Michael Roberts' Blog -San Jose Homes, Real Estate and Houses for Sale

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650,000

That number represents 20% of eligible homeowners at least 60 days behind in their payments, according to the Treasury report. This is up from 16% a month earlier.

Despite the progress, housing counselors say the number of people falling into foreclosure vastly exceeds the ranks getting assistance. The number of filings hit a record high of 937,840 in the third quarter, according to RealtyTrac, an online marketer of foreclosed homes. That’s a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

The $75 billion Obama plan is “lagging behind the massive number of foreclosures that continue to pile up,” said John Taylor, head of the National Community Reinvestment Coalition.

But administration officials have said that the program, which was projected to help up to 4 million homeowners, is on track.  On Track?  Which track?  Becsude, if it’’s the ‘railroad’ track..we are in REAL trouble.

The above excerpt is from CNNMoney’s reporting and I have to say I don’t believe the Loan Mod scammers are going to go away soon enough for this to get markedly different anytime soon.

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By signing the new bill, President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.

The following details apply to the homebuyer tax credit expansion ..You may HAVE to pay it back!  Read On.

Who is Eligible

-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.

Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.

-For married couples filing a joint return, the combined income limit is $225,000.

-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.

-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, Short Sale and foreclosures provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).

-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).

-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

So remember,  This is not for the short term buyer looking to make a buck.  It will be need to be repaid, upon the sale or transfer of title, at any time during the first 3 years.

Have you ever heard the term ‘a wet signature’?

Banks often want to see documents with the original signature called ‘a wet signature’  Often asked for when a notary was not required to witness the signature.    I have been using the Uniball 207 Gel Pen for over 5 years just for the slightly different color of the “ink”.  I had no idea it held a secrtet!!!!

The bank where you have a checking account..LOVES… this video.

Disappearing Ink Video

I usually go through several bubble packs a year.  You can probably get by with just a couple of these beauties!

I have no connection with the manufacturer or distributors..just wanted to give a consumer tip!

It’s a no brainer that housing and jobs are interrelated.  Fix housing and jobs will follow in service sectors and and the manufacturing of products we need at home.

I believe only one thing is going to get our  economy moving again..Housing. We got here because Real Estate based derivatives failed to produce gains. Right?  No money, no growth and no jobs.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September 2009, rose 6.1% to 110.1 from a reading of 103.8 in August, and is 21.2% higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.

We got here because Real Estate based derivatives failed to produce gains.   Well, then why doesn’t the government focus more on housing strategies? Obviously, it has been very effective!

This quote proves my point…

Lawrence Yun, NAR chief economist, said the momentum is understandable. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” he said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.”

What if  the Obama administration created another tax benefit for ALL buyers?  Better yet,  produce better guidelines that all banks must use to implement procedures that fast track short sales.  Oh, Oh, Oh I know!   LOAN MODS!!!!!  What happened to all the promises there?    Fix Housing-Fix America!

Even renters could see a benefit.   Consider an apartment owner who would not feel the need to raise rents to their max if he could only get a small loan mod.   Do you think you would be a ‘consumer’ again if you could get a loan mod?   I bet your answer is ” YEP”!  That new TV or new Dining Room table would become affordable for you and that only creates more jobs! Right?

So many sectors of the economy are dependent on housing that it is a big ‘no brainer’  that housing should be the focus.

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You want the Short Sale approved by the Jr. Lien Holder?  It can be like a Birthday Party!

Invite the Jr. Lien Holder to the Birthday Party if you want the Short Sale approved.

Remember when you were a kid and went to  birthday parties and the Cake never seemed to be divided exactly even?    If you saw Johnny get a bigger piece you wanted a bigger piece.  The Jr. Lien Holder has the same reaction.

The Jr. Lien Holder knows  the HUD1 only allocates to them what the First Lien Holder is willing to serve.   All the so called ‘experts’ say they have no recourse.    This is wrong in many cases!  You must persuade them to accept what the First is offering or find alternatives.  They may want the corner piece.  Not only is this important to know and execute, there is the question of the second position.  Is it a purchase money loan or HELOC (Home Equity Line of Credit)?

If the second mortgage is a purchase money loan, loan used as purchase money at the time of the purchase, then there really is no recourse… IF you do not fall prey to their tactics.    But Wait! Is the Second mortgage a HELOC?

In the case of a HELOC their recourse is to leave open the option of  a Deficiency Judgement against you.  It is important to know the law in your State regarding DJs.  Your Realtor and Attorney will know this.

