Napa Solano Yolo real estate blog

Short Sale Listings now outnumber the REO listings-

March 2010- Barbara Adams

I can represent you in the listing or sale of a short sale listed home.

Many new standardized actions will be implemented in early April 2010 which should make this process less harrowing, more standardized in bank submission forms and timelines should be streamlined once most of the banks are on board with the new HAFA program guidelines or create their own requirements which should fit into the format that Fannie Mae and Freddie Mac will follow.

This means the following will be more or less agreed to and understood from day one on the short sales of the near future (and some of today's):

-If homeowners cannot qualify for a loan modification thru HAMP, they can agree with the bank to short sale their home.

- All parties will agree to look at "bank approval" as just another escrow contingency, not just the formerly long and agonizing first step between contract approval and inspection periods.

-Since homeowners are the owners of their homes, they will still be hiring their own Realtor to list and sell their home. Someone they or their friends or relatives know and trust who can guide them thru the sales process.

-Their bank will give them guidelines on the approximate current market value of their home so that from the beginning, the homeowner and their Realtor will know what the bank would agree to on the short payoff of the current mortgage. No more guessing, no more waiting for months on end.

-Agree with the bank and the buyer of their home that a couple of things will change with the short sale buying process.

1) Buyer's deposit will be submitted/collected from the beginning of the short sale to the title company, and held in escrow.

2) The short sale approval from the bank is to be looked at for what it really is...just another one of the many contingencies in the sale of the home, meaning the inspections, appraisals etc will commence once the fully executed offer has been submitted to the bank, not after the written bank approval. 

These two actions alone will alleviate many of the failed escrows that are occurring in the current short sale arena. It will eliminate the terribly confusing chaos that is currently happening when a seller finally wins bank approval on their short sale only to find out their "buyer" had made many offers on many homes (this is not ethical nor legal in most cases) and that the seller now has approval on a buyer that is long gone, the approval process must then be completed again (in most cases) on a new buyer and oftentimes the seller is too far into foreclosure process.

Another important change taking effect in early April with Fannie Mae Loans is that there will be a specific price range the bank will be looking for on that property, the bank will tell the homeowner and their Realtor in advance so that an answer can be achieved from the bank in a timely manner, the goal is to see written bank approvals in approximately 2 weeks if everything is done per the new guidelines.

Over 115 banks have already agreed to the new short sale procedures so we expect a few rough spots in the beginning, but once we get the ball rolling the short sale process should be greatly reduced.

Homeowners will be expected to submit their financial package at the start of this process and use standard forms to the bank. This will be mandatory to the listing of the home for sale thru this process. Contact me for a complete list of the required information to submit to the bank.

Remember, to qualify, a homeowner must have been denied a home loan modification thru HAMP first.

Most short sale homes are in much better condition than the bank owned foreclosures of the past, they are more usually upgraded than the bank owned homes, so everyone wins.   -Barbara Adams, Realtor, SRES

All rights reserved. Protected under copyscape and copyright 2010 ~Napasolweb 2010

Investors who buy former bank owned homes had a problem selling them to FHA buyers before Feb 1, 2010 due to FHA guidelines. Most private buyers are using FHA loans these days because the down payment is only 3.5%. Investors who are buying homes, fixing them up and then wanting to sell them had to wait up to 90 days to close escrow on the sale. These people actually help improve neighborhoods by updating the homes, especially kitchen cabinets, flooring, new paint in and out and sometimes new landscaping.

FHA guidelines also outline all the factors used to approve buyers for loans such as credit scores, short sale or foreclosure in their backgrounds etc.

FHA Approved Condo Communities

As of January 6, 2010:  If you have a question about purchasing a condominium, be aware that your lender must ensure that the condo community is FHA approved or you will not be able to get a loan on a condo in that project. The condo project must meet certain criteria for liens, loans, number of units being used as rentals etc.

Per HUD Mortgagee Letter 2009-46A, “Spot Loan” approvals on condominiums will be eliminated, effective February 1, 2010.  Details here. The HUD database for FHA approved projects will no longer be the most accurate way to guarantee that a unit “is” or “is not” FHA approved.  

