In our world of merging and morphing banks, it is common for existing loans to change hands, sometimes more than once.
You may get a letter in the mail telling you that your loan servicer will be changing, and giving you instructions on where to send your next payment.
A word of caution. There are scammers out there that would love a few payments from you. How to tell? You should always get a letter from your current bank telling you of the changes and to expect a letter from the new bank.
If you don’t get both letters, call your current bank to confirm the change. If you can’t get immediate confirmation, send your payment to your old bank. They will have to forward the money to the new servicer, so you will be safe here for awhile.
Tags: Home mortgages
I remember years ago a statement made by a speaker on real estate legal issues:
“On average, there is one new law every year in the real estate industry. If they skip a year, they will make up for it with two the following year.” This was his explanation of why Realtors needed constant training.
Now, we are seeing new legislation every month. Just last week Gov. Arnold Schwarzenegger approved seven new laws that provide a range of consumer protections to home mortgage holders and may allow some to hold on to their houses.
One bill, AB 260, will tighten restrictions on mortgage brokers so they cannot steer borrowers to riskier, higher-interest loans when they qualify for less-expensive ones. This one takes effect on Jan. 1.
The new law also bans negative-amortization loans, which offer the option of monthly payments so low that the loan amounts can actually grow over time
For more on this, check out this story in the Los Angeles Times.
Another new bill, the Buyer’s Choice Act, will allow REO buyers to select their escrow and title companies. I am excited about this law, as I have witnessed first hand many problems with using out of town escrow companies. Now an REO buyer can sign all of their documents face to face with a local company who understands our area.
The Buyer’s Choice Act prohibits an REO lender selling residential property up to four units from directly or indirectly requiring the buyer to purchase escrow services or title insurance from any particular company. This is in Assembly Bill 957.
Tags: Foreclosure · Housing market · Short Sales
September 30th, 2009 · No Comments
When you are in escrow on a home, don’t buy anything big! Or medium big. Pretty much freeze everything until your escrow is closed. Sounds simple enough. ![images[5]](http://www.chicohomeblog.com/wp-content/uploads/2009/09/images5.jpg "images[5]")
Yet if not given this warning, many excited new home buyers will go out and buy furniture for the new home. Maybe use one of those “no payments for a year” kind of deals. Don’t.
Even paying cash can be problematic. When you are approved for your loan, the lender is using very specific information that you provided. NOTHING should change on this information, unless it gets better.
If you are aiming for the tax credit or working on a short sale, this is critical!
If you have an extra $5,000 in the bank, your loan approval may be requiring it as reserves. If you have minimum credit card payments, and it goes up, your ratios may shift. Shift you right out of home ownership!
Can I buy a car? Can I have my credit checked? Can I change jobs? Can I spend $100 on my credit card? Can I get a new Kohl’s credit card so I can get the 15% off? No, no, no, no and no.
Anything you do should be approved by your lender first! If you can get your lender to say OK, then I will let you spend the money.
The banks are extra picky these days, and the slightest shift can cause a last minute loan denial. They will run a new credit report right before funding your loan, and if anything changes, it may be cause for a review or denial of your loan.
Tags: Home buyer tip · Home mortgages · Other · Short Sales
September 23rd, 2009 · No Comments
A few years ago, a first time home buyer was able to buy their dream home on the first go-round. Even if it was a little too expensive, they could stretch into a loan to pay for it. For some it worked out, but for many it has led to disaster.
In today’s market, a buyer has to qualify for their loan. It is back to the basics. The loan is connected to the amount of income coming in, the down payment and the credit scores.
Before starting to shop for a home, a buyer should have a complete loan package submitted to a lender. The lender will then be able to explain how much they can afford to pay for their house. Once this process is complete, then go shopping.
In Chico, a first time buyer may not be able to get their dream home right away. But, they can opt for a starter home. Maybe one that needs some fixing, or that can be added on to over the years.
It may be worth the work to buy a short sale or REO. The 8000 tax credit is also a great incentive to get that first home now.
Here are seven bits of wisdom from economists and financial planners for anyone contemplating a home purchase today, as published in the New York Times:
- Old-fashioned basics are more important than ever. The safest way to purchase a home is to put down 20 percent on a fixed-rate, 30-year (or less) mortgage.
