If you live in California, and Southern California in particular, your property may be near the coastal areas and at or near sea level--and therefore closer to the water table levels. At certain times of the year there are annual high tides, i.e., the one seen almost up to the asphalt level of Pacific Coast Highway through Huntington Harbour.
Houses with basements, or more likely crawl spaces under the raised foundation, may show signs of moisture or even flooding. This is dealt with by creating sumps--or holes in the ground to collect water--and installing sump pumps. The pumps may be set up with connectors (i.e., a hose) to carry the water off the property, via drains, or whatever method complies with local codes.
While a buyer should obtain professional assistance about the best type and system to install, if you're buying property almost level to the water, don't be surprised to find out you may have to deal with this.
In more extreme cases, you may want to find out about subsidence and call in another expert. You will want to review the natural hazard disclosure reports, and even local flood zone reports available online through FEMA. Also, be aware that if the property is in a specific FEMA flood zone, additional insurance may be required before your lender will fund your new loan, or otherwise require you to obtain the additional insurance if you already own the property. You may be able to obtain an elevation certificate issued by a qualified surveyor if your property sits at a high enough elevation.
Although the terms "short pay" or "short sale" are heard frequently, some people are still asking what they mean: It means the property owner owes more on his/her property than it can be sold for, or sold for after paying all the standard closing costs. In other words, the seller is "under water". Briefly, the mortgage holder(s)--there may be more than one loan on the property--must agree to accept the lower payoff amount, which means the bank is losing money on the seller's outstanding loan amount. The owner must "apply" for that approval by submitting financial information and a written statement about the reasons for their situation. As more and more properties are involved in this situation, some banks are finally, at long last, gaining some level of efficiency at dealing with all the short pay applications. Guidelines for the seller include submission to the bank of a signed and dated financial worksheet (usually in a standardized format), and signed and dated hardship letter, as well as a copy of the listing agreement, and letter of authorization for the party helping you with your short sale to communicate with the bank about your loan.
The sale generally must be an "arms-length" transaction; you cannot sell to someone you have a close personal relationship with, i.e., family member, personal friend, even a neighbor.
Different banks have different approaches about when to best receive submission of the seller's package for approval; and these approaches have changed from one time period to another, even in the last several months, so it may be difficult to know what to expect. Some mortgage holders will want the seller's package up front; other banks seem to respond faster when an offer has been obtained and is sent with the seller's package so that the seller's package does not "sit" at the bank and get lost. The contract terms between the buyer and seller is negotiated as if it were a normal sale, but it's important to note that all disclosure about the short sale status must be given, and the buyer must in almost every case be willing to wait at least 60 days for the entire process. Even though the bank is not the seller, its role is key in whether the property gets sold and for what price. And, the bank will want an accounting of all costs of sale, and may not approve certain costs in order to preserve its bottom line. Banks have also been known to "approve" in advance a certain amount as the selling price, hoping that a buyer will be found at that price and they will therefore lose less money, but the market may decline, so the actual selling price may be less the longer it takes to find a buyer, or the approved price may not be realistic for the specific area of the property.
The Obama Administration will soon be issuing short sales guidelines and standardized forms--the outcome for all lenders to participate is yet unknown. It is hoped these guidelines will prevent future unrealistic negotiations among all parties, and faster treatment of short sales to assist stabilizing the real estate market.
As more loans entered into 2-3 years ago come up for their reset dates, the short sale process will continue to be a "staple" in the market, making a more uniform process mandatory. Some areas are completely dominated by either short sale/pre-foreclosure properties on the market, or bank-owned properties that have already been through foreclosure. Any seller contemplating this as the only possible way to sell their property should also seek any legal and tax advice at the same time, especially if also contemplating bankruptcy. Short sales generally have less impact on one's credit (assuming there are no or very few missed mortgage payments) than does a foreclosure, which will stay on the credit report for a much longer period of time and be a more severe "hit". Even with the FICO hits of missed mortgage payments, a short pay may be preferable for several reasons, including that the IRS has allowed debt forgiveness on mortgage amounts involved in the short sales. Foreclosure carries a longer period of impact on one's credit, something to think about when FICO scores are used in insurance applications, employment promotions, and of course, credit application.
There are many related and complex issues with these situations, and much confusing information which seems to change or modify on a monthly basis, and even legal and tax advisors are not totally familiar with impacts on credit scores in these two situations. For the most accurate information and opinion, contact a reliable loan professional who is in contact with borrower's credit reports on a regular basis.
More recently, per National Association of Realtors website: On May 14, 2009, the Obama Administration announced its upcoming Foreclosure Alternatives Program, expected to launch in late July. Among other things, the new program:
Establishes financial incentives for servicers, sellers, and second lien holders to encourage the completion of short-sale transactions.