When considering purchasing Condos or Townhouses these projects must have already been approved by the FHA and HUD. It is the task of your lender to make sure that the address you are getting a loan approval on is qualified for your fha loan. There is no exception to this rule.

HUD page will only display approved condo or townhouse projects in that zip code or town, so it is suggested you first make a list of zip codes you would consider living in then search for projects. Search the HUD database for condos.

Before you contact the FHA approved project please keep in mind it is very important to already be pre-approved by your lender for your personal financial data and the property you intend to purchase.

Investor flips are not a new idea. They just become more prevalent during certain markets and this is one of them. Investors who can purchase homes quickly with cash can cash in on today's lower home prices, often a cash sale is the only way a home in poor condition can be sold.

In today's market in Northern Solano and Yolo county, most sales are funded by FHA loans. FHA loans are popular here right now because they have the lowest down payment, now at 3.5% and they don't require a high credit score to qualify. (Read my Jan 2010 FHA update blog for more information on upcoming changes with FHA loans)

Investors with cash actually help the real estate market in one way and that is that they often buy the abused homes that are in bad condition and they use their own funds to repair and update a home and improve it to a liveable condition. Most of those homes would not qualify for FHA or VA loans due to the basic appliances or structure are not in acceptable condition, FHA appraisers would not agree to approve a lender to make a loan if the home does not have a stove to cook on, for example, or if the electrical wiring were not in a safe condition, or if there were serious amounts of wood rotting or termite damage.

Before Feb 1, 2010, investors could not sell their properties to FHA buyers even if they had come in and improved the property to the higher standards of the FHA appraisers, and that was because of a HUD rule that banned sellers who had owned the property less than 90 days to sell the home to FHA buyers.

That is changed now and FHA buyers can buy just about any house on the market, IF it is in livable condition.

FHA, IRS first time homebuyer tax credit, lower interest rates all equal to buying a home in today's market. Opportunity for some of this will soon be gone, so call your lender today, find out if you qualify for a home loan.   ~Barbara Adams, Realtor SRES, copyright, NapaWebSol subject to Copyscape protection. Feb 3, 2010

1- FHA loans dominate our local real estate market these days. Mainly because this is a loan insurer that guarantees to lenders the loans made under their criteria.

Lenders can increase the restrictions of fha requirements if they choose to. Currently (January 2010) there is a low down payment for this loan program, 3.5% of the loan amount. There is a 6% cap on the amount of money that a seller can credit to the fha buyer. This limit is about to be capped at a maximum of 3%, this means that soon, buyers will have to have more money to close their loan because other than the down payment, buyers are required to pay closing costs on their loan, this is over the 3.5% down payment.

Also, there is a mortgage insurance premium that buyers can include in their loan amount but this premium will increase in the coming weeks to at least $1000 more than it currently is.

2- Interest rates have held steady for a few months now, hovering at an all time low for 30 year conventional loans around 5%.

This will soon change due to economic stimulus packages and factors which will soon take no effect on this mortgage rate. You will see an increase in mortgage rates which will affect your monthly payments.

3- If you qualify for it, the First time homebuyer Federal Tax Credit ($8000) and the repeat homebuyer credit ($6500) will expire if you are not in an active escrow and buying a home before April 30.

4- Inventory of homes on the Northern Solano county market is very low right now. Choices of homes to buy is pretty low, many homes have multiple offers on them. This will probably not get better until mid-April. By then, rates and loan down payments, costs to close will all be less desirable than today.

Low interest rates, cooler weather, holiday recovery period makes buyers a little slower to go out and look at homes and place offers this week. Might be opportunity time for some of the fha and va buyers who were pushed out of the bidding wars of December.

Perhaps investors are in no more of a rush right now to get their investment purchases closed by years' end?

No doubt the slow period will soon end as the conventional 30 year fixed interest rates are starting to slip on up the hill from 4.75% into the 5s.

