California running out of $10,000 tax credits
First-time home buyers wanting to take advantage of the state’s $10,000 tax credit may have less time than originally expected. California set aside $100 million to help home buyers purchase newly built homes, hoping to jump start the residential-construction market. According to state officials, the tactic has worked well and is helping to entice home buyers into the market. However, there only is approximately 20 percent of the program’s funding remaining. The program launched in March, and as of June 3 nearly $24 million in tax credit certificates already had been issued, according to the state’s Franchise Tax Board, leaving nearly $76 million in credit available. Many applications still are in the pipeline awaiting approval. If all of the submitted applications are approved, only $17.5 million would remain in the fund.

The California state legislature is considering adding another $200 million to the program. However, securing approval may be difficult due to the state’s estimated $24 billion budget deficit. A bill to extend the program already has won Assembly approval and now is awaiting activity in the state Senate.

It’s called The California Foreclosure Prevention Act, or Assembly Bill X2 7. Here’s the bottom line: banks can’t foreclose a mortgage without either renegotiating the loan or giving you three months notice.

According to an article on www.kcbs.com, Assemblyman Ted Lieu, the Torrance Democrat who authored the bill, is quoted as saying:

“California is ground zero for foreclosures. We’re getting about 80 to 90,000 foreclosure filings every month. That’s one every 30 seconds, so until we start mitigating the number of foreclosures, our economic recovery is going to be hampered.”

If the bank doesn’t renegotiate, you have 3 months until the bank can take the house and you have to move. The law impacts loans made from 2003 to 2007.

IMPORTANT TO NOTE–The 90-day moratorium provides companies an opportunity to earn an exemption if they already have a loan modification program in place. And if your loan is an “investor-owned loan”, it is probably exempt from the moratorium. And if your mortgage payment is more than 38% of your income, you probably won’t qualify for the modification. Contact your lender for the details about how the new bill might impact you.

Want to read the entire bill? You can find it on this official website: http://www.leginfo.ca.gov/

Currently, borrowers applying for an FHA-insured mortgage are required to issue minimum down payments of 3.5 percent. Buyers still must issue the mandatory 3.5 percent down payment, but the tax credit now can be used as an additional down payment, or for other closing costs, which can help lower principal balances and monthly payments.

Ask a mortgage professional about the details! If you need help finding one, ask us at 800-895-5112.

with blessings,
Claudia

The NATIONAL ASSOCIATION OF REALTORS® (NAR) today announced that the Obama Administration has added new incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP), part of the administration’s Making Home Affordable plan.

Loan servicers may consider short sales or deeds-in-lieu of foreclosure for borrowers who do not qualify to have their loans modified on a permanent basis under the Making Home Affordable Loan Modification Program.

· Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program, but don’t qualify for a modification or do not successfully complete the three-month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.

· Incentives include: $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; $1,500 for borrowers/homeowners to help with relocation expenses; and up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).

· The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.

· Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.

· In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.

· The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.

· Servicers may not charge fees to borrowers/homeowners for participating in the FAP.

· The program is in effect through 2012.

· Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).

If you are a buyer or buyer’s agent, you don’t know how your offer will be treated. Most of our listings are bank-owned or short sales requiring lender approval. A property can be listed as ACTIVE on the MLS and still have 10-15 offers. Which offer gets sent to the bank? Will you be countered or passed over if someone makes a higher offer? How do you avoid a bidding war?

As a Broker Associate for Winkelmann Realty, I list many homes for Freddie Mac. And I see a shift in the offers I receive.

While appraisals remain low, the purchase price of offers is increasing. Buyers are offering list price and above…sometimes $10,000, $15,000 and even $50,000 over asking price. And this is for homes listed under $350,000.

Here’s the strategy I’m seeing—buyers are sending offers at the limit of their pre-approval letter. They hope to beat out all the other offers and get the property under contract. If the appraisal comes in closer to list price, they offer to purchase the home at the appraised value.

