Scott 's Blog

Does H.R. 2801 Have a Chance? AKA: Is a bird in the hand good enough?

Broadview Mortgage Corporation — Wed, 02 Sep 2009 17:26:26 -0500

This is a reprint of an article I wrote for our weekly homeownership education newsletter on September 1st, 2009:

Well, this is certainly going to be a closely watched topic over the next couple of months as the deadline for the Federal $8,000 First Time Homebuyer Tax Credit reaches it expiration date.

It seems now that the mainstream media is flirting with prospect of California nearing the bottom of the market. If this is true, it means it's going to get tougher and tougher for home buyers to get offers accepted.

It is also widely suspected that the there are many more foreclosures still out there that have yet to hit the open market.

Add to this, the urgency that many buyers are feeling about trying to buy before the Federal Tax Credit expires on November 30th, 2009. All of this points toward requiring better preparation and much more patience in the home buying process.

Is there a chance that the tax credit will be increased? Absolutely - H.R. 2801 is in committee now with Congress set to meet again on September 8th. The proposals made with H.R. 2801 are not new, this is very similar to a Senate bill being discussed in February of this year:

Included in both plans is a tax credit for homebuyers, which is expected to cost taxpayers as much as $39 billion. The House bill allows for a $7,500 tax credit for first-time homebuyers and the Senate bill allows up to $15,000 in tax credits for all homebuyers. Opponents of the tax credit argue that it will do little to decrease high inventory levels because current homeowner’s would have to sell their current home to buy a new one. The Fix Housing First Organization is lobbying to keep the Senate provisions for the $15,000 tax credit, and to ensure that the credit remains available to the taxpayer as a tax refund and is not limited to first-time homebuyers. The organization states that first-time buyers make up only a small percentage of the total market and that including more buyers would enhance the success of the incentive. The Senate has a record of winning negotiations with the House, so the $15,000 refundable tax credit for all homebuyers has a good chance of staying in the final bill.

There is an important point being made in the first sentence of this excerpt.....the tax credit is expected to cost taxpayers as much as $39 billion. With a current federal deficit nearing 12 Trillion dollars, how much more are taxpayers going to be expected to handle? How many generations are going to be expected to pay for the spending frenzy that has ensued in an effort to correct this economy?

I am not making any assertions as to whether the tax credit will be extended or not, my personal opinion is that it is extended. Yes, it will cost billions of dollars but I kind of have a "Well, we've gone this far" attitude about the whole thing. What's a few billion dollars amongst friends huh?

Ok, there's the framework for my approach to preparing those of you that want to take advantage of the "bird in hand" and the $8,000 First Time Homebuyer Tax Credit that is available now. In the upcoming weeks, we will continue to keep you up to date about the progress of H.R. 2801.

If you wish to take advantage of the $8,000 credit you MUST ACT NOW! It is as difficult as ever to get your offer accepted on a home now, some markets are more difficult than others.

You can expect that it will take at least 60 to 90 days to get an offer accepted if you have less than a 20% down payment. Buyers making offers on homes using low down payment loan programs are finding it more difficult to get their offer accepted as they compete against all cash investors and buyers with large down payments.

If you have a low down payment, this does not leave you in an impossible position, it may just take more offers before you get one accepted. All of this basically means that if you want to try to get in under the deadline, you need to get prepared now.

Here is my short list of things you MUST NOT COMPROMISE if you are trying to meet this deadline of November 30th:

Start interviewing Lenders and Real Estate Agents - This live class is a good place to start - You cannot underestimate the value of hiring the right team.
Get FULLY APPROVED for your loan now - This is a full underwriting approval from a direct lender (if possible). Many loan officers out there will give get you pre-qualified putting you in a compromised position when making offers on homes you wish to buy.
Don't panic! You need to maintain an empowered position of being in control of the home buying process. An implied sense of urgency can compromise your ability to make informed decisions.
Make educated and informed decisions. Taking short cuts in the home buying process are costly in terms of stress and increasing the chances of losing your deposit that you've saved up for buying your new home. Remember, your real motivation here is to buy a home for you and your family. The tax credit is just a bonus.
Be proactive but not rushed. Listen, if you start the process now and are able to complete it by November 30th - Great, if not....Do you believe that everything happens for a reason? I do.
Be in a position to take advantage of an extension of the tax credit. If the tax credit is extended, it will take effect immediately. Even if you're in the process you may be able to improve your position.
Be in a position to take advantage of changes in the market. Home prices have increased for the last 3 months in a row. If more foreclosures hit the market now, they are likely to sell very quickly because there are more buyers in the market. Being prepared now may put you in a position to take advantage of "buyer friendly" changes in the market more quickly than other that are waiting on the sidelines waiting for this to happen.

I hope this helps to empower you as a homebuyer, stay tuned for updates on H.R. 2801. Happy house hunting!

How to use CalHFA's Newly Reintroduced CHDAP Program to Lower Your Mortgage Payments

Broadview Mortgage Corporation — Wed, 01 Jul 2009 13:08:15 -0500

This is a reprint of an article that I wrote on June 29th as a follow up to a live webinar we conducted on the new CalHFA first time homebuyer programs.

The purpose of this article it show buyers how to leverage down payment and closing cost assistance programs.

Down payment and closing cost assistance programs seem to be a rarity in today’s strict lending market. With the reinstatement of the California Homebuyer Downpayment Assistance Program (CHDAP) earlier in June, 2009 – we now have some great opportunities to help first time homebuyers buy homes.

Although there are several ways to skin a cat (I apologize if i’ve offended any cat lovers here – insert “dog” if you wish) – I would like to talk about just one.

OK, here’s the scenario – You are going to use an FHA loan, you have the minimum 3.5% down payment saved up. Let’s look at the potential mortgage payment savings with a $300,000 purchase price.

For this scenario, we are going to assume that all closing costs come out to 3% of the sales price….and we have a 3% seller concession. The “closing costs” are a wash.

With an FHA loan, in exchange for only having to come in with a 3.5% down payment, there is an upfront Mortgage Insurance Premium (MIP) of 1.75% of the loan amount.

Loan Amount with 3.5% Down: $289,500
FHA Upfront MIP 1.75% of loan: $5,066.25

If you don’t have an extra $5,066.25 lying around to pay the MIP, you may add it to your loan amount. Your monthly payments are now based on this new “financed” loan amount of $294,566.25

If you finance MIP – New Loan is : $294,566.25

For example purposes only – we’re going to call the interest rate 6% even. 30 year fixed rate mortgage. Let’s look at the payments on this new mortgage.

Also, for the purposes of this example, we are only going to look at the Principle & Interest payment (PI) – Taxes and insurance will vary depending on your community and do not affect the actual loan payment because you do not finance either of these expenses. Ok, back to our purchase…..

Mortgage payment based on New Loan is: $1,766.07

Here’s where the CalHFA CHDAP program really triumphs as a money saving tool. CHDAP is a deferred payment junior loan. This means you do not make payments on this loan unless you sell or refinance the first mortgage. The interest rate on a CHDAP is about half of typical market rates. Here’s one way to use the CHDAP loan to lower your mortgage payment….

CHDAP loan is 3% of PURCHASE PRICE: $9,000
Use $5,066.25 of this to pay your FHA upfront MIP
Use the remaining $3,933.75 toward your down payment

Let’s take a look at what you just did to your mortgage payment -

Original loan Amount with 3.5% Down: $289,500
You are no longer financing the upfront MIP
Contribute another $3,933.75 to down payment
Your new financed loan amount is: $285,566.25

Same loan, same financing as above when we determined the payment to be $1,766.07……..drum roll please…..

Your New mortgage payment is $1,712.11

Hmmmm…..not sure if a drum roll was necessary to reduce your payment $53.96 a month?

Let’s take a closer look

Your first year’s savings: $647.52 – That might be a car payment? A contribution to your child’s college fund? Not too shabby right?
Your five year savings: $3,237.60 – Now we’re talking…can you say family vacation?
Let’s look at life of loan: (30 years) $19,425.60 – If you channeled this into an investment account or applied it back toward the principle balance of your loan the benefit becomes too great to measure here.

This is just one way to use CHDAP to help you buy your first home. Talk to your loan specialist and have a discussion about the best way to use this program to meet your family’s specific buying goals.

CHDAP does not have to be used with FHA only. It can be used with any other financing that is approved through the California Finance Agency. Make sure your lender is qualified to offer CalHFA loan programs.

