HOME LOANS Category
Need Help From Foreclosure Prevention Company?
HOME LOANS, SHORT SALES, TIPS FOR SELLERS
Fannie Mae launched a website this month to assist underwater borrowersincluding those in Redding/Shasta County. The site offers advice on steps to take to avoid foreclosure as well as directing borrowers to legitimate companies that provide foreclosure-prevention services. This is in response to a proliferation of companies claiming to offer foreclosure prevention services. In many cases, these companies take your money and do little or nothing to help the distressed borrower. The web address is www.knowyouroptions.com. Here is a summary of what the site contains:
- All information is available in English and Spanish
- Video explanations detailing what each site tab might accomplish
- Contact information for mortgage companies and loan counselors
- Calculators to help determine if a borrower is eligible for assistance
- Information on foreclosure alternatives such as short sales or Deed in Lieu of Foreclosure
The news release from the California Association of Realtors also recommends another helpful site www.homeloanport.com for consumers and loan counselors to submit financial documents to mortgage companies. This site also tracks the consumers efforts to avoid foreclosure which could be helpful when considering the various foreclosure alternatives.
Please feel free to contact me with specific questions. I’m here to help!!
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 REAL ESTATE SALES EXPERIENCE
Need To Refinance An Underwater Loan?
FHA LOANS, HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS
FHA just announced a new loan program for homeowners that owe more than the current market value for their home. In less than a month, the FHA Short Refinance program will enable some borrowers who owe more than the current market value of their home to qualify for a new FHA insued mortgage. Here are some important points:
- The loan to be refinanced can not be an FHA loan
- The homeowner must be current on their mortgage payments
- Must have a credit score of 500 or higher
- Must be the borrowers primary residence
- Existing lender must agree to write off at least 10% of the loan balance bringing the total loan-to-value ratio to no greater than 115% of fair market value
The first step for borrowers wishing to take advantage of this program would be to contact their existing lender(s) and see if they are willing to write off at least 10% of the unpaid principal balance. If so, contact a local FHA lender for more information.
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 Real Estate Prices Stabilizing?
HOME LOANS, INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
According to one Redding appraiser who tracks average home prices, prices are slowly ticking upward. The low point since the bubble burst in 2006 was March with 91 home sales with an average sales price of $203,830 or $121.08 per square foot. May saw 99 home sales averaging $214,352 or $124.6 per square foot. It would not be unreasonable to say the market is showing signs of stability especially if we’re talking about entry level homes priced below $250,000.
Inventory of available homes on the Shasta Multiple listing service is 1552 today, up from early January’s low of 1301. Pending home sales sit at 467 today, down from the peak of 529 the first week of May. This is likely due to the rush to buy before federal tax credits expired at the end of April. Closed sales for residential properties in 2010 total 824 units thus far.
Nearly 200 homes listed for sale are bank-owned homes, an all-time high for this market cycle. Another 248 homeowners are short sales or pre-foreclosure homes. 141 bank-owned properties are in escrow. 137 short sale listings are also in escrow. These two categories of distress sales represent 60% of the pending sales activity but less than 30% of the active listings.
Shasta County is still experiencing a high number of properties working their way through the foreclosure process. Unemployment is dropping slightly but remains nearly double the national average. Mortgage rates dropped unexpectedly due to European financial turmoil causing investors to move money into US securities. The 30-year fixed rate is around 4.75%!
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
Liar Loans Recede, But Still Common
A reporter for The Wall Street Journal recently outlined the latest mortgage fraud strategies. James Haggerty points out that the rate has declined but hotspots remain. He quotes data published by First American Core Logic, a company which tracks real estate related information. “Liar loans” as they are called in the business, were common during the subprime boom that peaked in 2007.
The most common types of fraud as it relates to mortgage loan origination include:
- Misstating a borrower’s income
- Misrepresenting the borrower’s identity
- Incorrectly designating who will occupy the property upon purchase
- Misleading information about the type of property or its condition
- Misrepresenting the borrower’s employment
- Misrepresenting the borrower’s debts and/or assets
Specific areas of the country have fraud occurring at a rate several times the national average. They include:
- Orlando, Fla
- Miami, Fla
- Jamaica, NY
- Atlanta, Ga
- Detroit, Mi
Government backed loans, including FHA, are estimated to have fraud rates of 1.22%. Conventional loans had a corresponding rate of 0.55% according to a First American representative. He estimates 25% of all loans currently in foreclosure show “some evidence of fraud”.