I recently found one of my clients was being led into foreclosure by the HELOC second holder.     Not only was there a so called  “Short Sale Expediting Company” involved there were 2 different lending institutions involved and the cake was not going to be divided evenly.   Birthday parties are always more fun if everyone feels they are getting their fair share of the Birthday Cake.  Actually, the SSEC was not doing anything for my new client.   They had not even tried to cut the cake.    I became involved and quickly learned the Jr. Lien Holder wanted MORE ( Really?) and was not going to settle for what the First was willing to offer.  I found that the Jr. Lien Holder would allow items to paid outside of escrow (POC).   It became obvious they only wanted to see contributions.  They were not necessarily concerned with the size of their slice of cake anymore.  The were more interested in the size of the other pieces.   Guess they didn’t like butter cream either.

Short Sales with 2 or 3 different lenders, in most cases, have a HELOC  in Santa Clara County.  How can you convince them that their piece of cake is satisfactory?    Talk with an accomplished Realtor and an Attorney if you find this is your situation.   Often, you can find a Realtor and Attorney who have a successful record of executed Short Sales and negotiated strongly with HELOC lenders.

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You always thought that over time your home would be worth it’s weight in gold  right?   Well,  maybe not exactly.   Now you are feeling like you are paying for a bottomless pit.   Many homeowners are considering alternatives to paying for their ‘non performing asset’ and Short Selling seems to have become the option of choice.

VIDEO

There are a number of other reasons you may need to consider the short sale option too.  Health, Job loss, divorce, relocation or a mortgage reset are hardships that your mortgage lender will agree are reason enough to allow a short sale if your assets are outweighed by your heavy mortgage burden.

There is some sunlight shining in your bottomless pit.

Your home is gold and there are miners digging for it right now.   If after consulting with your bank and finding your best option is selling then you will need to consult with the experts.  Your list should include your CPA, attorney and a Realtor experienced in navigating the short sale process.  These professionals will provide advice at little or no expense until the home is sold.

There are pitfalls to selling your home for less than you owe.   Your CPA can determine the tax implications, your Attorney; the legal ramifications and your Realtor will share the market opportunities,  strategies and process.

Al and Erin, homeowners in Sunnyvale, CA., say  “Be cautious in hiring  ’so called’ short sale expiditer companies”.    Al and Erin hired one and learned the hard way that they were sold a load of gold colored rocks.  Not gold.    The company they hired took a fee at the front end and had no motivation to complete the process.  They already earned money.

Consulting with your team of professionals will save time and money.  Your mortgage lender will consider a short sale more readily when confronted with the alternatives this team will present to them and you will not be burdened with undo out of pocket expense.

Buying a short sale is like being a miner…A miner will dig and dig, for months, until they find gold right?  Buying a short sale can be very much like mining for gold.  You need to have a miner’s mindset and use better tools than the others.

“How many months is this going to take?”   This question is being asked with great regularity… too much really.   The answer…It depends on who has the mine.  Period.  If the Listing agent  (who has the mine or short sale) is not proactive then it doesn’t matter how hard your Realtor works or how high your offer is…you won’t find any gold.

Your Realtor is your mining pick.   They need to know how to qualify the listing agent’s knowledge, experience and ability or, at least, be willing to work to help the listing agent make progress with the bank who is ultimately going to approve the short sale and…shine the light on the gold.

A successful gold miner will have a map of the gold mine and know how to navigate it.   Your Realtor of choice will need to have a good map and understand the best way to navigate their way to the gold and extract it.   This map is developed through representing sellers AND buyers of  short sale properties, understanding all the pitfalls  and the best practices to avoid them.

More and more short sales will be coming to the market and,  the best homes and best buys available, will likely be short sales.   This is the market condition reality for the next year or longer according to Banking industry experts and Real Estate professionals based on market statistics and economic conditions.

The extremely low interest rates are bringing droves of buyers out and multiple offers on the best homes are the norm in San Jose as well as Los Gatos and all around Santa Clara County, for that matter.  Too many miners and not enough mines.  You can avoid having to compete with these buyers if you realize they are overlooking the opportunity in front of them.  The Short Sale properties.    Agents are avoiding them because they think  that most of them will never close.    Ahhaa!    The key!   Find other mines!  Be a good miner and have the sharpest pick!

Beware if you are selling your home or if you are an interested buyer.  This article published by the San Jose Mercury news tells a true story of a sad result of government intervention.