CHDAP is a special program offered by the State of California and has specific qualfying requirements that are difference from FHA or Fannie Mae first mortgages. An experienced lender will be able to explain the requirements for being eligible for this program.

National Association of REALTORS® Summary of Key Provisions of HR 3221 - The Housing Stimulus bill (as of 7/28/08) - Complete with my .02 to make sense of it all

Broadview Mortgage Corporation — Wed, 30 Jul 2008 01:32:50 -0500

This is a summary provided by the National Association of Realtors® yesterday (7/28/2008) - under each section I have injected my two cents to provide clarity and stimulate conversation and exploration about the details of this 700 page bill.

The NAR summary will be identified with an indent and bullet point, my commentary identified as NOTE:

NOTE: Following is a summary of the key provisions of HR 3221 - The Housing Stimulus Bill of 2008 as reported by the National Association of Realtors® on 7/28/08:

H.R. 3221, the "Housing and Economic Recovery Act of 2008", passed the House on July 23rd by a vote of 272-152. On Saturday, July26th, the Senate passed the bill by a vote of 72-13. the President is expected to sign the bill on Tuesday, July 29th. It includes:

NOTE: As of 7/29/08 this bill has not been signed by President Bush. Although there are many things that sound "good" in this 700 page bill, there are many in Washington that are not happy with all the "other stuff" that's been squeezed in there. President Bush has indicated that he will sign the bill, no word about it being delayed.

GSE Reform - including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. the effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008 )

NOTE: Fannie Mae and Freddie Mac are Government Sponsored Entities (GSEs), they are not government run (yet) like FHA. Their primary purpose is to purchase mortgage backed securities. They are currently regulated by the Office of Housing and Enterprise Oversight Committee. I'm not sure yet what an "independent regulator" would consist of. Note to self, get more information on that. Making the conforming loan limit increases permanent is a very interesting prospect.

It seems that with housing prices dropping the way they are that would not be necessary. This does enable Fannie and Freddie to purchase mortgage backed securities that used to be considered "Jumbo". This is good news because there is absolutely no secondary market for Jumbo loans now and those banks still offering these loans have rates starting in the high 7% range.

FHA Reform - Including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008)

NOTE: Permanently increasing the FHA loan limits is a very good move. The loan limits have been antiquated for quite some time. This will allow many more people to qualify for FHA financing in states like California. Not sure what the streamlined processing for condos, reform to the HECM, and reforms to the manufactured housing program will entail. I will report on that when we find out more.

Program reforms go into effect immediately - loan limits after temporary increase expires at the end of the year.

Home Tax Credit - a $7,500 tax credit that would be available for any qualified purchase between April 8, 2008 and June 30, 2009. the credit is repayable over 15 years (making it, in effect, an interest free loan).

NOTE: This is phenomenal. I have heard a couple of versions of this so i'm not going to get too excited but this is a powerful program and a great incentive to buy in the next year. I have heard that it will be broken up over 3 years but there is no mention of that in this summary from NAR. The $7,500 is not free money, however it is interest free. It will be paid back over 15 years, i imagine it will just be added to your taxes due on your returns - if i did the math right, that's about $500 a year....not bad. Stay tuned for this one - any way you slice it this is a great feature of this bill.

FHA foreclosure rescue - development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.

NOTE: Ok, this is a clarification on earlier reports. The caveat of this program is that lenders are not required to participate in this write down, they must volunteer to forgive loan balances down to current market value, 85% of current market value no less. I just don't anticipate this going over well with most lenders and I believe they will be slow to adapt - you can read more about my opinion of this here.

Although it's not mentioned here, I have also read and reported that the lenders will have to pay a 3% fee to FHA and there will be an upfront mortgage insurance premium to the owner of 1.5% of the loan amount and a monthly mortgage insurance premium of .50. If this is consistent with FHA loan now, that upfront PMI can be financed into the loan.

Wait a minute now, hold the presses! FHA is entitled to 50% of future appreciation? This is the bottom of the market right here folks. If your home is being re-valued at current market value then you have nowhere to go but up right? I know reporters are not supposed to interject their personal feelings into a story...so it's a good think i'm not a reporter...this is something I am going to keep an eye on. Another question that comes to mind is will the county tax assesors adjust your property tax base to this new value? It's time to start asking more questions I think.

Finally, the loan limit of $550,440 nationwide is a good move. This is going to help a lot of people.

Seller funded downpayment assistance programs - codifies existing FHA propposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.

NOTE: This is unfortunate. HUD has had it in for Nehemiah, AmeriDream, HART and the sort since last year. My guess is that these charities will find a way to survive through private funding. Possibly putting home sellers on a "do solicit" list and hound them until they give? I don't know...it's a guess.

These organizations have helped many families achieve home ownership that otherwise would not have been able to. This bill simply states that FHA will not allow down payement assistance from someone that is set up to financially benefit from the transaction and the gift. Fair enough. These organizations I imagine will continue to operate somewhat in the style of city and state down payment assistance programs and try to acquire funding through government grants and donations. I'm confident that they will exist in some fashion or other, maybe just not the way they do now.

VA loan limits - temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.

NOTE: I don't quite understand the temporary part of this. I suspect that it's a set up for an extension at the end of the year, possibly a grand finale by the Bush administration to help Veterans. It's a very good move as far as i'm concerned, even if it is temporary for now. We don't do enough for our country's Veterans as it is.

Risk-based pricing - puts a moratorium on FHA using risk-based pricing for one year. This provision will be effective from October 1, 2008 through September 30, 2009.

NOTE: As part of the expansion of FHASecure, HUD implemented risk based pricing into thier mortage insurance model. It basically raised mortgage insurance premiums on homebuyers that were on the lowest end of the credit tolerances when being approved for FHA loans. I see their point, i just don't know if it's good for tax payers. It looks like it's just a temporary measure to stimulate the housing markets again by the end of 2009. That, i'm ok with.

GSE Stabilization - includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.

NOTE: This is a very positive move by the Treasury Department and will go a long way toward shoring up consumer confidence and stimulating the secondary market.

Mortgage Revenue Bond Authority - authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.

NOTE: I do not have enough information to comment on this.

CDBG Funding - Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes

NOTE: Community Development Block Grants. There are already reports of cities buying up foreclosure homes fixing them up and reselling them. This is an important move by responsible municipalities to revitalize hard hit communities and help home values recover quicker. I imagine these monies will be distributed proportionately to those areas of the country that have been hit hardest by foreclosures.

LIHTC - Modernizes the Low Income Housing Tax Credit program to make it more efficient.

NOTE: I do not have enough information to comment on this.

Loan Originator Requirements - Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. the purpose is the prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

NOTE: This is a move that many in the mortgage industry have been in support of. There is too much inconsistency from State to State in regards to licensing requirements and regulation. I do not know enough about these new requirements to comment further. I will do more research and report back.

As we wait for President Bush to sign this bill I'm sure more and more details will come out. I encourage you to comment and engage in debate about this bill so that we can disseminate details as we get them.

For questions, comments or conversation about H.R. 3221you may call me on my cell phone at 714-336-8286

New "Buy and Bail" Rule & How to REALLY Help Homeowners in Trouble

Broadview Mortgage Corporation — Sat, 26 Jul 2008 17:52:26 -0500

Being whispered in the back halls of Real Estate and Mortgage Lender's offices this past month is the news of Fannie and Freddie enacting a "Buy and Bail" rule to prevent fraudulent mortgage loans from being purchased on the secondary market.

In some cases, homeowners are encouraged and coached through this process by Real Estate Agents and Mortgage Brokers who believe there is nothing wrong with the practice as is reported in this WSJ article - Some Buy a New Home to Bail on the Old

Here's a snapshot of how "Buy and Bail" works:

Joe homeowner bought his home several years ago for X dollars. Property values in the neighborhood have dropped drastically over the past 12 months and Joe homeowner can now buy a similar or even bigger/better home for about 60% of what he owes on his current home.

Joe homeowner is advised or figures out that he can buy this new home and "say" that he is going to rent out current home. Under current underwriting guidelines Joe can use 75% of the rental agreement payments to offset the mortgage payment on his current home/rental.

Joe buys new home....Joe walks away from other home....Joe stops making payments because he never had intentions of carrying both payments....Joe is a "Buy and Bail" expert.

So, a conversation that Karen and I had today, which prompted this post, is understanding where the "Mortgage Fraud" comes in under this scenario. Neither of us are lawyers so this is speculation but here goes my best guess - When applying for the new loan, the existing home was listed as an investment property. Here lies the fraud.

