Archive for July, 2009
New Loan Rules Could Slow Home Closings
HOME LOANS, INDUSTRY NEWS, REAL ESTATE PRACTICE
As of July 30,2009, home buyers securing a loan may experience a delay in the loan closing if the interest rate on their loan changes from the initial quote. The Good Faith Estimate will have to be redone if the interest rate changes by more than one eighth of a percent (0.125%) triggering a three-day right of rescission. The new rule is part of the Mortgage Disclosure Improvement Act which is intended to increase transparency in the mortgage lending arena.
Here are some of the details:
- The new rules apply to purchase and refinance loans
- Covers all loans subject to RESPA regulations
- The lender must provide the borrower a Good Faith Estimate within 3 business days of receipt of a written loan application
- No one can charge an upfront fee on the borrower (except for a credit report) until the borrower has received the loan disclosures
- Barring financial emergencies, the lender must wait seven business days to close the loan from the date the borrower receives the loan disclosures
- As mentioned above, if the final interest rate changes more than 0.125%, the lender must provide the borrower a corrected loan disclosure which allows the buyer an opportunity to cancel loan
Lenders, escrow companies and real estate agents will need to be aware of these new regulations to prevent a delay in the loan closing. Hopefully, this will change the practice, by many lenders, of waiting until the last possible moment to draw final loan documents for signature, funding and closing!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Shasta County School Superintendent Briefs Realtors
REDDING LIFESTYLES, SHASTA COUNTY, TIPS FOR BUYERS
Tom Armelino, Superintendent of Shasta County Schools, addressed Realtors recently about the state of our public schools. He presented considerable statistical information about our schools and some of the challenges ahead sparked by the state’s budget crisis.
Here are some of the facts he discussed:
- Ethnic distribution for Shasta County schools-78% white, 8% hispanic, 6% African American, 3% Asian, 5% other
- 13% of students have learning disabilities
- 27,267 students-13% less than just a few years ago
- 25 school districts
- School districts range in size from 9 to 5,015 pupils
- 43 Elementary Schools, 8 Middle/Junior High Schools, 8 High Schools, 13 Charter Schools, 5 Continuation Schools, 1 ROP School
- 22 private Schools with 3,342 students
- 2275 students enrolled in Charter Schools
- 21 out of 25 Shasta County School districts have declining enrollments since 2005
- 1400 home study students in the county
Reasons cited for declining enrollment incude:
- Decline in birth rate
- Welfare Reform-some forced to move to larger cities for employment
- Housing Market-soaring home costs have forced families to leave the area
The school district loses $8,000/student/year for each student that does not enroll. Despite lost revenues, Shasta County school students continue to score better on math and reading tests over the past three years. The number of students taking advanced classes has increased significantly as well.
Tom stated the Academic Performance Index (API) is the best index for comparing schools. Overall, the state index is 728. The average in Shasta County is 781. Only 2 schools in Shasta County are below 700. Only 8% of our schools had an API above 800 in 1999; now it’s 74%!
Bottom line: Our schools are outperforming the state average for the most part despite large funding cuts to the county. Good job students and teachers!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
CAR Releases 2009 Housing Survey
The California Association of Realtors released their annual survey of home buyers. Factors motivating buyers to buy now center on favorable home prices, record-low mortgage interest rates and concern that interest rates may climb in the near future. More specifically, 68% cited price declines as the main reason they decided to buy now while 39% were motivated by low interest rates and 23% feared future interest rate spikes.
Nearly half the buyers purchased a home through a traditional market sale. 38% purchased a foreclosed property and only 13% bought a short sale. Just over half the sales are distress sales-REO or short payoff properties. Buyers of distressed sale properties reported more difficulty obtaining financing. Buyers rated their level of difficulty on a scale of 1 to 10. Distress sales were rated at a level of difficulty as 8.9 compared to 7.7 for traditional properties.
