Archive for Real Estate Tips
Orange County Foreclosures Drop
Orange County home foreclosures declined significantly this spring, with some economists and home financing analysts speculating that most risky mortgage loans have worked their way through the system and the housing market may bottom by year end. However, home financing advisor and Kelly Media Group founder, Jason Cardiff reminded us that “Orange County was the epic center for option ARM loan also know as 1% negative amortization loans.” Cardiff said in a recent article that “We are not out of the woods until the neg ams and exotic mortgages disappear. Banks seized 42 properties in the second quarter in Santa Ana’s 92701, which had the county’s highest ratio of foreclosures to existing homes at 8 per 1,000. Yet the 42 foreclosures represented a 65 % drop from a year ago. More examples: Buena Park’s 90620 saw foreclosures drop 57 % to 29 homes seized. In Costa Mesa’s 92627 they dropped 37 % to 22, and in Ladera Ranch’s 92694, foreclosures dropped 40 % to 30. Yet experts say government intervention has played a role in the declines. Read the original Jason Cardiff article at > Foreclosures Drop in Orange County
Is the FHA Planning to Penalize Borrowers?
When it was passed last year as part of the FHA reform package, the Hope for Homeowners program was a federal mortgage refinancing plan designed to help some 400,000 people who now have toxic loans. In fact, the program has been a complete bust. As of January 31st, HUD figures show that there have been 465 Hope for Homeowners applications — and not one approval from the government.
Hope for Homeowners has gone nowhere because it’s complex. It requires lenders to take a loss and borrowers to share profits and make big payments to Uncle Sam. While the intention is good, the program is just too complex to succeed.
Now we find an effort to revamp the Hope for Homeowners program and the betting here is that few FHA loans will result.
Under H.R. 1106: The Helping Families Save Their Homes Act of 2009, the program will become MORE restrictive if the legislation passes as it is now written. Huh? How can that help anyone?
Once again, the intention is good but the result is doomed to failure. For instance, the legislation requires that a borrower does not “intentionally defaulted on the existing FHA home loans or mortgages.”
Translation: If you’re stuck in an over-priced house you can’t buy a replacement home and then default on house #1. This seems logical, except that when someone applies to buy that second home they have not yet defaulted on the first house. If default comes at all, it will come later.
Here’s another one: You can’t get a Hope for Homeowners loan if you have “knowingly, or willfully and with actual knowledge, furnished material information known to be false for the purpose of obtaining the eligible mortgage to be insured.”
What’s remarkable about this section is that it ought to apply to all loans. The simple solution here is to require that EVERY home loan applications must be fully documented. That’s the case with FHA mortgage applications and one reason the program is successful. If a borrower can’t come up with some tax returns and proof of employment and income why would you give that person several hundred thousand dollars? It makes no sense.
However, my favorite section goes like this: “BAN ON MILLIONAIRES — The mortgagor shall not have a net worth, as of the date the mortgagor first applies for a mortgage to be insured under the Program under this section, that exceeds $1,000,000.” I’m not making this up. The home financing bill would actually ban financially-strong borrowers from the program. Now — just thinking out loud here — wouldn’t it make sense to get borrowers with a net worth of $1 million or more to participate in the program? You know, folks who might pay their bills and, if they don’t, could be sued by the government for any shortfall?
Read the complete article > Should We Ban Millionaire Borrowers?
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Whether you live in Orange County, California, Broward County, Florida, or Detroit Michigan, there is an opportunity nationwide for homeowners to reduce their expenses by making an effort to lower your property taxes. might be facing exorbitant hikes in property taxes. In one of the more extreme cases, residents of West New York, N.J., are fighting a planned 27% bump in their property tax rates. What gives? Squeezed by foreclosures and falling revenues, many local governments are facing unprecedented budget shortfalls. To fill some of the gap, more municipalities will have to raise property taxes, says Sharon McCabe, associate director of the Graaskamp Center for Real Estate at the University of Wisconsin. While homeowners would have a hard time fighting the local government on such increases (although West New York residents are certainly trying to), there are ways to reduce the impact of the hit. Like most homeowners, your property’s value has most likely fallen off a cliff over the past year. If your assessment is based on a higher valuation from several years ago, it’s probably time to get it reassessed, says Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA. The end result could save you hundreds of dollars a year. However, this move isn’t right for everyone. If you decide to hire a lawyer or property tax consultant to help you, for example, you could lose much of the savings you’d otherwise reap to their fees. Here are a few things to consider before seeking a reassessment: Your Town’s Methodology While some municipalities revalue properties annually, others do so every five years, says McCabe. There’s also wide variation in how towns assess properties. Homeowners should visit their assessor’s office or check their web site for information about when assessments can be done, what period they cover, and how and when homeowners can appeal those decisions. You Can Do It Yourself You may get mailed solicitations from realtors or attorneys offering to help lower your property taxes by filing for a reassessment. But most homeowners can manage the appeal process on their own, says Tara-Nicholle Nelson, a real estate broker. Lawyers and consultants typically charge a percentage of your first year’s tax reduction sometimes as much as 50%. Check for Errors Mistakes on property assessment records often mean homeowners are taxed at higher rates than they should be. The record might say, for instance, that your lot is one acre when it’s three-quarters of an acre, or your house has four bathrooms when it has three. Check Out Similar Home Sales Towns typically make assessments based on market value. But sometimes those figures aren’t very realistic. If you don’t think you can sell your home at the value your town pegs, find out what comparable homes in your area have been selling for, says McCabe. Lower Your Property Tax
Southern California Home Prices Decline 35% but Home Sales Jump 51%
DataQuick reported the dropping prices were driven by sales of foreclosed properties, which comprised 56% of all homes sold in the region. Consequently, the lowest median sales prices were reported in San Bernardino County ($180,000) and Riverside County ($209,000), where foreclosures have been rampant. The Low home sale prices fueled the increase for Southern California homes sold in December to rise almost 51% from the previous year.