If Joe stops making payments and the home goes into foreclosure shortly after he is in his new home...I believe this is where the "Duck" rule applies - If it walks like one and sounds like one...it probably is one.

The New Rules
Beginning August 1st, 2008 - Fannie and Freddie are implementing the following rules:

Home buyers claiming to rent out current home must produce supporting evidence including an executed rental agreement.

Borrowers must also qualify counting the full PITI payment for both homes against their debt to income ratios. With tightening underwriting guidelines that makes this a very strict rule that most will not be able to get around. The exception to this is if there is at least 30% equity in the "rental" home.

Although I have not read any documented policy for these new rules I have heard through the grapevine that it is the case and several lenders have already begun to implement these restrictions on conventional as well as FHA purchase loans.

I believe that this is a responsible rule and Fannie and Freddie are certainly justified in implementing these rules, maybe not a moment to soon as "Buy and Bail" seems to be growing in popularity - but here's my problem with it.

How to REALLY Help Homeowners in Trouble
There is no question that it is both legally and ethically questionable on the homeowners part to partake in this practice but how much responsibility falls on the lender's shoulders? I think quite a bit.

There are many of billions in inevitable losses on the horizon in the U.S. real estate market. The unfortunate end for many challenges homeowners are currently experiencing is foreclosure. What happens as the result of a foreclosure? The bank takes the asset/home and resells it in one of the worst real estate markets in the past 20 years.

What's the lesson here? Principle reduction is the lesson. The Foreclosure Prevention Act requires that lenders "forgive" principle balances down to 90% of current appraised value in order to qualify for FHA insurance on the loan. How long do you think it will take for the lender to "volunteer" for this? It is not required that Lenders participate in this program, it's going to be interesting to see who takes the lead on this.

If Lenders would embrace the these losses now and modify promisory notes to reflect affordable payments to the homeowner the note becomes a performing asset once again which is investment quality after 6 months of on-time payments....am I crazy or does this make sense?

Let me quickly qualify the above mention of "affordable payments" - Borrowers must qualify for payment by providing full income and assets to Lender for review and principle reduction must be reasonably close to current market value or there is no incentive by the Lender to accept modification as a viable option.

Keep an eye on this topic, I think there's a lot more to come in the upcoming months on the subject of principle reduction as a viable and universally accepted alternative to foreclosure.

What do you think?

Foreclosure Prevention Act of 2008 - Is this really a "Bail Out"?

Broadview Mortgage Corporation — Thu, 24 Jul 2008 23:13:21 -0500

On Wednesday the House voted 272-152 to pass H.R. 3221, The American Housing Rescue & Foreclosure Prevention Act that will offer up to $300 billion in assistance to troubled homeowners and offer government support for Fannie Mae and Freddie Mac.

This is a a 700 page bill that includes many moving parts. President Bush has been long threatening to veto this bill as package and asked that it be revised. It appears that this current version is not going to face any challenges when the President sees it shortly.

Helping At-Risk Borrowers

The part of this bill that is good news for challenged homeowners looking at adjusting interest rates and negative equity involved FHA insuring up to $300 Billion in new 30 year fixed rate mortgages for at-risk borrowers living in owner-occupied homes.

In a nut shell, here are the proposed terms outlined:

The existing lender must agree to "write down" the balance of the existing loan to 90% of the homes' current appraised value.
Lenders must agree to also pay upfront fees to the FHA equal to 3% of the home's appraised value.
Borrowers must agree to pay an annual premium to the FHA equal to 1.5% of thier new loan balance.
Borrowers must agree to share with the government any profit they realize from selling or refinancing.

Helping Hand Holds Comes At A Price

Ok, so is this a cure-all or a "bail out"? It certainly does not seem that way to me. For borrowers that qualify for this program, it will still come at a large cost. For instance, if your home is now worth $250,000 - you must pay $3,750 a year to FHA? Even if they break it up over 12 months that adds $312.50

Add the equity share if you sell or refinance and it starts to get a little less friendly. I saw this in the early 2000's when folks were just starting to see huge equity increases. One specific case was a county provided silent second mortgage used to purchase the home. It included an equity share clause similar to this one.

The "share" of equity for this particular loan was over $17,000!

Take into consideration also that although prices will continue to drop if left to follow it's natural course of market correction, it is likely that homes are very close to the bottom in many areas around the U.S. If you "commit" to a loan that is 90% of current appraised value at the "bottom" of the market.....That equity share could mean big bucks!

Historically, Real Estate doubles in value every 10 years. I'm sure this will be the case with many homes in many areas at the significantly deflated prices resulting from this unique collapse of the secondary and credit markets.

It will be interesting to see what happens and how many homeowners it helps.....And don't let me seemingly pessimistic and cautious reservation about this bill fool you....I see a rainbow!

The Rainbow - The Answer to Short Sales and Loan Modifications

I believe that the passing of this bill is going to help MANY, MANY home owners currently having challenges with their payments, and here's why.

This bill is going to force banks to start considering principle reduction as a method of preventing foreclosure.
This bill puts the responsibility back on the banks to keep people in their homes.
A Bank participating in this program is forced to pay big fees - 3% of the appraised value

Let me explain. If the banks are already being forced to consider principle reduction (reduce amount of loan to reflect current home values", why would they pay FHA an additional 3% instead of simply modifying the note themselves?

3% does not seem like a lot of money until you multiply it by tens of thousands of loans. It makes sense to me that if the banks hand is forced, they will accept that principle reduction is a vehicle that will keep their clients (home owners, investors) happy - and they will begin to look for ways to save money....say....3%

What I don't know is how valuable the Government Mortgage Insurance will be to these banks. As with all legislation, what looks good on paper does not always mean there's a practical application in a free market society. We will see.

Either way you cut it, i think it will help many home owners stay in their homes. I think it will force banks to do the "right" thing and do what it takes to keep folks in their homes. I believe that it will begin to restore confidence in foreign and domestic investors and bring liquidity back to mortgage backed securities.

There you have it....that's my .02 - I guess it's just wait and see time now.

CalHFA Announces 100% Financing, Discount Rates, Discount PMI on Bank Owned Homes in Hardest Hit California Cities - CalHFA Community Stabilization Home Loan Program

Broadview Mortgage Corporation — Wed, 23 Jul 2008 15:12:12 -0500

Reposted from my Blog on July 23rd @ 9:00am

July 23rd 2008 - JUST RELEASED!

This conventional first mortgage loan program features a below market, 30-year, fixed interest rate, fully amortized loan reserved for REO properties of participating financial institutions. It has a maximum LTV limit of 100% and may be used with CalHFA’s CHDAP and Fannie Mae eligible Community Seconds® programs (which are designated on CalHFA’s AHPP list as “CalHFA MBS Program Eligible”) for a total CLTV of 103%....Click here to get more details and guidelines

Vlad Zablotskyy - A Martyr for Reputation Management

Broadview Mortgage Corporation — Fri, 20 Jun 2008 11:38:24 -0500

Ok, I admit - i was originally inspired to write about Vlad's unfolding trials (literally) with ePerks because Mary McKnight was offering a free RSSPieces blog

I have been following the story, sort of half paying attention for some time....not sure how i ran into it, but it struck me as disturbing in a way that i haven't read a lot of comment on - so here I go with my own .02 rant on the situation.

Reputation management is an important part of our responsibility as bloggers. Blogging has become a very real and vital part of Web 2.0, RE 2.0 and i'm sure to a completely new level of transparency, ease of use and interaction through all of the "point o's" to come.

The ability for us as individuals, business owners and regular 'ole people to have the ability to engage in open converstation and exchange with the world simply by being interesting and capturing peoples attention is an amazing phenomenon. Hat's off to Vlad for earning that reputation so that this entire exposure is even possible.

The exposure I speak of is the vulnerability of Businesses wishing to compete in a 2.0 world. In this case, ePerks invited it's client base to solicit "word from the street" feedback on it's services. Ok, here's where i feel my blood pressure rising and I get that little white "v" between my eyes from my involentarily furrowed brow.

Is ePerk's entire premise for thier law suit here that they only wanted people to say "good things" about thier services?! Can anyone be so naieve to think that 100% of thier clients will be 100% satisfied? Thier reaction to the feedback they received could be taught in Harvard business school as exactly what NOT to do when given the opportunity to get completely legitimate and valuable feedback on your products and services from your customers.