- Don’t become overconfident about income growth. Even though buyers in their 20s and 30s will likely see their incomes grow more quickly than previous generations, it is important to act sensibly when borrowing.
- Anyone contemplating adding children to the family should calculate whether they could live on one income because having both halves of a couple work may turn out to be impractical.
- Include a maintenance budget. Even new homes need upkeep and repairs.
- Buyers who can’t afford their dream home now should opt for a starter home where they can save money each month for what they really want.
- Consider a property that can be expanded and improved down the road when money is available.
- No two buyers are the same, but they should all feel confident with the loan they enter into, no matter the size of the mortgage.
Source: The New York Times, Ron Lieber (09/12/2009)
Tags: Good to know · Housing market · Questions before you buy a house · Short Sales
A recent article in the San Francisco Chronicle reminds us that Californians who lose their homes in a foreclosure, short-sale, or deed-in-lieu of foreclosure this year could be hit with a state income tax on canceled or forgiven debt.
The state did agree to follow the federal guidelines of not taxing the phantom income for 2008, but as far as I know they have yet to sign a bill to cover 2009.
A state law that temporarily exempted many homeowners from this tax at the state level expired at the end of last year. Attempts to revive it have not been successful.
The state law was similar to a federal one that exempts many homeowners from federal tax on canceled mortgage debt. The federal law remains in effect through 2012.
The state-tax hit could be substantial and the rules are complex. People in mortgage trouble should consult a qualified tax professional.
To read the full story, please click here
You can also read more from the California Franchise Tax Board.
Tags: Foreclosure · Other · Short Sales
Watching and waiting has been the norm for home buyers in Chico, California. With the constant news of numerous foreclosures in California, it seems the prudent thing to do.
But for homebuyers that want that first home in Chico, it is becoming more difficult. My clients that are looking for a home under $225,000 are finding slim pickings. And now the pressure is on to beat the November 30th deadline for the 2009 home buyer tax credit.
Most of the homes they see online already have a purchase contract signed by the seller, subject to the bank approval of a short sale. Others are bank owned, waiting for the bank to sign one of many offers. Some of these sellers will accept back up offers, but most of them are not.
Now is the time to work with a qualified Realtor. They can supply you with a status list for the homes listed for sale, and send you emails of the homes coming on the market.
For more on the tax credit, this article from the Los Angeles Times real estate section helps explain the details.
First-time homebuyers—those who have not owned a home for at least three years—may be eligible for the $8,000 federal tax credit, but the window of opportunity is closing rapidly. To qualify for the credit, the buyer must close escrow by midnight on Nov. 30, when the tax credit expires. Buyers hoping to take advantage of this benefit are advised to start house-hunting early, as the buying and lending processes takes time.
· Finding the right house can take some time, so REALTORS® recommend home buyers start looking for a home as soon as they are able and ready to purchase. Buyers also should build in extra time to accommodate the lending process, which is taking approximately two weeks longer to process this year compared with last year.
· The tax credit is equal to 10 percent of the purchase price, up to $8,000, subject to income limits. Single taxpayers are eligible if their modified adjusted gross income is $75,000 or less, while married taxpayers filing jointly must have a modified adjusted gross income of $150,000 or less.
· Only primary residences are eligible for the federal tax credit, including new or existing single-family homes, townhouses, condominiums, manufactured homes, custom homes, and houseboats. Vacation homes and investment properties do not qualify.
· Purchases must be arm’s-length transactions, meaning the seller cannot be the buyer’s parent, grandparent, child, grandchild or spouse.
· Married people filing as such cannot claim the credit if either spouse has owned a primary residence within the last three years. However, unmarried joint purchasers may allocate the credit in any way they see fit, as long as it does not exceed the $8,000 maximum.
· The government will allow those who finance their purchases with a federally insured loan to apply their anticipated credit immediately toward closing costs or as additional down payment, rather than waiting until they file their 2009 taxes to receive the refund.
To read the full story, please click here
Tags: Home mortgages · Home prices · Household tips
In this era of REO’s and short sales, I am seeing more home renovations on a budget.
When people think of updating an older home to make it more “green” -they often think of insulation and dual pane windows. These are things that will make the home more energy efficient.
