Visalia Real Estate Forum

FHA Loan Limits Decrease October 1st 2011

2011-09-06T10:49:00.000-07:00

Unless Congress extends the expiration deadline, Federal Housing Administration (FHA) loan limits set in 2008 will drop significantly beginning October 1. Congress raised the loan limit amount in response to the housing crisis to help spur the homebuying market. FHA loans offer borrowers very competitive rates and terms, and they only require a 3.5% down payment. Allowable debt ratios are higher than the typical debt-ratio limits imposed for conventional loans, and there are no income limit qualifications, so more people can qualify for them.

If the loan limit drops on October 1, many California homebuyers will face higher down payments, higher mortgage rates and stricter loan qualification requirements. Borrowers seeking larger mortgages will have to apply for conventional loans or jumbo loans, which may be subject to higher interest rates and down payments.

The maximum FHA loan limit for Tulare county starting October 31, 2011 will be $271,050. The current loan limit set to expire on September 30, 2011 is $325,000.

2nd Lien Holder's Can No Longer Pursue Deficiency in CA

2011-07-27T14:24:00.000-07:00

Effective July 15, 2011, California has prohibited Junior Lenders (2nds, HELOCs, etc) from having any deficiency recourse claims against the borrower if the lender agrees to take part in a short sale. Gov. Jerry Brown signed SB 458 (Corbett) into law and it took effect immediately. In January, 2011, SB 931 (2010) was put into effect requiring that any First lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans. But unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens. Both laws only apply to one to four unit residential properties.

Whether this is a victory for sellers and the real estate industry remains to be seen.

California Association of Realtors President Beth L. Peerce stated: “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”

But the real question is whether this will in fact make short sales harder to get done. For any lender being asked to take the loss of the deficiency in a short sale, their only obligation is to determine whether a short sale will get more money back for their investors than a foreclosure. For first lenders on one to four unit residential properties, short sales are almost always better because: 1) Buyers pay more at a short sale than at a foreclosure sale; and 2) almost all foreclosures of these type of properties in California are done using a Trustee Sale from which there is no deficiency recourse. So for the foreclosing first lender, the short sale will generally bring them more money than a foreclosure. That is not necessarily the case with junior lenders.

Junior lenders would wait until the 1st lien foreclosed then they were free to pursue a deficiency judgement to get back the balance owed (unless the seller filed Bankruptcy). Now the 2nd lien does not have this option. So, it will be interesting to see how well they cooperate with short-sales. Still, the upside for a short-sale for a 2nd lien is at least they get "some" money from the short-sale proceeds from the 1st lien holder. Something is always better than nothing.

I am still not clear on whether or not the 2nd lien holder can send out a 1099 to the Seller/Borrower after they agree to a short-sale. Prior to SB 458 being passed a lender would either write off the balance owed to them via a 1099 to the Borrower or reserve the right to pursue deficiency. If they write off the balance as a loss and send the Borrower a 1099 that shows as ordinary income for that year for the borrower. It was my understanding that if they send out a 1099 they could not also pursue deficiency because they wrote the deficiency off as a loss.

As with anything else...only time will tell how this all plays out.

Note: I am not an attorney or accountant. This is for informational purposes only. Please contact your own attorney or accountant for advice regarding your specific situation.

How do I get a Home Loan if I'm Self-Employed?

2011-07-11T10:44:00.000-07:00

You would think that there would be a great loan option for self-employed borrowers. With the shift in the economy and real estate market I have noticed a huge void in the lending market...loan products for self-employed borrowers! So many of my self-employed clients have plenty of assets, money in the bank, and great credit. The problem is they can't get a loan. Why is this? Well, I will explain below:

Many self-employed individuals report expenses on their taxes in order to reduce their tax liability, but this can backfire when they apply for a mortgage. For tax purposes it might be beneficial to to write off as many expenses as possible to make your net income low (gross income - expenses = net income). Unfortunately, when it comes to qualifying for a loan the net income is what is used for qualification.

“Self-employed people typically report their gross income minus expenses to generate a net income,” says McDonough. “For tax purposes, it may be beneficial to have net income as low as possible, but the net income is the number used for income qualification.”

Even borrowers with $1 million in the bank and a credit score of 800 may not be approved for a mortgage if they do not have a qualifiable income stream. In addition to proving that you have enough income to qualify you must show that you have been self-employed for at least two years (this can be done with tax returns).

Self-employed borrowers who apply with a co-applicant still need to follow the same process of proving income. Those who report a loss on their taxes may be better off applying only with the co-applicant’s income. For example, if one borrower earns $100,000 and the other has declared a loss of $10,000, their combined income is $90,000. Also,making a larger down payment can help if the borrowers are close to qualifying and the smaller loan size lowers their debt-to-income ratio enough.

So, if you have plans to purchase a home make sure you plan ahead with your tax returns.

Can the bank come after me for more money after a short sale?

2011-03-24T12:17:00.000-07:00

California Homeowners have always been protected on “purchase money” loans

Traditionally, California has been an anti-deficiency, or non-recourse state when it comes to “purchase money” loans. Purchase money loans are loans taken out to buy a home, or residential property of one to four units. Purchase money loans can include second and third mortgages. If the loans were used to purchase a residential property, California homeowners are 100% protected from future deficiency judgments from their lender after foreclosure or short sale.

Prior to Senate Bill 931, California Homeowners were NOT protected on “refinance” loans

In the past, refinance loans were not included in California’s anti-deficiency laws. Refinance loans did not fall in the same group as “purchase money” and were considered recourse loans. Unlike purchase money loan, the lender can pursue a deficiency judgment against the homeowner, or borrower, after foreclosure or short sale.

Senate Bill 931 changes that: First mortgages, or first deeds of trust, on a refinance loan are now considered the same as “purchase money” loans and are non-recourse. Under the new California law, a homeowner’s lender can no longer pursue a deficiency judgment on a first mortgage of a refinance after foreclosure or short sale.

Difference between first and second mortgages

Second mortgages are generally excluded from the new law, but if the second mortgage was used to improve the property in some way, it would be included and considered non-recourse. Other uses, such as bill consolidation, or cash out, would be excluded, and the homeowner may be legally liable if their lender decides to pursue a deficiency judgment. In a short sale transaction, lenders usually will waive their right to pursue a deficiency judgment in the future.

Expert advice about short sales

If considering a short sale of a refinance loan on a residential property that includes a second mortgage, consult with a knowledgeable real estate attorney about deficiency liability.

If considering a short sale and later tax consequences, it is broker advised to consult with a licensed tax preparer, or tax attorney.

For more information:
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation (IRS website)

Information from California State Franchise Tax Board

Wait...I Just Found Out I Have Mortgage Insurance

2011-02-11T05:10:00.000-08:00

I keep running into short-sale with loans that have Mortgage Insurance (M.I.). More often than not the Seller is aware of the mortgage insurance that they are paying. The general rule of thumb is a home purchase with less than 80% equity is required by the lender to carry M.I. While there are still a lot of loans that were 100% financing the lenders solved the M.I. problem by giving the Buyer two loans, with the 2nd loan being at a higher rate since it was more risk in case of default.

Now that the market has declined I am also seeing that a few of these second lien holders, that did not require the Buyer to pay M.I., have purchased the insurance themselves. This practice is called "lender-paid" mortgage insurance coverage. It is actually very smart on the part of the lender because it covers them in case the homeowner defaults. So, what happens if you are trying to short-sale and this issue comes up? One of the more known M.I. companies is Radian. If the home is owner occupied they tend to work a little more with the Seller and offer decent terms to the Seller in order to cooperate with the short-sale. Below are some frequently asked questions that will help explain the process with Radian:

What information does Radian require to consider a short sale?
Since short sales are time sensitive, Radian accepts minimal information to consider a request. The next payment due date, outstanding mortgage balance, property value, purchase amount, estimated net proceeds and settlement date are the basics needed along with a borrower financial statement. Additional information may be required to make a final decision.

How long does it take Radian to respond to a short sale request?
Radian responds within two business days, but if additional information is needed to evaluate a request, a response can’t be provided until the requested information is delivered.

Will Radian discuss its approval terms directly with the REALTOR® or seller?
Yes, Radian Workout Specialists will speak with the agent or seller to clarify approval terms and negotiate a mutually acceptable arrangement. The specialist’s name and phone number can be obtained from the mortgage servicer and it’s also important to obtain the Radian Certificate Number so the specialist can quickly identify the case.