This is what is blowing my mind. Imagine any company worth it's salt attacking it's customers because they are not satisfied with the products and services it offers! Let me get this straight.....as an American I can go to the top of the highest building or on the busiest site on the web and rant and rave about how the leader of the free world, our President, is a bumbling fool and has done nothing but screw up since accepting charge of the helm...(for analogous purposes only - this does not reflect my political views :) - But if write a blog about the fact that McDonalds hamburgers taste like cardboard....they are going to sue me if enough people agree with me?

ePerk's is doing a great job and a great justice to all of us right now. I'm totally serious here. It takes a lot of guts and an incredible amount of ego to stand in the face of the ludicrous with index fingers firmly embedded in each ear and scream about how the big bad bully called them a name.

Forget about the fact that Vlad NEVER once made any negative comments about ePerks, this came about from comments he recieved from ePerk's unsatisfied masses (or few) that had a differing opinion from him on his original complementary input about thier offerings per thier request.

Ok..that was a drift...back to my point. ePerks is doing all of us in the blogging community and everyone in the Web 2.0 world a great justice here by being such cry baby's. Let's make this very, very simple in case an ePerks suit happens to keyword subpeona every blog ever written about this case as evidence in support of thier argument that they are being "hurt" by all this attention.

Are you ready? Here it its......You have been given a gift wrapped opportunity to improve your products and services. This attention is a GIFT vital to your survival IF you take the feedback seriously and use it to improve your product.

ePerks made one mistake and one mistake only....they made thier report card public. They thought that because they were good at sports that they would recieve straight A's even though they never did thier homework. Ok, i hear you, it sucks when your girlfriend says you're lousy in bed in the middle of a party...i get it. It's just that you can't walk up to her and punch her in the mouth! This is what happens....everyone at the party thinks you're an A**Hole (i apologize for the implied profanity...i'm a little riled up) and they talk about it to everyone they know.

Reputation management a huge reality for business in the web 2.0 world and ePerks is a blazing example of how it can all go horribly wrong. I think that more important than bringing attention to Vlad's fight is bringing even more attention to the outcome of this battle. If, and I can not possibly see it going any other way, Vlad comes out of this as the victor, ePerks will have set legal precedent for bloggers everywhere. I believe they have brought upon themselves a crippling blow to thier ability to survive as a company through thier immature handling of this situation.

Do you think that Zillow has not recieved criticism about it's products and services? What would David Gibbons do? He would thank you for your input and use it to improve thier products and services or engage in a converstaion with you better understand the root of your critisism so as to better provide a valuable service to all.

Vlad needs our help. There's no question. Greg Swann has set up a legal fund for Vlad to help with the legal expenses of defending himself against ePerks in court. Please continue to read about this case and understand it. This is an important opportunity for us to show the strength of our "Community".

Great News for First Time Homebuyers: Fannie Mae announces National Down Payment Policy Replaces Maximum Financing in Declining Markets Policy

Broadview Mortgage Corporation — Sat, 31 May 2008 17:15:27 -0500

This is GREAT News for first time home buyers! As this market begins to correct itself and new underwriting and credit guidelines are being established, Fannie mae announced on May 16th, 2008 that it is replacing it's Declining Markets Policy with a new Down Payment Policy.

The Declining Markets Policy basically said that if a property was located in a "declining market", the maximum LTV/CLTV would be reduced by 5%. In a nutshell, if you previously would have qualified for a FLEX 100 or MyCommunity 100 - meaning 100% financing, you now have to come up with a 5% down payment.

The National Down Payment Policy states that there is a minimum down payment of 3% required for all loans approved through DU and 5% required for manually underwritten loans. This is consistent with what have long been FHA guidelines in regards to down payment requirements.

The elimination of FLEX 100 and MCM 100 is not the end of the world. The FLEX 97 and MCM 97 are both very aggressive programs for first time home buyers and home buyers purchasing a primary residence that may own other properties.

Down Payment Assistance Programs are allowed to cover the 3% down payment requirement and/or closing costs making this an incredible opportunity for home buyers.

For information about the Flex 97 and MCM 97 or information about Special Programs Specifically for California Teachers and Employees, contact me today!

I can be reached any time at:

Cell / Text: 714-336-8286
Email: Scott@MyPorchLightScott.com
AOL / Yahoo IM: PorchLightScott
MSN IM: PorchLightScott@hotmail.com

I can also be found at LinkedIn, Facebook, Twitter, FriendFeed, Plaxo and MySpace

Important information about Selling your home as a Short Sale - How to be in Control of the Process on a Short Sale or Short Pay in California

Broadview Mortgage Corporation — Sun, 04 May 2008 13:21:41 -0500

Short Sales or short pays continue to be the number one most confusing subject in today's real estate market for new home buyers and home sellers.

Let me try to put a better perspective on this process and maybe help both buyers and sellers so that you can better understand the process and have a better chance buying and selling a short pay / short sale home.

Knowing your options will put you in control of your situation. Armed with this knowledge both buyers and sellers will have a better understanding of the process, the expectations of the bank and the patience you need to have to get through one of these transactions. When done correctly, as short sale will be a Win/Win/Win for seller, bank and buyer.

What a Seller Needs to Know about short sales is the bank is much less likely to kick you out of your home if you communicate with them. Bottom line is there are many options available to sellers of homes. I know these are difficult times, it is for many people right now.

There are many experienced Realtors® that can help you get through this as easy as possible and with as little stress as possible....and, unfortunately these situations are new for many people, including Realtors. There is a learning curve that we are all experiencing right now to help home owners through these difficult times.

If you are in a hardship and can not make your complete payments - talk to the bank/lender. It is important that you understand that there is a process and procedure and nobody wants to take your home from you. Banks are businesses and they have procedures for these situations.

Take a look at this simple, easy to understand web page from Washington Mutual. These options are available through many lenders and banks.

Let's take a closer look at the four most common options from Washington Mutual's site.

Repayment Plan

If your mortgage payments are past-due, we may be able spread out the past-due amount over several months. Each month you will pay your regular monthly payment amount plus a portion of the amount you are behind until your mortgage loan is deemed current.

With a repayment plan you can:

Repay the amount you are behind over time
Postpone foreclosure proceedings
Protect your home

Forbearance

If your mortgage loan is past-due and you're overcoming a temporary hardship, we can establish a forbearance plan. This plan will allow us to suspend or reduce your monthly payments for a short period of time to help you catch up. We can also establish a forbearance agreement if you are trying to sell your home or complete a loan modification. Please contact us to discuss how we can work together.

With a forbearance agreement you can:

Get a short break or reduction in your monthly mortgage payments
Work with WaMu toward a more permanent resolution by modification of your mortgage loan

Short Sale

If you owe more than your house is worth, we can work together to sell your house to payoff all or most of the mortgage amount. A short sale allows you to control the timing of the sale. The property must be listed on the Multiple Listing Service ('MLS') with a Realtor.

With a "Short Sale" you can:

Voluntarily List your house for sale and be in control of the sale process

Deed-in-Lieu

As a last resort you can voluntarily transfer the property title to the lender. This is called a "Deed-in-Lieu" of foreclosure. You voluntarily deed your property in-lieu of losing it at foreclosure. If you do not have any other loans, liens or judgments attached to your house, then we can discuss ways to transfer title. We would explore the deed-in-lieu only after we have exhausted all your other options.

With a Deed-in-Lieu of foreclosure you can:

Avoid additional foreclosure charges from being assessed

Being in Control is so important. These challenges are very common in this market for many, many reasons. Each situation is different and it is vital that you have good people on your side.

Listing your home for sale is not the answer to all of your challenges if you are behind on your payments. It is important that you work with a Realtor that is familiar with how to best market your home for a short sale so that you and your family are in control of the process.

If It Sounds To Good To Be True it probably is. Unfortunately when people are hurting there are other people out there to try to take advantage. There are many SCAMS in this marketplace that promise you options that at the very least are illegal (for them to offer) and at the very best highly unethical, misleading and could result in you losing your home in a much worse way. Here is a good article about some of the most common SCAMS in being perpetrated in this market.

The First Step is to find a Realtor® that understands how to market and sell your home as a short sale or short pay. There are no guarantees that you will not still have challenges throughout this process and there are no guarantees that the bank will cooperate with you during this process.

The Best You Can Do Is Be Proactive and be educated about the process. Avoid being the guest of honor at a pity party and take control of the situation. I know that sounds harsh - it's not - it's tough love. The best way for you to protect yourself and your family is to understand the facts, educate yourself about your options and work with a Realtor® that helps put you in control of your situation and helps you to work with the bank and communicate effectively to keep you in control of the process.

