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Just released, the First Time Home Buyer Tax Credit has changed.  Yes, already!  The fund, at only $200 million dollars, will not last very long and you had better know the new rules to take full advantage of it.

The $200 million dollar fund  still allows a credit amount of 5%  or a maximum credit of $10,000, whichever is the lesser amount, based on the final sales price.  A very substantial credit!

Previously, the first time buyer was required to have the seller of record sign the tax credit form 3549a  prior to submitting the application for the credit.  However, on June 1st , changes were made for First Time Buyers of previously owned homes.

According to an email I received from Colleen Graves of Lawyers Title in Southern California, a popular Escrow and Title company, chosen by financial institutions selling their bank owned (REO, Foreclosures) properties throughout California,… Read the rest of this entry »

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts, myself included, now contend it has done more harm than good.

If you have been reading my Los Gatos Real Estate musings you already know that since the program was announced in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people, but has largely failed to provide lasting relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.

As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

This fact that credit scores are affected by modifications boils my brain!  The program was meant to help!   In fact, it is hurting too many people.   How are you going Read the rest of this entry »

Buying a home means you need to understand your credit score better and how it weighs in and out of your favor. This is true In Los Gatos and the Bay Area, more than most, due to the high priced Real Estate here.  Investors know this and so should you.   What will a finance company consider when you make an offer on that Los Gatos foreclosure you want to buy?

With all the misguided information flying around about loan modifications understanding these myths will prevent some misteps.

“Many Americans hold mistaken beliefs about credit scores,” cautioned  Ethan Ewing, who heads the free online consumer portal at Bills.com. “Misinformation on television and in hearsay from friends and neighbors only compounds the problem.”

Here are the top 10 commonly held myths surrounding credit scores:

Myth #1: A credit score is a credit report. The credit report is a detailed listing of all debts and payments, going back throughout an individual’s entire payment history, Ewing explained. For each entry, it shows the creditor’s name, amount owed, the highest balance owed, the available credit, whether the account is open or closed (and who closed it), the number of late payments and whether the account is in default. A credit score is a number between 300 and 850 that is based on complex formulas incorporating all the data in the credit report.   Most homes for sale in Los Gatos yield many offers so, you need to have the best credit score. Read the rest of this entry »

Nearly everyone wants to do this so, Why don’t you?

The purchase of a fixer-upper house is often a catch-22 situation, because the bank won’t lend the money to buy the house until the repairs are complete, and the repairs can’t be done until the house has been purchased. Fixing up your new house is a costly idea in Los Gatos, San Jose and the whole Bay Area, really.

HUD’s 203(k) program can help you overcome this cost obstacle by enabling you to purchase or refinance a property plus the cost of making the repairs and improvements in one mortgage.

Dian Hymer of Inman News suggests “design your offer with a 60 day close and a 45 day finance contingency.”

Read the rest of this entry »

Image by Getty Images via Daylife

Last month BofA chose to work with REOtrans, a leading transaction vendor to the mortgage industry, to advance and streamline foreclosure solutions by reducing them all together.

They are working to move the short sale idea into the mainstream RE sale arena. This is great news no matter what side of the Real Estate market you find yourself standing in.

The traditional Short Sale process has led to immense frustration and outright anger, not only here in California, but throughout the nation for all parties involved. As a Real Estate professional, having to negotiate short sales on behalf of distressed homeowners, I have learned that many people charged with Short Sale approvals agree…the short sale process, as it is implemented now, is ridiculous even archaic.

B of A has been the penultimate banking institution in the United States for decades and it goes without saying their agreement to work with REOtrans is a window into Real Estate sales for the near term. Read the rest of this entry »

Action Taken against 5 more Loan Mod Scammers

From the  California Bar Journal

State Bar prosecutors took action last month against five more lawyers under investigation for loan modification misconduct, bringing to 14 the number of attorneys who have resigned or been placed on involuntary inactive enrollment since creation of the bar’s Loan Modification Task Force in April.

“I am very pleased with the results being obtained by members of our Loan Modification Task Force,” said Interim Chief Trial Counsel Russell Weiner. “They have exceeded my expectations. Our office has been aggressively investigating and prosecuting attorneys alleged to have committed loan modification misconduct. Any attorney thinking that he or she can commit loan modification misconduct and get away with it for a significant period of time should think again.”

The Loan Modification Task Force has received more than 1,250 complaints and is investigating almost 250 lawyers. Each task force investigator oversees about 135 cases, and almost 20,000 attorney files have been removed from the offices of attorneys whose loan modification practices have been shut down.

California Bar Journal Article

According to the following article it seems it may become the rule rather than the exception.   This always reminds me that a short sale is the only way to go.

Read this article to learn about the possible new trend.

New FHA lender short sale guidelines

The Home Mortgage Preservation Program is now Turbocharged enough to help high Los Gatos mortgages hopefully.

In May the government stepped up the pace to modify mortgages to stave off the 10–12 million potential foreclosures looming on the horizon.   This was to be done first, by allowing homeowners to qualify for modifications on a temporary basis.  650,000 homeowners are now in that process.

However, only 2000 have been approved for modifications through the program.

Request Loan Modification .PDF

Chase Loan Mod Docs .PDF

GMAC Financial Statement .PDF

“We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones,” said Phyllis Caldwell, the newly appointed chief for the Treasury Department’s upstart Homeownership Preservation Office, in a statement released Monday.