What terms and conditions are included in Radian’s approval?
Radian’s approval terms and conditions generally consist of the purchase amount, required net proceeds, a projected settlement date and, if applicable, the seller financial participation requirement and specified funds to the junior lien holder.

Are Radian approval terms negotiable?
Yes, and Radian makes every effort to offer favorable approval terms acceptable to the seller.

Does Radian’s approval of a short sale include a release from mortgage liability?Yes, but only to the extent of Radian’s loss. A release of mortgage liability should be obtained, in writing, from the mortgage servicer.

Why does Radian sometimes require the seller to contribute financially to a workout?
A short sale is an alternative to foreclosure—a settlement of a financial obligation and workout that requires compromise by all parties. If in a position to do so, the seller should participate financially by paying a reasonable portion of what they owe in exchange for approval of a transaction that has value. However, more often than not, Radian does not require seller financial participation. They will look at your credit and if they see anything fishy (such as a recent home purchase) you can bet they are going to require a promissory note before cooperating with the short-sale and possibly for the full amount of their loss.

How does Radian determine the amount of required seller financial participation?
Seller financial participation requirements are negotiated on a case-by-case basis after a careful review of available information regarding the seller’s financial and default situation.

How does Radian determine the promissory note and/or cash payment terms?Radian is flexible with payment terms in an effort to work out a settlement with the seller that allows the sale to move forward. The promissory note is unsecured and interest-free.

Now, if you are looking to short-sale your home and you know or think you might have M.I. on your loan the most important thing that you can do is to find a VERY qualified agent to handle the process for you. Many agents do not understand Mortgage Insurance themselves so they are not going to be able to help you. Make sure to ask questions...if your agent doesn't know...find another!

The Homeowner’s “Secret” Tax Deductions

2011-02-02T12:10:00.000-08:00

If you own a home you are probably already aware of the tax advantages associated with deducting your mortgage interest payments. After all, this is the big deduction that has been in the news lately and is often touted as a great reason to become a homeowner. However, there are a couple other deductions that are available to homeowner’s that you might not be aware of.

Did you purchase or refinance your home? Did you pay points? More than likely you did and they are in most cases tax deductible. Each point is 1 percent of the loan amount. Lenders charge points as a way to make a profit, and borrowers generally pay points in exchange for lower mortgage rates.

If you paid points, the amount should be listed on the 1098 statement from your lender. This document also notes how much mortgage interest you paid. You can also find this information on your Settlement Statement that you received at closing. Even if the seller pays all the points, the buyer gets the deduction. Exactly how much of one and when you can take the deduction depends on your loan circumstances.
If you purchased the home as your primary residence you should be able to deduct the points paid in the same tax year as the purchase as long as you meet all of the requirements (see IRS publication 936). If you refinanced or do not occupy the home as a primary residence then you still have the opportunity to deduct the points over the life of the loan.

Lastly, don’t forget to deduct property taxes. This amount will also show up on the tax form you receive from your lender. If you purchased a home in the current tax year you can find the amount on your Settlement Statement. Taxes are an annual deduction for as long as you own the home.

As with all tax related deductions there are rules and stipulations. Contact a qualified Accountant to see how these deductions pertain to your particular situation. After you complete your taxes and you find yourself needing more deductions…contact me…it might be time to buy a home!

Big Changes to FHA Loans Ahead

2010-08-24T05:29:00.000-07:00

If you are currently in the market to purchase a new home and intend on using FHA financing you might want to take note! Consumers looking for home loans backed by the Federal Housing Administration (FHA) will face tougher hurdles and higher costs under new legislation and new rules that could take effect as soon as this month. Below is a list of changes that are anticipated:

1. The biggest impact on borrowers will be the change to the allowable seller contribution amount. Currently FHA allows up to 6% of the purchase price to be paid by the seller to help cover the buyer's closing costs, pre-paid items(mortgage insurance premium, homeowners insurance, and property tax reserves), etc. This contribution amount will change to 3% allowable contribution from the seller. If you are purchasing a home below the $200,000 range this will make a difference to you! Your closing costs for a loan under $200,000 are closer to 5-6% of the purchase price. That would mean that on top of the 3.5% down payment you would need to come up with an additional 1-2% more.

2. The FHA would require borrowers to have at least a 500 score for FHA backing. At 580 and above, borrowers would be eligible for the 3.5% down payment. But those who fall between 500 and 580 would see their down payments jump to 10%. That, however, is still well below scores of 660 to 720 that most lenders already look for to accept only a 10% down payment.

3. FHA-backed loans have looser restrictions than other mortgages on down payments -- now at 3.5% of the home's selling price -- but require borrowers to pay an upfront fee and a monthly fee. The legislation allows the FHA to hike the monthly fee (this is to cover Mortgage Insurance on the loan) to as much as an annualized 1.5% of the loan balance, up from 0.55%, though initially it will go only to 0.9%. The initial fee was increased earlier this year to 2.25% from 1.75%, though the FHA has said it will bring it down to 1% with the higher monthly fee.

FHA Announces Refinance Option for Underwater Homeowners

2010-08-16T06:22:00.000-07:00

Not late on Mortgage payments, but too underwater to refinance and take advantage of record low interest rates? FHA will be offering an alternative to underwater homeowners. Of course you may want to read the fine print before rushing to your lender to refinance.

This new refinance loan offered by FHA is available to owner occupants, you cannot be late on payments, you must be able to qualify for a loan (good credit), and your current lender must be willing to accept a short-payoff on your current mortgage loan in order to complete the FHA refinance. This is where the fine print comes in...if you read the FHA Mortgagee Letter in full you will see at the bottom of the six page document "Additional Items of Note" where it states: "Mortgagees must make borrowers aware that, as with any loan forgiveness action, the short refinancing under this program may be reflected as a negative feature on a borrower’s credit score. Mortgagees must also advise borrowers that they need to consult with their tax advisors regarding the cancellation of debt and possible tax consequence."
So, in essence this will be reported the same as a short-sale would on your credit. If you want to stay in your home, you are current on your mortgage, and see that falling behind is eminent then this option might work for you. I think this is a very viable option for people who are current on their loan and want to stay in their home and do not mind a short-payoff on their credit report.

The problem I see is that most people who contact me for a short-sale are already late on their payments and can't take of advantage of this program. Even if they catch up on the payments they have missed their credit score would more than likely be too low to even qualify for this loan. The other problem is that the homeowners who are underwater and current on their payments still have not defaulted yet because they want to preserve their credit. Of course they would love to refinance and take advantage of low rates but not to the detriment of their credit score. I bet if lenders offered some of these homeowners current interest rates and did not even lower the principle balance they would have better luck. What they are not understanding is that the majority of the people who are not late on their mortgage are still paying because they do not want to damage their credit.

FHA Allowable Seller Paid Closing Costs Amount to Decrease

2010-07-19T10:12:00.000-07:00

The costs of getting a mortgage backed by the Federal Housing Administration are about to go up for some home buyers.

FHA-backed loans are wildly popular with first-time buyers for an obvious reason—they require a minimum down payment of 3.5%, far lower than what private lenders offer.

But the loans are quite popular for one other reason—they allow sellers to kick in more cash for closing costs. The FHA currently allow sellers to pay for loan origination, escrow, and other costs for up to 6% of the price of the home.

That could change as soon as next month. The FHA published a notice yesterday that it planned to follow through on moves announced earlier this year to cap those closing cost concessions at 3% of the price of the home.

The FHA’s reasons for doing this are twofold. First, the change will bring the FHA much closer to what the rest of the industry allows. But the other concern was that home sellers have an incentive to sell the home at an inflated price on the front end to recover the money that they’re spending on closing costs on the back end.

Tax Credit Escrow Closing Deadline Extended

2010-06-17T10:09:00.000-07:00

The U.S. Senate has passed an amendment that would extend the closing deadline of the homebuyer tax credit by three months.

Right now, qualifying homebuyers who were under contract by April 30 have until June 30 to close the deal. But because of the large volume of applications for lenders to process, concerns have begun to surface that some buyers may miss out on the tax break simply because of the backlogged pipeline.