You may be protected against Tax Liability in a short sale. President Bush signed HR 3648, the "Mortgage Forgiveness Debt Relief Act of 2007 on December 20th 2007. This act revises the IRS tax code and removes your tax liability for the "short" part of the payoff on your existing home. In the past, the "short" amount was 1099 misc income and you where liable to pay taxes on it. The Government has stepped in to protect home owners against this tax liability as a result of these difficult times for so many people. There are exceptions to having this debt forgiven and you should consult your CPA or Accountant for your specific situation.

Last and Certainly not Least - A Prime Example of What Not to Do!

Finally, i would like to leave you with this example of how difficult this situation can be. This is a great example of how we are all trying to learn about the complicities of short sales and short pays.

The other day I was making phone calls to listing agents to make appointments for my buyer. The listing agent returns my call on a short sale / short pay that I was inquiring about.

Here is the conversation that took place about the property i was inquiring about:

"That bank foreclosed on the property right out from under me. I can't believe that (insert explatives here) bank. I have had this listing for 4 months now and the other day I went to the home and knocked on the door. A person answered the door and it wasn't my client! The bank foreclosed on the home and already sold it behind my back! I asked the new owner who the bank was because that was just wrong."

This is not an exact quote but it certainly is the same conversation. This real estate agent was not familiar with short sales and did not educate the home owner. Communication is the moral of this story. Communication with your Realtor, communication with the home owner, communication with the lender/bank is so very important.

Important information about Buying a Short Sale - How to make an offer and get it accepted on a Short Sale or Short Pay in California

Broadview Mortgage Corporation — Sun, 04 May 2008 13:19:43 -0500

It is Important that you Understand what is happening on the other side of a short sale or short pay when you are considering making an offer on a home in this situation.

Read This First - And then come back and finish this article.

Ok, welcome back. I want to give you a perspective on buying short sales and short pays that will give you more control of the transaction. Short Sales and Short pays are becoming more and more common in this real estate market and my best guess is that over 70% of what you are finding when you search for homes are either short pay / short sales or foreclosure / REO homes.

The seller and seller's real estate agent are an important part of the short sale process. The number one thing i hear from "agents" is that the bank foreclosed on the home without notice. I understand that there are some banks/lenders that are not cooperative and difficult to work with and I also believe that many times that is a self induced "difficulty" due to a lack of understanding of the process.

Much of the difficulty of the Short Sale / Short Pay process can be avoided with a simple matter of perspective by both home buyers and the Realtors® that represent home buyers.

You can make the process easier by understanding it. Your Realtor should be able to communicate with the seller's agent to determine whether or not they are communicating with the bank/lender.

Here is a "Perfect World" example of how to make an offer on a short sale / short pay and buy your new home.

The seller's real estate agent has educated the home seller on all of their options. The seller is communicating with the bank and has ensured that the bank will not foreclose on the home during the process. The seller's agent has already prepared and reviewed the seller's hardship package and is confident that the seller is a good candidate to ask for a short pay from the bank.
Your Realtor® has researched the comparable sales in the area and has recommended a fair offer price that the bank should be willing to accept. You should typically offer between 10% and 15% below current market value to accomodate for any further reduction in values over this (3 month) process.
Once the offer has been accepted by the seller, open title and escrow and order an appraisal. You know that the bank will order an appraisal or BPO before even considering your offer. Submitting an appraisal with the purchase offer and financing approval to the bank/lender you will make the negotiator's job easier.
Your Realtor® and the sellers agent are communicating and have a solid game plan on how to get you into this home. They work together to give you the best chance of buying and give the current home owner the best chance of selling their property to result in a Win/Win/Win for all parties involved.

Be willing to make an investment of $350 if you really want this home. Pay for an appraisal. It is the single most pivotal component of your offer to purchase this home for less than what is owed on it. An appraisal is an opportunity to get an independent third party report on the actual market value of the property. Once you have the appraisal, you will know if your offer is too high or too low and you can change it accordingly before submitting the package to the bank.

The Bank/Lender would prefer not to foreclose on a property unless they have determined that it is thier only option. I have seen banks postpone the foreclosure process for up to a year if some arrangement is made to make partial payments on the loan during this process. It is very expensive for a bank to forelcose.

Doing your homework will save you money. By making a fair offer to buy the home, you increase your chances of having the bank pay for closing costs. Many banks/lenders will pay up to 3% of the sales price toward your closing costs if your offer is fair. Make sure your Realtor® also verifies that the current home owner has made arrangements with the bank to prevent the home from going into foreclosure during the offer process.

Getting a good deal on a Short Sale / Short Pay is a matter of you being able to buy the home of your dreams and have a payment that you can comfortably afford. There are no magic deals out there, you can not buy a home at a HUGE discount unless you are an all cash buyer and the home needs a lot of work. What they don't tell you is that the homes on TV that they buy, fix up, and sell for huge profits are cash purchases. Cash is king in Real Estate and there are incredible deals out there for investors. Investors do not buy short sales / short pays - they buy bank owned homes in poor condition that do not qualify for bank financing.

Now that you know the secret to buying a short sale / short pay home - be patient and find the home of your dreams. Buying a short sale or short pay is a long term commitment. Do your homework. Make sure your Realtor® does thier homework and most importantly - Enjoy the Process!

This is an incredible opportunity for home buyers. If you are armed with a good team going into this market - you will surely be the proud owner of a new home!

Important things to Know about Qualifying for Down Payment Assistance Programs in California

Broadview Mortgage Corporation — Sun, 04 May 2008 01:45:34 -0500

Many cities, counties and federal government programs exist to provide down payment and closing cost assitance for new home buyers.

Down Payment Assistance Programs allow home buyers to borrow money for the down payment which results in lower payments, more purchasing power, reduced or eliminated mortgage insurance and may also be used to cover closing costs.

This is a quick overview of the most common types of Down Payment Assistance Programs and what the most common features of these programs are:

Must be a first time home buyer - have not owned a home in past 3 years
Must meet income limitations - these limits range from 80% to 120% of the Area Median Income
Silent Second - No monthly payments during qualifying period
Low or no interest rates
May be forgiven at end of term (usually 30 to 45 years) - converts to grant
Repayment is based on low, simple interest rate
Must be paid back if you rent, sell or take cash out of a refinance
Must be owner occupied
Requires home ownership counceling or community service
Can require minimum of $1,000 up to 3% down payment from buyer
Have geographic restrictions based on coverage of program
Subject to approval by providing agency - family must "have a need" for program to qualify

Common Down Payment Assistance Programs are:

Consult your Realtor about DPA programs available to you in the area you wish to buy in. Many times programs will allow you to "stack" Down Payment Assistance programs to a maximum of 100% Loan to Value.

To search homes in your County that may qualify for Down Payment Assistance - Use this Free Membership to Listingbook. This is a free service that allows you to search the same MLS system that Realtors use to list properties for sale.

First Time Home Buyer assistance programs in Riverside California

Broadview Mortgage Corporation — Mon, 28 Apr 2008 23:27:41 -0500

I have a client that is currently looking to buy in Riverside County, California. This is a first time home buyer and although thier income is good, with a large family there is a small down payment available, but not much.

As I always do, i turned to my trusty down payment assistance resources to look up what programs might be available to help these folks get into thier first home.

I found two programs offered by the EDA - Economic Developement Agency of Riverside County.

The first, is a down payment assistance program that will provide up to 20% down payment. After 15 years, the assistance becomes a grant and does not need to be repaid!

The second program is Mortgage Credit Certificate program. This amazing program allows a first time home buyer to take 15% of the interest they pay each year on thier home loan and credit that against thier federal income tax owed.

It's a little confusing, but browsing the program guidelines will make it much more clear. This credit is available as long as you own and occupy the home and have a loan on it.

For more information on properties for sale in Riverside, CA - Here's a free account to Listingbook that will allow you to search the MLS like I do.

If you have further questions, email me.

Thank you for the invite!

Broadview Mortgage Corporation — Mon, 28 Apr 2008 18:12:41 -0500

Duane,

Thanks a million for the invititation. I look forward to making my way through the group's posts and contributing great positive feedback from my adventures in this fascinating market :)

Scott

Calling all agents - Share your success stories!