A local mortgage broker offered a theory as to why banks are making short sales difficult. Banks can write off the losses when they take a property back in foreclosure. Banks can also package and sell the properties they acquire to other banks recovering some of their capital. They can then ask for TARP funds to offset a portion of their losses.
Low mortgage rates and more affordable home priceshave contributed to a housing market rebound in 2008 and 2009 after two years of sharp declines according to CAR President, Jim Liptak. State and federal tax credits are cited as additional factors helping the market recovery. However, money set aside for the state tax credit, allocated to buyers of new homes, has been largely exhausted.
Looking ahead, the concern I hear over and over again from financial analysts is that mortgage rates could increase significantly due to the increasing national debt. The more money the feds print, the sooner this day of reckoning may come!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
New BMX Bike Park Planned For Redding
A group of bicycling advocates have begun planning a new bike park for the area along the east shore of the river below the new Hwy 44 bridge expansion in Redding. A portion of the area is currently being used as a construction yard. The group has pitched the idea to the City of Redding Parks Department where the group was given the green light to continue with the planning process. Details are sketchy as to the cost of construction and where the funds will come from, but the planning will continue.
Fresno recently opened a BMX bike park that is comparable to the one envisioned by the local work group. To see what it looks like, click here:http://videos.fresnobee.com/vmix_hosted_apps/p/media?id=4901773&item_index=1&query=video&sort=NULL
The park envisioned for Redding will have less concrete and more dirt jumps. The group recently developed a website and here’s the link:
Construction and completion of the park is several years away assuming the project is supported by the community and funds are allocated by the city or donated from private sources. Local athlete and sports celebrity Bobby McMullen is part of the group planning the bike park.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Property ID Refunds Fraction of Money Taken In By Kickback Scheme
Apparently, you can come out ahead ripping off the public with kickback schemes. That is especially true if you are a natural hazard disclosure (NHD) firm in cahoots with real estate companies. These disclosures are required in California for most real estate transactions. Inman News recently reported the final outcome of a lawsuit that settled in January 2009.
Property ID is mailing out $5.5 million in refunds to California consumers that were victimized by the scheme from 1996-2006. The attorneys that brought the class-action suit pocketed nearly $10 million. Less than one out of six victims successfully filed claims despite efforts using direct mail campaigns and newspaper advertising to locate those duped in the scheme . Nearly $40 million had been earmarked to compensate victims in the January settlement.
Here’s how the alleged scheme worked: Property ID partnered with real estate brokerage firms to profit from the sale of NHD reports. The reports were priced at $99-$114. Property ID deducted $50 to cover expenses to prepare the report then split the remainder with the real estate brokerages using sham “affiliated businesses” to funnel the profits to the real estate firms participating in the scheme. The real estate firms named by Inman News include Coldwell Banker, RE/MAX, Century 21, Prudential California Realty and ERA. Realogy is the parent company for these real estate firms. Some of these franchises are independently owned and operated and had nothing to do with the scam. Property ID and the real estate brokerages involved closed down the sham “affiliated businesses” , denied any wrongdoing and settled the lawsuit to “avoid further disruption of their business and bring to an end a protracted and costly court battle”.
More than 330,000 California homeowners were believed to have overpaid for reports, yet only about 50,000 filed claims that were accepted by Property ID. That means the other quarter million potential victims that were not located will not be compensated and the scammers can keep those funds, minus attorney fees.
Let’s see, that’s 250,000 reports at $50 profit apiece, or $12.5 million. Not bad, Property ID/Realogy! Considering the total liability could have exceeded nearly $120 million, according to the lead attorney for the alleged victims, paying out 1o cents on the dollaris smart business. Moving forward, Property ID and Realogy now acknowledge that NHD’s are considered settlement services and RESPA guidelines must be followed.