The National Association of Realtors (NAR) says it has received reports that as many as a third of the buyers eligible for the credit have already been notified by their lender that they won’t make the June 30 closing deadline. The Senate’s amendment, approved Wednesday by a vote of 60 to 37, would give homebuyers and their lenders until September 30 to complete their transactions.

Homeowners Defaulting on Mortgages Even if They Can Afford to Pay

2010-05-06T15:45:00.000-07:00

Decisions by U.S. homeowners to walk away from mortgages they can afford account for an increasing share of defaults, according to Morgan Stanley.

About 12 percent of all mortgage defaults in February were “strategic,” up from 4 percent in mid-2007, New York-based Morgan Stanley analysts led by Vishwanath Tirupattur wrote in a report today. Borrowers are more likely to stop paying their mortgages the higher their credit scores and the larger their loans, the analysts said.

Defaults by borrowers who owe more than their homes’ values are among the biggest risks for the housing market, according to analysts including Zelman & Associates’ Ivy Zelman and Amherst Securities Group LP’s Laurie Goodman. Last month, the Obama administration said it would adjust its anti-foreclosure program to encourage reductions to borrowers’ principal amounts, instead of just the payments they make, to address the issue.

Read Full Article

Schwarzenegger expected to sign short sale tax relief bill

2010-04-12T15:31:00.000-07:00

• Would stop state from collecting taxes on short sale ‘windfalls’
• Conforms state tax law to federal

Californians who lose their homes to foreclosures and short sales would not be hammered with a bill for state taxes on the “forgiven” debt under a bill approved by the Legislature Thursday and which is expected to be signed by Gov. Arnold Schwarzenegger.

SB 401, authored by Sen. Lois Wolk, D-Davis, whose district includes some of the most distressed real estate in the nation, exempts borrowers who lost homes last year from state taxes.
It’s estimated that about 100,000 homeowners will benefit.

The bill generally conforms California personal income tax, corporation tax, and administration of franchise and income tax laws to federal income tax laws as of Jan. 1, 2009. The bill also conforms to one provision of federal tax law enacted in 2009, from the Recovery and Reinvestment Act of 2009 by excluding income grants made-in-lieu of federal renewable energy tax credits.

Entertain in Style

2010-04-11T09:26:00.000-07:00

Entertain in Style

2030 S. Anthony Ct., Visalia, CA 93277 - presented by Heather Mendonca

2010-04-11T09:24:00.000-07:00

2030 S. Anthony Ct., Visalia, CA 93277 - presented by Heather Mendonca

Visalia, CA Real Estate Forecast 2010

2010-03-24T09:35:00.000-07:00

Visalia, CA
Home price forecast (1 year):* -2.3%

City stats†Population: (2006) 419,909
Median family income: (2008) $46,900

Home price data
Median home price: (2009) $160,000
Affordability index: (Median home price/family income 2009) 3.4
Prices peaked in: 2006:Q1
Total climb during the boom: (2000 to peak) 159.9%
Total decline so far: (Peak through 2009) -48.7%
One-year change: (Q4 2008 to Q4 2009) -10.0%

Forecast
Additional price change to bottom: -7.8%
When they'll hit bottom: 2010:Q3

*(Q1 2010 - Q1 2011)
† Data is for Visalia-Porterville, CA Metropolitan Statistical Area
Notes: Median home prices are for single-family homes through the third quarter of 2009, the most recent data available, and include sales of bank-owned properties.
Sources: Fiserv and Moody's Economy.com

California foreclosure starts rise nearly 20% in February

2010-03-17T09:56:00.000-07:00

ForeclosureRadar (www.foreclosureradar.com)issued its monthly California Foreclosure Report for for February 2010. After reaching the lowest level in a year last month, Notice of Defaults, the start of the foreclosure process, increased by 19.7 percent in February. The number of properties scheduled for foreclosure sale remained near record levels, yet foreclosure sales, either Back to Bank or Sold to 3rd Parties, dropped by 11.9 percent total.

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

Double Barrel Stimulus Deadlines Fast Approaching

2010-03-16T07:00:00.000-07:00

First, the Federal Reserve's Mortgage Backed Securities (MBS) purchase program will come to an end on March 31, just two weeks away! Without this program home loan rates could have been at least 1.00% higher...and potentially even higher...over the last year. Throughout 2009, the Federal Reserve was the primary buyer for MBS, purchasing as much as 80% of the supply in a given month. When this program ends, a lack of willing buyers will likely cause MBS prices to drop and rates to rise as a result.

The second shot will come on April 30th, which is the deadline for purchasers to get under contract to qualify for the Home Buyer Tax Credit program, which has been providing a tax credit of up to $8,000 to first time homebuyers and up to $6,500 to repeat purchasers.

Just How Much Will Waiting Cost?
While no one knows for certain what the future holds, two things appear clear. Home loan rates will likely be higher in the future, and free money from the government will be gone. These deadlines will affect both affordability to purchase and the opportunity to refi.

In a recent Wall Street Journal article, it was estimated that 37% of all borrowers with a 30-year fixed rate have interest rates of 6% or higher. The article also quotes Credit Suisse that more than half could lower their rate by nearly 0.75%.

For prospective homebuyers, any increase in interest rates erodes your purchasing power. In other words, a 1% increase in rate represents an approximate decline in purchasing power by 10%. For example, if rates increase by 1%, people who qualify for a $200,000 purchase price today may only qualify for a purchase price of $180,000afterwards.

If you or anyone you know is looking to purchase or refinance a home, waiting could be costly! Act now...so you can save later!

HAMP HAFA Home Affordable Foreclosure Alternatives Overview

2010-03-11T05:59:00.000-08:00

Hello everyone, I have been receiving telephone calls (559-302-2908) from Visalia Homeowners asking me questions about these new Loan Modification Programs by the Government that are starting April 5, 2010. When do they start? Do I qualify? What happens if I do not qualify what are my Options? What are the requirements? What is HAMP HAFA RASS SSA? If you have any questions that I can Help you with, call me at 559-302-2908 and I will be happy to advise you. Please read below a Helpful Overview that will answer majority of your questions in regards to these Government Loan Modifications:

HAMP: Home Affordable Modification Program
HAFA: Home Affordable Foreclosure Alternatives
RASS: Request for Approval of a Short Sale
SSA: Short Sale Agreement

Loan is eligible if all of the following conditions are met:

1. Property is borrower’s principal residence
2. Loan is a 1st lien mortgage
3. Originated before Jan 1, 2009
4. Mortgage is delinquent or default is reasonably foreseeable
5. Current unpaid balance is equal to or less than $729,750
6. Borrower’s total monthly mortgage payment exceeds 31% of borrower’s gross income

What are the timelines for HAFA if I choose to short sale?

- Based on a servicer’s written policy, the servicer must consider every potentially eligible borrower for HAFA.

- If a servicer has not already discussed a short sale or Deed In Lieu( DIL) with the borrower, it must notify the borrower in writing of these options and give the borrower 14 calendar day to respond, orally or in writing. If the borrower does not respond, that ends the servicer’s duty to give a HAFA offer.

- Servicers must consider HAMP-eligible borrowers for HAFA within 30 days after the borrower does at least one of the following:

1. Does not qualify for a HAMP trial period plan.
2. Does not successfully complete a HAMP trial period plan.
3. Is delinquent on a HAMP modification (misses at least 2 consecutive payments).
4. Requests a short sale or DIL(Deed In Lieu).

- The borrower has 14 calendar days from the date of the Short Sale Agreement to sign and return it to the servicer.

- The Short Sale Agreement must give the borrower an initial period of 120 days to sell the house (extensions permitted up to a total of 12 months).

- Within 3 business days of receiving an executed purchase offer, the borrower (or agent) must submit a completed RASS to the servicer, including (i) a copy of the sale contract and all addenda; (ii) buyer documentation of funds or pre-approval/commitment letter from a lender; and (iii) all information on the status of subordinate liens and/or negotiations with subordinate lien holders.

- Within 10 business days after the servicer receives the RASS and all required attachments, the servicer must approve or deny the request and advise the borrower.

- The servicer may require the closing to take place within a reasonable period after it approves the RASS, but not sooner than 45 days from the date of the sales contract unless the borrower agrees.