During the subprime meltdown, I heard estimates of fraud of 50% for these hard-money loans from staff at the California Association of Realtor’s business meetings. They stated the fraud was perpetrated by the borrower, the loan officer, or both. In response, lenders are requiring more documentation from borrowers than is actually needed. This action is apparently due to banks being required to buy back billions of dollars of “fraud-infested” loans.
I guess the new mantra in today’s lending environment is “trust but verify”!
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 SALES EXPERIENCE
Luxury Home Loans See Rise In Delinquencies
HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS
Jumbo loans, as we call them in real estate jargon, are showing a steady uptick in the number of delinquencies for the 33rd consecutive month according to a recent article in The Wall Street Journal. Depending on what part of California you reside, jumbo loans could be loan amounts exceeding $417,000 or $729,750 for high-cost areas. February saw 11.6% delinquency rate as reported by Fitch Ratings, a global company that renders independent opinions of credit markets.
California has the lion’s share of jumbo loans at 44% due to the fact real estate prices here are higher than most. New York is second with 7% followed by Florida at 6%. These loans are difficult to qualify for- usually requiring larger down payments and interest rates about 1% above conforming conventional loans. The biggest problem has been the drop in values leaving many luxury homeowners without enough equity to refinance or in some cases they are now underwater-owing more than the current market value of their home.
One exampleof how hard the high-end market has been hit was the recent sale of Hilton Hotels CEO’s Los Angeles home. Christopher Nassetta sold his home for $18 million which was $10 million less than the asking price and 35% less than what he bought it for in 2007!
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 SALES EXPERIENCE
Short Sale Could Lead To Big Tax Bill
HOME LOANS, SHORT SALES, TIPS FOR SELLERS
The IRS warns homeowners underwater to study the law regarding debt forgiveness before deciding which course of action to take to get out from underneath an over-encumbered property. The Mortgage Forgiveness Debt Relief Act of 2007 details who will be exempt from paying income taxes on debts forgiven by lenders. Some property owners that successfully sold their home are getting hit with huge tax bills because they were not exempt under this act.
Here are some basic provisions of the bill:
- Relief is granted to borrowers with mortgages on a qualified principal residence. Second homes, rentals and business properties do not qualify
- The maximum amount eligible to be forgiven is $2 million for married taxpayers filing jointly and $1 million for single taxpayers. This should cover 99% of Redding/ Shasta County homeowners!
- The loan must have been used to purchase, build or substantially improve a principal residence. Refinances qualify if the debt stays the same or if the mortgage increased, the funds were used for capital improvements or renovations of the principal residence. In the event the money was used for personal purposes such as paying off credit cards, buying a car or boat, or investing in stocks, then the mortgage debt attributable to those items is not eligible for debt relief
- Homeowners in California who sold their homes in 2009 using a short sale or were foreclosed upon, may be stuck with a bill for income taxes from the state
The IRS views forgiveness of debt as a taxable gift from the lender. The homeowner should inquire with a tax attorney or accountant before agreeing to a short sale. Short sales are less likely to cause as much damage to ones credit rating as a foreclosure but if doing so results in a huge tax liability the homeowner must factor this into their decision. Foreclosure or a Deed in Lieu of Foreclosure may be better options to divest oneself of an underwater property depending on individual circumstances and advice from a tax advisor.
Expect a push in coming months by some lenders to write down the principal balance on loans in an effort to keep homeowners in their homes and off the foreclosure block. Bank of America is undertaking a trial program to do just that due to the failure of loan modification programs. Homeowners can avoid unexpected tax consequences by consulting with qualified tax law professionals before agreeing to a short sale or loan modification.
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 SALES EXPERIENCE
AG Publishes Names Of Fraudulent Loan Mod Companies
HOME LOANS, LOCAL GOVERNMENT, TIPS FOR SENIORS
State Attorney General Jerry Brown has published the names of individuals and companies that have been sued by the AG for alledgedly running loan modification scams. Some of these companies have pocketed as much as $3,500 per victim promising loan modification services, but done nothing. Those duped in the schemes can apply for restitution through the Ag’s website. Assets have been frozen and property belonging to some of these scammers has been seized in an effort to recover some of the funds for victims.
To see a list of individuals and companies involved, click here:http://ag.ca.gov/loanmod/
If you or someone you know was duped by one of the listed firms, make sure they contact the Ag’s office for information regarding potential compensation from those being sued. It’s likely to be only pennies on the dollar but that’s better than nothing!
Jerry also lists tips to avoid becoming a victim of these schemes.
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
Millions Could Save Billions But Can’t!
HOME LOANS, TIPS FOR SELLERS, TIPS FOR SENIORS
Efforts by the Federal Reserve to push mortgage rates to near-record lows have been sucessful but many homeowners can’t refinance their loans. The Wall Street Journal reported that 37% of all borrowers with 30-year fixed rate loans have interest rates of 6% or higher and could benefit by refinancing at current rates hovering around 5%.
