TIPS FOR SELLERS Category
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
Redding/Shasta County Real Estate Market Update
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Distress sales continue to represent a significant number of homes selling in today’s market. The second week of March was marked with 465 homes pending. Of these, 133 are bank-owned homes and 157 are short sales or 41% of all homes under contract. These same two segments of the market only account for 31% of the 1379 active listings.
February saw 131 homes sold. 85% were listed for $300,000 or less. More than a third of the homes sold were priced under $150,000. Ten more homes sold this February than a year ago. The number of bank-owned properties listed for sale has doubled from a year ago.
Home prices continue to slide downward as noted by a local real estate appraiser. The last quarter of 2009 saw the average cost per square foot of homes in all areas served by the Shasta MLS drop from $122.75 to $114.86. On the positive side, prices for new homes actually increased to $158.29/square foot from $147.72. However, there have been far fewer new homes sold year-to-date than the last quarter of 2009. Homes more than 5 years old in Redding sold on average for $125 the end of 2009 and for $120 thus far this year.
The area price declines can be pegged to continuing high numbers of homes in various stages of foreclosure due to high unemployment and sharp price declines after the housing market bubble burst. Banks seem to be in no hurry to clear their books of overvalued assets which prevents steeper declines in prices in the near term but prolongs the overall recovery of the housing sector.
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
Inability To Make Mortgage Payments Tops Reasons To Sell
INDUSTRY NEWS, REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
A recent survey of California home sellers found that the biggest reason cited for putting their home up for sale was difficulty meeting the monthly mortgage obligations. Two thirds of sellers surveyed sold their home due to financial challenges caused by job loss or increases in their mortgage payment.
Complicating factors included an inability to refinance due to declining property values and tighter loan underwriting standards. Homeowners usually explore all their options including refinance as a way to keep their home. Loan modification, short sale, deed in lieu of foreclosure and deed-leaseback are potential options available to sellers who do not want to lose their home to foreclosure.
Other findings of the survey include:
- 99% of sellers chose to work with a Realtor
- 72% cited the agent’s ability to get a higher price as the primary reason they used a Realtor
- Homes sold on average $20,958 less than the listed price
- First-time sellers accounted for 44% of all sellers-a 33% increase from 2008
- Job loss was cited by 18% of sellers as the reasoning for listing their home for sale
- Nearly three-fourths of sellers expressed concerns whether a buyer could secure a loan
- 63% of sellers lost a sale with 70% of those failed escrows due to buyer inability to get an acceptable mortgage
- 26% of buyers had buyer’s remorse and canceled the sale
- 50% stated the sale did not close on time
This year may see an improvement in some of these numbers as prices stabilize and fewer homes begin the foreclosure process across portions of the state. Unemployment rates will need to drop before a housing recovery can get a foot-hold here in the Redding/Shasta County area.
bradgreps@yahoo.com
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
HUD Website Allows Consumers To Report Mortgage Scams
HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS
The California Association of Realtors announced a new HUD website where consumers can turn in loan modification scam artists. Numerous scams have become prevalent as more and more Americans find themselves facing foreclosure. Laws have been enacted making the collection of advance fees for promised loan modification services illegal. The latest twist is companies promising to do a “forensic audit” of the homeowner’s mortgage in attempts to uncover fraud. The typical fee to conduct such an audit usually exceeds $3,000. However there is no guarantee of success and some borrowers have reported getting nothing in return for the large advance fee tendered.
To access this website, click here: http://www.preventloanscams.org/
Anyone considering a loan modification should first contact their lender at the customer service department listed on their mortgage statement. If you need assistance negotiating with your lender, contact a non-profit credit counseling agency. The HUD website has links to approved free and low-cost credit counseling agencies.
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
Luxury Homes On Sale For Half Off?
INDUSTRY NEWS, TIPS FOR SELLERS
![santacruz-103[1]](http://movetoredding.com/files/2009/11/santacruz-1031-300x199.jpg)
Example after example can be found nationwide of discounted prices for high-end real estate. Nicholas Cage recently reduced the asking price for his 11,817 square foot English Tudor in ritzy Bel Air from $35 million to $17.5 million. A 21,897 square foot mansion in Greenwich, Conn. with 14 bedrooms, 13.5 bathrooms on 40 acres with a view of Long Island Sound was listed for $125 million two years ago and recently reduced to $60 million. The home of Suzanne Somers and Alan Hamel known as Les Baux de Palm Springs started at $35 million and has reportedly been reduced to $12.9 million- which works out to a 63% price reduction!