- The servicer must release its first mortgage lien within 10 business days (or earlier if required by state or local law) after receipt of sales proceed from a short sale or delivery of the deed in the case of a DIL. Investor must waive rights to seek deficiency judgment and may not require a promissory note for any deficiency.

Pending Home Sales in Tulare County Up for 3rd Month in a Row

2010-03-03T05:59:00.000-08:00

LISTING INVENTORY REMAINS RELATIVELY LOW AND THE RATIO OF SALES TO LISTING INVENTORY INDICATES THE MARKET REMAINS STABLE.
This month’s ratio of 3.79 months of inventory is down slightly from last month and one year ago when it was 4.39. “Pending sales” (shown below) were relatively strong as were “Solds” for February.

New-Home Sales Fall to Record-Low Level

2010-02-26T09:04:00.000-08:00

Sales of new U.S. homes plunged 11.2% in January 2010 to a seasonally adjusted annual rate of 309,000, the lowest rate on record dating back to 1963, the Commerce Department recently reported.

Sales of new homes are down 6.1% compared with January 2009’s 329,000 units, which was the previous record low. The number of homes for sale rose 0.4% to 234,000 in January. At the January sales pace, it would take 9.1 months to sell that inventory, up from 8.0 months in December and the highest monthly supply since May.

Government statisticians have low confidence in the monthly report, which is subject to large revisions, and large sampling and other statistical errors. In most months, the government isn’t sure whether sales rose or fell. The standard error in January for instance, was plus or minus 14%. The government says it can take up to five months to establish a statistically significant trend in sales. Over the last five months, sales have been on a 362,000 seasonally adjusted annual pace, down from 382,000 in the five-month interval through December.

Sales had risen fairly steadily in the first half of 2009 before plateauing last fall. Seasonally adjusted sales have now fallen three months in a row.

With mortgage rates still very low and prices down, most analysts had concluded that the recent decline in sales was due to the impending expiration of the first-time home buyers’ credit in November.

As it happened, Congress extended the tax credit through June and expanded it to include repeat buyers. But the tax credit didn’t help sales in January. Sales of new homes are recorded once a sales contract is signed, not at closing. Some homes are sold before ground is broken on construction.

Details
Home builders had been slashing their inventory of unsold homes for more than a year to a 38-year low before January’s 1,000 increase. The number of homes for sale that are under construction fell to a record low of 100,000.

Builders have cut back on production of new homes, but they still face headwinds from unsold existing-homes as foreclosures continue to mount up. If a home isn’t sold before it’s finished, it’s taking a record 14.2 months to sell it after completion—a reflection of the mismatch between more expensively priced homes in the inventory and lower-priced homes that have been selling.

Those Who Wait to Buy a Home Will Pay Thousands More This Spring

2010-01-28T05:21:00.000-08:00

If you are planning on obtaining an FHA loan to purchase your new home this is an important change you will want to take note of. Waiting a few extra days or weeks to purchase this spring could cost you thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March. Essentially you need to get an offer accepted by the end of March 2010.

Can a Loan Modification Damage Your Credit Score?

2010-01-19T12:21:00.000-08:00

It seems as if banks are not warning people that when they participate in a loan modification that it could negatively effect their credit. If you are considering a loan modification read the article by following the link below and be sure to ask your bank what their policy is on reporting to the credit bureau's.

http://rismedia.com/2010-01-18/can-loan-modifications-cause-trouble-down-the-road-2/

Mortgage Protection Program extended through 2010

2010-01-04T09:42:00.000-08:00

C.A.R. extends its Mortgage Protection Program through December 2010

Program has benefited more than 3,100 first-time home buyers in California

LOS ANGELES (Dec. 21) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) today announced it is extending its Mortgage Protection Program (MPP) for first-time home buyers through Dec. 31, 2010. To date, C.A.R. has approved benefits for 3,122 first-time home buyers at no cost to the consumer.

Offered by C.A.R.’s Housing Affordability Fund (C.A.R.H.A.F.), MPP provides up to $1,500 per month, for up to six months, to eligible first-time home buyers who lose their jobs due to layoffs. The funds are intended to help consumers meet their mortgage payment obligations. Qualified co-buyers also can participate in the program, and receive monthly benefits of $750 per month for up to six months.

“The home-buying process can be one of the most stressful periods in a person’s life,” said C.A.R. President Steve Goddard. “It also is one of the largest financial transactions most people make in their lifetime. Our goal with the C.A.R.H.A.F. Mortgage Protection Program is to help alleviate some of the anxiety home buyers feel when purchasing a home by providing a layer of security.”

First-time home buyer Giovanni Sedda was in the process of purchasing a home in Sacramento, Calif. when he heard about the C.A.R.H.A.F. Mortgage Protection Program from his REALTOR®, Erin Attardi of Lyon RE Sierra Oaks in Sacramento.

“We are thrilled to be spending the holidays in a home of our own,” said Sedda. “The Mortgage Protection Program offers me and my family additional security in the event that I lose my job, and it’s even better that it’s a free program.”

To apply for the program, home buyers must request an application for the C.A.R.H.A.F. Mortgage Protection Program from their REALTOR®.

The CALIFORNIA ASSOCIATION OF REALTORS® Housing Affordability Fund (C.A.R.H.A.F.) is a non-profit 501(c)(3) organization. It receives donations primarily from REALTOR® members and REALTOR® associations committed to addressing housing challenges in California. C.A.R.H.A.F. raises and distributes funds and partners with other groups to promote housing and homeownership, and address housing opportunities locally and statewide.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® ( www.car.org) is one of the largest state trade organizations in the United States, with more than 163,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Faster Short Sale Process set by Treasury?

2009-12-02T14:36:00.000-08:00

Yes, the rumors are true. The Treasury Department released its long-awaited guidelines to streamline short sales earlier this week.

The Home Affordable Foreclosure Alternatives Program (HAFA), part of the Home Affordable Modification Program (HAMP), provides financial incentives and simplifies Short Sales procedures by setting limits on the time it takes lenders to respond, freeing borrowers from debt and capping claims of subordinate lenders. As with anything there are still stipulations and lenders must agree to participate in the program. The guidelines are effective on April 5, 2010. So, for now we might not see any immediate relief to homeowners in distress or potential Buyer's but it is a step in the right direction.

Here is a quick summary of some of the program's key guidelines:

Lenders must respond to Short Sale requests within 10 business days of receipt of the offer package.
The seller will be released from all liability for repayment of the mortgage debt.
Subsequently, the seller is entitled to a relocation incentive of $1,500, which will be deducted from the gross sale proceeds at closing.
The lender will be paid $1,000 to cover administrative and processing costs for a Short Sale or a deed-in-lieu.
The property must be listed with a licensed real estate professional who does regular business in the community where the property is located.
The lender is prohibited from requiring, as a condition of approving the Short Sale, a reduction in the agreed-upon real estate commission.
The investor will be paid a maximum of $1,000 for allowing a total of up to $3,000 in Short Sale proceeds to be distributed to subordinate lien holders, or for allowing payment of up to $3,000 to subordinate lien holders.

For more detailed information on this program or short-sales in general contact Heather Mendonca at any time.

Homebuyer Tax Credit Changes

2009-11-06T09:16:00.000-08:00

Here is a handy chart published by the National Association of Realtors that lays out the changes in the newly approved and revamped tax credit for homebuyers.

Homebuyer Tax Credit Changes

Senate Clears Homebuyer Tax Credit Extension

2009-11-05T08:22:00.000-08:00

The Senate cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.

The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years. These credits can only be used to purchase a primary residence.

Get your $8,000 HUD tax credit now

2009-06-04T23:31:00.000-07:00

WASHINGTON - Speaking to the National Association of Home Builders Spring Board of Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan today announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today's action will help stabilize the nation's housing market by stimulating home sales across the country.

The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today's announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA's new mortgagee letter, visit HUD's website.

"We believe this is a real win for everyone," said Donovan. "Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation's housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."

Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today's announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate. Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower's own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today's action permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away. Unlike seller-funded down-payment assistance, which was a vehicle for abuse, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.

According to estimates by the National Association of Home Builders, the Administration's homebuyer tax credit will stimulate 160,000 home sales across the nation - 101,000 of which will be first-time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first-time buyer purchased their home. Given FHA's current market share, it's estimated that thousands of families will be able to purchase a home by allowing the anticipated tax credit to be applied toward their purchase together with an FHA-insured mortgage.