Broadview Mortgage Corporation — Sat, 26 Apr 2008 11:09:27 -0500

I have been very successful referring clients to agents from Active rain. I respect this community and it's ability to be "in touch" with the REAL market and pierce the dis-information campaign that the drive by media likes to dump onto the public.

Ok, i feel better - i got that out of my system. Here's my point. I would like to reach out to the Active rain community and ask for success stories in your local market. Share with the rest of us, share with home buyers and sellers that are unsure about this market.

Here's my latest sign that it's different on the ground than it appears in the news room!

The Inland Empire (Riverside/San Bernardino Counties) in California was a boom-town during the past 7 to 8 years. New constructions was rampant. These homes are 2,000 square feet and up and were selling for between $500,000 and $700,000.

Here was the last sale: old on 7-18-2006 for $560,000

Single Family Residence Detached RES Closed Sale

Bed 3 Model 1 Baths 2.5 Stories Two Levels ASqFt 2280 Assessor YrBlt 2003 Assessor ALotSz 5859 Assessor LotDim View No View Prkng Garage Attached Garage 2 Rem Num Spc Cprt Acres 0.13 RV Acc HOA Dues + Range $: n

Here is the new listing: Status: Active Pr: $279,900 Fontana, CA 92336

Single Family Residence Sq Feet: 2280 SubArea/Trac: / / 16112 Model Nm: Zone: List Price Excl: Bedrooms: 3 Year Built: 2003

Baths: 3 Full: 2 Half: 1 Lot Sqft: 5859 Remarks: BEAUTIFUL REO PROPERTY IN QUIET CULDESAC, NORTH OF FONTANA ,NEWER CONSTRUCTION ,CORNER LOT, FAMILY/LIVING ROOM,LOFT,TURN-KEY.

While researching properties for this particular family, we found several homes in this general area, priced similarly - THAT WERE REMOVED FROM THE MARKET LESS THAN ONE WEEK FROM LISTING because they received over 25 offers in the first 5 days.

So tell me then, why doesn't the media reporting about all of the families that can afford to buy now. The Califorina Real Estate market has been crazy for the past 8 years - this correction is GOOD for California families!

Please Share! I would like to hear about how HOT your market is - let's get a conversation going about all of the families that can now afford thier first home.

I have over 45 first time home buyers looking at homes right now - they are all pre-approved for financing and are actively looking to buy. Spread the word - Share your success stories!

How to buy Short Sales and Foreclosed Homes in California - Part 1 of 2

Broadview Mortgage Corporation — Thu, 17 Apr 2008 02:08:32 -0500

It seems lately that most properties listed for sale are short sales (short pays) or foreclosures. There is a very big difference between these two types of purchases and how you approach making an offer to buy one of these homes. Today's post is about Short Sales - I will follow this up with Foreclosures in the next day or two.

Short Sales (Short Pay) - I have this conversation on a daily basis with potential home buyers looking for a great deal. Usually it's a call or an email that goes something like this:

"Can this be true? There must be something really wrong with this property because this seems like it's priced way too low"

The old addage that "if it sounds too good to be true, it probably is" is quite relevant in many of these cases. It's not that it's too good to be true, in many cases it's simply a matter of trying to attract attention to the property. The Agent listing these homes rarely has any guidance or advice from the bank on what they would accept in lieu of what is owed on the property.

The definition of a Short Sale is a home that is selling for less than what is owed to the lien holder(s). The banks are dealing with many distressed homeowners right now and have a huge workload when it comes to "settling" for less that what is owed on the money they have already lent to the current owner.

Many banks will postpone the foreclosure process while the current owner tries to sell this home. On average, it will cost a bank upwards of $60,000 to foreclose on a home - and that doesn't even take into account the price that they may have to sell it for to get it off thier books - more on that later.

When a Real Estate Agent takes a listing to list a short sale, they rarely have any idea of whether or not the bank will cooperate and sell the home for less than what is owed on it. In addition to that, if there is a second mortgage on the property - many times they have to agree to completely forgive what's owed to them. If the first lien holder is settling for less than what is owed to them, there is obviously nothing left to pay for the second mortgage.

The Real Estate Agent's Biggest Challenge is to list this home at a price that will attract buyers. When there are buyers, the Agent has the ability to start negotiations with the lien holder(s) and get an idea of what they may settle for. In addition to the purchase offer, the Agent is required to put together a hardship package showing that the current owners can no longer afford the home.

Once you submit a purchase offer on a short sale - the waiting game starts. On average, it is taking 45 to 60 days to even get an answer from the bank on whether or not they will entertain the offer. I have waited over 60 days just to have the bank say "No" with no guidance or direction on what it would take for them to consider an offer to settle.

The most important thing you need to know is that a bank will not settle for less than, or at least much less than, what the home is worth today. Typically, before a bank considers an offer they will perform a Broker's Price Opinion, or BPO. This is advice from a third party real estate broker on what the current value of the property is worth.

Knowing what to expect is the most important message I am trying to get across here. If you see a low asking price, it doesn't mean that you will be able to buy that house for that price. There is a fundamental communication gap right now between the lien holding banks, servicing companies and Real Estate Agents.

I hear the frustration from both Agents and home buyers alike in dealing with Short Sales. I believe this is primarily because Buyer's Agents are not communicating with home buyers to set up thier expectations for this process of making an offer on a short pay home.

Perception is Reality. If you're a home buyer making an offer on a short sale property keep this in mind. Ask your Agent to do some homework. I can't tell you how many times i've spoken to a listing agent and had them basically just break down on the phone because the bank will not respond to any offers they submitted as long as 60 to 90 days ago.

Your Agent should be doing a lot of homework before you make an offer. Here is what your Agent should do FIRST if you are thinking about making an offer on a short sale:

1. Call the listing agent. A. Find out if the hardship package has been submitted from the seller and if the bank has reviewed it. B. Find out if the listing Agent has had any communications at all with the bank or servicer. C. Find out if the Agent has dealt with this bank before and if they have any expectations of the time line for processing the short pay request.

2. Check recent sales in the area. If properties with similar amenities have sold in the past 1 to 3 months in close proximity to the home you're interested in - how much did they sell for? What was the average price per square foot? Where they also short sales or foreclosures? This is important because the bank will check this data before considering your offer.

3. Lastly, and maybe most importantly - search the area for foreclosures that are for sale that are at or below comparable sales prices in the same area. You can save yourself a lot of time and trouble if an equally valuable property is already priced to sell close by.

I am not trying to discourage you from making offers on short sales. I am trying to educate and inform so that you are not surprised by the process. This is not a "close your eyes and throw a dart" type of sale.

Move forward on your Short Sale offers with this infromation and you will not be disappointed! There are two ways to approach making a short sale offer.

Short Sale Approach #1: Make an offer that YOU CAN'T REFUSE. Chances are, the bank will refuse it, but If the bank accepts your offer, Congratulations!

Short Sale Approach #2: Disregard the "asking price". Many times this number is pulled out of the air and has absolutely no relevance to the actual "value" of the property. Many times the Agent does the best they can to price the home such that it is consistent with recent sales in the area.....but that's still no guarantee that the bank will agree.

If you really want a Short Sale property, you may want to seek the advise of your Realtor as to what a realistic value might be and make your offer at that amount. Remember, the bank is going to do thier homework - I just doesn't make sense that you wouldn't do yours.

Finally, buying a short sale does not exclude you from using any Down Payment Assistance Programs, FHA or CalHFA loan programs and you can still always use Down Payment Assistance Grants like Nehemiah and Ameridream.

For more information on making offers on and buying short sale properties - feel free to contact me anytime by email at Scott@myporchlight.com, call or text my cell at 714-336-8286 or you can reach me on AOL IM or Yahoo IM @ PorchLightScott

Home Buying 101 for First Time Home Buyers

Broadview Mortgage Corporation — Mon, 14 Apr 2008 23:45:01 -0500

If you are reading this, you're probably one of the first time home buyers taking advantage of the incredible deals available in this market. I am a Realtor that specializes in representing people trying to buy homes - I am a Buyer's Agent.

There is so much information available on the internet about buying homes that a google search will produce results 1-10 of about 62,200,000 - uh...where do you start?

My favorite conversation with a new client (and this has happened more than once) starts with them revealing that they have done thier research and know just enough about the process to get themselves into trouble! How do you possibly sort out what is relevent to you and your family?

I have answered the same questions often enough that I though I would share this with you and maybe provide some buoyancy for you as you wade into the ocean of information available on the world wide web.

