Archive for October, 2010
Mortgage Rates Drop, But Credit Bar Rises?
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
According to a recent article in Smart Money, the minimum credit score to get the best rates and terms on a mortgage just increased by 40 points. A FICO score of 680 use to be the break-point between great credit and good credit. Now the line has been upped to 720, according to Smart Money author AnnaMaria Androitis.
If this is true, the Redding/Shasta County real estate market could be adversely impacted. Local loan brokers and loan officers have told me in the past the average credit score in this part of California hovers in the low 600’s. The higher the credit score bar is raised for a borrower to obtain the best loan terms, the fewer prospective buyers able to take advantage of historic-low interest rates.
AnnaMaria points out that a 680 credit score used to be something to be proud of. Such a score implied you paid your bills on time, perhaps getting dinged on a refi, but all and all qualified for the best interest rates. The change has now put this score solidly in the second-tier, potentially costing a borrower thousands over the life of a typical mortgage loan.
Other factors that impact credit scores:
- Length of credit history-15 years or more is tops
- Low credit card balances-in relation to total available credit
- Applying for new credit cards
For those near the break-point, a credit inquiry can push you down a tier. Increasing your credit balances above 30% of your total available credit could also send your score downward.
To maintain or increase your credit score, pay bills on time, pay your balances down and avoid applying for new lines of credit.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Redding/Shasta County Real Estate Market Update
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
Redding home prices slipped downward in the third quarter to $122/square foot on average for a 1500-2000 square foot home. That represents about $4/square foot less than the 2nd quarter of 2010. The number of homes listed for sale dropped from the August high-point of 1649 to 1521 this week.
Pending home sales peaked at 529 in May as buyers rushed to take advantage of the federal tax credit. Today, 431 homes are in escrow. More than 58% of pending sales are distressed properties-147 are bank-owned and 102 are short sales.
The majority of sales remain concentrated in the under $300,000 price range. 183 homes sold in September of which 157 were listed at or below $300,000. Year-to-date home closings are 1610. Roughly 2000 homes should close by year’s end.
The number of available bank-owned homes listed for sale has risen steadily over the summer. In early June, 196 REO’s were listed for sale. Today, 260 bank-owned properties are looking for a buyer. The voluntary foreclosure moratorium by Bank of America has had no impact locally.
Interest rates continue to drop. The 30-year fixed rate is just over 4% and the 15-year fixed is in the mid 3% range. Lenders today are reluctant to give firm interest rate quotes due to new underwriting guidelines which take into account a variety of factors besides credit scores.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Halt To Foreclosures by B of A Could Impact Real Estate Values
Realtors are studying Bank of America’s decision to voluntarily stop foreclosures in California and have made some preliminary observations. Steve Goddard, President of the California Association of Realtors, summarized what is going on in a newsletter released Tuesday. Here are some of his points:
- Lenders and loan servicers began halting foreclosures voluntarily in late September and early October
- Only B of A placed a moratorium on foreclosures in California where most foreclosures are not processed through the courts (non-judicial)
- Recent foreclosure laws in California place specific requirements on lenders. For example, loans made between Jan.1,2003 and Dec. 31, 2007 require the lender to attempt to make contact with the borrower to discuss foreclosure avoidance options at least 30 days before filing a Notice of Default (NOD), the first step in the foreclosure process
- The halt to foreclosures by all lenders is voluntary and not mandated by state or federal government
- Realtors across California have already reported delays on escrow closings and removal of listed properties for sale
- Long-term effects of this move are unknown but in the short-term reducing inventory of available homes for sale could slow home sales and place upward pressure on prices (supply and demand)
- Even if the moratorium is lifted in a month or so, the move has created uncertainty in the minds of buyers considering a purchase of a foreclosed property
- Lenders estimate the process of reviewing their foreclosure procedures will take at least a few weeks to 30 days to complete
California is unique in that most lenders utilize Deeds of Trust (DOT’s) to securitize their loans while most other states use mortgages. A DOT is a three party instrument-trustor (borrower), trustee (neutral third party-usually a title company) and the beneficiary (the lender). The process and timeframe for foreclosing on a DOT is fast compared to a mortgage.
Mortgages, a two-party instrument (mortgagor and mortgagee) allow the borrower to redeem their ownership interest in the property for up to 1 year after the foreclosure if they can cough up all the money borrowed plus back interest, penalties and costs. DOT’shave no right of redemption nor can the lender chase after the borrower for any deficiency in most cases. The property itself, not the borrowers personal assets, is the only place the lender can look to to recover what was owed. However, if a borrower refinanced the property, or the property was an investment, the lender may be able to pursue any cash deficiency loss if the property does not sell for enough to cover the loan balance and costs. Short sale sellers could also be subject to pursuit for any loss the lender incurs as a result of agreeing to a short payoff.
This halt in foreclosures will certainly prolong the day we can close the book on this ugly chapter of the Great Recession.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
New 2011 Real Estate Laws Outlined
REAL ESTATE LEGISLATION, REAL ESTATE PRACTICE
The 2009-2010 legislative session has come to a close and here are the bills impacting real estate transactions that
passed into law and take effect Jan. 1, 2011:
- Short Sale Deficiencies- A seller’s first trust deed lender cannot seek a deficiency judgement against the borrower after a short sale. Fraud or waste committed by the borrower could still allow the lender to seek compensation for damages according to SB 931.
- Energy Audits: Clients may request an audit of a home for energy efficiency by a home inspector according to the standards of the Home Energy Rating System (HERS) as per AB 1809. Realtors will be encouraged to provide home buyers the newly released HERS booklet as a way to inform buyers of the new state program.