Requires that a timeline, of no fewer than 90 days, be set to allow a homeowner to sell a home, without threat of foreclosure action.
This is a popular price range for many 1st time buyers, the group of people who are among the most active and largest group of buyers looking on the market now. In 2007 in Long Beach, there were less than 350 residential condos, own-your-owns, coops, and single family properties in this price range. Last fall, the inventory doubled to more than 700 listings in this group. As of June 16, the MLS is showing 430 properties in this category: 185 active listings are single family homes under $300,000 in various zip codes (but not 90803 or 90814). In a sampling of the first 25 on the list, 19 of them are short pay or REO properties. In the last 25 on the list, 23 out of 25 are short pay or REO properties. For condos, co-ops and own-your-owns (lofts excluded), there are 241 condos, etc., with about the same percentage of REOs and short pays: 21 out of first 25 on the list. The difference with condos is that they also represent many areas of town, including 90803, 90815, 90814. But not all condo opportunities are alike: Be prepared to face monthly HOA dues of as much as $600 for Marina Pacifica, where there have been several such sales. The price may be low, but the monthly payment must be able to accommodate the association expenses. For the buyer who is heading out on a home search with their REALTOR, and with a valid mortgage pre-approval in hand, be prepared, because due to shrinking inventory, lower sales prices, and many other first-time buyers, you may have severe competition and deal with many multiple offers on the property you would like--some houses in particular have seen over 30-50 offers--and only one will be chosen. And, a frustrating fact is that that buyer may be an investor with lots of cash, or all cash. Also, the qualified FHA buyer, with 3.5% down payment, may have a much harder time competing, not just because of their lower down payment, because FHA offers must be appriased by an FHA appraiser who is required to report on certain property conditions according to government guidelines. If the FHA buyer is considering a condo, which will probably be somewhat less competitive than a house, there are still HOA requirements to be met under FHA guidelines. Ideally, the buyer will select a property in an association that is already FHA-approved under the HUD guidelines. (Ask me, I can help you find out.) Otherwise, the buyer must hope for a "spot" approval, and that may have a more uncertain outcome until the transaction is further along in escrow and underwriting approval is obtained. So what can the buyer do in this situation? Try to find a property that will work for you and with your loan, maybe a property that is getting less attention from other buyers. It may be your golden opportunity. It may require patience, it may require imagination, and it may not have granite countertops in the kitchen to start, and it may require some compromise on some of your criteria, but in the end if you want to be a homeowner, you have to start somewhere, and the gains could be very great in the end. For a specific list of properties to be sent by e-mail, please contact me, OR go to http://www.juliahuntsman.com/ to see various current property searches from the MLS.
This is a popular price range for many 1st time buyers, the group of people who are among the most active and largest group of buyers looking on the market now. In 2007 in Long Beach, there were less than 350 residential condos, own-your-owns, coops, and single family properties in this price range. Last fall, the inventory doubled to more than 700 listings in this group. As of June 16, the MLS is showing 430 properties in this category: 185 active listings are single family homes under $300,000 in various zip codes (but not 90803 or 90814). In a sampling of the first 25 on the list, 19 of them are short pay or REO properties. In the last 25 on the list, 23 out of 25 are short pay or REO properties. For condos, co-ops and own-your-owns (lofts excluded), there are 241 condos, etc., with about the same percentage of REOs and short pays: 21 out of first 25 on the list. The difference with condos is that they also represent many areas of town, including 90803, 90815, 90814. But not all condo opportunities are alike: Be prepared to face monthly HOA dues of as much as $600 for Marina Pacifica, where there have been several such sales. The price may be low, but the monthly payment must be able to accommodate the association expenses. For the buyer who is heading out on a home search with their REALTOR, and with a valid mortgage pre-approval in hand, be prepared, because due to shrinking inventory, lower sales prices, and many other first-time buyers, you may have severe competition and deal with many multiple offers on the property you would like--some houses in particular have seen over 30-50 offers--and only one will be chosen. And, a frustrating fact is that that buyer may be an investor with lots of cash, or all cash. Also, the qualified FHA buyer, with 3.5% down payment, may have a much harder time competing, not just because of their lower down payment, because FHA offers must be appriased by an FHA appraiser who is required to report on certain property conditions according to government guidelines. If the FHA buyer is considering a condo, which will probably be somewhat less competitive than a house, there are still HOA requirements to be met under FHA guidelines. Ideally, the buyer will select a property in an association that is already FHA-approved under the HUD guidelines. (Ask me, I can help you find out.) Otherwise, the buyer must hope for a "spot" approval, and that may have a more uncertain outcome until the transaction is further along in escrow and underwriting approval is obtained. So what can the buyer do in this situation? Try to find a property that will work for you and with your loan, maybe a property that is getting less attention from other buyers. It may be your golden opportunity. It may require patience, it may require imagination, and it may not have granite countertops in the kitchen to start, and it may require some compromise on some of your criteria, but in the end if you want to be a homeowner, you have to start somewhere, and the gains could be very great in the end. For a specific list of properties to be sent by e-mail, please contact me, OR go to http://www.juliahuntsman.com/ to see various current property searches from the MLS.