Personally, I find this whole scam disgusting. It gives the real estate industry a black eye. I go out of my way to inform real estate agents that still use Property ID about this scam. Regardless if any local brokers were involved or not, everyone should question the corporate philosophy of Property ID and Realogy considering they concocted such a scheme to secretly glean additional profits from homeowners and referring agents that seek their services. Shameful!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Date For Community Creek Clean-up Set
REDDING LIFESTYLES, REDDING RECREATION
Ken Murray sprouted the idea of having volunteers spend a few hours each fall clearing trash from local streams that empty into the Sacramento River. The first year focused on Churn Creek from Shasta Lake City to the confluence with the Sacramento River near Anderson. The second year targeted streams in West Redding including Jenny Creek from Mary Lake to the Sacramento River and Caboose Creek. Last year volunteers returned to Churn Creek and Clover Creek in the eastern portion of Redding.
This year, October 3rd from 8am-noon, has been designated the clean-up day and the Sacramento River Trail area will be the area receiving a thorough cleaning. Local service clubs and the Coastal Commission are getting involved to clear brush between the trail and river.
Volunteers gather early in the morning at designated staging areas where they are briefed on safety, provided gloves and bags then directed to a segment of the clean-up locale. Once the area has been scoured for trash, volunteers meet at a designated spot for a complimentary lunch and swim if weather permits. Last year, The McConnell Foundation donated most of the food and beverages to feed the volunteers.
Years past have seen as many as 700 volunteers though last year it was less than 400. Anyone interested in 
participating this year should visit the following website for sign-ups and liability waivers:
My wife and I have volunteered since the program’s inception and plan to be there again this year. Consider giving something back to our wonderful community by volunteering a few hours of your time. You will feel good about your efforts and our downstream neighbors will appreciate our help prior to the arrival of winter storms.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Realtors Outline Short Sale Concerns
SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Short sales, defined as selling a property for less than what it would take to pay off loans and closing costs, are a significant part of real estate activity in Shasta County. Anyone involved with a short sale- buyers, sellers, escrow and title companies and real estate agents, have learned this is a difficult process that leads to failure more often than success. Realtors across the country have weighed in on the topic with these concerns:
- A lack of conformity among lenders/loan servicers with regards to information demands and processes
- Lost documents requiring multiple resubmissions
- Unrealistic view of current home values, delaying approval, often until the buyer walks away from the deal
- Lenders ultimately end up losing more money because they foreclose instead of agreeing to a short payoff
- The process for approval takes too long-most buyers withdraw offers and buy something else
- Non-responsivenesson the part of loan servicer/lender-even as to the status of an offer
- Insufficient or inexperienced staffrepresent lender/loan servicer
One local mortgage broker believes lenders are intentionally making the process difficult because the lender benefits in the long run by opting for foreclosure. The bank may write off the loss, sell the foreclosed asset to another investor or bank and finally look to the federal government for funds to make up any losses after all the dust settles.
I would add that lenders and the loan servicing companies they hire to manage these real estate assets have difficulty communicating within their company. It is not uncommon for the loss mitigation department to approve a short sale only to have their foreclosure department auction the property during the time period allowed to close the sale on the agreed upon price and terms. In other words, the left hand does not know what the right hand is doing.
In some cases, a buyer moves ahead with the transaction in good faith, knowing the escrow company has a written demand from the lender, ordering inspections, an appraisal and arranging for repairs only to find out the bank let the property go to auction. The buyer and their lender, the title company, escrow company, real estate agents and seller all lose when this happens. And it is happening, over and over again.
Ironically, many lenders take as long as 2-3 months to approve a short sale, then want it closed in 30 days or less. Recent rule changes have lengthened the traditional loan processing time needed from 30 days or less to 45 days or more. When lenders are disposing of REO’s they want it done yesterday. When they are processing a loan for a customer they want at least 45 days to process and fund. Why do banks talk out of both sides of their mouth?
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Fannie Mae Allows Borrowers to Refi Up To 125% of Home Value?
