to make payments on either note. Their thought is to allow the holders to foreclose and to let the property go.

WAIT A MINUTE.

In that situation, the holder of the first can foreclosure and wipe out the deed of trust that was the security for the holder of the first. However, since that second holder did not exercise his right to foreclose, he could then file and prosecute a lawsuit against you for the monetary amount of the note.

Think about this carefully, and it is complicated. Seek and retain the advice of qualified counsel in your state and jurisdiction.

Posted by Harrison K. Long, Realtor, Broker, Explore Properties Group, May 7, 2008. Also a lawyer licensed by the State Bar of California since 1976.

Is A Home Buyer Equity Sharing Arrangement a Good Thing in This Market? -- Part One

Sat, 03 May 2008 16:02:07 -0500

A man contacted us a week ago about his predicament. He and his wife had entered into an EQUITY SHARING AGREEMENT with a mortgage broker during 2006 to buy a home in South OC, California. This family made payments to the mortgage company as rent on the agreement. The mortgage company in turn made some payments to the lender on the note. The mortgage company went out of business six months ago and is not now making payments. This family could be facing foreclosure and evication? Was this EQUITY SHARING ARRANGEMENT a good thing?

...........

Investments in real property can take various forms, such as syndication, partnership, limited partnership, or LLC, where none of the parties live in the property and the property is rented to tenants.

An EQUITY SHARING ARRANGEMENT involves one party (the owner-occupant) occupying the property and the other (investor) putting up the bulk of the financing. Both the owner-occupant and the investor can receive tax benefits and share in the profit according to their investments as described in their equity sharing agreement. First-time homeowners are the typical owner-occupant while the investor can be a family member, a seller, or any real estate investor.

EQUITY SHARING is a form of ownership and investment that allows two or more parties to share an interest in real property. It is frequently used in situations where, because of the high cost of housing, one party, the investor, puts down the bulk of the downpayment, and the other, the owner-occupant (also caller the "occupier") puts down little or no downpayment but agrees to pay a monthly amount consisting of "rental payments," mortgage payments, taxes, and other specified charges, and lives in the dwelling. The owner-occupant may pay all of the mortage costs as "rent" or may pay two different amounts, one portion representing the rent and the other representing mortgage, which would include interest for which he or she could receive a tax deduction.

Depending on the specific terms of the contract, there are tax and ownership advantages to EQUITY SHARING.
Be very careful. There are potential tax and financial pitfalls in an equity sharing agreement that is loosely worded. Since the owner-occupant does not own 100 percent of the property, he or she must pay a "fair market rental" to the investor for living in the dwelling. The rent paid by the owner-occupant should be proportional to the percentage interest that the owner-occupant has, and should be based on the fair market rental value determined in good faith. Ideally, they have both signed the note and trust deed and are also on title. The rental paid to the investor is taxable income, and the interest paid on the mortgage is tax deductible. On the other hand, the investor also pays the remaining fraction of the mortgage each month based on his or her proportional share of ownership and can deduct the interest as an expense of the property, subject to passive loss and other restrictions.

Be careful with EQUITY SHARING AGREEMENTS. Consult a qualified Realtor and also with an experienced real estate lawyer in your area and jurisdiction.

Posted by Harrison K. Long, Explore Properties Group, Irvine, CA, May 3, 2008
Source: California Association of Realtors, March, 2008 Labels: foreclosures, Lending, Realtors and Brokers

Reinstatement of Your Home Loan or Mortgage After Default?

Sat, 03 May 2008 01:31:11 -0500

You don't have to be a bum or a deadbeat to get into a foreclosure position with your home loan. It can be as simple as missing some days of work or having a mortgage payment late. You are in over your head with your lender, which is now threatening you with foreclosure. The last thing you need is the stigma of foreclosure and are seeking a way out.

If it's possible, the best way to get out of this mess is to come up with cash and go for reinstatement of the loan.

This could be difficult. The lender requires you to catch up with payments and late fees in a lump sum. If you can work this out, get it in writing. The only chance you have of making it happen is if you satisfy the lender that conditions that led to this situation will not be repeated.

Be careful with this. Hire a qualified and professional Realtor, someone to trust who will look out for you during tough times. Get sound advice from an objective advocate who will be in your corner.