Homebuyers should beware of mortgage scams and carefully compare benefits and costs when seeking out tax credit monetization services. Programs will vary from organization to organization and borrowers should consider whether the services make sense for them, as well as what company offers the most suitable and affordable option.

For every FHA borrower who is assisted through the tax credit program, FHA will collect the name and employer identification number of the organization providing the service as well as associated fees and charges. FHA will use this information to track the business closely and will refer any questionable practices to the appropriate regulatory agencies, as necessary.

Obama Administration Announces Financial Incentives & Uniform Process for Short Sales

2009-05-21T22:05:00.000-07:00

Responding to the call of the National Association of REALTORS®, on May 14, 2009, the Obama Administration announced incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP). For borrowers who are unable to retain their home under the Making Home Affordable Loan Modification Program, the servicer may consider a short sale or, if that is not successful, a deed-in-lieu of foreclosure. Participating servicers must comply with program requirements so long as they do not conflict with contractual agreements with investors.

Borrowers (Homeowners). Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don’t qualify for a modification or do not successfully complete the three month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.
Incentives. Incentives include: (1) $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; (2) $1,500 for borrowers/homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).
Standardized Documents. The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.
Property Valuation by Appraisal or BPO. Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.
Timeline. In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.
Commissions. The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.
No Borrower Fees. Servicers may not charge fees to borrowers/homeowners for participating in the FAP.
Program Expiration. The program is in effect through 2012.
Deed-in-Lieu of Foreclosure Option. Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).

Average Visalia, CA Sales Price Increases for 2nd Month In a Row

2009-05-01T15:21:00.000-07:00

April 2009 Statistics are out and for the 2nd month in a row the average sales price is on the rise. This data is calculated by using actual SOLD listings that have closed escrow and does not factor in Active or Pending sales. Our local inventory is also declining. This compbined with interest rates in the 4.75-5.75% range makes for a very tempting market to buy a home.

If you are a Buyer looking in the $100,000-$250,000 price range you have more than likely been in a multiple offer situation. Buyers are competing for homes in this price range because that is what people who live and work here can afford and it is also the ideal price range for an investor looking for cash flow. If you have any questions or would like to receive a copy of the latest market stats. just shoot me an e-mail...I would be happy to share.

Is your Visalia home in a flood zone, do you need flood insurance?

2009-04-24T05:49:00.000-07:00

Effective June 2009 the new FEMA flood zone map will go into effect. To find out if your home or a home you are thinking of purchasing is either in a flood zone or possibly being removed from a flood zone you can visit the City of Visalia website and search by address. On the main FEMA flood zone information page it will tell you which zones require insurance and which zones do not. After reading that information you can then search by address to find out if your home is effected by the new changes.

Visalia Market Recovering?

2009-04-17T05:09:00.000-07:00

As I was reviewing the March 2009 Market statistics from our local MLS I noticed an interesting chain of events. As many know, real estate is cyclical. One sure fire way to tell when real estate is experiencing a turn around (for the better or worse) is to look at the current inventory, sold listings, as well as sales price. The current reports show that inventory is down to approximately 3 months worth of inventory. At the height of the market in 04-05 we had just below 2 months worth of inventory. In Nov. 2007 we had almost 15 months worth of inventory.

If you look at the latest report of Sold listings you will see that in the first quarter of 2009 more homes were sold than any quarter of 2000. Also, in the first quarter of 2009 the average sales price in Tulare county has been on the rise. We are now seeing the average home prices just over $150,000. That is just above where prices were in 2004 when the average sales price started to climb. At the peak we saw our local average sales price climb to just over $300,000.

So, does this mean our market is recovering? If history is correct and real estate is truly cyclical then it just might be...only time will tell. I do know that if you are waiting for the market to hit bottom to buy then you better hurry...you may have just missed it!

Free Mortgage Protection Insurance?

2009-04-01T11:16:00.001-07:00

On Thursday, April 2, C.A.R. (California Association of Realtors) will launch a new program designed to provide peace of mind to first-time buyers who are hesitant to enter the housing market due to concerns about potential job loss, and subsequently being unable to meet their monthly mortgage obligations.

Through the C.A.R. Housing Affordability Fund Mortgage Protection Program (C.A.R.H.A.F. MPP), first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a reduced monthly benefit of $750 per month for up to six months in the event of a job loss. Program benefits also include coverage for accidental disability and a $10,000 death benefit. C.A.R.’s Housing Affordability Fund is dedicating $1 million to the program this year, and estimates that as many as 3,000 families will benefit from the program throughout 2009.

To qualify for the Mortgage Protection Program, applicants must:
. Be a first-time home buyer – someone who has not owned a home in the last three years
. Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
. Use a California REALTOR® in the transaction
. Purchase the property in California
. Be a W-2 employee (cannot be self-employed or military personnel)

The Mortgage Protection Program is a proactive approach by C.A.R. to address consumers’ concerns about the real estate market and their ability to make their mortgage payments should they loose their jobs. Best of all, there is no cost to participate.

Contact Heather for more information.

How to Get Your $8000 First Time Homebuyer Tax Credit Now

2009-03-25T07:23:00.000-07:00

The Internal Revenue Service announced that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations and repayment of the credit.

This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.

The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

What if I already filed my 2008 return?

You can file an ammended return with Form 5405. You cannot e-file this so you will have to mail it in. Many Buyers have found a home and received their tax credit in the mail before the close of escrow. This will help many who might need the money for a down payment or closing costs. Remember, if you claim the money and do not close escrow on a home by the end of 2009 you must repay the money with penalties and interest. As always, check with your tax professional for further advice based on your personal situation.

Does Fannie Mae Own Your Loan?

2009-03-18T22:19:00.000-07:00

With Obama's new plan this can make all the difference in the world if you want to modify your exisitng loan. Click here to find out if Fannie Mae owns your loan.

Ambitious Foreclosure Plan Revealed - How Will It Help?

2009-03-08T07:57:00.000-07:00

The Obama administration on Wednesday detailed its ambitious $275 billion plan to halt soaring foreclosures nationwide, outlining the financial incentives it’s offering investors, lenders and their bill collectors to lure them into modifying distressed mortgages to keep Americans in their homes. The slump in home prices is the root cause of the global financial meltdown, so the success or failure of the administration’s housing plan is vital to ending the deepening economic recession.

Many homeowners would like to take advantage of today’s historically low interest rates and refinance but can’t, since the law prohibits refinancing if the current mortgages reflects less than 80% of the homes’ values. These homeowners now can seek to refinance if their mortgages are up to 5% higher than the present-day values of their homes. That helps some, but it won’t reach lots of homeowners in California, Florida and elsewhere whose homes are now worth substantially less than their mortgages.

Read the full article

Up to $10,000 Tax Credit to California Homebuyers

2009-02-21T10:09:00.000-08:00

Though greater details on the homebuyer tax credit will be forthcoming, the following provides a brief summary of what SB 15XX authorizes:

A tax credit of up to $10,000 credit (5% of home price or $10k, whichever is less) for the purchase of a newly constructed, previously unoccupied home.
Available March 1, 2009 and good until March 2010, or when funding authority runs out – whichever comes first ($100 million was allocated to program).
Allocated by the state's Franchise Tax Board on a first-come, first-served basis (details still to be worked out).
Paid out to home purchasers over three tax years in equal amounts (i.e. $3300 for 2009, $3300 for 2010, etc.) • Purchasers must reside in the home for at least two years.
There are no income limitations that have to be met by purchasers.
There is no first-time homebuyer requirement.
There is no repayment requirement (unless the purchaser sells, rents out, etc before 2 years expire).

To help homebuilding companies prepare their marketing plans for the new tax credit, CBIA will soon be meeting with the Franchise Tax Board with the intention of ironing out all the mechanics involved in administering the program as soon as possible.

As always, make sure you consult your REALTOR prior to visiting any new home subdivision otherwise you might not be able to let them represent you in the transaction. Builders often make a rule stating that your agent must be present on your first visit to the model homes in order to represent you. If not, the only person representing you will be the builders agent and sadly their loyalty generally lies with the person who gives them a paycheck (the builder). A knowledgeable REALTOR can help counsel you and look out for you when it comes to negotiating price and obtaining financing that is best for you & your family.