I shook my head during the boom years when lenders offered home owners the opportunity to borrow much more than their property was worth only to read last week that Fannie Mae has developed a loan program that does the same thing-bury a buyer in debt with even more debt!
The Home Affordable Refinance Program (HARP) has been expanded to permit refinancing of existing Fannie Mae and Freddie Mac loans to assist borrowers with a proven track record of paying their mortgages on time but have been unable to refinance due to sharp declines in property values. One would have to be very optomistic about future home value appreciation before signing on the dotted line for a loan that exceeds the value of their property by 25%!
One reason home owners with stellar credit are giving banks their house keys is the undesirable situation of making payments on a home that is worth much less than what is owed. Fannie and Freddie should be focused on writing down the principal balance of loans they hold for borrowers with a demonstrated ability to make monthly mortgage payments utilizing a loan modification program. Perhaps, a better idea would be for Fannie to split the equity loss with the banks that they purchased the loan from and complete a loan modification that lowers the principal balance of the loan to reflect current market value!
Why? I believe these government sponsored enterprises(GSE’s) are primarily responsible for this housing mess. They cooked the books to award top Fannie/Freddie CEO’s multi-million dollar bonuses, then started buying toxic mortgages despite warnings from internal staff that these loans were junk, then packaged and resold these loans to investors from around the world before it all unraveled. Red flags went up all over the place and these GSE’s turned a blind eye because the economy was humming along (toward a head-on train wreck).
Yes, Wall Street and banks had a major role in causing this economic catastrophe but neither would have been allowed to facilitate this fraud without the direct cooperation and blessing of these GSE’s. This new loan program should be canned before it creates a new list of victims. I hope no borrowers get duped into a loan that will burden them for decades to come. When will our government learn from past mistakes?
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
American Clean Energy and Security Act Creates Confusion
INDUSTRY NEWS, REAL ESTATE LEGISLATION
The National Association of Realtors (NAR) wants the public to know there is considerable misinformation being disseminated regarding this bill, H.R. 2454, causing a stir on talk radio and Internet chat sites. The erroneous information can be blamed, in part, on Congress for failing to post a current draft of the bill on the web in a timely manner. This led to speculation by opponents of the bill including suggestions of point-of-sale mandates, energy audits and other misinformation.
NAR opposes the bill and was successful in procurring an ammendment that would ensure the new energy standards apply to new construction only, not existing homes. The 1400-page bill only has a small number of provisions that directly impact real estate. It will create a national building code standard that states will be required to adopt. California’s building codes are already in compliance with the provisions in this legislation however NAR and CAR historically oppose federal laws that preempt state laws.
The law will offer incentives to homeowners that voluntarily make energy efficiency improvements. These incentives include grants, loans, loan guarantees and/or mortgage interest rate buy-downs.
Bottom line-this bill contains no point-of-sale mandates or retrofit standards for existing homes.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Mary Lake Beaver Dams Rebuilt
REDDING LIFESTYLES, SHASTA COUNTY
Despite the mysterious deaths of at least 5 beavers since the beginning of the year that called Mary Lake home, dams have been rebuilt at the inlet and outlet of Mary Lake. Although I have not laid eyes on the beaver or beavers that survived the natural or unnatural deaths that took so many from this clan, their busy works speaks for itself.
A freak thunderstorm in early June washed out their dams but they have been replaced and continue to be reinforced as weeks go by. The beaver den on the west shore remains intact and appears to be in good repair.
No news reports from the Record-Searchlight yet on the necropsy of one of the beavers found dead in the pond in early spring. Likewise, no sightings of the teenagers seen bludgeoning water fowl and a beaver by one Mary Lake resident while walking the park trail. Another theory floated was river otters invaded the lake and killed the resident beavers. I did see an otter in the lake munching on a big fish last winter lending weight to this theory.
We may never know the who, what and why of these critters demise but it’s nice to know there is at least one or more survivors living on to the delight of Mary Lake residents!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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