When David and Penny Mann decided it was time to move to a retirement community, their real estate agent told them that in this rough market, it could take months to sell their downtown San Jose Victorian. So they were thrilled to receive back-to-back offers in the first week, and they accepted the first offer of $560,000, from an enthusiastic young couple buying their first home.

“Things were sailing through,” said David Mann, a retired minister.

But just days before the sale was to close, an appraisal required by a new federal code came in $100,000 below the sale price, torpedoing the deal and sending the buyers and sellers into an emotional tailspin. It’s just one example of the turmoil this new rule-intended to prevent fraud-has caused: Appraisers say it is forcing many of them out of business while pushing up fees and derailing sales, all at a time when the real estate market can ill afford such problems.

The new rule, which took effect May 1, forbids brokers from hiring their own appraisers and requires intermediaries-called appraisal management companies-to choose them instead.

The change was intended to reduce the possibility that brokers and lenders would pressure appraisers to raise house values to match sale prices, regardless of the true value. It affects all loans backed by Fannie Mae and Freddie Mac.

The rule meant the Manns’ first appraisal, which came in at the full sales price and was conducted before the rule took effect, was invalid, and they needed a new one. The second appraiser, based in Oakland and sent by an appraisal management company, told the Manns’ agent he had never worked in San Jose. When his appraisal came in $100,000 below the offer price, the lender wouldn’t approve the buyers’ loan.

“That’s when the drama began,” Mann said. “There is something so wrong in all this,” said Georgie Huff, president of Capital Properties in downtown San Jose, who represented the Manns. “And a lot of qualified buyers and sellers are being victimized.”

No one is tracking the precise results of the new rule, but Bill Hillestad, strategic director of Think Big Work Small, which provides resources for the real estate industry and is pushing to have the rule repealed, says his research offers some clues.

In his online poll of industry professionals, about two-thirds of respondents said they had had at least one appraisal come in under the purchase price since the new rules took effect, with the average difference being more than $13,000. And 90% of respondents said they had lost at least one transaction.

Hillestad said the code has the potential to kill the country’s budding real estate recovery by depressing prices even more than the foreclosure crisis. If willing sellers and buyers agree on a price, the appraisal shouldn’t scuttle the deal, he said.

“We are exactly the kind of sale which our country needs in order to begin getting housing sales moving again,” Penny Mann wrote in a letter to the lender for the couple who wanted to buy their home. As David Mann put it, the deal he struck “was a new stake in the ground to revive this neighborhood.”

The new rule, called the Home Valuation Code of Conduct, is part of the settlement of a lawsuit filed by New York State Attorney General Andrew Cuomo, who had accused Washington Mutual of pressuring appraisers to inflate home values.

Accurate appraisals are necessary to prevent fraud in home sales and to protect lenders in case a loan holder defaults and the property has to be sold. Washington Mutual, however, was accused of inflating values to make more money on higher-priced loans.

While the intent was noble, the policy has had devastating consequences for some appraisers, many of whom have signed a petition (www.hvccpetition.com) to try to repeal the rule-a cause taken up by U.S. Rep. Gary Miller, a Southern California Republican who is co-sponsoring legislation asking for an 18-month moratorium.

A Santa Cruz appraiser who used to have about 10 jobs a month says she is now lucky to get just one, as the management companies change the way work is doled out. And instead of being paid between $350 and $500, she might get just $200. The management company pockets the difference. “I’m sure there were a lot of crooked appraisals. But to put every appraiser basically out of business is not OK,” said the appraiser, who didn’t want her name used for fear that she would jeopardize future work. “After having my business for 20 years, I’m about to lose my house.”

Qing Jiang, a San Jose appraiser, said the new rule is also having a chilling effect as appraisers, “to protect themselves, to avoid being accused of pushing values up, are putting the value at the lower end. This will push the housing values down and have a huge effect.”

For traditional home sellers like the Manns-both retired clergy with the United Church of Christ-the rule nearly cost them their retirement. The couple were waiting to take a tour of their new Southern California bungalow, near their children and grandchildren, when their agent called with the news that the deal was unraveling because of the second appraisal. “We postponed the tour for an hour,” Mann said, “and went to a neighborhood park and cried.”

The intentions of the HVCC rule have hurt more than helped and already struggling San Jose Real Estate market.

The buyers were equally devastated when their loan company balked at funding their mortgage. They had spent months looking for the perfect house, walking through at least 40 and viewing hundreds more online.