Refinance activity is near its lowest level for the year due to lower home values and stricter underwriting standards preventing homeowners from benefiting from today’s low mortgage rates. Estimates place about 25% of all loans as being “underwater“. Homeowners that successfully refinanced in 2009 saved $3.4 billion in interest according to a report from First American CoreLogic.
The tightened credit standards implemented by Fannie Mae in 2008 are also posing new hurdles for prospective “refinanciers”. Credit score thresholds have risen meaning those with decent credit scores( just under 700) must pay additional loan points to get the best interest rate. According to some in the mortgage industry, this has stymied a refinance boom.
Most borrowers consider a refinance when mortgage rates are 1% below their existing rate. Otherwise, the period of time required to recoup the upfront refinance costs with the lower payments becomes so long it isn’t worth the effort and cost. One can easily calculate the break-even point by dividing the net monthly payment savings into the total refinance fees to determine how many months it will take before the borrower reaps the benefits of a lower interest rate. If a payment reduction will offset the upfront cost in 36-48 months, it usually makes sense to refinance.
530-941-7492 or 530-224-6767
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Efforts To Streamline Short Sale Process Underway
HOME LOANS, INDUSTRY NEWS, REAL ESTATE LEGISLATION, SHORT SALES, TIPS FOR SELLERS
Lenders, loan servicing companies and homeowners have been fighting over how to deal with mortgages that are underwater. According to a recent article in the New York Times “more than 5 million households are behind in their mortgages and risk foreclosure”. The Obama administration has targeted billions for loan modification programs that have helped very few.
A new program to be launched April 5 will attempt to help homeowners unload their homes using the short sale process. The program aims to streamline and standardize the process by establishing some ground rules for determining who gets how much. The benefits this program is intended to create include:
- More net proceeds to the investor doing a short sale than a foreclosure
- Set amount of cash for the loan servicer ($1,000)
- A predetermined amount for second lienholders, if any ($1,000)
- Less damage to the home owner’s credit rating
- Relocation money for the homeowner ($1,500)
- Assurance from lender the homeowner will not be sued for any dollar deficiency
- Fewer empty homes waiting to be foreclosed upon
Real estate agents would be used to establish the home’s current fair market value. This value estimate would not be shared with the homeowner but if an offer meets or exceeds the indicated value, the lender must accept the offer. Lenders want proof the homeowner has done everything possible to keep the home including trying to sell the home or utilized available savings to make payments.
Those of us that have handled short sales know how frustrating the process can be for homeowners, title companies, lenders and loan servicing companies. Some are easy to work with while others have made the process very difficult and time consuming. It’s not unusal to have the first couple of buyers fall by the wayside before the investor wakes up and agrees to a short sale. Any help by the federal government to regulate the process is welcomed by real estate professionals.
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 REAL ESTATE SALES EXPERIENCE
Energy Efficient Mortgage Program Discussed
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
Jonathon Bell, mortgage banker with US Lending in Redding, briefed Realtors on a loan program that allows home buyers to secure a loan to buy and upgrade a home simultaneously using an Energy Efficient Mortgage (EEM). The investor for the loan allows the borrower to add funds into the loan to complete energy efficient retrofits. Most homes built prior to 1994 will qualify.
The concept allows the home buyer to borrow slightly more than they might otherwise qualify for because the higher payment will be offset by lower utility bills. The borrower must pay for a home energy audit using a local HERS (Home Energy Rating System) auditor at a cost of about $350. A report will be produced detailing which energy efficient improvements qualify for the loan program. Monthly energy savings must exceed the additional mortgage payment costs.
Common items covered include windows, HVAC systems, insulation and weatherization of doors, windows, pipes and walls. Water heaters and energy efficient appliances may also be candidates for replacement. Once the buyer selects the items to be upgraded, the loan amount is adjusted to cover the labor and material costs, the loan is closed and funds are held to pay contractors upon completion of the work.
Other benefits to an EEM may include:
- Federal Tax Rebates
- City Utility Rebates
- P,G&E rebates
Check with your tax preparer and utility providers for specific programs and rebates. Homes to be built may qualify for an EEM if additional upgrades are desired above current building codes.
For more information, call Jonathon at 530-356-8658.
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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Our Customer Satisfaction Rating, based on an independent survey, exceeds 97%. This is reflected in our 2008 "QUIE" Award recognizing the TOP 10 REAL ESTATE COMPANIES in NORTH AMERICA! REP/GMAC in #2.