It’s a good strategy as long as they know the risks. In a declining market, the buyer’s lender won’t want them buying the house over appraised value. If the contingency period has expired (typically 10-17 days), they might be legally obligated to purchase the house at the price in the contract. The seller will have to agree to reduce purchase price to appraised value. While this usually happens, no realtor can guarantee seller will agree to price less than stated in contract.

Just be aware. The Inland Empire has a lot of qualified buyers ready to purchase and determined to buy the house of their choice. This situation just might help slow the decline in property values and help stabilize the market.

If you need held finding AND buying the house you want, give us a call at 800-895-5112. We’re here to be of service.

with blessings,
Claudia

With low down-payment requirements, competitive rates, and less stringent credit score requirements, more home buyers are choosing mortgages insured by the Federal Housing Administration (FHA). Mortgages insured by the FHA account for 20 percent of the total dollar volume in home loans – up from just 3 percent in 2006.

Some benefits to FHA loans include: a better loan modification program; ability to easily and often less expensively refinance; low rates; and acceptance of borrowers with credit scores as low as 620.

FHA loans are targeted to low- and moderate-income borrowers, but there are not any income restrictions. However, these loans do restrict the amount that can be borrowed. In high-cost areas, such as California , the maximum amount that a mortgage applicant can borrower is $729,750.

Additionally, borrowers must pay an up-front insurance premium totaling 1.75 percent of the loan, which goes into FHA’s fund for repaying lenders if borrowers default. This is in addition to other usual closing costs.

In previous years, few lenders would originate FHA loans due to strict qualifications. That all changed a few years ago when the Dept. of Housing and Urban Development (HUD), which oversees the FHA, reworked its guidelines. The number of authorized FHA lenders has soared by 500 percent over the past two years.

Feel free to contact us for a list of authorized FHA lenders.

with blessings,
Claudia

Great news! Riverside County was not on the list! In fact, in my practice we’re seeing signs of fewer foreclosures on the market and offers coming in above asking price.

Last week, I listed two new REOs. Two days later I had multiple offers above asking price. Decline in values seems to be slowing at 40-50% off last year’s values. I’m hopeful we’ve just about hit bottom.

This doesn’t mean we’ll see equity building anytime soon. Yet, slowing decline is a good sign towards stabilization of the residential market.

Feel free to give us a call if you want to know the current Fair Market Value of your home. Call us at 800-895-5112. We’re here to help!

with blessings,
Claudia

Through the Housing Affordability Fund Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive $1,500 per month, for six months, to help make their mortgage payments. A qualified co-buyer also can participate in the program, and receive a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit.

C.A.R.’s Housing Affordability Fund is dedicating $1 million toward its Mortgage Protection Program, and estimates that as many as 3,000 families will benefit from the program this year.

To qualify for the Mortgage Protection Program, applicants must:

· Be a first-time home buyer – someone who has not owned a home in three

or more years

· Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009

· Use a California REALTOR® in the transaction

· Purchase the property in California

· Be a W-2 employee (cannot be self-employed)

To apply for the program, home buyers must request an application for the H.A.F. Mortgage Protection Program from their REALTOR®.

If you’re interested, give us a call at 800-895-5112.

with blessings,
Claudia

Weekly Market Borrowers interested in refinancing their loans under the Financial Stability Plan received some additional guidance this week. The program is designed to assist homeowners whose loans are owned or guaranteed by Fannie Mae or Freddie Mac, who are current on their payments, and where the loan amount is no more than 105% of the value of the home. A website (www.financialstability.gov) provides guidance on how to determine if a particular loan is owned or guaranteed by Fannie or Freddie and whether the borrower may qualify under this program. Additional details of the program are expected over coming months.

Not so. Banks often use servicing companies to oversee the day-to-day tasks associated with managing your loan. And your loan can move from one servicing company to another.

Here’s a really cool website: CLICK HERE You can search for the identity of your servicer online or by calling 888-679-6377.

Check it out!

with blessings,
Claudia