You might think "HVCC" refers to a heating system, but no, it refers to property appraisals performed under the new Home Valuation Code of Conduct. This Code came about through the New York State General Attorney Andrew Cuomo's agreement with FNMA and Freddie Mac and the Federal Housing Finance Agency, those agencies that create the rules for loans that buyers need.
What it means for the buyer and the seller both is that conventional loans obtained for single family homes fall under this new appraisal code. (Not for FHA loans.) Appraisals have always been important: the lender did not want to loan on a property which did not match a true market value. Diligent Realtors have always advised sellers to price their properties realistically, and advised their buyers of a realistic selling price according to local market comparables, in essence, the property had to be sold twice, once to the buyer and again to the lender. The subprime market blurred this picture for quite a while, but sometimes the cure is just as bad as the problem.
To counter the effects of the subprime market, effective May 1, neither lenders nor their staff are allowed to select the appraiser, nor are they allowed to have "substantive" communication with the appraiser or the appraisal management company (AMC) which now is the new level of bureaucracy managing the assignment of appraisers. The new system may have started more problems than it ended.
Some assigned appraisers may not be familiar with an area--coming from a different county even--have no particular vested interest as to the outcome of the appraisal, consumers are being advised their appraisal will cost about $100-$150 more and they may have to lock in their rates for a longer period of time, which will also cost them more. If the consumer changes lenders, they must pay for an additional appraisal. The AMCs pay low fees, thus attracting only the inexperienced appraisers, some of whom are failing to adequately appraise a home. See The Wall Street Journal's article on this.
The AMCs are unregulated, and do nothing the reduce fraud (the reason they were established in the first place), and transactions are being cancelled in some instances, at a great cost and inconvenience to both the buyer and seller. One professional association estimates that HVCC will cost consumers 2.8 billion dollars a year in extra fees.
These issues make an already form-and-disclosure-intensive transaction even more challenging and difficult under increasingly stringent legal and professional standards, especially in California which has the reputation of being a very litigious state. But I'm sure professional in Michigan, for instance, probably feels the same way.
Now is the time to know your market, and be prepared to address a possible appraisal gap as a "Plan B" to closing escrow, which could mean that if the difference is not too great between appraisal and contract price, that buyer and seller split the difference. Not great, but it could be an option to not meeting the closing date.
Six months ago (they've passed quickly), I covered this topic via an article by Pat Zaby complete with payment scenario. Last week's upset in the Treasury bond market , a more complex subject, ultimately sent mortgage interest rates up, with higher payment impact, that the earlier post referred to:
"Let's make an assumption that the prices may still decline 5% more before they start appreciating again. If while a buyer was waiting for the price on a $250,000 to go down 5% to $237,500, and the interest rate goes up one percent from 5.25% to 6.25%, which is entirely possible, the buyer's monthly payments will increase almost $79 per month."
Or putting it another way, some buyers who qualified before last week may now have lost as much as 10% of their original buying power. In fact, some mortgage professionals feel that because of the current economic forces driving the purchase of bonds vs. mortgage-backed securities, the edge on low interest rates--below 5%--is gone, and maybe gone for good. If you're just starting in the market, figure it's the luck of the draw. But if you've been looking for a very long period of time, or renewing your search after being away from it for a long time, your loan information probably needs to be updated.
One brighter spot is that the procedure is being put in place for the imminent start of a statewide (California) down payment assistance program offering a "silent second" for first time homebuyers (up to 3% of purchase price, income restrictions apply, FICO score over 680) and which may be used in conjunction with the FHA 3.5% down payment. If you're in that category, you might still be ahead if you fit this program. See my earlier post on waiting to buy.
If you're in the market to buy or sell, visit me at www.juliahuntsman.com, or call me.
Cheerful one-bedroom plus den unit is great for the first-time buyer or a second home--close to
Alamitos Bay and ocean breezes. This unit with a more contemporary look has been upgraded to include bamboo flooring; newer faux marble pattern kitchen and bathroom counters; double-paned windows, upgraded electric outlets, newer lighting fixtures. Breakfast bar for convenient eating area. Bathroom has large walk-in tiled shower with clear glass enclosure; recessed lighting in den. Lots of cupboard space in kitchen and bathroom, plus linen closet in hall. Large walk-in closet in bedroom. Den has separate doorway, add a closet and it could be enclosed to make a second bedroom, also makes a great office or formal dining room. Water views from common area, rooftop deck. See this unit on http://www.juliahuntsman.com. Offered at $329,000.