- Adverse Possession: One requirement for a claim of adverse possession is proof that taxes have been paid on the property for a period of five years. AB 1684 strengthens the requirement that proof of timely tax payments be certified for all state, county or municipal taxes.
- MLO license requirements- Mortgage Loan Originators (MLO’s) that operate without an MLO endorsement can be guilty of a crime punishable by six months in jail plus a $20,000 fine. SB 1137 extends to any real estate licensee employed or compensated by a broker for MLO activities.
- Tenants in Foreclosed Homes- Tenants that remain in a property that has been foreclosed upon must be provided a notice of their statutory rights for a period of one year after the foreclosure. The tenant’s rights must be explained on a separate cover sheet or incorporated into the notice for 90-day terminations. SB 1149 also prohibits a landlord from damaging a tenant’s credit rating with an unlawful detainer action unless the landlord prevails in court.
- Domestic Violence Protection for Tenants- SB 782 precludes a landlord from terminating or failing to renew a lease for a tenant or members of the tenant’s family victimized by domestic violence. These protections are forfeited if the victim subsequently allows the perpetrator to visit the property. Landlords would also be required to re-key the property at the tenants request within 24 hours after being provided written proof from the court or law enforcement that a protection order is in effect.
- Real Estate Fraud Protections: AB 1800 addresses three new fraud activities that have cropped up since the housing bubble burst. 1) Foreclosure consultants offering “forensic loan audits” will now be covered by the foreclosure consultant law which, among other things, prohibits advance fees for promised services. 2) Any mail solicitation that offers to provide a copy of an owner’s grant deed or other title records must include a prominent statement that the homeowner can obtain the records directly from the county recorder and the service is not associated with any government agency. 3) Penalties and punishments have been increased to one year imprisonment and a $2,500 fine for renting out a residence without the owners permission.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Arnie Vetoes Bill To Expand Short Sale Protections
INDUSTRY NEWS, REAL ESTATE LEGISLATION, SHORT SALES, TIPS FOR SELLERS
Last week, Governor Schwarzenegger vetoed SB 1178 (Corbett) which would have expanded anti-deficiency protections to homeowners that refinanced their purchase money loans. The bill was sponsored by the California Association of Realtors. Realtors sought protection for homeowners that refinanced their loans without realizing anti-deficiency protections were lost in the process.
Anti-deficiency laws were passed in the 1930’s during the Great Depression. The law limited the borrowers liability to the property value itself, not the borrowers personal assets. If the bank forecloses, resells the property and ends up taking a loss, the bank cannot then go after the borrower for any deficiency.
Unfortunately, the 1930’s era law did not anticipate thousands of borrowers refinancing their loans to secure a lower interest rate. Few borrowers realized doing so would make them personally liable for the entire amount of the new mortgage. And banks didn’t go out of their way to tell them. SB 1178 would have extended those anti-deficiency protections to those that refinanced their loans.
The law would not reward those that refinanced to pay bills or buy boats, cars or motor homes. In the event the refinance allowed the owner to extract cash equity, the homeowner would have to prove they put the extra money back into the property for remodeling, upgrades, swimming pool or adding on to the home.
Realtors feel Arnie misinterpreted the intent of the bill. In essence, the governor believed the bill would reward borrowers for bad decisons by interfering with an existing contract. Realtors were trying to close a loophole that allows lenders to also look to the borrower, not the property exclusively, for security for the loan granted.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Developers Envisioned Kids Secret Fishing Spot
REDDING LIFESTYLES, REDDING RECREATION, SHASTA COUNTY
Mary Lake in West Redding was pondered as a secret fishing lake for youngsters after the lake and 203 acres surrounding it was purchased by a group of developers around 1980. The developers-Brent Owen, Robert “Buzz” Loring and John Fitzpatrick- offered the 5-acre lake and adjacent land to the city for a park that would be the centerpiece of a future housing development.
Redding Planning commissioner Charlie Moss embraced the idea of restricting the lake to children only. Even “Spike” Naylor, regional manager of the California State Department of Fish and game agreed. At the time, the lake had populations of bluegill, large-mouth bass, golden shiners and mosquito fish. Unfortunately, the lake was never restricted to kids only fishing and is popular today with anglers of all ages.
Mary Lake was previously called FalkesLake, False Lake, Falk Lake and St. Mary’s Lake over the past 100 years according to an article in the Record Searchlight published June 1981. Historians are unsure how the lake came to be. Some believe the lake was built to create a water source for irrigation while others believe it was part of a mining operation. The earliest records indicate the lake was owned by William Falke before 1909. After he died, his family lost the property at a tax auction to Charles Lang. In 1931, it was sold to O. Merlo. Later the land was purchased by St. Joseph Catholic Church. That’s when the lake was named St. Mary’s Lake. In 1980, the Diocese of Sacramento sold the lake and surrounding acreage to the developers.
In 1984, the first lots of the new Mary Lake subdivision were sold just off Placer near Wisconsin. After the first phases of Mary Lake were sold, the area near the lake was developed, the park was constructed and given to the City of Redding. A generous donation from The McConnell Foundation paid for part of the construction cost to pave a concrete path around the perimeter of the lake.
In more recent times, the city met with Mary Lake residents to discuss plans to add grass lawns and a lighting system for the trail. Residents asked the city to keep the park in as natural state as possible dissing the idea of lights and grass. The city agreed and today they mow the weeds that grow around the lake and occasionally remove dead or dying trees that create a hazard.
Today, the 17-acre Mary Lake Park provides a wonderful walking and picnic spot for visitors near and far. It continues to be a vibrant ecosystem for fish, water fowl, mammals of many sizes and shapes. As a longtime Mary Lake resident, I have enjoyed the view of the lake from my home and the inviting trail which ties into the extensive and ever-expanding Westside Trail system.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
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