What about Redding? I listed the home pictured above in October in Stanford Hills at $995,000. This Street of Dreams showcase home originally sold in 2005 for $1.5 million to a local doctor. He proceeded to add a guest house (pushing the total square footage above 5000), shop and more landscaping investing several hundred thousand more. The property was bought by an out-of-area hospital to facilitate his transfer for more than $900,000 then quickly resold and closed in December for $875,000. Two doors down, a bank foreclosure was just listed this week at $795,000. It is another Street of Dreams home that originally sold for more than $1.6 million.
The bottom line for those with luxury homes is be realistic if you want to sell soon. Fortunately, many of these homes are owned free and clear and the owners can wait out the market. If you can’t wait, owners should focus on prices of recent closed sales, not list prices of comparable homes. In fact, to avoid chasing the market downward, smart sellers will pinpoint the fair market value then set the asking price under that to capture a sale before the market values slip even further.
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
Phony Foreclosure “Audit” Scheme Unmasked
HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS, TIPS FOR SENIORS
State Attorney General Jerry Brown is warning California homeowners in mortgage distress about a new scam designed to skirt recently implemented loan modification regulations. If you haven’t heard, it is now illegal for real estate agents, attorneys or anyone else to charge upfront fees for loan modification services. This latest scheme gets around this law by offering owners wishing to stave off foreclosure an expensive audit to determine if any fraud took place with regard to state and federal laws during the loan origination process.
Several months back, a client of mine received a solicitation from one such firm. They wanted $3,500 to do a “forensic audit” of my clients loan in an effort to uncover evidence of fraud which could then be used to negotiate a loan modification. I called the number on the letter on behalf of my client. The man I spoke with indicated he was located in San Juan Capistrano and formerly worked as a loan officer. I asked if there was any guarantee my client would be granted a loan modification and he said there was not. In fact, if fraud was discovered, my client would have to cough up thousands more to begin the process of taking the lender to task on the alledged fraud.
I referred my client to a non-profit credit counseling agency and he just informed me he has been granted a trial loan modification on his loan. This is not the first time I have helped a client avoid getting scammed by dubious loan modification service providers. To prevent being a victim of one of these schemes, the attorney general and Department of Real Estate make the following recommendations:
- Don’t pay upfront fees. Foreclosure consultants are prohibited from collecting advance fees
- Don’t ignore letters from your lender or loan servicer
- Don’t transfer title or sell your house to a” foreclosure rescuer”. This scam convinces homeowners they can stay in their home as renters and repurchase the home later (at a lower price). It could also be part of a fraudulent bankruptcy filing. The scammer can evict you and keep your home.
- Don’t make mortgage payments to anyone except your lender or loan servicer. Fraudulent consultants keep the money and you lose your home.
- Never sign a document without reading it. Many homeowners have unknowingly transferred title to someone intent on evicting them.
I would add to this list another caution-talk to your lender first before signing anything regarding any service that you believe will help you save your home from foreclosure. Deal directly with your lender’s loss mitigation department and employ one of the many non-profit credit counseling agencies if you need additional assistance.
These scam artists think nothing of taking advantage of those facing foreclosure. Contact me if I can be of any 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 A QUARTER CENTURY LOCAL SALES EXPERIENCE
Need A Mortgage? Better Sooner Than Later!
HOME LOANS, INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
The Federal Reserve propped up the housing industry last year by buying up $1.25 trillion in mortgage backed securities but has told banks that will end this spring. Investors typically buy these securities but stopped after the housing bubble burst. The Fed’s actions averted certain disaster by keeping money in the loan pipeline as well as keeping mortgage interest rates artificially low. The big concern moving forward is will investors re-enter the market after the Fed pulls out ensuring a continued supply of mortgage money.