Are there any loans that require no down payment? - The answer to this is tricky....it's both Yes and No. The Veteran's Administration (VA Loans) do not require a down payement . Government insured FHA loans require a minimum 3% down payment. Fannie Mae now requires a minimum 5% down payment due to the declining property values.

Do you have any First Time Buyer Programs? - Yes. There are first time home buyer programs, but more common are Down Payment Assistance programs to assist first time home buyers with the down payment requirements that most loans now require. There are also Down Payment Assistance Grants like The Nehemiah Program available that do not require repayment. Talk to your Realtor to get more information on these programs.

What does it mean that it says Short Sale or Short Pay on the listing? - Short Sales or Short Pay transactions have many more players than a home owner selling a home. The short and easy of it is that the current home owner can not afford the payments and is experiencing a hardship trying to make thier mortgage payments.

This challenged home owner is trying to sell the home for less than what they own on it. There are several steps to buying a short sale property. The most important and final step is that the bank that holds the loan now must agree to take less than what is owed on the home.

Due to a huge volume of these types of transactions in this market and the relative "surge" of this tumultuous market has caught most lenders off guard and they are very backed up with these short pay requests. The bottom line with Short Sales are that you should expect at least 6 to 8 weeks in most cases....and sometimes longer, before you even get a response from the bank after making your offer.

My experience is that most home buyers find a home they like even better before they even hear back from the bank on thier purchase offer. Your Realtor should communicate with the listing agent to see if the seller's financial package has been submitted to the bank yet and find out whether or not the bank has given the agent any indication of what they would accept as a "short pay" offer. If the listing agent has not had any communications with the bank....i would steer clear - there are many homes for sale right now.

Do you have any Foreclosures for Sale? - Yes, there are many foreclosures for sale right now. My experience is that the selling prices for these homes are VERY aggressive. I have been involved in several "bidding wars" for foreclosure properties that are priced well below "market".

What to watch out for......Many foreclosures are not eligible for financing. Lenders will not lend money on a property that requires construction work. A good number of these foreclosed properties are in very bad condition. Any home that says - "fixer upper", "investors dream", "sold in as-is condition" - these are indications that these homes may be unlendable.

Again, rely on your Realtor to do this research for you. An experience Buyer's Agent can save you a lot of time and trouble by doing extensive research on the properties you are interested in before you go out and look at them. Unless you are an ALL CASH buyer, you need to look for properties that the bank will lend on.

These are the most common conversations i have on a daily basis. Of course, all situations are different and having a good Buyer's Agent on your team will save you time, money and find you the best deals out there that meet your goals of owning a home.

This is an incredible market for first time home buyers - Congratulations for choosing to do your research so you can make an educated decision about buying your first home!

Contact me if you would like access to searchable real estate listings or detailed neighborhood information including schools, climate, crime, age and income statistics for the areas you would like to buy.

Fannie Mae DU 7.0 Release Notes

Broadview Mortgage Corporation — Thu, 03 Apr 2008 09:41:02 -0500

Well folks, here they are - the all new, all improved DU 7.0 version release notes.

What's New?

Basically, in true DU fashion Fannie is not saying exactly what the new tolerances are but here it is in a nutshell.

Debt to Income Ratios are going to be much more scrutinized. Higher DTI's will need compensating factors such as credit scores, LTV and reserves. Max DTI used to be 65% with Fico scores as low as 600 range, plus or minus depending on comp factors. Since the release on 3/31 I have not run into anything that tests this low end tolerance.

Loan to Value is going to be effected by the removal of Mortgage Insurance as a mitigating factor for LTV's above 80%. With the continued tightening guidelines of MI companies driving many of the changes in the credit markets, the presense of mortgage insurance is no longer considered a strength for the investment quality of high LTV loans.

Credit Scores have sort of come into play. Even though Fannie states that DU is not a fico score driven model, it does state in this release that it will not purchase any loan with a credit score under 580. Can you say FHA?

Housing Finance Agency loans for First Time Home Buyers continue to offer 100% CLTV financing with the use of payment deferred Down Payment Assistance programs.

This is the quick and dirty version of conventional loan underwriting changes. We have already experienced the tightening of underwriting guidelines over the past couple of months as FNMA sellers anticipated tightening of the seller guidelines.

30 Year fixed loans are still the flavor of the month.

Flavor of the Year - 30 Year Fixed Single Scoop Plain Vanilla

Broadview Mortgage Corporation — Fri, 28 Mar 2008 16:17:06 -0500

Time to jump in the time machine and dust off the underwriting guidelines of old.

Radian is the lates MI company to tighten their underwriting guidelines to exclude high LTV's and Stated Income/Stated Asset loans.

Fannie Mae is set to roll out tighter underwriting guidelines during the month of May 2008. We have already seen Fannie an Freddie lose thier taste for ARM loans as reflected in the pricing in the past 30 days.

Realtors use your FHA and Community Seconds resources for High LTV offers. In California, CalHFA offers some great loan programs to 95% with down payment assistance programs allowing up to 102% of the purchase price. CalHFA loans are not tied to traditional loan and income limits and

If your local market is anything like what i've been seeing in the 30 to 45 days.....things are heating up out there. Many first time home buyers are coming out of the shadows and getting some great deals on short sales and foreclosures in the Southern California area, and from talking with many Realtors, this appears to be a nationwide occurance.

Hope this helps!

A Survival Guide for Foreclosure Scams and "Stop Foreclosure" claims

Broadview Mortgage Corporation — Fri, 28 Mar 2008 12:56:15 -0500

If it sounds to good to be true.......

My heart just skipped a beat when i read this article this morning about this Foreclosure Scam. It's bad enough that so many home owners are struggleing to deal with misrepresented loan programs and falling home values, but when the vultures come out it infuriates me.

Banks are being quite cooperative in many cases and delaying foreclosure proceedingsto allow homeowners to either modify their existing loan terms or attempt to list their home for a short sale.

Note Modification

A note modification is when the lender rewrites the note to either fix or reduce the interest rate and possibly reduce the principle balance of the loan to stave off foreclosure action.

Short Sale Negotiations

A short sale occurs when the current owner is experiencing a hardship and is unable to afford the payments on the home. The balance of the liens owed against the property exceed the value of the property so refinance or equity sale is not possible.

It bothers me that you can type Stop Foreclosure into google, as i would imagine many folks have, and get bombarded with so many options. How can you possibly differentiate between professionals and scam artists looking to prey on those in trouble?

My advice is to seek the help of a Realtor. We understand that these are difficult times, it is our job and responsibility to assist you with these challenges. Realtors know how to talk to the banks to negotiate the terms that are acceptable and uncover your real options.

DO NOT PAY MONEY to somebody claiming to be able to keep you out of foreclosure.....it doesn't work that way. Foreclosure can only be prevented by negotiation or paying money to the lender.....not someone showing up on your doorstep with a new suit and a slick story.

Here on Activerain you will find many, many professionals that understand this market and what options are available to homeowners with challenges. Seek out a professional in your area and ask for help. We are more than happy to help you!

A new breed of First Time Home Buyers are finding great deals!

Broadview Mortgage Corporation — Wed, 26 Mar 2008 00:44:55 -0500

I am asked on almost a daily basis what i think the market is going to do....is this a good time to buy?....are prices going to continue to drop?

Listen, i would be a pretty popular guy and certainly would not have the time to write or even stop to eat if i knew with any degree of certainty what the answer to these questions are, i do however, as most folks that are still in this industry, have an opinion that I have been able to support with personal experience as well as validation from other professionals in the Real Estate business.

Here is what i'm finding: The market is continuing to correct as it always has and always will. My opinion is that there is still a lot of inventory out there and that home prices will continue to drop as reality hits the banks with "short sale hold out syndrome" and the residual time bombs left by the trillion plus dollars worth of adjustable rate notes yet to reach the maturity of thier introduction rates or recast periods in the case of negative amortization loans.

Is this a good time to buy? Absolutely! There are some incredible deals out there right now. Home prices are reasonable to the point that many of America's more conservative and deliberate First Time Home Buyers are beginning to stir. Bank owned properties by Countrywide are being priced extremely aggresively. They have worked fast to make thier REO units efficient (as efficient as they can be with that volume!). I have found that they are pricing these homes to sell and they are moving pretty quickly once listed on the market.

Are prices going to continue to drop? Yes. Quite simply, not everyone with a home to sell still believes that it's not worth the same as 5 years ago. This market will continue to level out until we hit that magic price point where financing and home values intersect and the drive by media takes a break from thier chicken little routine.