California Short Sales continue to close at a rapid pace, while many home foreclosures have been slowed by the recent trend of loan modification plans. loan modification companies and distressed homeowners. In a recent Reuters article, Lisa Baertlein evaluates the significance of recent reports that December home sales in Southern California jumped 50.5 % from the year earlier. The DataQuick report also indicated that the median price fell 34.6 % to $278,000 as homebuyers snapped up foreclosed properties. Read the original article > Southern California Home Sales up 50% but Most Are Foreclosures
What is a Loan Modification?
Turn on the news and you likely hear talk about the government planning foreclosure prevention measures with pressure on lenders to modify loans for struggling homeowners. What is a Loan Modification? First let’s spell out what a modification means today. Ten years ago when I was originating loans, we called them note modifications and they were extremely rare. Today, most people refer to them as a loan modification or mortgage modification, but they are extremely common and probable for distressed homeowners to be approved by most lenders. A home loan modification, can only become official if the present mortgage lender’s agrees to modify the existing mortgage note. The loss mitigation department actually creates a legal addendum to your mortgage note that specifies the changes in terms like, interest rate, term and in some cases the outstanding loan principal amount.
With the subprime mortgage meltdown fueling the foreclosure crisis, loan modification has become quite the buzz word. Loan work outs and mortgage modification programs have been promoted and in some cases sponsored by Government agencies (ie. FDIC loan modification) to for homeownership preservation, but they have introduced some interesting new twists in the home financing maze. Both government counseling agencies and local community service agencies concede they have been swamped by demand for loan modifications agreements.
Loan modifications have been around for years, but the recent events in our economy and the FDIC endorsement has created a whole new world for loan modification terms. The media continues to magnify the spotlight on foreclosure prevention options with short sales, forbearance, and bankruptcy. However, homeowners seeking home loan modifications are at the mercy of lenders, because the workouts are voluntary and often without regulatory standards. Now recent reports indicate that many homeowners are finding it difficult to know when a modification will benefit them and exactly how to qualify for a loss mitigation plan. Read the
Before starting the time consuming process of a mortgage refinance, take out a piece of paper write down the 3 most important goals you want to accomplish from home refinancing. Most people will list lower monthly payment, save money, get cash or convert ARM into a fixed interest rate home loan. o Lower Mortgage Payment o Save Money for Increased Cash Flow o Get Cash & Consolidate Revolving Debt o Convert ARM to a Fixed Rate Term Rarely do homeowners list things like, stretching the length of the loan term or increase your mortgage debt with a higher outstanding loan balance, but often that’s exactly what some of these borrowers end up accomplishing. Remember to hold true to whatever goals you listed on paper. Make sure the loan officers and processors that you work with are well aware of your refinancing goals and hold them accountable for delivering the mortgage terms that were quoted in the loan disclosures and “good faith estimate.” Use mortgage refinancing as an opportunity to save money by locking in lower interest rates that are fixed for the duration of the loan term. In most cases you should increase your cash flow simply by reducing the monthly mortgage payments. If you have the option to consolidate credit card debt or adjustable rate credit lines into your mortgage without the “cash-out” feature raising the interest rate, take it. According to mortgage rate publisher, HSH, savvy applicants should shop mortgage lenders and home loan brokers in an effort to uncover the lowest rates and most significant fees reductions. Take some advice from a former loan officer, interest rates and closing costs can vary significantly, so spend a few hours researching something that could save you thousands of dollars a year by refinancing with the best fitting mortgage program from a lender that provides you cost effective home financing. In the event that you are turned down from a mortgage company, consider a loan modification. Foreclosure prevention services have turned into a billion dollar business. You can either contact from your existing lender directly or attempt to negotiate a mortgage rate modification yourself or locate a loan modification company that will negotiate with the lender on your behalf. If you chose to hire a mortgage modification company, make sure they have a proven track record with your lender. I strongly recommend only working with attorney backed loan modification companies because attorneys appear to have more leverage and experience negotiating lower mortgage rates and principal reductions. Some loan modification lawyers have had success settling 2nd mortgages. For example, I have heard of $150,000 second mortgages being settled for $7,000. It sounds unbelievable and unrealistic, but when you consider the other alternative for the borrower is foreclosure and with the mortgage balances significantly exceeding the fair value of the home, the 2nd mortgage lender would get $0 if the borrower chose the foreclosure or bankruptcy options. Read more helpful articles on 2009 Home Financing Tips. Get alerted when new financing tips are published at