Sadly Obama's New "Mortgage Fix" is Going to do Little to Help California Homeowners

2009-02-18T21:27:00.000-08:00

When I woke up this morning I was very excited to hear what great plan our President had in store to help clean up this mortgage/foreclosure mess we have on our hands. I was very disappointed to hear that this new plan is going to do little for the hardest hit states (CA, AZ, NV, FL, etc). If you read the list of items that makes you ineligible it knocks out a large portion of distressed homeowners in the most foreclosure plagued areas.

Who's Not Eligible:

Homeowner's who have less than 5% equity in their home.
Those with Jumbo Loans (generally applies to loans above $417,000)
Investors: home must be owner occuppied
Those with "No Doc" loans who misrepresented their income on the original loan app. (these will be looked at very closely)

Of course the select few who will meet the above guidelines still need to qualify for their modified loan payments and be able to keep them up. The exact guidelines are still unclear.

Senate Passes Stimulus Package

2009-02-14T00:37:00.000-08:00

Now that the Senate has passed the stimulus package it will be on it's way to the President for his signature. So, what does this have to do with Visalia, CA real estate? For starters the bill increases the first-time home buyer credit from its current $7,500 to $8,000, and removes the requirement that the credit be paid back if the buyer stays in the home for at least three years. It also extends the expiration date for the credit from July 1 to Dec. 1, 2009. Homebuyers must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009, to be eligible for the $8,000 credit. The bill also reinstates 2008 conforming loan and FHA limits until January 2009. The stimulus package might not be perfect but in a county where unemployment is approximately 14.3% we will take what we can get!

Upside Down in Your Home...Can't Afford the Payments?

2009-02-12T11:26:00.000-08:00

If you owe more on your mortgage than you can sell your house for, check out the new refinancing options provided by the Federal Housing Administration, such as FHASecure. Lenders in this program voluntarily agree to forgive any mortgage debt that exceeds 90% of the current appraisal value of the home so that the homeowner can refinance into an FHA Guaranteed loan.

If you have trouble refinancing, first ask your lender about your options. The lender may be willing to reduce your payments for a few months or work out an arrangement for making the payments you've missed. If you need help understanding your options contact Heather today.

Visalia Home Inventory on the Way Down?

2009-02-06T12:31:00.000-08:00

SFR Inventory

Publish at Scribd or explore others: Economics Research news service

$15,000 Tax Credit...Now That is Incentive for Buyer's to Get off the Fence!

2009-02-05T10:49:00.000-08:00

Last evening the United States Senate unanimously passed a bipartisan amendment to the Economic Stimulus Bill creating a $15,000 tax credit to individuals who purchase a home in the next year.

Specifically, the Isakson-Lieberman amendment to the pending economic stimulus bill would provide a direct tax credit to any homebuyer who purchases any home. The amount of the tax credit would be $15,000 or 10 percent of the purchase price, whichever is less. Purchases must be made within one year of the legislation’s enactment, and the tax credit would not have to be repaid.

While the final details of the Stimulus Bill are still being debated, this amendment represents a tremendous step forward in NAR's efforts to stabilize housing markets around the nation. Because of the efforts of REALTORS®, we expect the Stimulus Bill will contain several major housing provisions.

Update on Stimulus Package

2009-02-03T05:31:00.000-08:00

Although the senate is still pouring over the proposed package there could be some great news for first-time home buyers. It is proposed that the $7500 tax credit re-payment will be waived for buyers who purchase a home in 2009. Currently the credit is available for those who purchase a home between April 8, 2008 and July 1, 2009. So, now that tax time is upon us it is a great time to apply for your credit if eligible.

The First-Time home buyer Credit can be claimed on Form 5405, which is filed with your 2008 or 2009 federal tax return.

IRS Notice 2009-12 has instructions for non-married persons who co-own a house and want to take the credit.

Snag a Great Deal on a Short Sale

2009-01-28T07:35:00.000-08:00

A friend e-mailed me this article from CNN Money regarding the deals to be had on short sale transactions. This article reaffirms what I have been sharing in previous blog articles. My goal is to get the word out there to Buyers and Sellers in Visalia, CA about the great option of short sales. Don't miss out on this new trend in real estate...you could be missing out on a great deal!

Read full article:
Snag a Great Deal on a Short Sale

Featured New Listing

2009-01-27T08:15:00.000-08:00

View video:

815 N. Stevenson, Visalia, CA 93291

Here is your chance to own one of the nicest vintage homes close to downtown Visalia. Contact Heather for more info.

What is an FHA loan?

2009-01-26T19:26:00.000-08:00

Well to start with FHA loans are one of the most popular loan products in today's real estate market. This is partially because they have one of the lowest required down-payments which is currently 3.5% of the purchase price. FHA loans are insured by the Federal Housing Administration and open to all qualified home purchasers. Yes, that's right...you do not have to be a first-time homebuyer to qualify (a common misconception). Anyone who meets the credit requirements, can afford the mortgage payments and cash investment, and who plans to use the mortgaged property as a primary residence may apply for an FHA-insured loan.

While there are limits to the size of FHA loans, they are generous enough to handle moderate-priced homes almost anywhere in the country. In Tulare County the FHA loan limit for a single-family home is currently $271,050. If you have plans to purchase a multi-unit property (i.e.: a duplex, tri-plex, etc.) they also have loans available with different limits as long as you occupy one of the units as your primary residence.

Another advantage of an FHA loan is the debt-to-income ratio they use for qualifying you for a loan. The FHA allows you to use 29% of your income towards housing costs and 41% towards housing expenses and other long-term debt. With a conventional loan, this qualifying ratio allows only 28% toward housing and 36% towards housing and other debt. If you have a bankruptcy you can apply for an FHA loan two years after the date of discharge if you have had excellent credit since that time. If you have had a foreclosure you can apply after 3 years.

You can also refinance your home with FHA for homes that serve as a principal residence. You can refinance for up to 85% of the appraised value plus most closing costs if the property has been owned at least one year. If you've owned your home for less than a year, you're still not disqualified. A different set of calculations will apply. In any event, your home must have sufficient equity to qualify for the loan.

Visalia Real Estate Forum: Homeowners Need Help in Visalia

2009-01-23T16:12:00.000-08:00

Visalia Real Estate Forum: Homeowners Need Help in Visalia

Homeowners Need Help in Visalia

2009-01-23T15:18:00.000-08:00

I have written many articles on short-sales and have received many calls regarding them. There are many people that own real estate in Visalia that are having a difficult time making payments. Regardless of the reason...help is out there!

Short-sales are gaining popularity because the media is starting to expose them to the public and lenders are encouraging homeowners to pursue a short-sale instead of foreclosure. The worst thing you can do is just walk away from your home. If you walk away it will take seven years before that foreclosure is removed from your credit. With a short-sale the forgiveness time period is much shorter. A short-sale will at least show future creditors that you tried.

Another thing I would like to touch on is for those of you who actually want to stay in your home. Staying in your home and having your current lender restructure your loan is often a possibility. Yes, I know many people/companies "claiming" to want to help you will not tell you about this option. If staying in your home is your goal please contact me for advice on how to start that process with your bank. Do not fall prey to comapnies wanting to charge you for this service. This is something you can do on your own. There are many things that a bank will look at to determine whether or not restructuring your loan is a better alternative than a short-sale or foreclosure(I will write more about this from a banks point-of-view in a future post.)

The moral of the story here is...know your options and watch out for people trying to prey on you because of your situation!

Record Low Mortgage Rates...woohoo!

2009-01-16T08:38:00.001-08:00

Mortgage rates fell for the third week in a row, tying a record low last seen in 2003. According to Bankrate.com’s weekly national survey, the average 30-year fixed mortgage rate dropped to 5.28% with an average of 0.42 discount and origination points.

New Year...New Credit

2009-01-14T12:21:00.000-08:00

Now that it is a new year what better time to think about turning over a new leaf with your credit. I know that a lot of people have possibly lost their homes, jobs, etc. and a lot of people are under the impression that since so many people are having a hard time there will be some type of forgiveness in the future. I for one would not count on that. Your good credit is a very important thing and now it is more important than ever to keep it in good standing.