Then decide for yourself whether reinstatement of your defaulted mortgage is a possibility and/or the best course of action.

Posted by Harrison K. Long, Explore Properties Group, May 2, 2008

Labels: Distressed Properties, foreclosures, Lending

Homeowners Who Are Upside Down on Loans Should Be Careful When Considering to List a Short Sale

Wed, 30 Apr 2008 10:59:45 -0500

Upside Down Homeowners Should Be Careful When Considering to List a Short Sale

With home loan foreclosure or deed-in-lieu of foreclosure, sellers will take a hit of 200 to 300 points on their FICO scores. The exact penalty on FICO will depend on overall condition of credit.

The effect of a short sale on a seller's credit FICO score is the same as a foreclosure. The peantly on credit report will appear as a pre-foreclosure in redemption status and result in a loss of 200 to 300 points on FICO.

With a foreclosure or deed-in-lieu of foreclosure situation, a seller who wants to buy another home later will end up waiting 36 months before a lender will offer a reasonable opportunity.

With a short sale, the notation on a seller's credit profile of 'settled for less than owed' (short sale) prevents the consumer from obtaining an institutional loan for 24 months, depending on the lender program (Fannie Mae guidelines).

More bad news is that the short sale seller could be subject to lawsuit and deficiency court judgment for the difference between the loan amount and the amount paid.

In California, purchase money loans are not subject to deficiency judgments. However, hard money loans, equity loans and refinances are subject to lawsuit and deficiency judgments. Other states have laws regarding personal guarantees on loans, which could also result in lawsuit and deficiency judgment against the owner.

This is complicated. Homeowners considering to list for short sale should be very careful and consult a qualified real estate or tax attorney in their state and jurisdiction.

Posted by Harrison K. Long, Explore Properties Group, April 30, 2008

Labels: foreclosures, Realtors and Brokers, short sales

The Rise of Gas Prices Is Not Good For Our Economy, Business & Real Estate

Mon, 28 Apr 2008 16:27:41 -0500

Some folks believe our high prices at the gas pump can be blamed on the big oil companies. Wrong.

Rising prices in free markets result from an increase in demand and/or decrease in supply. Supplies of oil have been reduced by environmentalists' demands that no more oil wells be drilled, that no petroleum products be refined and that no oil be transported.

Supplies of oil have been taken off the market by OPEC (which has a monopoly), not the big oil companies. Producing, refining and transporting oil has become more expensive, at least in part because of pressure from environmental activists.

Demand for gasoline has increased to some extent by growing economies of China and India, and others, and to some extent by wars in Iraq and Afghanistan.

The desire for safety and convenience causes some people to prefer larger, heavier, safer cars, which use more oil and gas.

The global warming movement criticizes the use of petroleum products, causing additional costs in taxes, regulation, carbon permits.

Let's discuss this as business people and Realtors, asking our policy and lawmakers to plan and focus on getting us better supply of oil products.

Posted by Harrison K. Long, Explore Properties Group, Irvine, CA, April 28, 2008

Labels: Economy and Business, Realtors and Brokers

Sellers Should Require Serious Earnest Money Deposits On The Sale of a Home

Mon, 28 Apr 2008 10:58:15 -0500

Sellers sometimes make the mistake of contracting with a buyer for a home sale and asking earnest money deposits of less than three percent of the price. That's painful when the buyer backs out of the deal.
One way to assure that a buyer is serious is to require 3 percent or more of earnest money deposit. If the buyer doesn't and later backs out, he would only lose the small deposit and cause financial hardship for the seller. The seller would also lose the benefit of finding a buyer during the time the home was taken off the market.

Smart sellers ask buyer deposit of at least 3 percent, so that the buyer will think twice about walking away.
In some states and according to contract, if the buyer defaults prior to sale closing, the earnest money goes to the seller.

In some states, the seller can also sue the buyer for damages, if the house subsequently sells for less than the original contract price, plus costs sellers incurred to carry the house until it sells. In some situations, seller can sue the buyer for specific performance, which is asking the court to force the buyer to close the deal.

Be careful and consult a local attorney for guidance on this. Keep in mind that litigation is time-consuming, expensive and uncertain.

Posted by Harrison K. Long, Explore Group, April 28, 2008

Labels: Ethics and business practices, Realtors and Brokers, Reasons to Buy a Home and Real Estate