Federal Reserve Chairman Ben Bernanke said today that a giant stimulus package continues to be crafted by the team of President-elect Barack Obama that many believe will give the economy the boost it needs, but additional measures must be taken to reinforce the unstable financial system for any recovery to work. In his news conference, the Fed Chief suggested the government infuse more funds into banking system. He offered options to deal with bad credit mortgages and other poor performing assets held by financial institutions, a problem that has contributed to stagnant mortgage lending. Again, Bernanke requested government intervention to stem the foreclosure crisis in the wake of a crumbling housing market. The Fed Chief mentioned that the $800 billion recovery plan, a combination of tax cuts and increased government spending is now being massaged by the Obama team and the Democrat-controlled Congress could provide a “significant boost” to the hobbling economy. But he made clear that such a plan must be part of a broader, multi-pronged government response to fight the worst financial and housing crisis the hit the U.S. and the global economy since the Great Depression in the 1930s. “Fiscal policy can stimulate economic activity, but a sustained recovery will also require a comprehensive plan to stabilize the financial system and restore normal flows of credit,” Bernanke said. “History demonstrates conclusively that a modern economy cannot grow if its financial system is not operating effectively.” To help on that front, the Federal Reserve has agreed to lend billions to finance companies and purchasing some of these companies’ debt to rebuild the credit markets. The US Treasury Department is overseeing a $700 financial bailout program that has pledged to inject $250 billion into banks in return for partial government ownership. Bernanke said “more capital injections and guarantees may become necessary” to stabilize financial markets and spur more lending. If Obama’s incoming Treasury secretary Timothy Geithner decides to remove toxic assets from financial institutions’ balance sheets — the original but abandoned strategy under the $700 billion bailout — Bernanke suggested some options to do that. Bernanke said he understands this concern, but added: “This disparate treatment, unappealing as it is, appears unavoidable.” Washington policymakers, Bernanke said, “must therefore do what they can to communicate to their constituencies why financial stabilization is essential for economic recovery and is therefore in the broader public interest.” The Federal Reserve Chief reminded us that more Obama led relief efforts were on the way to stop the home foreclosure mess could strengthen the real estate market if the lenders offer loan modification plans that struggling homeowners can afford. To soften the landing from the recession, last month the Fed Chief cut key rates to an all-time low of between zero and 0.25%. The Federal Reserve renewed his commitment to keep mortgage rates at that level for some time and pledged to use unconventional tools to jump-start the ailing economy. The central bank led by the Fed Chief will reconvene later this month to assess economic and financial conditions. Sign up today at
In a recent LA Times article, Peter Y. Hong examines the facts that many real estate experts troubled by a 10% drop in median home prices near the end of 2007 were likely astonished by the 35% decline in home values since then. The only forecasts that may be more shocked what lies ahead? With unemployment rates rising rapidly, more declines in consumer spending and a particularly long and deep recession are expected to batter home prices even further next year, they said. Director of USC’s Casden Real Estate Economics Forecast Delores A. Conway said “As unemployment keeps rising, demand for housing softens. It will probably get worse before it gets better.” And the ripple effect is pushing rents down, which in turn could put greater pressure on home prices and exacerbate the downward spiral. Overbuilding in some areas and hard economic times have driven apartment vacancies up, and that is causing rents to stagnate or fall, Conway said. In downtown Los Angeles, for instance, apartment rents were about the same in the third quarter this year as they were in the same period a year ago, halting the rise in rents in previous years, Conway said. In Hollywood, apartment rents fell 2% in the third quarter compared with a year ago, she said. Data on single-family home rentals are less complete, but real estate agents in areas with numerous foreclosures say rents for houses are falling as the supply of vacant houses for rent exceeds demand. Those falling rents could offset any boost to home sales from currently low interest rates and prices, economists said. For those able to qualify for mortgages and willing to buy a home, terms have become quite favorable. Sign up now and get the latest real estate and finance at At the end of November, Southern California’s median home sales price had fallen to $285,000, from $435,000 in November 2007. If median prices were to continue falling at that pace, they would be below $200,000 a year from now. But even bearish forecasters don’t expect so severe a decline. More likely, prices in Southern California will settle in late 2009 at a level roughly 55% below their peak, said Christopher