Banks are becoming more strict about who they lend their money to for any type of loan. You must have impeccable credit and prove to them that you are not a risk. A good way to start is by paying all of your bills on time. If you are having a tight month just make sure you get all bills paid before they are a full 30 days late because after 30 days from the due date that is when you will get reported to the 3 credit bureaus.

Another way to increase your credit scores is by paying down debt on any revolving lines of credit. Instead of taking money and paying off one card in full you might want to consider spreading that money out to pay down all of your credit cards. you should try to keep revolving lines of credit at approx. 30% (preferably less) than the authorized amount. It looks better to have all balances low rather than having one paid off and the others maxed out.

For more tips on keeping your credit on track feel free to contact Heather...she is happy to help.

More lenders allow "early workout" loan alterations

2009-01-01T19:15:00.000-08:00

Borrowers with loans owned by Fannie Mae no longer have to be behind in payments in order to
qualify for a loan modification. Borrowers facing financial difficulty, such as losing a source of
income, now can apply for an “early workout” loan alteration. Under Fannie Mae’s program,
borrowers who qualify will enter into a trial period of reduced payments, usually for four months. If the reduced payments are made on time each month during the trial period, the modified mortgage terms may become permanent.

To read the full story, please click here:
http://www.latimes.com/business/la-fi-harney21-2008dec21,0,5965944.story

Mortgage Interest Rates at 4.5%...really??

2008-12-08T11:31:00.000-08:00

Lobbyists are pushing the Treasury Department to consider a plan to purchase mortgage-backed securities in the hopes of driving mortgage rates to as low as 4.5%. The proposal calls for Treasury to buy securities backed by 30-year fixed-rate mortgages from Fannie Mae and Freddie Mac. There have been few details on the plan released so it is still unclear how and/or if this will all work out.

So how would this help lower interest rates you ask? Increased demand for mortgage-backed securities would prompt mortgage rates to drop. That, in turn, would enable homeowners to refinance into lower-cost loans and make it cheaper for potential homebuyers to get into the market.

As for now rates are historically low and still in the 5%-6% range. For the select few who did not refinance a couple years ago this would be a great time to do so if you still have equity in your home. For those of you on the fence about buying...you should jump off that fence and start looking!

How to Receive Your $7500 First Time Homebuyer Tax Credit

2008-12-02T19:52:00.000-08:00

As part of H.R. 3221 Housing and Economy Act of 2008 we have all been hearing so much about first time homebuyers are now eligible to receive 10% of the cost of a new home purchase, not to exceed $7500. The good news is that a “first time homebuyer” is a person who has not owned a home within the last 3 years.

Now that tax time is approaching you can request the credit when you file your 2008 return. You will receive the credit minus any taxes that you owe or in addition to any refund that you are entitled to. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs. Yep, you read that right…if you already purchased a home you may still be eligible to receive the credit!

Are there income limits? Your Modified Adjusted Gross Income (MAGI) cannot be more than $75,000 for a person with a single filing status or $150,000 when filing jointly. MAGI is defined by the IRS. To find it, you must first determine "Adjusted Gross Income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains. Partial credits of less than $7,500 are available for some taxpayers whose income exceeds the limits listed above. The credit becomes totally unavailable for individual taxpayers with income more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.

So what’s the catch? This credit has to be repaid over 15 years. The good news is that you pay no interest and it is a great resource for obtaining a down payment and closing costs for a new home. Homebuyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven. Also, if you turn the home into a rental the balance is due in that year.

What the Heck is a Short-Sale?

2008-12-02T19:49:00.000-08:00

I am sure if you are in the market for a new home or have been considering selling your home, but do not have enough equity you have heard the term “short-sale”. Short-sales are everywhere (along with foreclosures) in this market.

Quicky Definition of a Short-Sale: A short-sale happens prior to the home going into foreclosure. The seller owes more than the current market value of the home and is marketing the home for sale at the current market value. The seller is generally behind on some payments, but wants to avoid a full on foreclosure to spare their credit a little. By trying to sell their home in a short-sale it shows the creditors that the Seller at least tried and did not just walk away and let their home foreclose.

Are all agents qualified to sell properties in a Short-Sale? -or- Why won’t my agent show me homes listed as a “Short-Sale”? As a seller you want to make sure you do your homework and find an agent who really knows how to prepare a proper short-sale package for the bank. This short-sale package is your only chance to “sale” the offer you have on your home. Many agents take on short-sales because they just want a listing and do not fully understand the short-sale process which can greatly harm their clients chances of getting their home sold. If you are on the buying end this is sometimes why your agent does not want to show you properties listed as short-sales. An agent can tell if a property listed as a short-sale will actually be approved or not depending on whom the listing agent is. Then there are also the agents who just do not understand how the process works so they steer clear of short-sales for fear of the unknown.

Why would a bank approve a Short-Sale? Banks would much rather cooperate in the short-sale process rather than let a home go into foreclosure because it spares them a lot of money, time, and legal fees. Honestly, what bank needs another foreclosure on their books in this market?

Can I make a low-ball offer on a short-sale property? Sure you can…just be prepared for a counter offer. Once an offer is received and a complete short-sale package is submitted the bank will have an appraisal or Broker Price Opinion (BPO) conducted on the home. Banks are all about numbers so they want to know the true market value of the home before they accept or start negotiating an offer with a Buyer. This is not to say that you can’t get a deal though…you just need to be firm and realistic with your negotiations. Most banks know that what a home will appraise for and what a Buyer is willing to pay for the home are two different things in this market. That being said…the bank is still going to try and get as much as they can since they are already losing a lot by this home being sold as a short-sale.

So, do short-sales ever get approved by the bank? I have had three short-sales this month alone be approved. Again, it is all about being knowledgeable about the process and knowing how to negotiate with the bank. Two of the short-sales I got approved even had two loans (a first and second mortgage). In instances where there are two loans the second usually gets little to nothing. The 1st lien holder will usually give them some money in order to get them to approve the short-sale. Besides, if the bank in 2nd position doesn’t accept the home will go into foreclosure and they will get nothing. The bank in 1st position knows this so their tactic is always “something is better than nothing”.

How long does it take to get a short-sale approved? From the time an offer is received on a listing I have had it take anywhere from three weeks to 7 months (yes…7 months…that is a nightmare scenario and luckily that lender was bought out by another company). On average you should allow 6-8 weeks to get a short-sale approved. Some lenders are quicker than that at responding to offers, but that is a good rule of thumb. So, if you need to be in a home in 30 days a short-sale property might not be the right choice for you. If you have time and don’t mind the process of negotiating to get a good deal then don’t be afraid…try it out…just make sure you have a good agent on your side!

Heather Mendonca
heather@heatherm.com
RE/MAX Visalia

The Latest Visalia Metro Area Market Statistics

2007-11-15T11:34:00.000-08:00

Building Permit Statistics
12 Month Single Family Permits: 2,429
12 Month Total Permits: 3,081
Total Permits/Peak Permits: 85.1%

Employment Statistics
1 YR Growth: 600
1 YR Growth Rate: 0.5%
Unemployment Rate: 8.2%

Housing Affordabilty
Median Home Price: $209,000
Housing Costs/Income: 41%
Housing Cycle Barometer: 6.1

MORTGAGE RATES HIT SIX-MONTH LOW

2007-11-07T21:48:00.000-08:00

The 30-year fixed-rate mortgage averaged 6.26 percent for the week ending Nov. 1, its lowest point since May, compared with 6.33 percent a week earlier, and 6.31 for the same period a year ago. The five-year Treasury-indexed adjustable-rate mortgages averaged 5.98 percent for the week, down from the previous week from 6.03 percent, and 6.05 for the same period a year ago.

"Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks," said Frank Nothaft, Freddie Mac vice president and chief economist.

Spring forward...Fall back....

2007-11-01T15:41:00.000-07:00

It's ingrained in our consciousness almost as much as the A-B-Cs or our spelling reminder of "i before e...." And it's a regular event, though perhaps a bit less regular than the swallows coming back to Capistrano. Yet in those four words is a whole collection of trivia, facts and common sense about Daylight Saving Time.

In 2005 and 2006, Daylight Saving Time began for most of the United States at 2 a.m. on the first Sunday of April. Time reverts to standard time at 2 a.m. on the last Sunday of October.