The Manns’ century-old Victorian was ideal for Michael Schlemmer, a lawyer. So the young lawyer was undeterred. “I’m an educated person. I’ve lived in the Bay Area my whole life,” he said. “I had no question it was worth $560,000-plus. Neither did my agent or the mortgage broker or the first appraiser who approved it.” Nor, as it turned out, did a third appraiser. After Huff insisted the management company send someone with a 408 area code, the value came in at the sales price. Early this month, after weeks of hand-wringing, the deal closed.

This is only one of the many pitfalls in this new market that we are having to overcome.   What challenges have you experienced?

San Jose Mercury News article

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Following  very active home sales for nearly 60 days creates a problem for everyone!   What is a market price now?   Is it a Seller’s market or a Buyer’s market.    Well,  it sure is a market of change in all areas of Santa Clara County according to market statistics. Consider these 10 facts…

1. A spike in local sales activity. A spike refers to a significant rise in the number of home sales (or values) in a local market area, which generally is measured month to month. A spike does not necessarily mean continued growth, i.e. it could be a one month phenomenon.

2. Higher asking and selling prices vs. appraisal value opinions for residential properties. Appraisers study the markets; they do not make the markets. When the data shows higher sale prices in comparable properties market value opinions will increase proportionally. Appraisers seek evidence of value but do not create the value. In time periods with low activity, evidence of any kind is difficult to find.

3. More activity at open houses. Open houses with five to eight attendees is considered average,  so a dozen or more people attending, like we are seeing in Los Gatos and Cupertino,  open houses means buyer interest is picking up. Also, the mood of the attendees is important. Are they optimist and upbeat? Buyers interest alone does not always translate to effective purchasing power. If the number of buyers in the market increases but they do not have requisite down payments, the sales may still not occur.

4. Shorter marketing times. In some markets like  Downtown San Jose, houses have been up for sale for more than a year. In most balanced residential markets, properties that are priced competitively will typically sell in less than six months. If the Days On Market (DOM) is shortening, many practitioners will read an improvement in the market.

5. Reduced number of foreclosures and short sales. A reduction in these transactions commonly signals a more balanced market. This has become very evident in the  Cambrian area.  If lenders are reluctant to foreclose because of an oversupply of inventory, they may choose to wait to repossess the properties, which could allow a spike in the number of foreclosures later despite a better market condition.

6. Stabilized employment. Stable or increasing employment rates provide the necessary confidence for potential buyers to invest in a home. Since most buyers rely on borrowed funds to make real estate purchases and borrowing money usually requires a source of repayment and that usually means jobs, an increase in this basic need, will enable more real estate sales.

7. Fewer buyer incentives and seller concessions. Seller-paid incentives or concessions are a sign of seller motivation. If there are fewer builders offering “free” upgrades and fewer sellers sweetening the deal with big screen TVs, it may be a sign of lessening supply and therefore a better market.  The First Time Buyer Tax Credit is helping here a bunch!

8. New construction starts. Most builders are quite attune to their markets and will not build new homes without a corresponding contract for sale or a perceived increase in demand. An increase in the number of building permits usually indicates higher demand and higher prices. If residential properties are selling for 25% less than they cost to build, only a few new homes will be built. It would be prudent to buy an existing home rather than build a new one for a much higher price.

9. “Move-up” buyers entering the market. More buyers willing to move to a larger or superior quality home indicates a healthy market. The lack of buyers at the lower end of the price range will have a chain reaction throughout the market. If a buyer for a high priced home has a lower priced home to sell first, the sale of the higher priced home may have to occur before the higher priced one can sell.

10. Apartments advertising renter specials - fewer renters in the market may indicate more people are moving into owner occupied homes or it could indicate a reduction in population. Lower population will cause an oversupply of housing which will oftentimes permeate throughout several markets.

Bringing the Dream of Homeownership Within Reach

I have waited to post this info since, the last time the program was announced it was removed and now, finally, we can rely on it’s use.   I have added a link below, from the housing dept., to clarify the details for you and everyone in our Santa Clara County community of interested buyers and investors.

Congress has passed the legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?

The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

The price of the home-the credit is equal to 10% of the purchase price of the home, up to $8,000.    In our San Jose market this is a no brainer…the whole $8000 credit can be used if you meet the income restrictions.

The buyer’s income-single buyers with incomes up to $75,000 and married couples with incomes up to $150,000-may receive the maximum tax credit.

How to use the credit

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income-over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.