This isn't the end of the world, it's just a little house cleaning (excuse the pun) and a little sense is being knocked into the American consumer - i'm sorry to break it to you.....you can't have something for nothing and you do have to have a job to buy a house...and yes, you have to make enough money to afford the payments.

There are still many First Time Home Buyer Programs available in California and even though they have recently followed Fannie and Freddie's leads and reduced thier maximum LTV to 95%, there are still a wide range of Down Payment Assistance programs to bridge the gaps to 100+% of the purchase price for qualified buyers.

The qualifying criteria is typically that you can not earn more than 80% of the HUD Median Income. There are homes in the inland empire and even condominiums in Orange and Los Angeles counties that are quite affordable while meeting these income requirements.

If you would like more information on First Time Home Buyer programs, Down Payment Assistance programs or are just curious what properties are available in your area - Please shoot me an email and I can get you more information.

Purchasing your first home is not an impulse purchase. You are smart to have not bought until now, until this market, you are looking at the right time and you are in the right place. Do you research and you will find a great deal!

It's an incredible day for an Optimist!

Broadview Mortgage Corporation — Mon, 24 Mar 2008 13:45:41 -0500

I can hardly believe my eyes this morning! I have read article after article today that contains less than tragic news about the housing market. Is it possible that the words "Housing" and "Crisis" are tired of each other and may be filing for separation soon?

There are many pundits and talking heads out there that love to spew the vile evils of the housing market and credit markets with thier only real message being that it will only get worse before it gets better.....well, today is not your day my friends.

Even the Bear Sterns bail out of last week that sent the market sprialing has taken a little turn for the best and spread warm fuzzies all throughout Wall Street.

It's a great day for Optimists - Here's to hoping that you're one of them!

Cheers!

Scott

How to Buy Homes in California for Rock Bottom Prices!

Broadview Mortgage Corporation — Wed, 19 Mar 2008 01:34:04 -0500

I am going to prefice this by asking you to excuse my cynicism in coming up with this title. I'm just a little tired of all the snake oil salesman that seem to have popped up everywhere trying to teach people how to buy homes without a dime of your own money at .25 cents on the dollar - you too can get rich buying foreclosures!

Meanwhile, the rest of us continue to work hard and provide sound advice to home buyers....Here's my .02

I'm going to start by sharing with you several tried and true ways to NOT buy homes in California for Rock Bottom Prices!

1. Wait for interest rates to drop

2. Wait for the bottom of the market

3. Advise your Realtor to make an offer on a short sale for .50 on the dollar

Alright, now let's get to the other side of these coins:

1. Interest rates are still very, very low. This market we are in a just another natural correction of a free market system. If you look at Mortgage Interest Rate Trends you will find that money is available to borrow at very low interest rates.

Credit guidelines are significantly tighter, you need good credit, you need a down payment in most cases and you are not going to find any fancy short term loan programs with introductory rates. You're pretty much looking at plain vanilla 30 year fixed.

2. The bottom of the market. There are two ways to look at "Value". One way is as a home owner - you want to live in the home. If you find the home of your dreams or desires, it's in the school district you want, it has a great yard for the dog and the kids, there's a nice big garage that can double as a shop...etc....AND, you can easily afford the mortgage payments - Guess what? You just bought a home in California for a Rock Bottom Price.

The other way to look at this is as an Investment property. This much more simple. Will it cashflow? This is a buy and hold market. Read Rich Dad Poor Dad if you want to better understand how to be a successful Real Estate Investor.

Remember, price is directly relative to value. People do not buy Mercedes Benz or BMW because they are trying to meet a basic and primal need for transportation. Chances are you couldn't affort that home 3 or 5 years ago.....but you can NOW! and that's as good as it gets.

3. Short Sales are short only because the home is not worth now what it was bought for 2 to 5 years ago. If you look at what is owed on the property (a good agent can find that for you) and you see what it's "value" is now.....there is a significant discount, but it's still worth what it's worth. You can get an offer accepted under asking price and at below current market, but offering half or even three quarters of what they are asking for will just waste everyone's time.

All banks have a "Floor" - this is the lowest they are willing to take and in my experience, i've lost a couple of offers recently because they where offered more than the floor and one sold for above asking price.

Here's the bottom line. There are many great agents out there that can educate you on the market, analyze your goals and find you some incredible deals in your "price range". Take your time and do your research. It's an incredible buyer's market right now and it's only going to get more competitive as more people figure it out.

Contact me today to get free listings of homes in your area.....test the market...you might be surprised at what you will find!

A lesson on Real-ativity

Broadview Mortgage Corporation — Wed, 20 Feb 2008 21:41:56 -0600

This is going to be a short and sweet comment of which i have been previously hesitant to make, and yet, I shall.

I hear quite often this phrase "I'm waiting for the bottom of the market".

In the past week I have been outbid three times on REO's that the selling Realtor claims was awarded with to above listed price offer. I would repeat myself but i figure it's easier for you to just go back and read it again :)

Prior to making my offers i pulled sales comparable on MLS and title data from the last 60 days, maximum one mile range, I was excited to see that the listing price on these bank owned properties was indeed very aggresive...priced to sell one might say. Well, i guess! I made the typical "Just under listed price offer" to see how eager the bank was to unload this property. Imagine my surprise.

Here is the point of my post....The "BOTTOM" is a term relative to a perspective outside, or beyond said point. You can not see the BOTTOM until it has past you. Look to your left....look to your right....what do you see? your immediate surroundings and perhaps as far as you can in either direction until an obstacle presents itself and blocks your vision, right?

That obstacle which blocks your field of vision is speculation, mass media, or a friend's opinion perhaps......If you would block out all of those obstacles, search for opportunity eagerly, make educated decisions with all the possible data you could gather, perhaps bounce your conclusion off a fellow explorer....you may very well find yourself looking back on your decision and recognizing that you created the bottom of your market.

The BOTTOM is a point of reference only recognizable once it has past. If you read, hear, or are told that it is the bottom of the market.....it's already passed. You can not see the forest through the trees.

That's my 2 cents.

Need a hand? How about an ARM?

Broadview Mortgage Corporation — Tue, 19 Feb 2008 17:26:32 -0600

I know that the drive by media loves to paint with a brush the size of Texas when it comes to exposing the improprieties of predatory and unethical lenders.....but not all ARM loans are EVIL!

30 Year fixed rates are rising faster than the Fed's blood pressure today and do not be surprised if you see a par rate of 6.5% by the end of the week.

There was a time when i could, with some degree of accuracy, predict the trend of rates into the near future...i could actually cite the data, market activity and trends that where likely to effect these rate changes...Not anymore, not today.

What I AM seeing is that ARM indices are dropping, resulting in very aggressive pricing on conforming 5/1, 7/1 and 10/1 ARMs tied to LIBOR and the 1 year Treasury. LIBOR is currently at 2.73, Treasury at 2.08. With margins of 2.25 for Libor and 2.75 for the Treasury - We are seeing rates of 4.625% at par on 5/1 ARMS, 7/1 and 10/1 ARMS in the low 5% range at par.

There is much uncertainty in this market today, but the American economy as well as the housing market will rebound as it always has. This is not a doomsday market, it's a correction.

I know it's crazy out there - With every obstacle there is an opportunity. Anyone purchasing in this market full of incredible opportunities is accepting a certain amount of risk and speculation as to the future of thier investment. It's never all good and it's certainly never all bad. Right now, ARMs are Good - That's my .02

Beware of longer Underwriting turn times!

Broadview Mortgage Corporation — Sat, 09 Feb 2008 12:41:27 -0600

With the dramatic dip in conforming interest rates two weeks ago, and now the passing of the Stimulus package - BEWARE OF LONGER TURN TIMES!

I've been here before. The environment is ripe with downsized lenders and rapidly changing market conditions to plunge us into 3 to 4 weeks, maybe even longer underwriting turn times when you begin the loan process.

Lenders Prioritize Workflow - Purchases will usually take priority. Turn times for purchases right now are between 4 and 7 days. Refinances are currently running anywhere from 7 to 14 days. Several large lenders will only do 60 day locks!

With the anticipation of the Refi Boom resulting from the temporary increase in conforming loan limits I would expect that turn times could go 30 days or longer.

Be Aware that this is a new challenge and being prepared for it will allow you to set your expecations accordingly. You lender should be able to tell you what turn times are currently. Make sure you get all your documents in as soon as possible and be as complete as possible with all lender requests. This will assure that there will be no further delays.