Beginning in 2007, Daylight Saving Time is extended one month and begins for most of the United States at:

2 a.m. on the Second Sunday in March
and lasts until
2 a.m. on the First Sunday of November

The new start and stop dates were set in the Energy Policy Act of 2005. Daylight Saving Time - for the U.S. and its territories - is NOT observed in Hawaii, American Samoa, Guam, Puerto Rico, the Virgin Islands, and by most of Arizona (with the exception of the Navajo Indian Reservation in Arizona).

Indiana, which used to be split with a portion of the state observing DST and the other half not, is now whole. In the past, counties in the Eastern Time Zone portion of the state did not observe DST. They were on standard time year round. A state law was passed in 2005 that has the entire state of Indiana observing DST beginning in April 2006.

What Your Home is / is not Worth

2007-10-23T14:05:00.000-07:00

The Market Value of Your Home is NOT:

What you have in it.
What you need out of it.
What you want.
What it appraised for.
What you heard your neighbor's house sold for.
What the tax office says it is worth.
How much it is insured for.
Based on memories and treasures.
Based on prices of homes where you are moving.

The True Market Value of Your Home is What a Buyer is Willing to Pay:

Based on today's market.
Based on today's competition.
Based on today's financing.
Based on today's economic condition.
Based on the buyer's perception of the condition.
Based on location.
Based on normal marketing time.
Based on showing accessibility.

As a Seller you Control:

The price you ask.
The condition of the property.
Access to the property.

As a Seller you Do Not Control:

Market conditions.
The motivation of your competition.
Value.

Important Notice for Sellers

2007-10-17T22:13:00.000-07:00

Well, it's that time of year again. The holidays are approaching and those of you who don't want their homes on the market in March or April should call their REALTOR now! Every year REALTOR's know that October and November are two very important months. Statistics show that homes that do not sell in these months have a high likelihood of staying on the market until after well after the first of the new year.

The reason for this trend is because the fact is there are fewer people wanting to buy or move during the Holiday season. To top things off when January comes around the people waiting for the holidays are over to list their homes are flooding the market (as if those of you already trying to sell need more competition). If you want to add another flame to the fire consider the fact that home prices continuing to decline at a rate of at least 1% a month. If your home doesn't sell until March that means you will need to lower your price by at least 5% if not more just to stay competitive. Trust me, builders know this fact as well and will be responding with great incentives and price reductions to get their homes sold.

So, if your home is currently listed and you are alright with it still being on the market after the first of the year then do nothing. If you are not ok with not having your home sold then you better call your REALTOR today and ask him/her what you need to do to get your home sold...even if that means lowering your price! Just think of it this way, you can lower your price a little now or a lot later!

How Accurate is Zillow?

2007-10-15T13:05:00.000-07:00

To measure the accuracy of the Zestimates, Zillow goes back in time and compares the historic Zestimates with the actual transaction prices of homes that sold. Here's how it works:

Zestimate Accuracy/Star Rating: This shows how accurate the Zestimate is in a locale. Four stars indicate the best (most accurate) Zestimates, three stars better Zestimates, and two stars good Zestimates. One star indicates that Zillow is only able to show tax assessed values, and not Zestimates. If they do not show any stars, they do not have enough data to indicate valuations.

Median Error: Half of the Zestimates in an area were closer than the error percentage and half were farther off. For example, in Columbus, Ohio, Zestimates for half of the homes are within 5.7% of the selling price, and half are off by more than 5.7%.
Within 10%/Selling Price: This is the percentage of homes in a location for which the Zestimate was within 10% of the transaction price. For example, in the Sacramento area, 73% of the time the Zestimate was within 10% of the selling price.

Zestimate Accuracy
Best Zestimate = 4 stars
Better Zestimate = 3 stars
Good Zestimate = 2 stars
*Tax assessment = 1 star
No valuation = 0 stars

According to Zillow the accuracy for Zestimates in Tulare County is 4 stars. They claim to be within 10% of the selling price 63% of the time. The median error is 6.3%. This means that if Zillow says that a home is worth $380,000 it could actually only be worth $342,000 if they are within at least 10%, 63% of the time. For those of you buying or selling a home this is a big difference in price! Another thing to consider is the fact that Zillow does not take into account new home sales which is a major driving for in today's home prices. However, as long as you read the fine print Zillow can be a helpful tool. If you are about to list or buy a home I would check with a local REALTOR for a free home valuation to see how they compare.

What is a REALTOR? Why do I need one?

2007-10-11T19:45:00.000-07:00

Not every real estate licensee is a REALTOR®. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the Local, State and National Association of REALTORS® and subscribes to its strict Code of Ethics. Working with a REALTOR®, ensures your transaction will be handled professionally, and your rights in real estate activities protected. This mark represents a high standard of professional conduct in serving the interests of customers and clients.

Saving the commission crosses the minds of many sellers - unfortunately for the seller, it also crosses the minds of many buyers and their offers will reflect this. Unless your house is drastically under priced, it can take longer for you to sell it privately than it will through the services of a REALTOR®. There are many reasons for this but the principal one is that most people don't have the communication resources that give the real estate professional access to the entire spectrum of the marketplace. Real estate companies spend thousands of dollars in advertising and maintain vast referral networks to entice potential buyers to look at your property. You, trying to sell your own home, are competing with the real estate companies for those buyers.

But there are other issues beyond enticing the potential buyer to knock on your door. Once you've got the buyer in the house you've got to do a selling job. Remember, you only have one house to sell and he is looking at every home in the neighborhood that is comparable to yours and is for sale.

Also, bear in mind that the paperwork aspect of this kind of transaction can be extremely daunting. There are legal aspects of preparing sale contracts and understanding all the various clauses and making sure the important ones are in the agreement. And then there's the matter of arranging mortgage financing, opening escrow, knowing the contingency periods in a purchase contract, and what inspections will be required in order for the Buyer to obtain financing.

It all comes down to the two factors of money and peace of mind. If you try to sell your own house you'll find it can turn into a full time job. You have to ask yourself, "Am I able to learn the real estate business overnight? Am I willing to spend a considerable amount of money that might not result in a sale? Can I allocate the necessary time from my schedule?”

If the answers to those questions are 'No!', then you will be better off hiring a REALTOR®. Make sure, when you do this, that your REALTOR gives you a written marketing plan and keeps you informed of market statistics so that you know what is going on in your neighborhood at all times.

Most Pressing Issue in Today's Real Estate Market?

2007-10-10T16:15:00.000-07:00

I am just curious to see what others feel is the most pressing issue we are facing in the local real estate market...is it foreclosures, increasing interest rates, variable rate mortgages, too many new homes being built, or something else? What concerns you?

First Time Home Buyer Words of Wisdom

2007-10-10T15:33:00.000-07:00

When you are new to the world of home ownership, you can never ask too many questions. It is very easy to make a mistake. The best way to avoid these pitfalls is educate yourself to them.

Commitment to the process. It is typically the largest and most important purchase you will make. Plan carefully, deal with financing and ownership issues and listen to the advice of a professional REALTOR®.
Choose a professional. By selecting a REALTOR®, you are choosing a professional who abides by a code ethics and standards of practice and will have your best interests in mind. A REALTOR® will explain the purchase contract, disclosures, and inspection process to you in detail.
Know your credit history. Your credit history should be as clean as possible. Fix any problems you discover.
Get financing pre-approval. When a home buyer makes an effort to get pre-approved they gain two things 1.) how much home is affordable and 2.) a good negotiating position. There are a variety of financing options available, including programs to assist those challenged by affordability or credit concerns.
Be realistic about needs and wants. Make a list of the items that are "needs" and "wants" items and give it to your real estate agent.
How to choose the right house. Take notes when touring homes. Record the ‘pros’ and ‘cons’ and your overall impressions.
Make the right offer. Before making an offer, consider sales of similar homes in the last three to six months. Your REALTOR® can help you establish market values. A rule of thumb is that a low first offer usually results in the buyer either losing the home or puts the seller on the defensive.
Select a qualified home inspector. An expert in home construction building codes and safety can help determine if there are potential problems that could require costly repairs down the road.
Avoid significant changes. Be aware that major purchases during the home buying process may jeopardize the buyer’s ability to close escrow.
Prepare for closing costs. Work with your loan officer and REALTOR® to determine what your closings costs will be so you know how much you need to save before the close of escrow.