Many economists believe interest rates will have to increase to attract investors for these mortgage-backed securities. Some optimistically predict a slight rate increase from 5% currently to near 6%. Others believe rates would have to rise above 7% before investors will jump back in.
The Fed may have to step in again and buy loans through it’s GSE’s known as Freddie Mac, Fannie and Ginnie Mae in the event mortgage rates spike due to a lack of funds available for mortgages. Other government program changes will also impact the real estate market in the near future:
- The Federal home buyers tax credit is set to expire at the end of April
- Underwriting rules for the popular FHA loan program are tightening
- Many borrowers attempting loan modifications will be denied adding to the foreclosure crisis
The end result could be fewer buyers and more inventory of distress sales ultimately causing more price erosion forcing property values downward. This is likely to be the case until jobs that pay a living wage are created due to economic recovery. Some speculate that the government will extend a helping hand if their actions derail the housing sector recovery.
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
Home Foreclosures Subsiding Elsewhere
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR SELLERS
RealtyTrac reported its January numbers for foreclosure properties which include notices of default, auctions and bank repossessions. There was a 10% decrease from the previous month however the 315,716 foreclosure filings for U.S. properties was 15% higher than one year earlier.
Nevada has the honor of the highest number of filings for the 37th straight month. Other Western States making the top 10 include Arizona, California, Oregon, Utah and Idaho. Phoneix is the only large metro area that saw an increase from the previous month.
Las Vegas saw a 2% decrease from the previous month but retains the title of highest foreclosure rate-1 of every 82 housing units with a foreclosure filing. Six California cities had foreclosure rates in the top 10-
- Modesto-1 in every 107
- Stockton-1 in every 107
- Riverside-San Bernardino-Ontario-1 of every 109
- Merced-1 of every 109
- Vallejo-Farfield-1 of every 112
- Bakersfield-1 of every 118
The Central Valley saw a construction boom and rapid price appreciation during the bubble which explains why these same areas are tops in foreclosure activity. Locally, foreclosure filings have been up and down month-to-month with no clear downward trend as of yet. One could argue that foreclosure activity is focused in newer subdivision developments sold during the bubble however some foreclosures are a result of cash-out refinances on homes in more established neighborhoods that later lost significant value.
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
Get Paid To Pay Your Mortgage?
HOME LOANS, INDUSTRY NEWS, TIPS FOR SELLERS
That’s right! An experimental program has been launched to entice homeowners not to walk away from their mortgages that are underwater by offering a cash reward if they keep their payments current. According to a Wall Street Journal blog, Loan Value Group LLC is launching a pilot program to determine if rewarding borrowers with cash is enough to keep them from abandoning their home loan(s).
The mortgage investor will base the size of the incentive on factors such as the amount the borrower is upside down on their loan, their income, and other risk factors. The “responsible homeowner reward” will grow over a period up to five years as long as the homeowner makes scheduled mortgage payments. The general idea is to change the psychology from the buyer’s perspective from focusing on how much they owe to how much they could gain by staying the course. The reward is not large enough to offset negative equity but allows the borrower to keep their home until prices stabilize and possibly recover value and avoid negative impacts to credit scores caused by foreclosure.
I believe the problem is too big for this program to help. Banks will do anything to keep these overpriced assets on the books which makes them look stronger on paper. Once the properties are foreclosed and resold at a loss, the true value of these properties will be reflected on their balance sheets which will not make shareholders happy. Likewise, top exec’s will have a hard time justifying obscene bonuses if their financial statements are bleeding red ink.
Any borrower considering a program that modifies their original loan should proceed with caution. California law dictates that purchase-money loans do not allow the lender to seek a deficiency judgement. In other words, a bank cannot come after you for a loss after foreclosure if the loan was used to purchase the home. However, if the loan was modified or refinanced after the original purchase, the lender can typically pursue the debt through collections after a foreclosure for years to come. Borrowers should consult with qualified tax and legal professionals before agreeing to a refinance or loan modification to determine if any protections are being lost in the process.
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
PREMIER SERVICE® is the focus of Real Estate Professionals/GMAC. We are located in Redding, CA (at the North end of the Sacramento River Valley) in the midst of river, lake, ranch and mountain terrain.
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.