Thornberg, a Los Angeles economist. That would amount to a price near $230,000, a level at which home prices would be roughly in line with incomes by historical norms. The rapid drop in home prices this year has helped to bring previously inflated prices closer to normal levels. About 20% of Los Angeles-area residents could afford to buy a median-priced home at the end of September, according to a National Assn. of Home Builders index. A year before, only 2% could make such a purchase, based on area income levels. The typical monthly payment for such a home in November would be just over $1,300, according to the real estate information service MDA DataQuick. That’s down from $2,049 a year earlier. Adjusted for inflation, the $1,300 monthly payment would be 37% below the typical payment in 1989, the peak of the previous real estate cycle, DataQuick reported. Read the original article > Tips for Mortgage Refinancing
Fed Chief Says Obama Stimulus Could Revive Economy and Housing Markets
California Home Prices Forecasted to Decline Further in 2009
Home Buyer Tax Credit Tips
First-time homebuyers are able to take an income-tax credit on their purchase, thanks to passage in Congress earlier last year of the 1st-time home buyer tax credit. The definition of first-time homebuyer is very generous. To get the credit, the homebuyer cannot have owned a home in the previous three years. And: The home must be a principal residence and purchased between April 9, 2008 and July 1, 2009. The credit is equal to 10% of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for full credit. Singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. Those with higher incomes don’t qualify. Stay informed with new laws and news related to home financing and foreclosure prevention at If the amount of tax a homebuyer owes is less than the amount of the credit, they get to keep the difference in the form of an IRS refund. The homebuyer must begin to repay the credit in two years in increments of about $500 a year over a 15-year period for those who received the full credit. Homebuyers who sell their home before the credit is repaid must pay off the home loan with any profits. If they sell the home at a loss, the loan deficiency is forgiven. This credit is set to expire in mid-2009. Read the original article.
Home Financing Tips for 2009
If you plan on buying a home in 2009, you will need to a get a home loan that you can affford and financing that you actually qualify for. Gone are the days of everyone getting buying a new home with 80-20 down money down home loan programs. Good riddance, because those popular combination mortgages that were popular in 2005 and 2006 certainly played a major role in the current foreclosure crisis that is still dragging the economy down in 2009.
There are still home purchase loans available that require very little down. FHA recently amended there guidelines to require 3.5% down, rather than the 3% so many people became accustomed to with FHA loans. FHA mortgages require the borrower to pay mortgage insurance of 1.5% of the loan amount and .5% monthly, but that is tax deductible and borrowers who are only making a down-payment of 3.5% should not expect anything better. The mortgage rates are phenomenal as the Federal Reserve has cut interest rates to record low levels in an effort to revive the housing markets and our economy in general.
There are many home financing options and mortgage lenders are eager to earn your business. FHA remains flexible with credit scores as well, because there unique lending guidelines consider the “big picture” of the borrower rather than just a number from a credit score like most conventional lenders. To qualify for the best mortgage loans, applicants should pay close attention to the following tips and work with a mortgage lender that you trust to deliver the best possible loan for your specific needs.
Get Your Credit Report
Before applying for a home loan or searching for a lender, you should fully understand your credit score and clear up any derogatory comments being reported on your credit scores. If you have closed accounts that have been paid off, then request those finance companies update their records with Trans Union, Equifax and Experian. Even though FHA loans don’t focus on credit scores, most mortgage programs do and for whatever reason, you may not meet the FHA criteria for a new home loan any way. In most cases, credit scores have a significant impact on home loan program eligibility and ultimately how low your interest rate could be offered at. We recommend cleaning up your credit report, 6-12 months prior to shopping for a mortgage online.
Eliminate Monthly Costs
Debt to income ratio is one of the most important factors considered when underwriters approve or deny your loan application. By cutting your monthly expenses you will lower your debt to income ratio and maximize your chances of being approved. Try and get your debt to income ratio at or below 30% and you will have all sorts of home financing possibilities. Debt to income ratios can be calculated by dividing your monthly debt obligations by your gross monthly income.
If you can keep your credit good and your expenses low, you will ensure yourself the best opportunity to get a low interest rate with a mortgage that you can afford. The housing market should be near the bottom, so buying a home is a great opportunity to increase your wealth as the home equity will build quickly as our housing and economy rebound in the next few years. Please sumbit your comments and questions to me directly at