But what about the renovation itself. Are there ways we can be good to our planet during the process?
Picture our land fills. Maybe there is something used you can buy from classified ads or craigslist? I have found everything from cabinets to, yes, the kitchen sink!
Can you sell any useable parts? Your old cabinets could be the perfect solution to someone elses cluttered garage! Extra parts can be donated to the Re-store for Habitat for Humanity.
If you need to dispose of something, are you taking it to the proper disposal center?
Here is a valuable list of resources for the Chico area:
Tags: Energy · Foreclosure · Good to know · Short Sales
We are seeing weekly, if not daily, changes in the way the government and lenders are dealing with the housing crisis. What was true yesterday may not be true today.
If you contacted your lender about a loan modification in the past, try again. And again a month or so later. You may find that the rules have changed to fit your circumstances. Or your loan servicer may have changed to one with completely different guidelines.
Check this blog often, and I will post changes as I hear about them.
Guidelines aim to help struggling borrowers
The U.S. Dept. of Housing and Urban Development (HUD) recently announced that the Federal Housing Administration (FHA) has implemented changes to its loan modification program to ensure consistency with the Obama Administration’s Making Home Affordable Modification Program.
By August 15, FHA borrowers will be able to reduce their monthly mortgage payments by seeking a loan modification through their current mortgage company or loan servicer under the new FHA-Home Affordable Modification Program (FHA-HAMP).
The program will allow HUD to bring a borrower’s payment down to an affordable level. Under the plan, mortgage servicers can reduce the amount of principal on which the borrower must make loan payments by as much as 30 percent to get monthly payments to affordable levels. The borrower makes the reduced payments for the life of the loan, but is responsible for paying off the loan in full when the home is sold or the loan is refinanced.
FHA borrowers can receive a loan modification after they have missed one loan payment, rather than waiting until they are at least three payments behind, as in the past. This differs from the Making Home Affordable Program in that borrowers who are current, but are at risk of default can qualify for assistance.
HUD does not have an estimate on the number of borrowers that will be assisted. According to LPS Applied Analytics, 14.2 percent of FHA loans are at least 30 days past due and not yet in foreclosure.
To read the full story, please click here
Tags: Other
Inman has just awarded the city breaking news sites an award for the Most Innovative Media Site. Chico Breaking News was one of the first sites running.
Chico Breaking News is a site that is fed by both news sources and individuals. You can contribute news and information alongside conventional news sources.
Check out www.chicobreakingnews.com and see what you think.
Domus Consulting Group’s Breaking News Network was honored with the Most Innovative Media Site Award. Domus has built up a range of locally focused sites with constantly updated content fed by news sources and individuals. Categories at the sites range from events to food to sports to real estate, and the individual sites invite users to contribute items using a selection of hashtags on Twitter.
2009 INMAN INNOVATOR AWARD WINNERS
Innovator of the Year: Frank Borges LLosa
Most Innovative Brokerage or Franchise: Nest Realty Group
Most Innovative Technology: Closing.com
Most Innovative Web Service: Ubertor
Most Innovative Blog: The Phoenix Real Estate Guy
Most Innovative Media Site: Breaking News Network (Domus Consulting Group)
Tags: Other
Everyone wants an easy way to find out the current value of their property.
They can go onto web sites such as zillow.com and get a “zestimate,” but these numbers can be off by $100,000 or more in either direction. I have experimented on several homes, and have yet to find a zestimate that is right on.
So, should we go by a percentage drop? Has the market decreased by 30%? 40%? Yes, in some areas. Not in others. Most areas have adjusted downward somewhat from the highest point, which was summer of 2005 for our area. But the decrease can vary from 10% to 60%.
Why the huge gap? Desirability.
Whenever there is a strong buyer’s market, as there is today, the most desirable properties will hold their value the longest. If several homes were being sold for $300,000 in 2005, the current values can vary from a low of $120,000 to a high of $270,000, (with some exceptions of course.)
I will break desirability down into three main categories. First, location. Second, floor plan. Third, condition. A fourth one may be ease of sale. [Read more →]
Tags: Good to know · Home buyer tip · Home prices · Housing market · Questions before you buy a house · Questions before you sell a house