Time is nearly out to purchase a home under this program. You must close escrow by Nov 30th, with the new lending regulations, it takes nearly 60 days to close escrow due to disclosure notices, new HVCC appraisal rules and the last minute rush of buyers cashing in on this tax credit.

There is a movement to extend the expiration but that is not a certain thing. November 30 is certainly a reality.

Interest rates held steady at the last Fed meeting last week. Lenders are ready for the rush.

Call me today to see what's available right now. Don't delay.

California Association of Realtors Financing Programs- Comprehensive Manual

Government programs, local and state.

Financing options.

Federal homebuyer Tax credit details.

Mortgage Protection Program

Income criteria

Loan information

Home Investment Partnership Program

203b loan info

203k info

HUD homes (I am a registered HUD home buyer agent)

Energy Efficient mortgages

MCC program

RMCC program

Cal HFA

Cal 30

SMART loan program

AHPP

Home mortgage qualifying worksheet

NAR- National Assoc of Realtors is busy contacting Congressional leaders this month trying to get them to consider extending this worthwhile tax credit.

The $8000 federal tax credit is really a help for first time homebuyers (and any others who have not owned real estate in the past 3 years).

Your tax advisor will assist you in understanding how this credit works for you in your tax situation.

Call your congressman for support too. The current credit is set to expire on Nov 30th, this means your escrow must close by that date or the credit does not apply to you.

Don't pay a fee in advance for any company that promises to modify your loan.

First of all, you can easily call your mortgage lender or bank yourself and find out if they will modify your mortgage.

Click here for a consumer alert from the California Department of Real Estate concerning loan modifications.

In most cases the bank will ask you to supply financial information directly to them so they can assess your situation.

If you are behind on your payments or if you have missed payments, in California it really doesn't seem to make much of a difference Hope for Homeowners is for homes that are slightly lower value than what it was purchased for originally.

If you cannot make your payments, after four months your bank will most likely file a notice of foreclosure with the county. This does not mean you are evicted from your property yet, it is basically a notice warning you that if you do not pay your late payments plus late fees and charges you will most likely be served with a notice of sale and ultimately your home will be returned to the bank that currently holds your mortgage.

Lately, some banks have sold their loans (individual home loans) to outside persons, investors, groups either in or outside the USA.

In most loan modification cases, your loan modification approval will be reviewed by more than one entity or person or lender. It can take a long time for this process to work. In many cases, if you have not or cannot make any payments to them, the foreclosure process can take your home.

This is because the original paperwork you signed to purchase your home said that the bank could take this action if you don't make your payments.

Each case, each bank, each situation is handled differently.

Please read the information in the California Department of Real Estate Consumer Alert link to find out more information on the loan modification process and how to protect your family from distress.

written by barbara.adams @yahoo.com

It has been made known to our local Realtor Assocation that many of our listings have been scooped up off the local mls data feed and sent into fabricated Craigslist or other online sites by scam artists saying these homes are "for rent" when in fact they are only for sale and the intention of the scammer is to collect deposits from their victims (potential renters responding to the ads).

The FBI has warned us to report this type of activity as it is happening on a national level, many of the con men are located in Nigeria, but not always.

If you drive by a property you believe to be for rent and you see a for sale sign on it, please call the listing agent's phone number on the sign and ask them if the house is for rent.

Do not place a deposit on a home unless you are certain you are in contact with the owner of the property or their property manager agent.

All licensed real estate agents are now required to give you their California Department of Real Estate License number the first time they hand you any printed material since July 1, 2009.

Meet the property manager in person either at their office or at the rental property, this will insure that you are in fact dealing with the right person.

Also be aware of and ask the agent or owner if the property is in foreclosure or if the mortgage payments are being made in a timely manner. It is your right to know this information to protect yourself, ensure you are signing a valid rental lease contract so you can be certain that you will have a place to live for the duration of your lease period.

The best way to protect yourself is to work with a reputable licensed local property management company to find the home, duplex, condo or apartment you are looking for. Don't send money or personal information to strangers.

written by barbara.adams@ yahoo.com