The MakingHomeAffordable.gov Web site will include links to all required documents and an income verification checklist, as well as explanations of how the trial and conversion processes work. The Homeowner’s HOPE Hotline, at (888) 995-HOPE, will provide direct access to housing counselors

The temporary modification idea was meant to allow the homeowner time to submit documentation the lender would review to potentially grant an approval.   This has caused much anxiety on the part of the participants as evidenced in the following quote.

“Now it’s up to the banks to do their part to convert borrowers to permanent modifications,” said Michael Barr, an assistant Treasury secretary. “Servicers to date have not done a good enough job.”

We just don’t know what penalty the participating lender is facing if they do not comply with the pressure.   Without proof of substantial numbers of permanent modifications there is a real sense that this will just be another case of hot air.

This will lead to MORE foreclosures that may well have been prevented if the homeowner had time to seek out alternatives like a short sale or deed in lieu of foreclosure.

“If we don’t see a big increase in the permanent modification numbers, then there’s something seriously wrong with this program,” said Alan White, a law professor at Valparaiso University. “I can only assume the number is appallingly low.”

The Treasury Dept. began to publish reports naming those institutions that were lagging which proved to increase the numbers of temporary modifications from 235000 to 650000 by the end of July.

It is likely there will be another attempt to list their names if the number of permanent modifications does not rise soon!  Not quite Turbocharged.

There are new guidelines, now in place, that servicers are not going to like very much.

This is directly from the HMP press release …

Top servicers will be required to submit a schedule demonstrating their plans to reach a decision on each loan for which they have documentation and to communicate either a modification agreement or denial letter to those borrowers. Treasury/Fannie Mae “account liaisons” are being assigned to these servicers and will follow up daily as necessary to monitor progress against the servicer’s plan. Daily progress will be aggregated by the end of each business day and reported to the Administration.

If you or someone you know needs to get on board, forward this link to them. http://makinghomeaffordable.gov/index.html

Here they will find…

• Links to all of the required documents and an income verification checklist to help borrowers request a modification in four easy steps;
• Comprehensive information about how the trial phase works, what borrower responsibilities are to convert to a permanent modification, and a new instructional video which provides step by step instruction for borrowers;
• A toolkit for partner organizations to directly assist their constituents.

I think this is a mess that still needs cleaning up… and I am hear to watch ‘em.

The fundamental reason homes do not sell in a timely manner is due to misplacing it in the market.   Pricing!  No one is willing to pay more than something is worth… everyone knows that.  Still, I am often befuddled to find so many agents list a home for more than market price?   It’s called ‘buying the listing’.

Buying the listing is when an agent will do anything to stick a sign in your flower bed, including listing at a higher price just to get you to sign on the dotted line.  I call it,  sticking it to you.  That’s exactly what it is when you consider the fact that your home will see little exposure, sit on the market longer and end up selling for less than you expected.  It happens every time!

Elizabeth Weintraub writes “…Maybe the first agent knows there will be two other agents competing for the listing, so the first agent names an astronomical figure. The second agent, upon hearing the first agent’s price, beats it. The third agent comes in higher yet.”

This is all based on the fact you have already implemented the basic tips to sell your home.

Are you thinking “but, if a buyer offers less than we are asking we can’t negotiate”?  If your home is priced right you will have several buyers considering an offer.  This presents a problem for the buyers, a level of uncertainty that you will even consider their low offer.  Hence, the offers that come will be more in line with the market.  Less serious buyers will go fishing elsewhere and not waste your time.

This salesman ‘buy the listing’ tactic only leads to more work than is necessary. I had a similar experience of my own when I recently sold my personal residence.  I don’t use ‘buy the listing’ tactics but, market conditions led to the same result.    The market was falling and I had to lower my price two times to catch a buyer.  It was like chasing the market downhill.  If I had known the banking system was going to experience such failures I would have listed at the eventual selling price from the onset to avoid the trouble.

In reality, the chance a home will sell in the first few weeks is far greater when it is priced correctly and prepared well.  Sounds intuitive enough, Right?   Go look at some homes for sale and see how little thought is given to home preparation.   This is especially important when considering a short sale.   The sooner you can yield a willing buyer the sooner you can move the time consuming process forward.

Showhomes, a national franchised home stager staged Tracy Truitt’s listing and it sold in eight days.   Tracey said…“I had an almost full price offer within a week of Showhomes’ staging, and a 25% higher offer than the two offers that had come in previously to the home being staged,” Truitt says.

I found keeping my house prepared well, clean and neat, was tiresome after just a couple of weeks.  I am a terrible merry maid.  If I had to deal with a Realtor I would have lost my mind!  I know can do better than some..look at what  these people did.

Each time I made a price adjustment more people called and disrupted breakfast, dinner and quiet family time.  It was unnerving more than once.  Buyers  sense  desperation when you drop your price and lower offers will follow.

You can guard against this by simply stepping outside your bubble and looking at the competition in an unbiased fashion.  This means you will have to forget all the trouble and expense you suffered when you updated and improved your home.  A buyer’s eye only sees your home compared to other like properties that are available.  You must do the same. No one cares if Aunt Clara helped you cook your first Turkey there.

Is this boring yet?

Wake up!  Do a Walk Score or a Megans Law search for your home? How about a Crime Report review?   I will bet my favorite tie that buyers considering your home are.  Think like a buyer!

Following your internet searches and open house viewings you can reasonably determine what your home should sell for. This will afford you the knowledge and understanding to say no to –salespeople-.  Half hearted buyers will resist the urge to make low ball offers and serious buyers will make their highest and best offers.

Would you be interested in learning what buyers complain about most?  If so, please comment and I will provide a definitive list and some ideas to overcome them.

Tips on Appraisals

One in Four Homes Lowered Price

Why do agents take over priced listings

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