The buyers have gotten in the Spring action mode in Long Beach's 90803 zip code--and for some buyers, there are issues of multiple offers in certain parts of Long Beach within days of the property coming on the market. This is a result of the combination effect of sellers pricing their property correctly, presenting it well (even staging it, that's been betting the fastest offers), and buyers who are pre-approved and motivated to buy.
In a quick review of the MLS, in the 90803 zip code (Naples, Belmont Heights, Belmont Shore areas), there are 101 active single family home listings waiting for a buyer, and there are 30 single family homes currently in escrow, list price between $425,900 (Island Village) to $3,350,000 on the water with a boat dock (Naples)--days on market ranged from "0" to "395".
In the same area are 54 condos waiting for a buyer, ranging from $189,000 to $1,095,000 in complexes such as Marina Pacifica, Village on the Green, Bixby Village, Spinnaker Cove, and in areas of Naples, Bluff Park, the Peninsula, and Belmont Heights. There are 19 condos in escrow, ranging up to $669,000 in asking price, having been on the market from 3 days up to 364 days.
For motivated sellers, believe it or not, we need more inventory. If you would like a market analysis of your home or income property, at no obligation, there's nothing to lose by talking over the current value of your home. I can even send you market comps via e-mail, plus other valuable market information.
Prices are still low, and motivated buyers should check out their financing options now. Don't forget about your $8,000 tax credit!
To find more properties on the market, go to www.juliahuntsman.com, into the MLS property search which is updated through the MLS, so you will get current information on which listings are on the market.
Chase Home Finance, part of JPMorgan Chase & Co., will receive up to $3.6 billion, the largest amount among the six companies. The other recipients: Wells Fargo & Co., GMAC Mortgage Inc., Citigroup Inc.'s CitiMortgage unit, Select Portfolio Servicing and Saxon Mortgage Services Inc.
More banks and companies will be added in the coming months. The Making Home Affordable program can be found at FNMA and Freddie Mac sites for those with FNMA or Freddie Mac loans. By clicking on the above link, the homeowner can find out eligbility for the program. This program is for owners who are not able to meet current refinancing loan requirements, who bank is participating and who who have FNMA or Freddie Mac loans.
This plan is to help people who are current on their mortgage payments to refinance and take advantage of today's lower interest rates. Under this plan, Fannie and Freddie will be allowed to refinance qualified homeowners up to a 105% loan-to-value of the CURRENT VALUE of the home. It's well worth your time to keep checking on whether or not your current mortgage and your bank, now or in the future, will be one that qualifies for this plan.
The plan helps owners at risk of foreclosure by offering government assistance to help offset the cost of modifying loans of qualified homeowners into affordable mortgages allowing them to keep their homes. There are several different ways to achieve this: rate reduction; extending loan term, or allowing principal forbearance or cramdown. The unpaid balance must be $729,750 or less for owner occupied primary residence of 1-4 units, a first trust deed, current monthly payment exceeds 31% of gross monthly income, are among the requirements. Go to http://www.financialstability.gov/makinghomeaffordable for a self-assessment tool.
If you are thinking of selling, or you need more information about whether or not you can modify your loan, or are eligible for a short pay, contact me directly or go to http://www.juliahuntsman.com/ .
In spite of the billions of dollars spent and given away to Freddie Mac, Fannie Mae plus numerous other banks and institutions, in spite of the many government loan modification programs and federal homeowner help programs, loan streamlining programs ... but so many buyers are still reluctant to buy. Yes, there are more limitations on types of loans available, basically buyers have a choice between 3.5% down payment (FHA), 10% and 20%+ down payment loans (conventional). There are some first time buyer programs, there are still VA loans, but most buyers are going to fit in the middle of the distribution curve on the first 3 types of opportunities. There needs to be even more incentive(s) if there is to be a return to a real estate market where there are properties closing escrow with move-up buyers. Why, especially in California which is still a higher-priced market than other states, should only first-time buyers under a certain income level be eligible for the $8000 tax credit? Why not make it available to anyone who purchases a home? or an investment property? I've been meeting people lately who have certain assets, sense that the bottom of the market may be getting closer but they're still unsure, and this credit might give them the incentive to finally make the move off the fence.
Another suggestion has been to put a moratorium on the capital gains tax for future sales of residential property purchased in 2009 and 2010 which might encourage these capable but indecisive buyers to finally make a move into the market. Yes, a strong increase in sales has been occuring in 2009, but it's also at the lower end of the market. Think of the buyer who might otherwise put an offer on a high end property if these other incentives were in place.
Talk about housing, neighborhoods, things to think about buying or selling (sometimes it's more than you think), things to think about with credit and loans (things to think about and do), and sometimes some fun stuff!
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